Imperial Parking Corporation Announces 2002 Year End Results
VANCOUVER, British Columbia--Feb. 12, 2003-- Imperial Parking Corporation (AMEX:IPK) reported revenues (excluding reimbursement of management contract expenses-see footnote 1 below) of $109.4 million for the year ended December 31, 2002, a 20.8% increase over revenues of $90.5 million for the prior year. The Company reported net income of $2.3 million, or $1.21 per diluted share, for the year ended December 31, 2002, compared to net income of $0.7 million, or $0.39 per diluted share, for the prior year. However, as Impark adopted SFAS No. 142 (see footnote 2 below) effective January 1, 2002, the Company no longer amortizes goodwill. As a result, there was no goodwill amortization in the year ended December 31, 2002, compared to goodwill amortization of $2.2 million in the prior year period. If the Company had adopted SFAS No. 142 effective January 1, 2001, net income would have been $2.9 million, or $1.57 per diluted share, in the prior year period. Also, the Company reported operating income of $3.9 million for the year ended December 31, 2002, compared to operating income of $1.3 million in the prior year period.The Company's increased revenues this year are primarily attributable to several new long-term leases in the U.S. combined with including a full year of revenues from its July 1, 2001 acquisition of DLC Management Group, Inc. whereas only six months were recorded in 2001. Of the $18.9 million revenue increase, other U.S. operations contributed $10.4 million and DLC operations contributed $8.7 million, whereas the Canadian revenues declined $0.2 million.
The Company reported cash net income (see footnote 3 below) of $3.5 million, or $1.85 per diluted share, for the year ended December 31, 2002, compared to cash net income of $4.4 million, or $2.34 per diluted share, in the prior year. Impark reported EBITDA (see footnote 3 below) of $6.3 million for the year compared to $6.0 million in the prior year period.
During the year, cash and cash equivalents increased by $4.1 million to $15.1 million at December 31, 2002 from $11.0 million last year. Cash flow from operations was $10.2 million compared to $10.7 million in the prior year period. The cash flow from operations last year included the release of Restricted Cash in the amount of $2.7 million. In addition to the cash and cash equivalents of $15.1 million, the Company has approximately $15.3 million available under its Credit Facility with HSBC Bank Canada.
Commenting on Impark's fiscal year, Charles Huntzinger, the Company's President and Chief Executive Officer, stated, "Impark's 2002 operating results reflect the continuing economic weakness in the U.S. and Canada. Despite this weakness, we continued our growth strategy which is primarily to enter 1-2 new major cities annually. In 2002, we entered the Miami market with one location and now operate 6 locations. Also in New York, where we commenced operations on January 1, 2001 with one location, we now operate 29 locations and have reached profitability. We remain focused on expanding into major U.S. cities as we believe they geographically diversify the Company and provide the greatest opportunity for new income growth. In 2002, we increased revenues 20.8% over the prior year and added a number of new facilities, bringing our total operations to 1,637 facilities."
Mr. Huntzinger continued, "The weak economy significantly impacts our business at leased locations. When we commence operations at a new leased location, we expect low profit margins in the initial year or two with increasing profitability as the lease matures. The weak economy slowed the maturity of many of our leased locations and in some caused declining profit margins. While we continue to believe that new leased locations are key to our growth strategy and will represent significantly increased income for us as the U.S. economy strengthens, we are more cautious in taking on new leases especially in the smaller U.S. cities which typically are more affected by economic weakness."
Mr. Huntzinger also stated, "A key operating strategy is to position Impark as a technology leader in the parking industry. For example, in 2002, we signed an exclusive agreement with a leading "wireless" technology company to offer a convenient parking payment alternative to our customers via cell phone. Whereas we initially offered this in many Vancouver, BC facilities, we have also introduced this in several facilities in Calgary, AB and Seattle, WA, and plan to offer this exciting option to additional cities in 2003."
The table below compares the profitability of leased locations, grouped by the year operations at the location commenced, for the year ending December 31, 2002 and for the year ended December 31, 2001.
