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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1996.
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 001-13950
Exact Name of Registrant as Specified in Its Charter:
CENTRAL PARKING CORPORATION
State or Other Jurisdiction of Incorporation or Organization:
Tennessee
I.R.S. Employer Identification No.: 62-1052916
Address of Prncipal Executive Offices: 2401 21st Avenue South,
Suite 200, Nashville, Tennessee
Zip Code: 37212
Registrant's Telephone Number, Including Area Code: (615) 297-4255
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Title of Class: Common Stock $0.01 par Value
Name of each Exchange on which registered: New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES X NO _
Indicate 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. [ ]
The aggregate market value of the Common Stock held by non-affiliates of
the registrant, based on the closing price of the Common Stock on the New
York Stock Exchange on December 18, 1996, was $128,908,072. For purposes
of this response, the registrant has assumed that its directors,
executive officers, and beneficial owners of 5% or more of its Common
Stock are the affiliates of the registrant.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of the latest practicable date.
Class: Common Stock, $0.01 par value
Outstanding at December 18, 1996: 17,489,768
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held on February 28, 1997 are incorporated by
reference into Part III of this Form 10-K. Portions of the Registrant's
Annual Report to Shareholders for the fiscal year ended September 30,
1996 are incorporated by reference into Part II of this Form 10-K.
PART I
ITEM 1. BUSINESS
GENERAL
The Company, founded in 1968, is a leading provider of
parking services in the United States. As of September 30, 1996,
the Company operated 1,359 parking facilities containing
approximately 546,000 spaces, including 109 international
facilities with approximately 40,578 spaces, located in 32 states,
the District of Columbia, Puerto Rico, the United Kingdom, Germany
and Mexico. Since 1993, the Company has added on a net basis an
average of approximately 137 properties to its operations each
year. Since its inception, the Company has sought to increase the
level of integrity and professionalism in the parking industry.
Management believes the Company's reputation for professional
integrity is the cornerstone of its success and differentiates it
from competitors. The Company's leadership position in the
parking industry is a result of applying professional management
strategies to a consolidating industry historically managed by
small local operators, understanding the needs of the parking
public, applying technology to parking services, retaining
employees through proprietary training programs, and utilizing an
incentive compensation system that rewards performance.
The Company operates parking facilities under three general
types of arrangements: management contracts, leases, and fee
ownership. As of September 30, 1996, the Company operated 770
parking facilities through management contracts, leased 552
parking facilities, and owned 37, either independently or in joint
ventures with third parties. The general terms and benefits of
these three types of arrangements are described as follows:
MANAGEMENT CONTRACTS. The Company's responsibilities under
a management contract as a facility manager include hiring,
training, and staffing parking personnel, and providing
collections, accounting, recordkeeping, insurance, and
facility marketing services. In general, the Company is not
responsible for structural, mechanical, or electrical
maintenance or repairs, or for providing security or guard
services. The Company generally receives a base monthly fee
for managing these facilities plus fees for ancillary
services such as insurance, accounting, equipment leasing,
and consulting and often receives a percentage of facility
revenues above a base amount. Under the Company's typical
management contract, the facility owner pays a minimum
management fee and operating expenses such as taxes, license
and permit fees, insurance, payroll and accounts receivable
processing, and wages of personnel assigned to the facility.
In addition, the facility owner also pays for maintenance,
repair costs, and capital improvements. The typical
management contract is for a term of one to three years and
is renewable, typically for successive one-year terms. The
Company's management contract renewal rates for the years
ended September 30, 1996, 1995, and 1994, were 92.4%, 95.0%,
and 97.3%, respectively.
LEASES. In contrast to management contracts, lease
arrangements are typically for terms of three to ten years,
with a renewal term, and provide for a contractually
established payment to the facility owner regardless of the
operating earnings of the parking facility. The Company's
rent is generally either a flat annual amount, a percentage
of gross revenues, or a combination thereof. Under its
leases, the Company is responsible for all facets of the
parking operations, including utilities and ordinary and
routine maintenance, but is generally not responsible for
major maintenance, repair, or property taxes. The leased
facilities require a longer commitment and a larger capital
investment by the Company than managed facilities but
provide a more stable source of revenue and a greater
opportunity for long-term revenue growth.
FEE OWNERSHIP. Ownership of parking facilities, either
independently or through joint ventures, typically requires
a larger capital investment than managed or leased
facilities but provides maximum control over the operation
of the parking facility and all growth in owned facility
revenue flows directly to the Company. Additionally,
ownership provides the potential for realizing capital gains
from the appreciation in the value of underlying real
estate. The Company typically targets ownership
opportunities in cities in which it currently operates,
focusing on unrelated sites that are being used as parking
facilities. The Company also seeks joint venture partners
who are established local or regional developers pursuing
financing alternatives for development projects. Joint
ventures typically involve a development where the parking
facility is a part of a larger multi-use project, allowing
the Company's joint venture partners to benefit from a
capital infusion to the project. Joint ventures offer the
revenue growth potential of ownership with a partial
reduction in capital requirements. Prior to 1994, the
Company's ability to purchase properties was limited by a
contractual arrangement with Realty Parking Properties II
L.P. (see "Item 2 Parking Facility Properties --- Parking
Consultant to Fund").
