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.
2005 Highlights
• Earnings per share of $1.39
• Free cash flow per share of $2.51
• Reduced total debt by $17.6 million (16%)
• Increased location retention rate from 88% to 91%
Selected Financials
(in thousands)
2005
2004
2003
$ 154,099
93,876
$ 148,752
83,712
$ 138,681
76,613
247,975
232,464
215,294
338,679
331,171
330,243
Revenue
Lease contracts
Management contracts
Reimbursement of
management contract
expense
Total Revenue
Gross Profit
586,654
563,635
545,537
69,837
63,887
60,702
General and administrative
expenses
% of gross profit
Operating income
Net income
Total assets
Total debt
38,922
55.7%
23,588
33,470
52.4%
19,661
32,907
54.2%
13,589
$ 14,719
$ 2,640
$ (18,853)
$ 201,353
$ 195,102
$ 189,585
$ 92,108
$ 109,750
$ 161,079
Index Stock Performance$175$150$125$100$75$50Q2/04Q3/04Q4/04Q1/05Q2/05Q3/05Q4/05Standard ParkingS&P 500 IndexS&P SmallCap 600Commercial Services & Supplies To Our Shareholders:
We are pleased to present this report of our 2005 activity. Our first full year as a public company
was our best year ever, as we continued to deliver returns consistent with the business model we
identified at the time of our 2004 public offering. The 2005 numbers speak for themselves:
• Operating income of $23.6 million
• Earnings per share of $1.39
• Free cash flow of $26.5 million, or $2.51 per share
• $17.6 million, or 16%, reduction in total debt
• 91% location retention rate (up from 88% in 2004)
We achieved these results despite two significant challenges. Over the course of the year, we
recognized a $1.2 million loss, or ($0.11) per share, related to a contract in Minnesota. In the
second half of the year, we had to rebuild our New Orleans parking operations in the aftermath
of Hurricane Katrina, which impacted EPS by ($0.16) per share. Despite these challenges, we
achieved earnings per share of $1.39, up from $0.42 in 2004 and in excess of our guidance range
of $1.27 - $1.32.
During the year, we also entered the last phase of Sarbanes-Oxley documentation and testing of our
internal controls, costing ($0.08) per share, which required our organization’s concentrated focus.
We have now completed the assessment of our internal control as it relates to financial reporting,
and we are pleased to report that the controls were found to be effective and without material
weaknesses. Our independent auditors, Ernst & Young, LLP, have completed their evaluation and
testing of our internal control over financial reporting and have issued an unqualified opinion.
From the $26.5 million of free cash flow that the Company generated during 2005, we used $6.0
million to repurchase shares and $20.5 million to pay down debt. Net debt (total debt less cash) of
$81.3 million at year-end was below the range of $85 - $95 million that was projected at the
beginning of the year.
Capital expenditures totaled $4.8 million in 2005, and the Company also entered into $2.6 million
of new capital lease obligations intended primarily to fund the purchase of shuttle busses.
As part of our fundamental business model in the area of acquisitions, we consummated our
acquisition of the 2 shuttle operations and 55 parking locations operated by Sound Parking, based
in Seattle. The employment contracts that we entered into with Sound’s former principals contain
provisions that incentivize them to retain the existing contracts and to expand the Company’s
presence in the States of Washington, Oregon, Idaho and Alaska.
The fundamental characteristics of our business remain unchanged:
•
The use of a lower risk, higher margin management contract structure that produces consistent
earnings and stable cash flow. With approximately 86% 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. By way of example, for
municipal clients we not only can manage their parking facilities but also can provide on-street
parking meter collection, maintenance and enforcement services.
Our performance during 2005 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. It also
reflects the substantial efforts of our dedicated employees throughout North America, whose
professionalism and dedication contribute to our success each and every day. Finally, we believe our
positive performance in 2005 reflects our continuing efforts to balance the needs and interests of
our assorted constituencies – including our employees, our clients, the local communities in which
we work, our parking patrons, our lenders and our shareholders.
For 2006 and beyond, we will continue to focus on our internal growth (especially in our core
markets) and to be vigilant for opportunities to acquire other companies where the returns justify
the investment. And, of course, we also will focus on ways to improve our balance sheet.
We look forward to 2006 with continued confidence and optimism.
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
⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
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, Suite 1600, 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, PAR VALUE $0.001 PER SHARE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes (cid:134) No ⌧
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes (cid:134) No ⌧
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 ⌧ 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 a large accelerated filer, an accelerated filer, or a
non-accelerated filer. See definition of “accelerated filer and large accelerated filer’’ in Rule 12b-2 of the
Exchange Act (check one):
Large accelerated filer (cid:134)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Non-Accelerated Filer (cid:134)
Accelerated Filer ⌧
Act). Yes (cid:134) No ⌧
As of June 30, 2005, the aggregate market value of the voting and non-voting common equity held by
nonaffiliates of the registrant was approximately $81.8 million, based on the closing price of the common
stock as reported on the Nasdaq National Market.
As of March 3, 2006, there were 10,126,482 shares of common stock of the registrant outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement to be delivered to shareholders in connection
with the Annual Meeting of stockholders to be held on April 26, 2006 are incorporated by reference into
Part III of this Form 10-K.
Table of Contents
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved staff comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Submission of matters to a vote of security holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market for registrant ‘s common equity, related stockholder matters and issuer
purchases of equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected financial data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s discussion and analysis of financial condition and results of operations .
Quantitative and qualitative disclosures about market risk . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial statements and supplementary data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and disagreements with accountants on financial disclosure . . . . . . . . . . . . . .
Controls and procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Directors and executive officers of the registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security ownership of certain beneficial owners and management and related
stockholder matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain relationships and related transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal accountant fees and services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
Exhibits and financial statement schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 15.
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index to exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
16
23
24
25
25
26
27
29
46
47
48
48
49
52
52
52
52
53
96
98
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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 professional or other organized sports;
• changes in general economic and business conditions or demographic trends;
• integration of 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 or
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 choose to
procure insurance coverage 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;
• the ability to obtain 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;
• our ability to consummate transactions and integrate newly acquired contracts into our operations;
3
• 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 Item 1A Risk Factors, and Item 7, 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
ITEM 1. BUSINESS
General
PART I
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 more than 1,900 parking facilities, containing over one million parking spaces, in 303
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 112 parking-
related and shuttle bus operations serving 64 airports, including Chicago O’Hare International Airport,
Cleveland Hopkins International Airport and Dallas/Fort Worth International Airport.
Since entering the parking business in 1929, 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 that 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.
Moreover, as a public company subject to the requirements of the Securities Exchange Act of 1934
and the Sarbanes-Oxley Act, we adhere to accounting, internal control and reporting standards that are
more rigorous than those typically followed by our non-public competitors.
We believe that these factors distinguish us from our competitors and contribute to our high retention
rate, which averaged 91% for the year ended December 31, 2005 (which statistic includes the impact of our
decision to exit from 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, 2005, we operated 86% of our locations
under management contracts and 14% under leases.
5
We also provide a range of ancillary services to satisfy client needs such as municipal meter collection
and valet parking.
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
6
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.
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
7
location and strengthen our client relationships, which should enhance our ability to win new contracts and
increase our retention rate.
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
George Mason University and Boston University. 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-
8
specific information to calculate the impact of pricing alternatives, optimize staffing levels, improve
forecasting and assist in long-range planning.
• 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.
Musical Theme Floor Reminder System. Our 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. colleges as a theme, a different college logo is
displayed, and that college’s specific fight song is played, on each parking level. Other parking facilities
have themes such as famous recording artists, musical instruments, and professional sports teams.
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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.
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 Program® Services (SETUP®). 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 Assist® 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.
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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.
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
more than 11,000 employees and 1,900 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.
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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
American Museum of Natural History . .
Brookfield Properties Corporation . . . . .
City, State/Province
Property Type
New York, New York
Boston, Massachusetts
Museum
Office
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 Realty Corporation . . . . . . . . . . . . . .
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
Airport
Medical center
Office
Hotel
Airport
University/Medical
Office
Nationwide Arena Realty . . . . . . . . . . . . .
Columbus, Ohio
Office and Special
Washington Mutual, Inc. . . . . . . . . . . . . . .
Los Angeles, California
San Francisco, California
Westfield Properties Shoppingtowns. . . .
Los Angeles, California
event
Retail
Retail
No single client represented more than 6.0% of revenues or more than 3.0% of our gross profit for the
year ended December 31, 2005. For the year ended December 31, 2005, we retained an average of 91% of
our locations, as compared to 88% for the year ended December 31, 2004, (which statistic includes the
impact of our decision to exit from 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.
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
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management business has resulted in the creation of two proprietary products, ClientView™ 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, 2005, we employed approximately 11,300 individuals, including approximately
6,800 full-time and 4,500 part-time employees. As of December 31, 2004, we employed approximately
11,100 individuals, including approximately 6,700 full-time and 4,400 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 $2.0 million per occurrence and $2.0 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 property insurance that provides coverage for
loss or damage to our property and in some cases our clients’ property, as well as business interruption
coverage for lost operating income and certain associated expenses. The deductible applicable to any given
loss under our property insurance policy varies based upon the insured values and the peril that causes the
loss. 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) and 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 liability 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 insured’s under our liability 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.
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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 specialize in these services.
Seasonality
During the first quarter of each year, seasonality impacts our performance with regard to moderating
revenues, with the reduced levels of travel most clearly reflected in the parking activity associated with our
airport and hotel businesses as well as increases in certain costs of parking services, such as snow removal,
both of which negatively affect gross profit. Although our revenues and profitability are affected by the
seasonality of the business, general and administrative costs are relatively stable throughout the fiscal year.
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. The 300 feet
rule and new regulations may nevertheless prevent us from using a number of existing spaces during
heightened security alerts at airports. 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
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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.
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 or
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 invented the Multi-Level Vehicle Parking Facility, musical Theme
Floor Reminder System, and obtained 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 ClientView©, Hand Held Program©, License Plate Inventory Programs©, ParkNet® and ParkStat© with
the United States Copyright Office.
15
Item 1A. Risk Factors
You should carefully consider the following specific risk factors as well as other information contained
or incorporated by reference in this report, as these, among others, are important factors, that could cause
our actual results to differ from our expected historical results. It is not possible to predict or identify all
such factors. Consequently, you should not consider any such list to be a complete statement of all our
potential risks or uncertainties.
Risk Factors
Our indebtedness could adversely affect our financial health and prevent us from fulfilling our
obligations.
On December 31, 2005, 2004 and 2003 we had total indebtedness of approximately $92.1 million,
$109.8 million and $161.1 million, respectively.
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.
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 91⁄4% 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
16
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 entered into 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
agreement 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.
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 received net repayments of previous
deficiency payments of $1.5 million in 2005. 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. Although we expect to recover all amounts owed to us,
we expect that in any given period we may have to make additional deficiency payments.
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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 insured’s under our insurance policies. A material reduction in the number of
clients who choose 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. We also purchase property insurance that provides coverage for loss or damage to our
property, and in some cases our clients’ property, as well as business interruption coverage for lost
operating income and certain associated expenses. The deductible applicable to any given loss under our
property insurance policy varies based upon the insured values and the peril that causes the loss. 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 face business and financial risk in implementing our growth strategy.
We face 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;
• 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.
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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 believe that we will be able to obtain equity or debt capital on acceptable terms. However, our
senior credit facility, and the indentures governing our 91⁄4% notes contain provisions that restrict our
ability to incur additional indebtedness and/or make 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, 2005, we operated approximately 86% 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.
As of December 31, 2005, we operated approximately 14% 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
19
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.
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, 2005, approximately 20% 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.
20
The sureties for our performance bond program may require additional collateral to issue or renew
performance bonds in support of certain contracts or may elect not to provide us with new or renewal
performance bonds for any reason.
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. We currently have
commitments from certain surety carriers to provide us with a certain amount of bonding capacity without
requiring any additional collateral from us. Nevertheless, in the event of any material adverse changes in
our financial condition or in the event of changes in the surety industry, the sureties for our performance
bond program could require us to collateralize our performance bonds with additional letters of credit.
Our need to collateralize surety bonds would reduce 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 required but 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, 2005, we had approximately $0.3 million of letters of credit outstanding as collateral
with respect to our sureties 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 do not maintain insurance coverage for all possible risks.
We maintain a comprehensive portfolio of insurance policies to help protect us against loss or damage
incurred from a wide variety of insurable risks. Each year, we review with our professional insurance
advisers whether the insurance policies and associated coverages that we maintain are sufficient to
adequately protect us from the various types of risk to which we are exposed in the ordinary course of
business. That analysis takes into account various pertinent factors such as the likelihood that we would
incur a material loss from any given risk when viewed in light of the cost of obtaining insurance coverage
against any such risk. While we believe that we maintain a comprehensive portfolio of insurance that is
consistent with customary business practices and adequately protects us from the risks that we typically
face in the ordinary course of our business, there can be no assurance that we may not sustain a material
loss for which we do not maintain insurance coverage.
We believe that our client base is becoming more concentrated.
Because 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
21
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.
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 change occurred under Internal
Revenue Code Section 382 that 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.
Furthermore, a material increase in the cost of insurance premiums could adversely affect our financial
condition and results of operations.
Our parent company, Steamboat Industries LLC, and its wholly owned subsidiary, Steamboat Industries,
N.V., which are controlled by our chairman, control our major corporate decisions.
Our parent company, Steamboat Industries LLC, and its wholly owned subsidiary, Steamboat
Industries N.V., which are controlled by our chairman, John V. Holten, owns 51% of our outstanding
common stock as of December 31, 2005. As a result, Steamboat Industries LLC and its subsidiary control
us, the election and removal of the directors on our board of directors, and our management and policies.
Steamboat Industries LLC and its subsidiary also control all matters regarding stockholder approval,
including the amendment of certain provisions of our certificate of incorporation and by-laws and the
approval of fundamental corporate transactions. Steamboat Industries LLC also has the ability to pledge
shares of our common stock as security for its debt obligations. We have only 12,100,000 shares of capital
stock authorized, of which only 1,406,973 shares remain unissued after giving effect to all authorized
options under our long-term incentive plan. As a result, we require the consent of Steamboat Industries
LLC and its subsidiary in order to authorize and issue additional common stock in connection with
22
corporate actions that may be beneficial to our business or to our stockholders, such as increasing the
number of shares authorized under our Long-Term Incentive Plan for the retention of management,
acquisitions for stock and mergers. The ability of our parent company to control our major corporate
decisions may harm the market price for our common stock by delaying, deferring or preventing a business
combination involving our company; causing us to enter into transactions that are not in the best interests
of all stockholders or discouraging third-party investors.
A majority of our board of directors are not considered “independent” under the rules of The NASDAQ
Stock Market, Inc.
