SP Plus Corporation
STANDARD PARKING CORP (Form: 10-Q, Received: 08/06/2010 12:23:35)
Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2010
Commission file number: 000-50796
 
STANDARD PARKING CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
     
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
  16-1171179
(I.R.S. Employer Identification No.)
900 N. Michigan Avenue, Suite 1600
Chicago, Illinois 60611-1542

(Address of Principal Executive Offices, Including Zip Code)
(312) 274-2000
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES o NO 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 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 þ   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 Exchange Act). YES o NO þ
As of July 30, 2010, there were 15,633,764 shares of common stock of the registrant outstanding.
 
 

 

 


 

STANDARD PARKING CORPORATION
FORM 10-Q INDEX
         
       
 
       
       
 
       
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  EX-3.1.1
  EX-3.1.2
  EX-3.1.3
  EX-3.1.4
  Exhibit 31.1
  Exhibit 31.2
  Exhibit 31.3
  Exhibit 32.1

 

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PART I. FINANCIAL INFORMATION
Item 1.  
Financial Statements
STANDARD PARKING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share and per share data)
                 
    June 30, 2010     December 31, 2009  
    (Unaudited)     (see Note)  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 8,282     $ 8,256  
Notes and accounts receivable, net
    54,600       44,490  
Prepaid expenses and supplies
    2,893       5,401  
Deferred taxes
    3,457       3,457  
 
           
Total current assets
    69,232       61,604  
Leasehold improvements, equipment and construction in progress, net
    17,191       17,175  
Advances and deposits
    4,796       4,904  
Long-term receivables, net
    12,051       10,325  
Intangible and other assets, net
    8,446       6,765  
Cost of contracts, net
    13,374       12,879  
Goodwill
    128,190       126,853  
 
           
Total assets
  $ 253,280     $ 240,505  
 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
  $ 47,548     $ 48,502  
Accrued and other current liabilities
    32,903       33,156  
Current portion of long-term borrowings
    654       662  
 
           
Total current liabilities
    81,105       82,320  
Deferred taxes
    9,185       8,151  
Long-term borrowings, excluding current portion
    110,518       112,549  
Other long-term liabilities
    27,555       22,808  
Standard Parking Corporation’s stockholders’ equity:
               
Preferred stock, par value $.01 per share; 5,000,000 shares authorized and no shares issued
           
Common stock, par value $.001 per share; 50,000,000 shares authorized; 15,620,355 and 15,385,428 shares issued and outstanding as of June 30, 2010 and December 31, 2009, respectively
    16       15  
Additional paid-in capital
    95,065       91,793  
Accumulated other comprehensive income (loss)
    (80 )     313  
Accumulated deficit
    (70,019 )     (77,372 )
 
           
Total Standard Parking Corporation stockholders’ equity
    24,982       14,749  
Noncontrolling interest
    (65 )     (72 )
 
           
Total equity
    24,917       14,677  
 
           
Total liabilities and stockholders’ equity
  $ 253,280     $ 240,505  
 
           
 
     
Note:  
The balance sheet at December 31, 2009 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
See Notes to Condensed Consolidated Interim Financial Statements.

 

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STANDARD PARKING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share and per share data, unaudited)
                                 
    Three Months Ended     Six Months Ended  
    June 30, 2010     June 30, 2009     June 30, 2010     June 30, 2009  
Parking services revenue:
                               
Lease contracts
  $ 34,162     $ 35,687     $ 67,278     $ 70,387  
Management contracts
    42,081       37,311       82,156       75,604  
 
                       
 
    76,243       72,998       149,434       145,991  
Reimbursed management contract revenue
    100,757       97,595       206,812       200,152  
 
                       
Total revenue
    177,000       170,593       356,246       346,143  
Cost of parking services:
                               
Lease contracts
    31,217       32,932       62,988       65,881  
Management contracts
    22,278       19,938       44,542       40,329  
 
                       
 
    53,495       52,870       107,530       106,210  
Reimbursed management contract expense
    100,757       97,595       206,812       200,152  
 
                       
Total cost of parking services
    154,252       150,465       314,342       306,362  
Gross profit:
                               
Lease contracts
    2,945       2,755       4,290       4,506  
Management contracts
    19,803       17,373       37,614       35,275  
 
                       
Total gross profit
    22,748       20,128       41,904       39,781  
General and administrative expenses (1)
    12,218       10,320       23,778       23,081  
Depreciation and amortization
    1,570       1,413       3,030       2,900  
 
                       
Operating income
    8,960       8,395       15,096       13,800  
Other expenses (income):
                               
Interest expense
    1,398       1,528       2,888       2,964  
Interest income
    (52 )     (95 )     (105 )     (162 )
 
                       
 
    1,346       1,433       2,783       2,802  
Income before income taxes
    7,614       6,962       12,313       10,998  
Income tax expense
    3,021       2,692       4,868       4,266  
 
                       
Net income
    4,593       4,270       7,445       6,732  
Less: Net income attributable to noncontrolling interest
    85       42       92       106  
 
                       
Net income attributable to Standard Parking Corporation
  $ 4,508     $ 4,228     $ 7,353     $ 6,626  
 
                       
Common stock data:
                               
Net income per share:
                               
Basic
  $ 0.29     $ 0.28     $ 0.48     $ 0.43  
Diluted
  $ 0.28     $ 0.27     $ 0.46     $ 0.42  
Weighted average shares outstanding:
                               
Basic
    15,531,726       15,251,310       15,461,904       15,273,796  
Diluted
    15,877,258       15,601,643       15,841,713       15,642,234  
 
     
(1)  
Non-cash stock based compensation expense of $729 and $1,237 for the three and six months ended June 30, 2010, respectively, and $545 and $1,073 for the three and six months ended June 30, 2009, respectively, is included in general and administrative expenses.
See Notes to Condensed Consolidated Interim Financial Statements.

 

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STANDARD PARKING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except for share and per share data, unaudited)
                 
    Six Months Ended  
    June 30, 2010     June 30, 2009  
Operating activities:
               
Net income
  $ 7,445     $ 6,732  
Adjustments to reconcile net income to net cash provided by operations:
               
Depreciation and amortization
    2,998       2,691  
Loss on sale of assets
    37       193  
Amortization of debt issuance costs
    319       321  
Non-cash stock-based compensation
    1,237       1,073  
Excess tax benefit related to stock option exercises
    (968 )      
(Reversal) provision for losses on accounts receivable
    (55 )     143  
Deferred income taxes
    1,034       2,098  
Change in operating assets and liabilities
    (10,044 )     (5,418 )
 
           
Net cash provided by operating activities
    2,003       7,833  
Investing activities:
               
Purchase of leasehold improvements and equipment
    (1,560 )     (2,131 )
Cost of contracts purchased
    (121 )     (604 )
Capitalized interest
    (71 )     (89 )
Contingent purchase payments
    (104 )     (259 )
 
           
Net cash used in investing activities
    (1,856 )     (3,083 )
Financing activities:
               
Repurchase of common stock
          (3,885 )
Proceeds from exercise of stock options
    1,069        
Tax benefit related to stock option exercises
    968        
(Payments on) proceeds from senior credit facility
    (1,700 )     2,150  
Distribution to noncontrolling interest
    (85 )     (108 )
Payments on long-term borrowings
    (63 )     (59 )
Payments on capital leases
    (276 )     (571 )
 
           
Net cash used in financing activities
    (87 )     (2,473 )
Effect of exchange rate changes on cash and cash equivalents
    (34 )     (57 )
 
           
Increase in cash and cash equivalents
    26       2,220  
Cash and cash equivalents at beginning of period
    8,256       8,301  
 
           
Cash and cash equivalents at end of period
  $ 8,282     $ 10,521  
 
           
Supplemental disclosures:
               
Cash paid during the period for:
               
Interest
  $ 2,691     $ 3,005  
Income taxes
    3,032       1,770  
See Notes to Condensed Consolidated Interim Financial Statements.

 

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STANDARD PARKING CORPORATION
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(In thousands except for share and per share data, unaudited)
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Standard Parking Corporation have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements.
In the opinion of management, all adjustments (consisting only of adjustments of a normal and recurring nature) considered necessary for a fair presentation of the financial position and results of operations have been included. Operating results for the three-month and six-month periods ended June 30, 2010 are not necessarily indicative of the results that might be expected for any other interim period or the fiscal year ending December 31, 2010. The financial statements presented in this report should be read in conjunction with the consolidated financial statements and footnotes thereto included in our 2009 Annual Report on Form 10-K filed March 12, 2010.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and variable interest entities in which the Company is the primary beneficiary. Noncontrolling interest recorded in the consolidated statement of income is the interest in consolidated VIEs not controlled by the Company. We have interests in twelve joint ventures and one limited liability company. The twelve joint ventures each operate between one and thirty parking facilities. The limited liability company collects and distributes parking facility data for a fee. Of the thirteen variable interest entities, six are consolidated into our financial statements, and seven are single purpose entities where the Company is not the primary beneficiary and therefore has a noncontrolling interest as power is shared. Investments in variable interest entities where the Company is not the primary beneficiary are accounted for under the equity method. All significant intercompany profits, transactions and balances have been eliminated in consolidation.
Financial Instruments
The carrying values of cash and cash equivalents, accounts receivable and accounts payable are reasonable estimates of their fair value due to the short-term nature of these financial instruments. Long-term debt, including capital lease obligations, have a carrying value that approximates fair value because these instruments bear interest at market rates.
Interest Rate Caps
We do not enter into derivative instruments for any purpose other than cash flow hedging purposes.
On February 22, 2010, we entered into interest rate cap agreements with Wells Fargo Bank N.A. (“Wells Fargo”) and Fifth Third Bank (“Fifth Third”), allowing us to limit our exposure on a portion of our borrowings under our senior credit facility (“Rate Cap Transactions”). Pursuant to two separate letter agreements between the Company and Wells Fargo and Fifth Third, respectively, we will receive payments from Wells Fargo and Fifth Third each quarterly period to the extent that the prevailing three month LIBOR during that period exceeds our cap rate of 3.25%. The Rate Cap Transactions are effective March 31, 2010, and will settle each quarter on a date that is intended to coincide with our quarterly interest payment dates under our senior credit facility. The Rate Cap Transactions cap our LIBOR interest rate on a notional amount of $50,000 at 3.25% for a total of 39 months. These Rate Cap Transactions are classified as a cash flow hedge, and we calculate the effectiveness of the hedge on a quarterly basis. The ineffective portion of the cash flow hedge is recognized in current period earnings as an increase of interest expense. The fair value of the interest rate cap at June 30, 2010 is $206 and is included in prepaid expenses.
2. Common and Preferred Stock
On April 28, 2010, our stockholders approved the charter amendment increasing the Company’s number of shares of common stock authorized for issuance under the certificate of incorporation by 28,700,000 shares, and increasing the number of shares of preferred stock from ten to 5,000,000. The amount of total authorized capital stock following the amendment is 55,000,000 shares, which includes 50,000,000 shares of common stock with a $0.001 par value and 5,000,000 shares of preferred stock with a $0.01 par value. The amendment was filed with the State of Delaware on April 29, 2010.

 

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3. Stock-Based Compensation
We measure share-based compensation expense at the grant date, based on the fair value of the award, and the expense is recognized over the requisite employee service period (generally the vesting period) for awards expected to vest (considering estimated forfeitures).
The Company has an amended and restated Long-Term Incentive Plan that was adopted in conjunction with our initial public offering. On February 27, 2008, our Board approved an amendment to our Long-Term Incentive Plan, subject to shareholder approval, that increased the maximum number of shares of common stock available for awards under the Long-Term Incentive Plan from 2,000,000 to 2,175,000 and extended the Plan’s termination date. Our shareholders approved this Plan amendment on April 22, 2008, and the Plan now terminates twenty years from the date of such approval, or April 22, 2028. At June 30, 2010, 109,872 shares remained available for award under the Plan.
Stock Options and Grants
We use the Black-Scholes option pricing model to estimate the fair value of each option grant as of the date of grant. The volatilities are based on the 90 day historical volatility of our common stock as of the grant date. The risk free interest rate is based on zero-coupon U.S. government issues with a remaining term equal to the expected life of the option. For options granted prior to 2008, the expected life for options was calculated using the simplified method. The simplified method was calculated as the vesting term plus the contractual term divided by two.
There were no options granted during the six months ended June 30, 2010 and 2009.
On April 28, 2010, we authorized vested stock grants to certain directors totaling 12,892. The total value of the grant was $220 and is included in general and administrative expenses.
The Company recognized no stock-based compensation expense related to stock options for the six months ended June 30, 2010, as all options previously granted were fully vested. The Company recognized $30 of stock based compensation expense for the three and six months ended June 30, 2009. As of June 30, 2010, there were no unrecognized compensation costs related to unvested options.
Performance-Based Incentive Program
In December 2006, the Board of Directors adopted a performance-based incentive program under our Long-Term Incentive Plan. This program provided participating executives with the opportunity to earn a combination of stock (50%) and cash (50%) if certain performance targets for pre-tax income and pre-tax free cash flow were achieved. During 2007, certain participating executives became entitled to performance restricted stock based on the stock price at the commencement of the three year performance cycle (2007-2009), and as a result, 29,698 shares were issued subject to vesting upon the achievement of the performance goals. The plan was completed as of December 31, 2009, at which time a total of 17,677 shares had been released free of restrictions in accordance with the achievement of the cumulative program performance goals. The remaining 12,021 shares were not awarded under the performance-based incentive program and were returned to the pool of shares generally available for future use under the Long-Term Incentive Plan as of June 30, 2010.
We record stock-based compensation expense for awards with performance conditions based on the probable outcome of that performance condition. The Company recognized no stock-based compensation expense and no cash compensation expense related to the performance-based incentive program for the six months ended June 30, 2010. The Company recognized $11 and $21 of stock-based compensation expense and $11 and $21 of cash compensation expense related to the performance-based incentive program for the three and six months ended June 30, 2009, respectively, which is included in general and administrative expenses.
Restricted Stock Units
In March 2008, the Company’s Compensation Committee and the Board of Directors authorized a one-time grant of 750,000 restricted stock units that subsequently were awarded to members of our senior management team on July 1, 2008. In November 2008, an additional 5,000 restricted stock units were awarded. The restricted stock units vest in one-third installments on each of the tenth, eleventh and twelfth anniversaries of the grant date. The restricted stock unit agreements provide for accelerated vesting upon the recipient reaching their retirement age.

