SP Plus Corp - Quarter Report: 2009 March (Form 10-Q)

 

 

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

STANDARD PARKING CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware		16-1171179
(State or Other Jurisdiction of Incorporation or Organization)		(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 May 1, 2009, there were 15,270,057 shares of common stock of the registrant outstanding.

 

 

STANDARD PARKING CORPORATION
FORM 10-Q INDEX

Part I. Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of March 31, 2009 (Unaudited) and December 31, 2008			3
Condensed Consolidated Statements of Income (Unaudited) for the three months ended March 31, 2009 and March 31, 2008			4
Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2009 and March 31, 2008			5
Notes to Condensed Consolidated Interim Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18
Item 3. Quantitative and Qualitative Disclosures about Market Risk			30
Item 4. Controls and Procedures			31
Part II. Other Information
Item 1A. Risk Factors			32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			33
Item 6. Exhibits			34
Signatures			35
Index to Exhibits			36
Exhibit 31.1
Exhibit 31.2
Exhibit 31.3
Exhibit 32.1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

STANDARD PARKING CORPORATION

		March 31, 2009				December 31, 2008
		(Unaudited)				(see Note)
ASSETS
Current assets:
Cash and cash equivalents		$	9,788			$	8,301
Notes and accounts receivable, net			45,130				45,198
Prepaid expenses and supplies			2,357				2,496
Deferred taxes			3,253				3,253
Total current assets			60,528				59,248
Leasehold improvements, equipment and construction in progress, net			17,408				17,542
Advances and deposits			3,952				4,433
Long-term receivables, net			7,762				6,680
Intangible and other assets, net			7,182				6,916
Cost of contracts, net			11,077				10,872
Goodwill			123,316				123,550
Total assets		$	231,225			$	229,241
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable		$	45,486			$	46,446
Accrued and other current liabilities			29,223				31,416
Current portion of long-term borrowings			925				1,068
Total current liabilities			75,634				78,930
Deferred taxes			3,917				3,305
Long-term borrowings, excluding current portion			130,971				123,996
Other long-term liabilities			20,926				22,052
Stockholders’ equity (deficit) (1):
Common stock, par value $.001 per share; 21,300,000 shares authorized; 15,282,708 and 16,110,781 shares issued and outstanding as of March 31, 2009 and December 31, 2008, respectively			15				16
Additional paid-in capital			89,276				103,541
Accumulated other comprehensive income (loss)			(149	)			85
Treasury stock, at cost 12,651 and 627,423 shares as of March 31, 2009 and December 31, 2008, respectively			(252	)			(11,161	)
Accumulated deficit			(89,066	)			(91,464	)
Total Standard Parking Corporation stockholders’ (deficit) equity			(176	)			1,017
Noncontrolling interest			(47	)			(59	)
Total stockholders’ (deficit) equity			(223	)			958
Total liabilities and stockholders’ (deficit) equity		$	231,225			$	229,241

See Notes to Condensed Consolidated Interim Financial Statements.

STANDARD PARKING CORPORATION

		Three Months Ended
		March 31, 2009				March 31, 2008
Parking services revenue:
Lease contracts		$	34,700			$	37,694
Management contracts			38,293				35,880
			72,993				73,574
Reimbursed management contract expense			102,558				99,451
Total revenue			175,551				173,025
Cost of parking services:
Lease contracts			32,949				34,893
Management contracts			20,391				17,046
			53,340				51,939
Reimbursed management contract expense			102,558				99,451
Total cost of parking services			155,898				151,390
Gross profit:
Lease contracts			1,751				2,801
Management contracts			17,902				18,834
Total gross profit			19,653				21,635
General and administrative expenses (1)			12,761				11,411
Depreciation and amortization			1,487				1,371
Operating income			5,405				8,853
Other expenses (income):
Interest expense			1,436				1,518
Interest income			(67	)			(42	)
			1,369				1,476
Income before income taxes			4,036				7,377
Income tax expense			1,574				2,978
Net income			2,462				4,399
Less: Net income attributable to noncontrolling interest			(64	)			(122	)
Net income attributable to Standard Parking Corporation		$	2,398			$	4,277
Common stock data (2):
Net income per share:
Basic		$	0.15			$	0.24
Diluted		$	0.15			$	0.23
Weighted average shares outstanding:
Basic			15,296,282				18,122,846
Diluted			15,628,952				18,534,770

See Notes to Condensed Consolidated Interim Financial Statements.

STANDARD PARKING CORPORATION

		Three Months Ended
		March 31, 2009				March 31, 2008
Operating activities:
Net income		$	2,462			$	4,399
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization			1,390				1,367
Loss on sale of assets			82				4
Amortization of debt issuance costs			161				71
Non-cash stock-based compensation			527				53
Excess tax benefit related to stock option exercises			—				(319	)
(Reversal) provision for losses on accounts receivable			(36	)			10
Deferred income taxes			612				1,717
Change in operating assets and liabilities			(4,914	)			(3,009	)
Net cash provided by operating activities			284				4,293
Investing activities:
Acquisitions			—				(5,459	)
Purchase of leaseholds improvements and equipment			(847	)			(1,052	)
Cost of contracts purchased			(604	)			(96	)
Contingent purchase payments			(8	)			—
Net cash used in investing activities			(1,459	)			(6,607	)
Financing activities:
Repurchase of common stock			(3,884	)			(7,799	)
Proceeds from exercise of stock options			—				222
Tax benefit related to stock option exercises			—				319
Proceeds from senior credit facility			7,150				12,850
Distribution to noncontrolling interest			(52	)			(149	)
Payments on long-term borrowings			(29	)			(28	)
Payments on capital leases			(289	)			(456	)
Net provided by in financing activities			2,896				4,959
Effect of exchange rate changes on cash and cash equivalents			(234	)			(56	)
Increase in cash and cash equivalents			1,487				2,589
Cash and cash equivalents at beginning of period			8,301				8,466
Cash and cash equivalents at end of period		$	9,788			$	11,055
Supplemental disclosures:
Cash paid during the period for:
Interest		$	1,546			$	1,409
Income taxes			594				501

See Notes to Condensed Consolidated Interim Financial Statements.