Steamboat Industries LLC and its subsidiary own a majority of our common stock. As a result, we are
a “controlled company” under the rules of The NASDAQ Stock Market, Inc., and we rely on the
“controlled company” exception to the board of directors and committee composition requirements under
rules of The NASDAQ Stock Market, Inc. Pursuant to this exception, we are exempt from the rule that
requires that (i) our board of directors be comprised of a majority of “independent directors”; (ii) our
compensation committee be comprised solely of “independent directors”; and (iii) our nominating and
corporate governance committee be comprised solely of “independent directors”, as defined under the
rules of The NASDAQ Stock Market, Inc. Because we rely upon this exemption, a majority of our board of
directors are not considered “independent”. Furthermore, our compensation and nominating and
corporate governance committee are not comprised solely of “independent directors,” as only one member
out of the three member-directors for each committee is considered “independent” under the rules of The
NASDAQ Stock Market, Inc. The “controlled company” exception does not modify the independence
requirements of the audit committee.
Many of our employees are covered by collective bargaining agreements.
Approximately 25% of our employees are represented by labor unions. Approximately 34% of our
collective bargaining contracts, representing 6% of our employees, are up for renewal in 2006. 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. Our business could be materially adversely affected 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.
Item 1B. Unresolved Staff Comments
None.
23
ITEM 2. PROPERTIES
Parking Facilities
The Company operates 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 the Company’s facilities as of December 31, 2005:
Airports and Urban Cities
States/Provinces
Alabama . . . . . . . . . Airports
Alberta . . . . . . . . . . Airport, Calgary, Edmonton
Arizona . . . . . . . . . . Airport, Phoenix
British Columbia. . . Vancouver
California . . . . . . . .
Airport, Los Angeles, Long Beach, San
Diego, San Francisco, and San Jose
Topeka, Wichita, Bonner Springs
Colorado . . . . . . . . . Airports, Colorado Springs, and Denver
Connecticut. . . . . . . Airports
Delaware. . . . . . . . . Wilmington
District of Columbia Washington, DC
Florida . . . . . . . . . . Airports, Miami, Orlando and Pensacola
Georgia . . . . . . . . . . Airports and Atlanta
Hawaii. . . . . . . . . . . Airports and Honolulu
Idaho. . . . . . . . . . . . Airports
Illinois . . . . . . . . . . . Airports and Chicago
Indiana . . . . . . . . . . Airports, Indianapolis and Ft. Wayne
Iowa . . . . . . . . . . . . Airports and Des Moines
Kansas. . . . . . . . . . .
Kentucky. . . . . . . . . Airports
Louisiana . . . . . . . . Airport and New Orleans
Maine . . . . . . . . . . . Airports and Portland
Maryland. . . . . . . . . Baltimore, Bethesda and Towson
Massachusetts . . . . . Boston, Cambridge, and Worchester
Michigan . . . . . . . . . Airports and Detroit
Minnesota . . . . . . . . Airport, Minneapolis and St. Paul
Missouri . . . . . . . . . Airports and Kansas City
Montana . . . . . . . . . Airports
Nebraska. . . . . . . . . Airports
Nevada . . . . . . . . . .
New Jersey . . . . . . . Upper Montclair
New Mexico . . . . . . Airport
New York . . . . . . . . Airports, Buffalo and Rochester
North Carolina . . . . Charlotte
North Dakota . . . . . Airports
Ohio . . . . . . . . . . . .
Airports, Akron, Cleveland, Cincinnati,
Las Vegas and Reno
Providence
Columbus and Toledo
Ontario . . . . . . . . . . North York and Toronto
Oregon . . . . . . . . . . Airports
Pennsylvania . . . . . . Airports
Rhode Island . . . . .
South Dakota . . . . . Airports
Tennessee . . . . . . . . Airports, Memphis and Nashville
Texas. . . . . . . . . . . . Airports, Dallas, Forth Worth and Houston
Utah . . . . . . . . . . . .
Vermont . . . . . . . . . Burlington
Virginia . . . . . . . . . . Alexandria, Richmond and Virginia Beach
Washington. . . . . . . Airports, Seattle, and Bellingham
Wisconsin . . . . . . . . Airports and Milwaukee
Wyoming. . . . . . . . . Casper
Totals
Salt Lake City
24
# of Locations
Airport Urban
Total
3
1
1
—
6
1
9
—
—
6
3
4
1
12
1
2
—
3
1
3
—
—
7
1
6
7
2
—
—
1
6
—
2
6
—
2
2
—
3
2
3
—
—
—
2
3
—
112
—
21
12
29
537
29
—
1
37
78
15
38
—
202
4
1
8
—
42
1
19
120
2
39
113
—
—
11
2
44
1
—
138
47
—
—
2
—
19
85
1
1
73
9
12
1
1,794
# of Spaces
Airport Urban
—
8,574
10,584
3,075
1,562
—
—
—
4,073 189,061
23,107
7,700
—
7,941
473
—
12,480
—
31,215
16,627
16,388
5,433
17,371
2,777
—
372
29,986 102,903
2,450
1,234
2,603
3,487
16,005
—
—
16,060
19,782
1,302
528
3,809
7,104
—
39,471
—
270
11,006
17,198
555
25,038
24,238
—
3,674
—
1,307
2,280
—
2,818
—
—
—
29,800
10,380
818
—
—
1,415
Total
1,562
8,574
10,584
3,075
193,134
30,807
7,941
473
12,480
47,842
21,821
20,148
372
132,889
3,684
6,090
16,005
16,060
21,084
4,337
7,104
39,471
11,276
17,753
49,276
3,674
1,307
2,280
2,818
—
40,180
818
1,415
3
22
13
29
543
30
9
1
37
84
18
42
1
214
5
3
8
3
43
4
19
120
9
40
119
7
2
11
2
1
50
1
2
144
47
2
2
2
3
21
88
1
1
73
11
15
1
107,133
38,442
1,673
2,105
4,845
1,909
5,334
80,226
2,620
560
39,553
3,929
7,304
1,200
1,906 180,535 852,632 1,033,167
95,727
38,442
—
—
4,845
—
4,685
77,061
2,620
560
39,553
3,107
3,436
1,200
11,406
—
1,673
2,105
—
1,909
649
3,165
—
—
—
822
3,868
—
We have interests in 14 joint ventures, each of which operates between one and 22 parking facilities.
We are the general partner of three limited partnerships, each of which operates between one and nine
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 an expansion option for up to 6,000 additional square
feet of space, and we have a right of first opportunity on an additional 24,000 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.
Thomas J. Moriarty, Trustee on behalf of Teamsters Local Union No. 727 Pension Fund, Teamsters Local
Union No. 727 Health and Welfare Fund and Teamsters Local Union No. 727 Legal and Educational
Assistance Fund, Plaintiff v. Standard Parking Corporation IL and Standard Parking Corporation, Defendants,
Case No. 03C 9403, United States District Court, Northern District of Illinois, Eastern Division.
This matter was filed on December 30, 2003 by Thomas J. Moriarty, trustee, on behalf of the
Teamsters Local 727 Pension, Health and Welfare, and Legal and Educational Assistance Funds. The
action was brought under the Labor Management Relations Act (LMRA) and the Employee Retirement
Income Security Act of 1974 (ERISA); The lawsuit seeks to recover alleged unpaid contributions to the
Teamsters Local 727 benefit funds that plaintiff claims are owed under the collective bargaining
agreements in effect for the period January 1, 2000 through December 31, 2002. Plaintiff seeks to recover
(1) unpaid contributions; (2) interest on the alleged delinquencies; (3) liquidated damages of 20% of the
unpaid contributions, or the interest relating to these contributions (“double interest”); and (4) attorneys
fees and audit costs. These have been no significant procedural events in the litigation.
The plaintiff’s final version of the underlying audit was not issued until August 4, 2005. The amount
claimed on the audit (including interest, liquidated damages and auditors fees), is approximately $1.64
million. The Company disputes the plaintiff’s audit findings.
The Company completed its initial review of plaintiff’s audit in December 2005 and delivered its
findings to plaintiff’s auditors for their review and response. The Company is awaiting comments from
plaintiff’s auditors before undertaking any additional formal discussions. No significant court deadlines
exist at the present time. Substantial formal discovery is expected to begin in the second half of 2006 if the
parties are unable to resolve the disputed amounts in the audit report.
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 2005.
25
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.
Quarter Ended
March 31. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 30 . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . .
2005
2004
Sales Price
High
$ 16.00
$ 17.27
$ 19.40
$ 20.05
Low
$ 14.10
$ 13.80
$ 15.90
$ 18.02
Cash
Dividends
Sales Price
Declared High
Low
Cash
Dividends
Declared
—
—
—
—
n/a
$ 14.69
$ 13.75
$ 17.42
n/a
$ 11.86
$ 12.25
$ 12.00
—
—
—
—
As of March 3, 2006, there were approximately 529 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 2005 or 2004. 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. In 2004, 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. In 2004, we accrued dividends in
respect to our Series D preferred stock aggregating $4.4 million.
The indenture governing our 91⁄4% 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)
566,545
—
566,545
$ 8.17
—
$ 8.17
433,455
—
433,455
We did not repurchase any of our shares in the fourth quarter of 2005.
26
ITEM 6. SELECTED FINANCIAL DATA
The following table presents selected historical consolidated financial data as of December 31, 2005,
2004 and 2003, 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, 2002 and
2001 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 2005, 2004 and 2003 which are included elsewhere herein. The
historical results do not necessarily indicate results expected for any future period.
Statement of Operations Data:
Parking services revenue:
Lease contracts . . . . . . . . . . . . . . . . . . . . . . . . . .
Management contracts. . . . . . . . . . . . . . . . . . . .
Reimbursement of management contract
expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of parking services:
Lease contracts . . . . . . . . . . . . . . . . . . . . . . . . . .
Management contracts. . . . . . . . . . . . . . . . . . . .
Reimbursed management contract expense. .
Total cost of parking services(1). . . . . . . . . . . . . . . .
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. . . .
Valuation allowance related to long-term
receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss). . . . . . . . . . . . . . . . . . . . . . .
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on extinguishment of debt . . . . . . . . . . . . . . . .
Bad debt provision related to related-party non-
operating receivables . . . . . . . . . . . . . . . . . . . . . . .
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax (benefit) 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
2005
2004
Year Ended December 31,
2003
($ in Thousands)
2002
2001
$ 154,099 $ 148,752 $ 138,681 $ 142,376 $ 156,411
87,403
76,613
93,876
83,712
78,029
338,679 331,171
586,654 563,635
330,243
545,537
326,146 317,973
546,551 561,787
37,101
141,037 134,548
34,029
338,679 331,171
516,817 499,748
125,153
29,439
330,243
484,835
128,871 142,555
44,272
35,201
326,146 317,973
490,218 504,800
13,062
56,775
69,837
38,922
6,427
—
—
—
900
23,588
9,398
(841)
—
—
326
(14)
14,204
49,683
63,887
33,470
6,957
—
1,500
2,299
—
19,661
13,369
(534)
(3,832)
—
349
(112)
13,528
47,174
60,702
32,907
7,501
1,055
3,000
—
2,650
13,589
16,797
(238 )
(1,757 )
—
357
411
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
—
—
—
12,573
16,246
(281 )
—
—
(4,362)
18,403
(804)
—
—
180
252
12,878
209
406
14,719
—
10,421
(7,243)
(1,981 )
(15,630 )
(3,824 ) (35,454)
(6,354)
(13,540 )
put/call . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
(2,196)
$ 14,719 $ 2,640 $ (18,853 ) $ (18,334 ) $ (44,004)
(1,242 )
(970 )
(538)
27
2005
2004
Year Ended December 31,
2003
($ in Thousands)
2002
2001
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)
$ 10,777 $ 10,360 $
(9,544)
(8,115)
201,353 195,102
92,108 109,750
1
—
—
15,339
1
—
—
24,412
8,470 $
(9,243 )
189,585
161,079
56,399
60,389
10,712
6,153 $ 7,602
(9,143 ) (20,156)
190,950 192,234
166,173 175,257
—
61,330
8,500
(166,002 ) (147,560 ) (20,156)
47,224
56,347
9,470
(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.
28
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 Item 1A 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 three
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, 2005, we operated 86% of our locations under management
contracts and 14% 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, 2005, 86% of our
locations were operated under management contracts and 81% of our gross profit for the year ended
December 31, 2005 was derived from management contracts. Only 38% 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.
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. We raised
29
$53.7 million in gross proceeds 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 11¼% 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.
General Business Trends
We believe that sophisticated commercial real estate developers and property managers and owners
recognize the potential for parking and related services to be a profit generator rather than a cost center.
Often, the parking experience makes both the first and the last impressions on their properties’ tenants
and visitors. By outsourcing these services, they are able to capture additional profit by leveraging the
unique operational skills and controls that an experienced parking management company can offer. Our
ability to consistently deliver a uniformly high level of parking and related services and maximize the profit
to our clients improves our ability to win contracts and retain existing locations. Our retention rate for the
twelve month period ended December 31, 2005 was 91%, compared to 88% for the year-ago period, which
also reflects our decision not to renew, or to terminate, unprofitable contracts.
We are also experiencing an increase in our ability to leverage existing relationships to increase the
scope of services provided, thereby increasing the profit per location. For the year ended December 31,
2005 compared to the year ended December 31, 2004, we improved average gross profit per location by
8.7% from $33,696 thousand to $36,640 thousand.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31,
2005
1,643
263
1,906
December 31,
2004
1,591
295
1,886
December 31,
2003
1,567
294
1,861
30
Revenue
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, development fees, gains on sales of contracts, insurance and
other value-added services with respect to managed locations. Development fees received from
a customer for which we have provided certain consulting services as part of our offerings of
ancillary management services and gains from sales of contracts for which we have no asset
basis or ownership interest and would be received as part of a formula buy-out. 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.
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.
31
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 2005 or 2004. During 2003 we incurred a variety of special charges.
These charges included costs associated with: the write off of debt issuance costs related to the debt
exchange, employee severance costs, and certain expenses of AP Holdings, Inc., our former parent.
Management Fee
We recorded no management fee in 2005. The fee was terminated upon the closing of the initial
public offering in June 2004. We recorded $1.5 million and $3.0 million in management fees for the years
ended December 31, 2004 and 2003, respectively.
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
Hurricane Katrina
Our operations were impacted by Hurricane Katrina during the year ended December 31, 2005
compared to the year ended December 31, 2004. The impact is a $1.2 million reduction in net income
compared to the year-ago period and the recording of a $0.5 million provision to cover the deductible
portion of our casualty insurance program that we expect to incur in connection with the hurricane related
insurance claim that we will file. We estimate that we have sustained insured property damage from the
hurricane in excess of $2.7 million. We have assumed the damage was considered damage caused by wind
and not flood which has a higher deductible percentage.
We believe that we are entitled to recover the total amount of all losses sustained as a result of
Katrina, less the deductible that we have accrued for at $0.5 million. No amounts have been recorded
related to any expected recoveries from our insurance carriers.
Fiscal 2005 Compared to Fiscal 2004
Parking services revenue—lease contracts. Lease contract revenue increased $5.3 million, net of
$2.1 million attributable to Katrina, or 3.6%, to $154.1 million for the year ended December 31, 2005,
compared to $148.8 million in the year-ago period. This increase resulted from an increase in same
location revenue of $5.7 million, for the year ended December 31, 2005, compared to the year-ago period.
