1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended December 31, 1999
Commission file number 001-13950
CENTRAL PARKING CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Tennessee 62-1052916
------------------------------------ -------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2401 21st Avenue South,
Suite 200, Nashville, Tennessee 37212
- ---------------------------------------------------------- --------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (615) 297-4255
-----------------------------
Former name, address and fiscal year, if changed since last report:
Not Applicable
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date.
Class Outstanding at February 14, 2000
------------------------------------ -------------------------------------
Common Stock, $0.01 par value 36,848,177
2
INDEX
CENTRAL PARKING CORPORATION
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets
-- December 31, 1999 and September 30, 1999................................................... 3
Condensed consolidated statements of earnings
-- three months ended December 31, 1999 and 1998.............................................. 4
Condensed consolidated statements of cash flows
-- three months ended December 31, 1999 and 1998.............................................. 5
Notes to condensed consolidated financial statements.......................................... 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................................... 10-15
Item 3. Quantitative and Qualitative Disclosure about Market Risk .................................... 16
PART 2. OTHER INFORMATION
Item 1. Legal Proceedings ............................................................................ 17
Item 4. Submission of Matters to a Vote of Security Holders........................................... 17
Item 6. Exhibits and Reports on Form 8-K.............................................................. 17
Signatures ................................................................................... 23
3
CENTRAL PARKING CORPORATION
Condensed Consolidated Balance Sheets
Dollar amounts in thousands
Unaudited
December 31, September 30,
1999 1999
----------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 44,825 $ 53,669
Management accounts receivable 37,691 33,288
Accounts receivable - other 17,035 18,966
Current portion of notes receivable (including amounts due from related parties
of $523 at December 31, and $599 at September 30, 1999 12,649 12,503
Prepaid rent 8,345 14,222
Prepaid expenses 7,680 7,438
Deferred income taxes 227 247
Prepaid and refundable income taxes 5,374 5,374
----------- -----------
Total current assets 133,826 145,707
Investments, at amortized cost (fair value $5,630 at December 31, and $5,480 at
September 30, 1999) 5,571 5,488
Notes receivable, less current portion 47,525 47,870
Property, equipment, and leasehold improvements, net 430,015 421,090
Contract and lease rights, net 96,062 97,158
Goodwill, net 274,183 277,800
Investment in and advances to partnerships and joint ventures 30,274 32,218
Other assets 39,080 37,246
----------- -----------
$ 1,056,536 $ 1,064,577
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligation $ 43,123 $ 31,682
Accounts payable 69,131 74,778
Accrued payroll and related costs 16,102 12,268
Accrued expenses 7,430 20,051
Management accounts payable 37,870 33,416
Income taxes payable 7,478 4,171
----------- -----------
Total current liabilities 181,144 176,366
Long-term debt and capital lease obligations, less current portion 316,677 337,481
Deferred rent 17,894 17,681
Deferred compensation 12,100 12,058
Deferred income taxes 29,357 27,702
Minority interest 28,814 31,112
Other liabilities 6,272 5,058
----------- -----------
Total liabilities 592,308 607,458
Company-obligated mandatorily redeemable convertible securities of subsidiary
holding solely parent debentures 110,000 110,000
Shareholders' equity:
Common stock, $.01 par value; 50,000,000 shares authorized,
36,719,409 and 36,753,977 shares issued and outstanding, respectively 369 368
Additional paid -in capital 259,142 259,853
Foreign currency translation adjustment 125 (20)
Retained earnings 95,025 87,364
Deferred compensation on restricted stock (433) (446)
----------- -----------
Total shareholders' equity 354,228 347,119
----------- -----------
$ 1,056,536 $ 1,064,577
=========== ===========
See accompanying notes to condensed consolidated financial statements
Page 3 of 23
4
CENTRAL PARKING CORPORATION
Condensed Consolidated Statements of Earnings
Unaudited
Dollar amounts in thousands
Three Months Ended December 30,
-------------------------------
1999 1998
----------- ------------
Revenues:
Parking $ 159,496 $ 155,982
Management contract 25,837 22,941
--------- ---------
Total revenues 185,333 178,923
Costs and expenses:
Cost of parking 133,107 127,294
Cost of management contracts 8,440 5,638
General and administrative 19,927 19,701
Goodwill and non-compete amortization 3,062 2,900
Impairment loss 495 --
Merger costs 2,385 --
--------- ---------
Total costs and expenses 167,416 155,533
--------- ---------
Operating earnings 17,917 23,390
Other income (expenses):
Interest income 1,866 1,533
Interest expense (6,528) (7,562)
Dividends on Company-obligated mandatorily redeemable
convertible securities of a subsidiary trust (1,510) (1,396)
Net gains (losses) on sales and divestitures of property and equipment 2,253 (85)
Minority interest (814) (490)
Equity in partnership and joint venture earnings 1,486 1,186
--------- ---------
Other expenses, net (3,247) (6,814)
--------- ---------
Earnings before income taxes and extraordinary item 14,670 16,576
--------- ---------
Income tax expense 6,224 6,437
--------- ---------
Net earnings before extraordinary item 8,446 10,139
Extraordinary item, net of tax (195) --
--------- ---------
Net earnings $ 8,251 $ 10,139
========= =========
Basic earnings per share:
Net earnings before extraordinary item $ 0.23 $ 0.28
Extraordinary item, net of tax $ -- $ --
Net earnings $ 0.23 $ 0.28
Diluted earnings per share:
Net earnings before extraordinary item $ 0.23 $ 0.27
Extraordinary item, net of tax $ 0.01 $ --
Net earnings $ 0.22 $ 0.27
Page 4 of 23
5
CENTRAL PARKING CORPORATION
Condensed Consolidated Statements of Cash Flows
Dollar amounts in thousands
Three Months Ended December 31,
------------------------------
1999 1998
------------ -----------
Cash flows from operating activities:
Net earnings before extraordinary item $ 8,446 $ 10,139
Extraordinary item, net of tax (195)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 6,855 4,801
Amortization of goodwill and non-compete 3,062 2,900
Amortization of contract and lease rights, deferred rent, deferred financing fees and other 4,373 1,434
Equity in partnership and joint venture earnings (1,486) (1,186)
Distributions from partnerships and ventures 1,254 1,253
Net (gains) losses on sales and divestitures of property and equipment (2,253) 85
Impairment loss 495 --
Deferred income taxes 1,675 (258)
Minority interest 814 490
Changes in operating assets and liabilities, excluding acquisitions:
(Increase) decrease in management accounts receivable (4,403) (11,559)
(Increase) decrease in notes and accounts receivable - other 1,931 (4,631)
(Increase) decrease in prepaid rent 5,877 (3,516)
(Increase) decrease in prepaid expenses (242) (1,161)
(Increase) decrease in prepaid and refundable income taxes -- (273)
(Increase) decrease in other assets 1,267 (3,457)
Increase (decrease) in accounts payable, accrued expenses, and deferred compensation (17,111) (9,737)
Increase (decrease) in management accounts payable 4,454 12,242
Increase (decrease) in income taxes payable 3,307 4,666
-------- --------
Net cash provided by operating activities 15,586 2,232
-------- --------
Cash flows from investing activities:
Proceeds from sales and divestitures of property and equipment 5,516 203
Investment in notes receivable 199 (3,130)
Purchase of property, equipment, and leasehold improvements (19,043) (13,297)
Purchase of contract rights and lease rights (980) (22,140)
Investment in and advances to partnerships, joint ventures and unconsolidated subsidiaries 2,176 11
Purchase of investments, net (83) (65)
-------- --------
Net cash used by investing activities (12,215) (38,418)
-------- --------
Cash flows from financing activities:
Dividends paid (551) (444)
Net borrowings under revolving credit agreement, net of issuance costs (9,100) 2,300
Payments of financing charges for revolving credit agreement (700) --
Capital contributions -- 32
Proceeds from issuance of notes payable, net of issuance costs -- 15,330
Payment to minority interest partner (3,112) --
Principal repayments on notes payable and capital leases (263) (1,746)
Proceeds from issuance of common stock and exercise of stock options, net 1,366 193
-------- --------
Net cash provided by financing activities (12,360) 15,665
-------- --------
Foreign currency translation 145 168
-------- --------
Net decrease in cash and cash equivalents (8,844) (20,353)
Cash and cash equivalents at beginning of period 53,669 50,744
-------- --------
Cash and cash equivalents at end of period $ 44,825 $ 30,391
======== ========
Page 5 of 23
6
CENTRAL PARKING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Central Parking Corporation ("Central Parking" or the "Company") have been
prepared in accordance with generally accepted accounting principles and with
the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. All significant
inter-company transactions have been eliminated in consolidation. Operating
results for the three months ended December 31, 1999 are not necessarily
indicative of the results that may be expected for the fiscal year ending
September 30, 2000. For further information, refer to the consolidated financial
statements and footnotes thereto for the year ended September 30, 1999 (included
in the Company's Annual Report on Form 10-K). Certain items have been
reclassified to conform to current year presentation.