 

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The cost of restricted stock units is determined using the fair value of our common stock on the date of the grant, and compensation expense is recognized over the vesting period. In accordance with the guidance related to share-based payments, we estimated forfeitures at the time of the grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate pre-vesting forfeitures and record stock-based compensation expense only for those awards that are expected to vest.
The Company recognized $509 and $1,017 of stock based compensation expense related to the restricted stock units for the three and six months ended June 30, 2010, respectively, which is included in general and administrative expenses. The Company recognized $504 and $1,022 of stock based compensation expense related to restricted stock units for the three and six months ended June 30, 2009, respectively, which is included in general and administrative expenses. As of June 30, 2010, there was $8,848 of unrecognized stock-based compensation costs, net of estimated forfeitures, related to the restricted stock units that are expected to be recognized over a weighted average period of approximately 7.0 years.
4. Net Income Per Common Share
Companies are required to present basic and diluted earnings per share. Basic net income per share is computed by dividing net income by the weighted daily average number of shares of common stock outstanding during the period. Diluted net income per share is based upon the weighted daily average number of shares of common stock outstanding for the period plus dilutive potential common shares, including stock options and restricted stock units using the treasury-stock method.
A reconciliation of the weighted average basic common shares outstanding to the weighted average diluted common shares outstanding is as follows (Unaudited):
                                 
    Three Months Ended June 30     Six Months Ended June 30  
    2010     2009     2010     2009  
Weighted average common basic shares outstanding
    15,531,726       15,251,310       15,461,904       15,273,796  
Effect of dilutive stock options and restricted stock units
    345,532       350,333       379,809       368,438  
 
                       
Weighted average common diluted shares outstanding
    15,877,258       15,601,643       15,841,713       15,642,234  
 
                       
Net income per share:
                               
Basic
  $ 0.29     $ 0.28     $ 0.48     $ 0.43  
Diluted
  $ 0.28     $ 0.27     $ 0.46     $ 0.42  
There were 19,068 anti-dilutive options excluded in the computation of diluted earnings per share for the three and six months ended June 30, 2010 and 2009 because the options’ exercise prices were greater than the average market price of the common stock.
For the three and six months ended June 30, 2009, 18,777 shares of performance based restricted stock were not included in the computation of weighted diluted common share amounts because the number of shares ultimately issued is contingent on the Company’s performance goals, which were not achieved as of that date. The plan was completed as of December 31, 2009, and all non-awarded shares were returned to the pool of shares generally available for future use under the Long-Term Incentive Plan as of June 30, 2010.
There are no additional securities that could dilute basic EPS in the future that were not included in the computation of diluted EPS, other than those disclosed.
5. Recently Issued Accounting Pronouncements
Accounting Standards Net Yet Adopted
In October 2009, the FASB issued updated accounting guidance that amends the guidance related to revenue recognition-multiple-element arrangements. The standards enable companies to account for certain products and services (deliverables) separately rather than as a combined unit. This accounting guidance provides amendments to the criteria for separating deliverables, measuring and allocating arrangement consideration to one or more units of accounting. The amendments also establish a selling price hierarchy for determining the selling price of a deliverable. Significantly enhanced disclosures are also required to provide information about a vendor’s multiple-deliverable revenue arrangements, including information about the nature and terms, significant deliverables, and its performance within arrangements. The amendments also require providing information about the significant judgments made and changes to those judgments and about how the application of the relative selling-price method affects the timing or amount of revenue recognition. The amendments are effective prospectively for revenue arrangements entered into or materially modified in the fiscal years beginning on or after June 15, 2010. A company may adopt the new standard retroactively and early application is permitted. The Company currently does not have any multiple-element arrangements.

 

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Accounting Standards Adopted
In June 2009, the FASB updated the accounting standards related to the consolidation of variable interest entities. This new guidance requires a qualitative approach to identifying a controlling financial interest in a VIE, and requires an ongoing assessment of whether an entity is a VIE and whether an interest in a VIE makes the holder the primary beneficiary of the VIE. The updated accounting guidance is effective for annual reporting periods beginning after November 15, 2009. The Company’s adoption of this updated accounting guidance on January 1, 2010 did not impact the financial condition or results of operations of the Company.
In January 2010, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard which requires new disclosures and clarifies certain existing disclosure requirements about fair value measurements. The majority of the provisions of this update are effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of this standard did not have a material impact on our financial statements.
6. Acquisitions
2009 Acquisitions
On July 1, 2009, the Company acquired substantially all of the assets of Gameday Management Group U.S. Gameday Management, based in Orlando, Florida, which plans and operates transportation and parking systems for major stadiums and sporting events in the amount of $7,590, of which $2,450 was paid in cash, net of a hold back of $50, and $5,090 of potential earn-out payments. Among the assets acquired is Gameday’s Click and Park online parking and traffic management system, which enables customers to purchase reserved parking online in advance of an event. The acquisition represents an acquisition of a business and was accounted for using the purchase method of accounting. This acquisition is not considered material to the Company.
The purchase price allocations are based on preliminary estimates of intangibles with finite lives is $3,820 and goodwill of $3,770. The Company engaged a third party valuation firm to provide a fair value analysis. These estimates are subject to revision after the Company completes its fair value analysis. The Company financed the acquisition through additional term borrowings under the senior credit facility and existing cash. The results of operations of this acquisition are included in the Company’s consolidated statement of income from the date of acquisition.
The Company expensed acquisition related costs of $15 in 2010 and $178 in 2009. These costs are included in general and administrative expenses in the income statement.
7. Leasehold Improvements, Equipment and Construction in Progress, Net
A summary of leasehold improvements, equipment, and construction in progress and related accumulated depreciation and amortization is as follows:
                         
    Ranges of Estimated              
    useful life     June 30, 2010     December 31, 2009  
    (Unaudited)  
Equipment
  2-10 years   $ 31,378     $ 28,568  
Leasehold improvements
  Shorter of lease term or economic life up to 10 years     9,631       9,708  
Construction in progress
            5,817       7,543  
 
                   
 
            46,826       45,819  
Less accumulated depreciation and amortization
            (29,635 )     (28,644 )
 
                   
Leasehold improvements, equipment and construction in progress, net
          $ 17,191     $ 17,175  
 
                   

 

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Depreciation expense was $946 and $1,865 for the three and six months ended June 30, 2010, respectively, and $964 and $1,930 for the three and six months ended June 30, 2009, respectively. Depreciation includes losses on abandonments of leasehold improvements and equipment of $19 and $37 for the three and six months ended June 30, 2010, respectively, and $96 and $193 for the three and six months ended June 30, 2009, respectively.
8. Cost of Contracts, Net
Cost of contracts represents the contractual rights associated with providing parking services at a managed or leased facility. Cost consists of either capitalized payments made to third parties or the value ascribed to contracts acquired through acquisition. Cost of contracts is amortized over the estimated life of the contracts, including anticipated renewals and terminations.
The balance of cost of contracts is comprised of the following:
                 
    June 30, 2010     December 31, 2009  
    (Unaudited)          
Cost of contracts
  $ 20,017     $ 18,885  
Accumulated amortization
    (6,643 )     (6,006 )
 
           
Cost of contracts, net
  $ 13,374     $ 12,879  
 
           
During 2010, we retired fully amortized contracts in the amount of $169 that had expired.
Amortization expense related to cost of contracts was $450 and $806 for the three and six months ended June 30, 2010, respectively, and $402 and $799 for the three and six months ended June 30, 2009, respectively. The weighted average useful life is 9 years for 2010 and 10 years for 2009.
9. Goodwill
Goodwill is assigned to reporting units based upon the specific Region where the assets acquired and associate goodwill resided.
The following table reflects the changes in the carrying amounts of goodwill by reported segment for the six months ended June 30, 2010 (unaudited).
                                         
    Region     Region     Region     Region        
    One     Two     Three     Four     Total  
Balance as of January 1, 2010
  $ 61,849     $ 7,200     $ 35,227     $ 22,577     $ 126,853  
Acquisitions
                             
Adjustments to purchase price*
          1,270                   1,270  
Contingency payments related to acquisitions
    93             11             104  
Foreign currency translation
          (37 )                 (37 )
 
                             
Balance as of June 30, 2010
  $ 61,942     $ 8,433     $ 35,238     $ 22,577     $ 128,190  
 
                             
 
     
*  
The Company engaged a third-party valuation firm to provide a fair value analysis. These estimates are subject to revision after the Company completes its fair value analysis.

 

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10. Long-Term Receivables, Net
                 
    Amount Outstanding  
    June 30, 2010     December 31, 2009  
    (Unaudited)          
 
               
Bradley International Airport
               
Deficiency payments
  $ 11,332     $ 9,606  
Other Bradley related, net
    3,203       3,203  
Valuation allowance
    (2,484 )     (2,484 )
 
           
 
 
Total long-term receivables, net
  $ 12,051     $ 10,325  
 
           
Agreement
We entered into a 25-year agreement with the State of Connecticut that expires on April 6, 2025, under which we operate the surface parking and 3,500 garage parking spaces at Bradley International Airport located in the Hartford, Connecticut metropolitan area. The Company manages the facility for which it is expected to receive a management fee.
The parking garage was financed on April 6, 2000 through the issuance of $53,800 of State of Connecticut special facility revenue bonds, representing $47,700 non-taxable Series A bonds and a separate taxable issuance of $6,100 Series B bonds. The Series B bonds were retired on July 1, 2006 according to the terms of the indenture. The Bradley agreement provides that we deposit with a trustee for the bondholders all gross revenues collected from operations of the surface and garage parking, and from these gross revenues, the trustee pays debt service on the special facility revenue bonds, operating and capital maintenance expenses of the surface and garage parking facilities and specific annual guaranteed minimum payments to the State. Principal and interest on the Bradley special facility revenue bonds increase from approximately $3,600 in lease year 2002 to approximately $4,500 in lease year 2025. Annual guaranteed minimum payments to the State will increase from approximately $8,300 in lease year 2002 to approximately $13,200 in lease year 2024. The annual minimum guaranteed payment to the State by the trustee for the six months ended June 30, 2010 and 2009 was $4,925 and $4,823, respectively.
All of the cash flow from the parking facilities is pledged to the security of the bonds and is collected and deposited with the bond trustee. Each month the bond trustee makes certain required monthly distributions, which are characterized as “Guaranteed Payments.” To the extent the monthly gross receipts generated by the parking facilities are not sufficient for the trustee to make the required Guaranteed Payments, we are obligated to deliver the deficiency amount to the trustee. Additionally, the Guaranteed Payments are required to be paid before we are reimbursed for deficiency payments or management fees.
The following is the list of Guaranteed Payments:
   
Garage and surface operating expenses,
   
Principal and interest on bonds,
   
Trustee expenses
   
Major maintenance and capital improvement deposits
   
State Minimum Guarantee
However, to the extent there is a cash surplus in any month during the term of the lease, we have the right to be repaid the principal amount of any and all deficiency payments previously made, together with actual interest expenses and a premium, not to exceed 10% of the initial deficiency payment. We calculate and record interest income and premium income in the period the associated deficiency payment is received from the trustee.

 

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Deficiency Payments
To the extent that monthly gross receipts are not sufficient for the trustee to make the required payments, we are obligated pursuant to our agreement to deliver the deficiency amount to the trustee within three business days of being notified. We are responsible for these deficiency payments regardless of the amount of utilization for the Bradley parking facilities. The deficiency payments represent contingent interest bearing advances to the trustee to cover operating cash flow requirements. To the extent sufficient funds are available in the appropriate fund, the trustee is then directed by the State to reimburse us for deficiency payments up to the amount of the calculated surplus.
In the six months ended June 30, 2010, we made deficiency payments of $1,726 and we did not record or receive any interest and premium income deficiency repayments from the trustee. In the six months ended June 30, 2009, we made deficiency payments of $1,540 and we did not record or receive any interest and premium income related to deficiency repayments from the trustee. The receivable from the trustee for interest and premium income related to deficiency repayments was $0 as of June 30, 2010 and June 30, 2009.
The deficiency payments, if any, are recorded as a receivable by us for which we are reimbursed from time to time as provided in the trust agreement. As of June 30, 2010 and December 31, 2009, we have a receivable of $11,332 and $9,606, respectively, compromised of cumulative deficiency payments to the trustee, net of reimbursements. We believe these advances to be fully recoverable and therefore have not recorded a valuation allowance for them. We do not guarantee the payment of any principal or interest on any debt obligations of the State of Connecticut or the trustee.
The Construction, Financing and Operating Special Facility Lease Agreement, which governs reimbursement of Guarantor Payments, places no time restriction or limits on our right to reimbursement.
The following table reconciles the beginning and ending balance of the receivable for each period presented:
                 
    June 30, 2010     December 31, 2009  
    (Unaudited)          
Deficiency payments:
               
Balance at beginning of period
  $ 9,606     $ 5,961  
Deficiency payments made
    1,726       3,645  
Deficiency repayment received
           
 
               
Balance at end of period
    11,332       9,606  
Other Bradley related
    3,203       3,203  
Valuation allowance
    (2,484 )     (2,484 )
 
           
 
               
Total long-term receivables
  $ 12,051     $ 10,325  
 
           
Compensation
In addition to the recovery of certain general and administrative expenses incurred, our agreement provides for an annual management fee payment which is based on three operating profit tiers calculated for each year during the term of the agreement. The management fee is further apportioned 60% to us and 40% to an un-affiliated entity. To the extent that funds are available for the trustee to make a distribution, the annual management fee is paid when sufficient cash is paid after the Guaranteed Payments (as defined in our agreement), and after the repayment of all deficiency payments, including accrued interest and premium. However, our right to the management fee accrues each year during the term of the agreement and is paid when sufficient cash is available for the trustee to make a distribution.
The annual management fee is paid after the repayment of all deficiency payments, including accrued interest and premium. Therefore, due to the existence and length of time for repayment of the deficiency amounts to the Company, no management fees have been recognized. Management fees will be recognized in accordance with SAB 104 when “collectibility is reasonably assured.”
Cumulative management fees of $4,500 have not been recognized as of June 30, 2010 and no management fee income was recognized during the six months ending June 30, 2010 and 2009.

 

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11. Borrowing Arrangements
Long-term borrowings, in order of preference, consist of:
                         
    Amount Outstanding  
    Due Date     June 30, 2010     December 31, 2009  
            (Unaudited)          
Senior credit facility
  June 2013   $ 108,150     $ 109,850  
Capital lease obligations
  Various     1,779       2,056  
Obligations on seller notes and other
  Various     1,243       1,305  
 
                   
 
            111,172       113,211  
Less current portion
            654       662  
 
                   
 
          $ 110,518     $ 112,549  
 
                   
Senior Credit Facility
On July 15, 2008, we amended and restated our credit facility.
The $210,000 revolving senior credit facility will expire in July 2013. The revolving senior credit facility includes a letter of credit sub-facility with a sublimit of $50,000 and a swing line sub-facility with a sublimit of $10,000.
This revolving senior credit facility bears interest, at our option, at either (1) LIBOR plus an applicable LIBOR margin of between 2.00% and 3.50% depending on the ratio of our total funded indebtedness to our EBITDA from time to time (“Total Debt Ratio”) or (2) the Base Rate (as defined below) plus an applicable Base Rate Margin of between 0.50% and 2.00% depending on our Total Debt Ratio. We may elect interest periods of one, two, three or six months for LIBOR based borrowings. The Base Rate is the greater of (i) the rate publicly announced from time to time by Bank of America, N.A. as its “prime rate”, or (ii) the overnight federal funds rate plus 0.50%.
Our senior credit facility includes a fixed charge ratio covenant, a total debt to EBITDA ratio covenant, a limit on our ability to incur additional indebtedness, issue preferred stock or pay dividends, and certain other restrictions on our activities. We are required to repay borrowings under our senior credit facility out of the proceeds of future issuances of debt or equity securities and asset sales, subject to certain customary exceptions. Our senior credit facility is secured by substantially all of our assets and all assets acquired in the future (including a pledge of 100% of the stock of our existing and future domestic guarantor subsidiaries and 65% of the stock of our existing and future foreign subsidiaries).
We are in compliance with all of our financial covenants as of June 30, 2010.
The weighted average interest rate on our senior credit facility at June 30, 2010 and December 31, 2009 was 2.9% and 3.2%, respectively. The rate includes all outstanding LIBOR contracts, interest rate cap effect and letters of credit. The weighted average interest rate on outstanding borrowings, not including letters of credit, was 3.0% and 3.3% at June 30, 2010 and December 31, 2009, respectively.
At June 30, 2010, we had $16,884 of letters of credit outstanding under the senior credit facility, borrowings against the senior credit facility aggregated $108,150, and we had $23,680 available under the senior credit facility.
We have entered into various financing agreements, which were used for the purchase of equipment.

