2004 Annual Report
Company Profile
Standard Parking is a leading national provider of parking facility
management services, providing on-site management services at
multi-level and surface parking facilities for all major markets of the
parking industry. The Company manages parking facilities containing
more than one million parking spaces in hundreds of cities across
the United States and Canada.
The Company’s diversified client base includes some of the
nation's largest private and public owners, managers and developers
of major office buildings, residential properties, commercial
properties, shopping centers and other retail properties, sports
and special event complexes, hotels, and hospitals and medical
centers. In the airport market, the Company manages parking,
shuttle bus and ground transportation operations serving airports
throughout the United States and Canada.
The Company also provides an array of related ancillary services to
its clients, such as valet parking services at both urban and airport
locations as well as on-street parking enforcement and meter
collection services for municipal clients.
Selected Financials
(in thousands)
Revenue
Lease contracts
Management contracts
2004
2003
2002
$ 148,752
83,712
$ 138,681
76,613
$ 142,376
78,029
232,464
215,294
220,405
Reimbursement of management
contract expense
331,171
330,243
326,146
Total Revenue
563,635
545,537
546,551
Gross Profit
63,887
60,702
56,333
General and administrative
expenses
% of gross profit
33,740
52.8%
32,907
54.2%
30,309
53.8%
Operating income
19,661
13,589
12,573
2004 Highlights
Net income
$ 2,640
$ (18,853)
$ (18,334)
• Completed successful IPO, received $50 million in net proceeds
• Reduced total debt by $51 million (32% reduction)
• Generated free cash flow of approximately $10 million
Total assets
$ 195,102
$ 189,585
$ 190,950
Total debt
$ 109,750
$ 161,079
$ 166,173
Gross Profit(in millions)200220042003$70$60$50$40$30$20$10$0Gross ProfitGross ProfitGross ProfitGross Profit$0Gross ProfitGross Profit$10Gross ProfitGross ProfitGross ProfitGross ProfitGross ProfitGross Profit$70$70$60$60$50$50$40$40$30$30$20$20$10$10Gross ProfitGross ProfitGross Profit$10$10Gross ProfitGross ProfitGross ProfitGross ProfitGross ProfitGross ProfitGross ProfitGross ProfitGross Profit$0$0Gross ProfitGross ProfitGross Profit$0$0Gross ProfitGross ProfitGross ProfitGross ProfitGross ProfitGross ProfitGross ProfitGross ProfitGross Profit$63.9$60.7$56.3Indexed Stock Performance05/0406/0407/0408/0409/0410/0411/0412/04$150$140$130$120$110$100$90$80PPeerrffoormancermance$150$150$140$140$130$130$120$120$110$110$100$100$90$90PPPfff$80$80PPPeeerrrfffooormancermancermanceOperating Income(in millions)200220042003$20$15$10$5$0Operating Operating Operating Operating Operating Operating Operating Operating $5Operating Operating Operating Operating IncomeIncomeIncomeIncomeIncomeIncome$20$20$15$15$10$10$5$5Operating Operating Operating $5$5Operating Operating Operating Operating Operating Operating $19.7$13.6$12.6$0$0IncomeIncomeIncomeIncomeIncomeIncomeIncomeIncomeIncomeLocations2002200420032,0001,5001,0005000LocationsLocations2,0002,0001,5001,5001,0001,0005005001,8961,8611,885LocationsLocationsLocations00LocationsLocationsLocationsLocationsLocationsLocationsLocationsLocationsLocationsLocationsLocationsLocationsLocationsLocationsLocationsLocationsLocationsLocationsLocationsLocationsLeasedManagedStandard ParkingS&P 500 IndexS&P SmallCap 600 Diversified Commercial Services To our Shareholders:
Through this annual report – Standard Parking’s first as a public company after our successful
initial public offering (IPO) last June – we want to welcome our new investors and recognize all of
our clients and employees who contributed to an excellent 2004. The Company’s outstanding
performance last year underscores once again the validity and sustainability of our proven
business model.
The fundamental characteristics of our business model are:
• The use of a lower risk, higher margin management contract structure that produces
consistent earnings and stable cash flow. With approximately 85% of the Company’s locations
operating under this format, the impact on operations of external factors is significantly
moderated. Moreover, since management contracts don’t typically require investment in
working capital, we are able to grow our business without significant capital requirements.
• An emphasis on growth within our core markets, enabling us to recognize significant
economies of scale by spreading overhead costs across a large number of locations. Our
management structure and local knowledge within these core markets works to our
competitive advantage.
• A commitment to information technology and client reporting systems to drive increased
efficiencies and enhance revenue. Maintaining the integrity of the substantial amount of cash
that flows through our locations with enhanced systems and a dedicated internal audit team is
a cornerstone of Standard Parking’s operating strategy.
• Enhancing client relationships through the provision of ancillary services. For municipal clients,
for example, we not only can manage their parking facilities but also can provide on-street
parking meter collection, maintenance and enforcement services.
Our 2004 results underscore the validity of this business model. Our new contracts resulted in
a net increase of 35 locations and contributed to an 8% increase in revenues. The Company
generated net earnings of $2.6 million, or $0.42 per diluted share. On a pro forma basis,
reflecting the IPO and related one-time and non-recurring items, and pro forma for income taxes,
net income for the year was $9.4 million, or $0.89 per diluted share.
Our balance sheet improved considerably as well. The combination of the net IPO proceeds and
free cash flow of almost $10 million enabled the Company to reduce debt by $51 million, or 32%,
during the year. The lower debt levels resulted in interest savings of $3.8 million during the last
half of 2004. The Company’s strengthened financial position has enhanced our competitive
position in the marketplace, enabling us to further leverage our highly successful business model.
Our success also underscores the dedication and professionalism of our thousands of employees
throughout the United States and Canada, whose consistent commitment to providing quality
service is our most important competitive advantage. We are proud of their contributions to our
Company and to the communities in which they live. Standard Parking also recognizes the
importance of being a responsible corporate citizen in its own right. We take this role seriously
and recognize the need to support the communities that we serve.
Our performance during 2004 reflects improving trends in our industry, the benefits that we derive
from being a public company, and the predictability and reliability of our business model. For 2005
and beyond, we will maintain our focus on that business model to drive continued internal growth,
especially in our core markets. We will be vigilant for opportunities to acquire other companies
where the returns justify the investment. And, of course, we will continue to focus on improving
our balance sheet.
The Company’s 2004 results demonstrate that our business strategies reliably produce consistent
earnings and stable cash flows. As we move forward, our proven business model, understanding of
the business’ earnings potential and access to resources allow us to look to 2005 and beyond with
optimism and confidence.
John V. Holten
Chairman of the Board
James A. Wilhelm
President and Chief Executive Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(cid:58) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2004
Or
(cid:134) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number: 333-50437
Standard Parking Corporation
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction
of Incorporation or Organization)
16-1171179
(I.R.S. Employer
Identification No.)
900 N. Michigan Avenue, Chicago, Illinois 60611-1542
(Address of Principal Executive Offices, Including Zip Code)
(312) 274-2000
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK
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 periods that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (cid:58) No (cid:134)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. (cid:134)
Indicate by check mark whether the registrant is an accelerated filer (as defined in the Exchange Act Rule 12b-2).
Yes (cid:134) No (cid:58)
As of June 30, 2004, the aggregate market value of the voting and non-voting common equity held by nonaffiliates of the
registrant was approximately $63.8 million, based on the closing price of the common stock as reported on the Nasdaq
National Market.
As of March 4, 2005, there were 10,478,003 shares of common stock of the registrant outstanding.
1
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement to be delivered to shareholders in connection with the Annual Meeting of
stockholders to be held on April 27, 2005 are incorporated by reference into Part III.
2
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-K includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements relate to analyses and other information that are based on forecasts of future results and estimates of
amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies. The
statements contained in this Form 10-K that are not statements of historical fact may include forward-looking statements that
involve a number of risks and uncertainties.
We have used the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,”
“project,” “will” and similar terms and phrases, including references to assumptions in this Form 10-K to identify forward-
looking statements. These forward looking statements are made based on our management’s expectations and beliefs
concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business
environment, all of which are difficult to predict and many of which are beyond our control. These uncertainties and factors
could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking
statements. The following factors are among those that may cause actual results to differ materially from our forward-looking
statements:
• an increase in owner-operated parking facilities;
• changes in patterns of air travel or automobile usage, including effects of changes in gas and airplane fuel
prices, effects of weather on travel and transportation patterns or other events affecting local, national and
international economic conditions;
• implementation of our operating and growth strategy, including possible strategic acquisitions;
• the loss, or renewal on less favorable terms, of management contracts and leases;
• player strikes or other events affecting major league sports;
• changes in general economic and business conditions or demographic trends;
• ongoing integration of past and future acquisitions in light of challenges in retaining key employees,
synchronizing business processes and efficiently integrating facilities, marketing and operations;
• changes in current pricing;
• development of new, competitive parking-related services;
• changes in federal and state regulations including those affecting airports, parking lots at airports and
automobile use;
• extraordinary events affecting parking at facilities that we manage, including emergency safety measures,
military or terrorist attacks and natural disasters;
• our ability to renew our insurance policies on acceptable terms, the extent to which our clients purchase
insurance through us and our ability to successfully manage self-insured losses;
• our ability to form and maintain relationships with large real estate owners, managers and developers;
• our ability to provide performance bonds on acceptable terms to guarantee our performance under certain
contracts;
• the loss of key employees;
• our ability to develop, deploy and utilize information technology;
• our ability to refinance our indebtedness;
3
• our ability to consummate transactions and integrate newly acquired contracts into our operations;
• availability, terms and deployment of capital;
• the ability of our parent or its affiliates to control our major corporate decisions; and
• the other factors discussed under the heading “Risk Factors” at the end of Management’s Discussion and
Analysis of Financial Condition and Results of Operations and elsewhere in this Form 10-K.
All of our forward-looking statements should be considered in light of these factors. We undertake no obligation to update our
forward-looking statements or risk factors to reflect new information, future events or otherwise, except as may be required
under applicable securities laws and regulations.
4
PART I
ITEM 1. BUSINESS
General
We are a leading national provider of parking facility management services. We provide on-site management services at multi-
level and surface parking facilities for all major markets of the parking industry. We manage approximately 1,896 parking
facilities, containing over one million parking spaces, in 298 cities across the United States and Canada. Our diversified client
base includes some of the nation’s largest private and public owners, managers and developers of major office buildings,
residential properties, commercial properties, shopping centers and other retail properties, sports and special event complexes,
hotels, and hospitals and medical centers, including properties such as the Arco Tower in Los Angeles, the Four Seasons Hotel
in Chicago, the Harvard Medical School in Cambridge, the Nationwide Arena in Columbus and Westfield Shoppingtown
Century City in Los Angeles. In addition, we manage 115 parking-related and shuttle bus operations serving 63 airports,
including Chicago O’Hare International Airport, Cleveland Hopkins International Airport and Dallas/Fort Worth International
Airport.
During our 75 years in business, we have focused on providing our clients with superior management services to attract
customers. We believe that our management services, coupled with a leading position in our core markets, helps to maximize
profitability per parking facility for both us and our clients. We believe that we have created our leading position by providing:
• Ambiance in Parking®, an approach to parking that includes on-site, value-added services and amenities;
• service enhancing information technology, including ClientViewSM, a proprietary client reporting system which
allows us to provide our clients with on-line access to site-level financial and operating information;
• comprehensive training programs for on-site employees, including our web-based Standard University® training
programs for management-level personnel, that promote customer service and client retention; and
• an internal audit and contract compliance group to monitor cash and operational controls.
We believe that these services distinguish us from our competitors and contribute to our high retention rate, which averaged
88% for the year ended December 31, 2004. This statistic also reflects the impact of our decision not to renew, or to terminate,
unprofitable contracts.
We do not own any parking facilities and, as a result, we assume few of the risks of real estate ownership. We operate our
clients’ parking properties through two types of arrangements: management contracts and leases. Under a management
contract, we typically receive a base monthly fee for managing the facility, and we may also receive an incentive fee based on
the achievement of facility performance objectives. We also receive fees for ancillary services. Typically, all of the underlying
revenues and expenses under a standard management contract flow through to our client rather than to us. Under lease
arrangements, we generally pay either a fixed annual rent, a percentage of gross customer collections, or a combination thereof
to the property owner. We collect all revenues under lease arrangements and we are responsible for most operating expenses,
but we are typically not responsible for major maintenance, capital expenditures or real estate taxes. As of December 31, 2004,
we operated 85% of our locations under management contracts and 15% under leases.
We also provide a range of ancillary services to satisfy client needs such as municipal meter collection and valet parking.
5
Industry Overview
General
The International Parking Institute, a trade organization of parking professionals, estimates that as of December 2002 (the latest
year for which numbers are available) there were approximately 40,000 parking facilities in the United States generating over
$29.0 billion in gross customer collections. Industry participants, the vast majority of which are privately held companies,
consist of relatively few nationwide companies and hundreds of small regional or local operators, including a substantial
number of companies that provide parking as an ancillary service in connection with property management or ownership. The
parking industry from time to time experiences consolidation as smaller operators find that they lack the financial resources,
economies of scale and management techniques required to compete with larger providers. We expect this trend will continue
and provide larger parking management companies with opportunities to win business and acquire smaller operators.
Operating Arrangements
Parking facilities operate under three general types of arrangements: management contracts, leases and ownership. The general
terms and benefits of these three types of arrangements are as follows:
Management Contracts. Under a management contract, the facility manager generally receives a base monthly fee for
managing the facility and may receive an incentive fee based on the achievement of facility performance objectives. Facility
managers generally charge fees for various ancillary services such as accounting, equipment leasing and consulting.
Responsibilities under a management contract include hiring, training and staffing parking personnel, and providing revenue
collection, accounting, record-keeping, insurance and facility marketing services. In general, under a management contract, the
facility manager is not responsible for structural or mechanical repairs, and typically is not responsible for providing security or
guard services. Under typical management contracts, the facility owner is responsible for operating expenses such as taxes,
license and permit fees, insurance premiums, payroll and accounts receivable processing and wages of personnel assigned to
the facility. However, some management contracts, which are referred to as “reverse” management contracts, usually provide
for larger management fees and require the facility manager to pay certain of these costs. Generally under management
contracts, the facility owner is responsible for non-routine maintenance, repair costs and capital improvements. Management
contracts are typically for a term of one to three years, though the client often reserves the right to terminate, without cause, on
30 days’ notice, and may contain a renewal clause.
Leases. Under a lease arrangement, the parking facility operator generally pays to the property owner either a fixed annual
rent, a percentage of facility revenues, or a combination thereof. The parking facility operator collects all revenues and is
responsible for most operating expenses, but is typically not responsible for major maintenance, capital expenditures or real
estate taxes. In contrast to management contracts, leases are typically for terms of three to ten years, often contain a renewal
term, and provide for a fixed payment to the facility owner regardless of the facility’s operating earnings. However, many of
these leases may be cancelled by the client for various reasons, including development of the real estate for other uses. Some
are cancelable by the client on as little as 30 days’ notice without cause. Leased facilities generally require a longer
commitment and a larger capital investment by the parking facility operator than do managed facilities.
Ownership. Ownership of parking facilities, either independently or through joint ventures, typically requires a larger capital
investment and greater potential risks and rewards than managed or leased facilities. All owned facility revenues flow directly
to the owner, and the owner has the potential to realize benefits of appreciation in the value of the underlying real estate. The
owner of a parking facility is responsible for all obligations related to the property, including all structural, mechanical and
electrical maintenance and repairs and property taxes. Due to the high cost of real estate in many major urban markets,
ownership of parking facilities usually requires large capital investments.
6
Industry Growth Dynamics
A number of opportunities for growth exist for larger parking facility operators, including the following:
Growth of Large Property Managers, Owners and Developers. Over the past several years, there has been a substantial
increase in the number of national property managers, owners and developers with multiple locations. Sophisticated property
owners consider parking a profit center that experienced parking facility management companies can maximize. This dynamic
favors larger parking service providers that can provide specialized, value-added professional services with nationwide
coverage. In order to streamline their business, many of these large national property managers, owners and developers have
reduced the number of suppliers with which they conduct business.
Increased Outsourcing of Parking Management and Related Services. Growth in the parking management industry has
resulted from a continuing trend by parking facility owners to outsource the management of their parking and related
operations to independent operators. We believe that entities such as large property management managers, owners and
developers as well as cities, municipal authorities, hospitals and universities will increasingly retain parking management
companies to operate facilities and provide related services in an effort to focus on their core competencies, reduce operating
budgets and increase profitability and efficiency. We believe this trend is expanding to include outsourcing of shuttle bus
operations, municipal meter collection and valet parking.
Industry Consolidation. The parking management industry is highly fragmented, with hundreds of small regional or local
operators. We believe national parking facility managers have a competitive advantage over local and regional operators by
reason of their:
• broad product and service offerings;
• relationships with large, national property managers, developers and owners;
• efficient cost structure due to economies of scale; and
• financial resources to invest in infrastructure and information systems.
Growth Strategy
We believe we are well positioned to pursue the following growth strategies:
Grow Contract Portfolio Within Our Core Markets. Our strategy is to increase our presence and profitability in our core
markets by continuing to provide sophisticated parking services and by capitalizing on our economies of scale and operating
efficiency. This concentration of locations gives us the ability to spread administrative overhead costs across a large number of
parking facilities in a single market. We plan to continue to maximize our premium service, local market knowledge and
management infrastructure to retain existing locations and compete aggressively for new business in these core markets. We
regularly review potential acquisition opportunities to increase our position in our core markets.
Enhance Client Relationships Through Additional Services. We believe we can deepen our relationships with existing clients
and attract new clients by continuing to offer additional services that complement our parking expertise, such as shuttle bus,
taxi-dispatch, municipal meter collection, and valet-parking services. By offering these services to our clients, we increase our
revenues and gross profit per location and strengthen our client relationships, which should enhance our ability to win new
contracts and increase our retention rate.
7
Develop New Market Opportunities. We believe that a significant opportunity exists for us to expand our presence in markets
such as university campus parking and hospital parking. In addition to our long-standing relationships with Harvard Medical
School, Northwestern University and Northwestern Memorial Hospital, we have expanded our presence in these markets with
the recent addition of parking services at Montclair State University and the Louisiana State University Medical Center. In
addition to expanded growth opportunities in the hospital and university markets, we see significant potential within the
municipal on-street market, including enforcement services. We currently provide exclusive meter collection and management
services for the Cities of Miami Beach, Florida, Ft. Myers, Florida and New Orleans, Louisiana.
Develop New Core Markets. We believe that numerous opportunities for growth are available by developing new core markets
either through new contracts, acquisitions, alliances or partnerships. Our clients generally have a presence in a variety of urban
markets where they seek to outsource the management of their parking facilities to a national parking service provider that can
assist them in maximizing parking-related profit. One of our strategies is to grow our client relationships to facilitate the
addition of new locations and our strategic identification and development of new geographic markets.
Services
As a professional parking management company, we provide a comprehensive, turn-key package of parking services to our
clients. Under a typical management contract structure, we are responsible for providing and supervising all personnel
necessary to facilitate daily parking operations including cashiers, porters, valet attendants, managers, bookkeepers, and a
variety of maintenance, marketing, customer service, and accounting and revenue control functions. By way of example, our
typical day-to-day operating duties, whether performed using our own personnel or subcontracted vendors, include:
• Collection and deposit of daily and monthly parking revenues from all parking customers.
• Daily housekeeping to maintain the facility in a clean and orderly manner.
• Restriping of the parking stalls as necessary.
• Routine maintenance of parking equipment (e.g., ticket dispensing machines, parking gate arms, fee computers).
• Marketing efforts designed to maximize gross parking revenues.
• Delivery of courteous and professional customer relations.
• Painting of walkways, curbs, ceilings, walls or other facility surfaces.
• Snow removal from sidewalks and driveways.
The scope of our management services typically also includes a number of functions that support the basic daily facility
operations, such as:
• Preparation of an annual operating budget reflecting our estimates of the annual gross parking revenues that the
facility will generate from its parking customers, as well as the costs and expenses to be incurred in connection
with the facility’s operation.
• Evaluation and analysis of, and consultation with our clients with respect to, price structures that will optimize
our client’s revenue objectives. In doing so, we use our proprietary ParkStat® software tool. By automatically
polling information from on-site collection devices, ParkStat® uses location-specific information to calculate the
impact of pricing alternatives, optimize staffing levels, improve forecasting and assist in long-range planning.
8
• Consultation with our clients regarding which of our menu of customer amenities are appropriate and/or desirable
for implementation at the client’s parking facility.
• Implementation of a wide range of operational and revenue control processes and procedures, including internal
audit procedures, designed to maximize and protect the facility’s parking revenues. Compliance with our
mandated processes and procedures is supervised by a dedicated fifteen person internal audit and contract
compliance group.
• Consultation with our clients regarding any recommended modifications in facility design or traffic flow, or the
installation of new or updated parking equipment, designed both to enhance the ease and convenience of the
parking experience for the parking customers and to maximize facility profitability.
• Monthly reporting to our clients regarding the facility’s operating results. For those clients who wish to directly
access their financial reporting information on-line, we offer the use of our proprietary ClientViewSM client
reporting system, which provides on-line access to site-level financial and operating information.
Ancillary Services
Beyond the conventional parking facility management services described above, we also offer an expanded range of ancillary
services. For example:
• At various airports throughout the United States, we provide shuttle bus vehicles and the drivers to operate them
in support of on-airport car rental operations as well as private off-airport parking locations.
• At certain airports, we provide ancillary ground transportation services, such as taxi and livery dispatch services,
as well as concierge-type ground transportation information and support services for arriving passengers.
• For municipalities, we provide basic shuttle bus services, on-street parking meter collection and other forms of
parking enforcement services.
• Within the medical center and hospital market, we provide valet parking and shuttle bus services.
Amenities and Customer Service Programs
We offer a comprehensive package of amenity and customer service programs, branded as Ambiance in Parking®, that can be
provided to our customers, many at nominal or no cost to the client. These programs not only make the parking experience
more enjoyable, but also convey a sense of the client’s sensitivity to and appreciation of the needs of its parking customers. In
doing so, we believe the programs serve to enhance the value of the parking properties themselves.
Patented Musical Theme Floor Reminder System. Our patented musical theme floor reminder system is designed to help
customers remember the garage level on which they parked. A different song is played on each floor of the parking garage.
Each floor also displays distinctive signage and graphics that correspond with the floor’s theme. For example, in one parking
facility with U.S. cities as a theme, songs played include “I Left My Heart in San Francisco” on one floor and “New York,
New York” on a different floor. Other parking facilities have themes such as college fight songs, Broadway musicals, classic
movies and professional sports teams.
Books-To-Go® Audiotape Library. Monthly customers can borrow—free of charge—audio tapes to which they can listen as
they drive to and from work. A wide selection of fiction, non-fiction and business titles is maintained in the facility office.
9
Films-To-Go® Videotape Library. This amenity builds on the success of our popular Books-To-Go® program. Videotapes of
many popular movie titles are stocked in the parking facility office and made available free of charge to monthly customers.
The movie selections are updated on a regular basis.
Little Parkers® Child-Friendly Facilities. This amenity creates a family atmosphere at the parking facility. Customers may use
baby changing stations installed in the public restrooms. Kids appreciate the distribution of free toys such as bubble bottles,
coloring books and stuffed animals.
Complimentary Driver Assistance Services. Parking facility attendants provide a wide range of complimentary services to
customers with car problems. Assistance can include charging weak batteries, inflating/changing tires, cleaning windshields
and refilling windshield washer fluid. Attendants also can help customers locate their vehicles and escort them to their cars.
Standard Equipment & Technology Upgrade ProgramSM Services (SETUPSM). Standard Parking provides clients with a
complete turnkey solution to managing all phases of new equipment projects, from initial design to installation to ongoing
maintenance. Our design team will suggest a complete solution intended to return to our clients the greatest value for their
investment based upon consideration of a wide array of choices as to both equipment (such as Pay-On-Foot, Automated
Vehicle Identification and Automated Credit/Debit Card machine technology) and services (procurement, project management,
installation and maintenance).
Standard Road AssistSM Emergency Services. Parking customers experiencing vehicle problems beyond weak batteries and low
tire pressure call our toll-free number to receive, on a pay-per-use basis, a basic package of emergency services, including
towing up to five miles, jump starting, flat tire changing, fuel delivery, extracting a vehicle from the side of the road and lock-
out service. The emergency services are provided at the parking facility or anywhere on the road.
CarCareSM Maintenance Services. A car service vendor will pick-up a customer’s car from the parking facility, contact the
customer with an estimate, service the car during normal working hours and return it to the facility before the end of the
business day.
ParkNet® Traffic Information System. The system provides customers with continuously updated traffic reports on a site-
specific basis so that drivers can learn not only about traffic conditions on the area highways, but also about conditions in the
immediate vicinity of the parking facility.
Automated Teller Machines. On-site ATM machines provide customers access to cash from bankcards and credit cards. We
arrange for the installation of the machine, operated and maintained by an outside vendor. The parking facility realizes
supplemental income from a fixed monthly rent and a share of usage transaction fees.
Complimentary Courtesy Umbrellas and Flashlights. Courtesy umbrellas are loaned to customers on rainy days. A similar
lending program can be implemented to provide flashlights in emergency situations or power outages.
Car Washing, Detailing and Windshield Cleaning. We typically are able to arrange for car wash and/or detailing services to be
provided at our facilities during the business day, either by our own staff or through a contracted vendor. Moreover, during
non-peak times our attendants periodically clean windshields and headlamps, leaving a note on the windshield to advise the
customer of this complimentary service that the property owner has provided.
Complimentary Services/Customer Appreciation Days. Our clients select from a variety of complimentary services that we
provide as a special way of saying “thank you” to our parking customers. Depending on client preferences, coffee, donuts
and/or newspapers occasionally are provided to customers during the morning rush hour. On certain holidays, candy, with
wrappers that can be customized with the facility logo, can be distributed to customers as they exit. We also can distribute
personalized promotional items, such as ice scrapers and key-chains.
10
Business Development
Our efforts to attract new clients are primarily concentrated in and coordinated by a dedicated business development group,
currently comprised of 16 individuals, whose background and expertise is in the field of sales and marketing, and whose
financial compensation is determined to a significant extent by their business development success. This business development
group is responsible for forecasting sales, maintaining a pipeline of prospective and existing clients, initiating contacts with
such clients, and then following through to coordinate meetings involving those clients and the appropriate members of our
operations hierarchy. By concentrating our sales efforts through this dedicated group, we enable our operations personnel to
focus on achieving excellence in our parking facility operations and maximizing our clients’ parking profits and our own
profitability.
We also place a specific focus on marketing and client relationship efforts that pertain to those clients having a large regional
or national presence. Accordingly, we assign a dedicated executive to those clients to address any existing portfolio issues, as
well as to reinforce existing—and develop new—account relationships and to take any other action that may further our
business development interests.
Operations
We maintain regional and city offices throughout the United States and Canada in order to support approximately 11,100
employees and approximately 1,896 parking facility operations. These offices serve as the central bases through which we
provide the employees to staff our parking facilities as well as the on-site and support management staff to oversee those
operations. Our administrative staff accountants are based in those same offices and facilitate the efficient, accurate and timely
production and delivery to our clients of our monthly reports. Having these all-inclusive operations and accounting teams
located in regional and city offices throughout the United States and Canada allows us to add new locations quickly and in a
cost-efficient manner. To facilitate the training of our facility personnel throughout the country, we have separate, dedicated
trainers.