This increase was due to increases in short-term parking revenue of $4.8 million, or 6.2%, and an increase
in monthly parking revenue and other of $0.9 million, or 2.2%. Partially offsetting this increase, was a net
32
decrease of $0.4 million attributable to an increase of $13.5 million in revenues from new locations that
was offset by reductions in revenue related to contract expirations of $13.9 million.
Parking services revenue—management contracts. Management contract revenue increased $10.2
million, net of $0.2 million attributable to Katrina, or 12.1%, to $93.9 million for the year ended
December 31, 2005, compared to $83.7 million in the year-ago period. This increase resulted from a net
increase of $2.6 million attributable to $8.9 million in revenues from new locations that was offset by
reductions in revenue attributable to contract expirations of $6.3 million. We experienced an increase in
same location revenue of $7.6 million, or 10.8%, for the year ended December 31, 2005, compared to the
year-ago period. This increase was primarily due to additional fees from reverse management locations
and ancillary services.
Reimbursement of management contract expense. Reimbursement of management contract expenses
increased $7.5 million, or 2.3%, to $338.7 million for the year ended December 31, 2005, compared to
$331.2 million for 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 services for lease contracts increased $6.5
million, net of a benefit of $0.7 million attributable to Katrina, or 4.8%, to $141.0 million for the year
ended December 31, 2005, compared to $134.5 million in the year-ago period. This increase resulted from
an increase of $13.2 million in costs from new locations that was offset by reductions in costs attributable to
contract expirations of $12.8 million. We experienced an increase in same location costs of $6.1 million, or
5.5%, for the year ended December 31, 2005, compared to the year-ago period. This increase was due to
increases in rent expense of $4.2 million, or 5.3%, due to percentage rental payments from increased
revenue, $1.4 million, or 5.5% for increases in other operating costs and $0.5 million for a provision for the
deductible portion of our casualty loss related to the impact of Katrina.
Cost of parking services—management contracts. Cost of parking services for management contracts
increased $3.1 million, or 9.0%, to $37.1 million for the year ended December 31, 2005, compared to $34.0
million in the year-ago period. This increase resulted from a net increase of $1.7 million attributable to
$6.1 million in costs from new locations that was partially offset by reductions in costs attributable to
contract expirations of $4.4 million. We experienced an increase in same location costs of $1.4 million, or
5.7%, for the year ended December 31, 2005 compared to the year-ago period. This increase was due to
increases attributable to operating expenses on our reverse management locations of $1.4 million, or 3.4%,
and increases in other operating expenses of $0.3 million, offset by a net reduction of $0.3 million in
compensation and benefits.
Reimbursed management contract expense. Reimbursed management contract expenses increased
$7.5 million, or 2.3%, to $338.7 million for the year ended December 31, 2005, compared to $331.2 million
for 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 decreased $1.1 million, or 8.0%, to
$13.1 million for the year ended December 31, 2005, compared to $14.2 million for the year-ago period.
Gross margin for lease contracts decreased to 8.5% at December 31, 2005, compared to 9.5% for the year-
ago period. The margin decrease was due to the $0.5 million for a provision for the deductible portion of
our casualty loss and $0.9 million in operations related to the impact of Katrina.
Gross profit—management contracts. Gross profit for management contracts increased $7.1 million,
or 14.3%, to $56.8 million for the year ended December 31, 2005, compared to $49.7 million for the year-
ago period. Gross margin for management contracts increased to 60.5% for the year ended December 31,
2005, compared to 59.3% for the year-ago period. This increase was primarily due to additional fees from
reverse management locations and ancillary services.
33
General and administrative expenses. General and administrative expenses increased $5.5 million, or
16.3%, to $38.9 million for the year ended December 31, 2005, compared to $33.4 million for the year-ago
period. This increase resulted primarily from increases in consulting and accounting fees incurred for
regulation 404 certification of $0.8 million, professional fees and due diligence related to mergers and
acquisitions of $0.6 million, a previously announced one-time bonus to executive management of $0.3
million and increases in payroll, payroll related expenses, and other costs of $3.2 million.
Management fee—parent company. We recorded no management fee in 2005. The fee was
terminated upon the closing of the initial public offering in June 2004. We recorded $1.5 million in
management fee for the year ended December 31, 2004.
Valuation allowance related to long-term receivables. We recorded $0.9 million as a valuation
allowance related to long term receivables for the year ended December 31, 2005, compared to no
allowance in the year-ago period. The valuation allowance relates to a long-term receivable for a facility in
Minnesota where a breakdown in negotiations to restructure the contract has occurred. The allowance was
recorded due to the uncertainty of future collections.
Interest expense. Interest expense decreased $4.0 million, or 29.7%, to $9.4 million for the year ended
December 31, 2005, compared to $13.4 million for the year-ago period. The decrease resulted primarily
from the redemption of the 14% Notes and refinancing our senior credit facility, in conjunction with our
initial public offering in June 2004.
Interest income. Interest income increased $0.3 million, or 57.5%, to $0.8 million for the year ended
December 31, 2005, compared to $0.5 million for the year-ago period. The increase resulted primarily from
recognizing interest income due on the repayments received in 2005 for interest bearing guarantor
payments related to Bradley International Airport. (See Note O to our consolidated financial statements.)
Income tax (benefit) expense. Income tax (benefit) decreased $0.1 million for the year ended
December 31, 2005, compared to a benefit of $0.1 million for the year-ago period. The year ended
December 31, 2005 reflects the recognition of a reduction of the valuation allowance for the deferred tax
assets of $0.4 million offset by an increase of $0.5 million of current and foreign tax expense.
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. This increase was due to
increases in short-term parking revenue of $4.4 million, or 4.9%, and an increase in monthly parking
revenue of $0.5 million, or 1.3%.
Parking services revenue—management contracts. Management contract revenue increased $7.1
million, or 9.3%, to $83.7 million in the first year ended December 31, 2004, compared to $76.6 million in
the year-ago period. This increase resulted from a net increase of $3.6 million attributable to $7.4 million
in revenues from new locations that was partially offset by reductions in revenue attributable to contract
expirations of $3.8 million. We experienced an increase in same location revenue of $3.5 million, or 5.4%,
for the year ended December 31, 2004, compared to the year-ago period. This increase was primarily due
to additional fees from reverse management locations and ancillary services.
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
34
$330.2 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 increased $9.3 million, or
7.5%, to $134.5 million for the year ended December 31, 2004, compared to $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, compared to $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, 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, 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.
35
Management fee—parent company. We recorded $1.5 million for management fees for the year
ended December 31, 2004, 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.
Interest expense. Interest expense decreased $3.4 million, or 20.4%, to $13.4 million for the year
ended December 31, 2004, compared to $16.8 million for the year-ago period. The decrease resulted
primarily from the redemption of the 14% Notes and refinancing our senior credit facility in conjunction
with our initial public offering in June 2004.
Interest income. Interest income increased $0.3 million, or 124.4%, to $0.5 million for the year ended
December 31, 2004, compared to $0.2 million for the year-ago period. The increase resulted primarily from
interest received on a sales tax refund.
Income tax (benefit) expense. Income tax (benefit) increased $0.5 million to a (benefit) of $0.1 million
for the year ended December 31, 2004, compared to expense of $0.4 million for the year-ago period. The
$0.5 million decrease was due to the favorable adjustment of our foreign tax reserves.
36
Unaudited Quarterly Results
The following table sets forth our unaudited quarterly consolidated statement of operations data for
the years ended December 31, 2005 and December 31, 2004. The unaudited quarterly information has
been prepared on the same basis as the annual financial information and, in management’s opinion,
includes all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the
information for the quarters presented. Historically, the Company’s revenues and operating results have
varied from quarter to quarter and are expected to continue to fluctuate in the future. These fluctuations
have been due to a number of factors, including: general economic conditions in the Company’s markets;
additions of contracts; expiration and termination of contracts; conversion of lease contracts to
management contracts; conversion of management contracts to lease contracts and changes in terms of
contracts that are retained. The operating results for any historical quarter are not necessarily indicative of
results for any future period.
March 31
June 30
September 30
December 31 March 31
June 30
September 30
December 31
2005 Quarters Ended
2004 Quarters Ended
(unaudited)
(unaudited)
($ in thousands)
$
38,727 $
21,817
39,140
23,315
$
38,659
24,347
$
37,573
24,397
$ 35,121 $
20,873
37,120
21,575
$
37,125
20,089
$
39,386
21,175
82,532
143,076
84,903
147,358
85,253
148,259
85,991
147,961
87,721
143,715
82,207
140,902
76,597
133,811
84,646
145,207
35,371
9,179
35,330
9,578
35,546
10,034
34,790
8,310
32,424
8,119
33,549
9,025
33,131
8,660
35,444
8,225
82,532
84,903
85,253
85,991
87,721
82,207
76,597
84,646
Parking services revenue:
Lease contracts . . . . . . . . .
Management contracts . . .
Reimbursement of
management contract
expense . . . . . . . . . . . . .
Total revenue . . . . . . . . . .
Cost of parking services:
Lease contracts . . . . . . . . .
Management contracts . . .
Reimbursed management
contract expense . . . . . .
Total cost of parking
services . . . . . . . . . . . . .
127,082
129,811
130,833
129,091
128,264
124,781
118,388
128,315
Gross profit:
Lease contracts . . . . . . . . .
Management contracts . . .
Total gross profit . . . . . . .
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
Operating income . . . . . . .
Other expense (income):
Interest expense . . . . . . . .
Interest income. . . . . . . . .
Net (gain) loss on
extinguishment of debt .
3,356
12,638
15,994
3,810
13,737
17,547
3,113
14,313
17,426
2,783
16,087
18,870
2,697
12,754
15,451
3,571
12,550
16,121
3,994
11,429
15,423
3,942
12,950
16,892
9,094
9,210
9,937
10,681
8,483
8,665
7,848
8,474
1,464
—
1,493
—
—
—
900
4,536
2,384
(77 )
—
2,307
—
—
—
6,844
2,463
(77)
—
2,386
1,814
—
—
—
—
5,675
2,234
(63)
—
2,171
1,656
—
1,586
—
1,583
—
—
—
—
6,533
2,317
(624)
—
1,693
750
750
—
2,293
—
4,632
4,375
(93)
—
4,282
—
2,830
4,168
(249 )
(3,860 )
59
1,554
—
—
—
—
6,021
2,414
(78 )
27
2,363
2,234
—
—
6
—
6,178
2,412
(114)
1
2,299
37
March 31
June 30
September 30
December 31 March 31
June 30
September 30
December 31
2005 Quarters Ended
2004 Quarters Ended
(unaudited)
(unaudited)
($ in thousands)
2,229
121
4,458
87
3,504
62
4,840
56
17
108
(799)
660
350
97
178
2,771
145
140
3,658
54
3,879
53
19
(449)
2,091
—
4,263
—
4,241
—
4,124
—
75
4,198
2,486
3,045
3,585
—
4,275
—
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 income (loss) . . . . . . .
Common Stock Data:
Net income per common
share:
Basic . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . .
Weighted average common
shares outstanding:
Basic . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . .
—
2,091 $
—
4,263
$
—
4,241
$
—
4,124
315
$ (4,438) $
223
(782 )
$
—
3,585
$
—
4,275
$
.20
.19
.41
.40
.42
.40
.41
.39
—
—
(.24 )
(.24 )
.34
.33
.41
.40
10,457,155
10,727,044
10,288,457
10,567,468
10,191,044
10,496,786
10,126,482
10,450,360
—
—
3,229,817
3,229,817
10,464,888
10,708,537
10,487,003
10,756,395
38
Liquidity and Capital Resources
Outstanding Indebtedness
On December 31, 2005, we had total indebtedness of approximately $92.1 million, a reduction of $17.7
million from December 31, 2004. The $92.1 million includes:
• $33.6 million under our senior credit facility;
• $49.3 million of 91/4% Notes, including $0.5 million in carrying value in excess of principal, which are
due in March 2008; and
• $9.2 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 available borrowings under our senior
credit facility, which amounted to $31.1 million at December 31, 2005, will be 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 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 2.25% and 3.0% 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 0.75% and 1.50% 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 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
39
(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, 2005, we were in compliance with all of our covenants.
The weighted average interest rate on our Senior Credit Facility at December 31, 2005 was 4.4%. The
4.4% rate includes all outstanding LIBOR contracts, interest rate cap effect and letters of credit.
On July 7, 2004 we entered into a first amendment to our Credit Agreement, pursuant to which U.S.
Bank and Fifth Third were included as Lenders with commitments and to concurrently reduce the
commitments of LaSalle and Wells Fargo.
On March 14, 2005, we entered into a second amendment to our Credit Agreement, which permitted
us to repurchase shares of our common stock during 2005, on the open market or through private
repurchases, for a value not to exceed $6.0 million, provided that we meet certain financial tests.
On March 16, 2005, we entered into a third amendment to our Credit Agreement, pursuant to which
the interest pricing of our LIBOR Margin, Base Rate Margin and our Letter of Credit Fee Rate has been
reduced by 25 basis points across the entire interest rate pricing grid.
On February 28, 2006 we entered into a fourth amendment to our Credit Agreement, pursuant to
which the interest pricing of our LIBOR Margin, Base Rate Margin, and the Letter of Credit Fee rate has
been reduced by 25 basis points across the entire interest rate pricing grid. The termination date was
extended to December 2, 2007, the definition of Change in Control was amended and restated in its
entirety and we are permitted to repurchase shares of our common stock during 2006, on the open market
or through private purchases, for a value not to exceed $6.0 million, provided that we meet certain
financial tests. The covenants related to; fixed charge coverage ratio, senior debt to EBITDA ratio and the
total debt to EBITDA ratio were amended and restated.
At December 31, 2005, we had $25.3 million letters of credit outstanding under the senior credit
facility, borrowings against the senior credit facility aggregated $33.6 million and we had $31.1 million
available under the senior credit facility.
Interest Rate Cap Transactions
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 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 capped
our interest rate on a $15.0 million principal balance at 2.5% for a total of nine months which matured on
October 12, 2005 and for which we recognized a gain of $18 thousand which is reported as a reduction of
interest expense in the consolidated statement of operations. Each Rate Cap Transaction began as of
January 12, 2005 and settles each quarter on a date that is intended to coincide with our quarterly interest
payment dates under the credit agreement.
At December 31, 2005, the $30.0 million Rate Cap Transaction is reported at its fair value of $0.4
million and is included in prepaid expenses and other assets on the consolidated balance sheet. Total
40
changes in the fair value of $0.1 million have been reflected in accumulated other comprehensive income
on the consolidated balance sheet. The amount of change in the fair value at the time of maturity will be
reclassed into earnings at that time.
We do not enter into derivative instruments for any purpose other than cash flow hedging purposes.
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 $6.0 million. We repurchased certain shares in open market transactions from
time to time, and our majority shareholder 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.