 

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12. Stock Repurchases
In July 2008, our Board of Directors authorized us to repurchase shares of our common stock, on the open market or through private purchases, up to $60,000 in aggregate.
During the first quarter of 2009, we repurchased 213,301 shares at an average price of $18.21 per share, including average commissions of $0.01 per share, on the open market. The total value of the first quarter transactions was $3,884. We retired 200,650 shares during the first quarter of 2009, and retired the remaining 12,651 shares in April 2009.
We did not make any share repurchases subsequent to the first quarter of 2009. As of June 30, 2010, $18,973 remained available for repurchase under the July 2008 authorization by the Board of Directors.
13. Business Unit Segment Information
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, in deciding how to allocate resources. Our chief operating decision maker is the Company’s President and Chief Executive Officer.
Each of the operating segments is directly responsible for revenue and expenses related to their operations including direct regional administrative costs. Finance, information technology, human resources, and legal are shared functions that are not allocated back to the four operating segments. The CODM assesses the performance of each operating segment using information about its revenue and operating income (loss) before interest, taxes, and depreciation and amortization, but does not evaluate segments using discrete asset information. There are no inter-segment transactions and the Company does not allocate interest and other income, interest expense, depreciation and amortization or taxes to operating segments. The accounting policies for segment reporting are the same as for the Company as a whole.
Our business is managed based on regions administered by executive vice presidents. Regions one and three are generally organized geographically. The following is a summary of revenues (excluding reimbursed management contract revenue) and gross profit by regions for the three months ended June 30, 2010 and 2009. Information related to prior periods has been recast to conform to the current region alignment.

 

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The Company has provided this business unit segment information for all comparable prior periods. Segment information is summarized as follows (in thousands):
                                                                 
    For the three months ended     For the six months ended  
    June 30,     Gross     June 30,     Gross     June 30,     Gross     June 30,     Gross  
    2010     Margin     2009     Margin     2010     Margin     2009     Margin  
Revenues:
                                                               
Region One
                                                               
Lease contracts
  $ 18,309             $ 20,107             $ 35,344             $ 39,320          
Management contracts
    12,000               13,301               23,951               26,907          
 
                                                       
Total Region One
    30,309               33,408               59,295               66,227          
Region Two
                                                               
Lease contracts
    561               669               1,307               1,289          
Management contracts
    4,856               2,661               12,947               4,818          
 
                                                       
Total Region Two
    5,417               3,330               14,254               6,107          
Region Three
                                                               
Lease contracts
    5,171               4,878               10,126               9,784          
Management contracts
    12,884               13,234               25,374               27,428          
 
                                                       
Total Region Three
    18,055               18,112               35,500               37,212          
Region Four
                                                               
Lease contracts
    10,110               10,023               20,485               19,936          
Management contracts
    12,312               8,048               19,873               16,366          
 
                                                       
Total Region Four
    22,422               18,071               40,358               36,302          
Other
                                                               
Lease contracts
    11               10               16               58          
Management contracts
    29               67               11               85          
 
                                                       
Total Other
    40               77               27               143          
Reimbursed revenue
    100,757               97,595               206,812               200,152          
 
                                                       
Total revenues
  $ 177,000             $ 170,593             $ 356,246             $ 346,143          
 
                                                       
Gross Profit
                                                               
Region One
                                                               
Lease contracts
  $ 1,610       9 %   $ 1,773       9 %   $ 1,762       5 %   $ 2,507       6 %
Management contracts
    7,126       59 %     6,802       51 %     13,397       56 %     13,927       52 %
 
                                                       
Total Region One
    8,736               8,575               15,159               16,434          
Region Two
                                                               
Lease contracts
    58       10 %     25       4 %     133       10 %     41       3 %
Management contracts
    1,518       31 %     982       37 %     3,724       29 %     1,794       37 %
 
                                                       
Total Region Two
    1,576               1,007               3,857               1,835          
Region Three
                                                               
Lease contracts
    432       8 %     418       9 %     800       8 %     830       8 %
Management contracts
    6,484       50 %     6,006       45 %     12,285       48 %     12,272       45 %
 
                                                       
Total Region Three
    6,916               6,424               13,085               13,102          
Region Four
                                                               
Lease contracts
    840       8 %     596       6 %     1,522       7 %     1,108       6 %
Management contracts
    4,252       35 %     3,814       47 %     7,883       40 %     7,904       48 %
 
                                                       
Total Region Four
    5,092               4,410               9,405               9,012          
Other
                                                               
Lease contracts
    5       45 %     (57 )     (570 )%     73       456 %     20       34 %
Management contracts
    423       1,458 %     (231 )     (345 )%     325       2,954 %     (622 )     (732 )%
 
                                                       
Total Other
    428               (288 )             398               (602 )        
Total gross profit
    22,748               20,128               41,904               39,781          
General and administrative expenses
    12,218               10,320               23,778               23,081          
General and administrative expense percentage of gross profit
    54 %             51 %             57 %             58 %        
Depreciation and amortization
    1,570               1,413               3,030               2,900          
 
                                                       
Operating income
    8,960               8,395               15,096               13,800          
Other expenses (income):
                                                               
Interest expense
    1,398               1,528               2,888               2,964          
Interest income
    (52 )             (95 )             (105 )             (162 )        
 
                                                       
 
    1,346               1,433               2,783               2,802          
Income before income taxes
    7,614               6,962               12,313               10,998          
Income tax expense
    3,021               2,692               4,868               4,266          
 
                                                       
Net income
    4,593               4,270               7,445               6,732          
Less: Net income attributable to noncontrolling interest
    85               42               92               106          
 
                                                       
Net income attributable to Standard Parking Corporation
  $ 4,508             $ 4,228             $ 7,353             $ 6,626          
 
                                                       
Region One encompasses operations in Delaware, District of Columbia, Florida, Georgia, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Rhode Island, Tennessee, Vermont, Virginia, and Wisconsin.

 

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Region Two encompasses our Canadian operations, event planning and transportation, and our technology based parking and traffic management systems.
Region Three encompasses operations in Arizona, California, Colorado, Hawaii, Louisiana, Nevada, Texas, Utah, Washington, and Wyoming.
Region Four encompasses all major airport and transportation operations nationwide.
Other consists of ancillary revenue that is not specifically identifiable to a region and insurance reserve adjustments related to prior years.
The CODM does not evaluate segments using discrete asset information.
14. Comprehensive Income
Comprehensive income consists of the following components, net of tax (Unaudited):
                                 
    For the three months ended     For the six months ended  
    June 30, 2010     June 30, 2009     June 30, 2010     June 30, 2009  
Net income
  $ 4,593     $ 4,270     $ 7,445     $ 6,732  
Revaluation of interest rate cap
    (201 )           (360 )      
Effect of foreign currency translation
    (176 )     177       280       (57 )
 
                       
Comprehensive income
    4,216       4,447       7,365       6,675  
Less: comprehensive income attributable to noncontrolling interest
    85       42       92       106  
 
                       
Comprehensive income attributable to Standard Parking Corporation
  $ 4,131     $ 4,405     $ 7,273     $ 6,569  
 
                       
15. Income Taxes
For the three months ended June 30, 2010, the Company recognized income tax expense of $3,021 on pre-tax earnings of $7,614 compared to $2,692 income tax expense on pre-tax earnings of $6,962 for the three months ended June 30, 2009. For the six months ended June 30, 2010, the Company recognized income tax expense of $4,868 on pre-tax earnings of $12,313 compared to $4,266 income tax expense on pre-tax earnings of $10,998 for the six months ended June 30, 2009. Income tax expense is based on a projected annual effective tax rate of approximately 39.5% for the six months ended June 30, 2010 compared to approximately 38.8% for the six months ended June 30, 2009. The change in the Company’s effective tax rate resulted primarily from a decrease in the Company’s state effective tax rate.
In July 2006, the FASB issued accounting guidance for uncertainty in income taxes . The accounting guidance for uncertainty in income taxes recognized in an enterprise’s financial statements also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes potential interest and penalties related to uncertain tax positions, if any, in income tax expense. Upon adoption, the Company completed a detailed analysis of its tax positions and determined that the implementation of this guidance did not have an impact on the Company’s financial position or results from operations. As of June 30, 2010, the Company has not identified any uncertain tax positions that would have a material impact on the Company’s financial position.
The tax years that remain subject to examination for the Company’s major tax jurisdictions at June 30, 2010 are shown below:
     
2004 – 2009  
United States — federal income tax
2003 – 2009  
United States — state and local income tax
2006 – 2009  
Canada

 

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16. 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 determining the appropriate accounting for 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 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 loss or a range of loss involves significant judgment.
As previously disclosed in our Form 10-Q for the quarterly period ended March 31, 2010, John V. Holten, a former director and former indirect controlling shareholder of the Company, filed a lawsuit against us. On May 20, 2010, we filed an answer to this lawsuit, denying Mr. Holten’s claim for breach of his employment agreement. We asserted a separate counterclaim seeking a declaratory judgment that Mr. Holten’s employment agreement is voidable and void. The counterclaim further seeks, among other relief, restitution of all payments made to Mr. Holten and his affiliates pursuant to his employment agreement. Mr. Holten has not answered the counterclaim as of the date this report was filed.
Item 2.  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our results of operations should be read in conjunction with the consolidated financial statements and the notes thereto contained in this Quarterly Report on Form 10-Q and the consolidated financial statements and the notes thereto included in our Annual Report on our Form 10-K for the year ended December 31, 2009.
Overview
Our Business
We manage parking facilities in urban markets and at airports across the United States and in four Canadian provinces. We do not own any facilities, but instead enter into contractual relationships with property owners or managers.
We operate our clients’ 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 revenue 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 revenue 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 June 30, 2010, we operated approximately 90% of our locations under management contracts and approximately 10% of our locations under leases. For the six months ended June 30, 2010, we derived approximately 90% of our gross profit under management contracts and approximately 10% of our gross profit under leases.
In evaluating our financial condition and operating performance, management’s primary focus is on our gross profit, total general and administrative expenses and general and administrative expenses as a percentage of our gross profit. Although the underlying economics to us of management contracts and leases are similar, the manner in which we are required to account for them differs. Revenue from leases includes all gross customer collections derived from our leased locations (net of parking tax), whereas revenue from management contracts only includes our contractually agreed upon management fees and amounts attributable to ancillary services. Gross customer collections at facilities under management contracts, therefore, are not included in our revenue. Accordingly, while 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 June 30, 2010, we operated approximately 90% of our locations under management contracts, and for the six months ended June 30, 2010, we derived approximately 90% of our gross profit under management contracts. Only approximately 55% 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 expenses, rather than revenue, are management’s primary focus.

 

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General Business Trends
We believe that sophisticated commercial real estate developers and property managers and owners recognize the opportunity for parking and related services to be a profit generator rather than a cost center. Often, the parking experience makes both the first and the last impressions on their properties’ tenants and visitors. By outsourcing these services, they are able to capture additional profit by leveraging the unique operational skills and controls that an experienced parking management company can offer. Our ability to consistently deliver a uniformly high level of parking and related services and maximize the profit to our clients improves our ability to win contracts and retain existing locations. Our location retention rate for the twelve-month period ended June 30, 2010 and June 30, 2009 was approximately 89%, which also reflects our decision not to renew, or to terminate, unprofitable contracts.
For the three months ended June 30, 2010 compared to the three months ended June 30, 2009, average gross profit per location increased by 10.6% from $9.4 thousand to $10.4 thousand due to cost savings on non-operating items and increased profit on our 2009 acquisition.
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 periods indicated:
                         
    June 30, 2010     December 31, 2009     June 30, 2009  
Managed facilities
    1,966       1,921       1,919  
Leased facilities
    210       208       223  
 
                 
Total facilities
    2,176       2,129       2,142  
 
                 
Revenue
We recognize parking services revenue from lease and management contracts as the related services are provided. Substantially all of our revenue comes from the following two sources:
 
Parking services revenue—lease contracts . Parking services revenue related to lease contracts consist of all revenue received at a leased facility, including parking receipts (net of parking tax), consulting and real estate development fees, gains on sales of contracts and payments for exercising termination rights.
 
Parking services revenue—management contracts. Management contract revenue consists of management fees, including both fixed and performance-based fees, and amounts attributable to ancillary services such as accounting, equipment leasing, payments received for exercising termination rights, consulting, developmental fees, gains on sales of contracts, as well as insurance and other value-added services with respect to managed locations. We believe we generally purchase required insurance at lower rates than our clients can obtain on their own because we effectively self-insure for all liability and worker’s compensation claims by maintaining a large per-claim deductible. As a result, we have generated operating income on the insurance provided under our management contracts by focusing on our risk management efforts and controlling losses. Management contract revenue does not include gross customer collections at the managed locations as this revenue belongs to the property owner rather than to us. Management contracts generally provide us with a management fee regardless of the operating performance of the underlying facility.
Conversions between type of contracts (lease or management) are typically determined by our client 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.

 

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Cost of Parking Services
Our cost of parking services consists of the following:
   
Cost of parking services—lease contracts. The cost of parking services under a lease arrangement consists of contractual rental fees paid to the facility owner and all operating expenses incurred in connection with operating the leased facility. Contractual fees paid to the facility owner are generally based on either a fixed contractual amount or a percentage of gross revenue or a combination thereof. Generally, under a lease arrangement we are not responsible for major capital expenditures or real estate taxes.
   
Cost of parking services—management contracts. The cost of parking services under a management contract is generally the responsibility of the facility owner. As a result, these costs are not included in our results of operations. However, our reverse management contracts, which typically provide for larger management fees, do require us to pay for certain costs.
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, payroll taxes, insurance, travel and office related expenses for our headquarters, field offices, supervisory employees, and board of directors.
Depreciation and Amortization
Depreciation is determined using a straight-line method over the estimated useful lives of the various asset classes or in the case of leasehold improvements, over the initial term of the operating lease or its useful life, whichever is shorter. Intangible assets determined to have finite lives are amortized over their remaining useful life.
Seasonality
During the first quarter of each year, seasonality impacts our performance with regard to moderating revenue, with the reduced levels of travel most clearly reflected in the parking activity associated with our airport and hotel businesses as well as increases in certain costs of parking services, such as snow removal, both of which negatively affect gross profit. Although our revenue and profitability are affected by the seasonality of the business, general and administrative costs are relatively stable throughout the fiscal year.
Results of Operations
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, in deciding how to allocate resources. Our chief operating decision maker is our president and chief executive officer.
Our business is managed based on regions administered by executive vice presidents. The following is a summary of revenues (excluding reimbursed management contract revenue) by region for the three and six months ended June 30, 2010 and 2009. Information related to prior years has been recast to conform to the new region alignment.