MERGERS AND ACQUISITIONS
NEW YORK PARTNERSHIP
On May 28, 1999 the Company purchased the remaining 60% interest in a
partnership, a limited liability company, which operates a parking facility in
New York City for $20.5 million in cash. The Company previously owned 40% of the
partnership. The previous partner will continue to manage the garage for the
next 7 years.
ALLRIGHT HOLDINGS, INC.
On March 19, 1999, the Company completed a merger with Allright Holdings,
Inc. ("Allright"), pursuant to which approximately 7.0 million shares of Central
Parking common stock and approximately 0.5 million options and warrants to
purchase common stock of Central Parking, were exchanged for all of the
outstanding shares of common stock and options and warrants to purchase common
stock of Allright. The transaction, constituting a tax-free exchange, has been
accounted for as a pooling-of-interests under APB Opinion No. 16. Accordingly,
prior period financial statements presented have been restated to include the
combined results of operations, financial position and cash flows of Allright as
if it had been part of Central Parking from the date of Allright's inception,
October 31, 1996. Prior to the consummation of the merger, Allright's fiscal
year end was June 30. In recording the business combination, Allright's fiscal
year end has been restated to reflect a September year-end to conform to Central
Parking's fiscal year end. As a result of conforming the fiscal year with that
of the company's, the historical results of operations of Allright for the
quarter ending September 30, 1998 has been recorded directly to shareholders'
equity. In addition, the consolidated income tax provision has been restated on
a combined basis. The impact of the restatement was to increase net earnings by
$849 thousand and to decrease net earnings by $533 thousand in the quarters
ended December 31, 1998 and 1999, respectively. There were no material
transactions between Central Parking and Allright prior to the merger.
The Company incurred $2.4 million of merger related expenses on a pretax
basis during the quarter ended December 31, 1999 that were reported as operating
expenses. Included in these costs are approximately $0.6 million in professional
fees; comprised of legal, accounting, and consulting fees; $1.1 million related
to employment agreements and severance; and the balance of $0.7 million in
travel, supplies, printing and other out of pocket expenses. These costs, which
are directly attributable to the merger and are incremental to the combined
companies are recognized when incurred.
ALLIED PARKING
On October 1, 1998, Allright purchased from Allied Parking, Inc. ("Allied")
four leases relating to parking facilities in New York City, with maturities
ranging from 2006 to 2029 for approximately $14.2 million. Allied
Page 6 of 23
7
agreed to lease to Allright two more lots for 19 years, each in exchange for a
note receivable of $4.9 million, secured by an assignment of rents. Allright
also purchased the right to use the "Allied Parking" name associated with these
leases for $835 thousand.
On November 8, 1998, Allright purchased six additional leases from Allied
Parking with maturities ranging from 1999 to 2008 for $5.1 million. Allright
also purchased the right to use the "Allied Parking" name associated with these
leases for $300 thousand.
During April 1999, the Company purchased an additional lease from Allied
Parking which matures in 2020 for $3.0 million, and also purchased the right to
use the "Allied Parking" name associated with it as part of the purchase price.
PRIME GROUP REALTY TRUST
On May 10, 1999, the Company announced a definitive agreement to purchase a
parking facility that is being developed in Chicago by a wholly owned subsidiary
of Prime Group Realty Trust (NYSE: PGE). The purchase price is approximately
$37.3 million. The garage will have a total of 1,018 parking spaces as well as
4,200 square feet suitable for retail. Under the terms of the agreement, the
purchase will occur upon completion of the parking facility, which is expected
in the latter part of 2000.
EARNINGS PER SHARE
Basic earnings per share excludes dilution and is computed by dividing
income available to common shareholders by the weighted-average number of common
shares outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the
issuance of common stock, or if restricted shares of common stock were to become
fully vested, that then shared in the earnings of the entity.
The following tables set forth the computation of basic and diluted earnings per
share:
THREE MONTHS ENDED DECEMBER 31,
----------------------------------------------------------------------
1999 1998
---------------------------------- ---------------------------------
Income Common Income Common
Available Shares Per Share Available Shares Per Share
($000's) (000's) Amount ($000's) (000's) Amount
--------- ------- --------- --------- ------- --------
Basic earnings per share:
Earnings before extraordinary item $ 8,446 36,516 $ 0.23 $10,139 36,260 $ 0.28
Effect of dilutive stock and
options:
Stock option plan and warrants -- 308 -- -- 524 (0.01)
Restricted stock plan -- 180 -- -- 172 --
Deferred stock unit plan -- 36 -- -- 16 --
Employee stock purchase plan -- 73 -- -- 46 --
------- ------- ------- ------- ------- -------
Diluted earnings per share:
Earnings before extraordinary item $ 8,446 37,113 $ 0.23 $10,139 37,018 $ 0.27
======= ======= ======= ======= ======= =======
Weighted average common shares used for the computation of basic earnings
per share excludes certain common shares issued pursuant to the Company's
restricted stock plan and deferred compensation agreement, because under the
related agreements the holder of such restricted stock may forfeit the shares if
certain employment or service requirements are not met.
The effect of the conversion of the company-obligated mandatorily
redeemable securities of the subsidiary trust has not been included in the
diluted earnings per share calculation since such securities are anti-dilutive.
At December 31, 1999 and 1998, such securities were convertible into 2,000,000
shares of common stock. For the three months ended December 31, 1999, options
and warrants to purchase 1,014,248 shares are excluded from the diluted common
shares since they are anti-dilutive.
On January 18, 2000 the Company's board of directors authorized the
repurchase of up to $50 million in outstanding shares of the Company's common
stock. The repurchase was subsequently approved by the Company's bank lenders on
February 14, 2000. Subject to availability, the repurchases may be made from
time to time in open market transactions or in privately negotiated off-market
transactions at prevailing market prices that the Company deems appropriate.
Shares repurchased will be reserved for later reissue in connection with general
corporate purposes, including possible future acquisitions.
Page 7 of 23
8
LONG TERM DEBT
On March 19, 1999, Central Parking established a new credit facility
providing for an aggregate of up to $400 million (the "New Credit Facility")
consisting of a five-year $200 million revolving credit facility including a
sub-limit of $25 million for standby letters of credit, and a $200 million
five-year term loan. The principal amount of the term loan shall be repaid in
quarterly payments of $12,500,000 commencing June 30, 2000 and continuing until
the loan is repaid. The New Credit Facility bears interest at LIBOR plus grid
based margin dependant upon the Company achieving certain financial ratios. The
rate as of December 31, 1999 was LIBOR plus 1.125%. The New Credit Facility
contains certain covenants including those that require Central Parking to
maintain certain financial ratios, restrict further indebtedness and limit the
amount of dividends paid. Central Parking used the New Credit Facility to
replace the Company's previous credit facility and to refinance the existing
debt of Allright Holdings, Inc. The amount outstanding under the Company's New
Credit Facility as of December 31, 1999 was $340.0 million with a weighted
average interest rate of 6.65% as of December 31, 1999.
The New Credit Facility contains covenants including those that require the
Company to maintain certain financial ratios, restrict further indebtedness and
limit the amount of dividends paid. On December 28, 1999 the Company entered
into an amendment and waiver to the New Credit Facility agreement relating to
the waiver of non-compliance with certain loan covenants at September 30, 1999.
This amendment and waiver contains, among other things, provisions for up-front
fees of $700 thousand. Interest rates are not affected by the amendment and will
continue to be based upon the existing grid and determined based on certain
financial ratios, as amended.
On February 14, 2000, the Company entered into an amendment and restatement
to the New Credit Facility agreement primarily to allow for the Company to
repurchase up to $50 million in outstanding shares of its common stock. This
amendment and restatement contains provisions for up front fees of $700
thousand. Interest rates are not affected by the amendment and will continue to
be based upon the existing grid and determined based on certain financial
ratios.