Our overall basic corporate functions in the areas of finance, human resources, risk management, legal, purchasing and
procurement, general administration, strategy and information and technology, are based in our Chicago corporate office. The
Chicago corporate office also supports and promotes consistency throughout our field operations by developing and
administering our operational, financial and administrative policies, practices and procedures.
11
Clients and Properties
Our client base includes a diverse cross-section of public and private owners, developers and managers of real estate. A list of
some of our clients, and the types of properties for which we operate their parking, include:
Client / Property
City, State/Province
Property Type
American Museum of Natural History
Brookfield Properties Corporation
Chicago O’Hare International and Chicago
Midway Airports
Cleveland Clinic Foundation
Crescent Real Estate Equities Company
Four Seasons Hotel
Hartford Bradley International Airport
Harvard Medical School
JMB Real EstateRealty Corporation
Nationwide ArenaRealty
Sacramento Airport
Washington Mutual, Inc.
New York, New York
Boston, Massachusetts
Calgary, Alberta
Denver, Colorado
Minneapolis, Minnesota
New York, New York
Toronto, Ontario
Vancouver, British Columbia
Chicago, Illinois
Cleveland, Ohio
Austin, Texas,
Houston, Texas,
Miami, Florida
Chicago, Illinois,
Atlanta, Georgia
Hartford, Connecticut
Cambridge, Massachusetts
Chicago, Illinois
Houston, Texas
Los Angeles, California
Columbus, Ohio
Sacramento, California
Los Angeles, California
San Francisco, California
Museum
Office
Airport
Medical center
Office
Hotel
Airport
University / medical
Office
Office and Special event
Airport / consolidated car rental
shuttle
Retail
Westfield Properties Shoppingtowns
Los Angeles, California
Retail
No single client represented more than 6.0% of revenues or more than 3.3% of our gross profit for the year ended
December 31, 2004. For the year ended December 31, 2004, we retained an average of 88% of our locations, a statistic that
also reflects the effect of our decisions not to renew, or to terminate, unprofitable contracts.
Information Technology
We believe that automation and technology can enhance customer convenience, lower labor costs, improve cash management
and increase overall profitability. We have been a leader in the field of introducing automation and technology to the parking
business and we were among the first to adopt electronic fund transfer (EFT) payment options, pay-on-foot (ATM) technology
and bar code decal technology.
12
To promote internal efficiency, we have created advanced information systems that connect local offices across the country to
our corporate headquarters. These systems support accounting, financial management and reporting practices, general
operating procedures, training, employment policies, cash controls and marketing procedures. Our commitment to the
application of technology in the parking management business has resulted in the creation of two proprietary products,
ClientViewSM and ParkStat®. ClientViewSM is an Internet based system that gives our clients the flexibility and convenience to
access and download their monthly financials and detailed back-up reports. ParkStat® enhances the performance of the parking
facility by using location-specific information to assess the impact of pricing alterations, optimize staffing levels, improve
forecasting and assist in long-range planning. We believe that our standardized processes and controls enhance our ability to
successfully add new locations and expand our operations into new markets.
Employees
As of December 31, 2004, we employed approximately 11,100 individuals, including approximately 6,700 full-time and 4,400
part-time employees. As of December 31, 2003, we employed approximately 11,600 individuals, including approximately
6,300 full-time and 5,300 part-time employees. Approximately 25% of our employees are covered by collective bargaining
agreements. No single collective bargaining agreement covers a material number of employees. We believe that our employee
relations are good.
Insurance
We purchase comprehensive liability insurance covering certain claims that occur at parking facilities we lease or manage. The
primary amount of such coverage is $2 million per occurrence and $2 million in the aggregate per facility for our garage
liability and garage keepers legal liability coverages. In addition, we purchase umbrella/excess liability coverage. Under our
various liability and workers’ compensation insurance policies, we are obligated to reimburse the insurance carrier for the first
$250,000 of any loss. As a result, we are, in effect, self-insured for all claims up to the deductible levels. We utilize a third-
party administrator to process and pay claims. We also purchase group health insurance with respect to eligible full-time
employees and family members, whether such employees work at leased or managed facilities; in 2004 we were self-insured
for up to $125,000 per year per covered individual in eligible incurred medical expenses, and in 2005 are fully-insured for all
covered expenses. We purchase workers’ compensation insurance for all eligible employees. We believe that our insurance
coverage is adequate and is consistent with industry practice.
Because of the size of the operations covered and our claims experience, we purchase insurance policies at prices that we
believe represent a discount to the prices that would typically be charged to parking facility owners on a stand-alone basis. The
clients for whom we operate parking facilities pursuant to management contracts have the option of purchasing their own
liability insurance policies (provided that we are named as an additional insured pursuant to an additional insured
endorsement), but historically many of our clients have chosen to obtain insurance coverage by being named as additional
insureds under our master insurance policies. Pursuant to our management contracts we charge to such clients an allocated
portion of our insurance-related costs at rates that we believe are competitive. A material reduction or increase in the number
of clients who procure their insurance coverage by being named as additional insureds under our policies could have a material
effect on our operating income. In addition, a material change in insurance costs due to a change in the number of claims,
claims costs or premiums paid by us could have a material effect on our operating income. With respect to our management
contract locations, it has been our practice to recover our costs through the rates we charge our clients for insurance. In
addition, we have taken steps to control our insurance costs and losses, including the implementation of various measures and
safety and incentive programs.
13
Competition
The parking industry is fragmented and highly competitive, with limited barriers to entry. We face direct competition for
additional facilities to manage or lease, while our facilities themselves compete with nearby facilities for our parking customers
and in the labor market generally for qualified employees. Moreover, the construction of new parking facilities near our
existing facilities can adversely affect our business. We are one of four national parking management companies, with the
others being Ampco System Parking, Central Parking Corporation and Imperial Parking Corporation. We also face competition
from numerous smaller, locally owned independent parking operators, as well as from developers, hotels, national financial
services companies and other institutions that manage both their own parking facilities as well as facilities owned by others.
Many municipalities and other governmental entities also operate their own parking facilities, potentially eliminating those
facilities as management or lease opportunities for us. Some of our present and potential competitors have or may obtain
greater financial and marketing resources than us, which may negatively impact our ability to retain existing contracts and gain
new contracts.
We face significant competition in our efforts to provide ancillary services such as shuttle bus services and on-street parking
enforcement. Several large companies compete in these markets. These large companies may have greater financial and
marketing resources than we do, which may negatively impact our ability to compete against them.
Regulation
Regulations by the Federal Aviation Administration may affect our business. The FAA generally prohibits parking within 300
feet of airport terminals during times of heightened alert. While we believe that existing regulations or the present heightened
security alerts at airports may be relaxed in the future, the existing 300 feet rule and new regulations may nevertheless prevent
us from using a number of existing spaces. Reductions in the number of parking spaces may reduce our gross profit and cash
flow for both our leased facilities and those facilities we operate under management contracts.
Our business is not otherwise substantially affected by direct governmental regulation, although both municipal and state
authorities sometimes directly regulate parking facilities. We are affected by laws and regulations (such as zoning ordinances)
that are common to any business that deals with real estate and by regulations (such as labor and tax laws) that affect
companies with a large number of employees. In addition, several state and local laws have been passed in recent years that
encourage car pooling and the use of mass transit. For example, a Los Angeles, California law prohibits employers from
reimbursing employee parking expenses. Laws and regulations that reduce the number of cars and vehicles being driven could
adversely impact our business.
We collect and remit sales/parking taxes and file tax returns for and on behalf of us and our clients. We are affected by laws
and regulations that may impose a direct assessment on us for failure to remit sales/parking taxes or to file tax returns for
ourselves and on behalf of our clients.
Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator
of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under or in such
property. Such laws typically impose liability without regard to whether the owner or operator knew of, or was responsible for,
the presence of such hazardous or toxic substances. In connection with the operation of parking facilities, we may be
potentially liable for any such costs. Although we are currently not aware of any material environmental claims pending or
threatened against us or any of the parking facilities which we operate, there can be no assurance that a material environmental
claim will not be asserted against us or against the parking facilities which we operate. The cost of defending against claims of
liability, or of remediating a contaminated property, could have a material adverse affect on our financial condition or results of
operations.
14
Various other governmental regulations affect our operation of parking facilities, both directly and indirectly, including the
ADA. Under the ADA, all public accommodations, including parking facilities, are required to meet certain federal
requirements related to access and use by disabled persons. For example, the ADA requires parking facilities to include
handicapped spaces, headroom for wheelchair vans, attendants’ booths that accommodate wheelchairs and elevators that are
operable by disabled persons. When negotiating management contracts and leases with clients, we generally require that the
property owner contractually assume responsibility for any ADA liability in connection with the property. There can be no
assurance, however, that the property owner has assumed such liability for any given property and there can be no assurance
that we would not be held liable despite assumption of responsibility for such liability by the property owner. Management
believes that the parking facilities we operate are in substantial compliance with ADA requirements.
Available Information
Our Internet address is www.standardparking.com. There we make available, free of charge, our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports as soon as reasonably
practicable after we electronically file such material with or furnish it to the SEC. Our SEC reports can be accessed through
the investor relations section of our website. The information found on our website is not part of this or any other report we
file with our furnish to the SEC.
Intellectual Property
Standard Parking® and the Standard Parking logo are service marks registered with the United States Patent and Trademark
Office. In addition, we have registered the names and, as applicable, the logos of all of our material subsidiaries and divisions
as service marks with the United States Patent and Trademark Office or the equivalent state registry, including the right to the
exclusive use of the name Central Park in the Chicago metropolitan area. We have also obtained a United States patent, U.S.
Pat. No. 4,674,937, for our Multi-Level Vehicle Parking Facility (the musical Theme Floor Reminder System), which expires
in 2005, and trademark registrations for our proprietary parker programs, such as Books-to-Go®, Films-To-Go®, Little Parkers®
and Ambiance in Parking® and our comprehensive training program, Standard University®. We have also registered the
copyright rights in our proprietary software, such as ClientViewSM, Hand Held ProgramSM, License Plate Inventory ProgramsSM,
ParkNet® and ParkStat® with the United States Copyright Office.
15
ITEM 2. PROPERTIES
Parking Facilities
We operate parking facilities in 43 states and the District of Columbia in the United States and three provinces of Canada. We
do not currently own any parking facilities. The following table summarizes certain information regarding our facilities as of
December 31, 2004:
Airports and Urban Cities
Airport
# of Locations
Urban
Total
Airport
—
—
18
23
29
3
2
21
24
29
# of Spaces
Urban
—
—
6,925
18,179
Total
1,430
3,200
6,925
18,179
1,430
3,200
—
—
—
3,297
3,297
523
532
28,280
171,248
199,528
23
—
1
40
83
16
42
—
199
5
1
7
1
48
1
20
112
3
35
116
—
—
12
3
—
54
24
9
1
40
88
18
46
1
210
6
3
7
1
49
4
20
112
11
36
123
8
2
12
3
1
60
4,100
11,412
15,512
8,500
—
—
4,238
2,221
2,777
372
32,040
1,234
3,487
—
—
1,302
1,660
—
—
7,855
555
15,750
4,169
1,307
—
—
—
8,026
—
473
13,114
40,740
16,909
17,478
—
100,453
2,700
2,600
16,456
200
21,430
528
6,154
49,077
943
16,075
26,923
—
—
2,647
6,220
—
19,962
8,500
473
13,114
44,978
19,130
20,255
372
132,493
3,934
6,087
16,456
200
22,732
2,188
6,154
49,077
8,798
16,630
42,673
4,169
1,307
2,647
6,220
—
27,988
States/Provinces
Alabama
Alaska
Alberta
Arizona
British Columbia
California
Colorado
Connecticut
Airports
Airports
Calgary, Edmonton
Phoenix
Richmond, Vancouver, Victoria,
and Whistler
Airports, Los Angeles, Long
Beach, Sacramento, San Diego,
San Francisco, and San Jose
Airports, Colorado Springs and
Denver
Airports, Greenwich and
Stamford
Wilmington
Delaware
District of Columbia Washington, DC
Florida
Airports, Miami, Orlando, and
Pensacola
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Missouri
Montana
Nebraska
Nevada
New Jersey
New Mexico
New York
Airports and Atlanta
Airports and Honolulu
Airport
Airports and Chicago
Airport, Indianapolis and Fort
Wayne
Airports and Des Moines
Topeka, Wichita and Bonner
Springs
Louisville
Airport and New Orleans
Airports and Portland
Baltimore, Bethesda and Towson
Boston, Cambridge and
Worchester
Airports, Detroit and Southfield
Airports, Minneapolis and St.
Paul
Airports and Kansas City
Airports and Great Falls
Airports
Las Vegas and Reno
Upper Montclair
Airport
Airports, Buffalo and Rochester
3
2
3
1
—
9
1
9
—
—
5
2
4
1
11
1
2
—
—
1
3
—
—
8
1
7
8
2
—
—
1
6
16
States/Provinces
North Carolina
North Dakota
Ohio
Ontario
Oregon
Pennsylvania
Rhode Island
South Dakota
Tennessee
Texas
Utah
Virginia
Washington
Wisconsin
Wyoming
Airports and Urban Cities
Airport
Charlotte
Airports
Airports, Akron, Cleveland,
Cincinnati, Columbus, and
Toledo
Airport, North York,
Scarborough, and Toronto
Airports
Airports and Wilkes Barre
Providence
Airports
Airports, Memphis and Nashville
Airports, Dallas, Fort Worth, and
Houston
Salt Lake City
Airports, Alexandria, Richmond,
and Virginia Beach
Airports, Seattle, Yakima, and
Bellingham
Airports and Milwaukee
Casper
Totals
—
2
6
1
2
2
—
2
2
2
—
—
2
3
115
# of Locations
Urban
1
—
Total
Airport
1
2
—
1,415
# of Spaces
Urban
818
—
Total
818
1,415
112
118
7,800
107,042
114,842
42
—
—
3
—
20
88
1
76
43
2
2
3
2
22
90
1
76
3,140
1,673
1,600
—
1,508
649
1,465
—
36,241
—
—
4,995
—
35,261
74,746
2,350
39,381
1,673
1,600
4,995
1,508
35,910
76,211
2,350
—
32,237
32,237
9
13
1
1,781
11
16
1
1,896
822
1,751
154,326
3,337
1,640
1,200
4,159
3,391
1,200
872,010 1,026,336
We have interests in 13 joint ventures, each of which operates between one and three parking facilities. We are the general
partner of seven limited partnerships, each of which operates between one and twelve parking facilities. For additional
information, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Summary
of Operating Facilities.”
Office Leases
We lease approximately 24,000 square feet of office space for our corporate offices in Chicago, Illinois. The lease expires in
2013. The lease includes expansion options for up to 6,000 additional square feet of space, and we have a right of first
opportunity on an additional 4,000 square feet. We believe that the leased facility, together with our expansion options, is
adequate to meet current and foreseeable future needs.
We also lease regional offices. These lease agreements generally include renewal and expansion options, and we believe that
these facilities are adequate to meet our current and foreseeable future needs.
ITEM 3. LEGAL PROCEEDINGS
We are subject to various claims and legal proceedings that consist principally of lease and contract disputes. We consider
these claims and legal proceedings to be routine and incidental to our business, and in the opinion of management, the ultimate
liability with respect to these proceedings and claims will not materially affect our financial position, operations or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth quarter of fiscal 2004.
17
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the NASDAQ National Market under the symbol “STAN”. The following table sets forth, for
the periods indicated, the high and low sales prices for our common stock as reported by the NASDAQ.
Year 2004
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Year to Date
High
Low
n/a
14.69
13.75
17.42
17.42
n/a
11.86
12.25
12.00
11.86
As of March 4, 2005, there were approximately 555 holders of our common stock, based on the number of record holders of
our common stock and an estimate of the number of individual participants represented by security position listings.
We did not pay a cash dividend in respect of our common stock in 2004 or 2003. By the terms of our senior credit facility, we
are restricted from paying cash dividends on our capital stock while such facility is in effect. We accrued dividends in respect
of our Series C redeemable preferred stock in additional shares of Series C redeemable preferred stock aggregating $2.9
million and $6.5 million in 2004 and 2003 respectively. We accrued dividends in respect to our Series D preferred stock
aggregating $4.4 million and $9.2 million in 2004 and 2003 respectively.
The indenture governing our 9¼% notes limits our ability to pay cash dividends. Unless we meet certain financial ratios, we
may not pay dividends in respect of our capital stock except for those payable in additional shares of stock.
There are no restrictions on the ability of our wholly owned subsidiaries to pay cash dividends to us.
Plan Category
Equity compensation plans
approved by securities holders
Equity compensation plans not
approved by securities holders
Total
Number of securities
to be based upon exercise of
outstanding options, warrants
and rights
(a)
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
Number of securities remaining available for
future
issuance under equity compensation plans
(excluding securities reflected in column (a))
(c)
590,004
—
590,004
7.75
7.75
385,536
—
385,536
We did not repurchase any of our shares in the fourth quarter of 2004.
ITEM 6. SELECTED FINANCIAL DATA
The following table presents selected historical consolidated financial data as of December 31, 2004, 2003 and 2002, derived
from our audited consolidated financial statements, which are included elsewhere herein. The table also presents selected
historical consolidated financial data as of December 31, 2001 and 2000 derived from our audited consolidated financial
statements, which are not included herein. The selected financial data set forth below should be read in conjunction with
“Management’s Discussion and Analysis of Financial Condition and Result of Operations” and the historical consolidated
financial statements and notes thereto for years 2004, 2003 and 2002 which are included elsewhere herein. The historical
results do not necessarily indicate results expected for any future period.
18
($ in Thousands)
Statement of Operations Data:
Parking services revenue:
Lease contracts
Management contracts
Reimbursement of management contract expense
2004
2003
2002
2001
2000
Year Ended December 31,
$
148,752 $
83,712
331,171
$
138,681
76,613
330,243
142,376 $
78,029
326,146
156,411 $
87,403
317,973
181,828
70,654
308,591
Total revenue(1)
563,635
545,537
546,551
561,787
561,073
Cost of parking services:
Lease contracts
Management contracts
Reimbursed management contract expense
134,548
34,029
331,171
125,153
29,439
330,243
128,871
35,201
326,146
142,555
44,272
317,973
159,702
32,643
308,591
Total cost of parking services(1)
499,748
484,835
490,218
504,800
500,936
Gross profit:
Lease contracts
Management contracts
Total gross profit
General and administrative expenses
Depreciation and amortization
Special charges
Management fee-parent company
Non-cash stock option compensation expense
Valuation allowance related to long-term receivables
14,204
49,683
63,887
33,740
6,957
—
1,500
2,299
—
13,528
47,174
60,702
32,907
7,501
1,055
3,000
—
2,650
13,505
42,828
56,333
30,309
7,554
2,897
3,000
—
—
13,856
43,131
56,987
29,979
15,501
15,869
—
—
—
22,126
38,011
60,137
36,121
12,635
4,636
—
—
—
Operating income (loss)
19,661
13,589
12,573
(4,362)
6,745
Interest expense, net
Gain on extinguishment of debt
Bad debt provision related to related-party non-operating
receivables
Minority interest
Income tax (reversal) expense
Net income (loss) before preferred stock dividends and
increase in value of common stock subject to put/call
Preferred Stock Dividends
Increase in value of common stock subject to put/call
12,835
(3,832)
—
349
(112)
10,421
(7,243)
(538)
16,559
(1,757)
—
357
411
(1,981)
(15,630)
(1,242)
Net income (loss)
Balance Sheet Data (at end of year):
Cash and cash equivalents
Working capital deficiency
Total assets
Total debt
Convertible redeemable preferred stock, series D
Redeemable preferred stock, series C
Common stock subject to put/call rights
Common stockholders’ equity (deficit)
Other Data:
Gross customer collections
Capital expenditures
Number of managed locations
Number of leased locations
Number of total locations
Number of parking spaces
$
$
$
$
$
$
$
$
2,640 $
(18,853)
10,360 $
(8,115)
195,102
109,750
—
—
—
15,339
8,470
(9,243)
189,585
161,079
56,399
60,389
10,712
(166,002)
1,315,780 $
1,378 $
1,603
293
1,896
1,026,336
1,288,430
1,812
1,578
295
1,873
1,031,821
15,965
—
—
180
252
17,599
—
12,878
209
406
17,382
—
—
341
503
(3,824)
(13,540)
(970)
(35,454)
(6,354)
(2,196)
(11,481)
(5,696)
(1,715)
(18,334) $
(44,004) $
(18,892)
6,153 $
(9,143)
190,950
166,173
47,224
56,347
9,470
(147,560)
7,602 $
(20,156)
192,234
175,257
—
61,330
8,500
(20,156)
3,539
(11,941)
208,341
174,996
—
54,976
6,304
(100,731)
1,380,536 $ 1,505,645 $
1,537 $
1,617
330
1,947
1,026,608
1,843 $
1,591
294
1,885
1,028,047
1,545,690
4,684
1,559
364
1,923
1,033,587
(1) Restated to include reimbursable management contract expense in accordance with a new accounting standard
(EITF 01-14) adopted during the second quarter ended June 30, 2002.
19
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion of our results of operations should be read in conjunction with the “Selected Financial Data” and
our consolidated financial statements and the related notes included elsewhere herein. This discussion contains forward-
looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these
forward-looking statements as a result of many factors, including, but not limited to, those set forth in this Item 7 under “Risk
Factors” and elsewhere herein.
Overview
Our Business
We manage parking facilities in urban markets and at airports across the United States and in four Canadian provinces. We do
not own any facilities, but instead enter into contractual relationships with property owners or managers.
We operate our clients’ parking properties through two types of arrangements: management contracts and leases. Under a
management contract, we typically receive a base monthly fee for managing the facility, and we may also receive an incentive
fee based on the achievement of facility performance objectives. We also receive fees for ancillary services. Typically, all of
the underlying revenues and costs of parking services under a standard management contract flow through to our clients rather
than to us. However, some management contracts, which are referred to as “reverse” management contracts, usually provide
for larger management fees and require us to pay various costs. Under lease arrangements, we generally pay to the property
owner either a fixed annual rent, a percentage of gross customer collections or a combination thereof. We collect all revenues
under lease arrangements and we are responsible for most operating expenses, but we are typically not responsible for major
maintenance, capital expenditures or real estate taxes. Margins for lease contracts vary significantly, not only due to operating
performance, but also due to variability of parking rates in different cities and varying space utilization by parking facility type
and location. As of December 31, 2004, we operated 85% of our locations under management contracts and 15% under leases.
In evaluating our financial condition and operating performance, management’s primary focus is on our gross profit, total
general and administrative expense and general and administrative expense as a percentage of our gross profit. Although the
underlying economics to us of management contracts and leases are similar, the manner in which we are required to account
for them differs. Revenue from leases includes all gross customer collections derived from our leased locations (net of parking
tax), whereas revenue from management contracts only includes our contractually agreed upon management fees and amounts
attributable to ancillary services. Gross customer collections at facilities under management contracts, therefore, are not
included in our revenue. Accordingly, while our revenue can fluctuate simply based on the proportion of leases to management
contracts, our gross profit will not fluctuate merely because of the structure of our operating agreements. For example, as of
December 31, 2004, 85% of our locations were operated under management contracts and 78% of our gross profit for the year
ended December 31, 2004 was derived from management contracts. Only 36% of total revenue (excluding reimbursement of
management contract expenses), however, was from management contracts because under those contracts the revenue collected
from parking customers belongs to our clients. Therefore, gross profit and total general and administrative expense, rather than
revenue, are management’s primary focus.
Company History
APCOA, Inc. evolved from the consolidation of various parking companies, several of which had special competence in the
airport parking market. One of these companies first introduced the concept of paid airport parking in the United States at
Cleveland-Hopkins International Airport in 1951. Standard Parking, L.P., which traces its business roots back to 1929 in
Chicago, was operated as a family owned and controlled business until the time of its combination with APCOA in 1998. The
business operated under the corporate name of Standard Parking Corporation from 1981 until 1995, when it was reconstituted
as a limited partnership named Standard Parking, L.P. To avoid confusion, throughout this document we refer to Standard
Parking, L.P. and the prior Standard Parking Corporation simply as the Standard Companies.
APCOA, Inc. and the Standard Companies merged in March 1998 and the resulting company was called APCOA/Standard
Parking, Inc. We refer to the merger herein as the “combination”. In April 2003 we changed our name to “Standard Parking
Corporation.”
20
General Business Trends
Our ability to grow gross profit and add new locations during the last several years up to the completion of our initial public
offering in June 2004 was constrained due to a highly leveraged capital structure and limited liquidity. As a result, during that
time we focused on controlling capital spending and general and administrative expense, and on reducing our total debt. In
addition, we concentrated on growing our profit by improving the efficiency of our operations and by either not renewing or by
terminating unprofitable contracts. Based on these efforts, for the year ended December 31, 2003 compared to the year ended
December 31, 2004, we improved average gross profit per location by 3.3% from $32,618 to $33,696.
We recorded a $2.7 million valuation allowance related to long-term receivables for the year ended December 31, 2003. The
allowance was recorded due to the extended length of time estimated for collection on certain long-term receivables related to
the Bradley International Airport parking contract.
We recorded $2.3 million in non-cash stock option expense related to the vesting of options and a $3.8 million gain on
extinguishment of debt in conjunction with the initial public offering in 2004. We recorded no management fee for the second
half of 2004 as compared to $1.5 million in the second half of 2003 pursuant to a management agreement that terminated in
June 2004 in conjunction with our initial public offering.
Initial Public Offering and Recapitalization
In June 2004, we closed our initial public offering and sale of 4,666,667 shares of common stock, including the underwriters’
exercise of an over-allotment option, at a price of $11.50 per share. A total of $53.7 million in gross proceeds was raised from
this offering. After deducting the underwriting discount of $3.8 million, and offering expenses of $3.2 million, net proceeds to
us were $46.7 million. In conjunction with this offering, we entered into a new $90.0 million senior credit facility and
redeemed our 14% Notes in the amount of $57.7 million. In addition, we paid $1.6 million of interest premium on the 14%
Notes, $0.8 million of interest previously deferred on the term loan for the old senior credit facility, $6.6 million to purchase
the common stock subject to put/call rights and any remaining existing stock options of the common stock (plus a $5.0 million
note assumed by our parent company), $1.4 million in debt issuance costs for the new senior credit facility and $0.3 million for
professional fees related to the exchange of debt.
In connection with our Initial Public Offering, we exchanged a portion of our 11 ¼% Redeemable Preferred Stock (the
“Series C preferred stock”), that was owned by Steamboat Industries LLC for 5,789,499 shares of our common stock. Our
remaining Series C preferred stock was contributed to us by our parent as a capital contribution. There are no authorized or
outstanding shares of Series C preferred stock.
In connection with our IPO, Steamboat Industries LLC and its wholly owned subsidiary, Steamboat Industries N.V., acquired
all but ten shares of our outstanding 18% Senior Convertible Redeemable Series D Preferred Stock (the “Series D preferred
stock”). Steamboat Industries LLC then contributed its Series D preferred stock to us as a capital contribution. We then retired
all shares of Series D preferred stock contributed to us and now have only ten shares of Series D preferred stock outstanding.
The ten shares were retained in order to effect the recapitalized structure in connection with our IPO. The Series D preferred
stock has an initial liquidation preference equal to $100 per share or $1,000 in the aggregate.
