Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2019
Or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
Commission file number: 000-50796
 
splogoa20.jpg
SP Plus CorporationCorporation
(Exact Name of Registrant as Specified in Its Charter)
Delaware 16-1171179
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)  
 
200 E. Randolph Street, Suite 7700
Chicago, Illinois60601-7702
(Address of Principal Executive Offices, Including Zip Code)
(312) (312) 274-2000
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareSPThe NASDAQ Stock Market LLC
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 Yesý  NO   No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES Yesý  NO   No o


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one): 
Large accelerated filer oAccelerated Filer
ý
Accelerated Filer
Accelerated filer x
☐
Non-accelerated Filer  ☐Smaller Reporting Company☐
  
Non-accelerated filer o
Emerging Growth Company
(Do not check if a smaller reporting company)

Smaller reporting company o

Emerging growth company o

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 Yes ☐  No ý


AsIndicate the number of November 1, 2017, there were 22,520,672 shares outstanding of each of the registrant's classes of common stock, as of the registrant outstanding.latest practicable date.
ClassOutstanding at October 30, 2019
Common Stock, $0.001 par value per share22,948,766
Shares
 

SP PLUS CORPORATION
 
TABLE OF CONTENTS
 
PART I. FINANCIAL INFORMATION
2
Item 1. Financial Statements
2
Condensed Consolidated Balance Sheets as of September 30, 20172019 (unaudited) and December 31, 20162018
2
Condensed Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 20172019 and 20162018
3
Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 20172019 and 20162018
4
Condensed Consolidated Statements of Stockholders' Equity (unaudited) for the nine months ended September 30, 2019 and 2018
5
Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 20172019 and 20162018
57
Notes to Condensed Consolidated Financial Statements
68
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
2431
Item 3. Quantitative and Qualitative Disclosures about Market Risk
3945
Item 4. Controls and Procedures
3946
  
PART II. OTHER INFORMATION
4047
Item 1. Legal Proceedings
4047
Item 1A. Risk Factors
4047
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
4048
Item 3. Defaults Upon Senior Securities
4048
Item 4. Mine Safety Disclosures
4048
Item 5. Other Information
4048
Item 6. Exhibits
4149
  
Signatures
4250



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SP Plus Corporation
Condensed Consolidated Balance Sheets
(millions, except for share and per share data)September 30, 2017 December 31, 2016September 30, 2019 December 31, 2018
(unaudited)  
(unaudited)  
Assets 
  
 
  
Cash and cash equivalents$23.4
 $22.2
$29.6
 $39.9
Notes and accounts receivable, net124.9
 120.7
150.0
 150.7
Prepaid expenses and other10.2
 13.7
15.7
 17.2
Total current assets158.5
 156.6
195.3
 207.8
Leasehold improvements, equipment and construction in progress, net26.5
 30.9
43.2
 40.3
Right-of-use assets444.5
 —
Other assets 
  
 
  
Advances and deposits4.2
 4.3
4.2
 4.2
Other intangible assets, net55.4
 61.3
154.6
 166.0
Favorable acquired lease contracts, net24.4
 30.0
—
 17.6
Equity investments in unconsolidated entities18.7
 18.5
10.4
 9.8
Other assets, net17.7
 16.3
20.3
 17.3
Deferred taxes19.3

17.9
13.1

14.6
Cost of contracts, net9.5
 11.4
4.5
 9.2
Goodwill431.7
 431.4
585.7
 585.5
Total other assets580.9
 591.1
792.8
 824.2
Total assets$765.9
 $778.6
$1,475.8
 $1,072.3
Liabilities and stockholders’ equity 
  
 
  
Accounts payable$95.9
 $109.9
$102.5
 $110.1
Accrued rent23.6
 21.7
18.2
 23.5
Compensation and payroll withholdings21.5
 25.7
24.2
 25.8
Property, payroll and other taxes9.1
 7.6
8.7
 9.5
Accrued insurance19.3
 18.1
19.0
 19.7
Accrued expenses20.7
 25.5
40.0
 45.1
Current portion of obligations under Restated Credit Facility and other long-term borrowings20.4
 20.4
Short-term lease liabilities117.1
 —
Current portion of long-term obligations under credit facility and other long-term borrowings14.4
 13.2
Total current liabilities210.5
 228.9
344.1
 246.9
Long-term borrowings, excluding current portion

