SP Plus Corporation
SP Plus Corp (Form: 10-K, Received: 03/06/2015 17:25:03)

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TABLE OF CONTENTS
PART IV

Table of Contents

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Form 10-K


ý

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

Or

o

 

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: 000-50796



LOGO

SP Plus 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.)

200 E. Randolph Street, Suite 7700
Chicago, Illinois 60601-7702

(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:

COMMON STOCK, PAR VALUE $0.001 PER SHARE
(Title of Each Class)

The NASDAQ Stock Market LLC
(Name of Each Exchange on which Registered)

Securities registered pursuant to Section 12(g) of the Act: NONE



           Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o     No  ý

           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  o     No  ý

           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  ý     No  o

           Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ý     No  o

           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.  o

           Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o   Accelerated filer  ý   Non-accelerated filer  o
(Do not check if a
smaller reporting company)
  Smaller reporting company  o

           Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  o     No  ý

           As of June 30, 2014, the aggregate market value of the voting and non-voting common stock held by nonaffiliates of the registrant was approximately $470.5 million. Solely for purposes of this disclosure, shares of common stock held by executive officers and directors of the registrant as of such date have been excluded because such persons may be deemed to be affiliates. This determination of executive officers and directors as affiliates is not necessarily a conclusive determination for any other purposes.

           As of March 2, 2015, there were 22,127,725 shares of common stock of the registrant outstanding.



DOCUMENTS INCORPORATED BY REFERENCE

           Portions of the registrant's definitive proxy statement to be delivered to stockholders in connection with the Annual Meeting of Stockholders to be held on April 21, 2015, are incorporated by reference into Part III of this Form 10-K.

   


Table of Contents


TABLE OF CONTENTS

PART I

           

Item 1.

 

Business

   
3
 

Item 1A.

 

Risk Factors

    18  

Item 1B.

 

Unresolved Staff Comments

    26  

Item 2.

 

Properties

    27  

Item 3.

 

Legal Proceedings

    30  

Item 4.

 

Mine Safety Disclosures

    30  

PART II

 

 

   
 
 

Item 5.

 

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

   
31
 

Item 6.

 

Selected Financial Data

    32  

Item 7.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

    34  

Item 7A.

 

Quantitative and Qualitative Disclosures About Market Risk

    60  

Item 8.

 

Financial Statements and Supplementary Data

    61  

Item 9.

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

    61  

Item 9A.

 

Controls and Procedures

    61  

Item 9B.

 

Other Information

    62  

PART III

 

 

   
 
 

Item 10.

 

Directors, Executive Officers and Corporate Governance

   
63
 

Item 11.

 

Executive Compensation

    63  

Item 12.

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

    63  

Item 13.

 

Certain Relationships and Related Transactions, and Director Independence

    63  

Item 14.

 

Principal Accountant Fees and Services

    63  

PART IV

 

 

   
 
 

Item 15.

 

Exhibits and Financial Statement Schedules

   
64
 

Signatures

   
111
 

Schedule II—Valuation and Qualifying Accounts

    112  

Index to Exhibits

    113  

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         The Business section and other parts of this Annual Report on Form 10-K ("Form 10-K") contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Many of the forward-looking statements are located in "Management's Discussion and Analysis of Financial Condition and Results of Operations." Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "will," "would," "could," "can," "may," and similar terms. Forward-looking statements are not guarantees of future performance and the Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of this Form 10-K under the heading "Risk Factors," which are incorporated herein by reference. Each of the terms the "Company" and "SP Plus" as used herein refers collectively to SP Plus Corporation and its wholly owned subsidiaries, unless otherwise stated. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.


PART I

ITEM 1.    BUSINESS

Our Company

        We are one of the leading providers of parking management, ground transportation and other ancillary services to commercial, institutional and municipal clients in the United States, Puerto Rico and Canada. Our services include a comprehensive set of on-site parking management and ground transportation services, which include facility maintenance, security services, training, scheduling and supervising all service personnel as well as providing customer service, marketing, and accounting and revenue control functions necessary to facilitate the operation of our clients' facilities. We also provide a range of ancillary services such as airport shuttle operations, valet services, taxi and livery dispatch services and municipal meter revenue collection and enforcement services.

Acquisitions and Investment in Joint Venture

        On October 2, 2012, we completed our acquisition (the "Central Merger") of Central Parking Corporation ("Central") for 6,161,332 shares of our common stock and the assumption of $217.7 million of Central's debt net of cash acquired. Additionally, Central's former stockholders will be entitled to receive $27.0 million to be paid three years after closing, to the extent the $27.0 million is not used to satisfy seller indemnity obligations pursuant to the Agreement and Plan of Merger dated February 28, 2012. Our consolidated results of operations for the twelve months ended December 31, 2014 and 2013 include Central's results of operations for the entire year. Our consolidated results of operations for the year ended December 31, 2012 include Central's results of operations for the period of October 2, 2012 through December 31, 2012.

        On October 31, 2014, we entered into an agreement to establish a joint venture with Parkmobile USA, Inc. ("Parkmobile USA") and contributed all of the assets and liabilities of our proprietary Click and Park ® parking prepayment business in exchange for a 30 percent interest in the newly formed legal entity called Parkmobile, LLC ("Parkmobile"). Parkmobile is a leading provider of on-demand and prepaid transaction processing for on-and off-street parking and transportation services. The Parkmobile joint venture combines two parking transaction engines, with SP Plus contributing the Click and Park ® parking prepayment systems, which enables consumers to reserve and pay for parking online in advance and Parkmobile USA contributing its on demand transaction engine that allows consumers to transact real-time payment for parking privileges in both on- and off-street environments. We account for our investment in the joint venture with Parkmobile under the equity method of accounting.

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Our Operations

        Our history and resulting experience have allowed us to develop and standardize a rigorous system of processes and controls that enable us to deliver consistent, transparent, value-added and high-quality parking facility management services. We serve a variety of industries and have end-market specific specialization in airports, healthcare facilities, hotels, municipalities and government facilities, commercial real estate, residential communities, retail and colleges and universities. The professionals dedicated to each of our SP+ operating divisions and service lines possess subject matter expertise that enables them to meet the specific demands of their clients. Additionally, we complement our core services and help to differentiate our clients' parking facilities by offering to their customers Ambiance in Parking ®, an approach to parking facility management that includes a comprehensive package of amenity and customer service programs. These programs not only make the parking experience more enjoyable, but also convey a sense of the client's sensitivity to and appreciation for the needs of its parking customers. In doing so, we believe the programs serve to enhance the value of the parking properties themselves.

        Our focus on customer service and satisfaction is a key driver of our high location retention rate, which was approximately 90% for the year ended December 31, 2014, and was approximately 87% for the year ended December 31, 2013, excluding dispositions required by the Department of Justice in connection with the Central Merger.

        We operate our clients' facilities through two primary 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 revenue and expenses under a standard management contract flow through to our client rather than to us.

    Under a lease, we generally pay to the property owner either a fixed annual rent, a percentage of gross customer collections, or a combination of both. Under a lease, we collect all revenue and are responsible for most operating expenses, but typically we are not responsible for major maintenance, capital expenditures or real estate taxes.

        As of December 31, 2014, we operated approximately 81% of our locations under management contracts, and approximately 19% of our locations under leases. We held a partial ownership interest in four parking facilities (two leased and two managed) as of December 31, 2014 and 2013.

        Our revenue is derived from a broad and diverse group of clients, industry end-markets and geographies. Our clients include some of North America's largest private and public owners, municipalities, 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. No single client accounted for more than 3% of our revenue or more than 2% of our gross profit for the year ended December 31, 2014. Additionally, we have built a diverse geographic footprint that as of December 31, 2014 included operations in 44 states, the District of Columbia and Puerto Rico, and municipalities, including New York, Los Angeles, Chicago, Boston, Washington D.C. and Houston, among others, and four Canadian provinces. Our strategy is focused on building scale and leadership positions in large, strategic markets in order to leverage the advantages of scale across a larger number of parking locations in a single market.

        While a large share of our operating arrangements are fixed-fee management contracts, we continue to grow our lease and management contract businesses. Generally, management contracts provide us with insulation from economic cycles and enhance our earnings visibility because our management contract revenue does not fluctuate materially in relation to variations in parking volumes; our lease contracts experience variability, as revenues typically increase in periods of improving macroeconomic

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conditions through increased parking volumes and typically decrease during periods of deteriorating macroeconomic conditions through reduced parking volumes.

        As of December 31, 2014, we managed approximately 4,200 parking facility locations containing approximately 2.0 million parking spaces in approximately 411 cities, operated 44 parking-related service centers serving 71 airports, operated a fleet of approximately 770 shuttle buses carrying approximately 41.0 million passengers per year, operated 338 valet locations and employed a professional staff of approximately 24,000 people.

        We are a leader in the field of introducing automation and technology as part of our parking facility and transportation operations, having been a leader in the use of mobile payment technology, mobile parking apps that show parking options and shuttle bus locations for customers, implementation of remote parking management operations and the use of License Plate Recognition (LPR) system for parking enforcement operations. We continue to utilize and provide the Click and Park ® technology to our customers through our joint venture with Parkmobile, which is a leading provider of on-demand and prepaid transaction processing for on-and off-street parking and transportation services.

        Our ability to innovate operations by integrating and incorporating appropriate technologies into our service lines allows us to further strengthen our relationships with clients, improve cost efficiency, enhance customer service and introduce new customer facing services. This continuous commitment to using automation and technology to innovate within operations is demonstrated through our continued use of the Click and Park ® and Click and Ride ® technology, as a customer offering through our joint venture partner Parkmobile, and our development of new online parking programs and electronic shuttle pass systems that support large entertainment and sporting venues, various sized urban garages, office buildings and public transportation hubs. We also innovate through application of our in-house interactive marketing expertise and digital advertising to increase parking demand, development of electronic payment tools to increase customer convenience and streamline revenue processes, use of advanced video and intercom services to enhance customer service to parking patrons 24-hours-a-day, the creation of our remote management services technology and operating center that enables us to remotely monitor facilities and parking operations, the use of our LPR system and video analytics for car counting, on-street enforcement and enhanced security and our proprietary MPM Plus ® monthly parker management and billing system provides comprehensive and reliable billing of the parking-related provisions of multi-year commercial tenant leases.

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.

    Restriping of the parking stalls as necessary.

    Painting of walkways, curbs, ceilings, walls or other facility surfaces.

    Routine maintenance of parking equipment ( e.g. , ticket dispensing machines, parking gate arms, fee computers).

    Marketing efforts designed to maximize gross parking revenues.

    Snow removal from sidewalks and driveways.

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        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.

    Consultation with our clients regarding which of our 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 dedicated internal audit and contract compliance groups.

    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 Client View ® 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:

    We provide shuttle bus vehicles and the drivers to operate, for example; through on-airport car rental operations as well as private off-airport parking locations.

    We provide ground transportation services, such as taxi and livery dispatch services, as well as concierge-type ground transportation information and support services for arriving passengers

    We provide on-street parking meter collection and other forms of parking enforcement services.

    We provide remote parking management services using technology that enables us to monitor a parking operation from a remote, off-site location and provide 24-hour-a-day customer assistance (including remedying equipment malfunctions).