21
Summary of Operating Facilities
We focus our operations in core markets where a concentration of locations improves customer service levels and operating
margins. The following table reflects our facilities operated at the end of the years indicated:
Managed facilities
Leased facilities
Total facilities
Revenue
December 31, 2004
1,603
293
1,896
December 31, 2003
1,567
294
1,861
December 31, 2002
1,591
294
1,885
We recognize parking services revenue from lease and management contracts as the related services are provided. Substantially
all of our revenues come from the following two sources:
• Parking services revenue—lease contracts. Parking services revenues related to lease contracts consist of all
revenue received at a leased facility, including parking receipts (net of parking tax), consulting and real estate
development fees, gains on sales of contracts and payments for exercising termination rights.
• Parking services revenue—management contracts. Management contract revenue consists of management fees,
including both fixed and performance-based fees, and amounts attributable to ancillary services such as
accounting, equipment leasing, payments received for exercising termination rights, consulting, insurance and
other value-added services with respect to managed locations. We believe we generally purchase required
insurance at lower rates than our clients can obtain on their own because we effectively self-insure for all
liability and worker’s compensation claims by maintaining a large per-claim deductible. As a result, we have
generated operating income on the insurance provided under our management contracts by focusing on our risk
management efforts and controlling losses. Management contract revenues do not include gross customer
collections at the managed locations as this revenue belongs to the property owner rather than to us.
Management contracts generally provide us with a management fee regardless of the operating performance of
the underlying facility.
Reimbursement of Management Contract Expense
Reimbursement of management contract expense consists of the direct reimbursement from the property owner for operating
expenses incurred under a management contract.
Cost of Parking Services
Our cost of parking services consists of the following:
• Cost of parking services—lease contracts. The cost of parking services under a lease arrangement consists of
contractual rental fees paid to the facility owner and all operating expenses incurred in connection with operating the leased
facility. Contractual fees paid to the facility owner are generally based on either a fixed contractual amount or a percentage of
gross revenue or a combination thereof. Generally, under a lease arrangement we are not responsible for major capital
expenditures or real estate taxes.
• Cost of parking services—management contracts. The cost of parking services under a management contract is
generally the responsibility of the facility owner. As a result, these costs are not included in our results of operations. However,
our reverse management contracts, which typically provide for larger management fees, do require us to pay for certain costs.
22
Gross Profit
Gross profit equals our revenue less the cost of generating such revenue. This is the key metric we use to examine our
performance because it captures the underlying economic benefit to us of both lease contracts and management contracts.
General and Administrative Expenses
General and administrative expenses include salaries, wages, payroll taxes, insurance, travel and office related expenses for our
headquarters, field offices and supervisory employees.
Depreciation and amortization.
Depreciation is determined using a straight-line method over the estimated useful lives of the various asset classes or in the
case of leasehold improvements, over the initial term of the operating lease or its useful life, whichever is shorter. Intangible
assets determined to have finite lives are amortized over their remaining useful life.
Special Charges
We recorded no special charges in 2004. During 2002 and 2003 we incurred a variety of special charges. These charges
included costs associated with: our debt exchange in 2002 and the write off of debt issuance costs related to the exchange, a
provision for abandoned businesses (which was a non-cash expense), employee severance costs, retroactive prior period
insurance adjustments, incremental integration costs, and certain expenses of AP Holdings, Inc., our former parent.
Management Fee
From January 2002 to June 2004, we had a management agreement with our former parent AP Holdings, Inc. that provided for
periodic payment of management fees totaling $3.0 million per year on a pro rata basis. The agreement was terminated upon
the closing of the initial public offering in June 2004.
Valuation allowance related to long-term receivables.
Valuation allowance related to long-term receivables is recorded when there is an extended length of time estimated for
collection of long-term receivables.
Results of Operations
Fiscal 2004 Compared to Fiscal 2003
Parking services revenue—lease contracts. Lease contract revenue increased $10.1 million, or 7.3%, to $148.8 million in the
year ended December 31, 2004, compared to $138.7 million in the year-ago period. This increase resulted from a net increase
of $5.2 million attributable to $14.9 million in revenues from new locations and $1.1 million in revenues from the conversion
of certain contracts to leases agreements from management agreements that was partially offset by reductions in revenue
attributable to contract expirations of $10.8 million. We experienced an increase in same location revenue of $4.9 million, or
4.3%, for the year ended December 31, 2004 compared to the year-ago period.
Parking services revenue—management contracts. Management contract revenue increased $7.1 million, or 9.3%, to $83.7
million in the year ended December 31, 2004, compared to $76.6 million in the year-ago period. This increase resulted from
$7.4 million in revenues from new locations and an increase in same location revenue of $3.5 million, or 5.4%, which was
partially offset by contract expirations and conversions to lease agreements from management agreements of $3.8 million.
Reimbursement of management contract expense. Reimbursement of management contract expenses increased $1.0 million, or
0.3%, to $331.2 million in the year ended December 31, 2004, as compared to $330.2 million in the year-ago period. This
increase resulted from additional reimbursements for costs incurred on the behalf of owners.
23
Cost of parking services—lease contracts Cost of parking for lease contracts increased $9.3million, or 7.5%, to $134.5 million
for the year ended December 31, 2004, from $125.2 million for the year ago period. The increase is primarily due to an
increase in rent and concession fees of $8.4 million and an increase in payroll and payroll related expenses of $0.5 million
which are primarily related to new locations.
Cost of parking services—management contracts. Cost of parking for management contracts increased $4.6 million, or 15.6%,
to $34.0 million for the year ended December 31, 2004, from $29.4 million for the year-ago period. The increase is primarily
due to an increase in payroll and payroll related expenses of $3.9 million, an increase of $0.7 million in reserve for bad debts, a
$0.2 million net charge primarily related to the recovery of certain taxes offset by additional rent payments, which were
partially offset by decreases in other expenses of $0.2 million.
Reimbursed management contract expense. Reimbursed management contract expense increased $1.0 million, or 0.3%, to
$331.2 million in the year ended December 31, 2004, as compared to $330.2 million in the year-ago period. This increase
resulted from additional reimbursed costs incurred on the behalf of owners.
Gross profit—lease contracts. Gross profit for lease contracts increased $0.7 million, or 5.0% to $14.2 million for the year
ended December 31, 2004 as compared to $13.5 million in the year-ago period. Gross margin for lease contracts decreased
slightly to 9.5% during 2004 compared to 9.8% during 2003. The increase in gross profit was related to the increase in new
locations and the decrease in gross margin resulted from increased rent expense on new and existing contracts.
Gross profit—management contracts. Gross profit for management contracts increased $2.5 million, or 5.3%, to $49.7 million
for the year ended December 31, 2004, compared to $47.2 million in the year-ago period. Gross margin for management
contracts decreased to 59.3% during 2004 compared to 61.6% during 2003. The increase in gross profit was related to the
increase in new locations and the decrease in gross margin was related to the costs incurred on reverse management contracts.
General and administrative expenses. General and administrative expenses increased $0.8 million, or 2.5%, to $33.7 million
for the year ended December 31, 2004, compared to $32.9 million for the year-ago period. This increase resulted primarily
from increases in wage and benefit costs of $0.9 million, increases in professional and consulting fees of $0.3 million,
increases related to board of directors of $0.6 million, which was partially offset by a decrease in rent expense of $0.6 million
due to the consolidation of the corporate headquarters space, a $0.2 million benefit related to a key-man insurance policy and a
$0.2 million collection of a receivable that had been previously reserved. General and administrative expenses decreased as a
percentage of gross profit to 52.8% in 2004 from 54.2% in 2003.
Depreciation and amortization. Depreciation and amortization decreased $0.5 million, or 7.2%, to $7.0 million for the year
ended December 31, 2004, compared to $7.5 million in the year ago period. This decrease is primarily due to a reduction in
capital spending which was partially offset by a net charge of $0.5 million related to the termination of a non-compete
agreement with our former owner.
Special charges. We recorded no special charges for the year ended December 31, 2004, compared to $1.1 million for the year
ended December 31, 2003. The 2003 special charges included $0.4 million for costs associated with evaluating financing
alternatives, $0.3 million for costs associated with prior years’ terminated contracts, $0.3 million for costs incurred on behalf of
our parent company and $0.2 million for severance costs, which were partially offset by a $0.2 million reimbursement from a
mediated contract settlement of $0.8 million.
Management fee—parent company. We recorded $1.5 million for management fees for the year ended December 31, 2004, as
compared to $3.0 million in the year-ago period. We were a party to a management agreement with AP Holdings that provided
for periodic payment of annual management fees of $3.0 million. We recorded and paid the management fees through the
second quarter of 2004. The fee was terminated upon the closing of the initial public offering in June 2004.
Valuation allowance related to long-term receivables. We recorded no valuation allowance related to long-term receivables
for the year ended December 31, 2004, compared to a $2.7 million valuation allowance related to long-term receivables for the
year ended December 31, 2003. The allowance was recorded due to the extended length of time estimated for collection on
certain long-term receivables related to the Bradley International Airport parking contract.
24
Fiscal 2003 Compared to Fiscal 2002
Parking services revenue—lease contracts. Lease contract revenue decreased $3.7 million, or 2.6%, to $138.7 million in the
year ended December 31, 2003, compared to $142.4 million in the year-ago period. This decrease resulted from a net
reduction of $5.2 million attributable to $7.2 million in revenues from new locations that was more than offset by contract
expirations of $11.8 million and $0.6 million in revenues from the conversion of certain lease agreements to management
agreements. We experienced an increase in same location revenue of $1.5 million, or 1.4%, for the year ended December 31,
2003 compared to the year-ago period.
Parking services revenue—management contracts. Management contract revenue decreased $1.4 million, or 1.8%, to $76.6
million in the year ended December 31, 2003, compared to $78.0 million in the year-ago period. This decrease resulted from
$11.4 million in contract expirations which was partially offset by $4.8 million in new locations and an increase in same
location revenue of $5.2 million or 9.0%.
Reimbursement of management contract expense. Reimbursement of management contract expenses increased $4.1 million, or
1.3%, to $330.2 million in the year ended December 31, 2003, as compared to $326.1 million in the year-ago period. This
increase resulted from additional reimbursements for costs incurred on the behalf of owners.
Cost of parking services—lease contracts. Cost of parking for lease contracts decreased $3.7 million, or 2.9%, to $125.2
million for the year ended December 31, 2003, from $128.9 million for the year-ago period. The majority of this decrease
resulted from a reduction in rent expense of $2.6 million, payroll and payroll related expenses of $2.0 million which was
partially offset by increases in repairs and maintenance, supplies and other expenses of $0.9 million
Cost of parking services—management contracts. Cost of parking for management contracts decreased $5.8 million, or
16.5%, to $29.4 million for the year ended December 31, 2003, from $35.2 million for the year-ago period. This decrease
resulted from a reduction in payroll and payroll related expenses of $7.2 million, and $0.4 million in costs associated with our
casualty insurance program which were partially offset by increases of $0.9 million in repairs, supplies and other expenses, and
increase of $0.9 million in bad debt expense.
Reimbursed management contract expense. Reimbursed management contract expense increased $4.1 million, or 1.3%, to
$330.2 million in the year ended December 31, 2003, as compared to $326.1 million in the year-ago period. This increase
resulted from additional reimbursed costs incurred on the behalf of owners.
Gross profit—lease contracts. Gross profit for lease contracts of $13.5 million for the year ended December 31, 2003 was
equivalent to $13.5 million in the year-ago period. Gross margin for lease contracts increased to 9.8% during 2003 compared
to 9.5% during 2002. This increase resulted from the termination of lower margin contracts and the reduction of operating
expenses on existing contracts.
Gross profit—management contracts. Gross profit for management contracts increased $4.4 million, or 10.1%, to $47.2
million for the year ended December 31, 2003, compared to $42.8 million in the year-ago period. Gross margin for
management contracts increased to 61.6% during 2003 compared to 54.9% during 2002. The increases in gross profit and
gross margin were related to the elimination of several unprofitable contracts and the reduction in costs of operations.
General and administrative expenses. General and administrative expenses increased $2.6 million, or 8.6%, to $32.9 million
for the year ended December 31, 2003, compared to $30.3 million for the year-ago period. This increase resulted primarily
from increases in wage and benefit costs of $1.9 million, increases in professional and consulting fees of $0.5 million and
increases in office rent of $0.2 million.
Depreciation and amortization. Depreciation and amortization decreased $0.1 million, or 0.7%, to $7.5 million for the year
ended December 31, 2004, compared to $7.6 million in the year ago period. This decrease is primarily related to a reduction in
capital spending.
25
Special charges. We recorded $1.1 million of special charges for the year ended December 31, 2003, compared to $2.9 million
for the year ending December 31, 2002. The 2003 special charges included $0.4 million for costs associated with evaluating
financing alternatives, $0.3 million for costs associated with prior years’ terminated contracts, $0.3 million for costs incurred
on behalf of our former parent company and $0.2 million for severance costs, which were partially offset by a $0.2 million
reimbursement from a mediated contract settlement of $0.8 million. The 2002 special charges included $1.0 million related to
the legal costs for the registration of the 14% senior subordinated second lien notes, $0.8 million in costs related to contracts
terminated in prior years, $0.4 million in severance costs, $0.3 million in costs incurred on behalf of our former parent
company, $0.2 million for insurance costs in accordance with ERISA requirements, and $0.2 million in prior year rent and
other adjustments.
Management fee—parent company. We recorded $3.0 million of management fee for each of the years ended December 31,
2003 and December 31, 2002 to AP Holdings, Inc., our former parent company, pursuant to our management agreement.
Valuation allowance related to long-term receivables. We recorded $2.7 million as a valuation allowance related to long-term
receivables for the year ended December 31, 2003, as compared to no allowance for the year ended December 31, 2002. The
allowance was recorded due to the extended length of time estimated for collection on certain long-term receivables related to
the Bradley International Airport parking contract.
Unaudited Quarterly Results
The following table sets forth our unaudited quarterly consolidated statement of operations data for the years ended
December 31, 2004 and December 31, 2003. The unaudited quarterly information has been prepared on the same basis as the
annual financial information and, in management’s opinion, includes all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the information for the quarters presented. Historically, the Company’s revenues and
operating results have varied from quarter to quarter and are expected to continue to fluctuate in the future. These fluctuations
have been due to a number of factors, including: general economic conditions in the Company’s markets; additions of
contracts; expiration and termination of contracts; conversion of lease contracts to management contracts; conversion of
management contracts to lease contracts and changes in terms of contracts that are retained. In addition, operating results have
been seasonally lower during the first and second fiscal quarters than during the third and fourth quarters of the fiscal year. The
operating results for any historical quarter are not necessarily indicative of results for any future period.
26
($ in thousands)
March 31
June 30
September 30 December 31 March 31
June 30 September 30 December 31
2004 Quarters Ended
2003 Quarters Ended
(unaudited)
(unaudited)
Parking services revenue:
Lease contracts
Management contracts
Reimbursement of management contract
expense
$ 35,121 $
20,873
37,120 $
21,575
37,125 $
20,089
39,386 $
21,175
35,674 $
17,969
35,891 $
19,129
31,989 $
18,491
87,721
82,207
76,597
84,646
76,813
84,322
84,160
35,127
21,024
84,948
Total revenue
143,715
140,902
133,811
145,207
130,456
139,342
134,640
141,099
Cost of parking services:
Lease contracts
Management contracts
Reimbursed management contract
expense
32,424
8,119
33,549
9,025
87,721
82,207
33,131
8,660
76,597
35,444
8,225
32,818
6,696
32,703
7,500
84,646
76,813
84,322
28,001
7,097
84,160
31,631
8,146
84,948
Total cost of parking services
128,264
124,781
118,388
128,315
116,327
124,525
119,258
124,725
Gross profit:
Lease contracts
Management contracts
2,697
12,754
3,571
12,550
3,994
11,429
3,942
12,950
2,856
11,273
3,188
11,629
Total gross profit
15,451
16,121
15,423
16,892
14,129
14,817
3,988
11,394
15,382
8,318
1,815
203
750
—
—
4,296
4,061
(51)
(1,757)
2,253
2,043
81
95
1,867
4,052
3,496
12,878
16,374
8,383
1,946
507
750
—
2,650
2,138
4,550
(85)
—
4,465
(2,327)
91
87
(2,505)
4,063
305
(6,873)
—
—
—
—
7,848
1,554
—
—
—
—
6,021
2,414
(78)
27
2,363
3,658
54
19
3,585
—
8,474
2,234
—
—
6
8,164
1,890
97
750
—
—
—
8,042
1,850
248
750
—
—
6,178
3,228
3,927
2,412
(114)
1
2,299
3,879
53
(449)
4,043
(42)
—
4,001
(773)
65
125
4,143
(60)
—
4,083
(156)
120
104
4,275
—
(963)
3,688
(380)
3,827
General and administrative expense
Depreciation and amortization
Special charges
Management fee-parent company
Non-cash stock compensation expense
Valuation allowance related to long-term
receivables
8,483
1,586
—
750
—
—
8,665
1,583
—
750
2,293
—
Operating income
4,632
2,830
4,375
(93 )
—
4,282
350
97
178
4,168
(249)
(3,860)
59
2,771
145
140
75
4,198
2,486
3,045
Other expense (income)
Interest expense
Interest income
Net (gain) loss on extinguishment of debt
Income (loss) before minority interest
expense and income taxes
Minority interest
Income tax expense (benefit)
Net income (loss) before preferred stock
dividends and increase in value of
common stock subject to put/call
Preferred stock dividends
Increase in value of common stock
subject to put/call
Net (loss) income
Common Stock Data:
Net income per common share:
Basic
Diluted
Weighted average common shares
outstanding:
Basic
Diluted
315
(4,438 ) $
$
223
(782) $
—
3,585 $
—
4,275 $
243
(4,894) $
397
(4,604) $
297
(2,482) $
—
—
—
—
(.24)
(.24)
.34
.33
.41
.40
3,229,817
3,229,817
10,464,888
10,708,537
10,487,003
10,756,395
—
—
—
—
—
—
—
—
—
—
—
—
27
Liquidity and Capital Resources
Outstanding Indebtedness
On December 31, 2004, we had total indebtedness of approximately $109.8 million, a reduction of $51.3 million from
December 31, 2003. The $109.8 million includes:
• $50.0 million under our new senior credit facility;
• $49.5 million of 91/4% Notes, including $0.6 million in carrying value in excess of principal, which are due in
March 2008; and
• $10.2 million of other debt including joint venture debentures, capital lease obligations and obligations on seller
notes and other indebtedness.
We believe that our cash flow from operations, combined with additional borrowings under our senior credit facility will be
available in an amount sufficient to enable us to pay our indebtedness, or to fund other liquidity needs. We may need to
refinance all or a portion of our indebtedness, including the 91/4% Notes, on or before their respective maturities. We believe
that we will be able to refinance our indebtedness, including the new senior credit facility and the 91/4% Notes, on
commercially reasonable terms.
Senior Credit Facility
We entered into a new credit agreement as of June 2, 2004 with LaSalle Bank National Association, as agent and Wells Fargo
Bank, N.A., as syndication agent. LaSalle and Wells Fargo have subsequently assigned a portion of their loans and rights as
lender to Fifth Third Bank Chicago and U.S. Bank National Association.
The senior credit facility consists of a $90.0 million revolving credit facility that will expire on June 2, 2007, provided in the
following commitments:
• $30.0 million by LaSalle
• $30.0 million by Wells Fargo
• $20.0 million by US Bank
• $10.0 million by Fifth Third
The revolving credit facility includes a letter of credit sub-facility with a sublimit of $30.0 million provided by Wells Fargo
and a swing line sub-facility with a sublimit of $5.0 million.
The revolving credit facility bears interest, at our option, at either (1) LIBOR plus the applicable LIBOR Margin ranging
between 2.50% and 3.25% depending on the ratio of our total funded indebtedness to our EBITDA from time to time (“Total
Debt Ratio”) or (2) the Base Rate (as defined below) plus the applicable Base Rate Margin raging between 1.00% and 1.75%
depending on our Total Debt Ratio. We may elect interest periods of one, two, three or six months for LIBOR based
borrowings. The Base Rate is the greater of (i) the rate publicly announced from time to time by LaSalle as its “prime rate”, or
(ii) the overnight federal funds rate plus 0.50%.
The senior credit facility includes the covenants; fixed charge ratio, senior debt to EBITDA ratio, total debt to EBITDA ratio
and a limit on our net annual capital expenditures, that limit our ability to incur additional indebtedness, issue preferred stock
or pay dividends and contain certain other restrictions on our activities. We are required to repay borrowings under the new
senior credit facility out of the proceeds of future issuances of debt or equity securities and asset sales, subject to certain
customary exceptions. The senior credit facility is secured by substantially all of our assets and all assets acquired in the future
(including a pledge of 100% of the stock of our existing and future domestic guarantor subsidiaries and 65% of the stock of our
existing and future foreign subsidiaries). At December 31, 2004, we were in compliance with all of our covenants.
28
At December 31, 2004, we had $23.5 million letters of credit outstanding under the senior credit facility, borrowings against
the senior credit facility aggregated $50.0 million and we had $16.5 million available under the senior credit facility.
Interest Rate Cap Transactions
On November 15, 2004, we entered into two interest rate cap transactions with LaSalle Bank National Association (“LaSalle”),
allowing us to continue to take advantage of LIBOR based pricing under our Credit Agreement while hedging our interest rate
exposure on a portion of our borrowings under the Credit Agreement (“Rate Cap Transactions”). Under each Rate Cap
Transaction, we will receive payments from LaSalle at the end of each quarterly period to the extent that the prevailing three
month LIBOR during that period exceeds our cap rate of 2.5%. The first Rate Cap Transaction caps our interest rate on a $30.0
million principal balance at 2.5% for a total of 18 months. The second Rate Cap Transaction caps our interest rate on a $15.0
million principal balance at 2.5% for a total of nine months. Each Rate Cap Transaction will begin as of January 12, 2005 and
will settle each quarter on a date that is intended to coincide with our quarterly interest payment dates under the credit
agreement.
Stock Repurchase
On March 4, 2005, the Board of Directors authorized us to repurchase shares of our common stock for a value not to exceed $6
million. We intend to repurchase certain shares in open market transactions from time to time, and our majority shareholder
has agreed in each case to sell shares equal to its pro-rata ownership at the same price paid by us in each open market
purchase. On March 15, 2005, we repurchased 93,170 shares at $15.60 per share on the open market. Our majority
shareholder sold to us 99,136 shares at $15.60 per share. The total of the transaction was approximately $3.0 million.
Letters of Credit
We are required under certain contracts to provide performance bonds. These bonds are typically renewed on an annual basis.
As of December 31, 2004, we provided $3.8 million in letters of credit to collateralize our performance bond program.
During 2004, we provided letters of credit totaling $7.5 million to our casualty insurance carrier to collateralize our casualty
insurance program.
During the first quarter of 2003, our casualty insurance carrier returned funds previously held in trust, in the amount of
$12.0 million, which was exchanged for a letter of credit in the same amount.
Debt Restructuring
On January 11, 2002, we restructured our publicly issued debt. We exchanged $91.1 million of our outstanding 91/4% notes due
2008 for $59.3 million of our newly issued 14% senior subordinated second lien notes due 2006 and shares of our newly issued
Series D preferred stock. As part of these transactions, we also received $20.0 million in cash. The cash was used to repay
borrowings under our then existing senior credit facility, repurchase shares of existing redeemable Series C preferred stock
owned by our parent company and pay expenses incurred in connection with the restructuring transactions.
In conjunction with the exchange, we repaid $9.5 million of indebtedness under our then existing senior credit facility, paid
$2.7 million in accrued interest relating to the $91.1 million of the 91/4% notes due 2008 that were tendered, and paid
$9.7 million (including $1.3 million capitalized as debt issuance costs related to the senior credit facility) in fees and expenses
related to the exchange, which included a $3.0 million transaction advisory fee to AP Holdings, Inc. In addition, we
repurchased $1.5 million of redeemable preferred stock held by our former parent AP Holdings, Inc. (For additional
information, please see Note E to the consolidated financial statements included herein.)
29
Capital Leases
We incurred $5.1 million in additional capital lease obligations for the year ended December 31, 2004, compared to $1.4
million for the year ended December 31, 2003.
Lease Commitments
We have lease commitments of $22.4 million for fiscal 2005. The leased properties generate sufficient cash flow to meet the
base rent payment.
Guarantor Payments
Pursuant to our obligations with respect to the parking garage operations at Bradley International Airport, we have guaranteed
any revenue shortfall and are required to make certain payments for the benefit of the State of Connecticut and for holders of
special facility revenue bonds. We made deficiency payments (net of repayments) of $2.0 million in 2004 and $3.3 million in
2003. Although we expect to recover all amounts owed to us, we expect that we may have to make material additional
deficiency payments in the near term.
Daily Cash Collections
As a result of day-to-day activity at our parking locations, we collect significant amounts of cash. Lease contract revenue is
generally deposited into our local bank accounts, with a portion remitted to our clients in the form of rental payments according
to the terms of the leases. Under management contracts, some clients require us to deposit the daily receipts into one of our
local bank accounts, with the cash in excess of our operating expenses and management fees remitted to the clients at
negotiated intervals. Other clients require us to deposit the daily receipts into client accounts and the clients then reimburse us
for operating expenses and pay our management fee subsequent to month-end. Some clients require a segregated account for
the receipts and disbursements at locations. Our working capital and liquidity may be adversely affected if a significant number
of our clients require us to deposit all parking revenues into their respective accounts.
Gross daily collections are collected by us and deposited into banks using one of three methods, which impact our investment
in working capital:
• locations with revenues deposited into our bank accounts reduce our investment in working capital,
• locations that have segregated accounts generally require no investment in working capital, and
• accounts where the revenues are deposited into the clients’ accounts increase our investment in working capital.
Our average investment in working capital depends on our contract mix. For example, an increase in contracts that require all
cash deposited in our bank accounts reduces our investment in working capital and improves our liquidity. During 2004 and
2003, there were no material changes in these types of contracts. In addition, our clients may accelerate monthly distributions
to them and have an estimated distribution occur in the current month. During 2004 and 2003, there were no material changes
in the timing of current month distributions.
Our liquidity also fluctuates on an intra-month and intra-year basis depending on the contract mix and timing of significant
cash payments, such as our scheduled interest payments on our notes. Additionally, our ability to utilize cash deposited into our
local accounts is dependent upon the availability and movement of that cash into our corporate account. For all these reasons,
we, from time to time, carry a significant cash balance, while also utilizing our senior credit facility.
30
Net Cash Provided by Operating Activities
Net cash provided by operating activities totaled $11.4 million for 2004, compared to $13.6 million for 2003. Cash provided
during 2004 included an increase in accounts payable and accrued expenses of $3.9 million and an increase in net earnings
which were partially offset by increases in notes and accounts receivable of $6.0 million which includes $2.0 million in
guarantor payments on Bradley Airport.
Net cash provided by operating activities totaled $13.6 million for 2003, compared to $3.7 million for 2002. Cash provided
during 2003 included $12.0 million from the return of funds held in a trust by our casualty insurance carrier, which was
exchanged for a letter of credit in the same amount, a decrease in accounts receivable of $3.7 million due to improved
collection efforts, a decrease in deposits for insurance programs of $2.2 million and an increase of $6.8 million in accrued
liabilities primarily related to our casualty insurance program which were offset by interest payments of $10.4 million on the
senior subordinated notes and $4.5 million of other interest payments and an increase in long-term receivables of $4.3 million
related primarily to guarantor payments on Bradley airport.
Net Cash Used in Investing Activities
Net cash used in investing activities totaled $2.0 million in 2004 compared to $2.5 million in 2003. Cash used in investing for
2004 included capital expenditures of $1.4 million for capital investments needed to secure and/or extend leased facilities,
investment in information system enhancements and infrastructure and $0.6 million for contingent payments on previously
acquired contracts.