During the second quarter we repurchased 43,786 shares at an average price of $16.88 per share on
the open market. Our majority shareholder sold to us 32,956 shares in the second quarter at an average
price of $16.93 per share. The total value of the second quarter transactions was $1.3 million.
During the third quarter we repurchased 39,735 shares at an average price of $18.17 per share on the
open market. Our majority shareholder sold to us 52,921 shares in the third quarter at an average price of
$17.79 per share. The total value of the third quarter transactions was $1.7 million. The third quarter
purchases completed the repurchase program authorized by the Board of Directors on March 4, 2005.
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, 2005, we provided $0.3 million in letters of credit to
collateralize our performance bond program and $0.2 million in letters of credit to collateralize other
programs.
At December 31, 2005, we provided letters of credit totaling $24.7 million to our casualty insurance
carriers to collateralize our casualty insurance program.
Deficiency Payments
Pursuant to our obligations with respect to the parking garage operations at Bradley International
Airport, we are required to make certain payments for the benefit of the State of Connecticut and for
holders of special facility revenue bonds. The deficiency payments represent contingent interest bearing
advances to the trustee to cover operating cash flow requirements. The payments, if any, are recorded as a
receivable by us for which we are reimbursed from time to time as provided in the trust agreement. As of
December 31, 2005 we have advanced to the trustee $4.9 million, net of reimbursements. We believe these
advances to be fully recoverable and therefore have not recorded a valuation allowance for them. We do
not guarantee the payment of any principal or interest on any debt obligations of the State of Connecticut
or the trustee.
We received repayments (net of deficiency payments) of $1.5 million in the year ended December 31,
2005 compared to making deficiency payments (net of repayments) of $2.0 million in the year-ended
December 31, 2004.
Capital Leases
We incurred $2.6 million in new capital lease obligations for the year ended December 31, 2005,
compared to $5.1 million for the year ended December 31, 2004.
41
Lease Commitments
We have lease commitments of $26.5 million for fiscal 2006. The leased properties generate sufficient
cash flow to meet the base rent payment.
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 2005 and 2004, 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 2005 and 2004, 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.
Net Cash Provided by Operating Activities
Net cash provided by operating activities totaled $31.4 million for 2005, compared to $11.4 million for
2004. Cash provided during 2005 included $22.8 million from operations, a net increase in assets and
liabilities of $8.6 million due to an increase in accounts payable of $5.1 million, and increase of $8.1 million
in other liabilities primarily relating to our casualty insurance program, a decrease in prepaid expenses of
$0.6 million all of which was partially offset by increases in accounts receivable of $5.2 million.
42
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 Used in Investing Activities
Net cash used in investing activities totaled $5.1 million in 2005 compared to $2.0 million in 2004.
Cash used in investing for 2005 included capital expenditures of $4.8 million for capital investments
needed to secure and/or extend leased facilities, investment in information system enhancements and
infrastructure and $0.3 million for contingent payments on previously acquired contracts.
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 Financing Activities
Net cash used in financing activities totaled $26.1 million in 2005 to cash used of $7.8 million in 2004.
Net cash used in financing activities for 2005 included $6.0 million to repurchase our common stock, $16.4
million in payments on the senior credit facility, $3.1 million for payments on capital leases and $0.6
million for cash used on joint venture, debt issuance costs and other long-term borrowings.
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.
Cash and Cash Equivalents
We had cash and cash equivalents of $10.8 million at December 31, 2005, compared to $10.4 million at
December 31, 2004 and $8.5 million at December 31, 2003.
43
Summary Disclosures About Contractual Obligations and Commercial Commitments
The following summarizes certain of our contractual obligations at December 31, 2005 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.
Payments due by period
Long-term debt(1) . . . . . . . . . . . . . . . . . . . . . . .
Operating leases(2). . . . . . . . . . . . . . . . . . . . . . .
Capital leases(3) . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities(4) . . . . . . . . . . . . . .
Letters of credit(5) . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
$ 99,499
105,238
6,246
25,867
25,260
$ 262,110
Less than
1 year
$ 7,423
23,751
2,786
4,700
14,069
$ 52,729
1-3 years
($ in thousands)
$ 90,289
50,226
2,722
12,884
11,191
$ 167,312
4-5 years
After 5 years
$
412
13,853
518
3,586
—
$ 18,369
$ 1,375
17,408
220
4,697
—
$ 23,700
(1) Represents principal amounts and interest. See Note F to our consolidated financial statements.
(2) Represents minimum rental commitments, excluding contingent rent provisions under all non-
cancelable leases with remaining terms of more than one year.
(3) Represents minimum future payments on capital lease obligations. See Note M to our consolidated
financial statements.
(4) Represents deferred compensation, customer deposits and insurance claims.
(5) Represents amount of currently issued letters of credit at their maturities.
In addition we made contingent earnout payments of $0.3 million, $0.6 million, $0.6 million for the
years ended 2005, 2004 and 2003, respectively and we made deficiency payments related to Bradley of $0.5
million, $2.0 million and $3.3 million for the years ended 2005, 2004 and 2003, 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:
44
Impairment of Long-Lived Assets and Goodwill
As of December 31, 2005, our net long-lived assets were comprised primarily of $14.9 million of
property, equipment and leasehold improvements and $2.5 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, 2005, we had $118.8 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, 2005, and December 31, 2004, 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. 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.
45
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 2018
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).
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.
Thomas J. Moriarty, Trustee on behalf of Teamsters Local Union No. 727 Pension Fund, Teamsters Local
Union No. 727 Health and Welfare Fund and Teamsters Local Union No. 727 Legal and Educational
Assistance Fund, Plaintiff v. Stanard Parking Corporation IL and Standard Parking Corporation, Defendants,
Case No. 03C9403, United States District Court, Northern District of Illinois, Eastern Division.
This matter was filed on December 30, 2003 by Thomas J. Moriarty, trustee, on behalf of the
Teamsters Local 727 Pension, Health and Welfare, and Legal and Educational Assistance Funds. The
action was brought under the Labor management Relations Act (LMRA) and the Employee Retirement
Income Security Act of 1974 (ERISA): The lawsuit seeks to recover alleged unpaid contributions to the
Teamsters Local 727 benefit funds that plaintiff claims are owed under the collective bargaining
agreements in effect for the period January 1, 2000 through December 31, 2002. Plaintiff seeks to recover
(1) unpaid contributions; (2) interest on the alleged delinquencies; (3) liquidated damages of 20% of the
unpaid contributions, or the interest relating to these contributions (“double interest”); and (4) attorneys
fees and audit costs. These have been no significant procedural events in the litigation.
The plaintiff’s final version of the underlying audit was not issued until August 4, 2005. The amount
claimed on the audit (including interest, damages and auditors fees), is approximately $1.64 million. The
Company disputes the plaintiff’s audit findings.
The Company completed its initial review of plaintiff’s audit in December 2005 and delivered its
findings to plaintiff’s auditors for their review and response. The company is awaiting comments from
plaintiff’s auditors before undertaking any additional formal discussions. No significant court deadlines
exist at the present time. Substantial formal discovery is expected to begin in the second half of 2006 if the
parties are unable to resolve the disputed amounts in the audit report.
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.
46
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 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 capped
our interest rate on a $15.0 million principal balance at 2.5% for a total of nine months which matured on
October 12, 2005 and for which we recognized a gain of $18 thousand which is reported as a reduction to
interest expense in the consolidated statement of operations. Each Rate Cap Transaction began as of
January 12, 2005 and settles each quarter on a date that is intended to coincide with our quarterly interest
payment dates under the credit agreement.
At December 31, 2005, the $30.0 million Rate Cap Transaction is reported at its fair value of $0.4
million and is included in prepaid expenses and other assets on the consolidated balance sheet. Total
changes in the fair value of $0.1 million have been reflected in accumulated other comprehensive income
on the consolidated balance sheet. The amount of change in the fair value at the time of maturity will be
reclassed into earnings at that time.
We do not enter into derivative instruments for any purpose other than cash flow hedging 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 $1.7 million and $0.2 million of Canadian
dollar denominated cash and debt instruments, respectively, at December 31, 2005. 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.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this Item are attached to and are hereby incorporated into this
Report.
47
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this annual report, our chief executive officer, chief financial
officer, and corporate controller carried out an evaluation of the effectiveness of the design and operation
of our disclosure controls and procedures pursuant to Rule 13a-15(e) of the Securities Exchange Act of
1934 (the “Exchange Act”). Based upon their evaluation, our chief executive officer, chief financial officer,
and corporate controller 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.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control system is
designed to provide reasonable assurance to our management and Board of Directors regarding the
preparation and fair presentation of published financial statements. Under the supervision and with the
participation of our management, including our chief executive officer, chief financial officer and
corporate controller, we conducted an evaluation of the effectiveness of our internal control over financial
reporting based on the framework in Internal Control-Integrated Framework, issued by the Committee on
Sponsoring Organization of the Treadway Commission (“COSO Framework”). Based on our evaluation
under the COSO Framework, our management concluded that our internal control over financial
reporting was effective as of December 31, 2005.
Our management’s assessment of the effectiveness of our internal control over financial reporting as
of December 31, 2005 has been audited by Ernst & Young, LLP, an independent registered certified public
accounting firm, as stated in their attestation report, which is included herein.
Limitations of the Effectiveness of Internal Control
A control system, no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the internal control system are met. Because of the inherent
limitations of any internal control system, no evaluation of controls can provide absolute assurance that all
control issues, if any, within a company have been detected.
48
PART III
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.
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.
Name
Business Experience
Current
Position
Held
Since
Age
John V. Holten. . . . . . . . . . . . Mr. Holten has served as a director and our chairman of
1998
49
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 Incorporated since
1986. Holberg Incorporated 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.
49
Current
Position
Held
Since
Age
2000
52
2000
50
Name
Business Experience
James A. Wilhelm . . . . . . . . . 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.
G. Marc Baumann . . . . . . . . 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.
Thomas L. Hagerman. . . . . . Mr. Hagerman has served as our executive vice president—
2004
45
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.
John Ricchiuto. . . . . . . . . . . . Mr. Ricchiuto has served as our executive vice president-
2002
49
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.
50
Name
Business Experience
Current
Position
Held
Since
Age
Robert N. Sacks. . . . . . . . . . . Mr. Sacks has served as our executive vice president—
1998
53
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.
Edward E. Simmons . . . . . . . Mr. Simmons has served as our senior vice president—
1998
56
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 currently a
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.
Steven A. Warshauer . . . . . . Mr. Warshauer has served as our executive vice president—
1998
51
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.
Michael K. Wolf . . . . . . . . . . Mr. Wolf has served as our executive vice president—chief
1998
56
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.
51
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.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
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.
52
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, 2005 and 2004
For the years ended December 31, 2005, 2004 and 2003:
Consolidated Statements of Operations
Consolidated Statements of Stockholders’ Equity
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.
53
Exhibit Listing
Exhibit
Number
Description
3.1 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).
3.2 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).
4.1 Specimen common stock certificate (incorporated by reference to exhibit 4.1 of Amendment
4.2
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).
4.2.1 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).
4.2.2 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).
4.2.3 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).
4.2.4 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).
10.1 Credit Agreement, dated June 2, 2004 among the Company, various financial institutions,
LaSalle Bank National Association and Wells Fargo Bank, N.A. (incorporated by reference to
exhibit 10.1 of the Company’s Current Report on Form 8-K filed on June 16, 2004).
10.1.1 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).
10.1.2 Second Amendment to Credit Agreement dated March 14, 2005, among the Company, LaSalle
Bank National Association and various financial institutions (incorporated by reference to
exhibit 10.1 of the Company’s Current Report on Form 8-K dated March 17, 2005).
10.1.3 Third Amendment to Credit Agreement dated March 16, 2005, among the Company, LaSalle
Bank National Association, Wells Fargo Bank, N.A. and Fifth Third Bank Chicago
(incorporated by reference to exhibit 10.2 of the Company’s Current Report on Form 8-K dated
March 17, 2005).
10.2 Amended Rate Cap Transaction Agreement dated as of November 15, 2004 by and among
LaSalle Bank National Association and the Company (incorporated by reference to exhibit 10.1
of the Company’s Current Report on Form 8-K filed on November 17, 2004).
54
Exhibit
Number
Description
10.3 Amended Rate Cap Transaction Agreement dated as of November 15, 2004 by and among
LaSalle Bank National Association and the Company (incorporated by reference to exhibit 10.1
of the Company’s Current Report on Form 8-K filed on November 17, 2004).
10.4 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 (incorporated by reference to exhibit 10.4.1 of the Company’s Annual
Report on Form 10-K filed for December 31, 2004).
10.4.2 Amendment to Employment Agreement, dated as of May 10, 2004 between the Company and
Myron C. Warshauer (incorporated by reference to exhibit 10.4.2 of the Company’s Annual
Report on Form 10-K filed for December 31, 2004).
10.5 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).
10.5.1 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).
10.5.2 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).
10.5.3 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).
10.5.4 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).
10.6 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).
10.6.1 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).
10.6.2 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).
10.6.3 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).
10.6.4 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).
10.6.5 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).
55
Exhibit
Number
Description
10.6.6 Sixth Amendment to Executive Employment Agreement dated as of April 1, 2005, between the
Company and James A. Wilhelm (incorporated by reference to exhibit 10.4 of the Company’s
Current Report on Form 8-K filed on March 7, 2005).
10.7 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).
10.7.1 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).
10.7.2 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).
10.8 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).
10.8.1 First Amendment to Amended and Restated Executive Employment Agreement, dated as of
April 11, 2005, between the Company and John Ricchiuto (incorporated by reference to exhibit
10.3 of the Company’s Current Report on Form 8-K filed on March 7, 2005).
10.9 Amended and Restated Employment Agreement, dated March 1, 2005, between the Company
and Steven A. Warshauer (incorporated by reference to exhibit 10.2 to the Company’s Current
Report on Form 8-K filed on March 7, 2005).
10.10 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).
10.11 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).
10.12 Amended and Restated Executive Employment Agreement, dated as of March 1, 2005, between
the Company and Thomas L. Hagerman (incorporated by reference to exhibit 10.1 of the
Company’s Current Report on Form 8-K filed on March 7, 2005).
10.13 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).
10.14 Form of Amended and Restated Stock Option Award Agreement between the Company and an
optionee (incorporated by reference to exhibit 10.1 of the Company’s Current Report on
Form 8-K filed on November 21, 2005).
10.14.1 Form of First Amendment to the Amended and Restated Stock Option Award Agreement
between the Company and an optionee (incorporated by reference to exhibit 10.2 of the
Company’s Current Report on Form 8-K filed on November 21, 2005).
10.15 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).
10.15.1 Amendment to Consulting Agreement, dated as of May 10, 2004 between the Company and
Shoreline Enterprises, LLC (incorporated by reference to exhibit 10.14.1 of the Company’s
Annual Report on Form 10-K filed for December 31, 2004).
56
Exhibit
Number
Description
10.16 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).
10.17 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).
10.17.1 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).
10.18 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).
10.18.1 First Amendment to the Management Agreement dated June 9, 2003 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)
10.19 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).