The Company is required under the New Credit Facility to enter into certain
interest rate protection agreements designed to fix interest rates on variable
rate debt and reduce exposure to fluctuations in interest rates. On October 27,
1999 the Company entered into a $25 million interest rate swap for a term of
four years, cancelable after two years at the option of the counterparty, under
which the Company will pay to the counterparty a fixed rate of 6.16%, and the
counterparty will pay to the Company a variable rate equal to LIBOR. The
transaction involved an exchange of fixed rate payments for variable rate
payments and does not involve the exchange of the underlying nominal value.
The Company had previously established a credit facility (the "Previous
Credit Facility") providing for an aggregate availability of up to $300 million,
consisting of a five-year $200 million revolving credit facility, including a
sub-limit of $25 million for standby letters of credit, and a $100 million term
loan. The $100 million term loan was repaid with proceeds from securities
offerings completed in March 1998, and the remaining balance of the revolving
credit facility was repaid with proceeds from the New Credit Facility.
The Company's consolidated balance sheets reflect the Preferred Securities
of the Trust as company-obligated mandatorily redeemable convertible securities
of a subsidiary whose sole assets are convertible subordinated debentures of the
Company. The consolidated results of operations reflect dividends on the
Preferred Securities.
Page 8 of 23
9
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
established reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts. Under SFAS No. 133, the
Company would recognize all derivatives as either assets or liabilities,
measured at fair value, in the statement of financial position. In July 1999,
SFAS No. 137 "Accounting for Derivative Instruments and Hedging Activities -
Deferral of Effective Date of FASB No. 133, An Amendment of FASB Statement No.
133" was issued deferring the effective date of SFAS 133 to fiscal years
beginning after June 15, 2000. The Company is in the process of evaluating the
impact, if any, these pronouncements will have on its consolidated financial
statements.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," effective for fiscal years
beginning after December 16, 1998. SOP 98-1 defines which costs incurred to
develop or purchase internal use software should be capitalized and which should
be expensed. The Company's adoption of SOP 98-1 did not have a material impact
to the Company's financial statements.
On January 18, 2000 the Company's board of directors authorized the
repurchase of up to $50 million in outstanding shares of the Company's common
stock. The repurchase was subsequently approved by the Company's bank lenders on
February 14, 2000. Subject to availability, the repurchases may be made from
time to time in open market transactions or in privately negotiated off-market
transactions at prevailing market prices that the Company deems appropriate.
Shares repurchased will be reserved for later reissue in connection with general
corporate purposes, including possible future acquisitions
BUSINESS SEGMENTS
The Company is managed based on segments administered by senior vice
presidents. These segments are generally organized geographically, with
exceptions depending on the needs of specific regions. The following are
summaries of revenues, costs, and other expenses by segment for the three months
ended December 31, 1998 and 1999.
Three Months Ended December 31, 1999
One Two Three Four Five
----------- ----------- ----------- ----------- -----------
Parking revenue $ 20,188 $ 72,706 $ 21,687 $ 24,749 $ 13,409
Management contract 4,221 8,338 4,538 3,476 3,925
----------- ----------- ----------- ----------- -----------
Total revenues 24,409 81,044 26,225 28,225 17,334
Cost of parking 18,438 54,676 20,874 21,712 11,406
Cost of management 1,535 2,600 1,725 1,214 1,573
General & admin, goodwill,
impairment loss and merger costs 3,485 9,070 3,277 3,020 3,037
----------- ----------- ----------- ----------- -----------
Operating earnings 951 14,698 349 2,279 1,318
Interest income/(expense)/
dividends, net (64) (5,002) (694) (21) (75)
Gains / losses 2,253 2,253
Minority interest -- (814) -- -- --
Equity in partnerships and
joint ventures -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Earnings before income tax
and extraordinary items 887 8,882 (345) 2,258 1,243
Income tax
Net earnings before
extraordinary items
Extraordinary items,
net of tax
Net earnings
----------- ----------- ----------- ----------- -----------
Identifiable assets $ 62,523 $ 368,442 $ 97,636 $ 38,215 $ 48,603
=========== =========== =========== =========== ===========
Three Months Ended December 31, 1999
All others
Int'l & Gen'l Corp Total
----------- ----------- -----------
Parking revenue $ 6,757 $ -- $ 159,496
Management contract 1,339 -- 25,837
----------- ----------- -----------
Total revenues 8,096 -- 185,333
Cost of parking 6,001 -- 133,107
Cost of management (207) -- 8,440
General & admin, goodwill,
impairment loss and merger costs 1,100 2,880 25,869
----------- ----------- -----------
Operating earnings 1,202 (2,880) 17,917
Interest income/(expense)/
dividends, net (23) (293) (6,172)
Gains / losses
Minority interest -- -- (814)
Equity in partnerships and
joint ventures 294 1,192 1,486
----------- ----------- -----------
Earnings before income tax
and extraordinary items 1,274 471 14,670
Income tax 6,224
-----------
Net earnings before
extraordinary items 8,446
Extraordinary items,
net of tax (195)
-----------
Net earnings 8,251
----------- ----------- -----------
Identifiable assets $ 21,218 $ 418,409 $ 1,055,046
=========== =========== ===========
Segment One encompasses the western region of the United States, including West
Texas, and Louisiana.
Segment Two encompasses the northeastern region of the United States, including
New York, New Jersey, Eastern Pennsylvania, and New England.
Segment Three encompasses the southeastern region of the United States, and also
includes Washington D.C.
Segment Four encompasses parts of the mid-western region of the United States,
and also includes upstate New York. The executive responsible for Segment Four
administers parts of Canada as well.
Segment Five encompasses the inter-mountain region of the United States,
including Northern Texas and parts of the Mid-west.
Page 9 of 23
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS MAY PROVE INACCRUATE
This report includes various forward-looking statements regarding the
Company that are subject to risks and uncertainties, including, without
limitation, the factors set forth below and under the caption "Risk Factors" in
the Management's Discussion and Analysis of Financial Condition and Results of
Operations section of the Company's Report on Form 10-K for the year ended
September 30, 1999. Forward-looking statements include, but are not limited to,
discussions regarding the Company's operating strategy, growth strategy,
acquisition strategy, cost savings initiatives, industry, economic conditions,
financial condition, liquidity and capital resources and results of operations.
Such statements include, but are not limited to, statements preceded by,
followed by or that otherwise include the words "believes," "expects,"
"anticipates," "intends," "estimates" or similar expressions. For those
statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.
The following important factors, in addition to those discussed
elsewhere in this report, and the documents which are incorporated herein by
reference, could affect the future financial results of the Company and could
cause actual results to differ materially from those expressed in
forward-looking statements contained or incorporated by reference in this
document:
- - successfully integrating Allright and Kinney Systems, as well as past
and future acquisitions in light of challenges in retaining key
employees, synchronizing business processes and efficiently integrating
facilities, marketing, and operations;
- - successful implementation of the Company's operating and growth
strategy, including possible strategic acquisitions;
- - fluctuations in quarterly operating results caused by a variety of
factors including the timing of gains on sales of owned facilities,
preopening costs, changes in the Company's cost of borrowing, effect of
weather on travel and transportation patterns, player strikes or other
events affecting major league sports and local, national and
international economic conditions;
- - the ability of the Company to form and maintain its strategic
relationships with certain large real estate owners and operators;
- - the ability of the Company to successfully complete Year 2000
compliance measures;
- - global and/or regional economic factors;
- - compliance with laws and regulations, including, without limitation,
environmental, antitrust and consumer protection laws and regulations
at the federal, state, local and international levels.
OVERVIEW
On March 19, 1999, Central Parking completed a merger (the "Merger") with
Allright Holdings, Inc. ("Allright"). The transaction constituted a tax-free
reorganization and has been accounted for as a pooling-of-interests under
Accounting Principles Board ("APB") Opinion No. 16, "Business Combinations."
Refer to the accompanying notes to the condensed consolidated financial
statements.
The Company operates parking facilities under three types of arrangements:
leases, fee ownership, and management contracts. Parking revenues consist of
Central Parking Corporation and subsidiaries revenues from leased and owned
facilities. Cost of parking relates to both leased and owned facilities and
includes rent, payroll and related benefits, depreciation (if applicable),
maintenance, insurance, and general operating expenses.