Net cash used in investing activities totaled $2.5 million in 2003 compared to $2.4 million in 2002. Cash used in investing for
2003 included capital expenditures of $1.8 million for capital investments needed to secure and/or extend leased facilities,
investment in information system enhancements and infrastructure and $0.7 million for contingent payments on previously
acquired contracts.
Net Cash Used in Financing Activities
Net cash used in financing activities totaled $7.8 million in 2004 to cash used of $9.2 million in 2003. In June 2004, we closed
our initial public offering and sale of 4,666,667 shares of common stock, including the underwriters’ exercise of an over-
allotment option, at a price of $11.50 per share. A total of $53.7 million in gross proceeds was raised from this offering. After
deducting the underwriting discount of $3.8 million, and offering expenses of $3.2 million, net proceeds to us were $46.7
million. In conjunction with this offering, we entered into a new $90.0 million senior credit facility and redeemed our 14%
Notes in the amount of $57.7 million. In addition, we paid $1.6 million of interest premium on the 14% Notes, $0.8 million of
interest previously deferred on the term loan for the old senior credit facility, $6.6 million to purchase the common stock
subject to put/call rights and any remaining existing stock options of the common stock (plus a $5.0 million note assumed by
our parent company), $1.4 million in debt issuance costs for the new senior credit facility and $0.3 million for professional fees
related to the exchange of debt.
Net cash used in financing activities totaled $9.2 million in 2003 compared to cash used of $2.8 million in 2002. The 2003
activity included $5.9 million in cash used to repurchase 14% senior subordinated second lien notes, $3.0 million in cash used
for debt issuance costs in connection with amendments to our senior credit facility, $2.4 million in cash used for redemption of
preferred stock, $2.0 million in cash used for payments on capital leases and $0.7 million for cash used on joint venture
borrowings. (See Note F of the Notes to the Consolidated Financial Statements). In addition, we provided funds from increases
in borrowings on our senior credit facility of $4.5 million and borrowings of $0.3 million in long-term equipment financing.
31
Cash and Cash Equivalents
We had cash and cash equivalents of $10.4 million, including $2.5 million in overnight investments, at December 31, 2004,
compared to $8.5 million at December 31, 2003 and $6.2 million at December 31, 2002.
Summary Disclosures About Contractual Obligations and Commercial Commitments
The following summarizes certain of our contractual obligations at December 31, 2004 and the effect such obligations are
expected to have on our liquidity and cash flow in future periods. The nature of our business is to manage parking facilities.
As a result, we do not have significant short-term purchase obligations.
($ in thousands)
Long-term debt(1)
Operating leases(2)
Capital leases(3)
Other long-term liabilities(4)
Letters of credit (5)
Total
Total
Less than
1 year
1-3 years
4-5 years
After 5 years
Payments due by period
$
$
102,251
108,592
6,859
37,118
23,541
278,361
$
$
747
22,408
2,739
9,358
23,541
58,793
$
$
100,037
49,666
3,897
19,658
—
173,258
$
$
236
17,921
223
2,933
—
21,313
$
$
1,231
18,597
—
5,169
—
24,997
(1) Represents principal amounts, but not interest. See Note F to our consolidated financial statements.
(2) As described in Note I to our consolidated financial statements.
(3) Represents minimum future payments. See Note L to our consolidated financial statements.
(4) Represents deferred compensation, customer deposits, insurance claims and deferred interest on the term loan,
interest on fixed rate debt and future rent obligations for an abandoned location.
(5) Represents amount of currently issued letters of credit at their maturities.
In addition we had contingent earnout payments of $644, $709, $612 for the years ended 2004, 2003 and 2002, respectively
and we made deficiency payments related to Bradley of $2,002, 3,272 and 1,199 for the years ended 2004, 2003 and 2002,
respectively. No amounts have been included on the above schedule related to those payments for future periods as the
amounts, if any, are not presently determinable.
Critical Accounting Policies
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” discusses our consolidated
financial statements, which have been prepared in accordance with accounting principles generally accepted in the United
States of America. Accounting estimates are an integral part of the preparation of the financial statements and the financial
reporting process and are based upon current judgments. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported period. Certain accounting estimates are
particularly sensitive because of their complexity and the possibility that future events affecting them may differ materially
from our current judgments and estimates.
This listing of critical accounting policies is not intended to be a comprehensive list of all of our accounting policies. In many
cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in
the United States of America, with no need for management’s judgment regarding accounting policy. We believe that of our
significant accounting policies, the following may involve a higher degree of judgment and complexity:
32
Impairment of Long-Lived Assets and Goodwill
As of December 31, 2004, our net long-lived assets were comprised primarily of $14.6 million of property, equipment and
leasehold improvements and $1.9 million of contract and lease rights. In accounting for our long-lived assets, other than
goodwill, we apply the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of.” Beginning January 1, 2002, we account for
goodwill and other intangible assets under the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets.” As of
December 31, 2004, we had $118.3 million of goodwill.
The determination and measurement of an impairment loss under these accounting standards require the significant use of
judgment and estimates. The determination of fair value of these assets utilizes cash flow projections that assume certain future
revenue and cost levels, assumed discount rates based upon current market conditions and other valuation factors, all of which
involve the use of significant judgment and estimation. For the years ended December 31, 2004, and December 31, 2003, we
were not required to record any impairment charges related to long-lived assets or to goodwill. Future events may indicate
differences from our judgments and estimates which could, in turn, result in impairment charges in the future. Future events
that may result in impairment charges include increases in interest rates, which would impact discount rates, unfavorable
economic conditions or other factors which could decrease revenues and profitability of existing locations and changes in the
cost structure of existing facilities. Factors that could potentially have an unfavorable economic effect on our judgments and
estimates include, among others: changes imposed by governmental and regulatory agencies, such as property condemnations
and assessment of parking-related taxes; construction or other events that could change traffic patterns; and terrorism or other
catastrophic events.
Insurance Reserves
We purchase comprehensive casualty insurance (including, without limitation, general liability, garage-keepers legal liability,
worker’s compensation and umbrella/excess liability insurance) covering certain claims that occur at parking facilities we lease
or manage. Under our various liability and workers’ compensation insurance policies, we are obligated to reimburse the
insurance carrier for the first $250,000 of any loss. As a result, we are, in effect, self-insured for all claims up to the deductible
levels. In 2004, we also were self-insured for up to $125,000 per year per covered individual in eligible medical expenses
incurred by certain employees and family members who receive medical coverage through us (in 2005 we are fully-insured for
all covered medical expenses). We apply the provisions of SFAS No. 5, “Accounting for Contingencies”, in determining the
timing and amount of expense recognition associated with claims against us. The expense recognition is based upon our
determination of an unfavorable outcome of a claim being deemed as probable and reasonably estimated, as defined in SFAS
No. 5. This determination requires the use of judgment in both the estimation of probability and the amount to be recognized as
an expense. We utilize historical claims experience along with regular input from third party insurance advisors and actuaries
in determining the required level of insurance reserves. Future information regarding historical loss experience may require
changes to the level of insurance reserves and could result in increased expense recognition in the future.
Allowance for Doubtful Accounts
We report accounts receivable, net of an allowance for doubtful accounts, to represent our estimate of the amount that
ultimately will be realized in cash. Management reviews the adequacy of its allowance for doubtful accounts on an ongoing
basis, using historical collection trends, aging of receivables, and a review of specific accounts, and makes adjustments in the
allowance as necessary. Changes in economic conditions or other circumstances could have an impact on the collection of
existing receivable balances or future allowance considerations.
33
Income Taxes
We use the asset and liability method of SFAS No. 109, Accounting for Income Taxes, to account for income taxes. Under this
method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. We have certain net operating loss carry forwards which expire between
2012 and 2024. Our ability to fully utilize these net operating losses to offset taxable income is limited due to the change in
ownership resulting from the initial public offering (Internal Revenue Code Section 382). A valuation allowance was
established for all net operating loss carry forwards and deferred tax assets as their recoverability is deemed to be uncertain.
Litigation
We are subject to litigation in the normal course of our business. We apply the provisions of SFAS No. 5, “Accounting for
Contingencies,” in determining the timing and amount of expense recognition associated with legal claims against us.
Management uses guidance from internal and external legal counsel on the potential outcome of litigation in determining the
need to record liabilities for potential losses and the disclosure of pending legal claims. See Note L of the notes to consolidated
financial statements included herein.
Risk Factors
Our indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations.
On December 31, 2004, we had total indebtedness of approximately $109.8 million, including carrying value in excess of
principal of $0.6 million.
Our indebtedness could have important consequences. For example, it could:
• increase our vulnerability to general adverse economic and industry conditions;
• require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness,
thereby reducing the availability of our cash flow to fund working capital, capital expenditures, growth initiatives,
acquisitions and other general corporate purposes;
• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
• limit our ability to engage in activities that may be in our long-term best interests;
• limit our ability to use capital as a means of retaining existing clients and attracting new clients;
• be required to be repaid if we experience a change of control;
• make it more difficult for us to satisfy our obligations with respect to our debt;
• place us at a competitive disadvantage compared to our competitors that have less debt and greater financial
resources; and
• limit our ability to borrow additional funds.
34
We cannot assure you that cash flow from operations, combined with additional borrowings under the senior credit facility and
any future credit facility will be available in an amount sufficient to enable us to repay our indebtedness, or to fund other
liquidity needs. We and our subsidiaries may be able to incur substantial additional indebtedness in the future, which could
cause the related risks to intensify. We will need to refinance all or a portion of our indebtedness including our senior credit
facility and the 9 1/4% notes, on or before their respective maturities. We cannot assure you that we will be able to refinance any
of our indebtedness including our senior credit facility and the 9 1/4% notes, on commercially reasonable terms or at all. If we
are unable to refinance our debt, we may default under the terms of our indebtedness, which could lead to an acceleration of the
debt. We do not expect that we could repay all of our outstanding indebtedness if the repayment of such indebtedness were
accelerated.
Our working capital and liquidity may be affected if a significant number of our clients require us to deposit all parking
revenues into their respective accounts.
We frequently contract with clients to hold parking revenues in our account and remit the revenues, minus the operating
expenses and our fee, to our clients at the end of the month. Some clients, however, require us to deposit parking revenues in
their accounts on a daily basis. This type of arrangement requires us to pay costs as they are incurred and receive
reimbursement and the management fee after the end of the month. There can be no assurance that a significant number of
clients will not switch to the practice of requiring us to deposit all parking revenues into their respective accounts, which would
have a material adverse effect on our liquidity and financial condition.
Our business would suffer if the use of parking facilities we operate decreased.
We derive a substantial portion of our revenues from the operation and management of parking facilities. Our business would
suffer if the use of parking facilities in urban areas or at or near airports decreased. Further, our success depends on our ability
to adapt and improve our products in response to evolving client needs and industry trends. If demand for parking is low due to
decreased car and airplane travel resulting from increased gasoline prices, inclement weather, increased regulation, general
economic slowdown or other factors, our business, financial condition, results of operations and our ability to achieve
sufficient cash flow to service our indebtedness, may be materially adversely affected.
The operation of our business is dependent upon key personnel.
Our success is, and will continue to be, substantially dependent upon the continued services of our executive management
team. The loss of the services of one or more of the members of our executive management team could have a material adverse
effect on our financial condition and results of operations. Although we have entered into employment agreements with, and
historically have been successful in retaining the services of, our executive management, there can be no assurance that we will
be able to retain them in the future. In addition, our continued growth depends upon our ability to attract and retain skilled
operating managers and employees.
We have significant financial obligations under our lease at Bradley International Airport.
We are the lessee under a 25-year lease with the State of Connecticut that expires on April 6, 2025, under which we lease the
surface parking and 3,500 garage parking spaces at Bradley International Airport located in the Hartford, Connecticut
metropolitan area. The parking garage was financed on April 6, 2000 through the issuance of $47.7 million of State of
Connecticut special facility revenue bonds. The Bradley lease provides that we deposit with a trustee for the bondholders all
gross revenues collected from operations of the surface and garage parking, and from these gross revenues, the trustee pays
debt service on the special facility revenue bonds, operating and capital maintenance expenses of the surface and garage
parking facilities and specific annual guaranteed minimum payments to the State. Principal and interest on the Bradley special
facility revenue bonds increases from approximately $3.6 million in lease year 2002 to approximately $4.5 million in lease year
2025. Our annual guaranteed minimum payments to the State increase from approximately $8.3 million in lease year 2002 to
approximately $13.2 million in lease year 2024.
35
To the extent that monthly gross receipts are not sufficient for the trustee to make the required payments we are obligated,
pursuant to our guaranty agreement, to deliver the deficiency amount to the trustee within three business days of notice. We are
responsible for these deficiency payments regardless of the amount of utilization for the Bradley parking facilities. We made
payments of $2.0 million in 2004, net of repayments of $0.1 million and $3.3 million in 2003, to cover these deficiency
payments. Although the State of Connecticut has an obligation to raise parking rates to offset a decline in usage, there is no
guarantee that the State of Connecticut will raise rates enough to offset a decline in usage or that any change in rates will result
in revenues sufficient to cover the trustee’s payments without resort to our guaranty. As of December 31, 2004, the net
receivable for this contract, which comprises deficiency payments of $6.5 million, is included in long-term receivables.
Although we expect to recover all amounts owed to us, we expect we may have to make material additional deficiency
payments in the near term.
Our business would be harmed if fewer clients obtain insurance coverage through us.
Many of our clients have historically chosen to obtain liability insurance coverage for the locations we manage by being named
as additional insureds under our master insurance policies. Clients do, however, have the option of purchasing such insurance
independently, as long as we are named as an additional insured pursuant to an additional insured endorsement. We purchase
insurance policies at prices that we believe represent a discount to the prices that would typically be charged to parking facility
owners on a stand-alone basis. Pursuant to our management contracts, we allocate a portion of our risk management costs, at
rates we believe are competitive, to those clients who choose to obtain their insurance coverage by being named as additional
insureds under our insurance policies. A material reduction in the number of clients who chose to obtain their insurance
coverage from us in that manner could have a material adverse effect on our operating income.
Additional funds would need to be reserved for future insurance losses if such losses are worse than expected.
We provide liability and worker’s compensation insurance coverage consistent with our obligations to our clients under our
various management contracts and leases. We are obligated to reimburse our insurance carrier for each loss incurred in the
current policy year up to the amount of a deductible specified in our insurance policies. The deductible for our various liability
and workers’ compensation policies is $250,000. Our financial statements reflect our funding of all such obligations based
upon guidance and evaluation we have received from third party insurance professionals. There can be no assurance, however,
that the ultimate amount of our obligations will not exceed the amount presently funded or accrued, in which case we would
need to set aside additional funds to reserve for any such excess. Our obligations could increase if we receive a greater number
of insurance claims or the cost of claims generally increases. A material increase in insurance costs due to a change in the
number of claims, claims costs or premiums paid by us could have a material adverse effect on our operating income.
We could face considerable business and financial risk in implementing our growth strategy.
We face substantial risks in growing our business, either organically or through acquisitions. Risks include:
• Difficulties in the integration of new operations, technologies, products and personnel;
• Competitive pressures;
• Inability to maintain our standards, controls and procedures;
• Risks of entering new geographic or service markets in which we have no or limited prior experience;
• Potential loss of employees;
36
• Limited availability of capital for working capital, capital expenditures, acquisitions and investment in
information technology systems upgrades;
• Diversion of management’s attention; and
• Expenses of any undisclosed or potential liabilities of any acquired company.
Our growth will be directly affected by the results of operations of added parking facilities, which will depend, in turn, upon
the competitive environment for acquisitions and new contracts and our ability to obtain suitable financing, contract terms and
government licenses and approvals.
Our ability to expand our business will be dependent upon the availability of adequate capital.
The rate of our expansion will depend in part upon the availability of adequate capital, which in turn will depend in large part
upon cash flow generated by our business and the availability of equity and debt capital. We cannot assure you that we will be
able to obtain equity or debt capital on acceptable terms or at all. Our senior credit facility, and the indentures governing our 9
1/4% notes contain provisions that restrict our ability to incur additional indebtedness and make to substantial asset sales that
might otherwise be used to finance our expansion. Our failure to comply with those covenants could result in an event of
default which, if not cured or waived, could result in the acceleration of all of our indebtedness. As a result, we cannot assure
you that we will be able to finance our current growth strategy.
The failure to successfully integrate possible future acquisitions or new contracts could have a negative impact on our
business.
We plan to pursue acquisitions on a selective basis in the future. Successful integration and management of additional facilities
will depend on a number of factors, many of which are beyond our control. There can be no assurance that suitable acquisitions
or new contract candidates will be identified, that such acquisitions or new contracts will be consummated or that the acquired
operations or new contracts can be integrated successfully. Any acquisition contemplated or completed by us may result in
adverse short-term effects on our reported operating results, divert management’s attention, introduce difficulties in retaining,
hiring and training key personnel, and introduce risks associated with unanticipated problems or legal liabilities, cause the
incurrence of additional debt, cause the issuance of additional equity, contingent liabilities and amortization of expenses related
to intangible assets, some or all of which could reduce our profitability and harm our business.
Our management contracts and leases expose us to certain risks.
As of December 31, 2004, we operated approximately 85% of our parking facilities pursuant to management contracts. Under
these contracts, we typically receive a base monthly fee for managing the facility as well as amounts attributable to ancillary
services, and we may also receive an incentive fee based on the achievement of facility performance objectives. However,
some management contracts, which are referred to as “reverse” management contracts, usually provide for larger management
fees and require the facility manager to pay certain of these parking facility costs, which exposes us to greater risk. Many of
these contracts are for a one-year term and may be canceled by the client for various reasons, including development of the real
estate for other uses. Many of these contracts are cancelable on as little as 30 days’ notice without cause. Our ability to
continue operating in these facilities is based on the client’s satisfaction with our performance.
37
As of December 31, 2004, we operated approximately 15% of our parking facilities pursuant to leases. Although there is
generally more potential for income from leased facilities than from management contracts, they also generally carry more risk.
Under some of these lease contracts, we are obligated to pay to the owner of the facility a fixed base rent, often regardless of
the actual utilization of the facility. Some of these leases can be for periods exceeding ten years. Maintenance and operating
expenses for leased facilities are borne by us and are not passed through to the owner, unlike management contracts. A decline
in facility utilization could result in lease payments exceeding the revenues received for operating the parking facility. Many of
these leases may be canceled by the client for various reasons, including development of the real estate for other uses. Some
are cancelable on as little as 30 days’ notice without cause.
The loss or renewal on less favorable terms of a substantial number of management contracts or leases could have a material
adverse effect on our business, financial condition and results of operations. In addition, because certain management contracts
and leases are with state, local and quasi-governmental entities, changes to certain governmental entities’ approaches to
contracting regarding parking facilities could affect such contracts. A material reduction in the operating income associated
with ancillary services we provide under management contracts and leases, including increases in costs or claims associated
with, or a reduction in the number of clients purchasing, insurance we provide, could have a material adverse effect on our
business, financial condition and results of operations. To the extent that management contracts and leases are cancelable
without cause, most of these contracts would also be cancelable in the event of bankruptcy, despite the automatic stay
provisions under bankruptcy law.
Our business may be harmed as a result of terrorist attacks.
Any terrorist attacks, particularly in the United States or Canada, may negatively impact our business and results of operations.
Attacks have resulted in, and may continue to result in, increased government regulation of airlines and airport facilities,
including imposition of minimum distances between parking facilities and terminals, resulting in the elimination of currently
managed parking facilities, and increased security checks of employees and passengers at airport facilities. These types of
regulations could impose costs that we may not be able to pass on to clients and reduce revenues. To the extent that these
attacks deter people either from flying or congregating in public areas, demand for parking at airports and at urban centers may
decline. This decline may result in fewer owners of these facilities hiring us to manage their parking facilities and lower
incentive payments under those contracts where we receive an incentive fee based on facility utilization or other factors. If
these attacks cause or exacerbate a slowdown in the general economy, a similar effect may occur. An overall economic
slowdown could reduce traffic at parking facilities we operate. Additional terrorist attacks, an escalation of hostilities abroad or
war could have a material adverse impact on our business, financial condition and results of operations.
We operate in a very competitive business environment.
Competition in the field of parking facility management is intense. The market is fragmented and is served by a variety of
entities ranging from single lot operators to large regional and national multi-facility operators, as well as municipal and other
governmental entities that choose not to outsource their parking operations. Competitors with greater resources may be able to
adapt more quickly to changes in customer requirements, or devote greater resources to the promotion and sale of their
products. Competitors with greater financial resources may also be able to win contracts that require larger investments in
working capital or capital expenditures on the parking facility. Many of our competitors also have long-standing relationships
with our clients. Providers of parking facility management services have traditionally competed on the basis of cost and
service. As we have worked to establish ourselves as one of the principal members of the industry, we compete predominately
on the basis of high levels of service and strong relationships. We may not be able to, or may choose not to, compete with
certain competitors on the basis of price. As a result, a greater proportion of our clients may switch to other service providers or
self-manage during an economic downturn.
38
Increased government regulation of airports and reduced air travel may affect our performance.
We derive a significant percentage of our gross profit from parking facilities and parking related services in and around
airports. For the year ended December 31, 2004, approximately 20.2% of gross profit was derived from those operations. The
Federal Aviation Administration generally prohibits parking within 300 feet of airport terminals during periods of heightened
security. While the prohibition is not currently in effect, there can be no assurance that this governmental prohibition will not
again be reinstated. The existing regulations governing parking within 300 feet of airport terminals or future regulations may
prevent us from using certain parking spaces. Reductions in the number of parking spaces and air travelers may reduce our
revenues and cash flow for both our leased facilities and those facilities we operate under management contracts.
The sureties for our performance bond program may require additional collateral to issue or renew performance bonds
in support of certain contracts.
Under substantially all of our contracts with municipalities, government entities and airports, we are required to provide a
performance bond to support our obligations under the contract. The sureties for our performance bond program require us to
collateralize our performance bonds with letters of credit. Our need to collateralize surety bonds reduces the availability of
funds under our senior credit facility and limits funds available for debt service, investments in our growth strategies, working
capital and capital expenditure requirements. If we are unable to provide sufficient collateral in the future, our sureties may not
issue performance bonds to support our obligations under certain contracts. As of December 31, 2004, we had approximately
$3.8 million of letters of credit outstanding as collateral with respect to our surety’s issuance of performance bonds.
As is customary in the industry, a surety provider can refuse to provide a bond principal with new or renewal surety bonds. If
any existing or future surety provider refuses to provide us with surety bonds, there can be no assurance that we would be able
to find alternate providers on acceptable terms, or at all. Our inability to provide surety bonds could also result in the loss of
existing contracts. Failure to find a provider of surety bonds, and our resulting inability to bid for new contracts or renew
existing contracts, could have a material adverse effect on our business and financial condition.
We believe that our client base is becoming more concentrated.
Due to the fact that national property owners, managers and developers and other property management companies tend to own
or manage multiple properties, our ability to provide parking services for a large number of properties becomes dependent on
our relationships with these entities. As this happens, such clients become more significant to our business. The loss of one of
these clients or the sale of properties they own to clients of our competitors could have a material adverse effect on our
business and financial condition. Additionally, large clients with extensive portfolios have greater negotiating power when
negotiating contracts, which could adversely affect our profit margins.
We must comply with regulations that may impose significant costs on us.
Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator
of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under or in such
property. These laws typically impose liability without regard to whether the owner or operator knew of, or was responsible
for, the presence of such hazardous or toxic substances. In connection with the operation of parking facilities, we may be
potentially liable for such costs. Although we are currently not aware of any material environmental claims pending or
threatened by any party against us or any of our operated parking facilities, no assurances can be given that a material
environmental claim will not be asserted against us or against the parking facilities we operate. The cost of defending against
claims of liability, or of remediating a contaminated property, could have a material adverse effect on our business, financial
condition and results of operations.
39
Various other governmental regulations affect our operation of parking facilities, both directly and indirectly, including air
quality laws, licensing laws and the Americans with Disabilities Act of 1990, or ADA. Under the ADA, all public
accommodations, including parking facilities, are required to meet certain federal requirements related to access and use by
disabled persons. A determination that we or the facility owner is not in compliance with the ADA could result in the
imposition of fines or damage awards against us. In addition, several state and local laws have been passed in recent years that
encourage car pooling and the use of mass transit. For example, a Los Angeles, California law prohibits employers from
reimbursing employee parking expenses. Laws and regulations that reduce the number of cars and vehicles being driven could
adversely impact our business.
We collect and remit sales/parking taxes and file tax returns for and on behalf of ourselves and our clients. We are affected by
laws and regulations that may impose a direct assessment on us for failure to remit sales/parking taxes and filing of tax returns
for ourselves and on behalf of our clients.
Prior transactions may limit our ability to utilize our remaining net operating losses and may accelerate future payment
of taxes.
We have substantial net operating losses, or NOLs, for U.S. federal and state income tax purposes. As a result of the initial
public offering completed in June 2004 an ownership charge occurred under Internal Revenue Code Section 382 which limits
our ability to use pre-change NOLs to reduce future taxable income.
We may be unable to renew our insurance coverage.
Our liability and worker’s compensation insurance coverage expires on an annual basis. Failure to renew the existing coverage
or to procure new coverage would have a material adverse effect on our business, financial condition and results of operations
by preventing us from accepting new contracts and by placing us in default under a majority of our existing contracts. There
can be no assurance that our insurance carriers will in fact be willing to renew our coverage at any rate at the expiration date.
During the past several years we have solicited insurance quotes from alternate insurance carriers, but there can be no
assurance, that any alternate insurance carriers will offer to provide similar coverage to us or, if they will, that their quoted
premiums will not exceed those received from our current carrier. A material increase in the cost of insurance premiums could
adversely affect our financial condition and results of operations.
Many of our employees are covered by collective bargaining agreements.
Approximately 25% of our employees are represented by labor unions. Approximately 23% of our collective bargaining
contracts, representing 8% of our employees, are up for renewal in 2005. There can be no assurance that we will be able to
renew existing labor union contracts on acceptable terms. Employees could exercise their rights under the labor union contract,
which could include a strike or walk-out. In such cases, there are no assurances that we would be able to staff sufficient
employees for our short-term needs. Any such labor strike or our inability to negotiate a satisfactory contract upon expiration
of the current agreements could have a negative effect on our business and financial results.
We make contributions to multiemployer benefit plans on behalf of certain employees covered by collective bargaining
agreements and could be responsible for paying unfunded liabilities incurred by such benefit plans, which amount could be
material.
Economic and demographic trends could materially adversely affect our business.
Our business operations are located in North America and tend to be concentrated in large urban areas. To the extent that
economic or demographic factors result in: the movement of white-collar jobs from urban centers to suburbs or even out of
North America; increased office vacancies in urban areas or movement toward home office alternatives; or lower consumer
spending or employment levels, our business could be materially adversely affected.
40
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rates
Our primary market risk exposure consists of risk related to changes in interest rates. We use a variable rate senior credit
facility to finance our operations. This facility exposes us to variability in interest payments due to changes in interest rates. If
interest rates increase, interest expense increases and conversely, if interest rates decrease, interest expense also decreases. We
believe that it is prudent to limit the exposure of an increase in interest rates.