Industry Overview

Overview

        The parking industry is large and fragmented and includes companies that provide temporary parking spaces for vehicles on an hourly, daily, weekly, or monthly basis along with providing various ancillary services. A substantial number of companies in the industry offer parking services as a non-core operation in connection with property management or ownership, and the vast majority of companies in the industry are small, private and operate a limited number of parking facilities. Accordingly, the industry remains highly fragmented and dynamic. From time to time, smaller operators find they lack the financial resources, economies of scale and/or management techniques required to compete for the business of increasingly sophisticated clients or family owners face difficult generational transfers. We expect this

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trend to continue and will provide larger parking management companies with opportunities to expand their businesses and acquire smaller operators. We also expect that small new operators will continue to enter the business as they have for decades.

Industry Operating Arrangements

        Parking facilities operate under three general types of arrangements:

    management contract;

    lease; and

    ownership.

        The general terms and benefits of these three types of arrangements are as follows:

Management Contract

        Under a management contract, the facility operator 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 operators also generally charge fees for various ancillary services such as accounting support services, equipment leasing and consulting. Primary responsibilities under a management contract include hiring, training and staffing parking personnel, and providing revenue collection, accounting, record-keeping, insurance and facility marketing services. The facility owner usually is responsible for operating expenses associated with the facility's operation, such as taxes, license and permit fees, insurance costs, payroll and accounts receivable processing and wages of personnel assigned to the facility, although some management contracts, typically referred to as "reverse" management contracts, require the facility operator to pay certain of these cost categories but provide for payment to the operator of a larger management fee. Under a management contract, the facility owner usually is responsible for non-routine maintenance and repairs and capital improvements, such as structural and significant mechanical repairs. Management contracts are typically for a term of one to three years (although the contracts may often be terminated, without cause, on 30-days' notice or less) and may contain renewal clauses.

Lease

        Under a lease, the parking facility operator generally pays to the property owner either a fixed base rent, percentage rent that is tied to the facility's financial performance, or a combination of both. The parking facility operator collects all revenue and is responsible for most operating expenses, but typically is not responsible for major maintenance, capital expenditures or real estate taxes. In contrast to management contracts, leases typically are 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 and other leases may be cancelled by the client on as little as 30 days' notice without cause. Leased facilities generally require larger capital investment by the parking facility operator than do managed facilities and therefore tend to have longer contract periods.

Ownership

        Ownership of parking facilities, either independently or through joint ventures entails greater potential risks and rewards than either managed or leased facilities. All owned facility revenue flows directly to the owner, and the owner has the potential to realize benefits of appreciation in the value of the underlying real estate. Ownership of parking facilities usually requires large capital investments, and the owner is responsible for all obligations related to the property, including all structural, mechanical and electrical maintenance and repairs and property taxes.

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Industry Growth Dynamics

        A number of industry trends should facilitate growth for larger outsourced commercial parking facility management providers, including the following:

        Opportunities From Large Property Managers, Owners and Developers.     As a result of past industry consolidation, there is a significant number of national property managers, owners and developers that own or manage multiple locations. Sophisticated property owners consider parking a profit center that experienced parking facility management companies can maximize. This dynamic favors larger parking facility operators that can provide specialized, value-added professional services with nationwide coverage.

        Outsourcing of Parking Management and Related Services.     Growth in the parking management industry has resulted from a 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 managers, owners and developers, as well as cities, municipal authorities, hospitals and universities, in an effort to focus on their core competencies, reduce operating budgets and increase efficiency and profitability, will continue and perhaps increase the practice of retaining parking management companies to operate facilities and provide related services, including shuttle bus operations, municipal meter collection and valet parking.

        Vendor Consolidation.     Based on interactions with our clients, we believe that many parking facility owners and managers are evaluating the benefits of reducing the number of parking facility management relationships they maintain. We believe this is a function of the desire to reduce costs associated with interacting with a large number of third-party suppliers coupled with the desire to foster closer inter-company relationships. By limiting the number of outsourcing vendors, companies will benefit from suppliers who will invest the time and effort to understand every facet of the client's business and industry and who can effectively manage and handle all aspects of their daily requirements. We believe a trend towards vendor consolidation can benefit a company like ours, given our national footprint and scale, extensive experience, broad process capabilities and a demonstrated ability to create value for our clients.

        Industry Consolidation.     The parking management industry is highly fragmented, with hundreds of small regional or local operators. We believe national parking facility operators have a competitive advantage over local and regional operators by reason of their:

    broad product and service offerings;

    deeper and more experienced management;

    efficient cost structure due to economies of scale; and

    financial resources to invest in infrastructure and information systems.

Our Competitive Strengths

        We believe we have the following key competitive strengths:

        A Leading Market Position with a Unique Value Proposition.     We are one of the leading providers of parking management, ground transportation and other ancillary services, to commercial, institutional, and municipal clients in the United States, Puerto Rico and Canada. We market and offer many of our services under our SP+ brand, which reflects our ability to provide customized solutions and meet the varied demands of our diverse client base and their wide array of property types, and supplement them with Ambiance in Parking ®, a comprehensive package of amenity and customer service programs. We can augment our parking services by providing our clients with related services through our SP+ Facility Maintenance , SP+ Transportation , SP+ Event Logistics and, in certain sections of the country, SP+

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Security service lines, thus enabling our clients to efficiently address various needs through a single vendor relationship. We believe our ability to offer a comprehensive range of services on a national basis is a significant competitive advantage and allows our clients to attract, service and retain customers, gain access to the breadth and depth of our service and process expertise, leverage our significant technology capabilities and enhance their parking facility revenue, profitability and cash flow.

        Our Scale and Diversification.     Expanding our client base, industry end-markets and geographic locations has enabled us to significantly enhance our operating efficiency over the past several years by standardizing processes and managing overhead.

    Client Base.   Our clients include some of the nation's largest private and public owners, municipalities, 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. No single client accounted for more than 3% of our revenue or more than 2% of our gross profit for the year ended December 31, 2014.

    Industry End-Markets.   We believe that our industry end-market diversification, such as colleges and universities, hospitals and medical centers, municipalities and event services, allows us to minimize our exposure to industry-specific seasonality and volatility. We believe that the breadth of end-markets we serve and the depth of services we offer to those end-markets provide us with a broader base of customers that we can target.

    Geographic Locations.   We have a diverse geographic footprint that includes operations in 44 states, the District of Columbia, Puerto Rico and four Canadian provinces as of December 31, 2014. We strive to be the #1 or #2 provider in each of the core markets in which we operate, and our strategy is focused on building size and leadership positions in large, strategic markets in order to leverage the advantages of scale across a larger number of parking locations in a single market.

        Stable Client Relationships.     We have a track record of providing our clients and parking customers with a consistent, value-added and high quality parking facility management experience, as reflected by our high location retention rates. As our clients continue to outsource the management of their parking operations and look to consolidate the number of their outsourcing providers, we believe this trend has meaningful benefits to companies like ours, which has a national footprint and scale, extensive industry experience, broad process capabilities, and a demonstrated ability to create value for our clients.

        Established Platform for Future Growth.     We have invested resources and developed a national infrastructure and technology platform that is complemented by significant management expertise, which enables us to scale our business for future growth effectively and efficiently. We have the ability to transition into a new location very quickly, from the simplest to the most complex operation, and have experience working with incumbent facility managers to affect smooth and efficient takeovers and integrate new locations seamlessly into our operations.

        Visible and Predictable Business Model.     We believe that our business model provides us with a measure of insulation from broader economic cycles, because a significant portion of our combined locations operates on fixed-fee and reverse management fee management contracts that for the most part are not dependent upon the level of utilization of those parking facilities. Additionally, because we only have a partial ownership interest in four parking facilities, we have limited the risks of real estate ownership. We benefit further from visibility provided by a recurring revenue model reinforced by high location retention rates.

        Highly Capital Efficient Business with Attractive Cash Flow Characteristics.     Our business generates attractive cash flow due to negative working capital dynamics and our low capital expenditure requirements. For the fiscal year ended December 31, 2014, we generated approximately $51.6 million of cash flow from operating activities, and during the same period our capital expenditures for the purpose of

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leasehold improvements and equipment were $13.5 million. For the fiscal year ended December 31, 2013, we generated approximately $34.9 million of cash flow from operating activities, and during the same period our capital expenditures for the purpose of leasehold improvements and equipment were $15.7 million.

        Focus on Operational Excellence and Human Capital Management.     Our culture and training programs place a continuing focus on excellence in the execution of all aspects of day-to-day parking facility operation. This focus is reflected in our ability to deliver to our clients a professional, high-quality product through well-trained, service-oriented personnel, which we believe differentiates us from our competitors. To support our focus on operational excellence, we manage our human capital through a comprehensive, structured program that evaluates the competencies and performance of all of our key operations and administrative support personnel on an annual basis. Based on those evaluations, we create detailed developmental plans designed to provide our personnel with the skills and tools needed to perform their current duties effectively and to prepare themselves for future growth and advancement. We have also dedicated significant resources to human capital management, providing comprehensive training for our employees, delivered primarily through the use of our web-based SP+ University TM learning management system, which promotes customer service and client retention in addition to providing our employees with continued training and career development opportunities.

Our Growth Strategy

        Building on these competitive strengths, we believe we are well positioned to execute on the following growth strategies:

        Leverage Benefits from Central Merger.     Our acquisition of Central in October 2012 resulted in a combined company offering a broader range of services, with greater quality and cost effectiveness, which we believe will enable us to become a vendor of choice for outsourced parking facility management, maintenance, ground transportation and security services. More specifically and as a result of our acquisition of Central, we have effectively doubled our location footprint by adding more than 2,200 locations and approximately one million parking spaces to our portfolio, and we continue to focus on promoting revenue growth selling our current products and services to these new locations. In addition, we are focused on further strengthening our ability to serve our customers by integrating Central's customer-facing products and services, such as its centralized customer service centers, direct-to-consumer marketing programs, various web-based applications (including iPhone and Android apps) and enhanced technology applications, such as those used by its remote management services division, as well as its USA Parking System, Inc. ("USA Parking") valet expertise. In addition, we continue to take advantage of scale efficiencies by consolidating back-office processes and eliminating duplicate infrastructure, and to leverage increased purchasing volume, all of which are collectively expected to generate significant cost synergies and enable us to expand our client base and grow the business from a lower cost platform. We expect that our combined company will generate sufficient free cash flow to enable us to make additional investments in parking-related technology to accelerate development of new products and services that further improve our clients' satisfaction and our customers' parking experience. We also believe that sharing of complementary capabilities will allow the combined company to leverage customer information and technology to deliver services to our customers more effectively and to better understand customer preferences while also providing client-focused services, such as automated and web-based transportation, security, maintenance, parking enforcement and meter collection products and services; customer relationship management systems and the capability to capture parking data on a large scale; and enhanced property management technology, including electronic marketing services, billing systems and automated reporting. We believe these complementary capabilities also will bolster our ability to build upon existing relationships with, and attract, employees, clients and customers.

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        Grow the Hospitality Business.     USA Parking, one of the subsidiaries we acquired in the Central Merger, is a leader in the valet industry, and management continues to believe there is significant opportunity to use USA Parking's capability to develop a national valet business. Our objective is to focus on the most important aspects of the valet business promptly upon obtaining a new location, from the first contact with a potential customer to the execution of our services. Given the importance of neat, clean and polite service, the success of our valet business is dependent upon ensuring that its valet associates deliver excellent service every day. To accomplish this objective, our USA University subsidiary provides training to its valet associates. USA University, which began operating in 1995, trained approximately 2,000 employees during our past fiscal year to become an integrated extension of our clients' staff and blend seamlessly into the overall hospitality experience. In addition, we are expanding USA University to train a growing number of employees in valet operations serving other parking locations, including Class A office buildings and residences, municipalities, airports and stadiums and entertainment complexes, to provide high-quality service.