The Company provides parking management services at multi-
level parking facilities and surface lots. It also provides
parking consulting services, shuttle services, valet services,
parking meter enforcement services, and billing and collection
services. The Company distinguishes itself from its competitors
by combining a reputation for professional integrity and quality
management with operating strategies designed to increase the
revenues of parking operations for its clients. The Company's
clients include some of the nation's largest owners and developers
of mixed-use projects, major office building complexes, sports
stadiums, hotels, and municipalities. Parking facilities operated
by the Company include, among others, certain terminals operated
by BAA Heathrow International Airport (London), the Prudential
Center (Boston), Ericsson Stadium (Charlotte), Busch Stadium (St.
Louis), Reunion Arena (Dallas), Cinergy Field (Cincinnati), Coors
Field (Denver), Oriole Park at Camden Yards (Baltimore), and
various parking facilities owned by the Hyatt and Westin hotel
chains, the Rouse Company, Faison Associates, May Department
Stores, Equity Office Properties, and Crescent Real Estate. None
of these clients account for more than 5% of the Company's total
revenues.
The Company's early growth was generated by the new
construction of large office buildings, hotels, retail centers,
and mixed-use developments in the United States. However, when
domestic commercial development began declining in the late
1980's, the Company instituted a "take-away" strategy to replace
existing operators by offering value added services at competitive
prices, thus increasing clients' profitability. The Company also
has grown in recent years as a direct result of the purchase of
contract rights and international expansion. In 1992, the Company
purchased for $8 million the contract rights to manage 103 parking
facilities owned, leased, or managed by an unrelated parking
company, which accounted for approximately 22% of the Company's
revenues in fiscal 1996. The Company has a separate contract for
each facility. The contract rights are amortized over the various
facility contract terms through 2004. The Company believes these
contracts should experience the same general renewal rates the
Company has experienced in its overall business operations.
Additionally, although the Company did not begin operating
internationally until the early 1990's, the United Kingdom
operations accounted for approximately 9% of the Company's
revenues in fiscal 1996. The Company also operates five parking
facilities through a joint venture in Germany, 16 parking
facilities through a joint venture in Mexico, 17 parking
facilities in Puerto Rico, provides parking consulting services in
Malaysia, and has a business development office in the
Netherlands.
The following table sets forth certain information regarding
the number of managed, leased, or owned facilities as of the
specified dates:
As of September 30,
1996 1995 1994
Managed facilities 770 715 626
Leased facilities 552 485 436
Owned facilities 37 31 26
Total 1,359 1,231 1,088
INDUSTRY
The parking industry is highly fragmented, consisting of a
few nationwide companies and a large number of smaller operators,
including a substantial number of companies providing parking as
an ancillary service in connection with property management or
ownership. The primary industry participants are almost
exclusively privately-held companies. Management believes the
parking industry is consolidating as property managers favor
larger-scale operations, more reliable operating systems, better
revenue controls, and an increased emphasis on customer service.
Overall parking industry expansion is created by new
construction. Since new construction in the United States slowed
in the late 1980's and has only gradually begun to increase in
recent years, growth in parking companies in the 1990's has
generally resulted from take-aways from other parking companies.
Take-aways and new construction are essential to growth in the
parking industry because of the limitations on growth revenues of
existing operations. While some growth in revenues from existing
operations is possible through redesign, increased operational
efficiency, or increased facility use and prices, such growth is
ultimately limited by the size of a facility and market
conditions.
Management believes that most commercial real estate
developers and property owners view services such as parking as
potential profit centers rather than cost centers. These parties
outsource parking operations to parking management companies in an
effort to maximize profits or leverage the original rental value
to a third-party lender. Parking management companies can
increase profits by using managerial skills and experience,
operating systems, and operating controls unique to the parking
industry.
Privatization of government operations and facilities could
provide new opportunities for the parking industry. Cities and
municipal authorities may consider retaining private firms to
operate facilities and parking-related services in an effort to
reduce operating budgets and increase efficiency. Privatization
in the United Kingdom has already provided significant expansion
opportunities for private parking companies.
OPERATING STRATEGY
The Company's operating strategy is to increase revenues and
profitability of its owned, leased, and managed parking facilities
through containing costs and realizing economies of scale;
emphasizing the importance of marketing; maintaining strict cash
control; using a decentralized management structure; providing
strong training programs for employees; enhancing management
information systems; offering ancillary services; working to
retain parking patrons; and selecting strategic facility sites.
CONTAIN COSTS AND REALIZE ECONOMIES OF SCALE. In order to
provide competitively priced services, the Company must contain
costs. The Company has sought to contain its labor costs by
creating a decentralized structure of well-trained, highly
motivated managers that is complemented by computerized parking
and accounting systems. Managers are trained to analyze staffing
and cost control issues, and each facility is carefully tracked on
a monthly basis to determine whether financial results are within
budgeted ranges. In its early stages, the Company grew by adding
management contracts much more rapidly than it added more capital-
intensive leased or owned facilities. This strategy allowed the
Company to grow and create economies of scale for certain
administrative and accounting functions with relatively little
capital investment. In addition, the Company's size has allowed
it to invest in sophisticated technology systems, such as
computerized card tracking and accounting systems. The Company is
experimenting with a variety of automated parking settlement
systems that could enhance revenue by increasing the efficiency
and accuracy of payment collection, lowering labor costs, and
reducing lost revenue at parking facilities. Furthermore, the
Company will not enter a new market unless management believes it
has the opportunity to rapidly obtain the market presence
necessary to support the required overhead costs.