STANDARD PARKING CORPORATION

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 period ended March 31, 2009 are not necessarily indicative of the results that might be expected for any other interim period or the fiscal year ending December 31, 2009. The financial statements presented in this report should be read in conjunction with the consolidated financial statements and footnotes thereto included in our 2008 Annual Report on Form 10-K filed March 13, 2009.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures in which the Company has more than 50% ownership interest. Noncontrolling interest recorded in the consolidated statement of income is the joint venture partner’s non-controlling interest in consolidated joint ventures. We have interests in twelve joint ventures, each of which operates between one and twenty-two parking facilities. Of the twelve joint ventures, nine are majority owned by us and are consolidated into our financial statements, and three are single purpose entities where we have a 50% interest or a minority interest. Investments in joint ventures where the Company has a 50% or less non-controlling ownership interest are accounted for under the equity method. All significant intercompany profits, transactions and balances have been eliminated in consolidation.

Variable Interest Entities

Commencement of

Nature of

Equity

Operations

Activities

% Ownership

Locations

Other investments in VIEs

Sep 93 — Jun 08

Management of parking lots, shuttle operations and parking meters

50

%

Various states

The existing VIEs in which we have a variable interest are not consolidated into our financial statements because we are not the primary beneficiary.

2. Stock Split

On December 4, 2007, the Board of Directors declared a 2-for-1 stock split in the form of a 100% common stock dividend to stockholders of record as of the close of business on January 8, 2008, which was distributed on January 17, 2008. All share and per share data included in the consolidated financial statements and accompanying notes have been adjusted to reflect this stock split.

3. Stock-Based Compensation

The Company accounts for share-based payment awards in accordance with SFAS No. 123R, “Share-Based Payment,” as interpreted by SAB No. 107. Under the provisions of SFAS No. 123R, share-based compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense 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 IPO. 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 March 31, 2009, 123,149 shares remained available for award under the Plan. In most cases, options granted under the Plan vest at the end of a three-year period from the date of the award. Options are granted with an exercise price equal to the closing price at the date of grant.

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 three months ended March 31, 2009.

On January 24, 2008, we issued vested stock grants totaling 1,084 shares to a director. The total value of the grant was $25 and is included in general and administrative expenses.

The Company recognized no stock based compensation expense related to stock options for the three months ended March 31, 2009 and $26 of stock based compensation expense for the three months ended March 31, 2008, which is included in general and administrative expense. As of March 31, 2009, there was 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 new 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 are achieved. On February 23, 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 16,404 shares were issued subject to vesting upon the achievement of the performance goals. On April 13, 2007, an additional 13,294 shares of the performance restricted stock were issued subject to vesting upon the achievement of the three year performance goals to the remaining participating executives. On December 31, 2007, 3,849 shares were released free of restrictions in accordance with the achievement of the first year performance goals. On December 31, 2008, 7,072 shares were released free of restrictions in accordance with the achievement of the second year performance goals.

In accordance with SFAS No. 123R, recording of stock-based compensation expense for awards with performance conditions is based on the probable outcome of that performance condition. The Company recognized $10 and $27 of stock-based compensation expense and $10 and $27 of cash compensation expense related to the performance-based incentive program, for the three months ended March 31, 2009 and 2008, respectively, which is included in general and administrative expenses. As of March 31, 2009, there was $63 of unrecognized compensation costs related to the performance-based incentive program which is expected to be recognized over a weighted average period of 0.75 years.

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’s retirement age.

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 SFAS No. 123R, we estimate 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 $517 of stock based compensation expense related to the restricted stock units for the three months ended March 31, 2009, which is included in general and administrative expense. As of March 31, 2009, there was $11,303 of unrecognized stock-based compensation costs, net of estimated forfeitures, related to the restricted stock units that is expected to be recognized over a weighted average period of approximately 7.7 years.

4. Net Income Per Common Share

In June 2008, the FASB issued FSP EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities.” FSP EITF 03-6-1 was issued to clarify that unvested share-based payment awards with a right to receive nonforfeitable dividends are participating securities. This FSP also provides guidance on how to allocate earnings to participating securities and compute basic earnings per share using the two-class method. FSP EITF 03-6-1 was effective for fiscal years beginning after December 15, 2008. The Company adopted FSP EITF 03-6-1 on January 1, 2009. The adoption of this FSP did not have a material impact on the Company’s earnings per share calculations.

A reconciliation of the weighted average basic common shares outstanding to the weighted average diluted common shares outstanding is as follows:

		Three months ended March 31,
		2009				2008
Weighted average common shares outstanding — Basic			15,296,282				18,122,846
Effect of dilutive options			332,670				411,924
Weighted average common shares outstanding — Diluted			15,628,952				18,534,770
Net income per share:
Basic		$	0.15			$	0.24
Diluted		$	0.15			$	0.23

There were no anti-dilutive options for the three months ended March 31, 2009 and 2008.

For the three months ended March 31, 2009 and 2008, 18,777 and 25,849 shares, respectively, 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.