 

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Region One encompasses Delaware, District of Columbia, Florida, Georgia, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Rhode Island, Tennessee, Vermont, Virginia, and Wisconsin.
Region Two encompasses our Canadian operations, event planning and transportation, and our technology based parking and traffic management systems.
Region Three encompasses Arizona, California, Colorado, Hawaii, Louisiana, Nevada, Texas, Utah, Washington, and Wyoming.
Region Four encompasses all major airport and transportation operations nationwide.
Other consists of ancillary revenue that is not specifically identifiable to a region and reserve adjustments related to prior years.
The following tables present the material factors that impact our financial statements on an operating segment basis.
Three Months ended June 30, 2010 Compared to Three Months ended June 30, 2009
Segment revenue information is summarized as follows:
                                                                                                                 
    Three Months Ended June 30,  
    Region One     Region Two     Region Three     Region Four     Other     Total     Variance  
    2010     2009     2010     2009     2010     2009     2010     2009     2010     2009     2010     2009     Amount     %  
                                                    (in millions)                                                  
Lease contract revenue:
                                                                                                               
New location
  $ 0.4     $ 0.2     $     $     $ 0.9     $     $ 0.2     $ 0.1     $     $     $ 1.5     $ 0.3     $ 1.2       400.0  
Contract expirations
          1.5             0.2             0.4                                     2.1       (2.1 )     (100.0 )
Same location
    17.9       18.4       0.6       0.5       4.3       4.5       9.9       9.5                   32.7       32.9       (0.2 )     (0.6 )
Conversions
                                              0.4                         0.4       (0.4 )     (100.0 )
 
                                                                                   
Total lease contract revenue
  $ 18.3     $ 20.1     $ 0.6     $ 0.7     $ 5.2     $ 4.9     $ 10.1     $ 10.0     $     $     $ 34.2     $ 35.7     $ (1.5 )     (4.2 )
 
                                                                                   
Management contract revenue:
                                                                                                               
New location
  $ 1.9     $ 0.1     $ 2.2     $     $ 0.9     $ 0.1     $ 4.7     $     $     $     $ 9.7     $ 0.2     $ 9.5       4750.0  
Contract expirations
    0.1       1.8             0.1       0.2       1.3             0.2                   0.3       3.4       (3.1 )     (91.2 )
Same location
    10.0       11.4       2.7       2.6       11.8       11.9       7.6       7.8                   32.1       33.7       (1.6 )     (4.7 )
Conversions
                                                                                   
 
                                                                                   
Total management contract revenue
  $ 12.0     $ 13.3     $ 4.9     $ 2.7     $ 12.9     $ 13.3     $ 12.3     $ 8.0     $     $     $ 42.1     $ 37.3     $ 4.8       12.9  
 
                                                                                   
Parking services revenue—lease contracts. Lease contract revenue decreased $1.5 million, or 4.2%, to $34.2 million in the three months ended June 30, 2010, compared to $35.7 million for the three months ended June 30, 2009. The decrease resulted primarily from contract expirations and conversions exceeding increases in revenue from new locations. Same location revenue for those facilities, which as of June 30, 2010 are the comparative periods for the two years presented, decreased 0.6%. The decrease in same location revenue was due to decreases in monthly parking revenue of $0.3 million, or 3.2%, partially offset by increases in short-term parking revenue of $0.1 million, or 0.4%. Revenue associated with contract expirations relates to contracts that expired during the current period.
Parking services revenue—management contracts. Management contract revenue increased $4.8 million, or 12.9%, to $42.1 million for three months ended June 30, 2010, compared to $37.3 million for the three months ended June 30, 2009. The increase resulted primarily from new locations, partially offset by decreases in revenue from contract expirations. Same locations revenue for those facilities, which as of June 30, 2010 are the comparative for the two years presented, decreased 4.7%.
Reimbursed management contract revenue. Reimbursed management contract revenue increased $3.2 million, or 3.3%, to $100.8 million for the three months ended June 30, 2010, compared to $97.6 million for the three months ended June 30, 2009. This increase resulted from an increase in reimbursed costs incurred on behalf of owners.
Lease contract revenue decreased primarily due to region one same location revenue and regions one and two contract expirations, partially offset by increases in region three new location revenue and region four same location revenue. Same location revenue decreased in region one and three compared to the prior year primarily due to decreases in monthly parking revenue.
Management contract revenue increased primarily due to new locations in regions one, two, three and four, partially offset by contract expirations in regions one, two, three and four and decreases in same locations for regions one, three and four. Same location revenue decreased primarily due to decreased fees from reverse management locations and ancillary services.

 

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Segment cost of parking services information is summarized as follows:
                                                                                                                 
    Three Months Ended June 30,  
    Region One     Region Two     Region Three     Region Four     Other     Total     Variance  
    2010     2009     2010     2009     2010     2009     2010     2009     2010     2009     2010     2009     Amount     %  
    (in millions)  
Cost of parking services lease contracts:
                                                                                                               
New location
  $ 0.3     $ 0.1     $     $     $ 0.8     $     $ 0.2     $ 0.1     $     $     $ 1.3     $ 0.2     $ 1.1       550.0  
Contract expirations
          1.3             0.2             0.4                                     1.9       (1.9 )     (100.0 )
Same location
    16.4       16.9       0.5       0.5       3.9       4.1       9.0       8.9       0.1             29.9       30.4       (0.5 )     (1.6 )
Conversions
                                              0.4                         0.4       (0.4 )     (100.0 )
 
                                                                                   
Total cost of parking services lease contracts
  $ 16.7     $ 18.3     $ 0.5     $ 0.7     $ 4.7     $ 4.5     $ 9.2     $ 9.4     $ 0.1     $     $ 31.2     $ 32.9     $ (1.7 )     (5.2 )
 
                                                                                   
Cost of parking services management contracts:
                                                                                                               
New location
  $ 0.8     $     $ 1.8     $     $ 0.5     $     $ 4.2     $     $     $     $ 7.3     $     $ 7.3       100..0  
Contract expirations
          1.4                   0.1       0.8             0.1                   0.1       2.3       (2.2 )     (95.7 )
Same location
    4.0       5.1       1.6       1.7       5.8       6.4       3.9       4.1       (0.4 )     0.3       14.9       17.6       (2.7 )     (15.3 )
Conversions
                                                                                   
 
                                                                                   
Total cost of parking services management contracts
  $ 4.8     $ 6.5     $ 3.4     $ 1.7     $ 6.4     $ 7.2     $ 8.1     $ 4.2     $ (0.4 )   $ 0.3     $ 22.3     $ 19.9     $ 2.4       12.1  
 
                                                                                   
Cost of parking services—lease contracts. Cost of parking services for lease contracts decreased $1.7 million, or 5.2%, to $31.2 million for the three months ended June 30, 2010, compared to $32.9 million for the three months ended June 30, 2009. The decrease resulted primarily from decreases in costs related to contract expirations and conversions, partially offset by increases in costs related to new locations. Same locations costs for those facilities which as of June 30, 2010 are the comparative for the two years presented, decreased 1.6%. Same location costs decreased $0.3 million due to rent expense, primarily as a result of contingent rental payments on the decrease in revenue for same locations and $0.1 million due to payroll and payroll related and other operating costs of $0.1 million.
Cost of parking services—management contracts. Cost of parking services for management contracts increased $2.4 million, or 12.1%, to $22.3 million for the three months ended June 30, 2010, compared to $19.9 million for the three months ended June 30, 2009. The increase resulted primarily from increases in costs related to new locations, partially offset by decreases in costs related to contract expirations. Same location costs for those facilities, which as of June 30, 2010 are the comparative period for the two years presented, decreased 15.3%. Same location decrease in operating expenses for management contracts primarily result from decreases in costs associated with reverse management contracts and the cost of providing management services.
Reimbursed management contract expense. Reimbursed management contract expense increased $3.2 million, or 3.3%, to $100.8 million, for the three months ended June 30, 2010, compared to $97.6 million for the three months ended June 30, 2009. This increase resulted from an increase in reimbursed cost incurred on the behalf of owners.
Cost of parking services lease contracts decreased primarily due to fewer contract expirations in regions one, two and three, decreases in same location costs in region one and three and decreases in conversions in region four, partially offset by increases in new locations for regions one, three and four. Same location costs decreased primarily due to decreases in rent expense primarily as a result of contingent rental payments on the decrease in revenue for some locations and a reduction in payroll and payroll related.
Cost of parking services management contracts primarily increased due to new locations in regions one, two, three and four, partially offset by fewer contract expirations in regions one, three and four and decreases in same location in regions one, two, three and four. The other region amounts in same location costs primarily represent prior year insurance reserve adjustments.

 

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Segment gross profit/gross profit percentage information is summarized as follows:
                                                                                                                 
    Region One     Region Two     Region Three     Region Four     Other     Total     Variance  
    2010     2009     2010     2009     2010     2009     2010     2009     2010     2009     2010     2009     Amount     %  
    (in millions)  
Gross profit lease contracts:
                                                                                                               
New location
  $ 0.1     $ 0.1     $     $     $ 0.1     $     $     $     $           $ 0.2     $ 0.1     $ 0.1       100.0  
Contract expirations
          0.2                                                             0.2       (0.2 )     (100.0 )
Same location
    1.5       1.5       0.1             0.4       0.4       0.9       0.6       (0.1 )           2.8       2.5       0.3       12.0  
Conversions
                                                                                   
 
                                                                                   
Total gross profit lease contracts
  $ 1.6     $ 1.8     $ 0.1     $       $ 0.5     $ 0.4     $ 0.9     $ 0.6     $ (0.1 )         $ 3.0     $ 2.8     $ 0.2       7.1  
 
                                                                                   
    (percentages)
Gross profit percentage lease contracts:
                                                                                                               
New location
    25.0       50.0                   11.1                                     13.3       33.3                  
Contract expirations
          13.3                                                             9.5                  
Same location
    8.4       8.2       16.7             9.3       8.9       9.1       6.3                   8.6       7.6                  
Conversions
                                                                                       
 
                                                                                   
Total gross profit percentage
    8.7       9.0       16.7             9.6       8.2       8.9       6.0                   8.8       7.8                  
 
                                                                                       
    (in millions)
Gross profit management contracts:
                                                                                                               
New location
  $ 1.1     $ 0.1     $ 0.4     $     $ 0.4     $ 0.1     $ 0.5     $     $     $     $ 2.4     $ 0.2     $ 2.2       1100.0  
Contract expirations
    0.1       0.4             0.1       0.1       0.5             0.1                   0.2       1.1       (0.9 )     (81.8 )
Same location
    6.0       6.3       1.1       0.9       6.0       5.5       3.7       3.7       0.4       (0.3 )     17.2       16.1       1.1       6.8  
Conversions
                                                                                   
 
                                                                                   
Total gross profit management contracts
  $ 7.2     $ 6.8     $ 1.5     $ 1.0     $ 6.5     $ 6.1     $ 4.2     $ 3.8     $ 0.4       (0.3 )   $ 19.8     $ 17.4     $ 2.4       13.8  
 
                                                                                   
    (percentages)
Gross profit percentage management contracts:
                                                                                                               
New location
    57.9       100.0       18.2             44.4       100.0       10.6                         24.7       100.0                  
Contract expirations
    100.0       22.2             100.0       50.0       38.5             50.0                   66.7       32.4                  
Same location
    60.0       55.3       40.7       34.6       50.8       46.2       48.7       47.4                   53.6       47.8                  
Conversions
                                                                                       
 
                                                                                   
Total gross profit percentage
    60.0       51.1       30.6       37.0       50.4       45.9       34.1       47.5                   47.0       46.6                  
 
                                                                                       
Gross profit—lease contracts. Gross profit for lease contracts increased $0.2 million, or 7.1%, to $3.0 million for the three months ended June 30, 2010, compared to $2.8 million for the three months ended June 30, 2009. Gross profit percentage for lease contracts increased to 8.8% for the three months ended June 30, 2010, compared to 7.8% for the three months ended June 30, 2009. Gross profit lease contracts increases on same locations were primarily the result of a decrease in cost related to rent expense, primarily as a result of contingent rental payments on the decrease in revenue for same locations.
Gross profit—management contracts. Gross profit for management contracts increased $2.4 million, or 13.8%, to $19.8 million for the three months ended June 30, 2010, compared to $17.4 million for the three months ended June 30, 2009. Gross profit percentage for management contracts increased to 47.0% for the three months ended June 30, 2010 compared to 46.6% in the three months ended June 30, 2009. Gross profit for management contracts increases were primarily the result of our same locations, and our contract expirations, partially offset by decreases in our new locations. Gross profit percentage on contract expirations accounted for most of the increase on a percentage basis.
Gross profit for lease contracts increased primarily due to same locations in regions one and four due to decreases in cost related to rent expense, primarily as a result of contingent rental payments on the decrease in revenue for same locations.
Gross profit for management contracts increased primarily due to our same locations in regions two, three and other and our new locations in regions one, two, three and four.
General and administrative expenses. General and administrative expenses increased $1.9 million, or 18.4%, to $12.2 million for the three months ended June 30, 2010, compared to $10.3 million for the three months ended June 30, 2009. This increase resulted primarily due to the restoration of performance-based compensation programs in 2010 of $2.2 million, partially offset by a decrease of $0.3 million in legal-related expenses.
Interest expense. Interest expense was $1.4 million for the three months ended June 30, 2010 and did not change significantly compared to the three months ended June 30, 2009.
Interest income. Interest income was $0.1 million for the three months ended June 30, 2010 and did not change significantly compared to the three months ended June 30, 2009.