Parking revenues from owned properties amounted to $16.4 million and $15.3
million for the three months ended December 30, 1999 and 1998, respectively.
Owned properties parking revenues, as a percentage of parking revenues,
accounted for 10.3% and 9.7% in the three months ended December 31, 1999 and
1998, respectively. Ownership of parking facilities, either independently or
through joint ventures, typically requires a larger capital
Page 10 of 23
11
investment than managed or leased facilities but provides maximum control over
the operation of the parking facility and the greatest profit potential of the
three types of operating arrangements. As the owner, all changes in owned
facility revenue and expense flow directly to the Company. Additionally, the
Company has the potential to realize benefits of appreciation in the value of
the underlying real estate if the property is sold. Central Parking assumes
complete responsibility for all aspects of the property, including all
structural, mechanical, or electrical maintenance or repairs and property taxes.
Parking revenues from leased facilities amounted to $143.1 million and
$142.4 million for the first quarter of fiscal 2000 and 1999, respectively.
Leased properties parking revenues, as a percentage of parking revenues,
accounted for 89.7% and 90.3% in the three months ending December 31, 1999 and
1998, respectively. Leases generally provide for a contractually established
payment to the facility owner, which is either a fixed annual amount, a
percentage of gross revenues, or a combination thereof. As a result, Central
Parking's revenues and profits in its lease arrangements are dependent upon the
performance of the facility. Leased facilities require a longer commitment and a
larger capital investment by Central Parking than managed facilities but
generally provide a more stable source of revenue and a greater opportunity for
long-term revenue growth. Under its leases, the Company is typically responsible
for all facets of the parking operations, except for structural, mechanical, or
electrical maintenance or repairs, or property taxes. Lease arrangements are
typically for terms of three to ten years, with renewal options.
Management contract revenues amounted to $25.8 million and $22.9 million
for the three months ended December 31, 1999 and 1998, respectively. Management
contract revenues consist of management fees (both fixed and percentage of
revenues) and fees for ancillary services such as insurance, accounting,
equipment leasing, and consulting. The cost of management contracts includes
insurance premiums and claims and other indirect overhead. The Company's
responsibilities under a management contract as a facility manager include
hiring, training, and staffing parking personnel, and providing collections,
accounting, record keeping, insurance, and facility marketing services.
Generally, Central Parking is not responsible under its management contracts for
structural, mechanical, or electrical maintenance or repairs, or for providing
security or guard services or for paying property taxes. The typical management
contract is for a term of one to three years and generally is renewable for
successive one-year terms, but is cancelable by the property owner on short
notice.
The Company's clients have the option of obtaining insurance on their own
or having Central Parking provide insurance as part of the services provided
under the management contract. Because of its size and claims experience, the
Company can purchase such insurance at discounts to comparable market rates and,
management believes, at lower rates than the Company's clients can generally
obtain on their own. Accordingly, Central Parking generates profits on the
insurance provided under its management contracts.
As of December 31, 1999, Central Parking operated 2,088 parking facilities
through management contracts, leased 2,419 parking facilities, and owned 256
parking facilities, either independently or in joint venture with third parties.
THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 1998
Parking revenues for the first quarter of fiscal 2000 increased to $159.5
million from $156.0 million in the first quarter of fiscal 1999, an increase of
$3.5 million, or 2.3%. The increase is primarily a result of parking rate
increases and new locations offset by lost locations. The Company experienced a
net decline of 166 properties in the number of leased and owned locations in the
first quarter of 2000 from the first quarter of 1999 (226 locations added,
offset by 392 locations lost). The net reduction in locations is primarily a
result of the merger with Allright. Of the locations lost, 33 properties were
divested as a result of an agreement entered into with the Antitrust Division of
the U.S. Department of Justice, 180 lost locations resulted from the Allright
merger and 56 locations were closed because they were not profitable. Revenues
from foreign operations amounted to $6.6 million for the quarters ended December
31, 1999 and 1998.
Management contract revenues for the first quarter of fiscal 2000 increased
to $25.8 million from $22.9 million in the same period of fiscal 1999, an
increase of $2.9 million or 12.6%. Of the $2.9 million increase, $86 thousand is
attributable to 18 locations added as a result of the Sacramento Parking
acquisition. The remaining $2.8 million is attributed to the net addition of 128
management contracts in the three months ended December 31, 1999 as
Page 11 of 23
12
compared to the same quarter of 1998, and increased management fees on existing
locations.
Cost of parking in the first quarter of 2000 increased to $133.1 million
from $127.3 million in the first quarter of 1999, an increase of $5.8 million or
4.6%. This increase was due primarily to higher rent, payroll, medical claims by
employees, and depreciation as a percentage of total revenues in the quarter
ended December 31, 1999 than in the same quarter of 1998. Rent expense increased
$3.5 million from the first quarter of 1999 to the first quarter of 2000. Rent
as a percentage of parking revenues increased to 49.3% in the first quarter of
2000 from 47.3% in the same quarter of 1999. This increase is principally a
result of higher rates at new locations from acquisitions, and increased rental
rates at existing locations. Payroll increased $635 thousand from the quarter
ended December 31, 1999 over the same period in 2000. Cost of parking as a
percentage of parking revenues increased to 83.5% in the first quarter of fiscal
2000 from 81.6% in fiscal first quarter 1998.
Cost of management contracts in fiscal first quarter 2000 increased to $8.4
million from $5.6 million in the comparable period in 1999, an increase of $2.8
million or 49.7%. The increase in cost reflects higher medical claims by
employees, in total and as a percentage of management contract revenue. Cost of
management contracts as a percentage of management contract revenue increased to
32.7% for the first fiscal quarter 2000 from 24.6% for the same period in 1999,
primarily due to the costs of medical claims by employees.
General and administrative expenses, excluding amortization of goodwill and
non-compete agreements, increased to $19.9 million for the first quarter of
fiscal 2000 from $19.7 million in fiscal first quarter 1999, an increase of $226
thousand or 1.1%. This increase is due primarily to administrative activities
associated with increased business volume and expenses associated with
implementation of new accounting systems, including $2.4 million of additional
depreciation related to adopting a shorter life on Allright related computer
assets and $799 thousand of duplicative salaries as a result of the merger
integration process. This increase is partially offset by decreases in salaries
and supplies of approximately $2.6 million in the first quarter of 2000 as
compared to the first quarter of 1999. General and administrative expenses, as a
percentage of total revenues decreased to 10.8% for the first fiscal quarter
2000 compared to 11.0% for the first quarter of fiscal 1999.
Goodwill and non-compete amortization for the first quarter of fiscal 2000
increased to $3.1 million from $2.9 million in fiscal first quarter 1999, an
increase of $162 thousand or 5.6%, as a result of the acquisition of Sacramento
Parking Group in July 1999 and additional amortization associated with previous
acquisitions.
The Company incurred $2.4 million of merger related expenses on a pretax
basis during the quarter ended December 31, 1999 that were reported as operating
expenses. Included in these costs are approximately $0.6 million in professional
fees; comprised of legal, accounting, and consulting fees; $1.1 million related
to employment agreements and severance; and the balance of $0.7 million in
travel, supplies, printing and other out of pocket expenses. These costs, which
are directly attributable to the merger and are incremental to the combined
companies are recognized when incurred.
Interest income increased to $1.9 million for the first quarter of fiscal
2000 from $1.5 million in the first quarter of fiscal 1999, an increase of $333
thousand, or 21.7%. The increase in interest income is a result of additional
notes receivable outstanding during the quarter ended December 31, 1999 that
were not outstanding during the same quarter of 1998.
Interest expense and dividends on Company-obligated mandatorily redeemable
convertible securities of a subsidiary trust decreased to $8.0 million for the
first quarter of fiscal 2000 from $9.0 million in the first quarter of fiscal
1999, a decrease of $1.0 million or 10.3%. This decrease in interest expense was
primarily attributable to lower interest rates on the Company's overall
outstanding debt as a result of refinancing the Allright debt with the new
Credit Facility. The weighted average balance outstanding under such credit
facilities and convertible securities was $454.8 million during the quarter
ended December 31, 1999, at a weighted average interest rate of 6.3% compared to
$392.2 million during the quarter ended December 31, 1998 at an average interest
rate of 7.9%.