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 Not Yet Adopted

In April 2009, the Financial Accounting Standards Board (FASB) issued three FSPs related to fair value measurements. The first, FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, provides guidance on determining whether a market is inactive and whether transactions in that market are distressed. The second FSP issued, FSP FAS 115-2, FAS 124-2, and EITF 99-20-2, Recognition and Presentation of Other-Than-Temporary Impairments, provides guidance on how to assess whether an asset has experienced an other-than-temporary impairment and, if so, where the impairment should be recorded in the financial statements. The third FSP issued, FSP FAS 107-1 and APB 28-1, Interim Disclosures About Fair Value of Financial Instruments, requires that disclosures currently required under SFAS No. 107, Disclosures about Fair Value of Financial Instruments, be presented for interim periods as well as annual periods. These FSPs are first effective for interim periods ending after June 15, 2009 and are not expected to have a material impact on the Company’s consolidated financial statements.

Accounting Standards Adopted

In September 2006, the FASB issued Statement of Financial Accounting Standards, Fair Value Measurements (“Statement No. 157”). Statement No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. The statement does not require new fair value measurements, but is applied to the extent that other accounting pronouncements require or permit fair value measurements. The statement emphasizes that fair value is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or liability. Companies are required to disclose the extent to which fair value is used to measure assets and liabilities, the inputs used to develop the measurements, and the effect of certain of the measurements on earnings (or changes in net assets) for the period. On January 1, 2008, the Company adopted the provisions of Statement No. 157 related to financial assets and liabilities, as well as other liabilities carried at fair value on a recurring basis. These provisions did not have a material impact on the Company’s consolidated financial statements. On January 1, 2009, the Company adopted the provisions of Statement No. 157 related to nonfinancial assets and liabilities. The adoption of these provisions will not have a material impact on the Company’s consolidated financial statements.

On January 1, 2009, we adopted the provisions of Statement No. 141 (Revised 2007), Business Combinations (“Statement No. 141R”). Statement No. 141R establishes principles and requirements on how an acquirer recognizes and measures in its financial statements identifiable assets acquired, liabilities assumed, noncontrolling interests in the acquiree, goodwill or gain from a bargain purchase and accounting for transaction costs. Additionally, Statement No. 141R determines what information must be disclosed to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The adoption of Statement No. 141R did not have an impact on our consolidated financial statements, but will have an impact on the accounting for future business combinations.

On January 1, 2009, we adopted the provisions of Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51. (“Statement No. 160”). Statement No. 160 requires entities to report noncontrolling (minority) interests as a component of shareholders’ equity on the balance sheet; include all earnings of a consolidated subsidiary in consolidated results of operations; and treat all transactions between the parent and its noncontrolling interest holder that increase or decrease the noncontrolling interest as equity provided the parent does not lose control. The adoption of Statement 160 is reflected in these financial statements.

6. Acquisitions

During the year ended December 31, 2008, the Company completed two acquisitions. Consideration for all acquisitions was $8,505 of which $6,008 was paid in cash and $2,497 in a discounted non-interest bearing note to be paid in annual installments of $600, commencing February 2009 and an estimated $187 to be paid in the future based upon financial performance compared to forecast. On March 31, 2009, we entered into a settlement agreement with the principals of G.O. Parking which amended the installment payment agreement, provided for a termination fee and a reimbursement of legal fees we incurred for post acquisition disputes. On April 14th we paid G.O. parking $1,680 in lieu of the original installment payment obligation. In addition, the Company paid and capitalized $310 in acquisition costs. A summary of the acquisitions follows:

•

In November 2008, we acquired certain assets of Downtown Valet, LLC, a valet parking operator in Seattle, Washington.

•

In February 2008, we acquired certain assets of G.O. Parking, a parking operator in Chicago, Illinois.

The acquisitions of Downtown Valet, LLC and G.O. Parking represent acquisitions of businesses, as defined by EITF Issue No. 98-3.

These acquisitions consisted of goodwill of $3,007, cost of contract of $5,314, intangible assets of $233 and equipment of $261. At December 31, 2008, we accrued for a contingency payment of $225 related to a 2007 acquisition.

The acquisitions for 2008 were accounted for using the purchase method of accounting. The Company financed the acquisitions through additional term borrowings under the senior credit facility and existing cash. The results of operations of these acquisitions are included in the Company’s consolidated statement of income from the date of acquisition. None of the acquisitions, either individually or in the aggregate, is considered material to the Company.

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				March 31, 2009				December 31, 2008
						(Unaudited)
Equipment		2-10 years				$	29,764			$	29,615
Leasehold improvements		Shorter of lease term or economic life up to 10 years					10,515				10,340
Construction in progress							6,626				6,517
							46,905				46,472
Less accumulated depreciation and amortization							(29,497	)			(28,930	)
Leasehold improvements, equipment and construction in progress, net						$	17,408			$	17,542

Depreciation expense was $966 and $994 for the three months ended March 31, 2009 and 2008, respectively. Depreciation includes losses on abandonments of leasehold improvements and equipment of $97 and $4 in 2009 and 2008, 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:

		March 31, 2009				December 31, 2008
		(Unaudited)
Cost of contracts		$	15,906			$	15,303
Accumulated amortization			(4,829	)			(4,431	)
Cost of contracts, net		$	11,077			$	10,872

During 2008, we retired fully amortized contracts in the amount of $29,177 that had expired.

Amortization expense related to cost of contracts was $397 and $305 for the three months ended March 31, 2009 and 2008, respectively. The weighted average useful life is 10 years for 2009 and 9 years for 2008.

9. Goodwill and Intangible Assets

In accordance with FASB Statement No. 142, “Goodwill and Other Intangible Assets”, goodwill was assigned to reporting units that we now present based upon the specific Region where the assets acquired and associate goodwill resided.

As a result of the acquisitions which occurred during 2008 and 2007, our contingent payment obligations outstanding as of March 31, 2009 total $1,415 which may be paid over time provided certain performance criteria is achieved. Such contingent payments will be accounted for as additional purchase price if the performance criteria is achieved; accordingly, the contingent payment obligation is not recorded at December 31, 2008.