        Grow Our Portfolio of Contracts in Existing Geographic Markets.     Our strategy is to capitalize on economies of scale and operating efficiencies by expanding our contract portfolio in our existing geographic markets, especially in our core markets. As a given geographic market achieves a threshold operational size, we typically will establish a local office in order to promote increased operating efficiency by enabling local managers to use a common staff for recruiting, training and human resources support. This concentration of operating locations allows for increased operating efficiency and superior levels of customer service and retention through the accessibility of local managers and support resources.

        Increase Penetration in Our Current Vertical End-Markets.     We believe that a significant opportunity exists for us to further expand our presence into certain industry end-markets, such as colleges and universities, hospitals and medical centers as well as municipalities. In order to effectively target these new markets, we have implemented a go-to-market strategy of aligning our business by vertical end-markets and branding our domain expertise through our SP+ operating division designations to highlight the specialized expertise, competencies and services that we provide to meet the needs of each particular industry and customer. Our developed SP+ brand, which emphasizes our specialized market expertise and distinguishes our ancillary service lines from the traditional parking, includes a broad array of our operating divisions such as, SP+ Airport Services , SP+ GAMEDAY , SP+ Healthcare Services , SP+ Hotel Services , SP+ Municipal Services , SP+ Office Services , SP+ Residential Services , SP+ Retail Services and SP+ University Services , which further highlight the market-specific subject matter expertise that enables our professionals to meet the varied parking and transportation-related demands of those specific property types. Because our capabilities range beyond parking facility management, our SP+ Transportation , SP+ Facility Maintenance , SP+ Event Logistics and SP+ Security brands more clearly distinguish those service lines from the traditional parking services that we provide under our Standard Parking, Central Parking and USA Parking brands.

        Expand and Cross-Sell Additional Services to Drive Incremental Revenue.     We believe we have significant opportunities to further strengthen our relationships with existing clients, and to attract new clients, by continuing to cross-sell value-added services that complement our core parking operations. These services include shuttle bus operations, taxi and livery dispatch services, valet services, concierge-type ground transportation, on-street parking meter collection and enforcement, facility maintenance services, remote management, parking consulting and billing services.

        Expand Our Geographic Platform.     We believe that opportunities exist to further develop new geographic markets either through new contract wins, acquisitions, alliances, joint ventures or partnerships. Clients who outsource the management of their parking operations often have a presence in a variety of urban markets and seek to outsource the management of their parking facilities to a national provider. We continue to focus on leveraging relationships with existing clients that have locations in multiple markets as one potential entry point into developing new core markets.

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        Focus on Operational Efficiencies to Further Improve Profitability.     We have invested substantial resources in information technology and continually seek to consolidate various corporate functions where possible in order to improve our processes and service offerings. In addition, we will continue to evaluate and improve our human capital management to ensure a consistent and high-level of service for our clients. The initiatives undertaken to date in these areas have improved our cost structure and enhanced our financial strength, which we believe will continue to yield future benefits.

        Pursue Opportunistic, Accretive Acquisitions.     The outsourced parking management industry remains highly fragmented and presents a significant opportunity for us. Given the scale in our existing operating platform, we have a demonstrated ability to successfully identify, acquire and integrate accretive tuck-in acquisitions through our acquisition of Gameday Management Group U.S. in 2009 and more recently Central Parking Corporation in 2012 and our investment in Parkmobile in 2014. We will continue to selectively pursue acquisitions or joint venture opportunities that help us acquire scale or further enhance our service capabilities.

Amenities and Customer Service Programs

        We offer a comprehensive package of amenity and customer service programs, branded as Ambiance in Parking ®, 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 heard, on each parking level. Other parking facilities have themes such as famous recording artists, musical instruments, and professional sports teams.

        SPokes.     Monthly parkers at participating facilities can check out a cruiser bike, free of charge, for their personal use. Parking customers make their reservations through the facility manager, and all riders are provided with helmets. Returned bikes and helmets are inspected and cleaned by a facility employee before reuse.

        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.

        SP Equipment & Technology Upgrade Program® Services (SETUP®).     We provide 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).

        SPare TM Emergency Care Services.     Under our SPare TM Emergency Care Services program, 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, 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.

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        CarCare 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.

        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.

        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.

        Web-Based Applications.     As a result of the Central Merger, we acquired and utilize a portfolio of PC-based applications that are also supported with iPhone and Android apps. These advanced technology and feature rich applications are designed to support client and customer acquisition and retention, deliver business programs that benefit employees and other organizational members, and include direct-to-consumer programs intended to enhance daily, monthly and event parking revenue at our locations. These platforms are easily integrated with ecommerce capabilities such as the Click and Park ® online reservation and payment engine through our joint venture partner Parkmobile.

        Centralized Contact Center.     We deliver a high level of customer service by bringing our national customer service expertise to local markets through a centralized system designed to enhance consistency and performance. A centralized team of trained Contact Center professionals offer increased availability and improved responsiveness to meet customer needs. Whether via email, phone or other communication channels, our customer support team is readily accessible by our customers, and centralized databases provide the team with necessary customer-related information on a city-by-city basis.

Business Development

        Our efforts to attract new clients are primarily concentrated in and coordinated by a dedicated business development group, 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.

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Support Operations

        We maintain regional and city offices throughout the United States, Puerto Rico and Canada in order to support approximately 24,000 employees and approximately 4,200 locations. 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, Puerto Rico and Canada allows us to add new locations quickly and in a cost-efficient manner.

        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 and Nashville support office.

Clients and Properties

        Our client base includes a diverse cross-section of public and private owners of commercial, institutional and municipal real estate.

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. Our continuous commitment to using automation and technology to innovate within operations is demonstrated through our continued use of the Click and Park ® and Click and Ride ® technology, as a customer offering through our joint venture partner Parkmobile, which is a leading provider of on-demand and prepaid transaction processing for on-and off-street parking and transportation services, and our development of new online parking programs and electronic shuttle pass systems that support large entertainment and sporting venues, various sized urban garages, office buildings and public transportation hubs. We also innovate through application of our in-house interactive marketing expertise and digital advertising to increase parking demand, development of electronic payment tools to increase customer convenience and streamline revenue processes, use of advanced video and intercom services to enhance customer service to parking patrons 24-hours-a-day, the creation of our SP+ Remote Management Services technology and operating center, the use of our LPR system and video analytics for car counting, on-street enforcement and enhanced security and our proprietary MPM Plus ® monthly parker management and billing system provides comprehensive and reliable billing of the parking-related provisions of multi-year commercial tenant leases. SP+ Remote Management Services allows us to provide remote parking management services, whereby personnel are able to monitor revenue and other aspects of a parking operation and provide 24-hour-a-day customer assistance (including remedying equipment malfunctions). After consolidating remote operations, we have begun expanding the locations where our remote management technology is installed. As of December 31, 2014, we provided SP+ Remote Management Services to approximately 200 locations. We expect this business to grow as clients focus on improving the profitability of their parking operations by decreasing labor costs at their locations through remote management.

Employees

        As of December 31, 2014, we employed 24,030 individuals, including 14,057 full-time and 9,973 part-time employees and as of December 31, 2013, we employed 23,937 individuals, including 14,225 full-time and 9,682 part-time employees. Approximately 32% of our employees are covered by collective

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bargaining agreements and represented by labor unions. Various union locals represent parking attendants and cashiers in the following cities: Atlanta, Akron (OH), Baltimore, Boston, Buffalo, Chicago, Cleveland, Dallas, Denver, Detroit, Jersey City, Kansas City, Long Beach (CA), Los Angeles, Manchester (NH), Miami, New York City, Newark, Philadelphia, Pittsburgh, Portland, Rochester, San Francisco, San Jose, San Juan (Puerto Rico), Santa Monica, Seattle, Syracuse and Washington, DC.

        We are frequently engaged in collective bargaining negotiations with various union locals. No single collective bargaining agreement covers a material number of our employees. We believe that our employee relations are generally good.

Insurance

        We purchase comprehensive liability insurance covering certain claims that occur in the operations that we lease or manage. The primary amount of such coverage is $1.75 million per occurrence and $1.75 million in the aggregate per facility for our general/garage liability, $2.0 million per occurrence and $2.0 million in the aggregate per facility for our garagekeepers legal liability coverage and $2.0 million per occurrence for auto liability coverage. In addition, we purchase workers' compensation insurance for all eligible employees and umbrella/excess liability coverage. Under our various liability and workers' compensation insurance policies, we are obligated to pay directly or reimburse the insurance carrier for the first $0.5 million of each loss covered by our general/garage liability or automobile liability policies and $0.25 million for each loss covered by our workers' compensation and garagekeepers legal liability policies. As a result, we are effectively self-insured for all claims up to those levels. 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. 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 most of our clients have chosen to obtain insurance coverage by being named as additional insureds under our master liability insurance policies.

        We provide group health insurance with respect to eligible full-time employees (whether they work at leased facilities, managed facilities or in our support offices). For the year ended December 31, 2014, we self-insured the cost of the medical claims for these participants up to a stop-loss limit of $0.3 million per individual. Pursuant to our management contracts, we charge those clients an allocated portion of our insurance-related costs.

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. There are only a few national parking management companies that compete with us. However, 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 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 we have, which may negatively impact our ability to retain existing contracts and gain new contracts. We also face significant competition in our efforts to provide ancillary services such as shuttle bus services and on-street parking enforcement because a number of large

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companies specialize in these services. In addition, entry barriers into these ancillary service businesses are low.

        We believe that we compete for management clients based on a variety of factors, including fees charged for services, ability to generate revenues and control expenses for clients, accurate and timely reporting of operational results, quality of customer service, and ability to anticipate and respond to industry changes. Factors that affect our ability to compete for leased locations include the ability to make financial commitments, long-term financial stability, and the ability to generate revenues and control expenses. Factors affecting our ability to compete for employees include wages, benefits and working conditions.

Regulation

        Our business is subject to numerous federal, state and local laws and regulations, and in some cases, municipal and state authorities directly regulate parking facilities. Our facilities in New York City are, for example, subject to extensive governmental restrictions concerning automobile capacity, pricing, structural integrity and certain prohibited practices. Many cities impose a tax or surcharge on parking services, which generally range from 10% to 50% of revenues collected. We collect and remit sales/parking taxes and file tax returns for and on behalf of our clients and ourselves. 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.

        Several state and local laws have been passed in recent years that encourage car-pooling and the use of mass transit or impose certain restrictions on automobile usage. These types of laws have adversely affected our revenues and could continue to do so in the future. For example, the City of New York imposed restrictions in the wake of the September 11 terrorist attacks, which included street closures, traffic flow restrictions and a requirement for passenger cars entering certain bridges and tunnels to have more than one occupant during the morning rush hour. It is possible that cities could enact additional measures such as higher tolls, increased taxes and vehicle occupancy requirements in certain circumstances, which could adversely impact us. We are also affected by zoning and use restrictions and other laws and regulations that are common to any business that deals with real estate.

        In addition, we are subject to laws generally applicable to businesses, including but not limited to federal, state and local regulations relating to wage and hour matters, employee classification, mandatory healthcare benefits, unlawful workplace discrimination, human rights laws and whistle blowing. Several cities in which we have operations either have adopted or are considering the adoption of so-called "living wage" ordinances, which could adversely impact our profitability by requiring companies that contract with local governmental authorities and other employers to increase wages to levels substantially above the federal minimum wage. In addition, we are subject to provisions of the Occupational Safety and Health Act of 1970, as amended ("OSHA"), and related regulations. Any actual or alleged failure to comply with any regulation applicable to our business or any whistle-blowing claim, even if without merit, could result in costly litigation, regulatory action or otherwise harm our business, financial condition and results of operations.