 

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Income tax expense. Income tax expense increased $0.3 million, or 11.1%, to $3.0 million for the three months ended June 30, 2010, as compared to $2.7 million for the three months ended June 30, 2009. An increase in our pre-tax income resulted in a $0.3 million increase in income tax expense. Our effective tax rate was 39.7% for the three months ended June 30, 2010 and 38.7% for the three months ended June 30, 2009.
Six Months ended June 30, 2010 Compared to Six Months ended June 30, 2009
Segment revenue information is summarized as follows:
                                                                                                                 
    Six Months Ended June 30,  
    Region One     Region Two     Region Three     Region Four     Other     Total     Variance  
    2010     2009     2010     2009     2010     2009     2010     2009     2010     2009     2010     2009     Amount     %  
    (in millions)  
Lease contract revenue:
                                                                                                               
New location
  $ 0.7     $ 0.2     $     $     $ 1.6     $ 0.1     $ 0.5     $ 0.1     $     $     $ 2.8     $ 0.4     $ 2.4       600.0  
Contract expirations
          3.1       0.2       0.4             0.8                               0.2       4.3       (4.1 )     (95.3 )
Same location
    34.7       36.0       1.1       1.0       8.5       8.9       19.7       19.0             0.1       64.0       65.0       (1.0 )     (1.5 )
Conversions
                                        0.3       0.7                   0.3       0.7       (0.4 )     (57.1 )
 
                                                                                   
Total lease contract revenue
  $ 35.4     $ 39.3     $ 1.3     $ 1.4     $ 10.1     $ 9.8     $ 20.5     $ 19.8     $     $ 0.1     $ 67.3     $ 70.4     $ (3.1 )     (4.4 )
 
                                                                                   
Management contract revenue:
                                                                                                               
New location
  $ 3.0     $ 0.2     $ 8.0     $     $ 2.0     $ 0.4     $ 5.0     $ 0.1     $     $     $ 18.0     $ 0.7     $ 17.3       2471.4  
Contract expirations
    0.4       4.1             0.2       0.6       3.5             0.5                   1.0       8.3       (7.3 )     (88.0 )
Same location
    20.6       22.6       4.9       4.6       22.8       23.5       14.9       15.9                   63.2       66.6       (3.4 )     (5.1 )
Conversions
                                                                                   
 
                                                                                   
Total management contract revenue
  $ 24.0     $ 26.9     $ 12.9     $ 4.8     $ 25.4     $ 27.4     $ 19.9     $ 16.5     $     $     $ 82.2     $ 75.6     $ 6.6       8.7  
 
                                                                                   
Parking services revenue—lease contracts. Lease contract revenue decreased $3.1 million, or 4.4%, to $67.3 million in the six months ended June 30, 2010, compared to $70.4 million for the six months ended June 30, 2009. The decrease resulted primarily from contract expirations and conversions exceeding increases in revenue from new locations. Same location revenue for those facilities, which as of June 30, 2010 are the comparative periods for the two years presented, decreased 1.5%. The decrease in same location revenue was due to decreases in short-term parking revenue of $0.2 million, or 0.4%, and a decrease in monthly parking revenue of $0.8 million, or 3.9%. Revenue associated with contract expirations relates to contracts that expired during the current period.
Parking services revenue—management contracts. Management contract revenue increased $6.6 million, or 8.7%, to $82.2 million for six months ended June 30, 2010, compared to $75.6 million for the six months ended June 30, 2009. The increase resulted primarily from new locations, partially offset by decreases in revenue from contract expirations. Same locations revenue for those facilities, which as of June 30, 2010 are the comparative for the two years presented, decreased 5.1%.
Reimbursed management contract revenue. Reimbursed management contract revenue increased $6.6 million, or 3.3%, to $206.8 million for the six months ended June 30, 2010, compared to $200.2 million for the six months ended June 30, 2009. This increase resulted from an increase in reimbursed costs incurred on behalf of owners.
Lease contract revenue decreased primarily due to region one and three same location revenue, decreases in contract expirations in region one, two, and three, decreases in conversions in region four, partially offset by new location increases in region one, three, and four. Same location revenue decreased compared to the prior year primarily due to decreases in short-term and monthly parking revenue.
Management contract revenue increased primarily due to new locations in regions one, two, three and four, partially offset by contract expirations in regions one, two, three and four and decreases in same locations for regions one, two and four. Same location revenue decreased primarily due to decreased fees from reverse management locations and ancillary services.

 

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Segment cost of parking services information is summarized as follows:
                                                                                                                 
    Six Months Ended June 30,  
    Region One     Region Two     Region Three     Region Four     Other     Total     Variance  
    2010     2009     2010     2009     2010     2009     2010     2009     2010     2009     2010     2009     Amount     %  
    (in millions)  
Cost of parking services lease contracts:
                                                                                                               
New location
  $ 0.6     $ 0.2     $     $     $ 1.5     $     $ 0.4     $ 0.1     $     $     $ 2.5     $ 0.3     $ 2.2       733.3  
Contract expirations
          3.0       0.2       0.3             0.8                               0.2       4.1       (3.9 )     (95.1 )
Same location
    33.0       33.8       1.0       0.9       7.8       8.1       18.2       18.0                   60.0       60.8       (0.8 )     (1.3 )
Conversions
                                        0.3       0.7                   0.3       0.7       (0.4 )     (57.1 )
 
                                                                                   
Total cost of parking services lease contracts
  $ 33.6     $ 37.0     $ 1.2     $ 1.2     $ 9.3     $ 8.9     $ 18.9     $ 18.8     $     $     $ 63.0     $ 65.9     $ (2.9 )     (4.4 )
 
                                                                                   
Cost of parking services management contracts:
                                                                                                               
New location
  $ 1.2     $     $ 6.3     $     $ 1.2     $ 0.3     $ 4.5     $     $     $     $ 13.2     $ 0.3     $ 12.9       4300.0  
Contract expirations
    0.2       2.5                   0.3       2.2             0.2                   0.5       4.9       (4.4 )     (89.8 )
Same location
    9.2       10.6       2.9       3.0       11.6       12.7       7.5       8.2       (0.4 )     0.6       30.8       35.1       (4.3 )     (12.3 )
Conversions
                                                                                   
 
                                                                                   
Total cost of parking services management contracts
  $ 10.6     $ 13.1     $ 9.2     $ 3.0     $ 13.1     $ 15.2     $ 12.0     $ 8.4     $ (0.4 )   $ 0.6     $ 44.5     $ 40.3     $ 4.2       10.4  
 
                                                                                   
Cost of parking services—lease contracts. Cost of parking services for lease contracts decreased $2.9 million, or 4.4%, to $63.0 million for the six months ended June 30, 2010, compared to $65.9 million for the six months ended June 30, 2009. The decrease resulted primarily from decreases in costs related to contract expirations and conversions, partially offset by increases in costs related to new locations. Same locations costs for those facilities which as of June 30, 2010 are the comparative for the two years presented, decreased 1.3%. Same location costs decreased $0.7 million due to rent expense, primarily as a result of contingent rental payments on the decrease in revenue for same locations and $0.1 million due to payroll and payroll related.
Cost of parking services—management contracts. Cost of parking services for management contracts increased $4.2 million, or 10.4%, to $44.5 million for the six months ended June 30, 2010, compared to $40.3 million for the six months ended June 30, 2009. The increase resulted primarily from increases in costs related to new locations, partially offset by decreases in costs related to contract expirations. Same location costs for those facilities, which as of June 30, 2010 are the comparative period for the two years presented, decreased 12.3%. Same location decrease in operating expenses for management contracts primarily result from decreases in costs associated with reverse management contracts and the cost of providing management services.
Reimbursed management contract expense. Reimbursed management contract expense increased $6.6 million, or 3.3%, to $206.8 million, for the six months ended June 30, 2010, compared to $200.2 million for the six months ended June 30, 2009. This increase resulted from an increase in reimbursed cost incurred on the behalf of owners.
Cost of parking services lease contracts decreased primarily due to fewer contract expirations in regions one, two and three, decreases in same location costs in region one and three, partially offset by increases in new locations for regions one, three and four. Same location costs decreased primarily due to decreases in rent expense primarily as a result of contingent rental payments on the decrease in revenue for some locations and a reduction in payroll and payroll related.
Cost of parking services management contracts primarily increased due to new locations in regions one, two, three and four, partially offset by fewer contract expirations in regions one, three, and four, decreases in same location in regions one, two, three and four. The other region amounts in same location costs primarily represent prior year insurance reserve adjustments.

 

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Segment gross profit/gross profit percentage information is summarized as follows:
                                                                                                                 
    Six Months Ended June 30,  
    Region One     Region Two     Region Three     Region Four     Other     Total     Variance  
    2010     2009     2010     2009     2010     2009     2010     2009     2010     2009     2010     2009     Amount     %  
    (in millions)  
Gross profit lease contracts:
                                                                                                               
New location
  $ 0.1     $     $     $     $ 0.1     $ 0.1     $ 0.1     $     $     $     $ 0.3     $ 0.1     $ 0.2       200.0  
Contract expirations
          0.1             0.1                                                 0.2       (0.2 )     (100.0 )
Same location
    1.7       2.2       0.1       0.1       0.7       0.8       1.5       1.0             0.1       4.0       4.2       (0.2 )     (4.8 )
Conversions
                                                                                   
 
                                                                                   
Total gross profit lease contracts
  $ 1.8     $ 2.3     $ 0.1     $ 0.2     $ 0.8     $ 0.9     $ 1.6     $ 1.0     $     $ 0.1     $ 4.3     $ 4.5     $ (0.2 )     (4.4 )
 
                                                                                   
    (percentages)
Gross profit percentage lease contracts:
                                                                                                               
New location
    14.3                         6.3       100.0       20.0                         10.7       25.0                  
Contract expirations
          3.2             25.0                                                 4.7                  
Same location
    4.9       6.1       9.1       10.0       8.2       9.0       7.6       5.3             100.0       6.3       6.5                  
Conversions
                                                                                       
 
                                                                                       
Total gross profit percentage
    5.1       5.9       7.7       14.3       7.9       9.2       7.8       5.1             100.0       6.4       6.4                  
 
                                                                                       
    (in millions)
Gross profit management contracts:
                                                                                                               
New location
  $ 1.8     $ 0.2     $ 1.7     $     $ 0.8     $ 0.1     $ 0.5     $ 0.1     $     $     $ 4.8     $ 0.4     $ 4.4       1,100.0  
Contract expirations
    0.2       1.6             0.2       0.3       1.3             0.3                   0.5       3.4       (2.9 )     (85.3 )
Same location
    11.4       12.0       2.0       1.6       11.2       10.8       7.4       7.7       0.4       (0.6 )     32.4       31.5       0.9       2.9  
Conversions
                                                                                   
 
                                                                                   
Total gross profit management contracts
  $ 13.4     $ 13.8     $ 3.7     $ 1.8     $ 12.3     $ 12.2     $ 7.9     $ 8.1     $ 0.4     $ (0.6 )   $ 37.7     $ 35.3     $ 2.4       6.8  
 
                                                                                   
    (percentages)
Gross profit percentage management contracts:
                                                                                                               
New location
    60.0       100.0       21.3             40.0       25.0       10.0       100.0                   26.7       57.1                  
Contract expirations
    50.0       39.0             100.0       50.0       37.1             60.0                   50.0       41.0                  
Same location
    55.3       53.1       40.8       34.8       49.1       46.0       49.7       48.4                   51.3       47.3                  
Conversions
                                                                                       
 
                                                                                       
Total gross profit percentage
    55.8       51.3       28.7       37.5       48.4       44.5       39.7       49.1                   45.9       46.7                  
 
                                                                                       
Gross profit—lease contracts. Gross profit for lease contracts decreased $0.2 million, or 4.4%, to $4.3 million for the six months ended June 30, 2010, compared to $4.5 million for the six months ended June 30, 2009. Gross profit percentage for lease contracts remained flat at 6.4% for the six months ended June 30, 2010 and June 30, 2009. Gross profit lease contracts decreases on same locations were primarily the result of a decrease in short-term and monthly parking revenue, without an equal and corresponding decrease in costs.
Gross profit—management contracts. Gross profit for management contracts increased $2.4 million, or 6.8%, to $37.7 million for the six months ended June 30, 2010, compared to $35.3 million for the six months ended June 30, 2009. Gross profit percentage for management contracts decreased to 45.9% for the six months ended June 30, 2010 compared to 46.7% in the six months ended June 30, 2009. Gross profit for management contracts increases were primarily the result of our same locations, and our new locations, partially offset by decreases in our contract expirations. Gross profit percentage on new locations and same locations accounted for most of the decline on a percentage basis.
Gross profit for lease contracts declined primarily due to same locations in regions one and three due to decreases in short-term and monthly parking revenue, without an equal and corresponding decrease in costs. The other region amounts in same location primarily represent prior year insurance reserve adjustments.
Gross profit for management contracts increased primarily due to our same locations in regions two, three and other and our new locations in regions one, two, three and four, partially offset by contract expirations in regions one, two, three and four.
General and administrative expenses. General and administrative expenses increased $0.7 million, or 3.0%, to $23.8 million for the six months ended June 30, 2010, compared to $23.1 million for the six months ended June 30, 2009. This increase resulted primarily due to the restoration of performance-based compensation programs in 2010 of $2.0 million, partially offset by a decrease of $1.0 million in legal-related expenses and a decrease of $0.3 million in other costs.
Interest expense. Interest expense was $2.9 million for the six months ended June 30, 2010 and did not change significantly compared to the six months ended June 30, 2009.
Interest income. Interest income was $0.1 million for the six months ended June 30, 2010 and did not change significantly compared to the six months ended June 30, 2009.

 

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Income tax expense. Income tax expense increased $0.6 million, or 14.0%, to $4.9 million for the six months ended June 30, 2010, as compared to $4.3 million for the six months ended June 30, 2009. An increase in our pre-tax income resulted in a $0.5 million increase in income tax expense. Our effective tax rate was 39.5% for the six months ended June 30, 2010 and 38.8% for the six months ended June 30, 2009.
Liquidity and Capital Resources
Outstanding Indebtedness
On June 30, 2010, we had total indebtedness of approximately $111.2 million, a decrease of $2.0 million from December 31, 2009. The $111.2 million includes:
   
$108.2 million under our senior credit facility; and
   
$3.0 million of other debt including capital lease obligations and obligations on seller notes and other indebtedness.
We believe that our cash flow from operations, combined with availability under our senior credit facility, which amounted to $23.7 million at June 30, 2010, will be sufficient to enable us to pay our indebtedness, or to fund other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before their respective maturities. We believe that we will be able to refinance our indebtedness on commercially reasonable terms.
Senior Credit Facility
On July 15, 2008, we amended and restated our credit facility.
The $210.0 million revolving senior credit facility will expire in July 2013. The revolving senior credit facility includes a letter of credit sub-facility with a sublimit of $50.0 million and a swing line sub-facility with a sublimit of $10.0 million.
Our revolving senior credit facility bears interest, at our option, at either (1) LIBOR plus an applicable LIBOR margin of between 2.00% and 3.50% depending on the ratio of our total funded indebtedness to our EBITDA from time to time (“Total Debt Ratio”) or (2) the Base Rate (as defined below) plus an applicable Base Rate Margin of between 0.50% and 2.00% depending on our Total Debt Ratio. We may elect interest periods of one, two, three or six months for LIBOR based borrowings. The Base Rate is the greater of (i) the rate publicly announced from time to time by Bank of America, N.A. as its “prime rate,” or (ii) the overnight federal funds rate plus 0.50%.
Our senior credit facility includes a fixed charge ratio covenant, a total debt to EBITDA ratio covenant, a limit on our ability to incur additional indebtedness, issue preferred stock or pay dividends, and certain other restrictions on our activities. We are required to repay borrowings under our senior credit facility out of the proceeds of future issuances of debt or equity securities and asset sales, subject to certain customary exceptions. Our senior credit facility is secured by substantially all of our assets and all assets acquired in the future (including a pledge of 100% of the stock of our existing and future domestic guarantor subsidiaries and 65% of the stock of our existing and future foreign subsidiaries).
We are in compliance with all of our financial covenants.
The weighted average interest rate on our senior credit facility at June 30, 2010 and December 31, 2009 was 2.9% and 3.2%, respectively. The rate includes all outstanding LIBOR contracts, interest rate cap effect and letters of credit. The weighted average interest rate on outstanding borrowings, not including letters of credit, was 3.0% and 3.3% at June 30, 2010 and December 31, 2009, respectively.
At June 30, 2010, we had $16.9 million of letters of credit outstanding under the senior credit facility, borrowings against the senior credit facility aggregated $108.2 million and we had $23.7 million available under the senior credit facility.