The following table reflects the changes in the carrying amounts of goodwill by reported segment for the three months ended March 31, 2009 (Unaudited).

		Region				Region				Region				Region
		One				Two				Three				Four				Total
Balance as of January 1, 2009		$	58,454			$	15,479			$	27,040			$	22,577			$	123,550
Adjustments to purchase price			(100	)			—				—				—				(100	)
Contingency payments related to acquisitions			—				—				8				—				8
Foreign currency translation			—				(142	)			—				—				(142	)
Balance as of March 31, 2009		$	58,354			$	15,337			$	27,048			$	22,577			$	123,316

10. Long-Term Receivables, Net

Long-term receivables, net, consist of the following:

		Amount Outstanding
		March 31, 2009				December 31, 2008
		(Unaudited)
Bradley International Airport
Deficiency payments		$	7,043			$	5,961
Other Bradley related, net			3,203				3,203
Valuation allowance			(2,484	)			(2,484	)
Total long-term receivables, net		$	7,762			$	6,680

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 expects to receive a management fee for managing this parking facility.

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; $9,648 is the guaranteed minimum payment for calendar year 2009. The annual minimum guaranteed payment to the State by the trustee for the three months ended March 31, 2009 and 2008 was $2,412 and $2,362, 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.

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 three months ended March 31, 2009, we made deficiency payments (net of repayments received) of $1,082 and we did not record or receive any interest and premium income deficiency repayments from the trustee. In the three months ended March 31, 2008, we made deficiency payments (net of repayments received) of $952 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 March 31, 2009 and March 31, 2008.

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 March 31, 2009 and December 31, 2008, we have a receivable of $7,043 and $5,961, 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:

		March 31, 2009				December 31, 2008
		(Unaudited)
Deficiency payments:
Balance at beginning of period		$	5,961			$	4,135
Deficiency payments made			1,082				2,153
Deficiency repayment received			—				(327	)
Balance at end of period			7,043				5,961
Other Bradley related			3,203				3,203
Valuation allowance			(2,484	)			(2,484	)
Total long-term receivables		$	7,762			$	6,680

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 $3,750 have not been recognized as of March 31, 2009 and no management fee income was recognized during the three months ending March 31, 2009, 2008, and 2007.

11. Borrowing Arrangements

Long-term borrowings, in order of preference, consist of:

						Amount Outstanding
		Due Date				March 31, 2009				December 31, 2008
						(Unaudited)
Senior credit facility		June 2013				$	127,750			$	120,600
Capital lease obligations		Various					2,750				3,039
Obligations on Seller notes and other		Various					1,396				1,425
							131,896				125,064
Less current portion							925				1,068
						$	130,971			$	123,996

Senior Credit Facility

On July 15, 2008, we entered into an amended and restated credit agreement which restated our credit facility dated June 29, 2006.

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.

This revolving senior credit facility bears interest, at our option, at either (1) LIBOR plus the applicable LIBOR Margin ranging 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 the applicable Base Rate Margin ranging 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%.

The 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 the senior credit facility out of the proceeds of future issuances of debt or equity securities and asset sales, subject to certain customary exceptions. The senior credit facility is secured by substantially all of our assets and all assets acquired in the future (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 March 31, 2009.

The weighted average interest rate on our senior credit facility at March 31, 2009 and December 31, 2008 was 3.0% and 3.6%, 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 3.1% and 3.8% at March 31, 2009 and December 31, 2008, respectively.

At March 31, 2009, we had $18,884 of letters of credit outstanding under the senior credit facility, borrowings against the senior credit facility aggregated $127,750, and we had $19,346 available under the senior credit facility.

We have entered into various financing agreements, which were used for the purchase of equipment.

12. Stock Repurchases

2009 Stock Repurchases

In July 2008, the 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. As of December 31, 2008, $22,857 remained available for repurchase under this authorization.

During the first quarter of 2009, we repurchased from third party shareholders 93,600 shares at an average price of $18.23 per share, including average commissions of $0.03 per share, on the open market. Our majority shareholder sold to us 119,701 shares in the first quarter at an average price of $18.20 per share. The total value of the first quarter transactions was $3,884. 200,650 shares were retired during the first quarter of 2009 and the remaining 12,651 shares were retired in April 2009.

As of March 31, 2009, $18,973 remained available for repurchase under the July 2008 authorization by the Board of Directors.

2008 Stock Repurchases

In December 2007, the Board of Directors authorized us to repurchase shares of our common stock, on the open market or through private purchases, up to $25,000 in aggregate. As of December 31, 2007, $22,882 remained available for repurchase under this authorization.

During the first quarter of 2008, we repurchased from third party shareholders 257,125 shares at an average price of $20.79 per share, including average commissions of $0.03 per share, on the open market. Our majority shareholder sold to us 120,111 shares in the first quarter at an average price of $20.76 per share. The total value of the first quarter transactions was $7,839. 214,500 shares were retired in March 2008 and the remaining 162,736 shares were retired in June 2008.

13. Business Unit Segment Information

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information (“SFAS 131”), establishes annual and interim reporting standards for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, and about which separate financial information is regularly evaluated by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources. The CODM, as defined by SFAS 131, is the Company’s President and Chief Executive Officer (“CEO”).

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.

The Company is managed based on regions administered by executive vice presidents. Three regions are generally organized geographically with the fourth region encompassing major airports and transportation operations nationwide. The following is a summary of revenues (excluding reimbursement of management contract expenses) and gross profit by regions for the three months ended March 31, 2009 and 2008. Information related to prior periods has been recast to conform to the current region alignment.