10.21 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).
10.21.1 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).
10.21.2 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).
10.21.3 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).
10.22 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).
10.23 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).
57
Exhibit
Number
10.23.1 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).
Description
10.24 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).
10.26 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).
10.27 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).
10.28 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)
10.28.1 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).
10.29 Stock Repurchase Agreement dated March 14, 2005, between the Company and Steamboat
Industries LLC (incorporated by reference to exhibit 10.3 of the Company’s Current Report on
Form 8-K filed on March 17, 2005).
10.29.1 Amended and Restated Stock Repurchase Agreement dated June 10, 2005, between the
Company and Steamboat Industries LLC (incorporated by reference to exhibit 10.1 of the
Company’s current Report on Form 8-K filed on June 13, 2005).
10.30* Form of Property Management Agreement
14.1 Code of Ethics (incorporated by reference to exhibit 14.1 of the Company’s Annual Report on
Form 10-K for December 31, 2002).
21.1 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 7, 2006.
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* 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.
58
INDEX TO HISTORICAL FINANCIAL STATEMENTS
Standard Parking Corporation
Report of Independent Registered Public Accounting Firm. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60
Report of Independent Registered Public Accounting Firm on Internal Control over Financial
Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 31, 2005 and 2004. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations for each of the three years in the period ended
December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity for each of the three years in the period ended
December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
61
62
63
64
65
67
59
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
of Standard Parking Corporation
We have audited the accompanying consolidated balance sheets of Standard Parking Corporation as
of December 31, 2005 and 2004, and the related consolidated statements of operations, shareholders’
equity and cash flows for each of the three years in the period ended December 31, 2005. 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. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Standard Parking Corporation at December 31, 2005 and 2004, and the
consolidated results of their operations and their cash flows for each of the three years in the period ended
December 31, 2005, in conformity with US 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.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the effectiveness of Standard Parking Corporation’s internal control over financial
reporting as of December 31, 2005, based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated March 8, 2006 expressed an unqualified opinion thereon.
Chicago, Illinois
March 8, 2006
/s/ ERNST & YOUNG LLP
60
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
of Standard Parking Corporation
We have audited management’s assessment, included in Item 9A of the accompanying Form 10-K,
that Standard Parking Corporation maintained effective internal control over financial reporting as of
December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Standard
Parking Corporation’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting. Our
responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of
the Company’s internal control over financial reporting based on our audit.
We conducted our audit 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 effective internal control over financial reporting was maintained in
all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, evaluating management’s assessment, testing and evaluating the design and operating
effectiveness of internal control, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (3) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In our opinion, management’s assessment that Standard Parking Corporation maintained effective
internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects,
based on the COSO criteria. Also, in our opinion, Standard Parking Corporation maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2005, based on the
COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets as of December 31, 2005 and 2004, and the related
consolidated statements of operations, shareholders’ equity and cash flows for each of the three years in
the period ended December 31, 2005 of Standard Parking Corporation and our report dated March 8,
2006, expressed an unqualified opinion thereon.
Chicago, Illinois
March 8, 2006
/s/ ERNST & YOUNG LLP
61
STANDARD PARKING CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share and per share data)
Current assets:
ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes and accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 10,777
40,707
2,217
1,961
55,662
$ 10,360
34,608
2,330
—
47,298
December 31
2005
2004
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities:
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation and payroll withholdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, payroll and other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of obligations under credit agreements and other . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term borrowings, excluding current portion:
Obligations under credit agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Convertible redeemable preferred stock, series D 18%, par value $100 per share, 10 shares issued and
outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stockholders’ equity:
Common stock, par value $.001 per share; 12,100,000 shares authorized; 10,126,482 shares issued and
outstanding as of December 31, 2005, and common stock, par value $.001 per share, 12,100,000
shares authorized; 10,487,003 shares issued and outstanding in 2004 . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total common stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and common stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,835
17,782
36,513
2,514
81,644
(64,228 )
17,416
23,735
17,687
34,815
2,385
78,622
(62,141)
16,481
4,953
1,330
118,781
3,211
128,275
$ 201,353
7,317
1,816
118,342
3,848
131,323
$ 195,102
$ 31,174
6,178
8,041
1,933
3,973
10,028
977
2,786
65,090
1,561
82,938
3,460
1,947
88,345
21,944
$ 26,107
4,871
8,595
1,760
2,788
7,780
773
2,739
55,413
—
99,517
4,120
2,601
106,238
18,111
1
1
10
187,616
419
(163,633 )
24,412
$ 201,353
10
193,565
116
(178,352)
15,339
$ 195,102
See Notes to Consolidated Financial Statements.
62
STANDARD PARKING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for share and per share data)
Parking services revenue:
Lease contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reimbursement of management contract expense . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
154,099
93,876
338,679
586,654
$ 148,752
83,712
331,171
563,635
$ 138,681
76,613
330,243
545,537
Years Ended December 31,
2005
2004
2003
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(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management fee-parent company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash stock option compensation expense (2) . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) before minority interest and income taxes. . . . . . . . . . . . . . . . .
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax (benefit) 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 . . . . . . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common Stock Data:
Net income per common share:
Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average common shares outstanding:
Basic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
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
13,369
(534 )
(3,832 )
9,003
10,658
349
(112 )
16,797
(238)
(1,757)
14,802
(1,213)
357
411
10,421
(7,243 )
(538 )
2,640
(1,981)
(15,630)
(1,242)
$ (18,853)
141,037
37,101
338,679
516,817
13,062
56,775
69,837
38,922
6,427
—
—
—
900
563,066
23,588
9,398
(841)
—
8,557
15,031
326
(14)
14,719
—
—
14,719
1.43
1.39
$
$
$
$
$
$
0.44
0.42
—
—
—
—
10,265,785
10,560,415
6,040,389
6,289,591
(1) Non-cash stock compensation expense of $214 for the year ended December 31, 2004 is included in
general and administrative expense.
(2) Non-cash stock option compensation expense of $2,299 relates entirely to general and administrative
expense.
See Notes to Consolidated Financial Statements.
63
STANDARD PARKING CORPORATION
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS’ (DEFICIT) EQUITY
(in thousands, except for share and per share data)
Common Stock
Number of
Shares
26.3
Par Value
$ 1
Additional
Paid-In
Capital
$ 15,222
Accumulated
Other
Comprehensive Accumulated
(Loss) Income
$ (644)
Deficit
$ (162,139 ) $ (147,560)
Total
411
26.3
1
15,222
(233)
Balance (deficit) at December 31, 2002 . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . .
7,243
56,398
60,389
5,000
2,299
1
—
46,699
214
100
$ 193,565
349
$ 116
176
127
$ 419
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 . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments .
Revaluation of interest rate cap . . . . . . . . .
Comprehensive income. . . . . . . . . . . . . . . .
Repurchase and retirement of common
(26.3)
5,456,192
5,000,000
15,044
15,767
10,487,003
(1)
5
5
—
—
$ 10
stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from exercise of stock options. . .
Balance (deficit) at December 31, 2005 . . .
(361,704)
1,183
10,126,482
—
—
$ 10
(5,963)
14
187,616
(1,981 )
(15,630 )
(1,981)
411
(1,570)
(15,630)
(1,242 )
(180,992 )
(1,242)
(166,002)
10,421
(7,243 )
10,421
349
10,770
—
(538 )
(538)
56,398
60,389
5,000
2,299
—
5
46,704
214
100
$ (178,352 ) $ 15,339
14,719
176
127
15,022
14,719
(5,963)
14
$ (163,633 ) $ 24,412
See Notes to Consolidated Financial Statements.
64
STANDARD PARKING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except for share and per share data)
Year Ended December 31,
2004
2005
2003
Operating activities
Net income (loss) before preferred stock dividends and increase in
value of common stock subject to put/call . . . . . . . . . . . . . . . . . . . . . . .
$ 14,719
$ 10,421
$ (1,981)
Adjustments to reconcile net income (loss) to net cash provided by
operations:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 the 14%
senior subordinated second lien notes . . . . . . . . . . . . . . . . . . . . . . . .
Provision (reversal) for losses on accounts receivable . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from the sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,782
645
—
764
(179 )
—
900
—
—
533
(400 )
—
(5,168 )
240
358
5,068
8,092
31,354
(4,762 )
29
(316 )
(5,049 )
—
14
(5,963 )
—
360
—
(16,400 )
(213 )
(618 )
(126 )
(3,118 )
6,868
89
279
1,015
(1,308 )
2,513
—
2,385
(8,207 )
464
—
—
(6,035 )
(894 )
(194 )
1,136
2,812
11,344
(1,378 )
26
(644 )
(1,996 )
46,709
100
—
(6,250 )
—
54,550
(40,650 )
(145 )
(555 )
(1,409 )
(2,423 )
7,137
364
3,263
1,199
(2,854)
—
2,650
—
(1,172)
(1,029)
—
(585)
(1,544)
185
1,617
568
5,804
13,622
(1,812)
23
(709)
(2,498)
—
—
—
—
332
4,500
—
(54)
(687)
(2,987)
(1,994)
65
STANDARD PARKING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(in thousands, except for share and per share data)
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 in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of year. . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid for:
2005
Year Ended December 31,
2004
(57,734 )
—
(7,807 )
349
1,890
8,470
$ 10,360
—
—
(26,064 )
176
417
10,360
$ 10,777
2003
(5,915)
(2,413)
(9,218)
411
2,317
6,153
$ 8,470
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 8,670
400
$ 14,796
140
$ 14,901
323
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 14% senior subordinated second lien notes . . . . . . . . . . .
$ 2,644
—
—
$ 5,076
(60,389 )
(56,398 )
$ 1,412
—
—
—
—
5,000
375
—
2,347
See Notes to Consolidated Financial Statements.
66
STANDARD PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2005, 2004 and 2003
(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 more than 1,900 parking facilities, containing approximately 1,033,167 parking spaces in 303 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. We have interests in 14 joint ventures, each of which operates
between one and twenty-two parking facilities. Of the 14 joint ventures, nine are majority owned by us and
are consolidated into our financial statements, and five are single purpose entities where we have a 50%
interest or a minority interest. 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.
Variable Interest Entities
Equity
Other Investments
in VIE’s
Commencement
of Operations
Nature of Activities
%
Ownership
Locations
Jan 92—August 99 Management of parking lots,
50.0%
Various states
shuttle operations and parking
meters
The existing VIE’s in which we have a variable interest are not consolidated into our financial
statements because we are not the primary beneficiary.
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. Development fees are revenue received from a customer for which we have provided
certain consulting services as part of our offerings of ancillary management services. The gains from sales
of contracts are for these contracts for which we have no asset basis or ownership interest and would be
received as part of a formula buy-out in the contract in order for the owner to terminate the contract prior
to its expiration.
67
STANDARD PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 2005, 2004 and 2003
(In thousands except share and per share data)
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 $352, $456 and $412 for 2005, 2004 and 2003 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.
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, 2005 and 2004, the Company’s allowance for doubtful
accounts was $3,565 and $3,080, 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 on abandonments of leaseholds
and equipment of $646, $89 and $364 in 2005, 2004 and 2003, respectively. Depreciation expense was
$6,355, $5,801 and $6,914 in 2005, 2004 and 2003, respectively.
68
STANDARD PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 2005, 2004 and 2003
(In thousands except share and per share data)
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 annual impairment test of goodwill
made by the company in the fourth quarter for the years ended 2005, 2004 and 2003, 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.
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 $1,292
and $1,930 at December 31, 2005 and 2004, respectively, are included in intangibles and other assets in the
consolidated balance sheets and are reflected net of accumulated amortization of $4,768 and $4,004 at
December 31, 2005 and 2004, respectively.
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 91⁄4% 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, 2005 was approximately
$47,851 for the 91⁄4% 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’ equity.
69
STANDARD PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 2005, 2004 and 2003
(In thousands except share and per share data)
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 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 capped
our interest rate on a $15.0 million principal balance at 2.5% for a total of nine months which matured on
October 12, 2005 and for which we recognized a gain of $18 thousand which is reported as a reduction to
interest expense in the consolidated statement of operations. Each Rate Cap Transaction began as of
January 12, 2005 and settles each quarter on a date that is intended to coincide with our quarterly interest
payment dates under the credit agreement.
At December 31, 2005, the $30.0 million Rate Cap Transaction is reported at its fair value of $0.4
million and is included in prepaid expenses and other assets on the consolidated balance sheet. Total
changes in the fair value of $0.1 million have been reflected in accumulated other comprehensive income
on the consolidated balance sheet. The amount of change in the fair value at the time of maturity will be
reclassed into earnings at that time.
We do not enter into derivative instruments for any purpose other than cash flow hedging purposes.
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
70
STANDARD PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 2005, 2004 and 2003
(In thousands except share and per share data)
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 L).
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 January 1, 2006. We expect to adopt
Statement 123(R) on January 1, 2006.
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
$468 in additional costs on an annual basis.
71
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
2005
December 31,
2004
(in thousands except for per share data)
$ (18,853)
$ 2,640
$ 14,719
2003
reported net income, net of related tax effects . . . . . . . . . . . . . . . . . .
—
2,299
—
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 . . . . . . . . . . . . . . . . .
(468)
$ 14,251
$ 1.43
$ 1.39
$ 1.39
$ 1.35
(2,495 )
$ 2,444
.44
$
.41
$
.42
$
.39
$
—
$ (18,853)
$ —
$ —
$ —
$ —
The estimated weighted average fair value of the options granted was $6.87 for 2005 option grants and
$6.44 for 2004 option grants, using the Black-Scholes option pricing model with the following assumptions;
weighted average dividend yield was 0% for fiscal year 2005 and 2004, weighted average volatility of
34.57% was used for fiscal year 2005 and 50% was used for fiscal year 2004, 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 4.13% for 2005 and 2.78% for 2004, and a weighted average expected term of 7 years for
2005 and 2004.
On October 12, 2005, we issued stock options to purchase 16,608 shares of common stock at a market
price of $19.00 per share to our outside Directors.
For the year ended December 31, 2004, 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, of $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.
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.
72
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 . . . . . . . . . . . . . . . . . . .
December 31,
2005
Year Ended
December 31,
2004
December 31,
2003(1)
(in thousands except for share and per share data)
$
14,719
$
2,640
$ (18,853)
10,265,785
10,560,415
1.43
1.39
$
$
6,040,389
6,289,591
0.44
0.42
$
$
—
—
$ —
$ —
(1) Earnings per share was not calculated for 2003 as the number of outstanding shares were nominal.
There are no additional securities that could dilute basic EPS in the future that were not included in
the computation of diluted EPS.
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 on June 2, 2004.
For the year ended December 31, 2004, 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.
Note D. Net Gain from Extinguishment of Debt and Other
In 2003, we recorded a net gain from extinguishment of debt and other of $1,757 related to the
repurchase of 14% notes at a discount. In 2004, we recorded a net gain of $3,832 in conjunction with our
IPO. In 2005, we had no gains 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. . . . . . . . . . . . . . . . . . . . . . . . . .
