Imperial Parking Corporation Announces Second Quarter Results
VANCOUVER, British Columbia--Aug. 1, 20033, 2003--Imperial Parking Corporation ("Impark") (AMEX:IPK) today reported revenues of $40.2 million for the quarter ended June 30, 2003, an 11.6% increase over revenues of $36.0 million for the quarter ended June 30, 2002. The Company reported parking and management contract revenues of $31.6 million for the quarter ended June 30, 2003, an 11.6% increase over parking and management contract revenues of $28.3 million for the quarter ended June 30, 2002. The Company reported net income of $0.8 million, or $0.41 per diluted share, for the second quarter, compared to net income of $1.0 million, or $0.53 per diluted share, in the prior year period.Of the $3.3 million increase in parking and management contract revenues this quarter, the Company's Canadian operations contributed $1.8 million and the United States operations contributed $1.5 million. The increase in revenue from the Company's Canadian operations was primarily attributable ($1.5 million) to the stronger Canadian dollar with an average exchange rate for the second quarter of 2003 of C$1.00=US$0.72 compared to $0.64 in the prior year period. Revenues from the Company's U.S. operations were higher this quarter compared to the prior year mainly due to the opening of new locations. The Company commenced operating Miller Park, the baseball stadium of the Milwaukee Brewers and increased the number of facilities operating in Miami from two to seven, resulting in a combined increase in revenues of $2.1 million.
The Company's net income declined $0.2 million this quarter due to a $0.3 million decline in operating income combined with an increase in other expenses of $0.2 million offset in part by reduced income tax expense of $0.3 million. The Company reported operating income of $1.6 million for the second quarter, a $0.3 million decrease from operating income of $1.9 million in the prior year period. The decline in operating income is due to a lower gross margin of $0.2 million, and increased general and administrative expenses of $0.2 million. The increase in general and administrative expenses is primarily attributable to growth of the new expansion cities of Chicago, Miami and Philadelphia, and the relocation of the Company's U.S. headquarters from Minneapolis to Philadelphia. The increase in other expense is entirely due to $0.2 million in legal and professional fees incurred this quarter to assist the Special Committee of the Board of Directors in its previously announced review of the strategic alternatives available to the Company in the context of the decision by Gotham Partners to sell its ownership interest in the Company.
Commenting on Impark's second quarter, Charles Huntzinger, the Company's Chief Executive Officer and President, stated, "While we were satisfied that revenues this quarter grew by 11.6% over the same period last year, the parking industry this quarter continued to be affected by economic weakness in both Canada and the U.S., poor weather in Eastern Canada and the U.S. and other factors adversely affecting tourism and local traffic in many of our markets (e.g. SARS, War in Iraq). Accordingly, our revenues, direct costs and net income have been negatively impacted by these challenges."
Mr. Huntzinger continued, "We are pleased with recent new business development. In January 2003, we began an initiative to target stadiums, arenas and institutional parking. In this quarter we opened "Miller Park" in Milwaukee, home of the Milwaukee Brewers baseball team and also RFK Stadium in Washington, DC, home of professional mens' and womens' soccer teams United and Freedom. To secure these contracts so swiftly is a reflection on the effectiveness of our management team's efforts to implement this important marketing strategy and is significant to the long-term profitability of the Company."
Mr. Huntzinger also stated, "We added a net of 19 new locations this quarter, reflecting a 92% annualized lot retention rate. We are continuing our growth strategy in the U.S. and in Eastern Canada. We believe that with our solid base of operations and strong balance sheet we are well positioned to realize improving profitability when the economic and other challenges affecting our industry improve."
The table below compares the profitability of leased locations, grouped by the operations at the location commenced, for the second quarter ended June 30, 2003 and 2002.
Six
Months Ended June 30, 2002 Six Months
Number (In thousands of dollars, Ended June
of Locations except coverage) 30, 2003
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As of As of
Year June 30, June 30, Gross
opened 2003 2002 Revenue Margin Coverage(a) Coverage(a)
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Before 1999 341 374 $17,076 $ 2,152 1.14 1.18
1999 24 26 1,249 175 1.16 1.22
2000 48 54 6,995 768 1.12 1.16
2001 86 91 9,541 195 1.02 1.03
2002 48 27 4,533 317 1.08 0.95
2003 41 n/a 3,219 23 1.01 n/a
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588 572 $42,613 $ 3,630 1.09 1.12
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(a) Coverage is calculated by dividing Revenue by the difference
of Revenue less Gross Margin.