Net gains on sales and divestitures of property and equipment for the three
months ended December 31, 1999 includes a gain of $1.1 million resulting from
the disposal of two parking lots due to a governmental condemnation proceeding
and a $1.1 million net gains resulting from divestitures required by a
settlement agreement with the Anti-trust Division of the United States
Department of Justice as a result of the Allright merger.
Income taxes decreased to $6.2 million for the first quarter of fiscal 2000
from $6.4 million in the first fiscal quarter in 1999, a decrease of $213
thousand or 3.3%. The effective tax rate for the first fiscal quarter 2000 was
42.4% compared to 38.8% for the 1999 quarter. The increase in the effective tax
rate is attributable to a combination of certain non-deductible merger expenses
included in operating expenses, and higher overall state taxes applicable to
gain on sales of property. The tax rate is expected to normalize at 40% when
merger expenses are no longer incurred.
Page 12 of 23
13
LIQUIDITY AND CAPITAL RESOURCES
Operating activities for the three months ended December 31, 1999 provided
net cash of $15.6 million, compared to $4.0 million of cash provided by
operating activities for the three months ended December 31, 1998. Net earnings
of $8.4 million and depreciation and amortization of $14.3 million, together
with decreases in prepaid rent of $5.9 million, generally offset by increases in
management accounts receivables of $4.4 million and decreases in accounts
payable, accrued expenses, and deferred compensation of $17.1 million account
for the majority of the cash provided by operating activities during the first
three months of fiscal 2000. Net earnings of $10.1 million, depreciation and
amortization of $9.1 million, partially offset by increases in management
accounts receivable, prepaid expenses, and other assets and decreases in
accounts payable account for the majority of the cash provided by operating
activities during the first three months of fiscal 1999.
Investing activities for the three months ended December 31, 1999 used net
cash of $11.6 million, compared to $40.2 million for the same period in 1998.
Purchase of property, equipment, and leasehold improvements of $19.0 million,
partially offset by proceeds from sales of property of $5.5 million and
distributions from partnerships and joint ventures of $2.7 million account for
the majority of cash used by investing activities during the first three months
of fiscal 2000. Purchase of property, equipment, leasehold improvements, and
contract rights of $35.4 million and investment in notes receivable of $4.9
million account for the majority of the cash used by investing activities in the
first three months of fiscal 1999.
Financing activities for the three months ended December 31, 1999 used net
cash of $12.4 million, compared to cash provided of $15.7 million in the same
period in 1998. Net payments under the revolving credit agreement of $9.1
million and payment to minority interest partner of $3.1 million, partially
offset by proceeds from issuance of common stock and exercise of warrants of
$1.4 million during the three months ended December 31, 1999, account for the
majority of the cash used by financing activities. Proceeds from issuance of
notes payable of $15.3 million account for the majority of the cash provided by
financing activities during the three months ended December 31, 1998.
Depending on the timing and magnitude of the Company's future investments
(either in the form of leased or purchased properties, joint ventures, or
acquisitions), the working capital necessary to satisfy current obligations is
anticipated to be generated from operations and from Central Parking's credit
facility over the next twelve months. In the ordinary course of business,
Central Parking is required to maintain and, in some cases, make capital
improvements to the parking facilities it operates; however, as of December 31,
1999, Central Parking had no material outstanding commitments for capital
expenditures related to current operations.
If Central Parking identifies investment opportunities requiring cash in
excess of Central Parking's cash flows and the existing credit facility, Central
Parking may seek additional sources of capital, including seeking to further
amend the existing credit facility to obtain additional indebtedness. The
Allright Registration Rights Agreement, as noted under the caption "Risk
Factors", in Management's Discussion and Analysis of Financial Condition and
Results of Operations section of the Company's Report on Form 10-K for the year
ended September 30, 1999 provides certain limitations and restrictions upon
Central Parking's ability to issue new shares of Central Parking common stock.
Until certain shareholders of Central Parking have received at least $350
million from the sale of Central Parking common stock in either registered
offerings or otherwise, Central Parking cannot sell any shares of its common
stock on its own behalf, subject to certain exceptions. While Central Parking
does not expect this limitation to affect its working capital needs, it could
have an impact on Central Parking's ability to complete significant
acquisitions. The recent decrease in the market value of Central Parking common
stock also could have an impact on Central Parking's ability to complete
significant acquisitions or raise additional capital.
FUTURE CASH COMMITMENTS
In connection with the Allright Merger, the Company has incurred
approximately $43.4 million of merger costs before adjustment for the tax
benefits associated with those costs. The Company estimates that it will spend
approximately $2 million more to complete the integration of all systems related
to the Allright Merger.
On May 10, 1999, the Company announced a definitive agreement to purchase a
parking facility that is being developed in Chicago by a wholly owned subsidiary
of Prime Group Realty Trust (NYSE: PGE). The purchase price is approximately
$37.3 million. The garage will have a total of 1,018 parking spaces as well as
4,200 square feet suitable for retail. Under the terms of the agreement, the
purchase will occur upon completion of the parking facility,
Page 13 of 23
14
which is expected in 2001. Central Parking expects to finance this purchase
through a synthetic lease or borrow through other indebtedness.
On January 18, 2000 the Company's board of directors authorized the
repurchase of up to $50 million in outstanding shares of the Company's common
stock. The repurchase was subsequently approved by the Company's bank lenders on
February 14, 2000. Subject to availability, the repurchases may be made from
time to time in open market transactions or in privately negotiated off-market
transactions at prevailing market prices that the Company deems appropriate.
Shares repurchased will be reserved for later reissue in connection with general
corporate purposes, including possible future acquisitions
NEW CREDIT FACILITY
The weighted average amount outstanding under the Company's New Credit
Facility as of December 31, 1999 is $346.2 million, with a weighted average
interest rate of 6.65% for the period from October 1, 1999 through December 31,
1999.
On February 14, 2000, the Company entered into an amendment and restatement
to the New Credit Facility agreement to allow for the Company to repurchase up
to $50 million in outstanding shares of its common stock. This amendment and
restatement contains provisions for up front fees of 0.125%. Interest rates are
not affected by the amendment and will continue to be based upon the existing
grid and determined based on certain financial ratios
CONVERTIBLE TRUST ISSUED PREFERRED SECURITIES AND EQUITY OFFERINGS
On March 18, 1998, the Company completed an offering of 2,137,500 shares of
common stock. The Company received net proceeds from the offering of $89.1
million. Concurrent with the common stock offering, the Company created the
Trust which completed a private placement of 4,400,000 shares at $25.00 per
share of 5.25% convertible trust issued preferred securities pursuant to an
exemption from registration under the Securities Act of 1933, as amended. The
Preferred Securities represent preferred undivided beneficial interests in the
assets of Central Parking Finance Trust, a statutory business trust formed under
the laws of the State of Delaware. The Company owns all of the common securities
of the Trust. The Trust exists for the sole purpose of issuing the Preferred
Securities and investing the proceeds thereof in an equivalent amount of 5.25%
Convertible Subordinated Debentures ("Convertible Debentures") of the Company
due 2028. The net proceeds to the Company from the Preferred Securities private
placement were $106.0 million. Each Preferred Security is entitled to receive
cumulative cash distributions at an annual rate of 5.25% (or $1.312 per share)
and will be convertible at the option of the holder thereof into shares of
Company common stock at a conversion rate of 0.4545 shares of Company common
stock for each Preferred Security (equivalent to $55.00 per share of Company
common stock), subject to adjustment in certain circumstances. The Preferred
Securities do not have a stated maturity date but are subject to mandatory
redemption upon the repayment of the Convertible Debentures at their stated
maturity (April 1, 2028) or upon acceleration or earlier repayment of the
Convertible Debentures. The proceeds of the equity and preferred security
offerings were used to repay indebtedness.
The Company's consolidated balance sheets reflect the Preferred Securities
of the Trust as company-obligated mandatorily redeemable convertible securities
of subsidiary whose sole assets are convertible subordinated debentures of the
Parent.
Page 14 of 23
15
MERGERS AND ACQUISITIONS
New York Partnership
On May 28, 1999 the Company purchased the remaining 60% interest in a
partnership, a limited liability company, which operates a parking facility in
New York City for $20.5 million in cash. The Company previously owned 40% of the
partnership. The previous partner will continue to manage the garage for the
next 7 years.