Year Ended
December 31,
2002
Number (In thousands of dollars, Year Ended
of Locations except coverage) December 31,
2001
----------------------------------------------------------
As of As of
December December Gross
31, 2002 31, 2001 Revenue Margin Coverage Coverage
Year opened
----------------------------------------------------------------------
Before 1998 300 324 $ 25,925 $ 4,965 1.24 1.24
1998 50 55 7,342 453 1.07 1.10
1999 25 28 2,314 363 1.19 1.22
2000 52 53 15,148 2,029 1.15 1.10
2001 88 99 24,250 251 1.01 1.01
2002 53 n/a 4,306 (60) 0.99 n/a
----------------------------------------------------------------------
568 559 $ 79,285 $ 8,001 1.11 1.14
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Coverage is calculated by dividing Revenue by the difference of Revenue less Gross Margin.
Within the total of 568 leased locations operating at December 31, 2002, 90 of these locations incurred a combined loss of $2.0 million in 2002. Of these 90 loser locations, 26 were opened in 2002 and incurred a total loss of $0.4 million. Of the remaining 64 loser locations, 26 were opened in 2001 and incurred a total loss of $1.2 million in 2002.
For the quarter ended December 31, 2002, the Company reported revenues (excluding reimbursement of management contract expenses-see footnote 1 below) of $27.6 million representing a 10.6% increase over revenues (excluding reimbursement of management contract expenses) of $25.0 million in the prior year period. The Company reported net income of $0.5 million, or $0.26 per diluted share, for the three months ended December 31, 2002, compared to a loss of $(0.1) million, or $(0.07) per diluted share, in the prior year period. Also, the Company reported operating income of $0.1 million this quarter, compared to an operating loss of $0.2 million in the prior year period.
As Impark adopted SFAS No. 142 (see footnote 2 below) effective January 1, 2002, the Company no longer amortizes goodwill. As a result, there was no goodwill amortization in the three months ending December 31, 2002, compared to goodwill amortization of $0.5 million in the prior year period. If the Company had adopted SFAS No. 142 effective January 1, 2001, net income would have been $0.4 million, or $0.21 per diluted share, in the prior year period. Also, if the Company had adopted SFAS No. 142 effective January 1, 2001, operating income would have been $0.4 million in the prior year period.
The Company reported cash net income of $0.1 million for the fourth quarter ended December 31, 2002 compared to a cash net income of $0.5 million in the prior year period. Impark reported EBITDA of $0.8 million for the quarter compared to EBITDA of $1.1 million in the prior year period.
The Company announced that effective no later than January 1, 2003 it will change the method of recording employee stock compensation expense. Whereas Impark historically recorded these expenses based on the intrinsic value of options, the Company will begin recording employee stock compensation expense using the Black-Scholes option pricing model to determine the fair value of options in accordance with SFAS No. 123. We believe this method presents stock option compensation on a basis more widely understood by investors.
(1) In 2002, the Company adopted for all periods EITF 01-14, the new accounting pronouncement that requires the reimbursement of expenses by its management contract clients to be recorded as both a revenue and an expense. This is an accounting change that has no impact on operating income, net income, EBITDA, cash net income or the related per share amounts. This accounting change results only in the reclassification of expenses reimbursed under management contracts to be included as both revenue and expense, whereas previously these amounts were netted against those expenses in Direct Costs.
(2) Effective January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other Intangible Assets", which requires goodwill and intangible assets with indefinite lives be tested for impairment annually rather than amortized over time. The Company has completed the annual impairment and the initial reviews of the carrying value of goodwill and no adjustment was required. Also, as a result of this new standard, Impark no longer amortizes goodwill.
(3) Cash net income is defined as net earnings (loss) plus non-cash stock compensation expenses, goodwill amortization, and deferred income taxes. EBITDA is defined as net earnings (loss) before interest, taxes, depreciation and amortization. Cash net income, cash income per diluted share and EBITDA are not measures that have established meanings under GAAP and should not be considered as a substitute for measures of performance prepared in accordance with GAAP. The Company's method of computing cash net income, cash net income per diluted share and EBITDA has been made on a consistent basis and may not be comparable to similarly titled measures reported by other companies. The Company has reported the non-GAAP measures EBITDA and Cash Net Income since going public in March 2000. Impark has decided to minimize the non-GAAP presentation of its financial results and as a result will follow the trend of many corporations of reducing or eliminating non-GAAP disclosure. Accordingly, Impark will no longer present EBITDA or Cash Net Income for periods beginning January 1, 2003. The Company will continue to report these statistics for this quarter and in its 2002 Annual Report.