 

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Interest Rate Cap Transactions
We do not enter into derivative instruments for any purpose other than cash flow hedging purposes.
On February 22, 2010, we entered into interest rate cap agreements with Wells Fargo Bank N.A. (“Wells Fargo”) and Fifth Third Bank (“Fifth Third”), allowing us to limit our exposure on a portion of our borrowings under our senior credit facility (“Rate Cap Transactions”). Pursuant to two separate letter agreements between the Company and Wells Fargo and Fifth Third, respectively, we will receive payments from Wells Fargo and Fifth Third each quarterly period to the extent that the prevailing three-month LIBOR during that period exceeds our cap rate of 3.25%. The Rate Cap Transactions are effective March 31, 2010, and will settle each quarter on a date that is intended to coincide with our quarterly interest payments dates under our senior credit facility. The Rate Cap Transactions cap our LIBOR interest rate on a notional amount of $50 million at 3.25% for a total of 39 months. These Rate Cap Transactions are classified as a cash flow hedge, and we calculate the effectiveness of the hedge on a quarterly basis. The ineffective portion of the cash flow hedge is recognized in current period earnings as an increase of interest expense. The fair value of the interest rate cap at June 30, 2010 is $0.2 million and is included in prepaid expenses.
Stock Repurchases
In July 2008, our Board of Directors authorized us to repurchase shares of our common stock, on the open market or through private purchases, up to $60.0 million in aggregate.
During the first quarter of 2009, we repurchased 213,301 shares at an average price of $18.21 per share, including average commissions of $0.01 per share, on the open market. The total value of the first quarter transactions was $3.9 million. We retired 200,650 shares during the first quarter of 2009 and retired the remaining 12,651 shares in April 2009.We did not make any share repurchases since the first quarter of 2009. As of June 30, 2010, $19.0 million remained available for repurchase under the July 2008 authorization by the Board of Directors.
Letters of Credit
At June 30, 2010, we have provided letters of credit totaling $16.5 million to our casualty insurance carrier to collateralize our casualty insurance program.
As of June 30, 2010, we provided $0.4 million in letters to collateralize other obligations.
Deficiency Payments
Pursuant to our obligations with respect to the parking garage operations at Bradley International Airport, we are required to make certain payments for the benefit of the State of Connecticut and for holders of special facility revenue bonds. The deficiency payments represent contingent interest bearing advances to the trustee to cover operating cash flow requirements. The payments, if any, are recorded as a receivable by us for which we are reimbursed from time to time as provided in the trust agreement. As of June 30, 2010, we have a receivable of $11.3 million, comprised of cumulative deficiency payments to the trustee, net of reimbursements. We believe these advances to be fully recoverable and therefore have not recorded a valuation allowance for them. We do not guarantee the payment of any principal or interest on any debt obligations of the State of Connecticut or the trustee.
We made deficiency payments of $1.7 million in the first six months of 2010 compared to $1.5 million in the first six months of 2009. We did not receive any payments for interest and premium income related to deficiency payments in the first six months of 2010 and 2009.
Daily Cash Collections
As a result of day-to-day activity at our parking locations, we collect significant amounts of cash. Lease contract revenue is generally deposited into our local bank accounts, with a portion remitted to our clients in the form of rental payments according to the terms of the leases. Under management contracts, some clients require us to deposit the daily receipts into one of our local bank accounts, with the cash in excess of our operating expenses and management fees remitted to the clients at negotiated intervals. Other clients require us to deposit the daily receipts into client accounts and the clients then reimburse us for operating expenses and pay our management fee subsequent to month-end. Some clients require a segregated account for the receipts and disbursements at locations. Our working capital and liquidity may be adversely affected if a significant number of our clients require us to deposit all parking revenue into their respective accounts.
Our liquidity also fluctuates on an intra-month and intra-year basis depending on the contract mix and timing of significant cash payments. Additionally, our ability to utilize cash deposited into our local accounts is dependent upon the availability and movement of that cash into our corporate account. For all these reasons, from time to time, we carry a significant cash balance, while also utilizing our senior credit facility.

 

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Net Cash Provided by Operating Activities
Our primary sources of funds are cash flows from operating activities and changes in working capital. Net cash provided by operating activities totaled $2.0 million for the first six months of 2010. Cash provided included $12.0 million from operations, which was offset by a net decrease in working capital of $10.0 million. The decrease in working capital resulted primarily from (i) an increase of $11.7 million in notes and accounts receivable, which primarily related to an increase in business from new locations, acquisitions and deficiency payments related to Bradley International Airport guarantor payments as described under “Deficiency Payments”; (ii) an increase of $0.4 million in other assets primarily related to an increase in the cash surrender values related to the non-qualified deferred compensation plan; (iii) a decrease of $1.0 million in accounts payable due primarily to the timing on payments to our clients and new business under management contracts as described under “Daily Cash Collections”; (iv) offset by a decrease of $2.1 million in prepaid assets primarily related to timing of payroll taxes paid in 2009 relating to 2010 payroll and timing of insurance premium payments; and (v) an increase in other liabilities of $1.0 million primarily related to increases in the performance-based compensation accrual, insurance loss estimates and long-term contractual obligations, offset by decreases in deferred revenue due to timing of certain events and a reduction in accrued taxes related to a federal tax payment.
Our primary sources of funds are cash flows from operating activities and changes in working capital. Net cash provided by operating activities totaled $7.8 million for the first six months of 2009. Cash provided included $13.3 million from operations which was offset by a net decrease in working capital of $5.4 million. The decrease in working capital resulted primarily from an increase of $1.5 million in notes and accounts receivable, which primarily related to Bradley International Airport guarantor payments as described under “Deficiency Payments”, and a decrease of $3.9 million in other liabilities, which primarily related to a reduction in accruals related to payments under employee incentive program.
Net Cash Used in Investing Activities
Net cash used in investing activities totaled $1.9 million in the first six months of 2010. Cash used in investing activities for the first six months of 2010 included capital expenditures of $1.6 million for capital investments needed to secure and/or extend leased facilities, cost of contract purchases of $0.1 million, contingent payments on previously acquired contracts of $0.1 million and capitalized interest of $0.1 million.
Net cash used in investing activities totaled $3.1 million in the first six months of 2009. Cash used in investing activities for the first six months of 2009 included capital expenditures of $2.1 million for capital investments needed to secure and/or extend leased facilities, investment in information system enhancements and infrastructure, cost of contract purchases of $0.6 million, capitalized interest of $0.1 million and $0.3 million for contingent payments on previously acquired contracts.
Net Cash Used in Financing Activities
Net cash used in financing activities totaled $0.1 million in the first six months of 2010. Cash used in financing activities for 2010 included $0.3 million for payments on capital leases, $1.7 million for payments on our senior credit facility, partially offset by $1.1 million from the exercise of stock options and $1.0 million from the tax benefit related to stock option exercises.
Net cash used in financing activities totaled $2.5 million in the first six months of 2009. Cash used in financing activities for 2009 included $3.9 million to repurchase our common stock, $0.6 million for payments on capital leases, $0.1 million in distribution to noncontrolling interests and $0.1 million for payments on long-term borrowings, partially offset by $2.2 million from our senior credit facility.
Cash and Cash Equivalents
We had cash and cash equivalents of $8.3 million at June 30, 2010 and December 31, 2009. The cash balances reflect our ability to utilize funds deposited into our local accounts and which based upon availability, timing of deposits and the subsequent movement of that cash into our corporate accounts may result in significant changes to our cash balances.

 

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Forward-Looking Information
The Private Securities Litigation Reform Act of 1995 provides safe harbor provisions for forward-looking information. These statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies. The statements contained in this Form 10-Q that are not statements of historical fact may include forward-looking statements that involve a number of risks and uncertainties.
We have used the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and similar terms and phrases, including references to assumptions in this Form 10-Q, to identify forward-looking statements. These forward-looking statements are made based on our management’s expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. These uncertainties and factors could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements.
All of our forward-looking statements should be considered in light of these factors. All of our forward-looking statements speak only as of the date they were made, and we undertake no obligation to update our forward-looking statements or risk factors to reflect new information, future events or otherwise, except as may be required under applicable securities laws and regulations. You should review any additional disclosures we make in our press releases and Forms 10-K, 10-Q, and 8-K filed with or furnished to the SEC. We also suggest that you listen to our quarterly earnings release conference calls with financial analysts.
Risk Factors
While it is not possible to identify all risk factors, we continue to face many risks and uncertainties that could cause actual results to differ from our forward-looking statements and could otherwise have a material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition. Information related to risk factors is described in our most recent Form 10-K under “Risk Factors,” as supplemented or amended from time to time in our quarterly reports on Form 10-Q and our current reports on Form 8-K.
Item 3.  
Quantitative and Qualitative Disclosures about Market Risk
Interest Rates
Our primary market risk exposure consists of risk related to changes in interest rates. We use a variable rate senior credit facility to finance our operations. This facility exposes us to variability in interest payments due to changes in interest rates. If interest rates increase, interest expense increases and conversely, if interest rates decrease, interest expense also decreases. We believe that it is prudent to limit the exposure of an increase in interest rates.
We do not enter into derivative instruments for any purpose other than cash flow hedging purposes.
On February 22, 2010, we entered into interest rate cap agreements with Wells Fargo Bank N.A. (“Wells Fargo”) and Fifth Third Bank (“Fifth Third”), allowing us to limit our exposure on a portion of our borrowings under our senior credit facility (“Rate Cap Transactions”). Pursuant to two separate letter agreements between the Company and Wells Fargo and Fifth Third, respectively, we will receive payments from Wells Fargo and Fifth Third each quarterly period to the extent that the prevailing three month LIBOR during that period exceeds our cap rate of 3.25%. The Rate Cap Transactions are effective March 31, 2010, and will settle each quarter on a date that is intended to coincide with our quarterly interest payments dates under our senior credit facility. The Rate Cap Transactions cap our LIBOR interest rate on a notional amount of $50 million at 3.25% for a total of 39 months. These Rate Cap Transactions are classified as a cash flow hedge, and we calculate the effectiveness of the hedge on a quarterly basis. The ineffective portion of the cash flow hedge is recognized in current period earnings as an increase of interest expense. The fair value of the interest rate cap at June 30, 2010 is $0.2 million and is included in prepaid expenses.
Our $210.0 million senior credit facility provides for a $210.0 million variable rate revolving facility. In addition, the credit facility includes a letter of credit sub-facility with a sublimit of $50.0 million and swing line sub-facility with a sublimit of $10.0 million. Interest expense on such borrowing is sensitive to changes in the market rate of interest. If we were to borrow the entire $220.0 million available under the facility, a 1% increase in the average market rate would result in an increase in our annual interest expense of $2.2 million.

 

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This amount is determined by considering the impact of the hypothetical interest rates on our borrowing cost, but does not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Due to the uncertainty of the specific changes and their possible effects, the foregoing sensitivity analysis assumes no changes in our financial structure.
Foreign Currency Risk
Our exposure to foreign exchange risk is minimal. All foreign investments are denominated in U.S. dollars, with the exception of Canada. We had approximately $0.8 million of Canadian dollar denominated cash instruments at June 30, 2010. We had no Canadian dollar denominated debt instruments at June 30, 2010. We do not hold any hedging instruments related to foreign currency transactions. We monitor foreign currency positions and may enter into certain hedging instruments in the future should we determine that exposure to foreign exchange risk has increased.
Item 4.  
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Within the 90-day period prior to the filing date of this report, our chief executive officer, chief financial officer and corporate controller carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-14 of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon their evaluation, our chief executive officer, chief financial officer and corporate controller concluded that our disclosure controls and procedures were adequate and effective and designed to ensure that material information relating to us (including our consolidated subsidiaries) required to be disclosed by us in the reports we file under the Exchange Act is recorded, processed, summarized and reported within the required time periods.
Changes in Internal Controls Over Financial Reporting
There have been no significant changes in our internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
Limitations of the Effectiveness of Internal Control
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.
PART II. OTHER INFORMATION
Item 1.  
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 determining the appropriate accounting for 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 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 loss or a range of loss involves significant judgment.
As previously disclosed in our Form 10-Q for the quarterly period ended March 31, 2010, John V. Holten, a former director and former indirect controlling shareholder of the Company, filed a lawsuit against us. On May 20, 2010, we filed an answer to this lawsuit, denying Mr. Holten’s claim for breach of his employment agreement. We asserted a separate counterclaim seeking a declaratory judgment that Mr. Holten’s employment agreement is voidable and void. The counterclaim further seeks, among other relief, restitution of all payments made to Mr. Holten and his affiliates pursuant to his employment agreement. Mr. Holten has not answered the counterclaim as of the date this report was filed.

 

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Item 6.  
Exhibits
         
Exhibit    
Number   Description
       
 
  3.1.1    
Second Amended and Restated Certificate of Incorporation of Standard Parking Corporation as filed on June 2, 2004.
  3.1.2    
Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of Standard Parking Corporation as filed on January 7, 2008.
  3.1.3    
Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of Standard Parking Corporation as filed on April 29, 2010.
  3.1.4    
Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of Standard Parking Corporation as filed on May 6, 2010.
  31.1    
Section 302 Certification dated August 6, 2010 for James A. Wilhelm, Director, President and Chief Executive Officer.
  31.2    
Section 302 Certification dated August 6, 2010 for G. Marc Baumann, Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer).
  31.3    
Section 302 Certification dated August 6, 2010 for Daniel R. Meyer, Senior Vice President, Corporate Controller and Assistant Treasurer (Principal Accounting Officer).
  32.1    
Certification pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated August 6, 2010.

 

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
         
  STANDARD PARKING CORPORATION
 
 
Dated: August 6, 2010  By:   /s/ JAMES A. WILHELM    
    James A. Wilhelm    
    Director, President and Chief Executive Officer
(Principal Executive Officer)  
 
 
     
Dated: August 6, 2010  By:   /s/ G. MARC BAUMANN    
    G. Marc Baumann    
    Executive Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)  
 
 
     
Dated: August 6, 2010  By:   /s/ DANIEL R. MEYER    
    Daniel R. Meyer    
    Senior Vice President,
Corporate Controller and Assistant Treasurer
(Principal Accounting Officer and Duly Authorized Officer)  
 
 

 

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INDEX TO EXHIBITS
         
Exhibit    
Number   Description
  3.1.1    
Second Amended and Restated Certificate of Incorporation of Standard Parking Corporation as filed on June 2, 2004.
  3.1.2    
Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of Standard Parking Corporation as filed on January 7, 2008.
  3.1.3    
Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of Standard Parking Corporation as filed on April 29, 2010.
  3.1.4    
Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of Standard Parking Corporation as filed on May 6, 2010.
  31.1    
Section 302 Certification dated August 6, 2010 for James A. Wilhelm, Director, President and Chief Executive Officer.
  31.2    
Section 302 Certification dated August 6, 2010 for G. Marc Baumann, Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer).
  31.3    
Section 302 Certification dated August 6, 2010 for Daniel R. Meyer, Senior Vice President, Corporate Controller and Assistant Treasurer (Principal Accounting Officer).
  32.1    
Certification pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated August 6, 2010.

