View:
SECURITIES & EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 November 14, 2001 Date of Report (Date of earliest event reported): APCOA/STANDARD PARKING, INC. (Exact name of registrant as specified in its charter) DELAWARE 333-50437 16-1171179 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 900 N. Michigan Avenue Chicago, Illinois 60611-1542 (Address of Principal Executive Office) (312) 274-2000 (Registrant's Telephone Number, Including Area Code) (Not Applicable) (Former name, former address and former fiscal year, if changed since last report) Item 7. EXHIBITS None. Item 9. REGULATION FD DISCLOSURE APCOA/Standard Parking, Inc. is furnishing herewith certain risk factors relating to our business which have not been previously disclosed to the public but which may affect our business on a going forward basis. Unless the context requires otherwise, references in this Form 8-K to the "Company," "we," "us" or "our" are to APCOA/Standard Parking, Inc. OUR BUSINESS MAY BE HARMED AS A RESULT OF CONTINUED TERRORIST ATTACKS IN THE UNITED STATES AND CANADA. The terrorist attacks of September 11, 2001, and any future terrorist attacks in the United States and Canada, may negatively impact our business and results of operations. Attacks have resulted and may continue to result, in increased government regulation of airlines and airport facilities, including the imposition of minimum distances between parking facilities and terminals resulting in the elimination of currently managed parking facilities, and increased security checks of employees at airport facilities. These types of regulations could impose costs on us which we may not be able to pass on to our clients and reduce our revenues. In so far as 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 to us under those contracts where we receive an incentive bonus based on facility utilization among other factors. To the extent that these attacks cause or exacerbate a slowdown in the general economy resulting in reduced air travel, a similar effect may occur. An overall economic slowdown could reduce parking facility traffic at our facilities. There can be no assurance that continued terrorist attacks, an escalation of hostilities abroad or war would not have a material adverse impact on our business, financial condition and results of operations. OUR BUSINESS WOULD SUFFER IF THE USE OF PARKING FACILITIES WE OPERATE DECREASED DUE TO A DECREASE IN CAR AND AIR TRAVEL. We expect to derive substantially all 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 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 facilities is low due to decreased car and airplane travel, increased regulation, competition or other factors, our business, financial condition and results of operations and our ability to achieve sufficient cash flow to service our indebtedness will be materially adversely affected. We guarantee bonds issued to finance the construction of an airport parking facility that we operate. The principal and interest payments on the bonds increase from approximately $3.6 million in lease year 2002 to approximately $4.5 million in lease year 2025. Annual guaranteed minimum payments to the state increase from approximately $8.3 million in lease year 2002 to approximately $10.3 million in lease year 2025. The principal and interest payments and guaranteed payments to the state are funded by the revenues collected at the airport parking facility. We are responsible for these payments regardless of utilization of the parking facility. Although the state has an obligation to raise parking rates to offset a decline in usage, there is no guarantee that the state will raise rates enough to offset a decline in usage or that any change in rates will result in revenues to us sufficient to cover the principal and interest payments and guarantees on the bonds. OUR BAD DEBT RESERVES MAY ULTIMATELY BECOME INADEQUATE. The current economic downturn and the economic impact of the terrorist attacks on September 11, 2001 have had an unknown impact on the financial condition of some of our clients. We expect that our clients involved in the airline and travel industries may be experiencing significant declines in revenue. Failure by our clients to pay us money owed, or failure to pay in a timely manner could have a material adverse effect on our business, financial condition and results of operations. INCREASED GOVERNMENT REGULATION OF AIRPORTS AND REDUCED AIR TRAVEL MAY AFFECT OUR PERFORMANCE. We operate a significant percentage of our parking facilities and transportation related facilities in and around airports. For the twelve months ended September 30, 2001, approximately 24% of our gross profit was derived from those operations. Recently, the federal government prohibited parking within 300 feet of airport terminals, as they previously did during the Persian Gulf War in the early 1990s. While various government entities are still in the process of finalizing their rules regarding parking, as of November 1, 2001, all of our airport parking and transportation related facilities were affected by the attacks of September 11, 2001, including reduced air travel and regulation enacted following the attacks. While we believe that existing regulations may be relaxed in the future, future regulations may nevertheless prevent us from using a number of spaces. Additionally, recent events have led to a significant decline in air travel at airports we serve. This decline has led to a similar decline in the use of parking