Within the total of 588 leased locations operating at June 30, 2003, 134 of these locations incurred a combined loss of $1.4 million in the six months ended June 30, 2003. Of these 134 locations, 20 were opened in 2003 and incurred an aggregate loss of $0.2 million and 15 were opened in 2002 and incurred an aggregate loss of $0.2 million.
For the six months ended June 30, 2003, the Company reported revenues of $73.4 million representing a 7.3% increase over revenues of $68.4 million for the six months ended June 30, 2002. The Company reported parking and management contract revenues of $56.6 million for the six months ended June 30, 2003, representing a 6.5% increase over parking and management contract revenues of $53.1 million for the six months ended June 30, 2002. The Company reported net income of $8,000, or $0.00 per diluted share, for the six months ended June 30, 2003, compared to earnings of $1.0 million, or $0.50 per diluted share, in the prior year period. Also, the Company reported operating income of $1.2 million for the six months ended June 30, 2003, representing a 47.0% decrease from operating income of $2.2 million in the prior year period. In addition, the Company reported other expenses of $0.7 million for the six months ended June 30, 2003 entirely due to legal and professional fees incurred to assist the Special Committee of the Board of Directors with the decision of Gotham Partners to sell its ownership interest in the Company.
During the six months, cash and cash equivalents increased by $3.1 million from $15.1 million at December 31, 2002 to $18.2 million. The increased cash position resulted from cash flow from operations of $2.4 million, a decrease in net cash flow from financing and investing activities of $0.5 million and an increase in cash flow due to the effect of foreign exchange rates of $1.2 million.
(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 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.
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 1,670 parking locations and over 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 (Unaudited)
(In thousands of U.S. dollars, except earnings per share)
Three months Six months
ended June 30 ended June 30
------------------------------------------
2003 2002 2003 2002
(restated(1)) (restated(1))
Revenues
Parking and management
contract $ 31,595 $ 28,317 $ 56,573 $ 53,126
Reimbursement of
management contract
expenses 8,641 7,728 16,780 15,263
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Total Revenues 40,236 36,045 73,353 68,389
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Direct costs
Cost of parking and
management
contracts 25,188 21,705 45,684 41,740
Reimbursed management
contract
expenses 8,641 7,728 16,780 15,263
------------------------------------------
Total Direct Costs 33,829 29,433 62,464 57,003
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Gross margin 6,407 6,612 10,889 11,386
Other operating
expenses (income)
General and
administrative 4,273 4,065 8,559 8,006
Depreciation and
amortization 623 569 1,189 1,133
Equity share in limited
liability
company (income) losses (41) 59 (11) 75
------------------------------------------
Total other operating
expenses 4,855 4,693 9,737 9,214
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Operating income 1,552 1,919 1,152 2,172
Other expense 213 32 686 62
------------------------------------------
Earnings before income
taxes 1,339 1,887 466 2,110
Income tax expense 582 874 458 1,148
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Net Earnings $ 757 $ 1,013 $ 8 $ 962
------------------------------------------
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Diluted earnings
per share $ 0.41 $ 0.53 $ 0.00 $ 0.50
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(1) Effective January 1, 2003, the Company adopted the fair value recognition provisions of Statement of Financial Accounting No. 123 ("SFAS 123"), Accounting for Stock-Based Compensation, for stock-based employee compensation. In accordance with Statement of Financial Accounting No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure, the Company has elected to adopt the recognition and measurement provisions of SFAS 123 retroactively. As a result all prior periods presented have been restated to reflect the compensation costs that would have been recognized had the recognition provisions of SFAS 123 been applied to all awards granted to employees after December 15, 1994.
Adoption of the recognition and measurement provisions of SFAS 123 resulted in a decrease of $454,000 in additional paid in capital as of January 1, 2002, an increase of $454,000 in opening retained earnings as of January 1, 2002 and an increase of $146,000 in stock-based compensation expense recognized for the three months ended June 30, 2002, and an increase of $136,000 for the six months ended June 30, 2002, from the amounts previously reported. For the year ended December 31, 2002, adoption of the recognition provisions of SFAS 123 resulted in an increase in stock-based compensation expense of $398,000, a decrease in additional paid in capital of $56,000 as at December 31, 2002 and an increase of $56,000 in retained earnings as of December 31, 2002.