EMPHASIZE SALES AND MARKETING EFFORTS. The Company's
management is actively involved in developing and maintaining
business relationships and in exploring opportunities for growth.
The Company's incentive compensation system rewards managers who
are able to develop new business, and this incentive system is the
cornerstone of the Company's culture. The Company's marketing
efforts are designed to expand its operations by developing
lasting relationships with major developers and asset managers,
business and government leaders, and other high quality clients.
The Company implements its marketing strategy by encouraging
managers to pursue new opportunities at the local level while
simultaneously selectively targeting key clients and projects at a
national level.
MAINTAIN CASH CONTROL. Strict cash control is critical to
the Company and its clients. The Company's cash control
procedures are based on a ticketing system supervised by high
level managers and include on-site spot checks, multiple daily
cash deposits, local audit functions, managerial oversight and
review, and internal audit procedures. All tickets and gate
counts are reconciled daily against cash collected. Management
believes its cash control procedures are effective in minimizing
the loss of revenues at parking facilities.
DECENTRALIZE MANAGEMENT STRUCTURE. The Company has achieved
what management believes is a successful balance between
centralized and decentralized management. Because its business is
dependent, in large part, on personal relationships, the Company
provides its managers with a significant degree of autonomy in
order to encourage prompt and effective responses to local market
demands. In conjunction with this local operational authority,
the Company provides, through its corporate office, services that
typically are not readily available to independent operators such
as management support, marketing and business expertise, training,
and financial and information systems. The Company retains
centralized control, however, over those functions necessary to
monitor service quality and cash control integrity and to maximize
operational efficiency. Services performed at the corporate level
include billing, quality improvement oversight, financial and
accounting functions, policy and procedure development, systems
design, and corporate acquisitions and development.
TRAINING PROGRAMS AND INCENTIVE COMPENSATION. Management
believes that the Company's management training program is a
significant factor in the Company's success. Formalized in 1986,
this program is designed to identify and hire individuals that
meet a variety of criteria intended to enhance the likelihood of
success. Employees participating in the Company's management
program are generally required to have a college degree. The
Company has approximately 500 management positions and hires
approximately 100 managers a year. New managers in the Company's
management trainee program are assigned to a particular facility
where they are supervised as they manage one to five employees.
The management trainee program lasts approximately one year and
teaches a wide variety of skills, including organizational skills,
basic management techniques, and basic accounting. Upon
successful completion of this stage of the program, management
trainees are promoted to facility manager in charge of a
particular parking facility. The Company continues to train
facility managers for an additional year, at which time the
successful managers are typically promoted to position of area
manager. Area managers oversee several facilities and report to
an operations manager. Operations managers oversee all or a
portion of a city and report to a general manager. Each general
manager is responsible for both managing a particular city and
focusing on marketing the Company's services in that city.
General managers are entitled to a bonus based on the performance
of the Company's operations in that city. All positions at the
general manager level and above require a substantial time
commitment to marketing and business development.
The Company's incentive compensation system rewards managers
at the general manager level and above for the profitability of
their respective areas of responsibility. Each person
participating in the incentive program generally receives a
substantial portion of their compensation from this incentive
compensation system. Incentive compensation payments typically
range from 20% to 50% of total compensation.
ENHANCE MANAGEMENT INFORMATION SYSTEMS. In the last five
years, the Company has completely re-engineered and replaced all
of its accounting and operations software. Central to this effort
has been the development of industry-specific software models,
such as the Parker Accounts Receivable System, a proprietary
software system used to generate a range of reports related to
receivables and to audit access control systems for the Company's
parking facilities. The Company's distributed systems, which
include payroll, revenue collection, and monthly line-item
budgeting, provide local management access to data pertinent to
their operations, while allowing corporate review of all data.
The Company also provides bookkeeping services through an
accounting division that maintains separate financial statements
for large or complex facilities.
OFFER ANCILLARY SERVICES. The Company provides services
that are complementary to parking facility management, with a
particular emphasis on consulting services. For example, the
Company's operations in the United Kingdom grew out of a single
consulting arrangement. Other ancillary services include parking
meter enforcement services, on-street parking services, car
pooling coordination, shuttle van services, and public
transportation services. These ancillary services do not
constitute a significant portion of the Company's revenues, but
management believes that the provision of ancillary services can
be important in obtaining new business and preparing the Company
for future changes in the parking industry.
RETAIN PARKING PATRONS. In order for the Company to
succeed, its parking patrons must have a positive experience at
Company facilities. Accordingly, the Company stresses the
importance of having safe, clean facilities and cordial employees.
Each facility manager has primary responsibility for the
environment at the facility, and is evaluated on his or her
ability to retain parking patrons. The Company also monitors
customer satisfaction through customer surveys and "mystery
parker" programs.
SELECT FACILITY SITES. In existing markets, the facility
site selection process begins with identification of a possible
facility site and the analysis of projected revenues and costs at
the site by general managers and regional managers. The managers
then conduct an examination of a location's potential demand based
on traffic patterns and counts, area demographics, and potential
competitors. Pro forma financial statements are then developed
and a Company representative will meet with the property owner to
discuss the terms and structure of the agreement.
GROWTH STRATEGY
Historically, the Company's operations have grown primarily
through the addition of management contracts. Concentration on
management contracts was a function of client demands for such
arrangements coupled with the Company's capital and contractual
restraints that limited leasing and fee ownership opportunities.