To meet this objective, we entered into two interest rate cap transactions with LaSalle Bank National Association (“LaSalle”),
allowing us to continue to take advantage of LIBOR based pricing under our Credit Agreement while hedging our interest rate
exposure on a portion of our borrowings under the Credit Agreement (“Rate Cap Transactions”). Under each Rate Cap
Transaction, we will receive payments from LaSalle at the end of each quarterly period to the extent that the prevailing three
month LIBOR during that period exceeds our cap rate of 2.5%. The first Rate Cap Transaction caps our interest rate on a $30.0
million principal balance at 2.5% for a total of 18 months. The second Rate Cap Transaction caps our interest rate on a $15.0
million principal balance at 2.5% for a total of nine months. Each Rate Cap Transaction will begin as of January 12, 2005 and
will settle each quarter on a date that coincides with our quarterly interest payment dates under the credit agreement. The
underlying terms of the interest rate cap, including the notional amounts, the duration and reset dates are identical to the
associated debt instruments and therefore hedging results in no ineffectiveness. Historically, we have not used derivative
financial instruments for speculative or trading purposes.
Our $90.0 million senior credit facility provides for a $90.0 million variable rate revolving facility. Interest expense on such
borrowing is sensitive to changes in the market rate of interest. If we were to borrow the entire $90.0 million available under
the facility, a 1% increase in the average market rate would result in an increase in our annual interest expense of $0.9 million.
This amount is determined by considering the impact of the hypothetical interest rates on our borrowing cost, but does not
consider the effects of the reduced level of overall economic activity that could exist in such an environment. Due to the
uncertainty of the specific changes and their possible effects, the foregoing sensitivity analysis assumes no changes in our
financial structure.
Foreign Currency Risk
Our exposure to foreign exchange risk is minimal. All foreign investments are denominated in U.S. dollars, with the exception
of Canada. We had approximately $2.3 million and $0.3 million of Canadian dollar denominated cash and debt instruments,
respectively, at December 31, 2004. We do not hold any hedging instruments related to foreign currency transactions. We
monitor foreign currency positions and may enter into certain hedging instruments in the future should we determine that
exposure to foreign exchange risk has increased.
41
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this Item are attached to and are hereby incorporated into this Report.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Within the 90-day period prior to the filing date of this report, our chief executive officer and chief financial officer carried out
an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-
14 of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon their evaluation, our chief executive officer and
chief financial officer concluded that our disclosure controls and procedures were adequate and effective and designed to
ensure that material information relating to us (including our consolidated subsidiaries) required to be disclosed by us in the
reports we file under the Exchange Act is recorded, processed, summarized and reported within the required time periods.
Changes in Internal Controls
There were no significant changes in our internal controls or any other factors that could significantly affect these controls
subsequent to the date of the evaluation referred to above.
ITEM 9B. OTHER INFORMATION
None.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this item with respect to our directors and compliance by our directors, executive officers and certain
beneficial owners of our common stock with Section 16(a) of the Exchange Act is incorporated by reference to all information
under the captions entitled “Board and Corporate Governance Matters” and “Section 16(a) Beneficial Ownership Reporting
Compliance” from our Proxy Statement.
42
Executive Officers of the Registrant
The following chart names our executive officers of the Company, each of whom is elected by and serves at the pleasure of the
Board of Directors. The business experience shown for each officer has been his principal occupation for at least the past five
years.
Current
Position
Held Since
1998
Age
47
2000
51
Name
John V. Holten
James A. Wilhelm
Business Experience
Mr. Holten has served as a director and our chairman of the board of
directors since March 1998. Mr. Holten is the sole manager of
Steamboat Industries LLC and the sole managing director of
Steamboat Industries N.V. Steamboat Industries LLC, along with
Steamboat Industries N.V. (Steamboat Industries LLC owns 100%
of the common stock of Steamboat Industries N.V.), has been our
majority stockholder since May 2004. Steamboat Industries LLC
was established in, and Steamboat Industries LLC acquired 100% of
the common stock of Steamboat Industries N.V. in, May 2004.
Mr. Holten has also served as a director and chairman of the board
of directors of AP Holdings, Inc., our parent company until
May 2004, since April 1989. Mr. Holten is the chairman and chief
executive officer of Steamboat Holdings, Inc., the parent company
of AP Holdings, Inc. Mr. Holten has also served as the chairman and
chief executive officer of Holberg Industries, Inc. since 1989.
Holberg Industries, Inc. was our indirect parent until March 2001.
Mr. Holten received his M.B.A. degree from Harvard University in
1982 and graduated from the Norwegian School of Economics and
Business Administration in 1980.
Mr. Wilhelm has served as our president since September 2000 and
as our chief executive officer and a director since October 2001.
Mr. Wilhelm served as executive vice president—operations from
March 1998 to September 1999 and he served as senior executive
vice president and chief operations officer from September 1999 to
August 2000. Mr. Wilhelm joined the predecessors of Standard
Parking Corporation in 1985, serving as executive vice president
beginning in January 1998. Prior to March 1998, Mr. Wilhelm was
responsible for managing the Midwest and Western Regions,
which included parking facilities in Chicago and sixteen other cities
throughout the United States and Canada. Mr. Wilhelm received his
B.A. degree from Northeastern Illinois University in 1976.
43
G. Marc Baumann
Thomas L. Hagerman
John Ricchiuto
Robert N. Sacks
Mr. Baumann has served as our executive vice president, chief
financial officer and treasurer since October 2000. Mr. Baumann has
also served as treasurer of AP Holdings, Inc. from October 2000 to
April 2004. Prior to his appointment as our chief financial officer,
Mr. Baumann was chief financial officer for Warburtons Ltd. in
Bolton, England from January 1993 to October 2000. Mr. Baumann
is a certified public accountant and a member of both the American
Institute of Certified Public Accountants and the Illinois CPA
Society. He received his B.S. degree in 1977 from Northwestern
University and his M.B.A. degree from the Kellogg School of
Management at Northwestern University in 1979.
Mr. Hagerman has served as our executive vice president—
operations since July 2004 and as a senior vice president from
March 1998 through June 2004. He received his B.A. degree in
marketing from the Ohio State University in 1984, and a B.A.
degree in business administration and finance from Almeda
University in 2004.
Mr. Ricchiuto has served as our executive vice president-operations
since December 2002. Mr. Ricchiuto joined APCOA, Inc. in 1980
as a management trainee. He served as vice president—Airport
Properties Central from 1993 until 1994 and as senior vice
president—Airport Properties Central and Eastern United States
from 1994 until 2002. Mr. Ricchiuto received his B.S. degree from
Bowling Green University in 1979.
Mr. Sacks has served as our executive vice president—general
counsel and secretary since the consummation of the combination in
March 1998. Mr. Sacks joined APCOA, Inc. in 1988, and served as
general counsel and secretary since 1988, as vice president,
secretary, and general counsel from 1989, and as senior vice
president, secretary and general counsel from 1997 to March 1998.
Mr. Sacks has also served as secretary of AP Holdings, Inc. from
1989 to April 2004. Mr. Sacks received his B.A. degree, cum laude,
from Northwestern University in 1976 and, in 1979, received his
J.D. degree from Suffolk University where he was a member of the
Suffolk University Law Review.
2000
49
2004
44
2002
48
1998
52
44
Edward E. Simmons
Steven A. Warshauer
Michael K. Wolf
Mr. Simmons has served as our senior vice president—operations
since May 1998. Mr. Simmons has also served as executive vice
president—operations since August 1999. Previously, he was
president, chief executive officer and co-founder of Executive
Parking, Inc. Prior to joining Executive Parking, Inc., Mr. Simmons
was vice president/general manager for Red Carpet Parking Service
and a consultant on facility layout and design and general manager
of J & J Parking. Mr. Simmons is a current board member of the
National Parking Association and the International Parking Institute.
Mr. Simmons is a past executive board member and past president
of the Parking Association of California.
Mr. Warshauer has served as our executive vice president—
operations since the consummation of the combination in
March 1998. Mr. Warshauer joined the Standard Companies in
1982, initially serving as vice president, then becoming senior vice
president. Mr. Warshauer received his B.S. Degree from the
University of Northern Colorado in 1976 with a major in
Accounting.
Mr. Wolf has served as our executive vice president—chief
administrative officer and associate general counsel since the
combination in March 1998. Mr. Wolf served as senior vice
president and general counsel of the Standard Companies from 1990
to January 1998. Mr. Wolf was subsequently appointed executive
vice president of the Standard Companies. Mr. Wolf received his
B.A. degree in 1971 from the University of Pennsylvania and in
1974 received his J.D. degree from Washington University, where
he served as an editor of the Washington University Law Quarterly
and was elected to the Order of the Coif.
1998
55
1998
50
1998
55
We have adopted a Code of Ethics for Certain Executives (the “finance code of ethics”), a code of ethics that applies to our
chief executive officer, chief financial officer, corporate controller and other finance organization employees. The finance
code of ethics is publicly available on our website at www.standardparking.com. If we make any substantive amendments to
the finance code of ethics or grant any waiver, including any implicit waiver from our chief executive officer, chief financial
officer or corporate controller, we will disclose the nature of such amendment or waiver on that website or a report on Form 8-
K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to all information under the caption entitled “Report of the
Compensation Committee,” “Summary Compensation Table,” “Stock Options,” and “Compensation of Outside Directors,”
included in our Proxy Statement.
45
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference to all information under the caption entitled “Beneficial
Ownership of Directors and Executive Officers” and “Beneficial Ownership of More Than Five Percent of Any Class of
Voting Securities” included in our Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to all information under the caption “Certain Transactions”
included in our Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated by reference to all information under the caption “Appointment of
Independent Auditors” and “Independent Auditors’ Fees and Other Matters” included in our Proxy Statement.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
(a)
Financial Statements and Schedules
1.
Financial Statements
Report of Independent Registered Public Accounting Firm
Audited Consolidated Financial Statements
Consolidated Balance Sheets at December 31, 2004 and 2003
For the years ended December 31, 2004, 2003 and 2002:
Consolidated Statements of Operations
Consolidated Statements of Common Stockholders’ Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2.
Financial statement schedule
Schedule II—Valuation and Qualifying Accounts
All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require
submission of the schedule, or because the information required is included in the consolidated financial statements or the
notes thereto.
(b)
3.
Exhibit Listing
Exhibit
Number
Description
3.1
3.2
4.1
Second Amended and Restated Certificate of Incorporation of the Company filed on June 2, 2004 (incorporated
by reference to exhibit 3.1 of the Company’s Form 8-K filed on June 16, 2004).
Amended and Restated By-Laws of the Company effective as of June 2, 2004 (incorporated by reference to
exhibits 3.2 of the Company’s Form 8-K filed on June 16, 2004).
Specimen common stock certificate (incorporated by reference to exhibit 4.1 of Amendment No. 2 to the
Company’s Registration Statement on Form S-1, File No. 333-112652, filed on May 18, 2004).
46
Exhibit
Number
Description
4.2
4.2.1
4.2.2
4.2.3
4.2.4
10.1
10.1.1
Indenture governing the Company’s 91/4% Senior Subordinated Notes due 2008, dated as of March 30, 1998, by
and among the Company, the Subsidiary Guarantors and State Street Bank and Trust Company (incorporated by
reference to exhibit 4.1 of the Company’s Registration Statement on Form S-4, File No. 333-50437, filed on
April 17, 1998).
Supplemental Indenture governing the Company’s 91/4% Senior Subordinated Notes due 2008, dated as of
July 1, 2002, by and among the Company, Standard Parking Corporation IL, Tower Parking, Inc., Virginia
Parking Service, Inc. and State Street Bank and Trust Company (incorporated by reference to exhibit 4.1 of the
Company’s Quarterly Report on Form 10-Q filed for September 30, 2002).
Supplemental Indenture governing the Company’s 91/4% Senior Subordinated Notes due 2008, dated as of
January 11, 2002, by and among the Company, the Subsidiary Guarantors and State Street Bank and Trust
Company (incorporated by reference to exhibit 4.2 of the Company’s Registration Statement on Form S-4, File
No. 333-86008, filed on April 10, 2002).
Supplemental Indenture, dated as of September 21, 1998, among Virginia Parking Service, Inc., the Company,
and State Street Bank and Trust Company (incorporated by reference to exhibit 4.5 of the Company’s Annual
Report on Form 10-K filed for December 31, 1998).
Supplemental Indenture, dated as of July 6, 1998, among S&S Parking, Inc., Century Parking, Inc., Sentry
Parking Corporation, the Company, and State Street Bank and Trust Company (incorporated by reference to
exhibit 4.6 of the Company’s Annual Report on Form 10-K filed for December 31, 1998).
Credit Agreement, dated June 2, 2004 among the Company, various Financial Institutions, LaSalle Bank
National Association with Wells Fargo Bank, N.A. (incorporated by reference to exhibit 10.1 of the Company’s
Form 8-K filed on June 16, 2004).
First Amendment to Credit Agreement dated July 7, 2004 among the Company, various Financial Institutions,
La Salle Bank National Association and Wells Fargo Bank, N.A. (incorporated by reference to exhibit 10.1 of
the Company’s Quarterly Report on Form 10-Q filed for June 30, 2004).
10.2 Amended Rate Cap Transaction Agreement dated as of November 15, 2004 by and among LaSalle and the
10.3
10.4
10.4.1*
10.4.2*
10.5
10.5.1
10.5.2
Company (incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed on November 17, 2004).
Amended Rate Cap Transaction Agreement dated as of November 15, 2004 by and among LaSalle and the
Company (incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed on November 17, 2004).
Employment Agreement, dated as of March 30, 1998 between the Company and Myron C. Warshauer
(incorporated by reference to exhibit 10.6 of the Company’s Registration Statement on Form S-4, File No. 333-
50437, filed on April 17, 1998).
First Amendment to Employment Agreement, dated July 7, 2003 between the Company and Myron C.
Warshauer
Amendment to Employment Agreement, dated as of May 10, 2004 between the Company and Myron C.
Warshauer.
Employment Agreement, dated as of March 26, 1998 between the Company and Michael K. Wolf (incorporated
by reference to exhibit 10.12 of the Company’s Registration Statement on Form S-4, File No. 333-50437, filed
on April 17, 1998).
Amendment to Employment Agreement, dated as of June 19, 2000 between the Company and Michael K. Wolf
(incorporated by reference to exhibit 10.5.1 of the Company’s Registration Statement on Form S-1, File
No. 333-112652, filed on February 10, 2004).
Second Amendment to Employment Agreement, dated as of December 6, 2000, between the Company and
Michael K. Wolf, (incorporated by reference to exhibit 10.22 to the Company’s Annual Report on Form 10-K
filed for December 31, 2000).
47
Exhibit
Number
Description
10.5.3
10.5.4
10.6
10.6.1
10.6.2
10.6.3
10.6.4
10.6.5
10.7
10.7.1
10.7.2
10.8
10.9
10.9.1
10.10
10.11
Third Amendment to Employment Agreement, dated April 1, 2002 between the Company and Michael K. Wolf
(incorporated by reference to exhibit 10.19.3 to the Company’s Annual Report on Form 10-K filed for
December 31, 2002).
Fourth Amendment to Employment Agreement, dated December 31, 2003 between the Company and
Michael K. Wolf (incorporated by reference to exhibit 10.5.4 of the Company’s Registration Statement on
Form S-1, File No. 333-112652, filed on February 10, 2004).
Executive Employment Agreement, including Deferred Compensation Agreement, dated as of August 1, 1999
between Company and James A. Wilhelm (incorporated by reference to exhibit 10.14 of the Company’s Annual
Report of Form 10-K filed for December 31, 1999).
First Amendment to Executive Employment Agreement, dated as of April 25, 2001 between the Company and
James A. Wilhelm (incorporated by reference to exhibit 10.20.1 to the Company’s Annual Report on Form 10-K
filed for December 31, 2002).
Second Amendment to Employment Agreement, dated as of October 19, 2001 between the Company and
James A. Wilhelm (incorporated by reference to exhibit 10.33 of the Company’s Annual Report on Form 10-K
filed for December 31, 2001).
Third Amendment to Executive Employment Agreement, dated as of January 31, 2002 between the Company
and James A. Wilhelm (incorporated by reference to exhibit 10.34 of the Company’s Annual Report on
Form 10-K filed for December 31, 2001).
Fourth Amendment to Executive Employment Agreement, dated as of April 1, 2003 between the Company and
James A. Wilhelm (incorporated by reference to exhibit 10.6.4 of the Company’s Registration Statement on
Form S-1, File No. 333-112652, filed on February 10, 2004).
Fifth Amendment to Executive Employment Agreement dated as of April 30, 2004 between the Company and
James A. Wilhelm (incorporated by reference to exhibit 10.6.5 of Amendment No. 1 to the Company’s
Registration Statement on Form S-1, File No. 333-112652, filed on May 10, 2004.
Employment Agreement, dated May 18, 1998 between the Company and Robert N. Sacks (incorporated by
reference to exhibit 10.24 of the Company’s Annual Report on Form 10-K filed for December 31, 2001).
First Amendment to Employment Agreement, dated as of November 7, 2001 between the Company and
Robert N. Sacks (incorporated by reference to exhibit 10.25 of the Company’s Annual Report on Form 10-K
filed for December 31, 2001).
Second Amendment to Employment Agreement, dated as of August 1, 2003 between the Company and
Robert N. Sacks (incorporated by reference to exhibit 10.7.2 of the Company’s Registration Statement on
Form S-1, File No. 333-112652, filed on February 10, 2004).
Amended and Restated Executive Employment Agreement, dated as of December 1, 2002 between the
Company and John Ricchiuto (incorporated by reference to exhibit 10.22.2 of the Company’s Annual Report on
Form 10-K filed for December 31, 2002).
Employment Agreement between the Company and Steven A. Warshauer (incorporated by reference to
exhibit 10.17 to the Company’s Annual Report on Form 10-K filed for December 31, 1999).
First Amendment to Employment Agreement, dated as of June 1, 2002 between the Company and Steven A.
Warshauer (incorporated by reference to exhibit 10.23.1 to the Company’s Annual Report on Form 10-K filed
for December 31, 2002).
Employment Agreement, dated as of August 1, 1999 between the Company and Edward E. Simmons
(incorporated by reference to exhibit 10.10 of the Company’s Registration Statement on Form S-1, File No. 333-
112652, filed on February 10, 2004).
Amended and Restated Employment Agreement between the Company and G. Marc Baumann (incorporated by
reference to exhibit 10.27 to the Company’s Annual Report on Form 10-K filed for December 31, 2001).
48
Exhibit
Number
Description
10.12
10.14
10.14.1*
10.16
10.17
10.17.1
10.18
10.18.1
10.19
10.20
10.21
10.21.1
10.21.2
10.21.3
Long-Term Incentive Plan dated as of May 1, 2004 (incorporated by reference to exhibit 10.12 of Amendment
No. 1 to the Company’s Registration Statement on Form S-1, File No. 333-112652, filed on May 10, 2004).
Consulting Agreement, dated as of October 16, 2001 between the Company and Shoreline Enterprises, LLC
(incorporated by reference to exhibit 10.36 of the Company’s Annual Report on Form 10-K filed for
December 31, 2001).
Amendment to Consulting Agreement, dated as of May 10, 2004 between the Company and Shoreline
Enterprises, LLC
Consulting Engagement Agreement dated January 11, 2002 between the Company and AP Holdings
(incorporated by reference to exhibit 10.35 of the Company’s Annual Report on Form 10-K filed for
December 31, 2001).
Executive Parking Management Agreement, dated as of May 1, 1998 by and among the Company,
D&E Parking, Edward E. Simmons and Dale G. Stark (incorporated by reference to exhibit 10.32 of the
Company’s Annual Report on Form 10-K filed for December 31, 2002).
First Amendment to Executive Parking Management Agreement, dated as of August 1, 1999 by and among the
Company, D&E Parking, Edward E. Simmons and Dale G. Stark (incorporated by reference to exhibit 10.32.1
to the Company’s Annual Report on Form 10-K filed for December 31, 2002).
Management Agreement dated September 19, 2000 between the Company and Circle Line Sightseeing
Yachts, Inc. (incorporated by reference to exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed
for June 30, 2003).
First Amendment dated June 9, 2003 to the Management Agreement between the Company and Circle Line
Sightseeing Yachts, Inc. (incorporated by reference to exhibit 10.2 of the Company’s Quarterly Report on
Form 10-Q filed for June 30, 2003)
Property Management Agreement, dated as of September 1, 2003 between the Company and Paxton Plaza, LLC
(incorporated by reference to exhibit 10.19 of the Company’s Registration Statement on Form S-1, File No. 333-
112652, filed on February 10, 2004).
Property Management Agreement, dated as of September 1, 2003 between the Company and Infinity
Equities, LLC (incorporated by reference to exhibit 10.20 of the Company’s Registration Statement on Form S-
1, File No. 333-112652, filed on February 10, 2004).
Agreement of Lease, dated as of June 4, 1998 between the Company and LaSalle National Bank, as successor
trustee to LaSalle National Trust, N.A. as successor trustee to LaSalle National Bank. (incorporated by reference
to exhibit 10.21 of the Company’s Registration Statement on Form S-1, File No. 333-112652, filed on
February 10, 2004).
First Amendment to Agreement of Lease, dated as of May 1, 1999 between the Company and LaSalle National
Bank, as successor trustee to LaSalle National Trust, N.A. as successor trustee to LaSalle National Bank
(incorporated by reference to exhibit 10.21.1 of the Company’s Registration Statement on Form S-1, File
No. 333-112652, filed on February 10, 2004).
Second Amendment to Agreement of Lease, dated as of July 27, 2000 between the Company and LaSalle
National Bank, as successor trustee to LaSalle National Trust, N.A. as successor trustee to LaSalle National
Bank (incorporated by reference to exhibit 10.21.2 of the Company’s Registration Statement on Form S-1, File
No. 333-112652, filed on February 10, 2004).
Third Amendment to Agreement of Lease, dated as of September 11, 2003 between the Company and LaSalle
National Bank, as successor trustee to LaSalle National Trust, N.A. as successor trustee to LaSalle National
Bank (incorporated by reference to exhibit 10.21.3 of the Company’s Registration Statement on Form S-1, File
No. 333-112652, filed on February 10, 2004).
49
Exhibit
Number
Description
10.22
10.23
10.23.1
10.24
10.26
10.27
10.28
10.28.1
10.3
14.1
21.1
23.*
31.1*
31.2*
31.3*
32.1*
Exchange and Amendment Agreement dated November 20, 2001 by and among the Company and Fiducia Ltd.
(incorporated by reference to exhibit 10.30 of the Company’s Annual Report on Form 10-K filed for
December 31, 2001).
Employment Agreement between the Company and John V. Holten (incorporated by reference to exhibit 10.23
of Amendment No. 2 to the Company’s Registration Statement on Form S-1, File No. 333-112652, filed on
May 18, 2004).
Side Letters dated May 7, 2004 related to the Employment Agreement dated May 7, 2004 between the Company
and John V. Holten (incorporated by reference to exhibit 10.23.1 of Amendment No. 2 to the Company’s
Registration Statement on Form S-1, File No. 333-112652, filed on May 18, 2004).
Consulting Agreement dated as of March 1, 2004 between the Company and Gunnar E. Klintberg (incorporated
by reference to exhibit 10.24 of Amendment No. 1 to the Company’s Registration Form S-1, File No. 333-
112652, filed on May 10, 2004).
Form of Registration Rights Agreement, dated as of May 27, 2004 between the Company and Steamboat
Industries LLC (incorporated by reference to exhibit 10. 26 of Amendment No. 3 to the Company’s Registration
Statement on Form S-1, File No. 333-112652, filed on May 24, 2004).
Form of Exchange Agreement, dated as of May 27, 2004 between the Company and Steamboat Industries LLC
(incorporated by reference to exhibit 10.27 of Amendment No. 3 to the Company’s Registration Statement on
Form S-1, File No. 333-112652, filed on May 24, 2004).
Stock Purchase Agreement, dated as of May 10, 2004 among the Company, SP Associates , Waverly Partners,
L.P., the Carol R. Warshauer GST Exempt Trust, Myron C. Warshauer, Steamboat Industries LLC and John V.
Holten (incorporated by reference to exhibit 10.28 of Amendment No. 3 to the Company’s Registration
Statement on Form S-1, File No. 333-112652, filed on May 24, 2004).
First Amendment to Stock Purchase Agreement, dated as of May 20, 2004 among the Company, SP Associates,
Waverly Partners, L.P., the Carol R. Warshauer GST Exempt Trust, Myron C. Warshauer, Steamboat Industries
LLC and John V. Holten (incorporated by reference to exhibit 10.28.1 of Amendment No. 3 to the Company’s
Registration Statement on Form S-1, File No. 333-112652, filed on May 24, 2004).
Amended Rate Cap Transaction Agreement dated as of November 15, 2004 by and among LaSalle and the
Company (incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed on November 17, 2004).
Code of Ethics (incorporated by reference to exhibit 14.1 of the Company’s Annual Report on Form 10-K for
December 31, 2002).
Subsidiaries of the Company (incorporated by reference to exhibit 21.1 of the Company’s Registration
Statement on Form S-1, File No. 333-112652 filed on February 10, 2004).
Consent of Independent Registered Public Accounting Firm dated as of March 11, 2005.
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by James A. Wilhelm.
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by G. Marc Baumann
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Daniel R. Meyer
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by James A. Wilhelm, G. Marc
Baumann and Daniel R. Meyer.
* Filed herewith.
50
INDEX TO HISTORICAL FINANCIAL STATEMENTS
Standard Parking Corporation
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2004 and 2003
Consolidated Statements of Operations for each of the three years in the period ended December 31, 2004
Consolidated Statements of Common Stockholders’ Deficit for each of the three years in the period ended
December 31, 2004
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2004
Notes to Consolidated Financial Statements
51
Report of Independent Registered Public Accounting Firm
Board of Directors
Standard Parking Corporation
We have audited the accompanying consolidated balance sheets of Standard Parking Corporation (the “Company”) as of
December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash
flows for each of the three years in the period ended December 31, 2004. Our audits also included the financial statement
schedule listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over
financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated
financial position of the Company at December 31, 2004 and 2003, and the consolidated results of its operations and its
consolidated cash flows for each of the three years in the period ended December 31, 2004, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to
the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
ERNST & YOUNG LLP
Chicago, Illinois
March 11, 2005
52
STANDARD PARKING CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share and per share data)
ASSETS
$
Current assets:
Cash and cash equivalents
Notes and accounts receivable, net
Prepaid expenses and supplies
Total current assets
Leaseholds and equipment:
Equipment
Leasehold improvements
Leaseholds
Construction in progress
Less accumulated depreciation and amortization
Other assets:
Long-term receivables, net
Advances and deposits
Goodwill
Intangible and other assets, net
December 31,
2004
2003
$
10,360
34,608
2,330
47,298
23,735
17,687
34,815
2,385
78,622
(62,141)
16,481
7,317
1,816
118,342
3,848
131,323
8,470
30,923
1,436
40,829
20,804
17,750
34,835
560
73,949
(57,990)
15,959
5,431
2,090
117,390
7,886
132,797
Total assets
$
195,102
$
189,585
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable
Accrued rent
Compensation and payroll withholdings
Property, payroll and other taxes
Accrued insurance and expenses
Accrued special charges
Current portion of obligations under credit agreements and other
Current portion of capital lease obligations
Total current liabilities
Long-term borrowings, excluding current portion:
Obligations under credit agreements
Capital lease obligations
Other
$
Other long-term liabilities
Convertible redeemable preferred stock, series D
Redeemable preferred stock, series C
Common stock subject to put/call rights; 5.01 shares issued and outstanding
Common stockholders’ equity (deficit):
Common stock, par value $.001 per share; 12,000,100 shares authorized; 10,487,003 shares issued and outstanding
as of December 31, 2004, and common stock, par value $1.00 per share, 3,000 shares authorized; 26.3 shares issued
and outstanding in 2003
Additional paid-in capital
Accumulated other comprehensive income (loss)
Accumulated deficit
Total common stockholders’ equity (deficit)
$
26,107
4,871
8,595
1,760
10,320
248
773
2,739
55,413
99,517
4,120
2,601
106,238
18,111
1
—
—
10
193,565
116
(178,352)
15,339
24,971
3,748
6,989
2,289
7,967
1,268
690
2,150
50,072
152,586
2,268
3,385
158,239
19,776
56,399
60,389
10,712
1
15,222
(233)
(180,992)
(166,002)
Total liabilities and common stockholders’ equity (deficit)
$
195,102
$
189,585
See Notes to Consolidated Financial Statements.