ALLRIGHT HOLDINGS, INC.
On March 19, 1999, the Company completed a merger with Allright Holdings,
Inc. ("Allright"), pursuant to which approximately 7.0 million shares of Central
Parking common stock and approximately 0.5 million options and warrants to
purchase common stock of Central Parking, were exchanged for all of the
outstanding shares of common stock and options and warrants to purchase common
stock of Allright. The transaction, constituting a tax-free exchange, has been
accounted for as a pooling-of-interests under APB Opinion No. 16. Accordingly,
prior period financial statements presented have been restated to include the
combined results of operations, financial position and cash flows of Allright as
if it had been part of Central Parking from the date of Allright's inception,
October 31, 1996. Prior to the consummation of the merger, Allright's fiscal
year end was June 30. In recording the business combination, Allright's fiscal
year end has been restated to reflect a September year-end to conform to Central
Parking's fiscal year end. As a result of conforming the fiscal year with that
of the Company's, the historical results of operations of Allright for the
quarter ending September 30, 1998 has been recorded directly to shareholders'
equity. In addition, the consolidated income tax provision has been restated on
a combined basis. The impact of the restatement was to increase net earnings by
$849 thousand and to decrease net earnings by $533 thousand in the quarters
ended December 31, 1998 and 1999, respectively. There were no material
transactions between Central Parking and Allright prior to the Merger.
ALLIED PARKING
On October 1, 1998, Allright purchased from Allied Parking, Inc. ("Allied")
four leases relating to parking facilities in New York City, with maturities
ranging from 2006 to 2029 for approximately $14.2 million. Allied agreed to
lease to Allright two more lots for 19 years, each in exchange for a note
receivable of $4.9 million, secured by an assignment of rents. Allright also
purchased the right to use the "Allied Parking" name associated with these
leases for $835 thousand.
On November 8, 1998, Allright purchased six additional leases from Allied
Parking with maturities ranging from 1999 to 2008 for $5.1 million. Allright
also purchased the right to use the "Allied Parking" name associated with these
leases for $300 thousand.
During April 1999, the Company purchased an additional lease from Allied
Parking which matures in 2020 for $3.0 million, and also purchased the right to
use the "Allied Parking" name associated with it as part of the purchase price.
PRIME GROUP REALTY TRUST
On May 10, 1999, the Company announced a definitive agreement to purchase a
parking facility that is being developed in Chicago by a wholly owned subsidiary
of Prime Group Realty Trust (NYSE: PGE). The purchase price is approximately
$37.3 million. The garage will have a total of 1,018 parking spaces as well as
4,200 square feet suitable for retail. Under the terms of the agreement, the
purchase will occur upon completion of the parking facility, which is expected
in 2001.
Page 15 of 23
16
Three Months Ended December 31, 1999
One Two Three Four Five
----------- ----------- ----------- ----------- -----------
Parking revenue $ 20,188 $ 72,706 $ 21,687 $ 24,749 $ 13,409
Management contract 4,221 8,338 4,538 3,476 3,925
----------- ----------- ----------- ----------- -----------
Total revenues 24,409 81,044 26,225 28,225 17,334
Cost of parking 18,438 54,676 20,874 21,712 11,406
Cost of management 1,535 2,600 1,725 1,214 1,573
General & admin, goodwill,
impairment loss and merger costs 3,485 9,070 3,277 3,020 3,037
----------- ----------- ----------- ----------- -----------
Operating earnings 951 14,698 349 2,279 1,318
Interest income/(expense)/
dividends, net (64) (5,002) (694) (21) (75)
Gains / losses 2,253 2,253
Minority interest -- (814) -- -- --
Equity in partnerships and
joint ventures -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Earnings before income tax
and extraordinary items 887 8,882 (345) 2,258 1,243
Income tax
Net earnings before
extraordinary items
Extraordinary items,
net of tax
Net earnings
----------- ----------- ----------- ----------- -----------
Identifiable assets $ 62,523 $ 368,442 $ 97,636 $ 38,215 $ 48,603
=========== =========== =========== =========== ===========
Three Months Ended December 31, 1999
All others
Int'l & Gen'l Corp Total
----------- ----------- -----------
Parking revenue $ 6,757 $ -- $ 159,496
Management contract 1,339 -- 25,837
----------- ----------- -----------
Total revenues 8,096 -- 185,333
Cost of parking 6,001 -- 133,107
Cost of management (207) -- 8,440
General & admin, goodwill,
impairment loss and merger costs 1,100 2,880 25,869
----------- ----------- -----------
Operating earnings 1,202 (2,880) 17,917
Interest income/(expense)/
dividends, net (23) (293) (6,172)
Gains / losses
Minority interest -- -- (814)
Equity in partnerships and
joint ventures 95 1,391 1,486
----------- ----------- -----------
Earnings before income tax
and extraordinary items 1,274 471 14,670
Income tax 6,224
-----------
Net earnings before
extraordinary items 8,446
Extraordinary items,
net of tax (195)
-----------
Net earnings 8,251
----------- ----------- -----------
Identifiable assets $ 21,218 $ 418,409 $ 1,055,046
=========== =========== ===========
Three Months Ended December 31, 1998
One Two Three Four Five
----------- ----------- ----------- ----------- -----------
Parking revenue $ 22,584 $ 64,338 $ 22,128 $ 23,851 $ 15,196
Management contract 3,365 8,221 3,846 2,765 3,405
----------- ----------- ----------- ----------- -----------
Total revenues 25,949 72,559 25,974 26,616 18,601
Cost of parking 19,410 47,731 19,607 20,588 13,455
Cost of management 1,228 948 1,574 858 1,013
General & admin, goodwill,
impairment loss and merger costs 1,949 7,923 2,083 2,003 1,634
----------- ----------- ----------- ----------- -----------
Operating earnings 3,362 15,957 2,710 3,167 2,499
Interest income/(expense)/
dividends, net (102) (5,194) (665) (74) (200)
Gains / losses (85) (85)
Minority interest -- (490) -- -- --
Equity in partnerships and
joint ventures -- 287 -- --
----------- ----------- ----------- ----------- -----------
Earnings before income tax
and extraordinary items 3,260 10,560 2,045 3,093 2,299
Income tax
Net earnings before
extraordinary items
Extraordinary items,
net of tax
Net earnings
----------- ----------- ----------- ----------- -----------
Identifiable assets $ 34,842 $ 335,019 $ 59,062 $ 23,379 $ 31,851
=========== =========== =========== =========== ===========
Three Months Ended December 31, 1998
All others
Int'l & Gen'l Corp Total
----------- ----------- -----------
Parking revenue $ 7,885 $ -- $ 155,982
Management contract 1,339 -- 22,941
----------- ----------- -----------
Total revenues 9,224 -- 178,923
Cost of parking 6,503 -- 127,294
Cost of management 17 -- 5,638
General & admin, goodwill,
impairment loss and merger costs 1,246 5,763 22,601
----------- ----------- -----------
Operating earnings 1,458 (5,763) 23,390
Interest income/(expense)/
dividends, net 9 (1,199) (7,425)
Gains / losses
Minority interest -- -- (490)
Equity in partnerships and
joint ventures 93 806 1,186
----------- ----------- -----------
Earnings before income tax
and extraordinary items 1,560 (6,241) 16,576
Income tax 6,437
-----------
Net earnings before
extraordinary items 10,139
Extraordinary items,
net of tax --
-----------
Net earnings 10,139
----------- ----------- -----------
Identifiable assets $ 18,434 $ 510,608 $ 1,013,195
=========== =========== ===========
Segment One encompasses the western region of the United States, including West
Texas, and Louisiana.
Segment Two encompasses the northeastern region of the United States, including
New York, New Jersey, Eastern Pennsylvania, and New England.
Segment Three encompasses the southeastern region of the United States, and also
includes Washington D.C.
Segment Four encompasses parts of the mid-western region of the United States,
and also includes upstate New York. The executive responsible for Segment Four
administers parts of Canada as well.
Segment Five encompasses the inter-mountain region of the United States,
including Northern Texas and parts of the Mid-west.