        In connection with certain transportation services provided to our clients, including shuttle bus operations, we provide the vehicles and the drivers to operate these transportation services. The U.S. Department of Transportation and various state agencies exercise broad powers over these

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transportation services, including, licensing and authorizations, safety and insurance requirements. Our employee drivers must also comply with the safety and fitness regulations promulgated by the Department of Transportation, including those related to drug and alcohol testing and service hours. We may become subject to new and more restrictive federal and state regulations. Compliance with such regulations could hamper our ability to provide qualified drivers and increase our operating costs.

        We are also subject to consumer credit laws and credit card industry rules and regulations relating to the processing of credit card transactions, including the Fair and Accurate Credit Transactions Act and the Payment Card Data Security Standard. These laws and these industry standards impose substantial financial penalties for non-compliance.

        Various other governmental regulations affect our operation of parking facilities, both directly and indirectly, including the Americans with Disabilities Act (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.

        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 foot rule and new regulations may 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.

Intellectual Property

        SP Plus® and the SP+® and the SP+ logo, SP+ GAMEDAY®, Innovation In Operation®, Standard Parking® and the Standard Parking logo, CPC®, Central Parking System®, Central Parking Corporation®, USA Parking®, Focus Point Parking® and Allright Parking® 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. We invented the Multi-Level Vehicle Parking Facility musical Theme Floor Reminder System. We have also registered the copyright rights in our proprietary software, such as Client View ©, Hand Held Program ©, License Plate Inventory Programs © and ParkStat © with the United States Copyright Office. We also own the URL parking.com.

Corporate Information

        Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are also available free charge at www.spplus.com as soon as reasonably practicable after we file such material with, or furnish it to, the Securities and Exchange Commission (SEC). We provide references to our website for convenience, but our website does not constitute, and should not be viewed as, part hereof, and our website is not incorporated into this or any of our other filings with the SEC.

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ITEM 1A.    RISK FACTORS

         The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding any statement in this Form 10-K or elsewhere. The following information should be read in conjunction with Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements and related notes in Part II, Item 8, "Financial Statements and Supplementary Data" of this Form 10-K.

         The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below. Any one or more of such factors could directly or indirectly cause the Company's actual results of operations and financial condition to vary materially from past or anticipated future results of operations and financial condition. Any of these factors, in whole or in part, could materially and adversely affect the Company's business, financial condition, results of operations and stock price.

         Because of the following factors, as well as other factors affecting the Company's financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

Certain of our leases acquired in the Central Merger expose us to certain risks, including structural repair obligations.

        Certain of our leases acquired in the Central Merger include provisions allocating to us responsibility for the costs of certain structural and other repairs required to be made to the property, including repairs arising as a result of ordinary wear and tear. We will incur costs for structural repair obligations in 2015 and future years, although we are not yet able to estimate the full extent and amount of our liability for these repairs in any particular year or in the aggregate. Additionally, the applicable indemnity under the Merger Agreement may not cover all such obligations, and there will be timing differences between our payments to satisfy these obligations and our receipt of indemnification thereof, and some indemnification obligations may be satisfied by the selling stockholders of Central either through the surrender of shares of our common stock or payment in cash or some combination thereof. Accordingly, our expenditures to cover these structural and other repair obligations could have a material adverse impact on our operating results (including our gross profit derived from locations that we operate under leases) and cash flows for 2015 and future years. Any other increase in the cost of parking services could also reduce our gross profit derived from locations that we operate under leases.

Adverse litigation judgments or settlements resulting from legal proceedings in which we may be involved in the normal course of business, and a dispute with Central's former stockholders, could affect our operations and financial condition.

        In the normal course of business, we are from time to time involved in various legal proceedings. The outcome of these legal proceedings cannot be predicted. It is possible that an unfavorable outcome of some or all of the matters could cause us to incur substantial liabilities that may have a material adverse effect upon our financial condition and results of operations. Any significant adverse litigation, judgments or settlements could have a negative effect on our business, financial condition and results of operations. In addition, Central is subject to a number of ongoing legal proceedings, and we will incur substantial expenses defending such matters and may have judgments levied against us that are substantial and may not be covered by previously established reserves.

        We have periodically given Central's former stockholders notice regarding indemnification matters since the closing date of the Merger and have made adjustments for known matters, although Central's former stockholders have not agreed to such adjustments nor made any elections with respect to using cash or stock as payment for any indemnified matters. Furthermore, following our notices of

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indemnification matters, the representative of Central's former stockholders has indicated that they may make additional inquiries and potentially raise issues with respect to the our indemnification claims, and that they may assert various claims of their own relating to the Merger Agreement. Under the Merger Agreement, all post-closing claims and disputes, including indemnification matters, are ultimately subject to resolution through binding arbitration or, in the case of a dispute as to the calculation of "Net Debt Working Capital," resolution by an independent public accounting firm. We intend to pursue these dispute resolution processes, as applicable, in a timely manner, although our pursuit of these processes may be delayed by actions taken by representatives of Central's former stockholders. An unfavorable outcome could have an adverse impact to our business, financial condition and results of operations.

We are subject to intense competition that could constrain our ability to gain business, as well as our profitability.

        We believe that competition in parking facility management and ancillary services is intense. The low cost of entry into the parking facility management business has led to a strongly competitive, fragmented market consisting primarily of 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 may be able to adapt more quickly to changes in customer requirements, devote greater resources to the promotion and sale of their services or develop technology that is as or more successful than our proprietary technology solutions that are designed to strengthen customer loyalty and optimize facility pricing and performance. We provide nearly all of our services under contracts, many of which are obtained through competitive bidding, and 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 quality of service. As we have worked to establish ourselves as 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. Furthermore, these strong competitive pressures could impede our success in bidding for profitable business and our ability to increase prices even as costs rise, thereby reducing margins.

Our management contracts and leases expose us to certain risks.

        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. A material reduction in the operating income associated with the integrated services we provide under management contracts and leases could have a material adverse effect on our business, financial condition and results of operations. Our management contracts are typically for a term of one to three years, although the contracts may often be terminated, without cause, on 30 days' notice or less, giving clients regular opportunities to attempt to negotiate a reduction in fees or other allocated costs. Any loss of a significant number of clients could in the aggregate materially adversely affect our operating results.

        We are particularly exposed to increases in costs for locations that we operate under leases because we are generally responsible for all the operating expenses of our leased locations. During the first and fourth quarters 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, all of which negatively affects gross profit.

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We are increasingly dependent on information technology, and potential disruption, cyber attacks, cyber terrorism and security breaches present risks that could harm our business.

        We are increasingly centralized and dependent on automated information technology systems to manage and support a variety of business processes and activities. In addition, a portion of our business operations is conducted electronically, increasing the risk of attack or interception that could cause loss or misuse of data, system failures or disruption of operations. Improper activities by third parties, exploitation of encryption technology, new data-hacking tools and discoveries and other events or developments may result in a future compromise or breach of our networks, payment card terminals or other payment systems. In particular, the techniques used by criminals to obtain unauthorized access to sensitive data change frequently and often are not recognized until launched against a target; accordingly, we may be unable to anticipate these techniques or implement adequate preventative measures. Any significant breakdown, invasion, destruction or interruption of these systems could negatively impact our operations. In addition, there is a risk of business interruption, reputational damage and potential legal liability damages from leakage of confidential information. The occurrence of acts of cyber terrorism such as website defacement, denial of automated payment services, sabotage of our proprietary on-demand technology or the use of electronic social media to disseminate unfounded or otherwise harmful allegations to our reputation, could have a material adverse effect on our business. Any business interruptions or damage to our reputation could negatively impact our financial condition and results of operations. While we maintain insurance coverage that may, subject to policy terms and conditions, cover certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses and would not remedy damage to our reputation.

        In October 2014, a third-party vendor retained by our client that provides and maintains payment card systems in some of our parking facilities notified us that an unauthorized person had used a remote access tool to connect to some of its payment processing systems and that our customers' data was at risk. We retained a leading computer forensic firm to conduct an investigation and further determine the facts. After extensive analysis, we discovered evidence confirming that criminals used a remote access tool to install malware that searched for payment card data that was being routed through the computers that accept payments made at the parking facilities (the "Data Breach"). The malware has now been removed from servers that were attacked and it no longer presents a threat to customers using the impacted parking garages that we operate. We have received a small number of reports of fraudulent use of payment cards potentially connected to the data breach. We fulfilled all obligations for notifying our payment processors and impacted customers. We have also implemented additional security measures including forcing our vendors to use two-factor authentication for remote access.

        We do not have control over security measures taken by third-party vendors hired by our clients to prevent unauthorized access to electronic and other confidential information. There can be no assurance that other third-party payment processing vendors will not suffer a similar attack in the future, that unauthorized parties will not gain access to personal financial information, or that any such incident will be discovered in a timely manner.

We have incurred substantial indebtedness that requires us to comply with certain financial and operating covenants under our credit facility and to make payments as they become due, and our failure to comply could cause amounts borrowed under the facility to become immediate due and payable or prevent us from borrowing under the facility.

        On February 20, 2015, we entered into an Amended and Restated Credit Agreement ("Restated Credit Facility), providing for $400.0 million in secured senior credit facility ("Restated Senior Credit Facility) consisting of (i) a $200.0 million revolving credit facility and (ii) a $200.0 million term loan facility (which is subject to scheduled quarterly amortization) with Bank of America, Wells Fargo Bank and certain other financial institutions. The Restated Credit Facility matures on February 20, 2020, at which time any amounts outstanding will be due and payable in full. As of February 20, 2015, we had

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$200.0 million outstanding under the term loan facility and $147.3 million outstanding under the revolving credit facility, respectively. This level of indebtedness may:

    require us to dedicate a significant percentage of our cash flow from operations to payments on our debt, thereby reducing the availability of cash flow to fund capital expenditures, pursue other acquisitions or investments in new technologies, make stock repurchases, pay dividends and for general corporate purposes;

    increase our vulnerability to general adverse economic conditions, including increases in interest rates if the borrowings bear interest at variable rates or if such indebtedness is refinanced at a time when interest rates are higher; and

    limit our flexibility in planning for, or reacting to, changes in or challenges relating to our business and industry, creating competitive disadvantages compared to other competitors with lower debt levels and borrowing costs.

        We are required to comply with specified financial and operating covenants and to make scheduled payments of our term loan, which could limit our ability to operate our business as we otherwise might operate it. Our failure to comply with any of these covenants or to meet any payment obligations under the Restated Credit Facility could result in an event of default which, if not cured or waived, would result in any amounts outstanding, including any accrued interest and unpaid fees, becoming immediately due and payable.

        We cannot assure you that cash flow from operations, combined with additional borrowings under the Restated 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. If the consolidated leverage ratio exceeds certain thresholds, the interest rate on indebtedness outstanding under our credit facility will be higher.

        We may incur substantial additional indebtedness in the future, which could cause the related risks to intensify. We may need to refinance all or a portion of our indebtedness on or before their respective maturities. We cannot assure you that we will be able to refinance any of our indebtedness, including indebtedness under our Restated Credit Facility, 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 was accelerated.

We must comply with public and private regulations that may impose significant costs on us.