 



 

Obligations under Restated Credit Facility153.0
 174.5
Obligations under credit facility340.6
 360.9
Other long-term borrowings—
 0.2
15.1
 12.6
153.0
 174.7
355.7
 373.5
Long-term lease liabilities338.4
 —
Unfavorable acquired lease contracts, net33.5
 40.2
—
 24.7
Other long-term liabilities63.4
 66.4
59.3
 58.6
Total noncurrent liabilities249.9
 281.3
753.4
 456.8
Stockholders’ equity 
  
 
  
Preferred Stock, par value $0.01 per share; 5,000,000 shares authorized as of September 30, 2017 and December 31, 2016; no shares issued—
 —
Common stock, par value $0.001 per share; 50,000,000 shares authorized as of September 30, 2017 and December 31, 2016; 22,509,468 and 22,328,578 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively.—
 —
Treasury Stock, at cost; 305,183 shares at September 30, 2017 and December 31, 2016(7.5)
(7.5)
Preferred stock, par value $0.01 per share; 5,000,000 shares authorized as of September 30, 2019 and December 31, 2018; no shares issued—
 —
Common stock, par value $0.001 per share; 50,000,000 shares authorized as of September 30, 2019 and December 31, 2018; 22,948,766 and 22,783,976 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively—
 —
Treasury stock, at cost; 1,263,642 and 305,183 shares as of September 30, 2019 and December 31, 2018, respectively(39.8)
(7.5)
Additional paid-in capital254.7
 251.2
260.8
 257.7
Accumulated other comprehensive loss(1.2) (1.4)(3.3) (2.4)
Retained earnings59.1
 25.9
160.6
 120.7
Total SP Plus Corporation stockholders’ equity305.1
 268.2
378.3
 368.5
Noncontrolling interest0.4
 0.2
—
 0.1
Total stockholders’ equity305.5
 268.4
378.3
 368.6
Total liabilities and stockholders’ equity$765.9
 $778.6
$1,475.8
 $1,072.3
See Notes to Condensed Consolidated Financial Statements.

SP Plus Corporation
Condensed Consolidated Statements of Income
Three Months Ended Nine Months EndedThree Months Ended Nine Months Ended
(millions, except for share and per share data) (unaudited)September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Parking services revenue

 

  
 138.5
Lease contracts$140.9
 $136.1
 $422.6
 $410.3
Management contracts86.7
 84.1
 262.8
 262.0
Services revenue     
  
Lease type contracts$104.6
 $104.7
 $307.6
 $311.6
Management type contracts132.6
 82.6
 395.4
 264.8

227.6
 220.2
 685.4
 672.3
237.2
 187.3
 703.0
 576.4
Reimbursed management contract revenue165.1
 177.0
 512.7
 501.8
Total parking services revenue392.7
 397.2
 1,198.1
 1,174.1
Cost of parking services

 

  
 

Lease contracts131.0
 125.8
 387.0
 380.4
Management contracts50.7
 50.5
 154.5
 162.6
Reimbursed management type contract revenue181.4
 174.8
 539.2
 514.8
Total services revenue418.6
 362.1
 1,242.2
 1,091.2
Cost of services       
Lease type contracts93.0
 94.2
 274.5
 283.2
Management type contracts85.5
 48.1
 254.7
 157.6

181.7
 176.3
 541.5
 543.0
178.5
 142.3
 529.2
 440.8
Reimbursed management contract expense165.1
 177.0
 512.7
 501.8
Total cost of parking services346.8
 353.3
 1,054.2
 1,044.8
Reimbursed management type contract expense181.4
 174.8
 539.2
 514.8
Total cost of services359.9
 317.1
 1,068.4
 955.6
Gross profit

 

  
  
     
  
Lease contracts9.9
 10.3
 35.6
 29.9
Management contracts36.0
 33.6
 108.3
 99.4
Lease type contracts11.6
 10.5
 33.1
 28.4
Management type contracts47.1
 34.5
 140.7
 107.2
Total gross profit45.9
 43.9
 143.9
 129.3
58.7
 45.0
 173.8
 135.6
General and administrative expenses19.6
 20.3
 63.3
 67.0
26.0
 18.7
 80.8
 63.3
Depreciation and amortization4.9
 7.8
 16.3
 26.8
7.3
 4.2
 21.8
 12.7
Operating income21.4
 15.8
 64.3
 35.5
25.4
 22.1
 71.2
 59.6
Other expenses (income)