In accordance with SFAS 131, 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
		March 31, 2009								March 31, 2008
						Gross Margin								Gross Margin
Revenues:
Region One
Lease contracts		$	16,980							$	16,847
Management contracts			12,665								12,147
Total Region One			29,645								28,994
Region Two
Lease contracts			3,702								3,653
Management contracts			5,109								4,547
Total Region Two			8,811								8,200
Region Three
Lease contracts			4,081								4,980
Management contracts			12,124								11,690
Total Region Three			16,205								16,670
Region Four
Lease contracts			9,913								12,162
Management contracts			8,317								7,788
Total Region Four			18,230								19,950
Other
Lease contracts			24								52
Management contracts			78								(292	)
Total Other			102								(240	)
Reimbursed expense			102,558								99,451
Total revenues		$	175,551							$	173,025
Gross Profit
Region One
Lease contracts			602				4	%			844				5	%
Management contracts			6,553				52	%			6,730				55	%
Total Region One			7,155								7,574
Region Two
Lease contracts			242				7	%			586				16	%
Management contracts			2,336				46	%			2,691				59	%
Total Region Two			2,578								3,277
Region Three
Lease contracts			344				8	%			(34	)			(1	)%
Management contracts			5,298				44	%			5,360				46	%
Total Region Three			5,642								5,326
Region Four
Lease contracts			522				5	%			1,271				10	%
Management contracts			4,090				49	%			3,573				46	%
Total Region Four			4,612								4,844
Other
Lease contracts			41				171	%			134				258	%
Management contracts			(375	)			(481	)%			480				(188	)%
Total Other			(334	)							614
Total gross profit			19,653								21,635
General and administrative expenses			12,761								11,411
General and administrative expense percentage of gross profit			65	%							53	%
Depreciation and amortization			1,487								1,371
Operating income			5,405								8,853
Other expenses (income):
Interest expense			1,436								1,518
Interest income			(67	)							(42	)
			1,369								1,476
Income before income taxes			4,036								7,377
Income tax expense			1,574								2,978
Net income			2,462								4,399
Less: Net income attributable to noncontrolling interest			(64	)							(122	)
Net income attributable to Standard Parking Corporation		$	2,398							$	4,277

Region One encompasses operations in Delaware, District of Columbia, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Rhode Island, Vermont, Virginia, and Wisconsin.

Region Two encompasses operations in Alabama, Alberta, British Columbia, Florida, Georgia, Louisiana, Ontario, Tennessee, and Texas.

Region Three encompasses operations in Arizona, California, Colorado, Hawaii, Nevada, 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:

		For the three months ended
		March 31, 2009				March 31, 2008
		(Unaudited)
Net income		$	2,462			$	4,399
Revaluation of interest rate cap			—				95
Effect of foreign currency translation			(234	)			(55	)
Comprehensive income			2,228				4,439
Less: Net income attributable to noncontrolling interest			(64	)			(122	)
Comprehensive income attributable to Standard Parking Corporation		$	2,164			$	4,317

15. Income Taxes

For the three months ended March 31, 2009, the Company recognized income tax expense of $1,574 on pre-tax earnings of $4,036 compared to $2,978 income tax expense on pre-tax earnings of $7,377 for the three months ended March 31, 2008. Income tax expense is based on a projected annual effective tax rate of approximately 39.6% for the three months ended March 31, 2009 compared to approximately 41.0% for the three months ended March 31, 2008. 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, FASB issued Statement of Financial Accounting Standards Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS 109, Accounting for Income Taxes. FIN 48 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 FIN 48 did not have an impact on the Company’s financial position or results from operations. As of March 31, 2009, the Company has not identified any 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 March 31, 2009 are shown below:

2004 – 2008		United States — federal income tax
2003 – 2008		United States — state and local income tax
2004 – 2008		Canada

16. Hurricane Katrina

On May 2, 2008, we entered into a definitive settlement agreement with our insurance carrier to finalize all of our open claims with respect to Hurricane Katrina. The settlement agreement was for $4,225 of which $2,000 was received previously. We were required to reimburse the owners of the leased and managed locations for property damage of approximately $2,228. After payment of settlement fees, expenses and other amounts due under contractual arrangements, in the second quarter of 2008, we recorded $1,997 in pre-tax income, of which $1,577 was recorded as revenue and $420 was recorded as a reduction of general and administrative expenses.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion will assist in understanding our financial position and results of operations. The information below should be read in conjunction with the consolidated financial statements, the related notes to the consolidated financial statements and our Form 10-K for the year ended December 31, 2008.

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in this Quarterly Report generally. You should carefully review the risks described in this Quarterly Report as well as the risks described in other documents filed by us and from time to time with the Securities and Exchange Commission. In addition, when used in this Quarterly Report, the words “anticipates,” “plans,” “believes,” “estimates,” and “expects” and similar expressions are generally intended to identify forward-looking statements. Such statements are subject to a number of risks and uncertainties. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by these forward-looking statements or us. We undertake no obligation to revise these forward-looking statements to reflect any future events or circumstances.

We continue to be subject to certain factors that could cause our results to differ materially from expected and historical results (see the “Risk Factors” set forth in our 2008 Form 10-K filed on March 13, 2009 and this Form 10-Q).

Overview

Our Business

We manage parking facilities in urban markets and at airports across the United States and in three Canadian provinces. We do not own any facilities, but instead enter into contractual relationships with property owners or managers.