        Under various federal, state and local environmental laws, ordinances and regulations, current or previous owners or operators of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under or in their properties. This applies to properties we either own or operate. These laws typically impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. We may be potentially liable for such costs as a result of our operation of parking facilities. Additionally, we hold a partial ownership interest in four of these parking facilities acquired in the Central Merger, and Central previously owned a large number of properties that we did not acquire. We may now be liable for such costs as a result of such previous and current ownership. In addition, from time to time we are involved in environmental issues at certain locations or in connection with our operations. The cost of defending against claims of liability, or remediation of a contaminated property, could have a material adverse effect on our business, financial condition and results of operations. In addition, several state and local laws have been passed in recent years that encourage car pooling and the use of mass transit. Laws and regulations that reduce the number of cars and vehicles being driven could adversely impact our business.

        In connection with certain transportation services provided to our clients, including shuttle bus operations, we provide the vehicles and the drivers to operate these transportation services. The U.S.

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Department of Transportation and various state agencies exercise broad powers over these transportation services, including, licensing and authorizations, safety and insurance requirements. Our employee drivers must also comply with the safety and fitness regulations promulgated by the Department of Transportation, including those related to drug and alcohol testing and service hours. We may become subject to new and more restrictive federal and state regulations. Compliance with such regulations could hamper our ability to provide qualified drivers and increase our operating costs.

        We are also subject to consumer credit laws and credit card industry rules and regulations relating to the processing of credit card transactions, including the Fair and Accurate Credit Transactions Act and the Payment Card Data Security Standard. These laws and these industry standards impose substantial financial penalties for non-compliance.

        In addition, we are subject to laws generally applicable to businesses, including but not limited to federal, state and local regulations relating to wage and hour matters, employee classification, mandatory healthcare benefits, unlawful workplace discrimination and whistle blowing. Any actual or alleged failure to comply with any regulation applicable to our business or any whistle-blowing claim, even if without merit, could result in costly litigation, regulatory action or otherwise harm our business, financial condition and results of operations.

        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.

Deterioration in economic conditions in general could reduce the demand for parking and ancillary services and, as a result, reduce our earnings and adversely affect our financial condition.

        Adverse changes in global, national and local economic conditions could have a negative impact on our business. In addition, our business operations tend to be concentrated in large urban areas. Many of our customers are workers who commute by car to their places of employment in these urban centers. Our business could be materially adversely affected to the extent that weak economic conditions or demographic factors have resulted in the elimination of jobs and high unemployment in these large urban areas. In addition, increased unemployment levels, the movement of white-collar jobs from urban centers to suburbs or out of North America entirely, increased office vacancies in urban areas, movement toward home office alternatives or lower consumer spending could reduce consumer demand for our services.

        Adverse changes in economic conditions could also lead to a decline in parking at airports and commercial facilities, including facilities owned by retail operators and hotels. In particular, reductions in parking at leased facilities can lower our profit because a decrease in revenue would be exacerbated by fixed costs that we must pay under our leases.

        If adverse economic conditions reduce discretionary spending, business travel or other economic activity that fuels demand for our services, our earnings could be reduced. Adverse changes in local and national economic conditions could also depress prices for our services or cause clients to cancel their agreements to purchase our services.

The financial difficulties or bankruptcy of one or more of our major clients could adversely affect our results.

        Future revenue and our ability to collect accounts receivable depend, in part, on the financial strength of our clients. We estimate an allowance for accounts we do not consider collectible, and this allowance adversely impacts profitability. In the event that our clients experience financial difficulty, become unable to obtain financing or seek bankruptcy protection, our profitability would be further impacted by our failure to collect accounts receivable in excess of the estimated allowance. Additionally, our future revenue

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would be reduced by the loss of these clients or by the cancellation of leases or management contracts by clients in bankruptcy.

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 carriers for, or pay directly, each loss incurred up to the amount of a specified deductible or self-insured retention. The per-occurrence deductible is $0.25 million for our workers' compensation and garagekeepers legal liability policies and $0.5 million for our automobile liability policy. The per-occurrence self-insured retention for our general liability policy is $0.5 million. 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 the property insurance policies varies based upon the insured values and the peril that causes the loss. The stop-loss limit applicable under the group health insurance we provide for eligible employees is $0.3 million per illness. Our financial statements reflect our funding of all such obligations based upon guidance and evaluation 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. Changes in insurance reserves as a result of periodic evaluations of the liabilities can cause swings in operating results that may not be indicative of the operations of our ongoing business. Additionally, our obligations could increase if we receive a greater number of insurance claims, or if the severity of, or the administrative costs associated with, those claims generally increases. A material increase in insurance costs due to a change in the number or severity of claims, claim costs or premiums paid by us could have a material adverse effect on our operating income.

Labor disputes could lead to loss of revenues or expense variations.

        At December 31, 2014, approximately 32% of our employees were represented by labor unions and approximately 30% of our collective bargaining contracts are up for renewal in 2015, representing approximately 4% of our employees. In addition, at any given time, we may face a number of union organizing drives.

        When one or more of our major collective bargaining agreements becomes subject to renegotiation or when we face union organizing drives, we may disagree with the union on important issues that, in turn, could lead to a strike, work slowdown or other job actions. There can be no assurance that we will be able to renew existing labor union contracts on acceptable terms. In such cases, there are no assurances that we would be able to staff sufficient employees for our short-term needs. A strike, work slowdown or other job action could in some cases disrupt us from providing services, resulting in reduced revenues. If declines in client service occur or if our clients are targeted for sympathy strikes by other unionized workers, contract cancellations could result. The result of negotiating a first time agreement or renegotiating an existing collective bargaining agreement could result in a substantial increase in labor and benefits expenses that we may be unable to pass through to clients. In addition, potential legislation could make it significantly easier for union organizing drives to be successful and could give third-party arbitrators the ability to impose terms of collective bargaining agreements upon us and a labor union if we are unable to agree with such union on the terms of a collective bargaining agreement.

        In addition, 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.

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Negative or unexpected tax consequences could adversely affect our results of operations.

        Adverse changes in underlying profitability and financial outlook of our operations could lead to changes in valuation allowances against our deferred tax assets on our consolidated balance sheet, which could materially and adversely affect our results of operations. Additionally, changes in U.S. tax laws or state tax laws or our interpretation of existing laws in states where we have significant operations could have an adverse effect on deferred tax assets and liabilities on our consolidated balance sheets and results of operations. We are also subject to tax audits by governmental authorities in the United States and Canada. Negative unexpected results from one or more such tax audits or our failure to sustain our reporting positions on examination could have an adverse effect on our results of operations and our effective tax rate.

We have investments in joint ventures and may be subject to certain financial and operating risks with our joint venture investments.

        We have acquired or invested in a number of joint ventures, and may acquire or enter into joint ventures with additional companies. These transactions create risks such as: (i) additional operating losses and expenses in the businesses acquired or joint ventures for which we have made investments in, (ii) the dependence on the investee's accounting, financial reporting and similar systems, controls and processes of other entities whose financial performance is incorporated into our financial results due to our investment in that entity, (iii) potential unknown liabilities associated with a company we may acquire or in which we invest, (iv) our requirement or obligation to commit and provide additional capital, equity, or credit support as required by the joint venture agreements, (v) the joint venture partner may be unable to perform its obligations as a result of financial or other difficulties or be unable to provide for additional capital, equity or credit support as required by the joint venture agreements and (vi) disruption of our ongoing business, including loss of management focus on the business. As a result of future acquisitions or joint ventures for which we may invest in, we may need to issue additional equity securities, spend our cash, or incur debt and contingent liabilities, any of which could reduce our profitability and harm our business. In addition, valuations supporting our acquisitions or investments in joint ventures could change rapidly given the global economic environment and climate. We could determine that such valuations have experienced impairments other-than-temporary declines in fair value which could adversely impact our financial results.

Weather conditions, including natural disasters, or acts of terrorism could disrupt our business and services.

        Weather conditions, including fluctuations in temperatures, hurricanes, snow or severe weather storms, earthquakes, drought, heavy flooding, natural disasters or acts of terrorism may result in reduced revenues and gross profit. Weather conditions, natural disasters and acts of terrorism may also cause economic dislocations throughout the country. Weather conditions, including natural disasters, could lead to reduced levels of travel and require increase in certain costs of parking services of which could negatively affect gross profit. In addition, terrorist 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. We derive a significant percentage of our gross profit from parking facilities and parking related services in and around airports. 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 revenue and cash flow for both our leased facilities and those facilities we operate under management contracts.

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Because our business is affected by weather related trends, typically in the first and fourth quarters of each year, our results may fluctuate from period to period, which could make it difficult to evaluate our business.

        Weather conditions, including fluctuations in temperatures, snow or severe weather storms, heavy flooding, hurricanes or natural disasters, can negatively impact portions of our business. We periodically have experienced fluctuations in our quarterly results arising from a number of factors, including the following:

    reduced levels of travel during and as a result of severe weather conditions, which is reflected in lower revenue from urban, airport and hotel parking; and

    increased costs of parking services, such as snow removal.

        These factors reduced our gross profit in the first quarters of 2014 and 2013 and could cause gross profit reductions in the future. As a result of these seasonal affects, our revenue and earnings in the second, third and fourth quarters tend to be higher than revenue and earnings in the first quarter. Accordingly, you should not consider our first quarter results as indicative of results to be expected for any other quarter or for any full fiscal year. Fluctuations in our results could make it difficult to evaluate our business or cause instability in the market price of our common stock.

State and municipal government clients may sell or enter into long-term leases of parking-related assets to our competitors.

        In order to raise additional revenue, a number of state and municipal governments have either sold or entered into long-term leases of public assets or may be contemplating such transactions. The assets that are the subject of such transactions have included government-owned parking garages located in downtown commercial districts and parking operations at airports. The sale or long-term leasing of such government-owned parking assets to our competitors or clients of our competitors could have a material adverse effect on our business, financial condition and results of operations.

Our ability to expand our business will be dependent upon the availability of adequate capital.

        The rate of our expansion will depend in part on the availability of adequate capital, which in turn will depend in large part on cash flow generated by our business and the availability of equity and debt capital. In addition, our Restated Senior Credit Facility contains provisions that restrict our ability to incur additional indebtedness and/or make substantial investments or acquisitions. As a result, we cannot assure you that we will be able to finance our current growth strategies.

The sureties for our performance bond program may elect not to provide us with new or renewal performance bonds for any reason.

        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, either generally or because we are unwilling or unable to post collateral at levels sufficient to satisfy the surety's requirements, 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.

Federal health care reform legislation may adversely affect our business and results of operations.

        In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 were signed into law in the U.S. (collectively, the "Health Care Reform Laws").

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The Health Care Reform Laws include a large number of health-related provisions, including requiring most individuals to have health insurance and establishing new regulations on health plans. Although the Health Care Reform Laws do not mandate that employers offer health insurance, penalties will be assessed on large employers who do not offer health insurance that meets certain affordability or benefit requirements. Effective January 1, 2014, we modified our group health insurance program and we now self-insure all eligible full-time employees and their family members up to a $0.3 million stop loss limit. Providing such additional health insurance benefits to our employees, or the payment of penalties if such coverage is not provided, could increase our health insurance-related expenses. If we are unable to raise the rates we charge our clients to cover these expenses, such increases in expense could reduce our operating profit.

        In addition, under the Health Care Reform Laws, employers will have to file a significant amount of additional information with the Internal Revenue Service and will have to develop systems and processes to track requisite information. We will have to modify our current systems to do so, which could increase our general and administrative expenses.

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, as well as the cost of obtaining insurance coverage against any such risk. There can be no assurance that we may not sustain a material loss for which we do not maintain any, or adequate, insurance coverage.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

        Not applicable.