 

  
  
     
  
Interest expense2.2
 2.7
 7.1
 8.1
4.8
 2.1
 14.7
 6.5
Interest income(0.2) (0.1) (0.5) (0.4)(0.1) (0.1) (0.3) (0.3)
Gain on sale of business—
 —
 (0.1) —
Equity in losses from investment in unconsolidated entity0.1
 0.4
 0.5
 1.2
Equity in earnings from investment in unconsolidated entity—
 —
 —
 (10.1)
Total other expenses (income)2.1
 3.0
 7.0
 8.9
4.7
 2.0
 14.4
 (3.9)
Earnings before income taxes19.3
 12.8
 57.3
 26.6
20.7
 20.1
 56.8
 63.5
Income tax expense7.3
 5.1
 21.3
 10.9
5.7
 5.6
 14.6
 16.9
Net income12.0
 7.7
 36.0
 15.7
15.0
 14.5
 42.2
 46.6
Less: Net income attributable to noncontrolling interest0.8
 0.7
 2.6
 2.2
0.8
 1.0
 2.2
 2.5
Net income attributable to SP Plus Corporation$11.2
 $7.0
 $33.4
 $13.5
$14.2
 $13.5
 $40.0
 $44.1
Common stock data

 

  
  
     
  
Net income per common share

 

  
  
     
  
Basic$0.51
 $0.31
 $1.51
 $0.60
$0.64
 $0.60
 $1.79
 $1.97
Diluted$0.50
 $0.31
 $1.48
 $0.60
$0.64
 $0.60
 $1.78
 $1.95
Weighted average shares outstanding

 

           
Basic22,203,023
 22,208,139
 22,186,556
 22,293,776
21,945,129
 22,439,884
 22,277,852
 22,370,789
Diluted22,523,036
 22,497,111
 22,501,378
 22,571,933
22,038,905
 22,626,746
 22,411,965
 22,607,274
 
See Notes to Condensed Consolidated Financial Statements.



SP Plus Corporation
Condensed Consolidated Statements of Comprehensive Income
Three Months Ended Nine Months EndedThree Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2017
September 30, 2016
September 30, 2017 September 30, 2016September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Net income$12.0

$7.7

$36.0
 $15.7
$15.0
 $14.5
 $42.2
 $46.6
Other comprehensive income (expense)0.1

0.1

0.2
 (0.2)(0.2) 0.1
 (0.9) (0.4)
Comprehensive income12.1

7.8

36.2
 15.5
14.8
 14.6
 41.3
 46.2
Less: Comprehensive income attributable to noncontrolling interest0.8

0.7

2.6
 2.2
0.8
 1.0
 2.2
 2.5
Comprehensive income attributable to SP Plus Corporation$11.3

$7.1

$33.6
 $13.3
$14.0
 $13.6
 $39.1
 $43.7
 
See Notes to Condensed Consolidated Financial Statements.