 

33

Exhibit 3.1.1
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
STANDARD PARKING CORPORATION
Standard Parking Corporation, a corporation organized and existing under the General Corporation Law of the State of Delaware (the “ DGCL ”), hereby certifies as follows:
1. The name of the corporation is Standard Parking Corporation (the “ Corporation ”).
2. The date of the filing of the original Certificate of Incorporation of the Corporation with the Secretary of State of the State of Delaware was September 24, 1981, under the name 120 Oakland Place, Inc.
3. Pursuant to Sections 242 and 245 of the DGCL, this Second Amended and Restated Certificate of Incorporation (this “ Certificate ”) amends and restates the original Certificate of Incorporation, as amended and restated by the Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on February 24, 1994, as further amended. This Certificate amends, restates and supersedes in its entirety the provisions of the Certificate of Incorporation of this Corporation as heretofore amended.
4. The Certificate of Incorporation of the Corporation is hereby amended and restated in its entirety to read as follows:
Article I
Section 1.01 Name of Corporation . The name of the corporation is:
Standard Parking Corporation
Article II
Section 2.01 Registered Office and Registered Agent . The address, including street, number, city, and county, of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle; and the name of the registered agent of the Corporation in the State of Delaware at such address is The Corporation Trust Company.
Article III
Section 3.01 Nature of Business . The nature of the business and the purposes to be conducted and promoted by the Corporation are as follows:
To conduct any lawful business, to promote any lawful purpose, and to engage in any lawful act or activity for which corporations may be organized under the DGCL.
Article IV
Section 4.01 Authorized Capital Stock . The total number of shares of stock that the Corporation shall have authority to issue is 12,100,010, of which (i) 12,100,000 shares shall be shares of Common Stock, par value $0.00l per share (the “ Common Stock ”) and (ii) 10 shares shall be shares of Preferred Stock, par value $0.01 per share (the “ Preferred Stock ”), issuable in one or more series as hereinafter provided. Except as otherwise expressly provided herein, the number of authorized shares of any class or classes of capital stock of the Corporation may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the stock of the Corporation entitled to vote generally in the election of directors (“ Voting Stock ”) irrespective of the provisions of Section 242(b)(2) of the DGCL or any corresponding provision hereinafter enacted.

 

 


 

Section 4.02 Common Stock . All shares of Common Stock will be identical in all respects and will entitle the holders thereof to the same rights and privileges, except as otherwise provided in this Second Amended and Restated Certificate of Incorporation (this “ Certificate of Incorporation ”).
(a) Voting Rights . At every meeting of the stockholders of the Corporation, every holder of Common Stock shall be entitled to one (1) vote in person or by proxy for each share of Common Stock standing in such holder’s name on the transfer books of the Corporation in connection with the election of directors and all other matters submitted to a vote of all stockholders. Every holder of Common Stock shall be entitled to one vote in person or by proxy for each share of Common Stock standing in such holder’s name on the transfer books of the Corporation in connection with all matters submitted to a vote of the holders of Common Stock voting separately as a class. No stockholder shall be entitled to exercise any right of cumulative voting.
(b) Dividends and Distributions . Subject to the rights of the holders of Preferred Stock, and subject to any other provisions of this Certificate of Incorporation, holders of Common Stock shall be entitled to receive such dividends and other distributions in cash, stock of any corporation (including the Common Stock of the Corporation) or property of the Corporation as may be declared thereon by the Board of Directors from time to time out of assets or funds of the Corporation legally available therefor and shall share equally on a per share basis in all such dividends and other distributions.
(c) No Preemptive Rights . Subject to any Certificate of Designations, no stockholder of the Corporation shall have any preemptive or preferential right, nor be entitled as such as a matter of right, to subscribe for or purchase any part of any new or additional issue of stock of the Corporation of any class or series, whether now or hereafter authorized, and whether issued for money or for consideration other than money, or of any issue of securities convertible into stock of the Corporation.
(d) No Redemption Rights . Subject to any Certificate of Designations, no stockholder of the Corporation shall have any right to have the shares of Common Stock held by such holder redeemed by the Corporation.
Section 4.03 Preferred Stock .
(a) Designation . There shall be a series of Preferred Stock designated as “18% Senior Redeemable Series D Preferred Stock” (the “ Series D Stock ”). The number of shares of Series D Stock authorized for issuance shall be 10, and each such share shall have a par value of $0.01.
(b) Rank . The Series D Stock shall, with respect to dividend rights and rights on liquidation, rank (a) junior to, or on a parity with, as the case may be, any other series of the Preferred Stock established by the Board, the terms of which shall specifically provide that such series shall rank senior to, or on parity with, as the case may be, the Series D Stock with respect to dividend rights and rights on liquidation, and (b) senior to any other equity securities of the Company, including all classes of Company Common Stock. (All of such equity securities of the Company to which the Series D Stock ranks prior, including all classes of Company Common Stock, are at times collectively referred to herein as the “ Junior Securities ”).

 

 


 

(c) Dividends .
(i) The holders of record of shares of Series D Stock on the record date specified by the Board at the time such dividend is declared shall be entitled to receive, when, as and if declared by the Board, to the extent permitted under the DGCL, preferred dividends cumulative quarterly and payable on the first day of March, June, September and December (each such day being a “ Dividend Payment Date ”); provided, that such record date shall not be more than sixty (60) days nor less than ten (10) days prior to the respective Dividend Payment Date; provided, further, that such dividends may, at the option of the Board, accrue and accumulate. Each of such dividends shall be fully cumulative and shall accrue (whether or not declared, whether or not the Company has earnings or profits, and whether or not there are funds legally available for the payment of such dividends), without interest, from the first day of each of March, June, September and December, except that with respect to the first dividend, such dividend shall accrue from the date of the issuance of the Series D Stock. The per annum dividend rate on outstanding shares shall be 18% per share, of which 3% may, at the option of the Board, be paid in cash and the remaining 15% shall accrue and accumulate until paid. The Company shall take all actions required or permitted under the DGCL to permit the payment of dividends on the Series D Stock, including, without limitation, through the revaluation of its assets in accordance with the DGCL, to make or keep funds legally available for the payment of dividends.
(ii) All dividends paid with respect to shares of Series D Stock pursuant to paragraph (c)(i) shall be paid pro rata to the holders entitled thereto. Dividends will be computed on the basis of a 360-day year comprised of twelve 30-day months.
(iii) Each fractional share of Series D Stock outstanding shall be entitled to a ratably proportionate amount of all dividends accruing with respect to each outstanding share of Series D Stock pursuant to Paragraph (c)(i) hereof, and all such dividends with respect to such outstanding fractional shares shall be fully cumulative and shall accrue (whether or not declared) without interest, and shall be payable in the same manner and at such times as provided for in Paragraph (c)(i) hereof with respect to dividends on each outstanding share of Series D Stock.
(iv) Notwithstanding anything contained herein to the contrary, no cash dividends on shares of Series D Stock shall be declared by the Board or paid or set apart for payment by the Company at such time as the terms and provisions of any agreement of the Company, including any agreement relating to its indebtedness, specifically prohibits such declaration, payment or setting apart for payment; provided, that nothing herein contained shall in any way or under any circumstance be construed or deemed to require the Board to declare, or the Company to pay or set apart for payment, any dividends on shares of Series D Stock at any time, whether or not permitted by any of such agreements.
(v) If at any time the Company shall have failed to pay all dividends that have accrued on any outstanding shares of any other series of the Preferred Stock having cumulative dividend rights ranking prior to or on parity with the shares of Series D Stock at the times such dividends are payable, no cash dividend shall be declared by the Board or paid or set apart for payment by the Company on shares of Series D Stock unless prior to or concurrently with such declaration, payment or setting apart for payment, all accrued and unpaid dividends on all outstanding shares of such other series of the Preferred Stock shall have been or be declared, paid or set apart for payment, without interest; provided, that in the event such failure to pay accrued dividends is only with respect to the outstanding shares of Series D Stock and any outstanding shares of any other series of the Preferred Stock having cumulative dividend rights on parity with the shares of Series D Stock, subject to Paragraph (c)(i) above, cash dividends may be declared, paid or set apart for payment, without interest, pro rata on shares of Series D Stock and shares of such other series of the Preferred Stock so that the amount of any cash dividends declared, paid or set apart for payment on shares of Series D Stock and shares of such other series of the Preferred Stock shall in all cases bear to each other the same ratio that, at the time of such declaration, payment or setting apart for payment, all accrued but unpaid cash dividends on shares of Series D Stock and shares of such other series of the Preferred Stock bear to each other. Any dividend not paid pursuant to Paragraph (c)(i) hereof or this Paragraph (c)(v) shall be fully cumulative and shall accrue (whether or not declared), without interest, as set forth in Paragraph (c)(i) hereof.

 

 


 

(vi) Holders of shares of Series D Stock shall be entitled to receive the dividends provided for in Paragraph (c)(i) hereof in preference to and in priority over any dividends upon any of the Junior Securities.
(vii) So long as any shares of Series D Stock are outstanding, the Company shall not declare, pay or set apart for payment any dividend on any of the Junior Securities or any warrants, rights, calls or options exercisable for any of the Junior Securities, or make any distribution in respect thereof, either directly or indirectly, and whether in cash, obligations or shares of the Company or other property (other than pursuant to the conversion rights set forth herein and other than distributions or dividends in stock to the holders of such stock), and shall not permit any corporation or other entity directly or indirectly controlled by the Company to purchase or redeem any of the Junior Securities or any warrants, rights, calls or options exercisable for any of the Junior Securities, unless prior to or concurrently with such declaration, payment, setting apart for payment, purchase or distribution, as the case may be, all accrued and unpaid cash dividends on shares of Series D Stock not paid on the dates provided for in Paragraph (c)(i) hereof (including if not paid pursuant to the terms and conditions of paragraph (c)(i) or Paragraph (c)(v) hereof) shall have been or be paid; provided, that nothing herein contained shall limit or restrict the Company or any corporation or other entity directly or indirectly controlled by the Company from purchasing, redeeming or otherwise retiring any securities of the Company, including any Junior Securities and any warrants, rights, calls or options exercisable for any of the Junior Securities, (I) issued to any individual who was or is an employee or officer of the Company or any of its subsidiaries, or (II) that are subject to any stockholders agreement, any agreement providing for put/call rights or any similar agreement to which the Company or any of its subsidiaries is a party, which agreement provides for such purchase, redemption or retirement.
(viii) Subject to the foregoing provisions of this Paragraph (c), the Board may declare, and the Company may pay or set apart for payment, dividends and other distributions on any of the Junior Securities, and pay, purchase or otherwise redeem any of the Junior Securities or any warrants, rights or options exercisable for any of the Junior Securities, and the holders of the shares of Series D Stock shall not be entitled to share therein.
(d) Liquidation Preference .
(i) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the holders of shares of Series D Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders an amount in cash equal to one hundred dollars ($100) for each share outstanding (the “ Liquidation Amount ”) plus an amount in cash equal to all accrued but unpaid dividends thereon to the date fixed for liquidation, before any payment shall be made or any assets distributed to the holders of any of the Junior Securities; provided, that the holders of outstanding shares of Series D Stock shall not be entitled to receive such liquidation payment until the liquidation payments on all outstanding shares of any other series of the Preferred Stock having liquidation rights ranking prior to the shares of Series D Stock shall have been paid in full. If the assets of the Company are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of Series D Stock and any outstanding shares of any other series of the Preferred Stock having liquidation rights on parity with the shares of Series D Stock, then the holders of all such shares shall share ratably in such distribution of assets in accordance with the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Series D Stock and the holders of outstanding shares of such other series of the Preferred Stock are entitled were paid in full. The consolidation or merger of the Company with another entity shall not be deemed a voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company and shall not give rise to any rights provided for in this Paragraph (d).
(ii) The liquidation payment with respect to each fractional share of Series D Stock outstanding or accrued but unpaid shall be equal to a ratably proportionate amount of the liquidation payment with respect to each outstanding share of Series D Stock.

 

 


 

(e) Redemption .
(i) Optional .
(A) Shares of Series D Stock may be redeemed, in whole or from time to time in part, at the election of the Company (the “ Optional Redemption ”), at a redemption price per share in cash (the “ Redemption Price ”) equal to 118% of (x) the then-effective Liquidation Amount applicable to such share (treating the applicable date of redemption as the date of liquidation, dissolution or winding-up for such purpose) and (y) all accrued but unpaid dividends thereon.
(B) Shares of Series D Stock may be redeemed, in whole or from time to time in part, at a price per share equal to the then-effective Redemption Price at the election of the holder thereof or the Company, upon the occurrence of a Change of Control (as defined below) (a “ Change of Control Redemption ”), in which case the Redemption Price shall be paid in cash; provided , that the Company shall not be required to make a Change of Control Redemption if such a redemption would be prohibited by the terms of the 9-1/4% Notes, the New Notes or the Credit Agreement. If the Redemption Price payable in respect of a Change of Control Redemption shall not be paid in cash, the Board shall promptly declare a special dividend, payable in shares of Series D Stock, in an amount equal to the excess of the then-effective Redemption Price over the Liquidation Amount.
(C) On or after June 15, 2008, at the election of a holder of Series D Stock, exercisable by delivering to the Company a written notice stating the number of shares of Series D Stock such holder elects to redeem, the Company shall redeem all or any portion of the outstanding shares of Series D Stock held by such holder at the then-effective Redemption Price, payable in cash, within 60 days after the date of such notice. Notwithstanding the foregoing, the Company shall not be required to redeem shares of Series D Stock to the extent such a redemption would be prohibited by the terms of the 9-1/4% Notes, the New Notes or the Credit Agreement, or by any applicable law (collectively, the “ Redemption Prohibitions ”). If the Company can redeem only a portion of the Series D Stock that the holder elects to redeem without violating the Redemption Prohibitions, the Company shall redeem from the holder the maximum number of shares of Series D Stock it can redeem without violating the Redemption Prohibitions. If more than one holder elects to redeem shares of Series D Stock and the Company is subject to Redemption Prohibitions, the Company shall redeem shares of Series D Stock on a pro rata basis (based on the number of shares held by each holder). The Company shall redeem all or a portion of the remaining shares of Series D Stock from time to time when the Company can do so without violating the Redemption Prohibitions, on a pro rata basis (based on the number of shares held by each holder) if more than one holder has elected to redeem shares of Series D Stock.
(D) Definitions.
9-1/4% Notes ” shall mean the 9-1/4% Senior Subordinated Notes due 2008 of the Company, as amended.