53
STANDARD PARKING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for share and per share data)
2004
Years Ended December 31,
2003
2002
Parking services revenue:
Lease contracts
Management contracts
Reimbursement of management contract expense
Total revenue
Costs and expenses:
Cost of parking services:
Lease contracts
Management contracts
Reimbursed management contract expense
Total cost of parking services
Gross profit
Lease contracts
Management contracts
Total gross profit
General and administrative
Depreciation and amortization
Special charges
Management fee-parent company
Non-cash stock option compensation expense (1)
Valuation allowance related to long-term receivables
Total costs and expenses
Operating income
Other expenses (income):
Interest expense
Interest income
Gain on extinguishment of debt and other
Gain (loss) before minority interest and income taxes
Minority interest
Income tax expense (benefit)
Net income (loss) before preferred stock dividends and increase in value of common stock
subject to put/call
Preferred stock dividends
Increase in value of common stock subject to put/call
Net income (loss)
Common Stock Data:
Net income per common share:
Basic
Diluted
Weighted average common shares outstanding:
Basic
Diluted
$
148,752
83,712
$
138,681
76,613
$
331,171
563,635
134,548
34,029
331,171
499,748
14,204
49,683
63,887
33,470
6,957
—
1,500
2,299
—
543,974
19,661
13,369
(534)
(3,832)
9,003
10,658
349
(112)
10,421
(7,243)
(538)
330,243
545,537
125,153
29,439
330,243
484,835
13,528
47,174
60,702
32,907
7,501
1,055
3,000
—
2,650
531,948
13,589
16,797
(238)
(1,757)
14,802
(1,213)
357
411
(1,981)
(15,630)
(1,242)
142,376
78,029
326,146
546,551
128,871
35,201
326,146
490,218
13,505
42,828
56,333
30,309
7,554
2,897
3,000
—
—
533,978
12,573
16,246
(281)
—
15,965
(3,392)
180
252
(3,824)
(13,540)
(970)
$
2,640
$
(18,853)
$
(18,334)
$
$
0.44
0.42
$
$
6,040,389
6,289,591
$
$
—
—
—
—
—
—
—
—
(1) Non-cash stock option compensation expense of $2,299 relates entirely to general and administrative expense
See Notes to Consolidated Financial Statements.
54
STANDARD PARKING CORPORATION
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS’ (DEFICIT) EQUITY
(in thousands, except for share and per share data)
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
(Loss)Income
Accumulated
Deficit
Total
Common Stock
Number of
Shares
Par Value
Balance (deficit) at January 1, 2002
26.3
$
1
$
11,422 $
(803) $
(143,805) $
(133,185)
Net loss before preferred stock
dividends and increase in value of
common stock subject to put/call
Foreign currency translation
adjustments
Comprehensive loss
Preferred stock dividends
Increase in value of common stock
subject to put/call
Exchange of series C Preferred Stock
for series D Preferred Stock
Balance (deficit) at December 31, 2002
26.3
1
3,800
15,222
(3,824)
159
(3,824)
159
(3,665)
(13,540)
(13,540)
(970)
(970)
3,800
(644)
(162,139)
(147,560)
(1,981)
411
(1,981)
411
(1,570)
Net loss before preferred stock
dividends and increase in value of
common stock subject to put/call
Foreign currency translation
adjustments
Comprehensive loss
Preferred stock dividends
Increase in value of common stock
subject to put/call
Balance (deficit) at December 31, 2003
Net income before preferred stock
dividends and increase in value of
common stock subject to put/call
Foreign currency translation
adjustments
Comprehensive income
Preferred stock dividends
Increase in value of common stock
subject to put/call
Redemption of convertible redeemable
preferred stock, series D
Redemption of redeemable preferred
stock, series C
Note assumed by our parent company
related to repurchase of common stock
subject to put/call rights
Non-cash stock-based compensation
Redemption of common stock
Issuance of common stock
Net proceeds from initial public
offering
Issuance of stock grants
Proceeds from exercise of stock options
Balance (deficit) at December 31, 2004
26.3
1
15,222
(233)
(15,630)
(15,630)
(1,242)
(180,992)
(1,242)
(166,002)
10,421
10,421
7,243
56,398
60,389
5,000
2,299
1
—
46,699
214
100
(26.3)
5,456,192
5,000,000
15,044
15,767
(1)
5
5
—
—
$
10,478,003
10
See Notes to Consolidated Financial Statements.
55
193,565 $
$
349
(7,243)
(538)
349
10,770
—
(538)
56,398
60,389
5,000
2,299
—
5
46,704
214
100
116 $
(178,352) $
15,339
STANDARD PARKING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except for share and per share data)
2004
Year Ended December 31,
2003
2002
Operating activities
Net income (loss) before preferred stock dividends and increase in value of common stock subject to
put/call
Adjustments to reconcile net income (loss) to net cash provided by operations:
Depreciation and amortization
Non-cash interest expense
Amortization of deferred financing costs
Amortization of carrying value in excess of principal
Non-cash stock-based compensation
Valuation allowance related to long term receivables
Write off of debt issuance costs
Write off of carrying value in excess of principal related to the14% senior subordinated second lien
notes
Provision (reversal) for losses on accounts receivable
Gain on extinguishment of debt
Changes in operating assets and liabilities:
Notes and accounts receivable
Prepaid assets
Other assets
Accounts payable
Accrued liabilities
Net cash provided by operating activities
Investing activities
Purchase of leaseholds and equipment
Contingent purchase payments
Net cash used in investing activities
Financing activities
Net proceeds from initial public offering
Proceeds from exercise of stock options
Repurchase of common stock subject to put/call rights
Proceeds from long-term borrowings
Proceeds from senior credit facility
Payments on senior credit facility
Payments on long-term borrowings
Payments on joint venture borrowings
Payments of debt issuance costs
Payments on capital leases
Repurchase of 14% senior subordinated second lien notes
Redemption of preferred stock
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
$
10,421
$
(1,981)
$
6,957
279
1,015
(1,308)
2,513
—
2,385
(8,207)
464
—
(6,035)
(894)
(168)
1,136
2,812
11,370
(1,378)
(644)
(2,022)
46,709
100
(6,250)
—
54,550
(40,650)
(145)
(555)
(1,409)
(2,423)
(57,734)
—
(7,807)
349
1,890
8,470
7,501
3,263
1,199
(2,854)
—
2,650
—
(1,172)
(1,029)
(585)
(1,544)
185
1,640
568
5,804
13,645
(1,812)
(709 )
(2,521)
—
—
—
332
4,500
—
(54)
(687)
(2,987)
(1,994)
(5,915)
(2,413)
(9,218)
411
2,317
6,153
Cash and cash equivalents at end of year
$
10,360
$
8,470
$
Cash paid for:
Interest
Income taxes
$
Supplemental disclosures of non-cash activity:
Debt issued for capital lease obligations
Redemption of redeemable preferred stock, series C
Redemption of convertible redeemable preferred stock, series D
Note assumed by our parent company related to repurchase of common stock subject to put/call rights
Issuance of 18% senior convertible redeemable series D preferred stock
Redemption of 9 1/4% senior subordinated notes
Issuance of 14% senior subordinated second lien notes
Issuance of 18% senior convertible redeemable series D preferred stock
Carrying value in excess of principal, related to debt recapitalization
$
$
$
14,796
140
5,076
(60,389)
(56,398)
5,000
—
—
375
—
—
$
$
14,901
323
1,412
—
—
—
—
—
2,347
—
—
See Notes to Consolidated Financial Statements.
56
(3,824)
7,554
3,049
836
(2,655)
—
—
—
—
399
—
7,206
(427)
(6,526)
(10,217)
8,290
3,685
(1,846)
(612)
(2,458)
—
—
—
—
3,000
—
(394)
(882)
(159)
(1,900)
—
(2,500)
(2,835)
159
(1,449)
7,602
6,153
16,656
370
6,590
(8,800)
—
—
5,000
(91,123)
61,608
35,000
16,838
STANDARD PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2004, 2003 and 2002
(In thousands except share and per share data)
Note A. Significant Accounting Policies
Standard Parking Corporation (“Standard” or “the Company”), and its subsidiaries and affiliates manage, operate and develop
parking properties throughout the United States and Canada. The Company is a majority-owned subsidiary of Steamboat
Holdings. The Company provides on-site management services at multi-level and surface facilities for all major markets of the
parking industry. The Company manages approximately 1,896 parking facilities, containing approximately 1,026,336 parking
spaces in 298 cities across the United States and Canada.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures
in which the Company has more than 50% ownership interest. Minority interest recorded in the consolidated statement of
operations is the joint venture partner’s non-controlling interest in consolidated joint ventures. Investments in joint ventures
where the Company has a 50% or less non-controlling ownership interest are reported on the equity method. All significant
intercompany profits, transactions and balances have been eliminated in consolidation.
Parking Revenue
The Company recognizes gross receipts from leased locations management fees and amounts attributable to ancillary services
earned from management contract properties as parking revenue as the related services are provided. Also included in parking
revenue are gains on sales of parking contracts and development fees.
Cost of Parking Services
The Company recognizes costs for leases and non-reimbursed costs from managed facilities as cost of parking services. Cost of
parking services consists primarily of rent and payroll related costs.
Advertising Costs
Advertising costs are expensed as incurred and are included in general and administrative expenses. Advertising expenses
aggregated $456, $412 and $286 for 2004, 2003 and 2002 respectively.
Stock Based Compensation
The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees,
and related interpretations in accounting for the stock options granted to employees and directors. Accordingly, employee and
director compensation expense is recognized only for those options which price is less than fair market value at the
measurement date. The Company has adopted the disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based
Compensation.
57
Cash and Cash Equivalents
Cash equivalents represent funds temporarily invested in money market instruments with maturities of one to five days. Cash
equivalents are stated at cost, which approximates market value.
Allowance for Doubtful Accounts
Accounts receivable, net of the allowance for doubtful accounts, represents our estimate of the amount that ultimately will be
realized in cash. Management reviews the adequacy of its allowance for doubtful accounts on an ongoing basis, using
historical collection trends, aging of receivables, and a review of specific accounts, and makes adjustments in the allowance as
necessary. Changes in economic conditions or other circumstances could have an impact on the collection of existing
receivable balances or future allowance considerations. As of December 31, 2004 and 2003, the Company’s allowance for
doubtful accounts was $3.1 million and $3.3 million, respectively.
Leaseholds and Equipment
Leaseholds, equipment and leasehold improvements are stated at cost. Leaseholds (cost of parking contracts) are amortized on
a straight-line basis over the average contract life of 10 years. Equipment is depreciated on the straight-line basis over the
estimated useful lives of approximately 5 years on average. Leasehold improvements are amortized on the straight-line basis
over the terms of the respective leases or the service lives of the improvements, whichever is shorter (average of approximately
7 years). Assets under capital leases are amortized on the straight-line basis over the terms of the respective leases or the
service lives of the asset. Depreciation and amortization includes losses (gains) on abandonments of leaseholds and equipment
of $89, $364 and $0 in 2004, 2003 and 2002, respectively. Depreciation expense was $5,801, $6,914 and $6,983 in 2004, 2003
and 2002 respectively.
Goodwill
On January 1, 2002, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and
Other Intangible Assets, which eliminates the amortization of goodwill and instead requires that goodwill be tested for
impairment at least annually. The transitional impairment test in 2002 and the annual impairment test of goodwill made by the
company in the fourth quarter for the years ended 2004, 2003 and 2002, respectively, did not require adjustment to the carrying
value of our goodwill.
Long Lived and Finite-Lived Intangible Assets
Long-lived assets and identifiable intangibles with finite lives are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and
used is measured by a comparison of the carrying amount of an asset or group of assets to future undiscounted net cash flows
expected to be generated by the asset or group of assets. If such assets are considered to be impaired, the impairment
recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to
be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
Per the provisions of SFAS No. 142, the Company’s finite lived intangible assets, consisting primarily of non-compete
agreements, are amortized on a straight line basis over the term of the respective agreements which range from 5 to 10 years.
(See Note B).
Debt Issuance Costs
The costs of obtaining financing are capitalized and amortized as interest expense over the term of the respective financing
using a method which approximates the interest method. Debt issuance costs of $1,930, $3,920 and $2,132 at December 31,
2004, 2003 and 2002, respectively, are included in intangibles and other assets in the consolidated balance sheets and are
reflected net of accumulated amortization of $4,004, $3,911 and $3,859 at December 31, 2004, 2003 and 2002, respectively.
58
Financial Instruments
The carrying values of cash, accounts receivable and accounts payable are reasonable estimates of their fair value due to the
short-term nature of these financial instruments. The Company’s 9¼% Senior Subordinated Notes are included in the
Consolidated Balance Sheet at $48,877, which represents the aggregate face value of the notes. Estimated market value at
December 31, 2004 approximates face value for the 9¼% notes. Other long-term debt has a carrying value that approximates
fair value because these instruments bear interest at market rates.
Foreign Currency Translation
The functional currency of the Company’s foreign operations is the local currency. Accordingly, assets and liabilities of the
Company’s foreign operations are translated from foreign currencies into U.S. dollars at the rates in effect on the balance sheet
date while income and expenses are translated at the weighted-average exchange rates for the year. Adjustments resulting from
the translations of foreign currency financial statements are accumulated and classified as a separate component of
stockholders’ deficit.
Interest rate caps
We use a variable rate senior credit facility to finance our operations. This facility exposes us to variability in interest
payments due to changes in interest rates. If interest rates increase, interest expense increases and conversely, if interest rates
decrease, interest expense also decreases. We believe that it is prudent to limit the exposure of an increase in interest rates.
To meet this objective, we entered into two interest rate cap transactions with LaSalle Bank National Association (“LaSalle”),
allowing us to continue to take advantage of LIBOR based pricing under our Credit Agreement while hedging our interest rate
exposure on a portion of our borrowings under the Credit Agreement (“Rate Cap Transactions”). Under each Rate Cap
Transaction, we will receive payments from LaSalle at the end of each quarterly period to the extent that the prevailing three
month LIBOR during that period exceeds our cap rate of 2.5%. The first Rate Cap Transaction caps our interest rate on a $30.0
million principal balance at 2.5% for a total of 18 months. The second Rate Cap Transaction caps our interest rate on a $15.0
million principal balance at 2.5% for a total of nine months. Each Rate Cap Transaction will begin as of January 12, 2005 and
will settle each quarter on a date that coincides with our quarterly interest payment dates under the credit agreement. The
underlying terms of the interest rate cap, including the notional amounts, the duration and reset dates are identical to the
associated debt instruments and therefore hedging results in no ineffectiveness. The interest rate caps are reported at their fair
values and are included as prepaid and other assets on the face of the consolidated balance sheet.
59
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Insurance Reserves
The Company purchases comprehensive liability insurance covering certain claims that occur at parking facilities the Company
leases or manages. In addition, the Company purchases umbrella/excess liability coverage. The Company’s various liability
insurance policies have deductibles of up to $250,000 that must be met before the insurance companies are required to
reimburse the Company for costs incurred relating to covered claims. As a result, the Company is, in effect, self-insured for all
claims up to the deductible levels. The Company applies the provisions of SFAS No. 5, Accounting for Contingencies, in
determining the timing and amount of expense recognition associated with claims against the Company. The expense
recognition is based upon the Company’s determination of an unfavorable outcome of a claim being deemed as probable and
capable of being reasonably estimated, as defined in SFAS No. 5. This determination requires the use of judgment in both the
estimation of probability and the amount to be recognized as an expense. The Company utilizes historical claims experience
along with regular input from third party insurance advisors in determining the required level of insurance reserves. Future
information regarding historical loss experience may require changes to the level of insurance reserves and could result in
increased expense recognition in the future.
Litigation
The Company is subject to litigation in the normal course of our business. The Company applies the provisions of SFAS
No. 5, “Accounting for Contingencies”, in determining the timing and amount of expense recognition associated with legal
claims against us. Management uses guidance from internal and external legal counsel on the potential outcome of litigation in
determining the need to record liabilities for potential losses and the disclosure of pending legal claims. (See Note K).
Recent Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 123 (revised 2004), Share-
Based Payment, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement 123(R)
supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of
Cash Flows. Generally, the approach in Statement 123(R) is similar to the approach described in Statement 123. However,
Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be
recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. Statement
123(R) must be adopted no later than July 1, 2005. We expect to adopt Statement 123(R) on July 1, 2005.
We plan to adopt Statement 123 using the modified-prospective method. Accordingly, the adoption of Statement 123 ( R )’s
fair value method will have a significant impact on our results of operations, although it will have no overall impact on our
financial position. The impact of adoption of Statement 123 ( R ) cannot be predicted at this time because it will depend on
levels of share-based payments granted in the future. However, based upon the current share based payments the impact would
equate to approximately $320 in additional costs on an annual basis.
60
Stock-Based Compensation
We are required under SFAS No. 123, to disclose pro forma information regarding option grants made to our employees based
on specific valuation techniques that produce estimated compensation charges. The pro forma information is as follows (in
thousands, except per-share amounts):
Net income (loss)-as reported
Add: Non-cash stock option compensation expense included in
the reported net income, net of related tax effects
Deduct: Stock-based employee compensation expense using the
fair value method net of related tax effects
Pro-forma net income (loss)
Basic net income per common share- as reported
Basic pro-forma net income per common share
Diluted net income per common share- as reported
Diluted pro-forma net income per common share
December 31,
2002
2003
2004
(in thousands except for per share data)
$
2,640 $
(18,853) $
(18,334)
2,299
—
—
(2,495)
2,444 $
—
(18,853) $
—
(18,334)
.44 $
.41 $
.42 $
.39 $
— $
— $
— $
— $
—
—
—
—
$
$
$
$
$
The estimated weighted average fair value of the options granted was $6.42 for 2004 option grants, using the Black-Scholes
option pricing model with the following assumptions: weighted average dividend yield was 0%, weighted average volatility of
50% was used based upon companies in our industry as our stock is newly issued, weighted average risk free interest based on
zero-coupon U.S. government issues with a remaining term equal to the expected life of the option of 2.77%, and a weighted
average expected term of 7 years.
We issued stock grants totaling 15,044 shares to our outside Directors. On June 2, 2004, 8,696 shares were issued in
conjunction with our initial public offering at the NASDAQ market closing price of $13.09 per share. On December 27, 2004,
we issued 6,348 shares at the NASDAQ market closing price of $15.76 per share. The total value of the grants, $214 thousand,
was recorded as compensation and is included in our general and administrative expenses for the year ended December 31,
2004.
Reclassifications
Certain amounts previously presented in the financial statements of prior periods have been reclassified to conform to current
year presentation.
61
Note B. Net Income Per Common Share
In accordance with SFAS No.128, “Earnings Per Share,” basic net income per share is computed by dividing net income by the
weighted daily average number of shares of common stock outstanding during the period. The weighted daily average number
of shares of common stock excludes shares that have been exercised prior to vesting and are subject to repurchase by us.
Diluted net income per share is based upon the weighted daily average number of shares of common stock outstanding for the
period plus dilutive potential common shares, including stock options using the treasury-stock method.
The following table sets forth the computation of basic and diluted net income per share:
Numerator:
Net income (loss)
Denominator:
Denominator for basic net income per common share:
Weighted average basic shares outstanding
Weighted average of diluted shares outstanding
Basic net income per common share
Dilutive net income per common share
Year Ended
December 31,
December 31,
2004
2003(1)
(in thousands except for share and per share data)
December 31,
2002 (1)
2,640
$
(18,853)
$
(18,334)
6,040,389
6,289,591
0.44
0.42
$
$
—
—
—
—
$
$
—
—
—
—
$
$
$
(1) Earnings per share was not calculated for 2003 and 2002 as the number of outstanding shares were nominal
Note C. Non-Cash Stock Compensation Expense
In accordance with the 2001 Option Plan, outstanding options to purchase 503.86 shares of Series D preferred stock
immediately became fully vested and exercisable upon completion of our IPO. The vested Series D preferred stock options
were then converted into options to purchase an aggregate of 444,836 shares of our common stock which became fully vested
upon completion of our IPO.
We recorded $2.3 million in non-cash stock compensation expense which represented the difference between the fair market
value of $11.50 per share (the IPO price per share) and the exercise price of $6.34 per share on the 444,836 shares converted to
our common stock. In addition, we issued 4,414 options at an exercise price of $11.50, which were immediately vested, on
October 29, 2004 when the fair market value was $12.89 per share and we recorded the difference as compensation expense.
62
Note D. Special Charges
No special charges were recorded for the year ended December 31, 2004. Included in “special charges” in the accompanying
consolidated statement of operations for the years ended December 31, 2003 and 2002 are the following (expenses are cash
unless otherwise stated):
Costs related to the exchange offering
Costs related to refinancing
Employee severance costs
Retroactive prior period insurance adjustments
Provision (reversal) for headquarters reorganization
Incremental integration costs and other
Parent company expenses
Total special charges
Supplemental Disclosure—Special Charges
Accrued at beginning of year
Paid during year
$
$
$
2004
For The Year Ended December 31,
2003
2002
(in thousands)
$
—
343
156
—
—
256
300
982
—
391
215
(320)
1,329
300
1,055
$
2,897
For The Year Ended December 31,
2003
(in thousands)
1,870
(602)
1,268
(228)
$
$
2002
12,057
(10,187)
Accrued at end of year (1)
$
1,040
$
1,268
$
1,870
(1) The 2004 year-end balance includes $792 which is included in other long-term liabilities and consists of future rent
obligations owed for an abandoned facility.
In 2003, costs of $343 were incurred related to evaluation of refinancing alternatives, $300 in costs related to the parent
company, $256 in legal costs incurred on contracts terminated in prior years and severance costs of $156.
In 2002, costs of $982 were incurred for the registration of the 14% senior subordinated second lien notes, $391 in severance
for key management personnel and regional administrative personnel and $215 for insurance costs in accordance with ERISA
requirements. The $1,329 of incremental integration costs and other consists of $816 in legal and settlement costs incurred on
contracts terminated in prior years and $513 in prior period rent and other costs and $300 in costs related to the parent
company. The $(320) is a partial reversal of a provision for headquarters reorganization as the actual costs incurred were less
than anticipated.
63
Note E. Net Gain from Extinguishment of Debt and Other
The net gain from extinguishment of debt consists of the following (in thousands):
(Loss) gain:
Pre-payment penalty on former senior credit facility
Professional fees related to extinguishment of debt
Additional premium on 14% Notes
Purchase of common stock options
Write-off of debt issuance costs related to former senior
credit facility
Write-off of carrying value in excess of principal related
to 14% Notes
Gain on repurchase of 14% Notes
Net gain from extinguishment of debt and other
$
$
Year Ended
December 31,
2004
December 31,
2003
(in thousands)
(640) $
(310)
(740)
(300)
(2,385)
8,207
—
3,832
$
—
—
—
—
—
1,172
585
1,757
Note F. Borrowing Arrangements
Long-term borrowings, in order of preference, consist of:
Interest
Rate(s)
Due Date
December 31, 2004
December 31, 2003
Amount Outstanding
Senior Credit Facility
Senior Subordinated Second Lien Notes
Senior Subordinated Notes
Carrying value in excess of principal
Joint venture debentures
Capital lease obligations
Obligations on Seller notes and other
Various
14.00%
9 ¼%
Various
11.00
Various
Various
June 2007
$
December 2006
March 2008
Various
Various
Various
Various
Less current portion
(in thousands)
$
50,000
—
48,877
640
1,308
6,859
2,066
109,750
3,512
36,100
57,455
48,877
10,155
1,863
4,418
2,211
161,079
2,840
$
106,238
$
158,239
In conjunction with our initial public offering, on June 2, 2004, we repurchased our outstanding 14% Senior Subordinated
Second Lien Notes (“14% Notes”) for $57.7 million. The 14% Notes were issued in January 2002. Interest accrued at the rate
of 14% per annum and was payable semi-annually in a combination of cash and additional registered notes (the “PIK Notes”),
in arrears on June 15 and December 15, commencing on June 15, 2002. Interest in the amount of 10% per annum was paid in
cash, and interest in the amount of 4% per annum was paid in PIK Notes. We made each interest payment to the holders of
record on the immediately preceding June 1 and December 1. PIK Notes were issued in denominations of $100 principal
amount and integral multiples of $100. The amount of PIK Notes issued was rounded down to the nearest $100 with any
fractional amount refunded to the holder as cash.
The 9 1/4% Senior Subordinated Notes (the “9 1/4% Notes”) were issued in September of 1998 and are due in March of 2008.
64
The 9 1/4% Notes and senior credit facility contain covenants that limit us from incurring additional indebtedness and issuing
preferred stock, restrict dividend payments, limit transactions with affiliates and restrict certain other transactions. Substantially
all of our net assets are restricted under these provisions and covenants (See Note Q).
A roll-forward schedule of the 14% Notes, 9 1/4% Notes and carrying value in excess of principal is as follows:
14% Notes
9 1/4% Notes
(in thousands)
Carrying
value
in excess of
principal
Balance at December 31, 2003
Amortization of carrying value
PIK Notes issued
Repurchase of 14% Senior Subordinated Second Lien Notes
and write off of carrying value in excess of principal
Balance at December 31, 2004
$
$
$
57,455
—
279
(57,734)
—
$
$
48,877
—
—
—
48,877
$
10,155
(1,308)
—
(8,207)
640
We entered into a new senior credit agreement as of June 2, 2004 with LaSalle Bank National Association, as agent and Wells
Fargo Bank, N.A., as syndication agent. LaSalle and Wells Fargo have subsequently assigned a portion of their loans and
rights as lender to Fifth Third Bank Chicago and U.S. Bank National Association.
The revolving senior credit facility consists of a $90.0 million revolving credit facility that will expire on June 2, 2007. The
credit facility includes a letter of credit sub-facility with a sublimit of $30.0 million provided by Wells Fargo and a swing line
sub-facility with a sublimit of $5.0 million.
The revolving credit facility bears interest, at our option, at either (1) LIBOR plus the applicable LIBOR Margin ranging
between 2.50% and 3.25% depending on the ratio of our total funded indebtedness to our EBITDA from time to time (“Total
Debt Ratio”) or (2) the Base Rate (as defined below) plus the applicable Base Rate Margin raging between 1.00% and 1.75%
depending on our Total Debt Ratio. We may elect interest periods of one, two, three or six months for LIBOR based
borrowings. The Base Rate is the greater of (i) the rate publicly announced from time to time by LaSalle as its “prime rate”, or
(ii) the overnight federal funds rate plus 0.50%.
The senior credit facility includes the following covenants; fixed charge ratio, senior debt to EBITDA ratio, total debt to
EBITDA ratio and a limit on net annual capital expenditures, and limit on our ability to incur additional indebtedness, issue
preferred stock or pay dividends and contain certain other restrictions on our activities. We are required to repay borrowings
under the senior credit facility out of the proceeds of future issuances of debt or equity securities and asset sales, subject to
certain exceptions. The new senior credit facility is secured by a first lien on substantially all of our assets and any
subsequently acquired assets (including a pledge of 100% of the stock of our existing and future domestic guarantor
subsidiaries and 65% of the stock of our existing and future foreign subsidiaries). At December 31, 2004 we were in
compliance with all of the covenants.