SP Plus Corporation
Condensed Consolidated Statements of Stockholders' Equity

Nine months ended September 30, 2018 (unaudited)
 Common Stock            
(millions, except share and per share data)Number
of
Shares		 Par
Value		 Additional
Paid-In
Capital		 Accumulated
Other
Comprehensive
Loss		 Retained Earnings Treasury Stock Noncontrolling
Interest		 Total
Balance (deficit) at January 1, 201822,542,672
 $—
 $254.6
��$(1.2) $67.0
 $(7.5) $0.2
 $313.1
Net income—
 —
 —
 —
 15.3
 —
 0.6
 15.9
Foreign currency translation—
 —
 —
 (0.4) —
 —
 —
 (0.4)
Issuance of restricted stock units45,963
 —
 —
 —
 —
 —
 —
 —
Issuance of performance stock units48,174
 —
 —
 —
 —
 —
 —
 —
Non-cash stock-based compensation related to restricted stock units and performance share units—
 —
 0.6
 —
 —
 —
 —
 0.6
Distribution to noncontrolling interest—
 —
 —
 —
 —
 —
 (0.8) (0.8)
Balance (deficit) at March 31, 201822,636,809
 $—
 $255.2
 $(1.6) $82.2
 $(7.5) $—
 $328.3
Net income—
 —
 —
 —
 15.3
 —
 0.9
 16.2
Foreign currency translation—
 —
 —
 (0.2) —
 —
 —
 (0.2)
Issuance of stock grants20,757
 —
 0.7
 —
 —
 —
 —
 0.7
Non-cash stock-based compensation related to restricted stock units and performance share units—
 —
 0.9
 —
 —
 —
 —
 0.9
Distribution to noncontrolling interest—
 —
 —
 —
 —
 —
 (0.8) (0.8)
Balance (deficit) at June 30, 201822,657,566
 $—
 $256.8
 $(1.8) $97.6
 $(7.5) $0.1
 $345.2
Net income—
 —
 —
 —
 13.5
 —
 1.0
 14.5
Foreign currency translation—
 —
 —
 0.1
 —
 —
 —
 0.1
Issuance of restricted stock units71,998

—

—

—

—

—

—

—
Non-cash stock-based compensation related to restricted stock units and performance share units—
 —
 (0.1) —
 —
 —
 —
 (0.1)
Distribution to noncontrolling interest—
 —
 —
 —
 —
 —
 (1.0) (1.0)
Balance (deficit) at September 30, 201822,729,564
 $—
 $256.7
 $(1.6) $111.1
 $(7.5) $—
 $358.7

Note: Amounts may not foot due to rounding.

See Notes to Condensed Consolidated Financial Statements.


Nine months ended September 30, 2019 (unaudited)
 Common Stock            
(millions, except share and per share data)Number
of
Shares		 Par
Value		 Additional
Paid-In
Capital		 Accumulated
Other
Comprehensive
Loss		 Retained Earnings Treasury Stock Noncontrolling
Interest		 Total
Balance (deficit) at January 1, 201922,783,976
 $—
 $257.7
 $(2.4) $120.7
 $(7.5) $0.1
 $368.6
Net income—
 —
 —
 —
 10.6
 —
 0.3
 10.9
Foreign currency translation—
 —
 —
 0.2
 —
 —
 —
 0.2
Issuance of restricted stock units7,518
 —
 —
 —
 —
 —
 —
 —
Issuance of performance stock units62,094
 —
 —
 —
 —
 —
 —
 —
Non-cash stock-based compensation related to restricted stock units and performance share units—
 —
 0.4
 —
 —
 —
 —
 0.4
Treasury stock—
 —
 —
 —
 —
 (2.3) —
 (2.3)
Distribution to noncontrolling interest—
 —
 —
 —
 —
 —
 (0.7) (0.7)
Balance (deficit) at March 31, 201922,853,588
 $—
 $258.0
 $(2.2) $131.3
 $(9.8) $(0.3) $377.0
Net income—
 —
 —
 —
 15.2
 —
 1.1
 16.3
Foreign currency translation—
 —
 —
 (0.1) —
 —
 —
 (0.1)
Effective portion of cash flow hedge—

—

—

(0.8)
—

—

—

(0.8)
Issuance of stock grants14,076
   0.5
 —
 —
 —
 —
 0.5
Issuance of restricted stock units11,745
 —
 —
 —
 —
 —
 —
 —
Non-cash stock-based compensation related to restricted stock units and performance share units—
 —
 1.0
 —
 —
 —
 —
 1.0
Treasury stock—
 —
 —
 —
 —
 (11.3) —
 (11.3)
Distribution to noncontrolling interest—
 —
 —
 —
 —
 —
 (0.7) (0.7)
Balance (deficit) at June 30, 201922,879,409
 $—
 $259.5
 $(3.1) $146.5
 $(21.1) $0.1
 $381.9
Net income—
 —
 —
 —
 14.2
 —
 0.8
 15.0
Foreign currency translation—
 —
 —
 (0.1) —
 —
 —
 (0.1)
Effective portion of cash flow hedge—
 —
 —
 (0.1) —
 —
 —
 (0.1)
Issuance of restricted stock units69,357
 —
 —
 —
 —
 —
 —
 —
Non-cash stock-based compensation related to restricted stock units and performance share units—
 —
 1.3
 —
 —
 —
 —
 1.3
Treasury stock—
 —
 —
 —
 —
 (18.7) —
 (18.7)
Distribution to noncontrolling interest—
 —
 —
 —
 —
 —
 (1.0) (1.0)
Balance (deficit) at September 30, 201922,948,766
 $—
 $260.8
 $(3.3) $160.6
 $(39.8) $—
 $378.3

Note: Amounts may not foot due to rounding.