Imperial Parking Corporation, headquartered in Vancouver, B.C., Canada is the largest parking operator in Canada and is one of the four largest in North America. Impark currently operates more than 1,630 parking locations and 325,000 parking spaces in Canada and the United States.
This press release contains projections and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These projections and statements reflect the Company's current views with respect to future events and financial performance. No assurance can be given, however, that these events will occur or that these projections will be achieved and actual results could differ materially from those projected, as a result of certain factors. A discussion of these factors is included in the Company's filings with the Securities and Exchange Commission.
Imperial Parking Corporation
Consolidated Statements of Operations
(In thousands of U.S. dollars, except earnings per share)
Three months Year ended
ended December 31 December 31
(unaudited)
---------------------------------------------
2002 2001 2002 2001
-------- -------- -------- -------
Revenues
Parking and management
contract $ 27,610 $ 24,971 $ 109,351 $ 90,548
Reimbursement of
management contract
expenses 7,700 6,777 30,491 27,350
-------- -------- -------- -------
Total Revenues 35,310 31,748 139,842 117,898
-------- -------- -------- -------
Direct costs
Cost of parking and
management Contracts 22,837 19,934 87,160 70,027
Reimbursed management
contract Expenses 7,700 6,777 30,491 27,350
-------- -------- -------- -------
Total Direct Costs 30,537 26,711 117,651 97,377
-------- -------- -------- -------
Gross margin 4,773 5,037 22,191 20,521
Other operating expenses
General and administrative 3,988 3,852 15,821 14,362
Depreciation and
amortization 664 1,322 2,397 4,729
Equity share in limited
liability company losses 32 54 116 168
-------- -------- -------- -------
Total other operating
expenses 4,684 5,228 18,334 19,259
-------- -------- -------- -------
Operating income (loss) 89 (191) 3,857 1,262
Other income (expense) 20 (22) 94 279
-------- -------- -------- -------
Earnings before income
taxes 109 (213) 3,951 1,541
Income tax expense
(recovery) (388) (80) 1,630 822
-------- -------- -------- -------
Net income $ 497 $ (133) $ 2,321 $ 719
-------- -------- -------- -------
-------- -------- -------- -------
Basic earnings per share $ 0.27 $ (0.07) $ 1.27 $ 0.40
-------- -------- -------- -------
-------- -------- -------- -------
Diluted earnings per share $ 0.26 $ (0.07) $ 1.21 $ 0.39
-------- -------- -------- -------
-------- -------- -------- -------
Imperial Parking Corporation
Consolidated Balance Sheets
(In thousands of U.S. dollars)
December 31, December 31,
----------- -----------
2002 2001
---- ----
ASSETS
Current assets
Cash $ 15,138 $ 10,991
Accounts receivable 6,408 6,875
Current portion of
recoverable development costs 781 880
Inventory 960 781
Deposits and prepaid expenses 1,347 1,135
Deferred income taxes 1,034 2,412
------------ ----------
Total current assets 25,668 23,074
Recoverable development costs 2,435 3,940
Fixed assets 14,350 14,661
Management and lease
agreements 867 336
Other assets 3,895 2,975
Goodwill 45,213 44,259
------------ ----------
Total Assets $ 92,428 $ 89,245
------------ ----------
------------ ----------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities
Management agreements payable $ 5,889 $ 6,434
Trade accounts payable and
other accrued liabilities 7,479 5,861
Payable to employees and
former employees 2,302 1,936
Sales tax payable 1,542 1,367
Bank indebtedness 3,349 3,900
Current portion of other
long-term liabilities 1,581 1,204
Deferred revenue 1,985 2,081
------------ ----------
Total current liabilities 24,127 22,783
Other long-term liabilities 4,139 4,921
Deferred income taxes 2,690 3,280
------------ ----------
Total liabilities 30,956 30,984
Stockholders' equity
Common stock, $.01 par value,
10,000,000 shares authorized
1,821,889 shares issued and
outstanding 18 18
Additional paid-in capital 60,730 60,718
Retained earnings 4,504 2,183
Accumulated other
comprehensive loss
Foreign currency translation