We operate our clients’ properties through two types of arrangements: management contracts and leases. Under a management contract, we typically receive a base monthly fee for managing the facility, and we may also receive an incentive fee based on the achievement of facility performance objectives. We also receive fees for ancillary services. Typically, all of the underlying revenues and expenses under a standard management contract flow through to our clients rather than to us. However, some management contracts, which are referred to as “reverse” management contracts, usually provide for larger management fees and require us to pay various costs. Under lease arrangements, we generally pay to the property owner either a fixed annual rent, a percentage of gross customer collections or a combination thereof. We collect all revenues under lease arrangements and we are responsible for most operating expenses, but we are typically not responsible for major maintenance, capital expenditures or real estate taxes. Margins for lease contracts vary significantly, not only due to operating performance, but also due to variability of parking rates in different cities and varying space utilization by parking facility type and location. As of March 31, 2009, we operated 90% of our locations under management contracts and 10% under leases.

In evaluating our financial condition and operating performance, management’s primary focus is on our gross profit, total general and administrative expense and general and administrative expense as a percentage of our gross profit. Although the underlying economics to us of management contracts and leases are similar, the manner in which we are required to account for them differs. Revenue from leases includes all gross customer collections derived from our leased locations (net of parking tax), whereas revenue from management contracts only includes our contractually agreed upon management fees and amounts attributable to ancillary services. Gross customer collections at facilities under management contracts, therefore, are not included in our revenue. Accordingly, while 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 March 31, 2009, 90% of our locations were operated under management contracts and 91% of our gross profit for the period ended March 31, 2009 was derived from management contracts. Only 52% of total revenue (excluding reimbursement of management contract expenses), however, was from management contracts because under those contracts the revenue collected from parking customers belongs to our clients. Therefore, gross profit and total general and administrative expense, rather than revenue, are management’s primary focus.

General Business Trends

We believe that sophisticated commercial real estate developers and property managers and owners recognize the potential for parking and related services to be a profit generator rather than a cost center. Often, the parking experience makes both the first and the last impressions on their properties’ tenants and visitors. By outsourcing these services, they are able to capture additional profit by leveraging the unique operational skills and controls that an experienced parking management company can offer. Our ability to consistently deliver a uniformly high level of parking and related services and maximize the profit to our clients improves our ability to win contracts and retain existing locations. Our location retention rate for the twelve month period ended March 31, 2009 was 89%, compared to 92% for the year-ago period, which also reflects our decision not to renew, or terminate, unprofitable contracts.

For the three months ended March 31, 2009 compared to the three months ended March 31, 2008, average gross profit per location decreased by 8.1% from $9.8 thousand to $9.0 thousand, primarily due to the economic downturn and a negative fluctuation in prior years insurance reserve adjustments.

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:

		March 31, 2009				December 31, 2008				March 31, 2008
Managed facilities			1,960				1,986				1,966
Leased facilities			225				229				244
Total facilities			2,185				2,215				2,210

Revenue

We recognize parking services revenue from lease and management contracts as the related services are provided. Substantially all of our revenues come from the following two sources:

•

Parking services revenue—lease contracts. Parking services revenues related to lease contracts consist of all revenue received at a leased facility, including parking receipts (net of parking tax), consulting and real estate development fees, gains on sales of contracts and payments for exercising termination rights.

•

Parking services revenue—management contracts. Management contract revenue consists of management fees, including both fixed and performance-based fees, and amounts attributable to ancillary services such as accounting, equipment leasing, payments received for exercising termination rights, consulting, 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 revenues do not include gross customer collections at the managed locations as this revenue belongs to the property owner rather than to us. Management contracts generally provide us with a management fee regardless of the operating performance of the underlying facility.

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.

Reimbursement of Management Contract Expense

Reimbursement of management contract expense consists of the direct reimbursement from the property owner for operating expenses incurred under a management contract.

Cost of Parking Services

Our cost of parking services consists of the following:

•

Cost of parking services—lease contracts. The cost of parking services under a lease arrangement consists of contractual rental fees paid to the facility owner and all operating expenses incurred in connection with operating the leased facility. Contractual fees paid to the facility owner are generally based on either a fixed contractual amount or a percentage of gross revenue or a combination thereof. Generally, under a lease arrangement we are not responsible for major capital expenditures or real estate taxes.

•

Cost of parking services—management contracts. The cost of parking services under a management contract is generally the responsibility of the facility owner. As a result, these costs are not included in our results of operations. However, our reverse management contracts, which typically provide for larger management fees, do require us to pay for certain costs.

Gross Profit

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

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, chairman of the board 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.

Valuation Allowance Related to Long-Term Receivables

Valuation allowance related to long-term receivables is recorded when there is an extended length of time estimated for collection of long-term receivables.

Seasonality

During the first quarter of each year, seasonality impacts our performance with regard to moderating revenues, with the reduced levels of travel most clearly reflected in the parking activity associated with our airport and hotel businesses as well as increases in certain costs of parking services, such as snow removal, both of which negatively affect gross profit. Although our revenues and profitability are affected by the seasonality of the business, general and administrative costs are relatively stable throughout the fiscal year.

Results of Operations

Three Months ended March 31, 2009 Compared to Three Months ended March 31, 2008

The following table presents the material factors that impact our revenue.