See Notes to Condensed Consolidated Financial Statements.


SP Plus Corporation
Condensed Consolidated Statements of Cash Flows
 Nine Months Ended
(millions) (unaudited)September 30, 2019 September 30, 2018
Operating activities 
  
Net income$42.2
 $46.6
Adjustments to reconcile net income to net cash provided by operations:

 

Depreciation and amortization21.8
 13.4
Net amortization of acquired lease contracts—
 (0.5)
Net equity in earnings of unconsolidated entities (net of distributions)(0.6) (0.4)
Gain on sale of equity method investment in unconsolidated entity—
 (10.1)
Amortization of debt issuance costs0.4
 0.6
Amortization of original discount on borrowings0.3
 0.4
Non-cash stock-based compensation3.1
 2.1
Provisions for losses on accounts receivable0.5
 0.2
Deferred income taxes1.8
 0.1
Changes in operating assets and liabilities

 

Notes and accounts receivable0.2
 (14.4)
Prepaid assets1.9
 2.1
Right-of-use assets95.4
 —
Other assets(2.6) (0.4)
Accounts payable(7.6) (9.2)
Long-term lease liabilities(99.0) —
Accrued liabilities(3.0) 5.1
Net cash provided by operating activities54.8
 35.6
Investing activities 
  
Purchase of leasehold improvements and equipment(6.4) (6.7)
Proceeds from sale of equipment and contract terminations0.3
 0.2
Proceeds from sale of equity method investee's sale of assets—
 19.3
Cost of contracts purchased(2.1) (0.8)
Net cash (used in) provided by investing activities(8.2) 12.0
Financing activities 
  
Payments on credit facility revolver(360.3) (101.6)
Proceeds from credit facility revolver347.8
 104.8
Payments on credit facility term loan(8.4) (50.0)
Payments on other long-term borrowings(1.6) (0.3)
Distribution to noncontrolling interest(2.4) (2.6)
Payments of debt issuance costs and original discount on borrowings—
 (0.1)
Repurchase of common stock(32.0) —
Net cash used in financing activities(56.9) (49.8)
Effect of exchange rate changes on cash and cash equivalents—
 (0.4)
Decrease in cash and cash equivalents(10.3) (2.6)
Cash and cash equivalents at beginning of year39.9
 22.8
Cash and cash equivalents at end of period$29.6
 $20.2
Supplemental disclosures 
  
Cash paid during the period for 
  
Interest$13.8
 $5.5
Income taxes, net$11.6
 $11.8
 Nine Months Ended
(millions) (unaudited)September 30, 2017 September 30, 2016
Operating activities 
  
Net income$36.0
 $15.7
Adjustments to reconcile net income to net cash provided by operations:

 

Depreciation and amortization16.9
 27.0
Net accretion of acquired lease contracts(1.2) (1.4)
Loss (gain) on sale of equipment0.1
 (0.2)
Net equity in (earnings) losses of unconsolidated entities (net of distributions)(8.6)
0.6
Gain on sale of business(0.1)
—
Amortization of debt issuance costs0.6
 0.6
Amortization of original discount on borrowings0.4
 0.4
Non-cash stock-based compensation3.2
 2.8
Provisions for losses on accounts receivable0.2
 0.1
Deferred income taxes(1.5) 2.3
Changes in operating assets and liabilities

 

Notes and accounts receivable(4.6) (15.6)
Prepaid assets3.5
 1.5
Other assets(1.9) (5.6)
Accounts payable(14.1) 2.0
Accrued liabilities(7.5) 0.4
Net cash provided by operating activities21.4
 30.6
Investing activities 
  
Purchase of leasehold improvements and equipment(4.9) (10.8)
Proceeds from sale of equipment and contract terminations0.9
 2.9
Proceeds from equity method investee's sale of assets8.4