See "Item 2 Parking Facility Properties --- Parking Consultant to
Fund." Because of its operating results, increased cash flows,
and release from such contractual restraints, the Company has
begun to make more capital intensive investments in leasing and
ownership of parking facilities. The Company currently intends to
increase the relative number of leased and owned facilities in its
total operations, and to convert managed facilities to leased or
owned facilities when possible. The Company will, however,
continue to pursue management contracts with clients or potential
clients who prefer that arrangement. Set forth below are the key
elements of the Company's growth strategy.
INCREASE MARKET SHARE. The Company plans to continue to add
properties to its operations by focusing its marketing efforts on
increasing market share at the local level, targeting asset
managers and developers with a national presence, and pursuing
specific projects associated with high-use, special-purpose
facilities.
LOCAL. At the local level the Company's sales and marketing
efforts are decentralized and are directed towards
identifying new expansion opportunities within a particular
city or region. Managers are trained to develop the
business contacts necessary to generate new opportunities
and to monitor their local markets for take-away and
outsourcing opportunities. The Company provides its
managers with a significant degree of autonomy in order to
encourage prompt and effective responses to local market
demands, which is complemented by management support and
marketing training through the Company's corporate offices.
In addition, a manager's compensation is dependent, in part,
upon his or her success in developing new business. By
developing business contacts locally, the Company's managers
often get the opportunity to bid on projects when asset
managers and property owners are dissatisfied with current
operations and also learn in advance of possible new
projects.
NATIONAL. At the national level, the Company's marketing
efforts are undertaken primarily by upper-level management
who target developers, governmental entities, the
hospitality industry, mixed-use projects, and medical
facilities. These efforts are directed at operations that
generally have national name recognition, substantial demand
for parking related services, and the potential for nation-
wide growth. For example, the Company's current clients
include, among other national property ownership companies
and hotel chains, the Rouse Company, Faison Associates,
Equity Office Properties, May Department Stores, Crescent
Real Estate, Westin Hotels, and Hyatt Hotels. None of these
clients account for more than 5% of the Company's total
revenues. Management believes that providing high-quality,
efficient services to such companies will lead to additional
opportunities as those clients continue to expand their
operations. Outsourcing by parking facility owners will
continue to be a source for additional facilities, and
management believes the Company's experience and reputation
with large asset managers give it a competitive advantage in
this area.
SPECIALIZED HIGH-USE FACILITIES. The Company targets
facilities that are located to take advantage of a mixed
customer base. These locations generally are in
metropolitan areas and are convenient to entertainment,
tourist, and leisure attractions, such as downtown sporting
areas, or are associated with 24-hour facilities, such as
hospitals and airports. Such facilities combine commuter
demand with off-hour demand resulting in relatively higher
utilization. For example, the Company has targeted special
event parking and currently operates parking facilities at,
or convenient to, sports venues such as Madison Square
Garden, the new Boston Garden, Busch Stadium, Cinergy Field,
Ericsson Stadium (Carolina Panthers), Oriole Park at Camden
Yards, Coors Field, and Reunion Arena. The Company also
targets facilities near urban entertainment and tourist
destinations such as its operations at CoCo Walk in Miami,
One Colorado Place in Pasadena, California, Larimer Square
in Denver, and Harbor Place in Baltimore. Examples of
current mixed-used facility clients include Crown Center in
Kansas City, Prudential Center in Boston, Arizona Center in
Phoenix, and Canary Wharf in London.
ACQUIRE ADDITIONAL OPERATORS. Although the Company
historically has focused primarily on adding individual facility
operations rather than on acquiring competing companies,
management believes that the Company can benefit from acquiring
regional operators. The Company's acquisition strategy focuses
primarily upon acquisitions in attractive new markets and
acquisitions that will enable the Company to become a leading
provider in selected current markets. The Company believes it can
improve acquired operations through more sophisticated operating
systems and more professional management.
EXPAND INTERNATIONAL OPERATIONS. Management believes that
there are significant international growth opportunities,
particularly for well-capitalized companies that are interested in
making significant investments in equipment and construction,
either independently or with foreign partners. The Company's
international operations began in the early 1990's with the
formation of an international division, which is now one of the
fastest growing areas of the Company. Operations in London began
in 1991 with a single consulting agreement. Later in 1991, the
Company was awarded a contract to manage Terminal 4 of Heathrow
International Airport. Since then, the Company has expanded its
Heathrow operations to include Terminal 1 and has a total of 88
United Kingdom facilities, with operations in Birmingham,
Newcastle, and London. To complement its parking business in the
United Kingdom, the Company also provides parking meter
enforcement and ticketing services for three local governments
that have privatized these services. The Company began expansion
into Mexico in July 1994 by forming a joint venture with Fondo
Opcion, an established Mexican developer and now operates 16
facilities in Mexico. The Company also operates 17 facilities in
Puerto Rico and provided consulting services in Kuala Lumpur,
Malaysia related to the operation of a 5,400 space parking
facility servicing one of the largest development projects in the
world. The Company has a business development office in the
Netherlands to pursue expansion into other European countries. In
1996, the Company acquired a 50% equity interest in a joint
venture which operates five facilities in Germany. Revenues from
foreign operations accounted for approximately 9.2%,12.8%, and
13.6% of the Company's total revenues for the years ended
September 30, 1996, 1995 and 1994, respectively. See Note 16 to
Notes to Consolidated Financial Statements.