73
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 E. 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.
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. 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 11¼% 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. Our remaining Series C preferred stock was contributed to us by our parent as a capital
contribution, which amounted to $63.3 million and included accumulated dividends of $2.9 million. As of
December 31, 2004, there are no outstanding shares of Series C preferred stock.
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, which amounted to $60.7 million and included
accumulated dividends of $4.4 million. 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.
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.
74
Note F. Borrowing Arrangements
Long-term borrowings, in order of preference, consist of:
Interest
Rate(s)
Due Date
December 31, 2005
December 31, 2004
Amount Outstanding
(in thousands)
Senior Credit Facility . . . . . . . . . . . . . . . . Various
Senior Subordinated Notes . . . . . . . . . . .
Carrying value in excess of principal . . . Various
Joint venture debentures . . . . . . . . . . . . .
11.00
Capital lease obligations . . . . . . . . . . . . . Various
Obligations on Seller notes and other . . Various
Various
Various
Various
Various
June 2007(1)
91⁄4% March 2008
Less current portion . . . . . . . . . . . . . . . . .
$ 33,600
48,877
461
689
6,246
2,235
92,108
3,763
$ 88,345
$ 50,000
48,877
640
1,308
6,859
2,066
109,750
3,512
$ 106,238
(1) On February 28, 2006, we entered into an amendment which extended the due date to December 2,
2007.
Senior Subordinated Notes
The 91⁄4% Senior Subordinated Notes (the “91⁄4% Notes”) were issued in September of 1998 and are
due in March of 2008.
The 91⁄4% 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 R).
Senior Credit Facility
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 2.25% and 3.00% 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 0.75% and 1.50% 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
75
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, 2005 we were in compliance with all of the covenants.
The weighted average interest rate on our Senior Credit Facility at December 31, 2005 was 4.4%. The
4.4% rate includes all outstanding LIBOR contracts, interest rate cap effect and letters of credit.
On July 7, 2004,we entered into a first amendment to our Credit Agreement, pursuant to which U.S.
Bank and Fifth Third were included as Lenders with commitments and to concurrently reduce the
commitments of LaSalle and Wells Fargo.
On March 14, 2005, we entered into a second amendment to our Credit Agreement, which permitted
us to repurchase shares of our common stock during 2005, on the open market or through private
repurchases, for a value not to exceed $6.0 million, provided that we meet certain financial tests.
On March 16, 2005, we entered into a third amendment to our Credit Agreement, pursuant to which
the interest pricing of our LIBOR Margin, Base Rate Margin and our Letter of Credit Fee Rate has been
reduced by 25 basis points across the entire interest rate pricing grid.
On February 28, 2006 we entered into a fourth amendment to our Credit Agreement, pursuant to
which the interest pricing of our LIBOR Margin, Base Rate Margin, and the Letter of Credit Fee rate has
been reduced by 25 basis points across the entire interest rate pricing grid. The termination date was
extended to December 2, 2007, the definition of Change in Control was amended and restated in its
entirety and we are permitted to repurchase shares of our common stock during 2006, on the open market
or through private purchases, for a value not to exceed $6.0 million, provided that we meet certain
financial tests. The covenants related to; fixed charged coverage ratio, senior debt to EBITDA ratio and
the total debt to EBITDA ratio were amended and restated.
At December 31, 2005, we had $25.3 million of letters of credit outstanding under the senior credit
facility, borrowings against the senior credit facility aggregated $33.6 million, and we had $31.1 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.
We have entered into various financing agreements, which were used for the purchase of equipment.
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.
76
Note G. Accumulated Other Comprehensive Income
Accumulated other comprehensive income consists of the following components:
Balance at beginning of year
Revaluation of interest rate cap
Effect of foreign currency translation
Balance at end of year
Note H. Income Taxes
For the year ended
December 31,
2005
$ 116
127
176
$419
2004
$ (233 )
—
349
$116
The components of income tax (benefit) expense for the years ended December 31, 2005, 2004, and
2003 were as follows:
Current provision (benefit):
U.S. federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
_2005
2004
(in thousands)
2003
$ 173
201
12
386
$ —
(116 )
4
(112 )
$ —
381
30
411
Deferred provision (benefit):
U.S. federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(359)
—
(41)
(400)
—
—
—
—
—
—
—
Income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (14) $ (112 ) $ 411
77
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, 2005 and
2004 are as follows:
Deferred tax assets:
Net operating loss carry forwards . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carrying value in excess of principal . . . . . . . . . . . . . . . . . . . . .
Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carry forwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Undistributed Foreign Earnings . . . . . . . . . . . . . . . . . . . . . . . .
Book over tax depreciation and amortization . . . . . . . . . . . . .
Accrued lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2005
2004
(in thousands)
$ 24,433
8,742
180
3,069
801
(737 )
451
324
37,263
(24,179 )
13,084
$ 28,189
7,752
250
4,697
712
—
(376 )
379
41,603
(30,938 )
10,665
Deferred tax liabilities:
Tax over book goodwill amortization . . . . . . . . . . . . . . . . . . . .
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(12,684 )
(12,684 )
400
$
(10,665 )
(10,665 )
$ —
Amounts recognized on the balance sheet consist of:
Deferred tax asset, current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liability, long term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2005
(in thousands)
2004
$ 1,961
(1,561 )
$ 400
$ —
—
$ —
SFAS No. 109 “Accounting for Income Taxes” requires that we assess the realizability of deferred tax
assets ateach reporting period. These assessments generally consider several factors including the reversal
of existing temporary differences, projected future taxable income, and potential tax planning strategies.
We have reduced a portion of the valuation allowance for the deferred tax assets related to our net
operating loss carryforwards (NOL’s). We believe that it is more likely than not that the net deferred tax
asset of $13,084 will be realized based upon our history of profitability, estimates of future taxable income,
and the carryforward life over which the tax benefits will be realized.
At December 31, 2005 the Company had $62.6 million of federal net operating loss (NOLs)
carryforwards which will expire in the years 2018 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.
In previous years, the Company had treated its investment in its Canadian subsidiary as permanently
reinvested under APB 23. Based on its future investment plans, the Company has determined that its
investment in Canada is no longer permanent in duration and has provided for taxes on its undistributed
Canadian earnings as part of its 2005 tax provision.
78
A reconciliation of the Company’s reported income tax provision (benefit) to the amount computed
by multiplying book income/(loss) before income taxes by the statutory United States federal income tax
rate is as follows:
Tax at statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Permanent Differences . . . . . . . . . . . . . . . . . . . . . . . . . . .
State taxes, net of federal benefit . . . . . . . . . . . . . . . . . .
Effect of foreign tax rates . . . . . . . . . . . . . . . . . . . . . . . . .
Reduction of foreign tax reserves . . . . . . . . . . . . . . . . . .
Change in valuation allowance. . . . . . . . . . . . . . . . . . . . .
Income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . . .
2005
2003
$ 5,147
535
(88)
8
4
—
5,606
(5,620)
2004
(in thousands)
$ (534 )
$ 3,505
—
—
186
32
20
3
64
88
—
(449 )
(264 )
3,179
675
(3,291 )
(14) $ (112 ) $ 411
$
Taxes paid, which are for United States Federal alternative minimum tax, certain state income taxes,
and Canadian taxes were $400, $140, and $323 in 2005, 2004, and 2003, respectively.
Note I. 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, 2005 and
2004 , the Company has accrued $2,752 and $2,652 , respectively, representing the present value of the
future benefit payments. Expenses related to these plans amounted to $268, $288, and $275 in 2005, 2004
and 2003, respectively.
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 $782, $817, and $784 in 2005, 2004 and 2003,
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 $500,
$483 and $566 in 2005, 2004 and 2003, respectively.
The Company has a Long Term Incentive Plan which began in conjunction with the IPO. The
maximum number of shares of common stock that may be issued and awarded under the Long-Term
Incentive Plan is 1,000,000 of which 566,545 shares are outstanding as of December 31, 2005. The Long-
Term Incentive Plan will terminate 10 years from the date it was adopted by our board. In most cases the
options vest at the end of a three-year period from the date of the award. Options are granted with an
exercise price equal to the fair market value at the date of grant.
79
The following table summarizes the transactions pursuant to our stock option plans for the last three
years ended December 31.
Outstanding at December 31, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of
Shares
503.86
—
—
—
503.86
605,771
(15,767 )
(503.86 )
590,004
28,420
(1,183 )
(50,696 )
566,545
Weighted Average
Exercise Price
$ 5,600.00
—
—
—
$ 5,600.00
7.71
$
$
6.34
$ 5,600.00
$
$
$
$
$
7.71
17.26
11.50
8.27
8.17
At December 31, 2005 and 2004, options to purchase 419,491 and 433,482 shares of common stock,
respectively, were exercisable at a weighted average exercise prices of $6.91 and $6.39 per share,
respectively.
At December 31, 2005, information for outstanding options and options currently exercisable is as
follows:
Options outstanding
$6.00-$10.99
Option Price Range Per Share
$11.00-$13.99
$14.00-$19.99
Number of options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average exercise price . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average contractual lives . . . . . . . . . . . . . . . . . . . . . . .
$
397,285
6.34
8.42 years
$
140,840
11.50
8.63 years
$
28,420
17.26
9.14 years
Options exercisable
Number of options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average exercise price . . . . . . . . . . . . . . . . . . . . . . . . .
397,285
6.34
$
$
5,598
11.50
$
16,608
19.00
At December 31, 2004, information for outstanding options and options currently exercisable is as
follows:
Options outstanding
Option Price Range Per Share
$ 11.00-$13.99
$6.00-$10.99
$ 14.00-$19.99
Number of options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average exercise price . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average contractual lives . . . . . . . . . . . . . . . . . . . . . . .
$
429,068
6.34
9.42 years
$
160,936
11.50
9.63 years
$
Options exercisable
Number of options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average exercise price . . . . . . . . . . . . . . . . . . . . . . . . .
429,068
6.34
4,414
11.50
—
—
—
—
—
80
Note J. 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, 2005, 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:
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011 and thereafter, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(in thousands)
$ 23,751
22,320
16,885
11,021
7,855
23,406
$ 105,238
Rent expense, including contingent rents, was $108,721, $102,300 and $94,105 in 2005, 2004 and 2003,
respectively.
Contingent rent expense was $66,959, $79,892 and $73,558 in 2005, 2004 and 2003, respectively.
Note K. 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 $39,900 in 2005, $39,800 in 2004 and
$39,200 in 2003 under the applicable management contracts.
We entered into a management agreement with D&E Parking, Inc., a privately held company entirely
owned by Ed Simmons, Executive Officer of the Company and Dale Stark, a former Senior Vice President
and presently a consultant of the Company. In consideration of the services provided by D&E, we paid
D&E an annual base fee of $388,479 in 2005, $364,600 in 2004 and $358,000 in 2003. On December 31,
2003, we entered into an agreement to sell, at fair market value, certain contract assets to D&E. 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 $159,287, in 2005,
$71,900 in 2004 and $133,000 in 2003 under this arrangement
In 2005, Standard Parking provided property management services to eight separate retail shopping
centers and commercial office buildings, in which D&E have a minority ownership interest. Dale Stark, a
former Senior Vice President and presently a consultant of the Company, is the managing member of each
of the property ownership entities. In consideration of the property management services we provided for
these eight properties, we received fees totaling $273,218 in 2005. In 2004, we operated six of these
properties and received fees totaling $161,030 for our property management services. In 2003, we operated
two of these properties and received fees totaling $9,059 for our property management services.
In 2005, our wholly owned subsidiary, Preferred Response Security Services, Inc., provided security
services to a property owned by D&E. We received net fees amounting to $17,981 for these security
services. In 2005, we provided sweeping and power washing for three properties owned by D&E. For these
services we received fees totaling $26,331.
81
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. Until June of 2005, Circle Line
was 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 $78,900 in 2005, $71,400 in 2004 and $131,400 in
2003 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 $100,000 in 2005 which has been repaid as of December 31, 2005.
Note L. 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.
Thomas J. Moriarty, Trustee on behalf of Teamsters Local Union No. 727 Pension Fund, Teamsters Local
Union No. 727 Health and Welfare Fund and Teamsters Local Union No. 727 Legal and Educational
Assistance Fund, Plaintiff v. Standard Parking Corporation IL and Standard Parking Corporation, Defendants,
Case No. 03C 9403, United States District Court, Northern District of Illinois, Eastern Division.
This matter was filed on December 30, 2003 by Thomas J. Moriarty, trustee, on behalf of the
Teamsters Local 727 Pension, Health and Welfare, and Legal and Educational Assistance Funds. The
action was brought under the Labor Management Relations Act (LMRA) and the Employee Retirement
Income Security Act of 1974 (ERISA); The lawsuit seeks to recover alleged unpaid contributions to the
Teamsters Local 727 benefit funds that plaintiff claims are owed under the collective bargaining
agreements in effect for the period January 1, 2000 through December 31, 2002. Plaintiff seeks to recover
(1) unpaid contributions; (2) interest on the alleged delinquencies; (3) liquidated damages of 20% of the
unpaid contributions, or the interest relating to these contributions (“double interest”); and (4) attorneys
fees and audit costs. These have been no significant procedural events in the litigation.
The plaintiff’s final version of the underlying audit was not issued until August 4, 2005. The amount
claimed on the audit (including interest, damages and auditors fees), is approximately $1.64 million. The
Company disputes the plaintiff’s audit findings.
The Company completed its initial review of plaintiff’s audit in December 2005 and delivered its
findings to plaintiff’s auditors for their review and response. The Company is awaiting comments from
plaintiff’s auditors before undertaking any additional formal discussions. No significant court deadlines
exist at the present time. Substantial formal discovery is expected to begin in the second half of 2006 if the
parties are unable to resolve the disputed amounts in the audit report.
82
Note M. 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,
2005
$ 9,349
2,537
2,057
13,943
7,106
$ 6,837
2004
$ 8,425
2,537
1,698
12,660
5,009
$ 7,651
Future minimum lease payments under capital leases at December 31, 2005 together with the present
value of the minimum lease payments are as follows:
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total minimum payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Amounts representing interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Present value of minimum payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3,064
1,456
978
561
811
6,870
(624)
6,246
(2,786)
$ 3,460
Note N. Goodwill and Intangible Assets
As of December 31, 2005 and 2004, the Company’s finite lived intangible assets amounted to $0 and
$56 , respectively, net of accumulated amortization of $731 and $676, respectively, which primarily
consisted of non-compete agreements amortized over their useful lives.
The change in the carrying amount of goodwill is summarized 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,
2005
$ 118,342
122
317
$ 118,781
2004
$ 117,390
308
644
$ 118,342
Amortization expense for intangible assets during the year ended December 31, 2005 was $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.