		Three Months Ended
		March 31,								Variance
		2009				2008				Amount				%
						(in millions)
Lease contract revenue:
New location		$	2.4			$	0.2			$	2.2				1100.0
Contract expirations			0.3				2.4				(2.1	)			(87.5	)
Same location:
Short-term parking			20.3				22.2				(1.9	)			(8.6	)
Monthly parking			9.5				10.0				(0.5	)			(5.0	)
Total same location			29.8				32.2				(2.4	)			(7.5	)
Conversions			—				1.6				(1.6	)			(100.0	)
Acquisitions			2.2				1.3				0.9				69.2
Total lease contract revenue		$	34.7			$	37.7			$	(3.0	)			(8.0	)
Management contract revenue:
New location		$	3.0			$	0.3			$	2.7				900.0
Contract expirations			0.4				4.8				(4.4	)			(91.7	)
Same location			31.9				28.6				3.3				11.5
Conversions			0.1				—				0.1				100.0
Acquisitions			2.9				2.2				0.7				31.8
Total management contract revenue		$	38.3			$	35.9			$	2.4				6.7
Reimbursement of management contract expense		$	102.3			$	99.5			$	2.8				2.8

Parking services revenue—lease contracts. Lease contract revenue decreased $3.0 million, or 8.0%, to $34.7 million in the first quarter of 2009, compared to $37.7 million in the first quarter of 2008. The decrease resulted primarily from a decrease in same location short-term parking revenue and conversions, which was partially offset by increases from our acquisitions. Increases from new locations offset decreases from expired contracts. Same location revenue for those facilities, which as of March 31, 2009 have been operational a minimum of 24 months, decreased 7.5%. Revenue associated with contract expirations relates to contracts that expired during the current period.

Parking services revenue—management contracts. Management contract revenue increased $2.4 million, or 6.7%, to $38.3 million for the first quarter of 2009, compared to $35.9 million in the first quarter of 2008. The increase resulted primarily from same location revenue, new locations, acquisitions and conversions, partially offset by decreases in revenue from contract expirations. Same locations revenue for those facilities, which as of March 31, 2009 have been operational a minimum of 24 months, increased 11.5%.

Reimbursement of management contract expense. Reimbursement of management contract expenses increased $2.8 million, or 2.8%, to $102.3 million in the first quarter of 2009, compared to $99.5 million in the first quarter of 2008. This increase resulted from additional reimbursements for costs incurred on behalf of owners.

The following table presents the material factors that impact our cost of parking services.

		Three Months Ended
		March 31,								Variance
		2009				2008				Amount				%
						(in millions)
Cost of parking services lease contracts:
New location		$	2.4			$	0.2			$	2.2				1100.0
Contract expirations			0.3				2.3				(2.0	)			(87.0	)
Same location:
Rent			21.1				22.5				(1.4	)			(6.2	)
Payroll and payroll related			4.0				4.4				(0.4	)			(9.1	)
Other operating costs			2.8				2.8				—				—
Total same location			27.9				29.7				(1.8	)			(6.1	)
Conversions			—				1.4				(1.4	)			(100.0	)
Acquisitions			2.3				1.3				1.0				76.9
Total cost of parking services lease contracts		$	32.9			$	34.9			$	(2.0	)			5.7
Cost of parking services management contracts:
New locations		$	1.5			$	0.2			$	1.3				650.0
Contract expirations			0.4				3.0				(2.6	)			(86.7	)
Same location:
Payroll and payroll related			8.2				7.3				0.9				12.3
Other operating expenses			8.2				5.1				3.1				60.8
Total same location			16.4				12.4				4.0				32.3
Conversions			—				—				—				—
Acquisitions			2.1				1.4				0.7				50.0
Total cost of parking services management contracts		$	20.4			$	17.0			$	3.4				20.0
Reimbursed management contract expense		$	102.6			$	99.5			$	3.1				3.1

Cost of parking services—lease contracts. Cost of parking services for lease contracts decreased $2.0 million, or 5.7%, to $32.9 million for the first quarter of 2009, compared to $34.9 million in the first quarter of 2008. The decrease resulted primarily from decreases in costs related to contract expirations, same locations and conversions, partially offset by increases in costs related to new locations and acquisitions. Same locations costs for those facilities which as of March 31, 2009 have been operational a minimum of 24 months decreased 6.1%. Same location rent expense for lease contracts decreased primarily as a result of contingent rental payments on the decrease in revenue for same locations.

Cost of parking services—management contracts. Cost of parking services for management contracts increased $3.4 million, or 20.0%, to $20.4 million for the first quarter of 2009, compared to $17.0 million in the first quarter of 2008. The increase resulted primarily from increases in costs related to same locations, new locations and acquisitions, partially offset by decreases in costs related to contract expirations. There was no impact on costs for those management contracts which converted to a lease contract. Same location costs for those facilities, which as of March 31, 2009 have been operational a minimum of 24 months, increased 32.3%. Same location increase in operating expenses for management contracts primarily result from negative fluctuations in prior years insurance reserve adjustments, increases in snow removal costs and garage supplies and the cost of providing insurance.

Reimbursed management contract expense. Reimbursed management contract expense increased $3.1 million, or 3.1%, to $102.6 million for the first quarter of 2009, compared to $99.5 million in the first quarter of 2008. This increase resulted from additional reimbursed cost incurred on the behalf of owners.

The following table presents the material changes to the gross profit and gross profit percentage on our lease and management contracts.

		Three Months Ended
		March 31,								Variance
		2009				2008				Amount				%
						(in millions)
Gross profit lease contracts:
New location		$	—			$	—			$	—				—
Contract expirations			—				0.1				(0.1	)			(100.0	)
Same location			1.9				2.5				(0.6	)			(24.0	)
Conversions			—				0.2				(0.2	)			(100.0	)
Acquisitions			(0.1	)			—				(0.1	)			(100.0	)
Total gross profit lease contracts		$	1.8			$	2.8			$	(1.0	)			(35.7	)
Gross profit percentage lease contracts:
New location			—	%			—	%
Contract expirations			—	%			4.2	%
Same location			6.4	%			7.8	%
Conversions			—	%			12.5	%
Acquisitions			(4.5	)%			—	%
Total gross profit percentage lease contracts			5.2	%			7.4	%
Gross profit management contracts:
New location		$	1.5			$	0.1			$	1.4				1400.0
Contract expirations			—				1.8				(1.8	)			(100.0	)
Same location			15.5				16.2				(0.7	)			(4.3	)
Conversions			0.1				—				0.1				100.0
Acquisitions			0.8				0.8				—				—
Total gross profit management contracts		$	17.9			$	18.9			$	(1.0	)			(5.3	)
Gross profit percentage management contracts:
New location			50.0	%			33.3	%
Contract expirations			—	%			37.5	%
Same location			48.6	%			56.6	%
Conversions			100.0	%			—	%
Acquisitions			27.6	%			36.4	%
Total gross profit percentage management contracts			46.7	%			52.6	%