adjustment (3,780) (4,658)
------------ ----------
Total stockholders' equity 61,472 58,261
------------ ----------
Total Liabilities and
stockholders' equity $ 92,428 $ 89,245
------------ ----------
------------ ----------
Imperial Parking Corporation
Consolidated Statements of Cash Flow
(In thousands of U.S. dollars)
Year ended
December 31
-----------------------------
2002 2001
---- ----
Cash flows from operations
Net income $ 2,321 $ 719
Adjustments to reconcile net
income to cash provided by
operating activities
Depreciation and amortization
of management and lease
agreements 2,397 2,523
Amortization of goodwill - 2,206
Recovery of recoverable
development costs 640 1,057
Equity share of limited
liability company losses 116 168
Stock-based compensation (65) 780
Non-cash interest expense 128 154
Deferred income taxes 1,284 649
Changes in non-cash working
capital items, excluding
acquisitions
Restricted cash - 2,688
Accounts receivable 843 (1,026)
Inventory (171) (80)
Deposits and prepaid expenses (214) (126)
Management agreements payable (591) 270
Trade accounts payable and
other accrued liabilities 3,082 879
Payable to employees and
former employees 348 (486)
Sales tax payable 164 (97)
Deferred revenue (106) 444
------------------------------------------------------------------
Net cash provided by
operating activities 10,176 10,722
------------------------------------------------------------------
Cash flow from investing
activities
Purchase of fixed assets (1,675) (2,624)
Increase in recoverable
development costs (1,491) (266)
Increase in other assets (233) (686)
Acquisition of management and
lease agreements (828) -
Additional consideration on
acquisition of parking
business (1,836) (4,601)
------------------------------------------------------------------
Net cash used in investing
activities (6,063) (8,177)
------------------------------------------------------------------
Cash flow from financing
activities
Purchase of common shares - (543)
Options exercised 77 84
Change in bank indebtedness (552) 3,900
Change in other liabilities 492 (75)
------------------------------------------------------------------
Net cash used in financing
activities 17 3,366
------------------------------------------------------------------
Effect of exchange rate
changes on cash & cash
equivalents 17 (535)
------------------------------------------------------------------
Increase in cash and cash
equivalents 4,147 5,376
Cash and cash equivalents,
beginning of period 10,991 5,615
------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 15,138 $ 10,991
------------------------------------------------------------------
------------------------------------------------------------------
Imperial Parking Corporation
Other Information (Unaudited)
(In thousands of U.S. dollars)
Three months ended Year ended
------------------ ----------
December 31 December 31
----------- -----------
2002 2001 2002 2001
NET INCOME (LOSS) $ 497 $ (133) $ 2,321 $ 719
Amortization of
goodwill (1) - 541 - 2,206
--------- --------- --------- ---------
Net income
(pro forma) $ 497 408 2,321 2,925
Non-cash stock
compensation (9) 264 (65) 780
Deferred income taxes (426) (180) 1,284 649
--------- --------- --------- ---------
CASH NET INCOME (2) $ 62 $ 492 $ 3,540 $ 4,354
--------- --------- --------- ---------
--------- --------- --------- ---------
CASH NET INCOME PER
DILUTED SHARE (2) $ 0.03 $ 0.26 $ 1.85 $ 2.34
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average
number of shares
outstanding
(diluted basis) 1,889 1,907 1,913 1,861
--------- --------- --------- ---------
--------- --------- --------- ---------
NET INCOME
(pro forma) $ 497 $ 408 $ 2,321 $ 2,925
Depreciation and
amortization of
management and lease
agreements 664 781 2,397 2,523
Interest expense
(income) (20) 22 (94) (279)
Income tax expense
(recovery) (388) (80) 1,630 822
--------- --------- --------- ---------
EARNINGS BEFORE
INTEREST, TAXES,
DEPRECIATION AND
AMORTIZATION
(EBITDA) (2) $ 753 $ 1,131 $ 6,254 $ 5,991
--------- --------- --------- ---------
--------- --------- --------- ---------
(1) See footnote 2 of press release
(2) See footnote 3 of press release