Page 16 of 23
17
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In connection with the merger of Allright Holdings, Inc. with a subsidiary of
the Company, the Antitrust Division of the United States Department of Justice
(the "Antitrust Division") filed a complaint in U.S. District Court for the
District of Columbia seeking to enjoin the merger on antitrust grounds. In
addition, the Company received notices from several states, including Tennessee,
Ohio, Texas, Illinois, and Maryland, that the attorneys general of those states
were reviewing the merger from an antitrust perspective. Several of these states
also requested certain information relating to the merger and the operations of
Central and Allright in the form of civil investigative demands.
Central and Allright entered into a settlement agreement with the Antitrust
Division on March 16, 1999, under which the two companies agreed to divest a
total of 74 parking facilities in 18 cities, representing approximately 18,000
parking spaces. None of the states that reviewed the transaction from an
antitrust perspective became a party to the settlement agreement with the
Antitrust Division, and the Company is aware that at least one of these states,
Tennessee, is still conducting a review of the operations of Central and
Allright. Under the settlement agreement, the terms of the divestitures are
subject to approval by the Antitrust Division, and the Company is required to
divest the facilities within five days after the court enters a final judgment
relating to the settlement agreement. As of February 11, 2000, the court had not
yet entered a final judgement relating to the settlement agreement.
Substantially all of the facilities required to be divested had been divested or
were under contract to be divested as of such date. The settlement agreement
also provides that Central and Allright may not operate any of the divested
facilities for a period of two years following the divestiture of such facility.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
There were no matters submitted to a vote of security holders during the quarter
ended December 31, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2 Plan of Recapitalization, effective October 9, 1997 (Incorporated by
reference to Exhibit 2 to the Company's Registration Statement No.
33-95640 on Form S-1).
2.1 Agreement and Plan of Merger dated September 21, 1998, by and among the
Registrant, Central Merger Sub, Inc., Allright Holdings, Inc., Apollo
Real Estate Investment Fund II, L.P. and AEW Partners, L.P.
(Incorporated by reference to Exhibit 2.1 to the Company's Registration
Statement No. 333-66081 on Form S-4 filed on October 21, 1998).
2.2 Amendment dated as of January 5, 1999, to the Agreement and Plan of
Merger dated September 21, 1998 by and among the Registrant, Central
Merger Sub, Inc., Allright Holdings, Inc., Apollo Real Estate
Investment Fund II, L.P. and AEW Partners, L.P. (Incorporated by
reference to Exhibit 2.1 to the Company's Registration Statement No.
333-66081 on Form S-4 filed on October 21, 1998, as amended).
2.3 Acquisition Agreement and Plan of Merger dated as of November 7, 1997,
by and between the Registrant and Kinney System Holding Corp and a
subsidiary of the Registrant (Incorporated by reference to the
Company's Current Report on Form 8-K filed on February 17, 1998).
3.1 (a) Amended and Restated Charter of the Registrant (Incorporated by
reference to Exhibit 4.1 to the Company's Registration Statement
No. 333-23869 on Form S-3).
Page 17 of 23
18
(b) Articles of Amendment to the Charter of Central Parking Corporation
increasing the authorized number of shares of common stock, par
value $0.01 per share, to one hundred million (Incorporated by
reference to Exhibit 2 to the Company's 10-Q for the quarter
ended March 31, 1999).
3.2 Amended and Restated Bylaws of the Registrant (Incorporated by
reference to Exhibit 4.1 to the Company's Registration Statement No.
333-23869 on Form S-3).
4.1 Form of Common Stock Certificate (Incorporated by reference to Exhibit
4.1 to the Company's Registration Statement No. 33-95640 on Form S-1).
4.4 Registration Rights Agreement dated as of September 21, 1998 by and
between the Registrant, Apollo Real Estate Investment Fund II, L.P.,
AEW Partners, L.P. and Monroe J. Carell, Jr., The Monroe Carell Jr.
Foundation, Monroe Carell Jr. 1995 Grantor Retained Annuity Trust,
Monroe Carell Jr. 1994 Grantor Retained Annuity Trust, The Carell
Children's Trust, The 1996 Carell Grandchildren's Trust, The Carell
Family Grandchildren 1990 Trust, The Kathryn Carell Brown Foundation,
The Edith Carell Johnson Foundation, The Julie Carell Stadler
Foundation, 1997 Carell Elizabeth Brown Trust, 1997 Ann Scott Johnson
Trust, 1997 Julia Claire Stadler Trust, 1997 William Carell Johnson
Trust, 1997 David Nicholas Brown Trust and 1997 George Monroe Stadler
Trust (Incorporated by reference to Exhibit 4.4 to the Company's
Registration Statement No. 333-66081 filed on October 21, 1998).
4.4 Amendment dated January 5, 1999 to the Registration Rights Agreement
dated as of September 21, 1998, by and between the Registrant, Apollo
Real Estate Investment fund II, L.P., AEW Partners, L.P. and Monroe J.
Carell, Jr., The Monroe Carell Jr. Foundation, Monroe Carell Jr. 1995
Grantor Retained Annuity Trust, Monroe Carell Jr. 1994 Grantor Retained
Annuity Trust, The Carell Children's Trust, The 1996 Carell
Grandchildren's Trust, The Carell Family Grandchildren 1990 Trust, The
Kathryn Carell Brown Foundation, The Edith Carell Johnson Foundation,
The Julie Carell Stadler Foundation, 1997 Carell Elizabeth Brown Trust,
1997 Ann Scott Johnson Trust, 1997 Julia Claire Stadler Trust, 1997
William Carell Johnson Trust, 1997 David Nicholas Brown rust and 1997
George Monroe Stadler Trust. (Incorporated by reference to Exhibit
4.4.1 to the Company's Registration Statement No. 333-66081 filed on
October 21, 1998, as amended).
4.5 Indenture dated March 18, 1998 between the registrant and Chase Bank of
Texas, National Association, as Trustee regarding up to $113,402,050 of
5-1/4% Convertible Subordinated Debentures due 2028. (Incorporated by
reference to Exhibit 4.5 to the Registrant's Registration Statement No.
333-52497 on Form S-3).
4.6 Amended and Restated Declaration of Trust of Central Parking Finance
Trust dated as of March 18, 1998. (Incorporated by reference to Exhibit
4.5 to the Registrant's Registration Statement No. 333-52497 on Form
S-3).
4.7 Preferred Securities Guarantee Agreement dated as of March 18, 1998 by
and between the Registrant and Chase Bank of Texas, national
Association as Trustee (Incorporated by reference to Exhibit 4.7 to the
Registrant's Registration Statement No. 333-52497 on Form S-3).
4.8 Common Securities Guarantee Agreement dated March 18, 1998 by the
Registrant. (Incorporated by reference to Exhibit 4.9 to 333-52497 on
Form S-3).
Page 18 of 23
19
10.1 Executive Compensation Plans and Arrangements
(a) 1997 Incentive and Nonqualified Stock Option Plan for Key
personnel (Incorporated by reference to Exhibit 10.1 to the
Company's Registration Statement No. 33-95640 on Form S-1).
(b) Form of Option Agreement under Key Personnel Plan
(Incorporated by reference to Exhibit 10.2 to the Company's
Registration Statement No. 33-95640 on Form S-1).
(c) 1997 Restricted Stock Plan (Incorporated by reference to
Exhibit 10.5.1 to the Company's Registration Statement No.
33-95640 on Form S-1.)
(d) Form of Restricted Stock Agreement (Incorporated by reference
to Exhibit 10.5.2 to the Company's Registration Statement No.
33-95640 on Form S-1.)
(e) Form of Employment Agreements with Executive Officers
(Incorporated by reference to Exhibit 10.7 to the Company's
Registration Statement No. 33-95640 on Form S-1.)
(f) Monroe J. Carell, Jr. Employment Agreement (Incorporated by
reference to Exhibit 10.8 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
(g) Monroe J. Carell, Jr. Revised Deferred Compensation Agreement,
as amended (Incorporated by reference to Exhibit 10.9 to the
Company's Registration Statement No.33-95640 on Form S-1.)
(h) James H. Bond Employment Agreement (Incorporated by reference
to Exhibit 10.10 to the Company's Registration Statement No.
33-95640 on Form S-1.)
(i) Performance Unit Agreement between Central Parking Corporation
and James H. Bond (Incorporated by reference to Exhibit
10.11.1 to the Company's Registration Statement No. 33-95640
on Form S-1.)
(j) Modification of Performance Unit Agreement of James H. Bond
(Incorporated by reference to Exhibit 10.1(j) to the
Company's Annual Report on Form 10-K filed on December 27,
1997).