At December 31, 2004, we had $23.5 million of letters of credit outstanding under the senior credit facility, borrowings against
the senior credit facility aggregated $50.0 million, and we had $16.5 million available under the senior credit facility.
Consolidated joint ventures have entered into four agreements for stand-alone development projects providing nonrecourse
funding. These joint venture debentures are collateralized by the specific contracts that were funded and approximate the net
book value of the related assets.
We have entered into various financing agreements, which were used for the purchase of equipment.
65
Redeemable Preferred Stock, Series C
In connection with our IPO, we exchanged a portion of our 11 ¼% Redeemable Preferred Stock (the “Series C preferred
stock”), that was owned by Steamboat Industries LLC for 5,789,499 shares of our common stock. Our remaining Series C
preferred stock was contributed to us by our parent as a capital contribution. As of December 31, 2004, there are no
outstanding shares of Series C preferred stock.
The Series C preferred stock had an initial liquidation preference equal to $1.0 million per share or $40.7 million in the
aggregate. The Series C preferred stock accrued dividends on a cumulative basis at 11 1/4% per year. Conversion was fixed by
resolution of the Board of Directors and the shares have no voting rights except as to alterations or changes that may adversely
affect the holders of the Series C preferred stock.
In January 2002, we redeemed $1.5 million and $0.1 million of the Series C preferred stock held by AP Holdings in two
separate transactions for cash of $1.6 million. On June 17, 2002, we redeemed an additional $0.9 million of Series C preferred
stock held by AP Holdings for $0.9 million in cash. On September 9, 2003, we redeemed an additional $2.4 million of the
Series C preferred stock held by AP Holdings. The proceeds received by AP Holdings were used by it to repurchase, directly or
indirectly, its outstanding 11 1/4% senior discount notes.
Beginning balance
Dividends accumulated
Exchange for common stock
Ending balance
Series C preferred stock 11 1/4%
For the period ended
December 31, 2004
December 31, 2003
Shares
Value
Shares
Value
(in thousands except for share data)
$
31.9004
—
(31.9004)
60,389
2,876
(63,265)
$
33.2194
—
(1.319)
56,347
6,455
(2,413)
—
$
—
31.9004
$
60,389
Convertible Redeemable Preferred Stock, Series D
In connection with our IPO, Steamboat Industries LLC and its wholly owned subsidiary, Steamboat Industries N.V., acquired
all but ten shares of our outstanding 18% Senior Convertible Redeemable Series D Preferred Stock (the “Series D preferred
stock”). Steamboat Industries LLC then contributed its Series D preferred stock to us as a capital contribution. We then retired
all shares of Series D preferred stock contributed to us and now have only ten shares of Series D preferred stock outstanding.
The Series D preferred stock has an initial liquidation preference equal to $100 per share or $1,000 in the aggregate.
66
Prior to our IPO and, in connection with our recapitalization, we issued 3,500 shares of the Series D preferred stock to
Fiducia, Ltd. that had an initial liquidation preference equal to $10,000 per share or $35.0 million in the aggregate. The
Series D preferred stock accrued dividends on a cumulative basis at 18% per year. Conversion was upon occurrence of an IPO
at a rate related to the IPO price and the shares had no voting rights except as to creation of any class or series of shares ranking
senior to the Series D preferred stock. We were required to redeem Series D preferred stock at the election of the holder any
time on or after June 15, 2008. The number of shares of Series D preferred stock authorized for issuance was 17,500.
Series D preferred stock 18%
For the period ended
December 31, 2004
December 31, 2003
Shares
Value
Shares
Value
(in thousands except for share data)
$
4,000
—
(3,990)
56,399
4,367
(60,765)
$
4,000
—
—
47,224
9,175
—
10
$
1
4,000
$
56,399
Beginning balance
Dividends accumulated
Retirement
Ending balance
Note G. Income Taxes
At December 31, 2004 the Company had $72.3 million of federal net operating loss (NOLs) carry forwards and $5.6 million of
net cumulative temporary differences which will provide future tax deductions. Assuming a 39% tax rate, the NOLs and net
temporary differences create a deferred tax asset of $30.9 million. Due to our historical financial results, a full valuation
allowance has been recorded on the net deferred tax assets. The Company has net operating loss carry forwards of $72.3
million for federal income tax purposes that expire in years 2012 through 2024.
As a result of the initial public offering completed in June of 2004, an ownership change occurred under Internal Revenue
Code Section 382 which limits our ability to use pre-change NOLs to reduce future taxable income.
A reconciliation of the Company’s reported income tax expense, (benefit) to the amount computed by multiplying
income/(loss) before income taxes by the effective federal income tax rate is as follows:
Statutory provision (benefit)
Permanent differences
State taxes, net of federal benefit
Effect of foreign tax rates
Reduction of foreign tax reserves
Change in valuation allowance
$
2004
2003
2002
$
3,505
32
3
88
(449)
3,179
(3,291)
$
(in thousands)
(534 )
187
20
64
—
(264)
675
(1,215)
86
13
(44)
—
(1,160)
1,412
Income tax, (benefit) expense
$
(112) $
411
$
252
Income tax, (benefit) expense consists of the following:
Current:
Foreign
State
2004
2003
(in thousands)
2002
$
(116) $
4
$
381
30
Income tax (benefit) expense
$
(112) $
411
$
232
20
252
67
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amount used for income tax purposes. Significant components of the Company’s deferred
tax assets and liabilities as of December 31, 2004 and 2003 are as follows:
Net operating loss carry forwards
Accrued expenses
Carrying value in excess of principal
Accrued compensation
Tax credit carry forwards
Reserves for special charges
Tax over book depreciation and amortization
Net deferred tax assets before valuation allowance
Less: valuation allowance for deferred tax assets
$
2004
2003
(in thousands)
28,189 $
7,752
250
4,697
712
379
41,979
(11,041)
30,938
(30,938)
25,730
7,734
3,960
2,500
1,094
437
41,455
(7,226)
34,229
(34,229)
Net deferred tax assets
$
— $
—
For financial reporting purposes, a valuation allowance for net deferred tax assets will continue to be recorded until realization
of such assets is more likely than not. Taxes paid, which relate to certain states and foreign jurisdictions, were $140, $323 and
$370 in 2004, 2003 and 2002, respectively.
Note H. Benefit Plans
The Company offers deferred compensation arrangements for certain key executives and sponsors an employees’ savings and
retirement plan in which certain employees are eligible to participate. Subject to their continued employment by the Company,
certain employees offered supplemental pension arrangements will receive a defined monthly benefit upon attaining age 65. At
December 31, 2004, 2003 and 2002, the Company has accrued $2,652, $2,614 and $2,509, respectively, representing the
present value of the future benefit payments.
Participants in the savings and retirement plan may elect to contribute a portion of their compensation to the plan. The
Company, contributes an amount in cash or other property as required by the plan. Expenses related to these plans amounted to
$817, $784, and $872 in 2004, 2003 and 2002, respectively.
The Company also contributes to two multi-employer defined contribution and nine multi-employer defined benefit plans
which cover certain union employees. Expenses related to these plans were $483, $566 and $1,119 in 2004, 2003 and 2002,
respectively.
68
The following table summarizes the transactions pursuant to our stock option plans for the last three years ended December 31.
Outstanding at December 31, 2001
Granted
Exercised
Canceled
Outstanding at December 31, 2002
Granted
Exercised
Canceled
Outstanding at December 31, 2003
Granted
Exercised
Canceled
Outstanding at December 31, 2004
Number of
Shares
Weighted Average
Exercise Price
$
$
—
503.86
—
—
503.86
—
—
—
503.86
$
$
605,771
(15,767) $
(503.86) $
—
5,600.00
—
—
5,600.00
—
—
—
5,600.00
7.71
6.34
5,600.00
590,004
$
7.71
At December 31, 2004, options to purchase 433,483 shares of common stock were exercisable at a weighted average price of
$6.39 per share.
Note I. Leases and Contingencies
The Company operates parking facilities under operating leases expiring on various dates, generally prior to 2017. Certain of
the leases contain options to renew at the Company’s discretion.
Total future annual rent expense is not determinable due to the application of percentage factors based on revenues. At
December 31, 2004, the Company’s minimum rental commitments, excluding contingent rent provisions under all non-
cancelable leases with remaining terms of more than one year, are as follows:
2005
2006
2007
2008
2009
2010 and thereafter,
(in thousands)
22,408
19,285
17,069
13,312
10,115
26,403
108,592
$
$
Rent expense, including contingent rents, was $102,300, $94,105 and $96,682 in 2004, 2003 and 2002, respectively.
Contingent rent expense was $79,892, $73,558 and $76,088 in 2004, 2003 and 2002, respectively.
In the normal course of business, the Company is involved in disputes, generally regarding the terms of lease agreements. In
the opinion of management, the outcome of these disputes and litigation will not have a material adverse effect on the
consolidated financial position or operating results of the Company.
69
Note J. Management Contracts and Related Arrangements with Affiliates
We have management contracts to operate two surface parking lots in Chicago. Steven A. Warshauer and Michael K. Wolf
own membership interests in a limited liability company that is a member of the limited liability companies that own those lots.
We received a total of $39,800 in 2004, $39,200 in 2003 and $38,300 in 2002 under the applicable management contracts.
We entered into a management agreement with D&E Parking, Inc., a company in which two of our officers have an interest. In
consideration of the services provided by D&E, we paid D&E an annual base fee of $364,600 in 2004, $358,000 in 2003 and
$325,000 in 2002. On December 31, 2000, we entered into an agreement to sell, at fair market value, certain contract assets to
D&E Parking, Inc. We continue to operate the parking facilities and receive management fees and reimbursement for support
services in connection with the operation of the parking facilities. We received a total of $71,900 in 2004, $133,000 in 2003
and $116,000 in 2002 under this arrangement. Standard Parking provides property management services to Elmwood Villas, a
residential apartment complex in Las Vegas and Paxton Plaza, a shopping center in Los Angeles. Both of these properties are
controlled by entities affiliated with D&E. We expect to expand our property management services for entities controlled by
D&E.
We entered into a management agreement dated as of September 19, 2000, with Circle Line Sightseeing Yachts, Inc. to
manage and operate certain parking facilities located along the Hudson River and Piers located in New York City and under the
control of Circle Line. Circle Line is approximately 41.25% indirectly owned by John V. Holten’s immediate family. Mr.
Holten was previously a Director of New York Cruise Lines, Inc., which owned all of the outstanding stock of Circle Line,
from 1990 to February 2005. We received a total of $71,400 in 2004, $131,400 in 2003 and $66,000 in 2002 under this
arrangement. Additionally, Circle Line has the right to require us to temporarily advance to Circle Line on or before each
December 31st and April 1st the anticipated net profit in increments of $100,000 each. We made an advance of $200,000 in
2004 and a total of $100,000 remains outstanding. We anticipate collecting this amount prior to June 2005.
Note K. Legal Proceedings
We are subject to various claims and legal proceedings that consist principally of lease and contract disputes. We consider
these claims and legal proceedings to be routine and incidental to our business, and in the opinion of management, the ultimate
liability with respect to these proceedings and claims will not materially affect our financial position, operations or liquidity.
Note L. Capital Leases
Property under capital leases included within equipment is as follows: (in thousands)
Service vehicles
Computer equipment
Parking equipment
Less: Accumulated depreciation
December 31,
2004
2003
$
$
8,425 $
2,537
1,698
12,660
5,009
7,651 $
5,774
997
1,388
8,159
3,450
4,709
70
Future minimum lease payments under capital leases at December 31, 2004 together with the present value of the minimum
lease payments are as follows:
2005
2006
2007
2008
2009
Total minimum payments
Less: Amounts representing interest
Present value of minimum payments
Less: Current portion
Total long-term portion
$
$
2,917
2,071
1,261
819
237
7,305
(446)
6,859
(2,739)
4,120
Note M. Goodwill and Intangible Assets
As of December 31, 2004, 2003 and 2002, the Company’s finite lived intangible assets amounted to $56, $2,244 and $2,815,
respectively, net of accumulated amortization of $676, $3,544 and $3,242, respectively, which primarily consist of non-
compete agreements amortized over their useful lives.
A roll forward of goodwill for the periods presented is as follows: (in thousands)
Balance at beginning of year
Effect of foreign currency translation
Contingency payments related to prior acquisitions
Balance at end of year
For the Year Ended December 31,
2004
2003
$
$
117,390 $
308
644
118,342 $
115,944
737
709
117,390
Amortization expense for intangible assets during the year ended December 31, 2004 was $496. Estimated amortization
expense for intangible assets for the year ended 2005 is $56.
On October 3, 2004, a Consulting Agreement dated March 20, 1998 between us and Sidney Warshauer, a former owner of
ours, was terminated by its terms as a result of Mr. Warshauer’s death. We recorded a one-time non-cash charge to
amortization expense in the fourth quarter of 2004 reflecting the write-off of the net unamortized balance of Mr. Warshauer’s
covenant not to compete of $570,000.
Note N. Long-term Receivables
Long-term receivables, net, consist of the following:
Bradley International Airport
Guarantor payments
Other Bradley related, net
Valuation allowance
Net amount related to Bradley
Other long-term receivables, net
Total long-term receivables, net
Amount Outstanding
December 31, 2004
December 31, 2003
(in thousands)
6,473
2,491
(2,484)
6,480
836
7,316
$
$
4,471
2,611
(2,650)
4,432
999
5,431
$
$
71
We are the lessee under a 25-year lease with the State of Connecticut that expires on April 6, 2025, under which we lease the
surface parking and 3,500 garage parking spaces at Bradley International Airport located in the Hartford, Connecticut
metropolitan area. The parking garage was financed on April 6, 2000 through the issuance of $47.7 million of State of
Connecticut special facility revenue bonds. The Bradley lease provides that we deposit with a trustee for the bondholders all
gross revenues collected from operations of the surface and garage parking, and from these gross revenues, the trustee pays
debt service on the special facility revenue bonds, operating and capital maintenance expenses of the surface and garage
parking facilities and specific annual guaranteed minimum payments to the State. Principal and interest on the Bradley special
facility revenue bonds increase from approximately $3.6 million in lease year 2002 to approximately $4.5 million in lease year
2025. Our annual guaranteed minimum payments to the State increase from approximately $8.3 million in lease year 2002 to
approximately $13.2 million in lease year 2024.
To the extent that monthly gross receipts are not sufficient for the trustee to make the required payments we are obligated,
pursuant to our guaranty agreement, to deliver the deficiency amount to the trustee within three business days of being notified.
We are responsible for these deficiency payments regardless of the amount of utilization for the Bradley parking facilities. We
made deficiency payments of $2.0 million, net of repayments of $0.1 million in the period ended December 31, 2004 and
$3.3 million in the year ended December 31, 2003 and $1.2 million in the year-ended December 31, 2002.
We recorded $2.7 million as a valuation allowance related to long-term receivables during the year ended December 31, 2003.
The amount was sufficient to cover all net receivables related to Bradley Airport other than the guarantor payments. There was
no additional allowance recorded in the period ended December 31, 2004. It is anticipated that we will continue to reflect a
valuation allowance against these receivables until the collectibility becomes more assured. In September 2004, we received
payment of approximately $0.2 million which reduced the other Bradley related amount and we reversed an equal amount of
the valuation allowance.
Note O. Initial Public Offering
In June 2004, we closed our initial public offering and sale of 4,666,667 shares of common stock, including the underwriters’
exercise of an over-allotment option, at a price of $11.50 per share. A total of $53.7 million in gross proceeds was raised from
this offering. After deducting the underwriting discount of $3.8 million, and offering expenses of $3.2 million, net proceeds to
us were $46.7 million. In conjunction with this offering, we entered into a new $90.0 million senior credit facility and
redeemed our 14% Notes in the amount of $57.7 million. In addition, we paid $1.6 million of interest premium on the 14%
Notes, $0.8 million of interest previously deferred on the term loan for the old senior credit facility, $6.6 million to purchase
the common stock subject to put/call rights and any remaining existing stock options of the common stock (plus a $5.0 million
note assumed by our parent company), $1.4 million in debt issuance costs for the new senior credit facility and $0.3 million for
professional fees related to the exchange of debt.
Note P. Domestic and foreign operations
Our business activities consist of domestic and foreign operations. Foreign operations are conducted in Canada. Revenue
attributable to foreign operations were less than 10% of consolidated revenues for each of the years ended December 31, 2004,
2003 and 2002.
72
A summary of information about our foreign and domestic operations is as follows (in thousands):
Total revenues, excluding reimbursement of management contract
expenses:
Domestic
Foreign
Consolidated
Operating income:
Domestic
Foreign
Consolidated
Net income (loss) before minority interest and income taxes:
Domestic
Foreign
Consolidated
Identifiable assets:
Domestic
Foreign
Consolidated
2004
Year ended December 31,
2003
2002
$
$
$
$
$
$
$
$
229,915
2,549
232,464
17,971
1,690
19,661
8,946
1,712
10,658
185,095
10,007
195,102
$
$
$
$
$
$
$
$
213,148
2,146
215,294
12,027
1,562
13,589
$
$
$
$
(2,389) $
1,176
(1,213) $
179,737
9,848
189,585
217,881
2,524
220,405
10,814
1,759
12,573
(5,089)
1,697
(3,392)
73
Note Q. Subsidiary Guarantors
Substantially all of the Company’s direct or indirect wholly owned active domestic subsidiaries, fully, unconditionally, jointly
and severally guarantee the Senior Subordinated Notes discussed in Note F. Separate financial statements of the guarantor
subsidiaries are not separately presented because, in the opinion of management, such financial statements are not material to
investors. The non-guarantor subsidiaries include joint ventures, wholly owned subsidiaries of the Company organized under
the laws of foreign jurisdictions and inactive subsidiaries, all of which are included in the consolidated financial statements.
The following is summarized combining financial information for Standard, the guarantor subsidiaries of the Company and the
non-guarantor subsidiaries of the Company:
Standard
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Eliminations
Total
$
December 31, 2004
Balance Sheet Data:
Current assets:
Cash and cash equivalents
Notes and accounts receivable, net
Prepaid expenses and supplies
Total current assets
Leaseholds and equipment, net
Long term receivables, net
Advances and deposits
Goodwill
Intangible and other
Investment in subsidiaries
Total assets
Current liabilities:
Accounts payable
Accrued and other current liabilities
Current portion of long-term borrowings
Total current liabilities
Long-term borrowings, excluding current portion
Other long-term liabilities
Convertible redeemable preferred stock, series D
Common stockholders’ equity (deficit):
Common stock, par value $.001 per share;
12,000,100 shares authorized; 10,87,003 shares
issued and outstanding
Additional paid-in capital
Accumulated other comprehensive income
Accumulated (deficit) equity
Total common stockholders’ equity (deficit)
Total liabilities and common stockholders’ equity
(deficit)
8,262
27,841
2,290
38,393
14,900
7,317
1,590
110,637
3,509
11,319
187,665
24,306
22,826
2,708
49,840
105,153
17,332
1
10
193,562
—
(178,233)
15,339
187,665
$ $
590
29
619
263
—
—
3,585
48
—
4,515
215
1,011
—
1,226
10
—
—
—
2
—
3,277
3,279
4,515
2,098
6,177
11
8,286
1,318
—
226
4,120
291
—
14,241
1,586
1,957
804
4,347
1,075
779
—
—
1
116
7,923
8,040
—
—
—
—
—
—
—
—
(11,319)
(11,319)
—
—
—
—
—
—
—
—
—
(11,319)
(11,319)
10,360
34,608
2,330
47,298
16,481
7,317
1,816
118,342
3,848
—
195,102
26,107
25,794
3,512
55,413
106,238
18,111
1
10
196,565
116
(178,352)
15,339
14,241
(11,319)
195,102
74
Standard
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Eliminations
Total
21,993
160
22,153
—
22,153
20,147
64
20,211
—
20,211
1,846
96
1,942
—
215
—
—
1,727
1
—
—
1
1,726
—
—
—
1,726
—
—
1,726
11,518
4,598
16,116
—
16,116
10,027
1,860
11,887
—
11,887
1,491
2,738
4,229
815
632
—
—
2,782
197
(84)
—
113
2,669
186
(122)
—
2,605
—
—
2,605
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4,331)
(4,331)
—
—
(4,331)
148,752
83,712
232,464
331,171
563,635
134,548
34,029
168,577
331,171
499,748
14,204
49,683
63,887
33,470
6,957
1,500
2,299
19,391
13,369
(534)
(3,832)
9,003
10,658
349
(112)
—
10,421
7,243
538
2,640
Income Statement Data:
Parking services revenue:
Lease contracts
Management contracts
Reimbursement of management contract expense
Total revenue
Cost of parking services:
Lease contracts
Management contracts
Reimbursement of management contract expense
Total cost of parking services
Gross profit:
Lease contracts
Management contracts
Total gross profit
General and administrative expenses
Depreciation and amortization
Management fee-parent company
Non-cash stock option compensation expense
Operating income
Other expenses (income):
Interest expense
Interest income
Net gain from extinguishment of debt
Income before minority interest and income taxes
Minority interest
Income tax expense (benefit)
Equity in earnings of subsidiaries
Net income before preferred stock dividends and
increase in value of common stock subject to
put/call rights
Preferred stock dividends
Increase in value of common stock subject to
put/call rights
Net income (loss)
115,241
78,954
194,195
331,171
525,366
104,374
32,105
136,479
331,171
467,650
10,867
46,849
57,716
32,655
6,110
1,500
2,299
14,882
13,171
(450)
(3,832)
8,889
6,263
163
10
4,331
10,421
7,243
538
2,640
75
$
Cash Flow Data:
Operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities
Depreciation and amortization
Non-cash interest expense
Amortization of deferred financing costs
Amortization of carrying value in excess of
principal
Non-cash stock option compensation expense
Provision (reversal) for losses on accounts
receivable
Write-off of debt issuance costs
Write-off of carrying value in excess of principal
related to the 14% Notes
Change in operating assets and liabilities
Net cash provided by (used in) operating activities
Investing activities:
Purchase of leaseholds and equipment
Contingent purchase payments
Net cash used in investing activities
Financing activities:
Net proceeds from initial public offering
Proceeds from exercise of stock options
Repurchase of common stock subject to put/call
rights
Proceeds from senior credit facility
Payments on long-term borrowings
Payments on joint venture borrowings
Payments on debt issuance costs
Payments on capital leases
Repurchase of 14% senior subordinated second lien
notes
Net cash used in financing activities
Effect of exchange rate changes
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
Standard
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Eliminations
Total
10,421
$
1,726
$
2,605
$
(4,331) $
10,421
6,110
279
1,015
(1,308)
2,513
408
2,385
(8,207)
(840)
12,776
(1,378)
(644)
(2,022)
46,709
100
(6,250)
13,900
(101)
—
(1,409)
(2,423)
215
—
—
—
—
28
—
—
(200)
1,769
—
—
—
—
—
—
—
—
—
—
—
(54,734)
(7,208)
—
3,546
6,660
10,206
$
—
—
—
1,769
78
1,847
$
632
—
—
—
—
28
—
—
(2,109)
1,156
—
—
—
—
—
—
—
(44)
(555)
—
—
—
(599)
349
906
1,732
2,638
—
—
—
—
—
—
—
—
—
(4,331)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4,331)
—
(4,331) $
$
6,957
279
1,015
(1,308)
2,513
464
2,385
(8,207)
(3,149)
11,370
(1,378)
(644)
(2,022)
46,709
100
(6,250)
13,900
(145)
(555)
(1,409)
(2,423)
(54,734)
(7,807)
349
1,890
8,470
10,360
76
December 31, 2003
Balance Sheet Data:
Current assets:
Cash and cash equivalents
Notes and accounts receivable, net
Prepaid expenses and supplies
Total current assets
Leaseholds and equipment, net
Long term receivables, net
Advances and deposits
Goodwill
Intangible and other
Investment in subsidiaries
Total assets
Current Liabilities:
Accounts payable
Accrued and other current liabilities
Current portion of long-term borrowings
Total current liabilities
Long-term borrowings, excluding current portion
Other long-term liabilities
Convertible redeemable preferred stock, series D
Redeemable preferred stock, series C
Common stock subject to put/call rights; 5.01
shares issued and outstanding
Common stockholders’ equity (deficit):
Common stock, par value $1 per share; 3000 shares
authorized; 26.3 shares issued and outstanding
Additional paid-in-capital
Accumulated other comprehensive loss
Accumulated (deficit) equity
Total common stockholders’ (deficit) equity
Total liabilities and common stockholders’ (deficit)
equity
$
$
$
Standard
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Eliminations
Total
$
$
6,660
25,889
1,421
33,970
13,518
5,431
1,810
110,032
7,544
8,573
180,878
23,201
18,825
1,922
43,948
156,325
19,107
56,399
60,389
10,712
1
15,221
—
(181,224)
(166,002)
$
$
78
542
—
620
381
—
—
3,545
119
—
4,665
321
663
—
984
20
—
—
—
—
—
—
—
3,661
3,661
1,732
4,492
15
6,239
2,060
—
280
3,813
223
—
12,615
1,449
2,773
918
5,140
1,894
669
—
—
—
$
$
— $
8,470
—
30,923
—
1,436
—
40,829
—
15,959
—
5,431
—
2,090
—
117,390
—
7,886
—
(8,573)
(8,573) $ 189,585
—
—
—
—
—
—
—
—
—
24,971
22,261
2,840
50,072
158,239
19,776
56,399
60,389
10,712
—
1
(233)
5,144
4,912
—
—
—
(8,573)
(8,573)
1
15,222
(233)
(180,992)
(166,002)
180,878
$
4,665
$
12,615
$
(8,573) $ 189,585
77
Standard
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Eliminations
Total
Income Statement Data:
Parking services revenue:
Lease contracts
Management contracts
Reimbursement of management contract expense
Total revenue
Cost of parking services:
Lease contracts
Management contracts
Reimbursement of management contract expense
Total cost of parking services
Gross profit:
Lease contracts
Management contracts
Total gross profit
General and administrative expenses
Depreciation and amortization
Special Charges
Management fee—parent company
Valuation allowance related to long-term receivable
Operating income
Other expenses (income):
Interest expense
Interest income
Net gain from extinguishment of debt
Income before minority interest and income taxes
Minority interest
Income tax expense
Equity in earnings of subsidiaries
Net (loss) income before preferred stock dividends
and increase in value of common stock subject to
put/call rights
Preferred stock dividends
Increase in value of common stock subject to
put/call rights
Net (loss) income
106,378
72,410
330,243
509,031
96,130
28,063
330,243
454,436
10,248
44,347
54,595
32,084
6,408
866
3,000
2,650
9,587
16,531
(141)
1,757
(5,046)
151
240
3,456
(1,981)
(15,630)
(1,242)
(18,853)
22,114
181
—
22,295
20,158
53
—
20,211
1,956
128
2,084
—
213
—
—
—
1,871
1
—
—
1,870
—
—
—
1,870
—
—
1,870
10,189
4,022
—
14,211
8,865
1,323
—
10,188
1,324
2,699
4,023
610
880
189
—
—
2,344
265
(97)
—
2,176
206
384
—
1,586
—
—
1,586
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(3,456)
13
138,681
76,613
330,243
545,537
125,153
29,439
330,243
484,835
13,528
47,174
60,702
32,694
7,501
1,055
3,000
2,650
13,802
16,797
(238)
(1,757)
(1,000)
357
624
—
(3,456)
—
(1,981)
(15,630)
—
(3,456)
(1,242)
(18,853)
78
$
Cash Flow Data:
Operating activities:
Net (loss) income
Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activities
Depreciation and amortization
Non-cash interest expense
Amortization of deferred financing costs
Amortization of carrying value in excess of
principal
Valuation allowance related to long-term
receivables
Write off of carrying value in excess of principal
related to the 14% senior subordinated second lien
notes
Provision (reversal) for losses on accounts
receivable
Gain on extinguishment of debt
Change in operating assets and liabilities
Net cash provided by (used in) operating activities
Investing activities:
Purchase of leaseholds and equipment
Contingent purchase payments
Net cash used in investing activities
Financing activities:
Proceeds from long-term borrowings
Proceeds from senior credit facility
Payments on long-term borrowings
Payments on joint venture borrowings
Payments on debt issuance costs
Payments on capital leases
Repurchase of 14% senior subordinated second lien
notes
Redemption of preferred stock
Net cash (used in) financing activities
Effect of exchange rate changes
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
Standard
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Eliminations
Total
(1,981) $
1,870
$
1,586
$
(3,456) $
(1,981)
213
—
—
—
—
—
(61)
—
(2,041)
(19)
—
—
—
—
—
—
—
—
—
—
—
—
—
(19)
97
78
$
880
—
—
—
—
—
(61)
—
(2,029)
376
—
—
—
332
—
(33)
(687)
—
—
—
—
(388)
411
399
1,333
1,732
—
—
—
—
—
7,501
3,263
1,199
(2,854)
2,650
—
(1,172)
—
—
—
(3,456)
—
—
—
—
—
—
—
—
—
—
—
—
—
(3,456)
—
(3,456) $
$
(1,029)
(585)
6,653
13,645
(1,812)
(709)
(2,521)
332
4,500
(54)
(687)
(2,987)
(1,994)
(5,915)
(2,413)
(9,218)
411
2,317
6,153
8,470
6,408
3,263
1,199
(2,854)
2,650
(1,172)
(907)
(585)
10,723
16,744
(1,812)
(709)
(2,521)
—
4,500
(21)
—
(2,987)
(1,994)
(5,915)
(2,413)
(8,830)
—
5,393
4,723
10,116
$
79
Standard
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Eliminations
Total
71,074
170
—
71,244
55,788
55
—
55,843
15,286
115
15,401
25,839
1,868
—
—
(12,306)
(19)
(73)
(19)
(12,287)
—
—
—
(12,287)
—
—
(12,287)
15,559
5,077
—
20,636
13,930
3,113
—
17,043
1,629
1,964
3,593
262
1,158
66
—
2,107
397
—
324
1,264
49
249
—
966
—
—
966
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
11,321
11,321
—
—
11,321
13
142,376
78,029
326,146
546,551
128,871
35,201
326,146
490,218
13,505
42,828
56,333
30,133
7,554
2,897
3,000
12,749
16,246
(281)
15,965)
(3,216)
180
428
—
(3,824)
—
—
(18,334)
December 31, 2002
Income Statement Data:
Parking services revenue:
Lease contracts
Management contracts
Reimbursement of management contract expense
Total revenue
Cost of parking services:
Lease contracts
Management contracts
Reimbursement of management contract expense
Total cost of parking services
Gross profit:
Lease contracts
Management contracts
Total gross profit
General and administrative expenses
Depreciation and amortization
Special Charges
Management fee—parent company
Operating income
Other expenses (income):
Interest expense
Interest income
Income before minority interest and income taxes
Minority interest
Income tax expense
Equity in earnings of subsidiaries
Net income before preferred stock dividends and
increase in value of common stock subject to
put/call rights
Preferred stock dividends
Increase in value of common stock subject to
put/call rights
Net (loss) income
55,743
72,782
326,146
454,671
59,153
32,033
326,146
417,332
(3,140)
40,749
37,339
4,032
4,528
2,831
3,000
22,948
15,868
(208)
15,660
7,807
131
179
(11,321)
(3,824)
(13,540)
(970)
(18,334)
80
Cash Flow Data:
Operating activities:
Net (loss) income
Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities
Depreciation and amortization
Non-cash interest expense
Amortization of deferred financing costs
Amortization of carrying value in excess of
principal
Provision (reversal) for losses on accounts
receivable
Change in operating assets and liabilities
Net cash (used in) provided by operating activities
Investing activities:
Purchase of leaseholds and equipment
Contingent purchase payments
Net cash used in investing activities
Financing activities:
Proceeds from senior credit facility
Payments on long-term borrowings
Payments on joint venture borrowings
Payments on debt issuance costs
Payments on capital leases
Redemption of preferred stock
Net cash (used in) provided by financing activities
Effect of exchange rate changes
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
$
Standard
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Eliminations
Total
(3,824) $
(12,287) $
966
$
11,321 $
(3,824)
4,528
3,049
836
(2,655)
351
(13,064)
(10,779)
(1,843)
(612)
(2,455)
3,000
(394)
—
(159)
(1,900)
(2,500)
(1,953)
—
(15,187)
8,589
(6,598) $
1,868
—
—
—
24
13,832
3,437
—
—
—
—
—
—
—
—
—
—
—
3,437
(3,340)
97
$
1,158
—
—
—
24
(2,442)
(294)
(3)
—
(3)
—
—
(882)
—
—
—
(882)
159
(1,020)
2,353
1,333
$
—
—
—
—
—
—
11,321
—
—
—
—
—
—
—
—
—
—
—
11,321
—
11,321 $
7,554
3,049
836
(2,655)
399
(1,674)
3,685
(1,846)
(612)
(2,458)
3,000
(394)
(882)
(159)
(1,900)
(2,500)
(2,835)
159
(1,449)
7,602
6,153
81
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.