Gross profit—lease contracts. Gross profit for lease contracts decreased $1.0 million, or 35.7%, to $1.8 million for the first quarter of 2009, compared to $2.8 million in the first quarter of 2008. Gross profit percentage for lease contracts decreased to 5.2% for the first quarter of 2009, compared to 7.4% in the first quarter of 2008. Gross profit lease contracts decreases on same locations were primarily the result of a decrease in short-term parking revenue.

Gross profit—management contracts. Gross profit for management contracts decreased $1.0 million, or 5.3%, to $17.9 million for the first quarter of 2009, compared to $18.9 million in the first quarter of 2008. Gross profit percentage for management contracts decreased to 46.7% for the first quarter of 2009 compared to 52.6% in the first quarter of 2008. Gross profit for management contracts decreases were primarily the result of our same locations and our contract expirations. Gross profit percentage on same locations accounted for most of the decline on a percentage basis, primarily due to negative fluctuations in prior years insurance reserve adjustments, increases in snow removal costs and garage supplies and the cost of providing insurance.

General and administrative expenses. General and administrative expenses increased $1.4 million, or 12.3%, to $12.8 million for the first quarter of 2009, compared to $11.4 million in the first quarter of 2008. This increase resulted primarily from increases in restricted stock units $0.5 million, payroll and payroll related expenses of $0.3 million, increases in legal fees of $0.7 million, related to the potential sale by the Company’s majority shareholder of all or substantially all of its stake in the Company, which was partially offset by decreases in other costs of $0,1million.

Interest expense. Interest expense decreased $0.1 million, or 6.6%, to $1.4 million for the first quarter of 2009, as compared to $1.5 million in the first quarter 2008 This decrease resulted from the decrease in the weighted average interest rate on our senior credit facility for the period ended March 31, 2009 of 3.0% as compared to 4.0% for the period ended March 31, 2008. Average borrowings on our senior credit facility increased $49.9 million for the first quarter of 2009 as compared to the first quarter of 2008.

Interest income. Interest income remained flat at $0.1 million for the first quarter of 2009 and the first quarter of 2008.

Income tax expense. Income tax expense decreased $1.4 million, or 46.7%, to $1.6 million for the first quarter of 2009, as compared to $3.0 million in the first quarter of 2008. A decrease in our pre-tax income resulted in a $1.3 million decrease in income tax expense and a decrease in our effective tax rate. Our effective tax rate was 39.6% for the first quarter of 2009 and 41.0% for the first quarter of 2008.

Segments

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information (“SFAS 131”), establishes annual and interim reporting standards for an enterprise’s operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, and about which separate financial information is regularly evaluated by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources. The CODM, as defined by SFAS 131, is our President and Chief Executive Officer (“CEO”).

The Company is managed based on regions administered by executive vice presidents. Three regions are generally organized geographically with the fourth region encompassing major airports and transportation operations nationwide. The following is a summary of revenues (excluding reimbursement of management contract expenses) by region for the three months ended March 31, 2009 and 2008. Information related to prior years has been recast to conform to the new region alignment.

Region One encompasses Delaware, District of Columbia, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Rhode Island, Vermont, Virginia, and Wisconsin.

Region Two encompasses Alabama, Alberta, British Columbia, Florida, Georgia, Louisiana, Ontario, Tennessee, and Texas.

Region Three encompasses Arizona, California, Colorado, Hawaii, Nevada, 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.

Segment revenue information is summarized as follows:

		Three Months Ended March 31,
		Region One								Region Two								Region Three								Region Four								Other								Total
		2009				2008				2009				2008				2009				2008				2009				2008				2009				2008				2009				2008
		(in millions)
Lease contract revenue:
New location		$	0.7			$	—			$	1.0			$	0.2			$	0.7			$	—			$	—			$	—			$	—			$	—			$	2.4			$	0.2
Contract expirations			0.1				0.8				—				0.2				0.2				1.4				—				—				—				—				0.3				2.4
Same location			14.1				14.3				2.7				3.3				3.1				3.5				9.9				11.1				—				—				29.8				32.2
Conversions			—				0.5				—				—				—				—				—				1.1				—				—				—				1.6
Acquisitions			2.1				1.2				—				—				0.1				0.1				—				—				—				—				2.2				1.3
Total lease contract revenue		$	17.0			$	16.8			$	3.7			$	3.7			$	4.1			$	5.0			$	9.9			$	12.2			$	—			$	—			$	34.7			$	37.7
Management contract revenue:
New location		$	0.7			$	0.2			$	0.3			$	—			$	1.4			$	0.1			$	0.6			$	—			$	—			$	—			$	3.0			$	0.3
Contract expirations			0.2				1.4				—				1.7				0.2				1.6				—				0.1				—				—				0.4				4.8
Same location			10.8				10.0				4.8				2.8				8.6				8.4				7.7				7.7				—				(0.3	)			31.9				28.6
Conversions			—				—				—				—				—				—				—				—				0.1				—				0.1				—
Acquisitions			1.0				0.6				—				—				1.9				1.6				—				—				—				—				2.9				2.2
Total management contract revenue		$	12.7			$	12.2			$	5.1			$	4.5			$	12.1			$	11.7			$	8.3			$	7.8			$	0.1			$	(0.3	)		$	38.3			$	35.9