Imperial Parking Corporation
Consolidated Balance Sheets
(In thousands of U.S. dollars)
June 30, December 31,
2003 2002
-----------------------------
ASSETS (unaudited) (restated(1))
Current assets
--------------
Cash $ 18,168 $ 15,138
Accounts receivable 7,053 6,408
Current portion of recoverable
development costs 852 781
Inventory 1,152 960
Deposits and prepaid expenses 2,851 1,347
Deferred income taxes 267 1,034
-----------------------------
Total current assets 30,343 25,668
Recoverable development costs 2,061 2,435
Fixed assets 16,242 14,350
Management and lease
agreements 733 867
Other assets 5,140 3,895
Goodwill 50,992 45,213
-----------------------------
Total Assets $105,511 $ 92,428
-----------------------------
-----------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
-------------------
Management accounts payable $ 6,777 $ 5,889
Trade accounts payable and
other accrued liabilities 7,282 7,479
Payable to employees and
former employees 2,412 2,302
Sales tax payable 1,906 1,542
Bank indebtedness 6,031 3,349
Current portion of other
long-term liabilities 1,116 1,581
Deferred revenue 3,680 1,985
-----------------------------
Total current liabilities 29,204 24,127
Other long-term liabilities 4,578 4,139
Deferred income taxes 2,200 2,690
-----------------------------
Total liabilities 35,982 30,956
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 60,851 60,674
Retained earnings 4,568 4,560
Accumulated other
comprehensive income (loss)
Foreign currency translation
adjustment 4,092 (3,780)
-----------------------------
Total stockholders' equity 69,529 61,472
-----------------------------
Total Liabilities and
stockholders' equity $105,511 $ 92,428
-----------------------------
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(1) See footnote (1) to Consolidated Statement of Operations
Imperial Parking Corporation
Consolidated Statements of Cash Flow
(unaudited)
(In thousands of U.S. dollars)
Six months ended
June 30
-----------------------------
2003 2002
-----------------------------
(restated(1))
Cash flows from operations
Net earnings for the period $ 8 $ 962
Adjustments to reconcile net
earnings to cash provided by
operating activities
Depreciation and amortization
of management and lease
agreements 1,189 1,133
Recovery of recoverable
development costs 307 488
Equity share of limited
liability company (income)
losses (11) 75
Stock-based compensation 171 160
Non-cash interest expense 117 154
Rent expense in excess of
lease payments 204 100
Deferred income taxes 296 916
Discount on settlement of note
receivable 100 -
Changes in non-cash working
capital items, excluding
acquisitions
Accounts receivable 319 1,334
Inventory (36) (50)
Deposits and prepaid expenses (1,054) (914)
Management accounts payable 56 (839)
Trade accounts payable and
other accrued liabilities (839) 124
Payable to employees and
former employees (131) 89
Sales tax payable 232 545
Deferred revenue 1,515 877
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Net cash provided by operating
activities 2,443 5,154
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Cash flow from investing
activities
Purchase of fixed assets (1,008) (658)
Change in other assets (2,851) (233)
Settlement of note receivable 1,036 -
Increase in recoverable
development costs - (1,478)
Acquisition of management and
lease agreements - (766)
Additional consideration on
acquisition of parking
business - (212)
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Net cash used in investing
activities (2,823) (3,347)
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Cash flow from financing
activities
Proceeds from bank
indebtedness 3,000 -
Repayment of bank indebtedness (321) (233)
Change in other liabilities (484) (89)
Options exercised 6 61
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Net cash provided by (used in)
financing activities 2,201 (261)
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Effect of exchange rate
changes on cash & cash
equivalents 1,209 189
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Increase in cash and cash
equivalents 3,030 1,735
Cash and cash equivalents,
beginning of period 15,138 10,991
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Cash and cash equivalents, end
of period $ 18,168 $ 12,726
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(1) See footnote (1) to Consolidated Statement of Operations