COMPETITION
The parking industry is fragmented and highly competitive,
with limited barriers to entry. The Company faces direct
competition for additional facilities to manage, lease, or own and
the facilities currently operated by the Company face competition
for employees and customers. The Company competes with a variety
of other companies to add new operations. Although there are
relatively few large, national parking companies that compete with
the Company, developers, hotel companies, and national financial
services companies have the potential to compete with parking
companies. The Company also faces competition from local owner-
operators of facilities who are potential clients for the
Company's management services. Construction of new parking
facilities near the Company's existing leased or managed
facilities could adversely affect the Company's business.
Management believes that it competes for clients based on
rates charged for services; ability to generate revenues for
clients; ability to anticipate and respond to industry changes;
range of services; and ability to expand operations. The Company
has a reputation as a leader in the industry and as a provider of
high quality services. The Company also is one of the largest
companies in the parking industry and is not limited to a single
geographic region. The Company has the financial strength to make
capital investments as an owner or joint venture partner that
smaller or more leveraged companies cannot make. The Company's
size has also allowed it to centralize administrative functions
that give the decentralized managerial operations cost-efficient
support. Moreover, the Company has obtained broad experience in
managing and operating facilities of a wide variety over the past
28 years. Additionally, the Company is able to attract and retain
quality managers through its incentive compensation system that
directly rewards successful sales and marketing efforts and places
a premium on profitable growth.
REGULATION
The Company's business is not substantially affected by
direct governmental regulation, although parking facilities are
sometimes directly regulated by both municipal and state
authorities. The facilities in New York City are, for example,
subject to certain governmental restrictions concerning numbers of
cars, pricing, and certain prohibited practices. The Company is
also affected by laws and regulations (such as zoning ordinances)
that are common to any business that owns 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, including, for example, a Los
Angeles, California law prohibiting employers from reimbursing
employee parking expenses. Laws and regulations that reduce the
number of cars and vehicles being driven could adversely impact
the Company's business.
Environmental laws also may adversely affect the Company.
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 ownership or operation of
parking facilities, the Company may be potentially liable for any
such costs. In addition, the Company could incur significant
costs defending against claims of liability.
Various other governmental regulations affect the Company's
operation of parking facilities, both directly and indirectly,
including the Americans with Disabilities Act ("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. Management
believes that the parking facilities the Company owns and operates
are in substantial compliance with these requirements.
EMPLOYEES
As of September 30, 1996, the Company employed approximately
6,600 individuals, including 3,400 full-time and 3,200 part-time
employees. Management believes that the Company's employee
relations are good. Approximately 600 U.S. employees are
represented by labor unions. Parking attendants and cashiers at
the New York City facilities are represented by various union
locals, including Teamsters Local No. 272. Other cities in which
some of the Company's employees are represented by labor unions
are Miami, Philadelphia, San Francisco and Chicago.
SERVICE MARKS AND TRADEMARKS
The Company has registered its logo with the United States
Patent Office. The Company has also reinstated its application
for registration of the name "Central Parking System." This
application was initially opposed by two parties. One party has
recently withdrawn its opposition but continues to use the name
"Central Parking" in the Chicago area. The second party, which
operates only in Atlantic City, New Jersey, has expressed a
willingness to limit its use to such area, although there can be
no assurance that the Company will receive a binding commitment
from such party. The Company uses the name "Chicago Parking
System" in Chicago, the name CPS Parking in Seattle and Milwaukee,
and the name Control Plus in London.
INSURANCE
The Company purchases comprehensive liability insurance
covering parking facilities owned, leased, and managed by the
Company. In addition, the Company purchases group insurance with
respect to all Company employees, whether such persons are
employed at owned, leased, or managed facilities. Because of the
size of the operations covered, the Company purchases these
policies at prices that, management believes, represent a discount
to the prices that would be charged to parking facility owners on
a stand-alone basis. Pursuant to its management contracts, the
Company charges its customers for insurance at rates it believes
approximate market rates based upon its review of the applicable
market. In each case, the Company's clients have the option of
purchasing their own policies, provided the Company is named as an
additional insured; however, because the Company's fees for
insurance are generally competitive with market rates, the
Company's clients have historically chosen to pay the Company's
insurance fees. A reduction in the number of clients that
purchase insurance through the Company, however, could have a
material adverse effect on the operating earnings of the Company.
In addition, although the Company's cost of insurance has not
fluctuated significantly in recent years, a material increase in
insurance costs due to increased claims experienced by the Company
could adversely affect the profit associated with insurance
charges pursuant to management contracts and could have a material
adverse effect on the operating earnings of the Company.
FOREIGN AND DOMESTIC OPERATIONS
Information about the Company's foreign and domestic operations
is incorporated by reference to Note 16 to the Consolidated
Financial Statements
ITEM 2. PARKING FACILITY PROPERTIES
The Company's facilities are currently organized into 12
regions, 11 in North America and one which is comprised of the
United Kingdom and Germany. Each region is supervised by a
regional manager who reports directly to a Senior Vice President
or the President. Regional managers oversee four to six general
managers who each supervise the Company's operations in a
particular city. The following table summarizes certain
information regarding the Company's facilities as of September 30,
1996.