 

 


 

Credit Agreement ” shall mean that certain Credit Agreement, dated as of January 11, 2002, by and among the Company and LaSalle Bank National Association as Agent, LaSalle Bank National Association and Bank One, N.A., together with all related agreements, instruments and documents executed or delivered pursuant thereto at any time, in each case as such agreements, instruments and documents may be amended, restated, modified or supplemented and in effect from time to time, including any agreements, instruments or documents extending the maturity of, refinancing, replacing or otherwise restructuring all or any portion of the indebtedness and other obligations under such credit agreement or any successor or replacement agreement, whether by the same or any other agent, lender or group of lenders.
New Notes ” shall mean the 14% Senior Subordinated Second Lien Notes due 2006 of the Company, as the same may be amended, restated, modified or supplemented from time to time.
(ii) Allocation . If the Company elects to make an Optional Redemption or a Change of Control Redemption, the Company may redeem all or any number of the shares of Series D Stock then outstanding. If the Company shall elect to redeem less than all of the shares of Series D Stock then outstanding, the Company shall determine the number of shares of Series D Stock to be redeemed and shall redeem from each holder a number of shares of Series D Stock equal to the product of (i) the number of shares of Series D Stock held by such holder multiplied by (ii) a fraction, the numerator of which shall be the number of shares of Series D Stock included in such redemption by the Company and the denominator of which shall be the total number of shares of Series D Stock then outstanding.
(f) Procedure for Redemption .
(i) In the event the Company shall redeem shares of Series D Stock, notice of such redemption shall be given by first class mail, postage prepaid, mailed not less than 30 days nor more than 60 days prior to the redemption date, to each holder of record of the shares to be redeemed, at such holder’s address as the same appears on the stock register of the Company. Each such notice shall state: (v) the redemption date; (w) the number of shares of Series D Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of shares to be redeemed from such holder; (x) the Redemption Price; (y) the place or places where certificates for such shares are to be surrendered for payment of the Redemption Price; and (z) that dividends on the shares to be redeemed will cease to accrue on such redemption date.
(ii) Notice having been mailed as aforesaid, from and after the redemption date (unless default shall be made by the Company in providing money for the payment of the redemption price of the shares called for redemption) dividends on the shares of Series D Stock so called for redemption shall cease to accrue, and said shares shall no longer be deemed to be outstanding, and all rights of the holders thereof as stockholders of the Company (except the right to receive from the Company the Redemption Price) shall cease. Upon surrender in accordance with said notice of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Board shall so require and the notice shall so state), such shares shall be redeemed by the Company at the redemption price aforesaid. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof.

 

 


 

(g) Voting Rights .
(i) The holders of record of Series D Stock shall not be entitled to any voting rights except as hereinafter provided in this Paragraph (g).
(ii) So long as any shares of Series D Stock are outstanding, the Company will not, without the affirmative vote or consent at an annual or special meeting of its stockholders of at least a majority of the outstanding shares of Series D Stock (excluding treasury shares and shares held by Subsidiaries of the Company) voting as a separate class, create any class or series of shares ranking senior to the Series D Stock either as to dividends or upon liquidation, or amend, alter or repeal (whether by merger, consolidation or otherwise) the Certificate of Incorporation to affect adversely the voting powers (except as such powers may be limited by the voting rights given to additional shares of any class), rights or preferences of the Series D Stock.
(iii) At any annual or special meeting of the stockholders of the Company at which a matter is submitted to the holders of Series D Stock, each holder shall be entitled to one vote per share of Series D Stock.
Article V
Section 5.01 Board of Directors . The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors initially consisting of eight (8) directors. The number of directors may be increased or decreased from time to time in accordance with the provisions of Section 5.02; provided that the number of directors shall not be less than three (3) nor more than nine (9).
Section 5.02 Increase or Decrease in Board of Directors . The number of directors may be increased or decreased only pursuant to a resolution adopted by the affirmative vote of a majority of the directors then in office.
Section 5.03 Vacancies in the Board . Newly created directorships resulting from any increase in the number of directors and any director vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled as provided in the Amended and Restated Bylaws of the Corporation (the “ Bylaws ”). Any director elected in accordance with this Section 5.05 shall hold office until such director’s successor shall have been duly elected and qualified. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
Section 5.04 Removal of Directors . A director shall hold office until the annual meeting of the year in which such director’s term expires and until such director’s successor shall be elected and shall qualify, subject, however, to prior death, resignation or removal from office. Any director or the entire Board of Directors of this Corporation may be removed with or without cause at any annual or special meeting of stockholders by the holders of a majority of the shares then entitled to vote at an election of directors.
Section 5.05 Written Ballot . The directors of the Corporation need not be elected by written ballot unless the Bylaws of the Corporation so provide.
Section 5.06 Approval of Related Party Transactions . All related party transactions (defined below) shall be approved by the Corporation’s Audit Committee. “ Related party transaction ” shall refer to transactions required to be disclosed pursuant to Regulation S-K, Item 404 promulgated by the Securities and Exchange Commission or any successor regulation.

 

 


 

Article VI
Section 6.01 Stockholder Action by Written Consent . Any corporate action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, and shall be delivered to the Corporation (either by hand or by certified or registered mail, return receipt requested) at its registered office in the State of Delaware or its principal place of business, or to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded.
Section 6.02 Calling of Special Meeting of Stockholders . Special meetings of the stockholders of the Corporation may be called only by (i) the chairperson of the Board of Directors, or (ii) the Board of Directors pursuant to a resolution adopted by a majority of the directors. Any other power of stockholders to call a special meeting is specifically denied.
Section 6.03 Business at Special Meeting of Stockholders . No business other than that stated in the notice shall be transacted at any special meeting of stockholders.
Section 6.04 Notice of Stockholder Proposals . Advanced notice of the proposal of business by stockholders, including, without limitation, nominations of directors, shall be given in the manner provided in the Bylaws, as amended and in effect from time to time.
Article VII
Section 7.01 Amendment or Modification of Bylaws . Subject to Article 11 of the Bylaws, the Board of Directors is expressly authorized and empowered to adopt, amend or repeal the Bylaws of the Corporation; provided, however, that the Bylaws adopted by the Board of Directors under the powers hereby conferred may be amended or repealed by the Board of Directors or by the affirmative vote of stockholders having at least a majority of the voting power of the then outstanding Voting Stock of the Corporation.
Article VIII
Section 8.01 Limitation of Director’s Liability . No director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, as the same exists or hereafter may be amended, or (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended to authorize the further elimination or limitation of liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by a amended DGCL. Any repeal or modification of this Article VIII by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification.
Article IX
Section 9.01 Right to Indemnification . The Corporation shall, to the fullest extent permitted by the provisions of Section 145 of the DGCL, as the same may be amended and supplemented (“ Section 145 ”), indemnify any director or officer of the Corporation whom it shall have the power to indemnify under said section (each a “ Covered Person ”) from and against any and all of the expenses, liabilities, or other matters referred to in or covered by Section 145 (“ Covered Matter ”).
Section 9.02 Authorization of Indemnification . Notwithstanding Section 9.01, the Corporation shall indemnify a Covered Person only as authorized in the specific case upon a determination that indemnification of the Covered Person is proper in the circumstances because such Covered Person has met the applicable standard of conduct set forth in Section 145. Such determination shall be made, with respect to a Covered Person who is a director or officer at the time of such determination, (1) by the Board of Directors by a majority vote of directors who were not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders of the Corporation.

 

 


 

Section 9.03 Advancement of Expenses . Expenses (including attorneys’ fees) incurred by an officer or director in defending any Covered Matter may be paid by the Corporation in advance of the final disposition of such Covered Matter upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such Covered Person is not entitled to be indemnified by the Corporation as authorized in this Article IX. Such expenses (including attorneys’ fees) incurred by former directors and officers or other Covered Persons may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate.
Section 9.04 Non-exclusive Rights . The indemnification and advancement of expenses provided by or granted pursuant to this Article IX shall not be deemed exclusive of any other rights to which Covered Persons may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office.
Section 9.05 Amendment or Repeal of Article IX . Any amendment or repeal of this Article IX shall not adversely affect any right or protection hereunder of any Covered Person in respect of any act or omission occurring prior to the time of such repeal or modification. The indemnification and advancement of expenses provided by or granted pursuant to this Article IX, unless otherwise provided when authorized or ratified, shall continue as to a Covered Person who has ceased to be a Covered Person and shall inure to the benefit of the heirs, executors, and administrators of such person.”
5. This Certificate was duly adopted in accordance with Sections 141(f), 242, and 245 of the DGCL by the unanimous written consent of the Corporation’s Board of Directors and by the stockholders having not less than the minimum number of votes required to adopt this Certificate, with written notice being provided to all stockholders in accordance with Section 228 of such law.
IN WITNESS WHEREOF, Standard Parking Corporation has caused this Second Amended and Restated Certificate of Incorporation to be executed by an authorized officer of Standard Parking Corporation as of the 2nd day of June, 2004.
         
  Standard Parking Corporation
 
 
  By:   /s/ James A. Wilhelm    
    Name:   James A. Wilhelm   
    Title:   President and Chief Executive Officer   
 

 

 

Exhibit 3.1.2
CERTIFICATE OF AMENDMENT
OF
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
STANDARD PARKING CORPORATION
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
Standard Parking Corporation, a Delaware corporation, does hereby certify as follows:
1. The name of the corporation (hereinafter called the “ Corporation ”) is Standard Parking Corporation. The date of the filing of the Second Amended and Restated Certificate of Incorporation of the Corporation (the “ Certificate of Incorporation ”) with the Secretary of State of the State of Delaware was June 2, 2004.
2. The Certificate of Incorporation is hereby amended by striking out Article IV, Section 4.01 thereof and by substituting in lieu of Article IV, Section 4.01, the following Article IV Section 4.01
“Section 4.01. Authorized Capital Stock . The total number of shares of stock that the Corporation shall have authority to issue is 21,300,010, of which (i) 21,300,000 shares shall be shares of Common Stock, par value $0.001 per share (the “ Common Stock ”) and (ii) 10 shares shall be shares of Preferred Stock, par value $0.01 per share (the “ Preferred Stock ”), issuable in one or more series as hereinafter provided. Except as otherwise expressly provided herein, the number of authorized shares of any class or classes of capital stock of the Corporation may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the stock of the Corporation entitled to vote generally in the election of directors (“ Voting Stock ”) irrespective of the provisions of Section 242(b)(2) of the DGCL or any corresponding provision hereinafter enacted.”
3. The Amendment of the Certificate of Incorporation herein certified has been duly adopted in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Amendment to be executed by its duly authorized officer this 7th day of January, 2008.
         
  STANDARD PARKING CORPORATION
 
 
  By:   /s/ ROBERT N. SACKS    
    Name:   Robert N. Sacks   
    Title:   Executive Vice President & General Counsel   

 

 

         
Exhibit 3.1.3
CERTIFICATE OF AMENDMENT
OF
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
STANDARD PARKING CORPORATION
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
Standard Parking Corporation, a Delaware corporation, does hereby certify as follows:
1. The name of the corporation (hereinafter called the “ Corporation ”) is Standard Parking Corporation. The date of the filing of the Certificate of Incorporation of the Corporation (the “ Certificate of Incorporation ”) with the Secretary of State of the State of Delaware was September 24, 1981.
2. The Second Amended and Restated Certificate of Incorporation, filed on June 2, 2004, as amended on January 7, 2008, is hereby amended by striking out Article IV, Section 4.01 thereof and by substituting in lieu of Article IV, Section 4.01, the following Article IV, Section 4.01:
“Section 4.01. Authorized Capital Stock. The amount of total authorized capital stock of this Corporation shall be 55,000,000 shares, divided as follows: (i) 50,000,000 shares of Common Stock, with $0.0001 par value (the “ Common Stock ”), and (ii) 5,000,000 shares of Preferred Stock, with $0.01 par value (the “ Preferred Stock ”).”
The Amendment of the Certificate of Incorporation herein certified has been duly adopted in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Amendment to be executed by its duly authorized officer this 29th day of April, 2010.
         
  STANDARD PARKING CORPORATION
 
 
  By:   /s/ Michael K. Wolf    
    Name:   Michael K. Wolf   
    Title:   Executive Vice President & Chief Administrative Officer   

 

 

Exhibit 3.1.4
CERTIFICATE OF AMENDMENT
OF
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
STANDARD PARKING CORPORATION
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
Standard Parking Corporation, a Delaware corporation, does hereby certify as follows:
1. The name of the corporation (hereinafter called the “ Corporation ”) is Standard Parking Corporation. The date of the filing of the Certificate of Incorporation of the Corporation (the “ Certificate of Incorporation ”) with the Secretary of State of the State of Delaware was September 24, 1981.
2. The Second Amended and Restated Certificate of Incorporation, filed on June 2, 2004, as amended on January 7, 2008, and April 29, 2010, is hereby amended by striking out Article IV, Section 4.01 thereof and by substituting in lieu of Article IV, Section 4.01, the following Article IV, Section 4.01:
“Section 4.01. Authorized Capital Stock. The amount of total authorized capital stock of this Corporation shall be 55,000,000 shares, divided as follows: (i) 50,000,000 shares of Common Stock, with $0.001 par value (the “ Common Stock ”), and (ii) 5,000,000 shares of Preferred Stock, with $0.01 par value (the “ Preferred Stock ”).”
The Amendment of the Certificate of Incorporation herein certified has been duly adopted in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Amendment to be executed by its duly authorized officer this 6th day of May, 2010.
         
  STANDARD PARKING CORPORATION
 
 
  By:   /s/ Robert N. Sacks    
    Name:   Robert N. Sacks   
    Title:   Executive Vice President, General Counsel & Secretary   
 

 

 

Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, James A. Wilhelm, certify that:
  1.  
I have reviewed this Form 10-Q of Standard Parking Corporation;
  2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
  3.  
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
  4.  
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) ) for the registrant and have:
  a.  
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
  b.  
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
  c.  
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
  d.  
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
  5.  
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
  a.  
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
  b.  
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
         
     
Date: August 6, 2010  By:   /s/ JAMES A. WILHELM    
    James A. Wilhelm,   
    Director, President and Chief Executive Officer
(Principal Executive Officer)
 
 

 

 

Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, G. Marc Baumann, certify that:
  1.  
I have reviewed this Form 10-Q of Standard Parking Corporation;
  2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
  3.  
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
  4.  
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
  a.  
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
  b.  
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
  c.  
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
  d.  
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
  5.  
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
  a.  
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
  b.  
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
         
     
Date: August 6, 2010  By:   /s/ G. MARC BAUMANN    
    G. Marc Baumann,    
    Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
 
 

 

 

Exhibit 31.3
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Daniel R. Meyer, certify that:
  1.  
I have reviewed this Form 10-Q of Standard Parking Corporation;
  2.  
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
  3.  
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
  4.  
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
  a.  
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
  b.  
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
  c.  
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
  d.  
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
  5.  
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
  a.  
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
  b.  
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
         
Date: August 6, 2010  By:   /s/ DANIEL R. MEYER    
    Daniel R. Meyer,    
    Senior Vice President Corporate Controller and Assistant Treasurer
(Principal Accounting Officer and Duly Authorized Officer)
 
 

 

 

Exhibit 32.1
Certification pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Form 10-Q of Standard Parking Corporation (the “Company”) for the quarter ended June 30, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of their knowledge and belief, that:
1) the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and
2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
         
     
Date: August 6, 2010  By:   /s/ JAMES A. WILHELM    
    Name:   James A. Wilhelm   
    Title:   Director, President and Chief Executive Officer
(Principal Executive Officer)
 
 
 
     
Date: August 6, 2010  By:   /s/ G. MARC BAUMANN    
    Name:   G. Marc Baumann   
    Title:   Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
 
 
 
     
Date: August 6, 2010  By:   /s/ DANIEL R. MEYER    
    Name:   Daniel R. Meyer   
    Title:   Senior Vice President, Corporate Controller and Assistant Treasurer
(Principal Accounting Officer and Duly Authorized Officer)
 
 
 
This certification shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, or the Exchange Act, or otherwise subject to the liability of Section 18 of the Exchange Act. Such certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.