SIGNATURES
STANDARD PARKING CORPORATION
/s/ James A. Wilhelm
By: James A. Wilhelm
Director, President and Chief Executive Officer
Date: March 18, 2005
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 and in the capacities and on the dates indicated.
Signature
/s/ John V. Holten
John V. Holten
/s/ James A. Wilhelm
James A. Wilhelm
/s/ Gunnar E. Klintberg
Gunnar E. Klintberg
/s/ Charles L. Biggs
Charles L. Biggs
/s/ Karen M. Garrison
Karen M. Garrison
/s/ Leif F. Onarheim
Leif F. Onarheim
/s/ A. Petter Ostberg
A. Petter Ostberg
/s/ Robert S. Roath
Robert S. Roath
/s/ G. Marc Baumann
G. Marc Baumann
Director and Chairman
Title
Date
March 18, 2005
Director, President and Chief Executive Officer
March 18, 2005
(Principal Executive Officer)
Director and Vice President
Director
Director
Director
Director
Director
March 18, 2005
March 18, 2005
March 18, 2005
March 18, 2005
March 18, 2005
March 18, 2005
Executive Vice President, Chief Financial Officer, and Treasurer
March 18, 2005
(Principal Financial Officer)
/s/ Daniel R. Meyer
Daniel R. Meyer
Senior Vice President, Corporate Controller and Asst.
Treasurer (Principal Accounting Officer)
March 18, 2005
82
STANDARD PARKING CORPORATION
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
Description
Allowance for doubtful accounts
Year ended December 31, 2004:
Deducted from asset accounts
Allowance for doubtful accounts
Year ended December 31, 2003:
Deducted from asset accounts
Allowance for doubtful accounts
Year ended December 31, 2002:
Deducted from asset accounts
Allowance for doubtful accounts
Deferred tax valuation account
Year ended December 31, 2004
Year ended December 31, 2003
Year ended December 31, 2002
Additions
Balance at
Beginning
of Year
Charged to
Costs and
Expenses
Charged
to Other
Accounts
Deductions(1)
Balance at End
of Year
$
3,308
$
316
$
—
$
(544) $
3,080
1,687
3,849
—
(2,228)
3,308
$
$
$
$
1,288
34,229
27,802
40,889
473
$
—
$
(74) $
1,687
— $
—
—
(3,291) $
6,427
(13,087)
$
—
—
—
30,938
34,229
27,802
(1) Represents uncollectible account written off, net of recoveries and reversal of provision.
(2) Includes long-term receivables valuation of $2.7 million.
83
Exhibit
Number
INDEX TO EXHIBITS
Description
3.1
3.2
4.1
4.2
4.2.1
4.2.2
4.2.3
4.2.4
10.1
10.1.1
10.2
10.3
10.4
Second Amended and Restated Certificate of Incorporation of the Company filed on June 2, 2004 (incorporated by
reference to exhibit 3.1 of the Company’s Form 8-K filed on June 16, 2004).
Amended and Restated By-Laws of the Company effective as of June 2, 2004 (incorporated by reference to exhibits 3.2
of the Company’s Form 8-K filed on June 16, 2004).
Specimen common stock certificate (incorporated by reference to exhibit 4.1 of Amendment No. 2 to the Company’s
Registration Statement on Form S-1, File No. 333-112652, filed on May 18, 2004).
Indenture governing the Company’s 91/4% Senior Subordinated Notes due 2008, dated as of March 30, 1998, by and
among the Company, the Subsidiary Guarantors and State Street Bank and Trust Company (incorporated by reference to
exhibit 4.1 of the Company’s Registration Statement on Form S-4, File No. 333-50437, filed on April 17, 1998).
Supplemental Indenture governing the Company’s 91/4% Senior Subordinated Notes due 2008, dated as of July 1, 2002,
by and among the Company, Standard Parking Corporation IL, Tower Parking, Inc., Virginia Parking Service, Inc. and
State Street Bank and Trust Company (incorporated by reference to exhibit 4.1 of the Company’s Quarterly Report on
Form 10-Q filed for September 30, 2002).
Supplemental Indenture governing the Company’s 91/4% Senior Subordinated Notes due 2008, dated as of January 11,
2002, by and among the Company, the Subsidiary Guarantors and State Street Bank and Trust Company (incorporated
by reference to exhibit 4.2 of the Company’s Registration Statement on Form S-4, File No. 333-86008, filed on April 10,
2002).
Supplemental Indenture, dated as of September 21, 1998, among Virginia Parking Service, Inc., the Company, and State
Street Bank and Trust Company (incorporated by reference to exhibit 4.5 of the Company’s Annual Report on Form 10-
K filed for December 31, 1998).
Supplemental Indenture, dated as of July 6, 1998, among S&S Parking, Inc., Century Parking, Inc., Sentry Parking
Corporation, the Company, and State Street Bank and Trust Company (incorporated by reference to exhibit 4.6 of the
Company’s Annual Report on Form 10-K filed for December 31, 1998).
Credit Agreement, dated June 2, 2004 among the Company, various Financial Institutions, LaSalle Bank National
Association with Wells Fargo Bank, N.A. (incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed
on June 16, 2004).
First Amendment to Credit Agreement dated July 7, 2004 among the Company, various Financial Institutions, La Salle
Bank National Association and Wells Fargo Bank, N.A. (incorporated by reference to exhibit 10.1 of the Company’s
Quarterly Report on Form 10-Q filed for June 30, 2004).
Amended Rate Cap Transaction Agreement dated as of November 15, 2004 by and among LaSalle and the Company
(incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed on November 17, 2004).
Amended Rate Cap Transaction Agreement dated as of November 15, 2004 by and among LaSalle and the Company
(incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed on November 17, 2004).
Employment Agreement, dated as of March 30, 1998 between the Company and Myron C. Warshauer (incorporated by
reference to exhibit 10.6 of the Company’s Registration Statement on Form S-4, File No. 333-50437, filed on April 17,
1998).
10.4.1* First Amendment to Employment Agreement, dated July 7, 2003 between the Company and Myron C. Warshauer
84
Exhibit
Number
Description
10.5
10.5.2
10.5.1
10.4.2* Amendment to Employment Agreement, dated as of May 10, 2004 between the Company and Myron C. Warshauer.
Employment Agreement, dated as of March 26, 1998 between the Company and Michael K. Wolf (incorporated by
reference to exhibit 10.12 of the Company’s Registration Statement on Form S-4, File No. 333-50437, filed on April 17,
1998).
Amendment to Employment Agreement, dated as of June 19, 2000 between the Company and Michael K. Wolf
(incorporated by reference to exhibit 10.5.1 of the Company’s Registration Statement on Form S-1, File No. 333-
112652, filed on February 10, 2004).
Second Amendment to Employment Agreement, dated as of December 6, 2000, between the Company and Michael K.
Wolf, (incorporated by reference to exhibit 10.22 to the Company’s Annual Report on Form 10-K filed for December 31,
2000).
Third Amendment to Employment Agreement, dated April 1, 2002 between the Company and Michael K. Wolf
(incorporated by reference to exhibit 10.19.3 to the Company’s Annual Report on Form 10-K filed for December 31,
2002).
Fourth Amendment to Employment Agreement, dated December 31, 2003 between the Company and Michael K. Wolf
(incorporated by reference to exhibit 10.5.4 of the Company’s Registration Statement on Form S-1, File No. 333-
112652, filed on February 10, 2004).
10.5.3
10.5.4
10.6 Executive Employment Agreement, including Deferred Compensation Agreement, dated as of August 1, 1999
10.6.1
10.6.2
10.6.3
10.6.4
10.6.5
10.7
10.7.1
10.7.2
between Company and James A. Wilhelm (incorporated by reference to exhibit 10.14 of the Company’s Annual Report
of Form 10-K filed for December 31, 1999).
First Amendment to Executive Employment Agreement, dated as of April 25, 2001 between the Company and James A.
Wilhelm (incorporated by reference to exhibit 10.20.1 to the Company’s Annual Report on Form 10-K filed for
December 31, 2002).
Second Amendment to Employment Agreement, dated as of October 19, 2001 between the Company and James A.
Wilhelm (incorporated by reference to exhibit 10.33 of the Company’s Annual Report on Form 10-K filed for
December 31, 2001).
Third Amendment to Executive Employment Agreement, dated as of January 31, 2002 between the Company and
James A. Wilhelm (incorporated by reference to exhibit 10.34 of the Company’s Annual Report on Form 10-K filed for
December 31, 2001).
Fourth Amendment to Executive Employment Agreement, dated as of April 1, 2003 between the Company and James A.
Wilhelm (incorporated by reference to exhibit 10.6.4 of the Company’s Registration Statement on Form S-1, File
No. 333-112652, filed on February 10, 2004).
Fifth Amendment to Executive Employment Agreement dated as of April 30, 2004 between the Company and James A.
Wilhelm (incorporated by reference to exhibit 10.6.5 of Amendment No. 1 to the Company’s Registration Statement on
Form S-1, File No. 333-112652, filed on May 10, 2004.
Employment Agreement, dated May 18, 1998 between the Company and Robert N. Sacks (incorporated by reference to
exhibit 10.24 of the Company’s Annual Report on Form 10-K filed for December 31, 2001).
First Amendment to Employment Agreement, dated as of November 7, 2001 between the Company and Robert N. Sacks
(incorporated by reference to exhibit 10.25 of the Company’s Annual Report on Form 10-K filed for December 31,
2001).
Second Amendment to Employment Agreement, dated as of August 1, 2003 between the Company and Robert N. Sacks
(incorporated by reference to exhibit 10.7.2 of the Company’s Registration Statement on Form S-1, File No. 333-
112652, filed on February 10, 2004).
85
Exhibit
Number
Description
10.8
10.9
10.9.1
10.10
10.11
10.12
10.14
Amended and Restated Executive Employment Agreement, dated as of December 1, 2002 between the Company and
John Ricchiuto (incorporated by reference to exhibit 10.22.2 of the Company’s Annual Report on Form 10-K filed for
December 31, 2002).
Employment Agreement between the Company and Steven A. Warshauer (incorporated by reference to exhibit 10.17 to
the Company’s Annual Report on Form 10-K filed for December 31, 1999).
First Amendment to Employment Agreement, dated as of June 1, 2002 between the Company and Steven A. Warshauer
(incorporated by reference to exhibit 10.23.1 to the Company’s Annual Report on Form 10-K filed for December 31,
2002).
Employment Agreement, dated as of August 1, 1999 between the Company and Edward E. Simmons (incorporated by
reference to exhibit 10.10 of the Company’s Registration Statement on Form S-1, File No. 333-112652, filed on
February 10, 2004).
Amended and Restated Employment Agreement between the Company and G. Marc Baumann (incorporated by
reference to exhibit 10.27 to the Company’s Annual Report on Form 10-K filed for December 31, 2001).
Long-Term Incentive Plan dated as of May 1, 2004 (incorporated by reference to exhibit 10.12 of Amendment No. 1 to
the Company’s Registration Statement on Form S-1, File No. 333-112652, filed on May 10, 2004).
Consulting Agreement, dated as of October 16, 2001 between the Company and Shoreline Enterprises, LLC
(incorporated by reference to exhibit 10.36 of the Company’s Annual Report on Form 10-K filed for December 31,
2001).
10.14.1* Amendment to Consulting Agreement, dated as of May 10, 2004 between the Company and Shoreline Enterprises, LLC
10.16
10.17
10.17.1
10.18
10.18.1
10.19
Consulting Engagement Agreement dated January 11, 2002 between the Company and AP Holdings (incorporated by
reference to exhibit 10.35 of the Company’s Annual Report on Form 10-K filed for December 31, 2001).
Executive Parking Management Agreement, dated as of May 1, 1998 by and among the Company, D&E Parking,
Edward E. Simmons and Dale G. Stark (incorporated by reference to exhibit 10.32 of the Company’s Annual Report on
Form 10-K filed for December 31, 2002).
First Amendment to Executive Parking Management Agreement, dated as of August 1, 1999 by and among the
Company, D&E Parking, Edward E. Simmons and Dale G. Stark (incorporated by reference to exhibit 10.32.1 to the
Company’s Annual Report on Form 10-K filed for December 31, 2002).
Management Agreement dated September 19, 2000 between the Company and Circle Line Sightseeing Yachts, Inc.
(incorporated by reference to exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed for June 30, 2003).
First Amendment dated June 9, 2003 to the Management Agreement between the Company and Circle Line Sightseeing
Yachts, Inc. (incorporated by reference to exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed for
June 30, 2003)
Property Management Agreement, dated as of September 1, 2003 between the Company and Paxton Plaza, LLC
(incorporated by reference to exhibit 10.19 of the Company’s Registration Statement on Form S-1, File No. 333-112652,
filed on February 10, 2004).
10.20 Property Management Agreement, dated as of September 1, 2003 between the Company and Infinity
Equities, LLC (incorporated by reference to exhibit 10.20 of the Company’s Registration Statement on Form S-1, File
No. 333-112652, filed on February 10, 2004).
86
Exhibit
Number
10.21
10.21.1
10.21.2
10.21.3
10.22
10.23
10.23.1
10.24
10.26
10.27
10.28
10.28.1
Description
Agreement of Lease, dated as of June 4, 1998 between the Company and LaSalle National Bank, as successor trustee to
LaSalle National Trust, N.A. as successor trustee to LaSalle National Bank. (incorporated by reference to exhibit 10.21
of the Company’s Registration Statement on Form S-1, File No. 333-112652, filed on February 10, 2004).
First Amendment to Agreement of Lease, dated as of May 1, 1999 between the Company and LaSalle National Bank, as
successor trustee to LaSalle National Trust, N.A. as successor trustee to LaSalle National Bank (incorporated by
reference to exhibit 10.21.1 of the Company’s Registration Statement on Form S-1, File No. 333-112652, filed on
February 10, 2004).
Second Amendment to Agreement of Lease, dated as of July 27, 2000 between the Company and LaSalle National Bank,
as successor trustee to LaSalle National Trust, N.A. as successor trustee to LaSalle National Bank (incorporated by
reference to exhibit 10.21.2 of the Company’s Registration Statement on Form S-1, File No. 333-112652, filed on
February 10, 2004).
Third Amendment to Agreement of Lease, dated as of September 11, 2003 between the Company and LaSalle National
Bank, as successor trustee to LaSalle National Trust, N.A. as successor trustee to LaSalle National Bank (incorporated
by reference to exhibit 10.21.3 of the Company’s Registration Statement on Form S-1, File No. 333-112652, filed on
February 10, 2004).
Exchange and Amendment Agreement dated November 20, 2001 by and among the Company and Fiducia Ltd.
(incorporated by reference to exhibit 10.30 of the Company’s Annual Report on Form 10-K filed for December 31,
2001).
Employment Agreement between the Company and John V. Holten (incorporated by reference to exhibit 10.23 of
Amendment No. 2 to the Company’s Registration Statement on Form S-1, File No. 333-112652, filed on May 18, 2004).
Side Letters dated May 7, 2004 related to the Employment Agreement dated May 7, 2004 between the Company and
John V. Holten (incorporated by reference to exhibit 10.23.1 of Amendment No. 2 to the Company’s Registration
Statement on Form S-1, File No. 333-112652, filed on May 18, 2004).
Consulting Agreement dated as of March 1, 2004 between the Company and Gunnar E. Klintberg (incorporated by
reference to exhibit 10.24 of Amendment No. 1 to the Company’s Registration Form S-1, File No. 333-112652, filed on
May 10, 2004).
Form of Registration Rights Agreement, dated as of May , 2004 between the Company and Steamboat Industries
LLC (incorporated by reference to exhibit 10. 26 of Amendment No. 3 to the Company’s Registration Statement on
Form S-1, File No. 333-112652, filed on May 24, 2004).
Form of Exchange Agreement, dated as of May , 2004 between the Company and Steamboat Industries LLC
(incorporated by reference to exhibit 10.27 of Amendment No. 3 to the Company’s Registration Statement on Form S-1,
File No. 333-112652, filed on May 24, 2004).
Stock Purchase Agreement, dated as of May 10, 2004 among the Company, SP Associates , Waverly Partners, L.P., the
Carol R. Warshauer GST Exempt Trust, Myron C. Warshauer, Steamboat Industries LLC and John V. Holten
(incorporated by reference to exhibit 10.28 of Amendment No. 3 to the Company’s Registration Statement on Form S-1,
File No. 333-112652, filed on May 24, 2004).
First Amendment to Stock Purchase Agreement, dated as of May 20, 2004 among the Company, SP Associates, Waverly
Partners, L.P., the Carol R. Warshauer GST Exempt Trust, Myron C. Warshauer, Steamboat Industries LLC and John V.
Holten (incorporated by reference to exhibit 10.28.1 of Amendment No. 3 to the Company’s Registration Statement on
Form S-1, File No. 333-112652, filed on May 24, 2004).
87
Exhibit
Number
Description
10.3
14.1
21.1
Amended Rate Cap Transaction Agreement dated as of November 15, 2004 by and among LaSalle and the Company
(incorporated by reference to exhibit 10.1 of the Company’s Form 8-K filed on November 17, 2004).
Code of Ethics (incorporated by reference to exhibit 14.1 of the Company’s Annual Report on Form 10-K for
December 31, 2002).
Subsidiaries of the Company (incorporated by reference to exhibit 21.1 of the Company’s Registration Statement on
Form S-1, File No. 333-112652 filed on February 10, 2004).
23.* Consent of Independent Registered Public Accounting Firm dated as of March 11, 2005
31.1* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by James A. Wilhelm.
31.2* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by G. Marc Baumann
31.3* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Daniel R. Meyer
32.1*
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by James A. Wilhelm, G. Marc Baumann and
Daniel R. Meyer.
* Filed herewith.
88
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, James A. Wilhelm, certify that:
1. I have reviewed this Form 10-K of Standard Parking Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: March 18, 2005
By:
/s/James A. Wilhelm
James A. Wilhelm, Chief Executive
Officer and President
89
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, G. Marc Baumann, certify that:
1. I have reviewed this Form 10-K of Standard Parking Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: March 18, 2005
By:
/s/ G. Marc Baumann
G. Marc Baumann, Executive Vice
President, Chief Financial Officer and
Treasurer
90
Exhibit 31.3
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Daniel R. Meyer, certify that:
1. I have reviewed this Form 10-K of Standard Parking Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: March 18, 2005
By:
/s/ Daniel R. Meyer
Daniel R. Meyer, Senior Vice
President and Corporate Controller
(Chief Accounting Officer)
91
Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 32
In connection with the Form 10-K of Standard Parking Corporation (the “Company”) for the year ended December 31, 2003,
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certifies,
pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of their knowledge
and belief, that:
1) the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities and Exchange Act of 1934,
as amended; and
2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
/s/ James A. Wilhelm
Name:
Title:
Date: March 18, 2005
James A. Wilhelm
Chief Executive Officer and President
/s/ G. Marc Baumann
Name: G. Marc Baumann
Title:
Date: March 18, 2005
Chief Financial Officer
/s/ Daniel R. Meyer
Name: Daniel R. Meyer
Title:
Senior Vice President and Corporate Controller
(Chief Accounting Officer)
Date: March 18, 2005
This certification shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, or the
Exchange Act, or otherwise subject to the liability of Section 18 of the Exchange Act. Such certification shall not be deemed to
be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the
Company specifically incorporates it by reference.
92
Directors
Executive Officers
Stockholder Information
James A. Wilhelm
President and Chief Executive Officer
G. Marc Baumann
Executive Vice President, Chief
Financial Officer and Treasurer
Thomas L. Hagerman
Executive Vice President, Operations
John Ricchiuto
Executive Vice President, Operations
Robert N. Sacks
Executive Vice President, General
Counsel and Secretary
Edward E. Simmons
Executive Vice President, Operations
Steven A. Warshauer
Executive Vice President, Operations
Michael K. Wolf
Executive Vice President, Chief
Administrative Officer and Associate
General Counsel
John V. Holten, Chairman (b)(c)
Chairman and Chief Executive Officer,
Holberg Industries, Inc.
James A. Wilhelm, Director
President and Chief Executive Officer,
Standard Parking Corporation
Charles L. Biggs, Director (c)(a)
Retired – Senior Partner,
Deloitte Consulting
Karen M. Garrison, Director (b)(a)
Retired - President,
Pitney Bowes Business Services
Gunnar E. Klintberg, Director
Vice President,
Standard Parking Corporation
Vice Chairman, Holberg Industries, Inc.
Leif F. Onarheim, Director
Member of Parliament,
Kingdom of Norway
A. Petter Østberg, Director (b)(c)
Senior Vice President and Chief
Financial Officer, Holberg Industries, Inc.
Robert S. Roath, Director (a)
Retired – Senior Vice President and
Chief Financial Officer, RJR Nabisco, Inc.
(a) Audit Committee
Chair: Robert S. Roath
(b) Nominating and Corporate
Governance Committee
Chair: Karen M. Garrison
(c) Compensation Committee
Chair: Charles L. Biggs
Corporate Address
Standard Parking Corporation
900 N. Michigan Avenue
Suite 1600
Chicago, IL 60611
Telephone: (888) 700-PARK
www.standardparking.com
Investor Relations Contact
G. Marc Baumann
Executive Vice President, Chief
Financial Officer and Treasurer
Telephone: (312) 274-2199
Investor_Relations@standardparking.com
Independent Auditor
Ernst & Young LLP
Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Transfer Agent
Wells Fargo Shareowner Services
161 North Concord Exchange
South St. Paul, MN 55075
Telephone: (800) 468-9716
Stock Listing
NASDAQ National Market
Trading Symbol: STAN
Stock Price Information
The table below shows the reported
high and low sales price of common
stock for the periods indicated in 2004.
The closing price of a common share
at December 31, 2004 was $15.34.
Second Quarter
Third Quarter
Fourth Quarter
LOW
HIGH
$14.69 $11.86
$13.75 $12.25
$17.42 $12.00
Annual Meeting of Shareholders
The Annual Stockholders Meeting will
be held on April 27, 2005 at 4:00 PM,
local time, at the Whitehall Hotel, 105
East Delaware Place, Chicago, IL 60611.
Innovation
Amenities
Technology
Revenue Enhancement
Training Programs