Number of Total Percentage of
REGIONS - Cities Locations Managed Leased Owned Spaces Total Spaces
ATLANTA 94 45 49 --- 38,050 7.0%
Atlanta,
Birmingham,
Charleston (SC),
Charlotte,
Columbia (SC),
Jackson (MS),
Mobile
DALLAS-FT. WORTH 128 79 43 6 51,111 9.3%
Dallas-Ft. Worth,
Oklahoma City,
San Antonio,
Tulsa
EUROPEAN
United Kingdom 93 11 82 --- 28,689 5.3%
Birmingham,
London,
Newcastle
Germany
Berlin,
Dresden,
Frankfurt,
Hamburg,
Schwerin
FLORIDA 166 95 71 --- 67,498 12.3%
Jacksonville,
Miami/Ft. Lauderdale,
Orlando,
Puerto Rico,
Tampa/St. Petersburg
HOUSTON 113 79 34 --- 59,818 11.0%
Albuquerque,
Austin,
El Paso,
Houston,
New Orleans
LOS ANGELES 75 56 19 --- 43,607 8.0%
Los Angeles,
Orange County (CA),
Phoenix
MID-ATLANTIC 100 77 20 3 46,416 8.5%
Baltimore,
Hartford,
Norfolk,
Philadelphia,
Providence,
Richmond,
Washington (D.C.)
MIDWEST 98 62 36 --- 53,827 9.9%
Charleston (WV),
Cincinnati,
Cleveland,
Columbus,
Milwaukee,
Pittsburgh
NASHVILLE 217 97 99 21 (1) 45,432 8.3%
Chattanooga,
Knoxville,
Lexington/Frankfort,
Louisville,
Memphis,
Nashville
NEW YORK 64 25 39 --- 23,621 4.3%
New York,
Jersey City,
Stamford
SAN FRANCISCO 30 21 9 --- 9,296 1.7%
Oakland,
Salt Lake City,
San Francisco,
Seattle
ST. LOUIS 143 96 41 6 57,001 10.4%
Denver/Colorado Springs,
Des Moines,
Kansas City,
Minneapolis-St. Paul,
St. Louis
OTHER 38 27 10 1 21,623 4.0%
Boston,
Chicago,
Mexico City
TOTAL 1,359 770 552 37 545,989 100.0%
(1) Includes the Company's corporate headquarters.
JOINT VENTURES. The Company has interests in joint ventures
that own or operate parking facilities located in Nashville,
Denver, Germany, and Mexico. The Company has a 50% interest in a
joint venture that owns a parking complex on Commerce Street in
Nashville, and the Company operates the parking at this complex
under a management contract with the joint venture. The Company
has a similar interest in two joint ventures in Denver and one
joint venture in Germany. The Company is also a joint venture
partner with Fondo Opcion and operates twelve facilities on behalf
of that joint venture in Mexico City.
MBE PARTNERSHIPS. The Company is currently a party to ten
separate minority business enterprise partnerships formed by the
Company and a minority businessperson to manage various
facilities. The Company owns 60% to 70% of the partnership
interests in each partnership and typically receives management
fees before partnership distributions are made to the partners.
ACQUISITION OF CONTRACT RIGHTS. In August 1992, the Company
purchased for $8 million the contract rights to manage 103 parking
facilities which are owned, leased, or managed by an unrelated
parking company. Of these 103 facilities, 39 were included in
parking revenues and their related costs and 64 were included in
management contract revenues and their related costs. The Company
has a separate contract for each facility. The contract rights
are amortized over the various facility contract terms through
2004. The Company believes these contracts should experience the
same general renewal rates the Company has experienced in its
overall business operations. This arrangement generated parking
revenues from the facilities totalling approximately $28.8
million, $30.3 million, and $30.8 million for fiscal 1996, 1995,
and 1994, respectively. Additionally, management contract
revenues generated from the facilities were approximately $3.2
million, $3.0 million, and $3.1 million for fiscal 1996, 1995, and
1994, respectively. See Note 5 to Consolidated Financial
Statements.
PARKING CONSULTANT TO FUND. In March 1991, the Company
agreed to act as a consultant to Realty Parking Properties II
L.P., a $34.8 million publicly held fund sponsored by Alex Brown
Realty, Inc. (the "Fund"), which was formed to acquire interests
in land and facilities to be used for parking operations and
incidental ancillary uses. The Fund's investment strategy
emphasized surface commercial parking lots believed by the Fund to
have significant future potential value for eventual sale as
development sites. In connection with the formation of the Fund,
the Company purchased 3.0% of the outstanding units for
approximately $1.1 million. Pursuant to the Parking Consultant
Agreement with the Fund, the Company was required until March 1994
to provide information to the Fund concerning any land or parking
structure available for acquisition that the Company believed (i)
would be suitable for investment by the Fund, (ii) was or could be
readily convertible into and useable as a profitable parking
facility, and (iii) had an acquisition cost of at least $1.0
million or was contiguous to a parking facility already owned by
the Fund or certain of its affiliates. In this regard, the
Company was also required to offer the Fund a right-of-first-
refusal on sales of certain land or parking facilities by the
Company. As compensation for the Company's services provided in
connection with any property acquisition, the Fund was required to
pay a fee to the Company equal to a percentage of such property's
acquisition cost. Pursuant to the Parking Consulting Agreement,
the Company was also required, subject to certain conditions, to
lease properties acquired by the Fund based upon the Company's
recommendation. Rental payments by the Company under the ten year
net leases are calculated on the basis of the cost of the property
and include a percentage of gross receipts over a base amount. In
addition, if a lease is terminated because of the sale of the
property, the Company is entitled to a consulting fee equal to a
percentage of the contract price and a fee for termination of the
lease equal to a percentage of the gain on sale. The Parking
Consulting Agreement terminated in March 1994. Currently, the
Company leases seven properties from the Fund.