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ITEM 2.    PROPERTIES

Parking Facilities

        We operate parking facilities in 44 states and the District of Columbia in the United States, Puerto Rico and four provinces of Canada. The following table summarizes certain information regarding our facilities as of December 31, 2014:

 
   
  # of Locations    
  # of Spaces    
 
States/Provinces
  Airports and Urban Cities   Airport   Urban   Total   Airport   Urban   Total  

Alabama

  Airports, Birmingham, Mobile and Talladega     1     60     61     1,074     10,483     11,557  

Alberta

  Calgary, Edmonton and Sherwood Park         9     9         1,229     1,229  

Arizona

  Glendale, Mesa, Nogales, Phoenix, Scottsdale, Sedona and Tempe         32     32         22,747     22,747  

California

  Airports, Glendale, Long Beach, Los Angeles, Newport Beach, Oakland, Riverside, Sacramento, San Francisco, San Jose, Santa Monica and other various cities     21     769     790     54,936     261,372     316,308  

Colorado

  Airports, Aurora, Boulder, Broomfield, Colorado Springs, Denver, Golden, Greenwood Village, Lakewood, Lone Tree, Westminster and other various cities     9     164     173     40,477     65,182     105,659  

Connecticut

  Airports, Hartford, Stamford, Waterbury and Windsor Locks     8     5     13     7,941     2,725     10,666  

Delaware

  Wilmington         3     3         1,167     1,167  

District of Columbia

  Airport and Washington, DC     1     73     74         17,252     17,252  

Florida

  Airports, Coral Gables, Ft. Lauderdale, Jacksonville, Miami, Miami Beach, Orlando, South Miami, St. Petersburg, Tampa, West Palm Beach and other various cities     24     233     257     46,602     97,567     144,169  

Georgia

  Airports, Athens, Atlanta, Decatur, and Duluth     16     71     87     35,367     46,670     82,037  

Hawaii

  Aiea, Honolulu, Kaneohe, Lahaina, Wailuku and Waipahu         39     39         15,039     15,039  

Idaho

  Airport     1         1     915         915  

Illinois

  Airports, Chicago, Elgin, Evanston, Harvey, Lake County, North Chicago, Oak Lawn, Oak Park, Rosemont, Schaumburg and other various cities     13     317     330     37,366     124,877     162,243  

Indiana

  Indianapolis and South Bend         7     7         2,130     2,130  

Kansas

  Kansas City and Topeka         3     3         832     832  

Kentucky

  Airports, Covington, Erlanger, Frankfort and Lexington     6     16     22     16,807     3,368     20,175  

Louisiana

  Airports, Baton Rouge, Gretina, Kenner, New Orleans, Shreveport and Westwego     7     75     82     10,324     16,362     26,686  

Maine

  Airports and Portland     3     3     6     3,081     1,890     4,971  

Manitoba

  Winnipeg         2     2         399     399  

Maryland

  Baltimore, Bethesda, Ellicott City, Landover, Oxon Hill, Riverdale, Rockville, Silver Spring and Towson         54     54         53,414     53,414  

Massachusetts

  Attleboro, Boston, Cambridge, Charlestown, Chelsea, Lawrence, Roxbury, Somerville, Springfield and Worcester         98     98         33,669     33,669  

Michigan

  Airports, Ann Arbor, Birmingham, Detroit, Flint, Freeland, Grand Rapids, Kalamazoo, Lansing, Royal Oak, Traverse City and other various cities     14     32     46     34,416     16,152     50,568  

Minnesota

  Minneapolis and St. Paul         36     36         11,459     11,459  

Mississippi

  Jackson         15     15         4,484     4,484  

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  # of Locations    
  # of Spaces    
 
States/Provinces
  Airports and Urban Cities   Airport   Urban   Total   Airport   Urban   Total  

Missouri

  Airports, Barnhart, Clayton, Kansas City, Springfield and St. Louis     7     79     86     24,816     34,690     59,506  

Montana

  Airports     6         6     5,170         5,170  

Nebraska

  Airports, Lincoln and Omaha     2     12     14     1,307     2,949     4,256  

New Hampshire

  Airports     5         5     8,427         8,427  

New Jersey

  Atlantic City, Bayonne, Camden, East Rutherford, Jersey City, New Brunswick, Newark, Paterson, Wayne and Weehawken         88     88         67,281     67,281  

New Mexico

  Airport and Albuquerque     1     8     9         3,777     3,777  

New York

  Airports, Bronx, Brooklyn, Buffalo, Elmhurst, Flushing, Hamburg, Manhattan, New York City, Ronkonkoma, Syracuse and other various cities     8     546     554     15,547     101,274     116,821  

North Carolina

  Airports, Asheville, Carolina Beach,Charlotte, Fletcher, Greensboro, Wilmington, and Winston Salem     8     50     58     17,208     19,674     36,882  

North Dakota

  Airports     2         2     2,336         2,336  

Ohio

  Airports, Akron, Cincinnati, Cleveland, Columbus, Dayton, Lakewood, North Canton and Westerville     16     170     186     17,892     95,521     113,413  

Oklahoma

  Oklahoma City and Tulsa         26     26         6,728     6,728  

Ontario

  Brampton, Cambridge, Kitchener, Mississauga, North York, Oshawa, Ottawa, Saultsaintemarie, Thunder bay and Toronto         89     89         36,550     36,550  

Oregon

  Airports, Corvallis, Medford, Portland and Redmond     8     16     24     18,293     9,259     27,552  

Pennsylvania

  Airports, Avoca, Chester, Harrisburg, Lancaster, Middletown, Norristown, Philadelphia, Pittsburgh and Scranton     4     70     74     7,241     57,181     64,422  

Puerto Rico

  Caguas, Carolina, Dorado, Guaynabo, Ponce, Rio Grande and San Juan         40     40         19,736     19,736  

Quebec

  Gatineau         8     8         4,647     4,647  

Rhode Island

  Airports, Newport, Providence and Warwick     7     16     23     9,027     7,138     16,165  

South Carolina

  Columbia         2     2         1,311     1,311  

South Dakota

  Airports     2         2     2,716         2,716  

Tennessee

  Airports, Blountville, Knoxville, Memphis and Nashville     9     71     80     18,300     15,560     33,860  

Texas

  Airports, Addison, Austin, Dallas, El Paso, Ft. Worth, Houston, Irving, San Antonio, Waco and Woodlands     33     234     267     37,481     140,230     177,711  

Utah

  Airports, Farmington, Park City and Salt Lake City     10     16     26     15,067     5,536     20,603  

Virginia

  Airports, Arlington, Fairfax, Manassas, Newport News, Norfolk, Reston, Richmond, Roanoke, Vienna and Virginia Beach     8     109     117     11,280     39,662     50,942  

Washington

  Airport, Bellevue, Bellingham, Renton, Seattle and Tukwila     1     103     104     1,253     23,394     24,647  

West Virginia

  Charleston         8     8         2,655     2,655  

Wisconsin

  Airports, Appleton, Green Bay, Lacrosse, Madison and Milwaukee     12     33     45     20,099     17,062     37,161  

  Totals     273     3,910     4,183     522,766     1,522,284     2,045,050  

        We have interest in seventeen joint ventures, twelve limited liability companies, eighteen general partnerships, and one limited partnership that each operate between one and thirty-five parking facilities. We also held a partial ownership interest in four parking facilities as of December 31, 2014.

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        For additional information on our properties, see also Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations—Summary of Operating Facilities" and the notes to the Consolidated Financial Statements included in Item 8. "Financial Statements and Supplementary Data."

Office Leases

        We lease approximately 35,000 square feet for our corporate offices in Chicago, Illinois. We believe that this space will be adequate to meet our current and foreseeable future needs.

        We also lease approximately 33,000 square feet for our support office in Nashville, Tennessee. We believe that this space will be adequate to our meet current and foreseeable future needs.

        We also lease regional offices in various cities in the United States and Canada. 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.

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ITEM 3.    LEGAL PROCEEDINGS

        We are subject to litigation in the normal course of our business. The outcomes of legal proceedings and claims brought against us and other loss contingencies are subject to significant uncertainty. We accrue a charge against income when our management determines that it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. In addition, we accrue for the authoritative judgments or assertions made against us by government agencies at the time of their rendering regardless of our intent to appeal. In addition, we are from time-to-time party to litigation, administrative proceedings and union grievances that arise in the normal course of business, and occasionally pay non-material amounts to resolve claims or alleged violations of regulatory requirements. There are no "normal course" matters that separately or in the aggregate, would, in the opinion of management, have a material adverse effect on our operations, financial condition or cash flow.

        In determining the appropriate loss contingencies, we consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of potential loss. We regularly evaluate current information available to us to determine whether an accrual should be established or adjusted. Estimating the probability that a loss will occur and estimating the amount of a potential loss or a range of potential loss involves significant estimation and judgment.

ITEM 4.    MINE SAFETY DISCLOSURES

        Not applicable.

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

        Our common stock is listed on the NASDAQ Stock Market LLC under the symbol "SP". The following sets forth the high and low intraday sales prices of our common stock on the NASDAQ Stock Market LLC during each quarter of the two most recent calendar years.

 
  2014   2013  
 
  Sales Price   Sales Price  
Quarter Ended
  High   Low   High   Low  

March 31

  $ 27.48   $ 24.55   $ 22.60   $ 19.34  

June 30

  $ 26.08   $ 21.09   $ 23.26   $ 20.00  

September 30

  $ 22.25   $ 18.83   $ 26.92   $ 21.40  

December 31

  $ 25.23   $ 19.26   $ 28.09   $ 21.97  

Dividends

        We did not pay a cash dividend in respect of our common stock in 2014 or 2013. By the terms of our Restated Senior Credit Facility, we can pay cash dividends on our capital stock while such facility is in effect. Any future dividends will be determined based on earnings, capital requirements, financial condition, and other factors considered relevant by our Board of Directors. There are no restrictions on the ability of our wholly owned subsidiaries to pay cash dividends to us.

Holders

        As of March 2, 2015, there were 2,880 holders of our common stock, based on the number of record holders of our common stock.

Securities Authorized for Issuance Under Equity Compensation Plans

Plan Category
  Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants
and
Rights (a)
  Weighted-
Average
Exercise
Price of
Outstanding
Options,
Warrants
and
Rights
  Number of
Securities
Remaining
Available
for Future
Issuance
Under Equity
Compensation
Plans
(Excluding
Securities
Reflected in
Column (a))
 

Equity compensation plans approved by securities holders

    651,918   $ 0.06     500,202  

Equity compensation plans not approved by securities holders

             

Total

    651,918   $ 0.06     500,202  

Stock Repurchases

        In June 2011, our Board of Directors authorized us to repurchase shares of our common stock, on the open market, up to $20.0 million in share repurchases in the aggregate. Under this repurchase

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program, we may purchase our common shares from time to time in open market purchases or privately negotiated transactions and may make all or part of the purchases pursuant to Rule 10b5-1 plans. Any repurchased shares are retired and returned to an authorized but unissued status. The repurchase program may be suspended or discontinued at any time without notice. As of December 31, 2014, $12.5 million remained available for stock repurchases under the June 2011 authorization by the Board of Directors. We made no stock repurchases during 2014 or 2013.

ITEM 6.    SELECTED FINANCIAL DATA

        The following selected consolidated data should be read in conjunction with the consolidated financial statements and the notes thereto, which are included in Item 8. "Financial Statements and Supplementary Data" and the information contained in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations."