83
Note O. Long-term Receivables
Long-term receivables, net, consist of the following:
Amount Outstanding
December 31, 2005
December 31, 2004
(in thousands)
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 4,945
2,492
(2,484 )
4,953
—
$ 4,953
$ 6,473
2,492
(2,484)
6,481
836
$ 7,317
We are entered into a 25-year agreement with the State of Connecticut that expires on April 6, 2025,
under which we operate 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 agreement 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 received repayments (net of
deficiency payments) of $1.5 million the year-ended December 31, 2005. We made deficiency payments
(net of repayments) of $2.0 million in the year-ended December 31, 2004 and $3.3 million in the year-
ended December 31, 2003.
The deficiency payments represent contingent interest bearing advances to the trustee to cover
operating cash flow requirements. The payments, if any, are recorded as a receivable by us for which we
are reimbursed from time to time as provided in the trust agreement. As of December 31, 2005 we have
advanced to the trustee $4.9 million, net of reimbursements. For the year ended December 31, 2005, we
recorded a receivable of $523 related to interest income on the repayments received in 2005. We believe
these advances to be fully recoverable and therefore have not recorded a valuation allowance for them. We
do not guarantee the payment of any principal or interest on any debt obligations of the State of
Connecticut or the trustee.
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 deficiency payments. There was no additional allowance recorded in the period
ended December 31, 2005 and 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.
84
The $0.8 million of other long-term receivables related to a facility in Minnesota where a breakdown
in negotiations to restructure the contract occurred. We recorded a valuation allowance for the amount of
the receivable during 2005.
Note P. 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 $6.0 million. We repurchased certain shares in open market transactions from
time to time and our majority shareholder 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 value of the transaction was approximately $3.0 million
During the second quarter we repurchased 43,786 shares at an average price of $16.88 per share on
the open market. Our majority shareholder sold to us 32,956 shares in the second quarter at an average
price of $16.93 per share. The total value of the second quarter transactions was $1.3 million.
During the third quarter we repurchased 39,735 shares at an average price of $18.17 per share on the
open market. Our majority shareholder sold to us 52,921 shares in the third quarter at an average price of
$17.79 per share. The total value of the third quarter transactions was $1.7 million. The third quarter
purchases completed the repurchase program authorized by the Board of Directors on March 4, 2005.
The Company retired the total 361,704 shares it purchased during the year ended December 31, 2005.
Note Q. 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, 2005, 2004 and 2003.
85
A summary of information about our foreign and domestic operations is as follows (in thousands):
Year ended December 31,
2004
2005
2003
Total revenues, excluding reimbursement of management contract
expenses:
Domestic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income:
$ 245,155
2,820
$ 247,975
$ 230,561
1,903
$ 232,464
$ 213,863
1,431
$ 215,294
Domestic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 23,080
508
$ 23,588
$ 18,911
750
$ 19,661
$ 13,084
505
$ 13,589
Net income (loss) before minority interest and income taxes:
Domestic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 14,463
568
$ 15,031
$ 9,869
789
$ 10,658
$ (1,581)
368
$ (1,213)
Identifiable assets:
Domestic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 193,468
7,885
$ 201,353
$ 186,454
8,648
$ 195,102
$ 181,531
8,054
$ 189,585
Note R. 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
Parking
Corporation
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Elimination
Total
December 31, 2005
Balance Sheet Data:
Current assets:
Cash and cash equivalents . . . . .
Notes and accounts receivable,
net . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and supplies .
Deferred income taxes . . . . . . . .
Total current assets. . . . . . . . . . .
Leaseholds and equipment, net . .
Long term receivables, net. . . . . . .
Advances and deposits . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . .
$
8,886
$
94
$ 1,797
$
—
$ 10,777
36,930
2,078
1,961
49,855
14,695
4,953
1,187
110,953
647
—
—
741
1,620
—
—
3,585
3,130
139
—
5,066
1,101
—
143
4,243
—
—
—
—
—
—
—
—
40,707
2,217
1,961
55,662
17,416
4,953
1,330
118,781
86
Intangible and other . . . . . . . . . . . .
Investment in subsidiaries . . . . . . .
Total assets. . . . . . . . . . . . . . . . . . . .
Current liabilities:
Accounts payable . . . . . . . . . . . .
Accrued and other current
Standard
Parking
Corporation
2,905
7,322
$ 191,870
Guarantor
Subsidiaries
—
—
$ 5,946
Non-Guarantor
Subsidiaries
306
—
$ 10,859
Elimination
—
(7,322 )
$ (7,322 )
Total
3,211
—
$ 201,353
$ 28,562
$
184
$ 2,428
$
—
$ 31,174
liabilities . . . . . . . . . . . . . . . . . .
25,134
2,789
2,230
—
30,153
Current portion of long-term
borrowings . . . . . . . . . . . . . . . .
Total current liabilities. . . . . . . .
Deferred income taxes . . . . . . . . . .
Long-term borrowings, excluding
current portion . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . .
Convertible redeemable preferred
stock, series D 18%, par value
$100 per share, 10 shares issued
and outstanding . . . . . . . . . . . . . .
Common stockholders’ equity
(deficit):
Common stock, par value $.001
per share; 12,100,000 share
authorized; 10,126,482 shares
issued and outstanding. . . . . .
Additional paid—in capital . . . .
Accumulated other
comprehensive income. . . . . .
Accumulated (deficit) equity . .
Total common stockholders’
2,994
56,690
1,561
88,060
21,146
—
2,973
—
—
—
769
5,427
—
285
798
—
—
—
—
—
3,763
65,090
1,561
88,345
21,944
1
—
—
—
1
10
187,613
—
2
127
(163,338)
—
2,971
—
1
292
4,056
—
—
10
187,616
—
(7,322 )
419
(163,633)
equity (deficit) . . . . . . . . . . . . .
24,412
2,973
4,349
(7,322 )
24,412
Total liabilities and common
stockholders’ equity (deficit).
$ 191,870
$ 5,946
$ 10,859
$ (7,322 )
$ 201,353
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 . . . .
$ 121,328
86,573
207,901
$ 21,335
122
21,457
$ 11,436
7,181
18,617
$
338,679
546,580
—
21,457
111,245
33,127
144,372
19,461
58
19,519
338,679
483,051
—
19,519
—
18,617
10,331
3,916
14,247
—
14,247
—
—
—
—
—
—
—
—
—
—
$ 154,099
93,876
247,975
338,679
586,654
141,037
37,101
178,138
338,679
516,817
87
Standard
Parking
Corporation
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Elimination
Total
10,083
53,446
63,529
37,724
5,536
900
19,369
9,265
(773)
1,874
64
1,938
—
274
—
1,664
—
—
1,105
3,265
4,370
1,198
617
—
2,555
133
(68)
—
—
—
—
—
—
—
—
—
13,062
56,775
69,837
38,922
6,427
900
23,588
9,398
(841)
10,877
150
(159)
3,833
$ 14,719
1,664
—
—
—
$ 1,664
2,490
176
145
—
$ 2,169
—
—
—
(3,833 )
$ (3,833 )
15,031
326
(14)
—
$ 14,719
$ 14,719
$ 1,664
$ 2,169
$ (3,833 )
$ 14,719
Gross profit:
Lease contracts . . . . . . . . . . . . . .
Management contracts. . . . . . . .
Total gross profit. . . . . . . . . . . . .
General and administrative
expenses . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization. . .
Valuation allowance related to
long-term receivables . . . . . . . . .
Operating income . . . . . . . . . . . . . .
Other expenses (income):
Interest expense . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . .
Income before minority interest
and income taxes . . . . . . . . . . . . .
Minority interest . . . . . . . . . . . . . . .
Income tax expense (benefit) . . . .
Equity in earnings of subsidiaries .
Net income (loss) . . . . . . . . . . . . . .
Cash Flows Data:
Operating activities:
Net income (loss) . . . . . . . . . . . .
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities
Depreciation and amortization.
Loss on sale of assets . . . . . . . . .
Amortization of deferred
4,925
611
263
11
financing costs . . . . . . . . . . . . .
764
Amortization of carrying value
in excess of principal. . . . . . . .
(179)
Valuation allowance related to
long-term receivables . . . . . . .
Provision for losses on accounts
receivable . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . .
Change in operating assets and
900
471
(400)
—
—
—
7
—
594
23
—
—
—
55
—
—
—
—
—
—
—
—
—
5,782
645
764
(179)
900
533
(400)
8,590
liabilities . . . . . . . . . . . . . . . . . .
4,271
119
4,200
Net cash provided by (used in)
operating activities . . . . . . . . .
26,082
2,064
7,041
(3,833 )
31,354
Investing activities:
Purchase of leaseholds and
equipments. . . . . . . . . . . . . . . .
Proceeds from the sale of assets
Contingent purchase payments.
(4,738)
22
(316)
—
—
—
(24)
7
—
—
—
—
(4,762)
29
(316)
88
Standard
Parking
Corporation
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Elimination
Total
Net cash used in investing
activities . . . . . . . . . . . . . . . .
(5,032)
—
(17)
—
(5,049)
Financing activities:
Proceeds from exercise of stock
options . . . . . . . . . . . . . . . . . . .
Repurchase of common stock. .
Proceeds from long-term
14
(5,963)
borrowings . . . . . . . . . . . . . . . .
360
Payments on senior credit
facility . . . . . . . . . . . . . . . . . . . .
(16,400)
Payments on long-term
borrowings . . . . . . . . . . . . . . . .
(214)
Payments on joint venture
borrowings . . . . . . . . . . . . . . . .
Payments on debt issuance costs
Payments on capital leases . . . .
Net cash used in financing
activities . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes
Increase in cash and cash
—
(126)
(2,271)
(24,600)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1
(618)
—
(847)
(1,464)
176
—
—
—
14
(5,963)
360
—
(16,400)
—
—
—
—
—
—
(213)
(618)
(126)
(3,118)
(26,064)
176
equivalents . . . . . . . . . . . . . . . .
(3,550)
2,064
5,736
(3,833 )
417
Cash and cash equivalents at
beginning of year. . . . . . . . . . . . .
5,875
1,847
2,638
—
10,360
Cash and cash equivalents at end
of year . . . . . . . . . . . . . . . . . . . . . .
$
2,325
$ 3,911
$ 8,374
$ (3,833 )
$ 10,777
89
Standard
Parking
Corporation
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Elimination
Total
December 31, 2004
Balance Sheet Data:
Current assets:
8,262
Cash and cash equivalents . . . . . . . . . . . $
27,841
Notes and accounts receivable, net . . .
2,290
Prepaid expenses and supplies . . . . . . .
38,393
Total current assets. . . . . . . . . . . . . . . . .
14,900
Leaseholds and equipments, net. . . . . . . .
7,317
Long term receivables, net. . . . . . . . . . . . .
1,590
Advances and deposits . . . . . . . . . . . . . . . .
110,637
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,509
Intangible and other . . . . . . . . . . . . . . . . . .
Investment in subsidiaries . . . . . . . . . . . . .
11,319
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . $ 187,665
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . $ 24,306
Accrued and other current liabilities . .
22,826
Current portion of long-term
$ —
590
29
619
263
—
—
3,585
48
—
$ 4,515
$ 2,098
6,177
11
8,286
1,318
—
226
4,120
291
—
$ 14,241
$ — $ 10,360
34,608
—
2,330
—
47,298
—
16,481
—
7,317
—
1,816
—
118,342
—
3,848
—
(11,319 )
—
$ (11,319 ) $ 195,102
$ 215
1,011
$ 1,586
1,957
$ — $ 26,107
25,794
—
borrowings . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities. . . . . . . . . . . . . .
Long-term borrowings, excluding current
portion . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . .
Convertible redeemable preferred
stock, series D 18%, par value $100
per share, 10 shares issued and
outstanding . . . . . . . . . . . . . . . . . . . . .
Common stockholders’ equity (deficit):
Common stock, par value $.001 per
share; 12,100,000 share authorized;
10,487,003 shares issued and
outstanding . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . .
Accumulated other comprehensive
income . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated (deficit) equity . . . . . . . .
Total common stockholders’ equity
2,708
49,840
—
1,226
105,153
17,332
10
—
804
4,347
1,075
779
—
—
—
—
3,512
55,413
106,238
18,111
1
—
—
—
1
10
193,562
—
2
—
1
—
—
10
193,565
—
(178,233)
—
3,277
116
7,923
—
(11,319 )
116
(178,352)
(deficit) . . . . . . . . . . . . . . . . . . . . . . . . .
15,339
3,279
8,040
(11,319 )
15,339
Total liabilities and common
stockholders’ equity (deficit). . . . . . . $ 187,665
$ 4,515
$ 14,241
$ (11,319 ) $ 195,102
90
Standard
Parking
Corporation
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Elimination
Total
Income Statement Data:
Parking services revenue:
Lease contracts . . . . . . . . . . . . . . . . . . . . . . $ 115,241 $ 21,993
160
Management contracts. . . . . . . . . . . . . . . .
22,153
78,954
194,195
$ 11,518
4,598
16,116
$ — $ 148,752
83,712
232,464
—
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. . . . . . . . . . . . . . . . . . . . .
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
—
16,116
10,027
1,860
11,887
—
11,887
1,491
2,738
4,229
815
632
—
—
2,782
197
(84)
—
331,171
525,366
—
22,153
104,374
32,105
136,479
20,147
64
20,211
331,171
467,650
—
20,211
10,867
46,849
57,716
32,655
6,110
1,500
2,299
15,152
13,171
(450)
(3,832)
6,263
163
10
4,331
1,846
96
1,942
—
215
—
—
1,727
1
—
—
1,726
—
—
—
— 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
19,661
13,369
(534)
(3,832)
10,658
349
(112)
—
2,669
186
(122)
—
—
—
—
(4,331 )
10,421
(7,243)
1,726
—
2,605
—
(4,331 )
—
10,421
(7,243)
to put/call rights. . . . . . . . . . . . . . . . . . . . . .
—
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . $ 2,640 $ 1,726
(538)
—
$ 2,605
—
(538)
$ (4,331 ) $ 2,640
91
Standard
Parking
Corporation
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Elimination
Total
Cash Flows Data:
Operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income (loss)
$ 10,421
$ 1,726
$ 2,605
$ (4,331 ) $ 10,421
to net cash provided by (used in)
operating activities
Depreciation and amortization. . . . . . . . . .
Loss on sale of assets . . . . . . . . . . . . . . . . . .
Non-cash interest expense . . . . . . . . . . . . . .
Amortization of deferred financing costs .
Amortization of carrying value in excess of
principal . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash stock option compensation
expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off debt issuance costs . . . . . . . . . . .
Write off of carrying value in excess of
principal related to the 14% senior
subordinated second lien notes . . . . . . .
Provision for losses on accounts receivable
Change in operating assets and liabilities .
Net cash provided by (used in) operating
activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investing activities:
Purchase of leaseholds and equipments . .
Proceeds from the sale of assets . . . . . . . . .
Contingent purchase payments. . . . . . . . . .
Net cash used in investing activities . . . . . .
Financing activities:
Proceeds from initial public offering . . . . .
Proceeds from exercise of stock options . .
Repurchase of common stock subject to
put/call rights . . . . . . . . . . . . . . . . . . . . . . .
Payments on senior credit facility. . . . . . . .