ITEM 3. LEGAL PROCEEDINGS
The ownership of property and provision of services to the
public entails an inherent risk of liability. Although the
Company is engaged in routine litigation incidental to its
business, in the opinion of management, there is no legal
proceeding to which the Company is a party which, if decided
adversely to the Company, would be material to the Company's
financial condition, liquidity, or results of operations. The
Company takes steps to attempt to disclaim its liability for
personal injury and property damage claims by printing disclaimers
on its ticket stubs and by placing warning signs in the facilities
it owns or operates. The Company also carries liability insurance
that management believes meets industry standards; however, there
can be no assurance that any future legal proceedings (including
any related judgments, settlements or costs) will not have a
material adverse effect on the Company's financial condition,
liquidity, or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
No matter was submitted to a vote of the Company's security-
holders during the fourth quarter of the fiscal year ended
September 30, 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a) The Registrant's Common Stock has been traded on the
New York Stock Exchange under the symbol PK since October 10,
1995. The following is a list of the high and low closing prices
by fiscal quarters for the last fiscal year, as recorded by the
New York Stock Exchange. All share prices have been adjusted to
reflect the effects of the three-for-two stock split in March
1996. Prior to October 10, 1995, there was no public market for
these shares.
High Low
Three months ended December 31, 1995 $ 19.8750 $ 12.0000
Three months ended March 31, 1996 27.2500 18.0000
Three months ended June 30, 1996 34.1250 23.7500
Three months ended September 30, 1996 33.2500 23.6250
Twelve months ended September 30, 1996 $34.1250 $12.0000
(b) There were, as of September 30, 1996 approximately
5,500 holders of the Registrant's Common Stock, as evidenced by
depository and transfer agent listings.
(c) During fiscal 1996, a split-adjusted equivalent of
$0.02 per share was distributed to holders of the Registrant's
Common Stock in each of the four fiscal quarters. Prior to the
Initial Public Offering on October 10, 1995, there were no
dividends on Common Stock. The Company declared dividends of
$450,000 and $398,000 in 1995 and 1994, respectively, on the
Preferred Stock that was outstanding prior to the
recapitalization. See Note 9 to the Consolidated Financial
Statements.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The information set forth under the caption "Five Year
Selected Consolidated Financial Data " in the Company's Annual
Report to Shareholders for the fiscal year ended September 30,
1996 is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's Annual Report to Shareholders for the
fiscal year ended September 30, 1996 is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The information set forth under the captions "Independent
Auditors' Report", "Consolidated Balance Sheets", "Consolidated
Statements of Earnings", "Consolidated Statements of Shareholders'
Equity", "Consolidated Statements of Cash Flows", and "Notes to
Consolidated Financial Statements" in the Company's Annual Report
to Shareholders for the fiscal year ended September 30, 1996 is
incorporated herein by reference.
The Company's unaudited operating results for each fiscal
quarter within the two most recent fiscal years, as set forth
under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's
Annual Report to Shareholders for the fiscal year ended September
30, 1996, is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Information concerning this Item is incorporated by
reference to the Company's definitive proxy materials for the
Company's 1997 Annual Meeting of Shareholders.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning this Item is incorporated by
reference to the Company's definitive proxy materials for the
Company's 1997 Annual Meeting of Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information concerning this Item is incorporated by
reference to the Company's definitive proxy materials for the
Company's 1997 Annual Meeting of Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning this Item is incorporated by
reference to the Company's definitive proxy materials for the
Company's 1997 Annual Meeting of Shareholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS
The following financial statements and related
notes of the Company contained
on pages 16 through 31 of the Company's Annual
Report to Shareholders for the
fiscal year ended September 30, 1996 are
incorporated herein by reference.
Independent Auditors' Report 16
Consolidated Balance Sheets -
September 30, 1996 and 1995 17
Consolidated Statements of Earnings - Fiscal Years
Ended September 30, 1996, 1995, and 1994 18
Consolidated Statement of Shareholders' Equity -
Fiscal Years Ended
September 30, 1996, 1995, and 1994 19
Consolidated Statements of Cash Flows - Fiscal Years
Ended September 30, 1996, 1995, and 1994 20
Notes to Consolidated Financial Statements 21-32
(a)(2) FINANCIAL STATEMENT SCHEDULES
None
Financial statement schedules have been omitted
because they are not applicable or because the
required information is otherwise furnished.
(a)(3) EXHIBITS
The exhibits listed in the Index to Exhibits, which
appears on pages E-__ through E-___ of this
Form 10-K, are incorporated herein by reference or
filed as part of this Form 10-K.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Registrant
during the last quarter of the fiscal
year ended September 30, 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CENTRAL PARKING CORPORATION
Date: December 24, 1996 By: /s/ Stephen A. Tisdell
Stephen A. Tisdell
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant in the capacities and on the
dates indicated.
Signature Title Date
/s/ Monroe J. Carell, Jr. Chairman of the Board, December 24, 1996
Monroe J. Carell, Jr. Chief Executive Officer
and Director
/s/ James H. Bond President & Chief December 24, 1996
James H. Bond Operating Officer;
Director
/s/ Stephen A. Tisdell Chief Financial Officer December 24, 1996
Stephen A. Tisdell (Principal Financial and
Accounting Officer)
/s/ John W. Eakin Director December 24, 1996
John W. Eakin
/s/ Edward G. Nelson Director December 24, 1996
Edward G. Nelson
/s/ William C. O'Neil Director December 24, 1996
William C. O'Neil
EXHIBIT INDEX
Exhibit Page
Number Document Number
2 Plan of Recapitalization, effective October 9, 1995
(Incorporated by reference to Exhibit 2 to the
Company's Registration Statement No. 33-95640
on Form S-1.)