        The results of operations for the historical periods are not necessarily indicative of the results to be expected for future periods. See Item 1A. "Risk Factors" of this Annual Report on Form 10-K for a discussion of risk factors that could impact our future results.

        On October 2, 2012, we completed our acquisition (the "Central Merger") of Central Parking Corporation ("Central"). Our consolidated results of operations for the years ended December 31, 2013 and 2014 include Central's results of operations for the entire year. Our consolidated results of operations for the year ended December 31, 2012 include Central's results of operations for the period October 2, 2012 through December 31, 2012.

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  Year Ended December 31,  
 
  2014   2013   2012   2011   2010  
 
  (In millions)
 

Statement of Operations Data:

                               

Parking services revenue:

                               

Lease contracts

  $ 496.6   $ 489.6   $ 250.4   $ 147.5     138.7  

Management contracts

    338.3     347.3     230.5     173.7     171.3  

    834.9     836.9     480.9     321.2     310.0  

Reimbursed management contract revenue

    679.8     629.9     473.1     408.4     411.1  

Total revenue

    1,514.7     1,466.8     954.0     729.6     721.1  

Cost of parking services:

                               

Lease contracts

    455.7     456.1     231.8     136.5     128.6  

Management contracts

    207.9     208.7     141.9     97.2     96.9  

    663.6     664.8     373.7     233.7     225.5  

Reimbursed management contract expense

    679.8     629.9     473.1     408.4     411.1  

Total cost of parking services

    1,343.4     1,294.7     846.8     642.1     636.6  

Gross profit:

                               

Lease contracts

    40.9     33.5     18.6     11.0     10.1  

Management contracts

    130.4     138.6     88.6     76.5     74.4  

Total gross profit

    171.3     172.1     107.2     87.5     84.5  

General and administrative expenses

    101.5     98.9     86.5     48.3     47.9  

Depreciation and amortization

    30.3     31.2     13.5     6.6     6.1  

Operating income

    39.5     42.0     7.2     32.6     30.5  

Other expense (income):

                               

Interest expense

    17.8     19.0     8.6     4.7     5.3  

Interest income

    (0.4 )   (0.6 )   (0.3 )   (0.2 )   (0.2 )

Gain on contribution of a business to an unconsolidated entity

    (4.1 )                

Equity in losses from investments in unconsolidated entity

    0.3                  

Total other expense (income)

    13.6     18.4     8.3     4.5     5.1  

Income before income taxes

    25.9     23.6     (1.1 )   28.1     25.4  

Income tax expense (benefit)

    (0.2 )   8.8     (3.6 )   10.7     9.8  

Net income

    26.1     14.8     2.5     17.4     15.6  

Less: Net income attributable to noncontrolling interest

    3.0     2.7     1.0     0.4     0.3  

Net income attributable to SP Plus Corporation(1)

  $ 23.1   $ 12.1   $ 1.5   $ 17.0   $ 15.3  

Balance Sheet Data (at end of year):

                               

Cash and cash equivalents

  $ 18.2   $ 23.2   $ 28.5   $ 13.2   $ 7.3  

Total assets(2)

    825.8     862.4     905.3     242.9     242.8  

Total debt(3)

    253.4     288.7     310.6     82.0     97.9  

Total SP Plus Corporation stockholders' equity(4)

  $ 229.1   $ 203.1   $ 186.2   $ 41.3   $ 29.2  

(1)
Net income attributable to SP Plus Corporation for 2012 includes the following significant amounts from the Central Merger: Total revenue, excluding reimbursed revenue, of $127.8 million; total cost of parking services, excluding reimbursed expense, of $190.0 million; and general and administrative expenses of $24.6 million.

(2)
Total assets as of December 31, 2012 includes the impact of assets acquired in the Central Merger of $624.9 million.

(3)
Total long-term debt, including current portion as of December 31, 2012, includes $217.7 million of debt, net of cash acquired, assumed in the Central Merger.

(4)
Total SP Plus Corporation stockholders' equity as of December 31, 2012 includes approximately $140.7 million related to the issuance of our common stock in the Central Merger.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         This Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and other parts of this Form 10-K contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "will," "would," "could," "can," "may," and similar terms. Forward-looking statements are not guarantees of future performance and the Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of this Form 10-K under the heading "Risk Factors," which are incorporated herein by reference. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in Part II, Item 8 of this Form 10-K. Each of the terms the "Company" and "SP Plus" as used herein refers collectively to SP Plus Corporation and its wholly owned subsidiaries, unless otherwise stated. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Overview

Our Business

        We provide parking management, ground transportation and other ancillary services to commercial, institutional and municipal clients in urban markets and airports across the United States, Puerto Rico and Canada. Our services include a comprehensive set of on-site parking management and ground transportation services, which include facility maintenance, security services, training, scheduling and supervising all service personnel as well as providing customer service, marketing, and accounting and revenue control functions necessary to facilitate the operation of our clients' facilities. We also provide a range of ancillary services such as airport shuttle operations, valet services, taxi and livery dispatch services and municipal meter revenue collection and enforcement services. We typically enter into contractual relationships with property owners or managers as opposed to owning facilities.

        We operate our clients' 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 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, 2014, we operated 81% of our locations under management contracts and 19% under leases.

        In evaluating our financial condition and operating performance, management's primary focus is on our gross profit and total general and administrative expense. 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 local parking taxes), whereas revenue from management contracts only includes our contractually

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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 a change in the proportion of our operating agreements that are structured as leases versus management contracts may cause significant fluctuations in reported revenue and expense of parking services, that change will not artificially affect our gross profit. For example, as of December 31, 2014, 81% of our locations were operated under management contracts and 76% of our gross profit for the year ended December 31, 2014 was derived from management contracts. Only 41% of total revenue (excluding reimbursed management contract revenue), 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.

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.

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:

 
  December 31,  
 
  2014   2013   2012(2)  

Leased facilities(1)

    774     850     939  

Managed facilities(1)

    3,409     3,393     3,325  

Total facilities

    4,183     4,243     4,264  

(1)
Includes partial ownership in two managed facilities and two leased facilities acquired in the Central Merger.

(2)
Includes 1,388 managed facilities, 754 leased facilities, 2,142 total facilities and partial ownership in two managed facilities and four leased facilities acquired in the Central Merger.

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 contract.   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 contract.   Management contract revenue consists of management fees, including both fixed and performance-based fees, and amounts attributable to

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      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. We believe we generally purchase required insurance at lower rates than our clients can obtain on their own because we effectively self-insured for all liability, worker's compensation and health care 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 these revenues belong to the property owners rather than to us. Management contracts generally provide us with management fees regardless of the operating performance of the underlying facilities.

        Conversions between type of contracts, lease or management, are typically determined by our clients and not us. Although the underlying economics to us of management contracts and leases are similar, the manner in which we account for them differs substantially.

Reimbursed Management Contract Revenue

        Reimbursed management contract revenue consists of the direct reimbursement from the property owner for operating expenses incurred under a management contract, which is reflected in our revenue.

Cost of Parking Services

        Our cost of parking services consists of the following:

    Cost of parking services—lease contract.   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 contract.   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.

Reimbursed Management Contract Expense

        Reimbursed management contract expense consists of direct reimbursed costs incurred on behalf of property owners under a management contract, which is reflected in our cost of parking services.

Gross Profit

        Gross profit equals our revenue less the cost of generating such revenue. This is the key metric we use to examine our performance because it captures the underlying economic benefit to us of both lease contracts and management contracts.

General and Administrative Expenses

        General and administrative expenses include salaries, wages, benefits, payroll taxes, insurance, travel and office related expenses for our headquarters, field offices, supervisory employees, and board of directors.

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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 estimated remaining useful life.

Results of Operations

        As noted previously, our consolidated results of operations for the years ended December 31, 2014 and 2013 include Central's results of operations for the entire year, and the financial results for the year ended December 31, 2012 include only approximately three months of operations related to the acquired Central operations due to the timing of the closing of the Central Merger on October 2, 2012. To help understand the operating results for Fiscal 2013 Compared to Fiscal 2012, the term "Central operations" refers to the results of Central on a stand-alone basis for the period from October 2, 2012 to December 31, 2012 and the term "Standard operations" refers to the results of Standard on a stand-alone basis and not inclusive of results from the acquired operations of Central for the twelve months ended December 31, 2012.

Fiscal 2014 Compared to Fiscal 2013

Segments

        An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenue and incur expenses, and about which separate financial information is regularly evaluated by our chief operating decision maker (CODM), in deciding how to allocate resources. Our CODM is our president and chief executive officer.

        The chief operating decision maker does not evaluate segments using discrete asset information. The business is managed based on regions administered by executive vice presidents. On November 1, 2013, we changed our internal reporting segment information reported to its CODM. We now report Ontario, Manitoba and Quebec in region one and Missouri, Nebraska, North Carolina and South Carolina in region five. The following includes the current internal reporting for which all periods presented have been restated to reflect the new internal reporting to the CODM.

    Region One, encompasses operations in Connecticut, Delaware, District of Columbia, Illinois, Indiana, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Virginia, West Virginia, Wisconsin and the Canadian Provinces of Manitoba, Ontario, and Quebec.

    Region Two, encompasses event planning and transportation, and our technology-based parking and traffic management systems.

    Region Three, encompasses operations in Arizona, California, Hawaii, Oregon, Utah, Washington, and the Canadian Province of Alberta.

    Region Four, encompasses all major airport and transportation operations nationwide.

    Region Five encompasses Alabama, Colorado, Florida, Georgia, Louisiana, Mississippi, Missouri, Nebraska, New Mexico, North Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, and Texas.

    Other, consists of ancillary revenue that is not specifically identifiable to a region and insurance reserve adjustments related to prior years.

        The following tables are a summary of revenues (excluding reimbursed management contract revenue), cost of parking services (excluding reimbursed management contract expense) and gross

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profit by regions for the comparable years ended December 31, 2014 and 2013 and the comparable years ended December 31, 2013 and 2012:

        Segment revenue information is summarized as follows:

 
  Year Ended December 31,  
 
  Region
One
  Region
Two
  Region
Three
  Region
Four
  Region
Five
  Other   Total   Variance  
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   Amount   %  
 
  (In millions)
 

Lease contract revenue:

                                                                                                 

New location

  $ 15.8   $ 2.3   $ 0.2   $   $ 6.7   $ 1.2   $ 2.5   $ 0.7   $ 2.9   $ 0.2   $   $   $ 28.1   $ 4.4   $ 23.7     538.6 %

Contract expirations

    7.7     12.4             1.3     5.2         3.1     1.7     6.2             10.7     26.9     (16.2 )   –60.2 %

Same location

    279.0     281.2     4.5     4.4     40.9     39.6     41.5     39.7     86.1     87.8     (0.7 )   1.6     451.3     454.3     (3.0 )   –0.7 %

Conversions

    1.5     3.4             0.2     0.2     4.5         0.3     0.4             6.5     4.0     2.5     62.5 %

Total lease contract revenue

  $ 304.0   $ 299.3   $ 4.7   $ 4.4   $ 49.1   $ 46.2   $ 48.5   $ 43.5   $ 91.0   $ 94.6   $ (0.7 ) $ 1.6   $ 496.6   $ 489.6   $ 7.0     1.4 %

Management contract revenue:

                                                                                                 

New location

  $ 14.3   $ 4.1   $ 5.2   $ 0.7   $ 7.3   $ 1.4   $ 5.3   $ 0.9   $ 8.1   $ 1.7   $   $   $ 40.2   $ 8.8   $ 31.4     356.8 %

Contract expirations

    4.0     21.9     0.3     1.2     2.2     10.9     (0.2 )   0.9     2.1     4.4             8.4     39.3     (30.9 )   –78.6 %

Same location

    82.0     83.4     24.9     29.3     49.3     51.1     100.2     98.0     32.1     36.3     (0.3 )   0.4     288.8     298.5     (9.7 )   –3.2 %

Conversions

    0.6     0.5                 0.3     0.2         0.1     0.1         (0.2 )   0.9     0.7     0.2     28.6 %

Total management contract revenue

  $ 100.9   $ 109.9   $ 30.4   $ 31.2   $ 58.8   $ 63.7   $ 105.5   $ 99.8   $ 42.4   $ 42.5   $ (0.3 ) $ 0.2   $ 338.3   $ 347.3   $ (9.0 )   –2.6 %

Parking services revenue—lease contract

        Lease contract revenue increased $7.0 million, or 1.4%, to $496.6 million for the year ended December 31, 2014, compared to $489.6 million for the year-ago period. The increase resulted primarily from increases in revenue from new locations and locations that converted from management contracts during the current year, partially offset by decreases in revenue from contract expirations and same location revenue. The decrease in same location revenue of $3.0 million, or 0.7%, was primarily due to decreases in short-term parking revenue and monthly parking revenue.