(k) James H. Bond Severance Agreement (Incorporated by reference
to Exhibit 10.17 to the Company's Registration Statement No.
33-95640 on Form S-1.)
(l) Deferred Stock Unit Plan (Incorporated by reference to Exhibit
10.1 to the Company's Annual Report on Form 10-K for the
period ended September 30, 1998).
(m) EPS Compensation Program for Senior Executives. (Incorporated
by reference to Exhibit 10.1(m) of the Company's Report on
Form 10-K for the period ended September 30, 1999.)
10.2 1997 Nonqualified Stock Option Plan for Directors (Incorporated by
reference to Exhibit 10.3 to the Company's Registration Statement No.
33-95640 on Form S-1.)
Page 19 of 23
20
10.3 Form of Option Agreement under Directors plan (Incorporated by
reference to Exhibit 10.4 to the Company's Registration Statement No.
33-95640 on Form S-1.)
10.4 Central Parking System, Inc. Profit Sharing Plan, as amended
(Incorporated by reference to Exhibit 10.6 to the Company's
Registration Statement No. 33-95640 on Form S-1.)
10.5 Form of Indemnification Agreement for Directors (Incorporated by
reference to Exhibit 10.12 to the Company's Registration Statement No.
33-95640 on Form S-1.)
10.6 Indemnification Agreement for Monroe J. Carell, Jr. (Incorporated by
reference to Exhibit 10.13 to the Company's Registration Statement No.
33-95640 on Form S-1.)
10.7 Form of Management Contract (Incorporated by eference to Exhibit 10.14
to the Company's Registration Statement No. 33-95640 on Form S-1.)
10.8 Form of Lease (Incorporated by reference to Exhibit 10.15 to the
Company's Registration Statement No. 33-95640 on Form S-1.)
10.9 1998 Employee Stock Purchase Plan (Incorporated by reference to Exhibit
10.16 to the Company's Registration Statement No. 33-95640 on Form
S-1.)
10.10 Exchange Agreement between the Company and Monroe J. Carell, Jr.
(Incorporated by reference to Exhibit 10.18 to the Company's
Registration Statement No. 33-95640 on Form S-1.)
10.11 $400 Million Credit Agreement dated as of March 19, 1999 by and among
various banks with Bank of America, N.A., as Agent, and Central Parking
Corporation and certain affiliates. (Incorporated by reference to
Exhibit 10.11 of the Company's Report on Form 10-K for the period ended
September 30, 1999.)
10.12 Letter Amendment dated as of June 25, 1999 to Credit Agreement dated as
of March 19, 1999, by and among various banks with Bank of America,
N.A., as Agent, and Central Parking Corporation and certain affiliates.
(Incorporated by reference to Exhibit 10.12 of the Company's Report on
Form 10-K for the period ended September 30, 1999.)
10.13 Letter Amendment dated as of October 27, 1999 to Credit Agreement dated
as of March 19, 1999, by and among various banks with Bank of America,
N.A., as Agent, and Central Parking Corporation and certain affiliates.
(Incorporated by reference to Exhibit 10.13 of the Company's Report on
Form 10-K for the period ended September 30, 1999.)
10.14 Form of Amendment dated as of December 28, 1999 to $400 million Credit
Agreement dated as of March 19, 1999, by and among various banks with
Bank of America, N.A., as Agent, and Central ParkingCorporation and
certain affiliates. (Incorporated by reference to Exhibit 10.14 of the
Company's Report on Form 10-K for the period ended September 30, 1999.)
10.19 Consultancy Agreement dated as of January 21, 1997 between Central
Parking System, Inc. and Lowell Harwood (Incorporated by reference to
Exhibit(c)(4) to the Company's Tender Offer Statement on Schedule 14D-1
filed December 13, 1996).
Page 20 of 23
21
10.20 Consulting Agreement dated as of February 12, 1998, by and between
Central Parking Corporation and Lewis Katz. (Incorporated by reference
to Exhibit 10.20 of the Company's Report on Form 10-K for the period
ended September 30, 1999.)
10.21 Limited Partnership Agreement dated as of August 11, 1999, by and
between CPS of the Northeast, Inc. and Arizin Ventures, L.L.C.
(Incorporated by reference to Exhibit 10.21 of the Company's Report on
Form 10-K for the period ended September 30, 1999.)
10.22 Registration Rights Agreement dated as of February 12, 1998, by and
among Central Parking Corporation, Lewis Katz and Saul Schwartz.
(Incorporated by reference to Exhibit 10.22 of the Company's Report on
Form 10-K for the period ended September 30, 1999.)
10.23 Shareholders' Agreement and Agreement Not to Compete by and among
Central Parking Corporation, Monroe J. Carell, Jr., Lewis Katz and Saul
Schwartz dated as of February 12, 1998. (Incorporated by reference to
Exhibit 10.23 of the Company's Report on Form 10-K for the period ended
September 30, 1999.)
10.24 Lease Agreement dated as of October 6, 1995, by and between The Carell
Family LLC and Central Parking System of Tennessee, Inc. (Alloway
Parking Lot) (Incorporated by reference to Exhibit 10.24 of the
Company's Report on Form 10-K for the period ended September 30, 1999.)
10.25 First Amendment to Lease Agreement dated as of July 29, 1997, by and
between The Carell Family LLC and Central Parking System of Tennessee,
Inc. (Alloway Parking Lot) (Incorporated by reference to Exhibit 10.25
of the Company's Report on Form 10-K for the period ended September 30,
1999.)
10.26 Lease Agreement dated as of October 6, 1995 by and between The Carell
Family LLC and Central Parking System of Tennessee, Inc. (Second and
Church Parking Lot) (Incorporated by reference to Exhibit 10.26 of the
Company's Report on Form 10-K for the period ended September 30, 1999.)
10.27 First Amendment to Lease Agreement dated as of October 6, 1995, by and
between The Carell Family LLC and Central Parking System of Tennessee,
Inc. (Second and Church Parking Lot) (Incorporated by reference to
Exhibit 10.27 of the Company's Report on Form 10-K for the period ended
September 30, 1999.)
10.28 Prospectus and offering document for 2,625,000 shares of Common Stock
dated February 17, 1998. (Incorporated by reference to the Company's
Registration Statement No. 233-23869 on Form S-3).
10.29 Transaction Support Agreement by Monroe J. Carell, Jr., the Registrant,
Kathryn Carell Brown, Julia Carell Stadler and Edith Carell Johnson to
Allright Holdings, Inc., Apollo Real Estate Investment Fund II, L.P.
and AEW Partners, L.P. dated September 21, 1998. (Incorporated by
reference to Exhibit 2.1 to the Company's Registration Statement No.
333-66081 filed on October 23, 1998).
10.30 Form of Transaction Support Agreement by certain shareholders of the
Registrant to Allright Holdings, Inc., Apollo Real Estate Investment
Fund II, L.P., and AEW Partners, L.P., dated September 21, 1998.
(Incorporated by reference to Exhibit 2.1 to the Company's Registration
Statement No. 333-66081 filed on October 23, 1998).
Page 21 of 23
22
10.31 Form of Transaction Support Agreement by certain shareholders of
Allright Holdings, Inc. to the Registrant and Central Merger Sub, Inc.
dated September 21, 1998. (Incorporated by reference to Exhibit 2.1 to
the Company's Registration Statement No. 333-66081 filed on October 23,
1998).
(27) Financial Data Schedule (EDGAR Filing Only)
(b) Reports on Form 8-K
On December 1, 1999, the Company filed a current report on form 8-K
announcing preliminary results for fiscal 1999, incorporating the text
of a press release on that date.
On December 2, 1999, the Company filed a current report on form 8-K
announcing preliminary results for fiscal 1999, incorporating the text
of a press release on that date.
On December 9, 1999, the Company filed a current report on form 8-K
announcing results for fiscal 1999, incorporating the text of a press
release on that date.
Page 22 of 23
23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CENTRAL PARKING CORPORATION
Date: February 14, 2000 By: /s/ Stephen A. Tisdell
--------------------- -------------------------------
Stephen A. Tisdell
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Stephen A. Tisdell Chief Financial Officer (Principal February 14, 2000
- ------------------------------------------- Financial and Accounting Officer)
Stephen A. Tisdell
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned party duly authorized.
Page 23 of 23