3.1 Form of Amended and Restated Charter of the Registrant
(Incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement No. 33-95640
on Form S-1.)
3.2 Amended and Restated Bylaws of the Registrant
(Incorporated by reference to Exhibit 3.2 to the
Company's Registration Statement No. 33-95640
on Form S-1.)
4 Form of Common Stock Certificate (Incorporated by
reference to Exhibit 4.1 to the Company's
Registration Statement No. 33-95640 on Form S-1.)
10.1 Executive Compensation Plans and Arrangements
(a) 1995 Incentive and Nonqualified Stock
Option Plan for Key Personnel
(Incorporated by reference to Exhibit
10.1 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
(b) Form of Option Agreement under Key
Personnel Plan (Incorporated by reference
to Exhibit 10.2 to the Company's
Registration Statement No. 33-95640 on
Form S-1.)
(c) 1995 Restricted Stock Plan (Incorporated
by reference to Exhibit 10.5.1 to the
Company's Registration Statement No.
33-95640 on Form S-1.)
(d) Form of Restricted Stock Agreement
(Incorporated by reference to Exhibit
10.5.2 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
(e) Form of Employment Agreements with
Executive Officers (Incorporated by
reference to Exhibit 10.7 to the Company's
Registration Statement No.
33-95640 on Form S-1.)
(f) Monroe J. Carell, Jr. Employment Agreement
(Incorporated by reference to Exhibit 10.8
to the Company's Registration Statement
No. 33-95640 on Form S-1.)
(g) Monroe J. Carell, Jr. Revised Deferred
Compensation Agreement, as amended
(Incorporated by reference to Exhibit 10.9
to the Company's Registration Statement
No. 33-95640 on Form S-1.)
(h) James H. Bond Employment Agreement
(Incorporated by reference to Exhibit 10.10
to the Company's Registration Statement No.
33-95640 on Form S-1.)
(i) Performance Unit Agreement between Central
Parking Corporation and James H. Bond
(Incorporated by reference to Exhibit
10.11.1 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
(j) Modification of Performance Unit
Agreement of James H. Bond (Incorporated by
reference to Exhibit 10.1(j) to the Company's
Annual Report on Form 10-K filed on
December 27, 1995)
(k) James H. Bond Severance Agreement
(Incorporated by reference to Exhibit
10.17 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
10.2 1995 Nonqualified Stock Option Plan for Directors
(Incorporated by reference to Exhibit 10.3 to
the Company's Registration Statement No.
33-95640 on Form S-1.)
10.3 Form of Option Agreement under Directors Plan
(Incorporated by reference to Exhibit 10.4
to the Company's Registration Statement
No. 33-95640 on Form S-1.)
10.4 Central Parking System, Inc. Profit Sharing Plan, as
amended (Incorporated by reference to Exhibit
10.6 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
10.5 Form of Indemnification Agreement for Directors
(Incorporated by reference to Exhibit 10.12 to the
Company's Registration Statement No.
33-95640 on Form S-1.)
10.6 Indemnification Agreement for Monroe J. Carell, Jr.
(Incorporated by reference to Exhibit 10.13 to
the Company's Registration Statement
No. 33-95640 on Form S-1.)
10.7 Form of Management Contract (Incorporated by
reference to Exhibit 10.14 to the Company's
Registration Statement No. 33-95640 on
Form S-1.)
10.8 Form of Lease (Incorporated by reference to
Exhibit 10.15 to the Company's
Registration Statement No. 33-95640 on Form S-1.)
10.9 1996 Employment Stock Purchase Plan
(Incorporated by reference to Exhibit 10.16 to
the Company's Registration Statement No. 33-
95640 on Form S-1.)
10.10 Exchange Agreement between the Company and
Monroe J. Carell, Jr.
(Incorporated by reference to Exhibit 10.18
to the Company's Registration
Statement No. 33-95640 on Form S-1.)
10.11 Separation Agreement between the Company and
Calvin L. Friddle (Incorporated by reference
to Exhibit 10.19 to the Company's Registration
Statement No. 33-95640 on Form S-1.)
10.12 Form of $150,000,000 Credit Agreement dated
December 12, 1996 by and among various
banks with SunTrust Bank, Nashville,
N.A. as Agent, and Central Parking Corporation
and certain of its subsidiaries (Incorporated
by reference to Item 11(b)(1) to the Company's Tender
Offer Statement on Schedule 14D-1 as filed on
December 13, 1996).
10.13 Agreement and Plan of Merger, dated as of December 6,
1996, by Central Parking System -- Empire State,
Inc., an indirect wholly-owned subsidiary of Central
Parking Corporation and Square Industries
(Incorporated by reference to Item 11(c)(1) to the
Company's Tender Offer Statement on Schedule 14D-1 as
filed on December 13, 1996).
11 Detail Computation of Per Share Earnings E-__
13 Annual Report to Shareholders E-__
21 Subsidiaries of the Registrant E-__
23 Consent of KPMG Peat Marwick LLP E-__
27 Financial Data Schedule E-__