        From a reporting segment perspective, lease contract revenue increased primarily due to new locations in all five operating regions, same locations in regions two, three and four and conversions in region four. This was partially offset by decreases in contract expirations in regions one, three, four and five, same location revenue in regions one, five and other and conversions in regions one and five. Same location revenue decreases for the aforementioned regions were primarily due to decreases in short-term parking revenue and monthly parking revenue. The other region amounts in same location represent revenues not specifically identifiable to a region.

        Revenue associated with contract expirations relates to contracts that have expired, however, we were operating the facility in the comparative period.

Parking services revenue—management contract

        Management contract revenue decreased $9.0 million, or 2.6%, to $338.3 million for the year ended December 31, 2014, compared to $347.3 million for the year-ago period. The decrease resulted primarily from decreases in contract expirations and same location revenue, which was partially offset by the increase in new location revenue and locations that converted from a lease contract during the current year. Same location revenue for those facilities decreased $9.7 million, or 3.2%, primarily due to decreased fees from ancillary services.

        From a reporting segment perspective, management contract revenue decreased due to contract expirations in all five regions, same locations in regions one, two, three, five and other and conversions in region three, partially offset by, increases in management contract revenue for new locations in all five operating regions, same location in region four and conversions in regions one, four and other. The decreases in same location revenue were primarily due to decreases in fees from ancillary services. The other region amounts in same location represent revenue from ancillary services and other revenue not specifically identifiable to a region.

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        Revenue associated with contract expirations relates to contracts that have expired, however, we were operating the facility in the comparative period.

Reimbursed management contract revenue

        Reimbursed management contract revenue increased $49.9 million, or 7.9%, to $679.8 million for the year ended December 31, 2014, compared to $629.9 million in the year-ago period. This increase resulted primarily from an increase in reimbursements for costs incurred on behalf of owners.

        Segment cost of parking services information is summarized as follows:

 
  Year Ended December 31,  
 
  Region One   Region Two   Region
Three
  Region
Four
  Region Five   Other   Total   Variance  
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   Amount   %  
 
  (In millions)
 

Cost of parking services lease contracts:

                                                                                                 

New location

  $ 13.8   $ 1.6   $ 0.1   $   $ 5.7   $ 1.1   $ 2.3   $ 0.6   $ 2.7   $ 0.2   $ (0.1 ) $   $ 24.5   $ 3.5   $ 21.0     600.0 %

Contract expirations

    6.1     13.1             1.1     4.7         2.8     1.4     5.0         (0.1 )   8.6     25.5     (16.9 )   66.3 %

Same location

    267.1     269.3     4.1     4.3     36.6     36.7     38.6     37.2     70.4     73.6     (0.5 )   2.6     416.9     423.6     (6.7 )   –1.6 %

Conversions

    1.4     3.0             0.2     0.2     4.0         0.1     0.3             5.7     3.5     2.2     62.9 %

Total cost of parking services lease contracts

  $ 288.4   $ 287.0   $ 4.2   $ 4.3   $ 44.2   $ 42.6   $ 44.9   $ 40.6   $ 74.6   $ 79.1   $ (0.6 ) $ 2.5   $ 455.7   $ 456.1   $ (0.4 )   –0.1 %

Cost of parking services management contracts:

                                                                                                 

New location

  $ 9.4   $ 2.3   $ 3.5   $ 0.5   $ 4.6   $ 0.7   $ 4.0   $ 0.8   $ 4.1   $ 1.3   $ 1.4   $   $ 27.0   $ 5.6   $ 21.4     382.1 %

Contract expirations

    2.7     12.4     0.1     0.4     1.4     5.8     0.1         1.1     1.8             5.4     20.4     (15.0 )   –73.5 %

Same location

    39.5     43.9     14.0     20.5     29.0     31.2     71.1     71.1     16.6     18.6     3.4     (4.0 )   173.6     181.3     (7.7 )   –4.2 %

Conversions

    0.1     0.1                     1.7     1.4     0.1                 1.9     1.5     0.4     –4.2 %

Total cost of parking services management contracts

  $ 51.7   $ 58.7   $ 17.6   $ 21.4   $ 35.0   $ 37.7   $ 76.9   $ 73.3   $ 21.9   $ 21.7   $ 4.8   $ (4.0 ) $ 207.9   $ 208.8   $ (0.9 )   –0.4 %

Cost of parking services—lease contracts

        Cost of parking services for lease contracts decreased $0.4 million, or 0.1%, to $455.7 million for the year ended December 31, 2014, compared to $456.1 million for the year-ago period. The decrease resulted primarily from decreases in costs from contract expirations and same locations, which was partially offset by increases in costs from new locations and locations that converted from management contracts during the current year. Same location costs decreased $6.7 million, or 1.6%, primarily due to lower operating expenses and lower rent expense, primarily as a result of contingent rental payments on the decrease in revenue for same locations, partially offset by structural repair costs related to certain lease contracts acquired in the Central Merger.

        From a reporting segment perspective, cost of parking services for lease contracts decreased primarily due to contract expirations in regions one, three, four and five, same locations in regions one, two, five and other and conversions in regions one and five, partially offset by increases in cost of parking services for lease contracts in same locations in regions three and four, new locations in all five regions, conversions in region four and contract expirations in region other. Same location cost decreased primarily due to a reduction on contingent rental payments on the decrease in revenue and reduced other operating costs, partially offset by structural repair costs related to certain lease contracts acquired in the Central Merger. The other region amounts represent structural repair costs related to certain lease contracts acquired in the Central Merger and other costs that are not specifically identifiable to a region.

        Cost of parking services associated with contract expirations relates to contracts that have expired, however, we were operating the facility in the comparative period presented.

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Cost of parking services—management contracts

        Cost of parking services for management contracts decreased $0.9 million, or 0.4%, to $207.8 million for the year ended December 31, 2014, compared to $208.7 million for the year-ago period. The decrease resulted from decreases in costs related to contract expirations and same locations, partially offset by increases in new locations and locations that converted from lease contracts during the current year. Same location decrease in operating expenses of $7.7 million, or 4.2%, for management contracts primarily resulted from decreases in costs associated with reverse management contracts and in the cost of providing management services.

        From a reporting segment perspective, cost of parking services for management contracts decreased due to contract expirations in regions one, two, three and five, same locations in regions one, two, three and five, partially offset by increases in cost of parking services for management contract in new locations in all five regions and other, same locations in region other, conversions in regions four and five and contract expirations in region four. Same location cost decreases primarily resulted from decreases in costs associated with reverse management contracts and in the cost of providing management services and prior year insurance reserve adjustments. The other region amounts represent prior year insurance reserve adjustments and other costs that are not specifically identifiable to a region.

        Cost of parking services associated with contract expirations relates to contracts that have expired, however, we were operating the facility in the comparative period presented.

Reimbursed management contract expense

        Reimbursed management contract expense increased $49.9 million, or 7.9%, to $679.8 million for the year ended December 31, 2014, compared to $629.9 million in the year-ago period. This increase resulted primarily from an increase in reimbursements for costs incurred on behalf of owners.

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        Segment gross profit/gross profit percentage information is summarized as follows:

 
  Year Ended December 31,  
 
  Region One   Region Two   Region Three   Region Four   Region Five   Other   Total   Variance  
 
  2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   2014   2013   Amount   %  
 
  (In millions)
 

Gross profit lease contracts:

                                                                                                 

New location

  $ 2.0   $ 0.7   $ 0.1   $   $ 1.0   $ 0.1   $ 0.2   $ 0.1   $ 0.2   $   $ 0.1   $   $ 3.6   $ 0.9   $ 2.7     300.0 %

Contract expirations

    1.6     (0.7 )           0.2     0.5         0.3     0.3     1.2         0.1     2.1     1.4     0.7     50.0 %

Same location

    11.9     11.9     0.4     0.1     3.7     3.0     2.9     2.5     15.7     14.2     (0.2 )   (1.0 )   34.4     30.7     3.7     12.1 %

Conversions

    0.1     0.4                     0.5         0.2     0.1             0.8     0.5     0.3     60.0 %

Total gross profit lease contracts

  $ 15.6   $ 12.3   $ 0.5   $ 0.1   $ 4.9   $ 3.6   $ 3.6   $ 2.9   $ 16.4   $ 15.5   $ (0.1 ) $ (0.9 ) $ 40.9   $ 33.5   $ 7.4     22.1 %

Gross profit percentage lease contracts:

                                                                                                 

New location

    12.7 %   30.4 %   50.0 %   0.0 %   14.9 %   8.3 %   8.0 %   14.3 %   6.9 %   0.0 %   0.0 %   0.0 %   12.8 %   20.5 %            

Contract expirations

    20.8 %   –5.6 %   0.0 %   0.0 %   15.4 %   9.6 %   0.0 %   9.7 %   17.6 %   19.4 %   0.0 %   0.0 %   19.6 %   5.2 %            

Same location

    4.3 %   4.2 %   8.9 %   2.3 %   9.0 %   7.6 %   7.0 %   6.3 %   18.2 %   16.2 %   28.6 %   –62.5 %   7.6 %   6.8 %            

Conversions

    6.7 %   11.8 %   0.0 %   0.0 %   0.0 %   0.0 %   11.1 %   0.0 %   66.7 %   25.0 %   0.0 %   0.0 %   12.3 %   12.5 %            

Total gross profit percentage

    5.1 %   4.1 %   10.6 %   2.3 %   10.0 %   7.8 %   7.4 %   6.7 %   18.0 %   16.4 %   –14.3 %   –56.3 %   8.2 %   6.8 %            

Gross profit management contracts:

                                                                                                 

New location

  $ 4.9   $ 1.8   $ 1.7   $ 0.2   $ 2.7   $ 0.7   $ 1.3   $ 0.1   $ 4.0   $ 0.4   $ (1.4 ) $   $ 13.2   $ 3.2   $ 10.0     312.5 %

Contract expirations

    1.3     9.5     0.2     0.8     0.8     5.1     (0.3 )   0.9     1.0     2.6             3.0     18.9     (15.9 )   –84.2 %

Same location

    42.5     39.5     10.9     8.8     20.3     19.9     29.1     26.9     15.5     17.7     (3.1 )   4.4     115.2   $ 117.2     (2.0 )   –1.7 %

Conversions

    0.5     0.4                 0.3     (1.5 )   (1.4 )       0.1