facilities at airports. Reductions in the number of parking spaces and the number of air travelers may reduce our revenues and cash flow for both our leased facilities and those facilities we operate under management contracts. OUR NEW PERFORMANCE BOND SURETY PRESENTLY REQUIRES ADDITIONAL COLLATERAL TO ISSUE NEW PERFORMANCE BONDS IN SUPPORT OF OUR CONTRACTS, WHICH WILL REDUCE OUR AVAILABLE WORKING CAPITAL AND MAY REFUSE TO ISSUE PERFORMANCE BONDS FOR US. Under substantially all of our contracts with municipalities and government entities (including airports), we are required to provide a performance bond to support our obligations under the contract. Due to our financial condition and the financial state of the surety bond industry, our new surety of our performance bond program has required us to collateralize a greater percentage of our performance bonds with letters of credit. As a result, our working capital needs will increase. If we are unable to provide sufficient collateral in the future, our surety may not issue performance bonds to support our obligations under certain contracts. As of September 30, 2001, we had obtained a letter of credit which was provided as collateral to our old surety provider to support our existing performance bonds. We are presently transferring our performance bond portfolio to a new surety. On November 8, 2001, we obtained a $1.0 million letter of credit to partially collateralize a new surety program. The new program will require an increase in supporting letters of credit from $1.0 million to $4.0 million by April 2002. In addition, we will be required to maintain the existing $1.5 million collateral with our old surety provider until the performance bonds expire or are transferred to the new surety provider. Our surety provider, as is customary in the industry, can refuse to provide us with new surety bonds. If our current surety provider or any surety provider in the future 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 would prevent us from obtaining new business from those entities requiring performance bonds and from renewing contracts with those entities which require performance bonds. Our inability to provide surety bonds could also result in the actual loss of existing contracts. Failure to find a provider of surety bonds, and the resulting inability to bid for new or renew existing contracts, would have a material adverse effect on our business and financial condition. WE MAY BE UNABLE TO RENEW OUR INSURANCE COVERAGE. Our current liability and worker's compensation insurance coverage expires on December 31, 2001. Our current carrier has expressed a preliminary indication of its willingness to renew our coverage at a premium increase in excess of 65%. While there can be no assurance that the carrier will not increase its proposed premiums even further, or that the carrier will in fact be willing to renew our coverage at any rate, we have no reason to believe that the carrier's position will change. We are soliciting insurance quotes from alternate insurance carriers, but there can be no assurance, given the current state of the insurance industry and our current financial condition, that any alternate carrier will offer to provide similar coverage to us or, if it will, that its quoted premiums will not exceed those received from our current carrier. 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. WE BELIEVE THAT OUR CLIENT BASE IS BECOMING MORE CONCENTRATED. We believe that over time, real estate investment trusts, commonly known as REITs, or other property management companies will represent a larger portion of our client base. As each REIT or other property management companies own many properties, our ability to provide parking services for a large number of properties becomes dependent on our relationship with a single REIT or other property management companies. As this happens, certain REITs or other property management companies may become significant clients. In that event, the loss of one of those REITs or other property management companies as a client or the sale of properties they own to clients of our competitors could have a material adverse impact on our business and financial condition. Additionally, REITs or property managers with extensive portfolios have greater negotiating power when negotiating contracts with us. WE ARE SUBJECT TO REGULATIONS WHICH MAY IMPOSE SIGNIFICANT COSTS ON US. Our airport facilities are governed by the Federal Aviation Administration (the "FAA"). Recently, the FAA prohibited parking within 300 feet of airport terminals, as they previously did during the Persian Gulf War in the early 1990s. While the FAA is still in the process of finalizing their rules regarding parking, as of November 1, 2001, substantially all of our airport parking and air transportation related facilities were affected by the attacks of September 11, 2001, including regulations enacted following the attacks. While we believe that existing regulations may be relaxed in the future, future regulations may nevertheless prevent us from using a number of spaces. Reductions in the number of parking spaces may reduce our revenues and cash flow for both our leased facilities and those facilities we operate under management contracts. 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. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. APCOA/Standard Parking, Inc. DATE: November 14, 2001 By: /s/ Robert N. Sacks ----------------------------- Robert N. Sacks General Counsel and Secretary