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 (decrease) in cash and cash
6,034
76
279
1,015
(1,308)
2,513
2,385
215
—
—
—
—
—
—
619
13
—
—
—
—
—
—
—
—
—
6,868
89
279
1,015
—
(1,308)
—
—
2,513
2,385
(8,207)
412
(866)
—
24
(200)
—
28
(2,109)
—
—
—
(8,207)
464
(3,175)
12,754
1,765
1,156
(4,331 )
11,344
(1,372)
21
(644)
(1,995)
46,709
100
(6,250)
(40,650)
54,550
(101)
—
(1,409)
(1,634)
(57,734)
(6,419)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(6)
5
—
(1)
—
—
—
—
—
(44)
(555)
—
(789)
—
(1,388)
349
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1,378)
26
(644)
(1,996)
46,709
100
(6,250)
(40,650)
54,550
(145)
(555)
(1,409)
(2,423)
(57,734)
(7,807)
349
equivalents . . . . . . . . . . . . . . . . . . . . . . . . .
4,340
1,765
116
(4,331 )
1,890
Cash and cash equivalents at beginning of
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of year . . .
6,660
$ 11,000
78
$ 1,843
1,732
$ 1,848
—
8,470
$ (4,331 ) $ 10,360
92
December 31, 2003
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 . . . . . . . . . . . . . . . .
Standard
Parking
Corporation
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Elimination
Total
$ 106,378
72,410
$ 22,114
181
$ 10,189
4,022
$ —
—
$ 138,681
76,613
330,243
509,031
—
22,295
96,130
28,063
20,158
53
330,243
454,436
—
20,211
10,248
44,347
54,595
32,084
6,408
866
3,000
1,956
128
2,084
—
213
—
—
2,650
9,587
—
1,871
16,531
(141)
(1,757)
(5,046)
151
240
3,456
1
—
—
1,870
—
—
—
—
14,211
8,865
1,323
—
10,188
1,324
2,699
4,023
610
880
189
—
—
2,344
265
(97)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
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)
2,176
206
384
—
—
—
—
(3,456 )
(1,000)
357
624
—
(1,981)
(15,630)
1,870
—
1,586
—
(3,456 )
—
(1,981)
(15,630)
(1,242)
$ (18,853)
—
$ 1,870
—
$ 1,586
—
$ (3,456 )
(1,242)
$ (18,853)
93
Standard
Parking
Corporation
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Elimination
Total
$ (1,981)
$ 1,870
$ 1,586
$ (3,456 )
$ (1,981)
Cash Flows 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 . . . . . . . . . . . .
Valuation allowance related to
6,408
3,263
1,199
(2,854)
long-term receivables . . . . . . . . .
2,650
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
(1,172)
(907)
(585)
213
—
—
—
—
—
(61)
—
880
—
—
—
—
—
—
—
7,501
3,263
1,199
—
(2,854)
—
2,650
—
—
(1,172)
(61)
—
—
—
—
(1,029)
(585)
6,630
liabilities . . . . . . . . . . . . . . . . . . . .
10,700
(2,041)
(2,029)
Net cash (used in) provided by
operating activities . . . . . . . . . . .
16,721
(19)
376
(3,456 )
13,622
Investing activities:
Purchase of leaseholds and
equipments. . . . . . . . . . . . . . . . . .
Proceeds from the sale of assets . .
Contingent purchase payments. . .
Net cash used in investing
(1,812)
23
(709)
activities . . . . . . . . . . . . . . . . . . . .
(2,498)
—
—
—
—
—
—
—
—
—
—
—
(1,812)
23
(709)
—
(2,498)
94
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) provided by
financing activities . . . . . . . . . . .
Effect of exchange rate changes . .
(Decrease) increase in cash and
Standard
Parking
Corporation
Guarantor
Subsidiaries
Non-Guarantor
Subsidiaries
Elimination
Total
332
4,500
(21)
—
(2,987)
(1,994)
(5,915)
(2,413)
(8,498)
—
—
—
—
—
—
—
—
—
—
—
—
—
(33)
(687)
—
—
—
—
(720)
411
—
—
—
—
—
—
—
—
—
—
332
4,500
(54)
(687)
(2,987)
(1,994)
(5,915)
(2,413)
(9,218)
411
cash equivalents. . . . . . . . . . . . . .
5,725
(19)
67
(3,456 )
2,317
Cash and cash equivalents at
beginning of year. . . . . . . . . . . . . . .
Cash and cash equivalents at end of
year . . . . . . . . . . . . . . . . . . . . . . . . . .
Note S. Subsequent Event
4,723
97
1,333
—
6,153
$ 10,448
$
78
$ 1,400
$ (3,456 )
$ 8,470
On February 28, 2006 we entered into a fourth amendment to our Credit Agreement, pursuant to
which the interest pricing of our LIBOR Margin, Base Rate Margin, and the Letter of Credit Fee rate has
been reduced by 25 basis points across the entire interest rate pricing grid. The termination date was
extended to December 2, 2007, the definition of Change in Control was amended and restated in its
entirety and we are permitted to repurchase shares of our common stock during 2006, on the open market
or through private purchases, for a value not to exceed $6.0 million, provided that we meet certain
financial tests. The covenants related to; fixed charge coverage ratio, senior debt to EBITDA ratio and the
total debt to EBITDA ratio were amended and restated.
95
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
By:
/s/ JAMES A. WILHELM
James A. Wilhelm
Director, President and Chief Executive Officer
Date: March 10, 2006
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
Title
Date
/s/ JOHN V. HOLTEN
John V. Holten
/s/ JAMES A. WILHELM
James A. Wilhelm
Director and Chairman
March 10, 2006
Director, President and Chief Executive Officer
March 10, 2006
(Principal Executive Officer)
/s/ GUNNAR E. KLINTBERG
Gunnar E. Klintberg
Director
/s/ CHARLES L. BIGGS
Charles L. Biggs
Director
/s/ KAREN M. GARRISON
Karen M. Garrison
Director
/s/ LEIF F. ONARHEIM
Leif F. Onarheim
Director
/s/ A. PETTER OSTBERG
A. Petter Ostberg
Director
/s/ ROBERT S. ROATH
Robert S. Roath
Director
March 10, 2006
March 10, 2006
March 10, 2006
March 10, 2006
March 10, 2006
March 10, 2006
/s/ G. MARC BAUMANN
G. Marc Baumann
/s/ DANIEL R. MEYER
Daniel R. Meyer
Executive Vice President, Chief Financial Officer,
March 10, 2006
and Treasurer (Principal Financial Officer)
Senior Vice President, Corporate Controller and
March 10, 2006
Asst. Treasurer (Principal Accounting Officer)
96
STANDARD PARKING CORPORATION
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
Description
Year ended December 31, 2005:
Allowance for doubtful accounts . . . . .
Deducted from asset accounts
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 . . . . .
Deferred tax valuation account
Year ended December 31, 2005 . . . . . .
Year ended December 31, 2004 . . . . . .
Year ended December 31, 2003 . . . . . .
Additions
Balance at
Beginning
of Year
Charged to
Costs and
Expenses
Charged
to Other
Accounts
Deductions(1)
Balance at End
of Year (2)
$ 3,080
$ 964
—
$ (479 )
$ 3,565
3,308
316
—
(544 )
3,080
1,687
3,849
—
(2,228 )
3,308
$ 30,938
34,229
27,802
$ —
—
—
$ (6,359)
(3,291)
6,427
$ (400 )
—
—
$ 24,179
30,938
34,229
(1) Represents uncollectible account written off, net of recoveries and reversal of provision.
(2) Includes long-term receivables valuation of $2.5 million.
97
Exhibit
Number
INDEX TO EXHIBITS
Description
3.1 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).
3.2 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).
4.1 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).
4.2
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).
4.2.1 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).
4.2.2 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).
4.2.3 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).
4.2.4 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).
10.1 Credit Agreement, dated June 2, 2004 among the Company, various financial institutions,
LaSalle Bank National Association and Wells Fargo Bank, N.A. (incorporated by reference to
exhibit 10.1 of the Company’s Current Report on Form 8-K filed on June 16, 2004).
10.1.1 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).
10.1.2 Second Amendment to Credit Agreement dated March 14, 2005, among the Company, LaSalle
Bank National Association and various financial institutions (incorporated by reference to
exhibit 10.1 of the Company’s Current Report on Form 8-K dated March 17, 2005).
98
Exhibit
Number
Description
10.1.3 Third Amendment to Credit Agreement dated March 16, 2005, among the Company, LaSalle
Bank National Association, Wells Fargo Bank, N.A. and Fifth Third Bank Chicago
(incorporated by reference to exhibit 10.2 of the Company’s Current Report on Form 8-K dated
March 17, 2005).
10.2 Amended Rate Cap Transaction Agreement dated as of November 15, 2004 by and among
LaSalle Bank National Association and the Company (incorporated by reference to exhibit 10.1
of the Company’s current Report on Form 8-K filed on November 17, 2004).
10.3 Amended Rate Cap Transaction Agreement dated as of November 15, 2004 by and among
LaSalle Bank National Association and the Company (incorporated by reference to exhibit 10.1
of the Company’s Current Report on Form 8-K filed on November 17, 2004).
10.4 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 (incorporated by reference to exhibit 10.4.1 of the Company’s Annual
Report on Form 10-K filed for December 31, 2004).
10.4.2 Amendment to Employment Agreement, dated as of May 10, 2004 between the Company and
Myron C. Warshauer (incorporated by reference to exhibit 10.4.2 of the Company’s Annual
Report on Form 10-K filed for December 31, 2004).
10.5 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).
10.5.1 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).
10.5.2 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).
10.5.3 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).
10.5.4 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).
10.6 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).
10.6.1 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).
99
Exhibit
Number
Description
10.6.2 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).
10.6.3 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).
10.6.4 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).
10.6.5 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).
10.6.6 Sixth Amendment to Executive Employment Agreement dated as of April 1, 2005, between the
Company and James A. Wilhelm (incorporated by reference to exhibit 10.4 of the Company’s
Current Report on Form 8-K filed on March 7, 2005).
10.7 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).
10.7.1 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).
10.7.2 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).
10.8 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).
10.8.1 First Amendment to Amended and Restated Executive Employment Agreement, dated as of
April 11, 2005, between the Company and John Ricchiuto (incorporated by reference to exhibit
10.3 of the Company’s Current Report on Form 8-K filed on March 7, 2005).
10.9 Amended and Restated Employment Agreement, dated March 1, 2005, between the Company
and Steven A. Warshauer (incorporated by reference to exhibit 10.2 to the Company’s Current
Report on Form 8-K filed on March 7, 2005).
10.10 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).
10.11 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).
100
Exhibit
Number
Description
10.12 Amended and Restated Executive Employment Agreement, dated as of March 1, 2005,
between the Company and Thomas L. Hagerman (incorporated by reference to exhibit 10.1 of
the Company’s Current Report on Form 8-K filed on March 7, 2005).
10.13 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).
10.14 Form of Amended and Restated Stock Option Award Agreement between the Company and
an optionee (incorporated by reference to exhibit 10.1 of the Company’s Current Report on
Form 8-K filed on November 21, 2005).
10.14.1 Form of First Amendment to the Amended and Restated Stock Option Award Agreement
between the Company and an optionee (incorporated by reference to exhibit 10.2 of the
Company’s Current Report on Form 8-K filed on November 21, 2005).
10.15 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).
10.15.1 Amendment to Consulting Agreement, dated as of May 10, 2004 between the Company and
Shoreline Enterprises, LLC (incorporated by reference to exhibit 10.14.1 of the Company’s
Annual Report on Form 10-K filed for December 31, 2004).
10.16 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).
10.17 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).
10.17.1 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).
10.18 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).
10.18.1 First Amendment to the Management Agreement dated June 9, 2003 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)
10.19 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).
101
Exhibit
Number
Description
10.21 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).
10.21.1 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).
10.21.2 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).
10.21.3 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).
10.22 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).
10.23 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).
10.23.1 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).
10.24 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).
10.26 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).
10.27 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).
102
Exhibit
Number
Description
10.28 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).
10.28.1 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).
10.29 Stock Repurchase Agreement dated March 14, 2005, between the Company and Steamboat
Industries LLC (incorporated by reference to exhibit 10.3 of the Company’s Current Report on
Form 8-K filed on March 17, 2005).
10.29.1 Amended and Restated Stock Repurchase Agreement dated June 10, 2005, between the
Company and Steamboat Industries LLC (incorporated by reference to exhibit 10.1 of the
Company’s current Report on Form 8-K filed on June 13, 2005).
10.30* Form of Property Management Agreement
14.1 Code of Ethics (incorporated by reference to exhibit 14.1 of the Company’s Annual Report on
Form 10-K for December 31, 2002).
21.1 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 7, 2006.
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* 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.
103
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)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a—15(f) and 15d—15(f) )or 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. Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c. 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
d. 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 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 10, 2006
By:
/s/ JAMES A. WILHELM
James A. Wilhelm, Chief Executive
Officer and President
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)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a—15(f) and 15d—15(f)) 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. Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c. 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
d. 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 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 10, 2006
By:
/s/ G. MARC BAUMANN
G. Marc Baumann
Executive Vice President, Chief
Financial Officer and Treasurer
(Principal Financial Officer)
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)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a—15(f) and 15d—15(f)) 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. Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c. 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
d. 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 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 10, 2006
By:
/s/ DANIEL R. MEYER
Daniel R. Meyer,
Senior Vice President
Corporate Controller and Assistant
Treasurer
(Principal Accounting Officer)
Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Form 10-K of Standard Parking Corporation (the “Company”) for the year ended December 31,
2005, 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, 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.
Exhibit 32
Name:
Title:
Date:
/s/ JAMES A. WILHELM
James A. Wihelm
Director, President and Chief Executive Officer
March 10, 2005
Name:
Title:
Date:
/s/ G. MARC BAUMANN
G. Marc Baumann
Executive Vice President, Chief Financial Officer, and
Treasurer (Principal Financial Officer)
March 10, 2005
Name:
Title:
Date:
/s/ DANIEL R. MEYER
Daniel R. Meyer
Senior Vice President, Corporate Controller and Assistant
Treasurer (Principal Accounting Officer)
March 10, 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.
Directors
Executive Officers
Stockholder Information
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 Chairman, Holberg Industries, Inc.
Leif F. Onarheim, Director
Former Member of Parliament,
Kingdom of Norway
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
A. Petter Østberg, Director (b)(c)
Senior Vice President and
Chief Financial Officer,
Holberg Industries, Inc.
Michael K. Wolf
Executive Vice President,
Chief Administrative Officer and
Associate General Counsel
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 during the periods indicated in
2005. The closing price of a common
share at December 30, 2005 was $19.59.
LOW
HIGH
$16.00 $14.10
First Quarter
Second Quarter $17.27 $13.80
Third Quarter
$19.40 $15.90
Fourth Quarter $20.05 $18.02
Annual Meeting of Shareholders
The Annual Stockholders Meeting will
be held on April 26, 2006 at 4:00 PM,
local time, at the Whitehall Hotel, 105
East Delaware Place, Chicago, IL 60611.