—
Proceeds from sale of business0.6

—
Cost of contracts purchased(0.6) (2.0)
Net cash provided by (used in) investing activities4.4
 (9.9)
Financing activities 
  
Payments on senior credit facility revolver (Restated Credit Facility)(308.7) (302.2)
Proceeds from senior credit facility revolver (Restated Credit Facility)301.5
 301.7
Payments on term loan (Restated Credit Facility)(15.0) (11.2)
Payments on other long-term borrowings(0.2) (0.2)
Distribution to noncontrolling interest(2.4) (2.6)
Payments of debt issuance costs and original discount on borrowings(0.1) (0.1)
     Repurchase of common stock—

(5.4)
Net cash used in financing activities(24.9) (20.0)
Effect of exchange rate changes on cash and cash equivalents0.3
 (0.1)
Increase in cash and cash equivalents1.2
 0.6
Cash and cash equivalents at beginning of period22.2
 18.7
Cash and cash equivalents at end of period$23.4
 $19.3
Supplemental disclosures 
  
Cash paid during the period for 
  
Interest$6.2
 $6.9
Income taxes, net$21.4
 $11.8

See Notes to Condensed Consolidated Financial Statements.

SP Plus Corporation
Notes to Condensed Consolidated Financial Statements
(millions, except for share and per share data) (unaudited) 


1. Significant Accounting Policies and Practices
 
The Company


SP Plus Corporation (the “Company”"Company") facilitates the efficient movement of people, vehicles and personal belongings with the goal of enhancing the consumer experience while improving bottom line results for our clients. The Company provides professional parking management, ground transportation, remote baggage check-in and handling, facility maintenance, security, event logistics, and other ancillary servicestechnology-driven mobility solutions to aviation, commercial, institutionalhospitality, healthcare and municipalgovernment clients in urban markets and airports across the United States, Puerto Rico and Canada. These services include a comprehensive set of on-site parking management and ground transportation services, which include facility maintenance, training, scheduling and supervising all service personnel as well as providing customer service, marketing, and accounting and revenue control functions necessary to facilitate the operation of clients’ facilities.North America. The Company also provides a range of ancillary services suchtypically enters into contractual relationships with property owners or managers as airport shuttle operations, valet services, taxi and livery dispatch services, security services and municipal meter revenue collection and enforcement services.opposed to owning facilities.

Basis of Presentation
 
The accompanying unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and disclosures normally included in the Condensed Consolidated Balance Sheets, Statements of Income, Comprehensive Income, Stockholders' Equity and Cash Flows prepared in conformity with U.S. GAAP have been condensed or omitted as permitted by such rules and regulations.

During the third quarter 2017, the Company corrected reimbursed management contract revenue and reimbursed management contract expense for the previous periods presented, whereby, the Company had been overstating reimbursed management contract revenue and reimbursed management contract expense included within the Condensed Consolidated Statements of Income in equal and off-setting amounts. This correction resulted in the following: (i) a reduction of reimbursed management contract revenue of $11.9 million and $35.2 million and a reduction of reimbursed management contract expense by $11.9 million and $35.2 million for the three and nine months ended September 30, 2016, respectively, and (ii) a reduction of reimbursed management contract revenue of $24.4 million and a reduction reimbursed management contract expense of $24.4 million for the nine months ended September 30, 2017, which represents the correction of the over statement previously reported for the six-month period ended June 30, 2017. The correction had no impact to the Condensed Consolidated Balance Sheets, Statements of Income, Comprehensive Income or Cash Flows, except as described above and as it relates to reimbursed management contract revenue and reimbursed management contract expense. Management has evaluated the effects of the previous misstatements, both qualitatively and quantitatively, and concluded that these corrections were immaterial to any current or prior interim or annual periods that were affected.

In the opinion of management, all adjustments (consisting only of adjustments of a normal and recurring nature) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 20172019 are not necessarily indicative of the results that might be expected for any other interim period or the fiscal year endedending December 31, 2017.2019. The financial statements presented in this report should be read in conjunction with the Company’s annual consolidated financial statementsConsolidated Financial Statements and notes thereto included in the Annual Report on Form 10-K filed on February 24, 2017.27, 2019.

Reclassifications

Certain reclassifications having no effect on the Condensed Consolidated Balance Sheets, Statements of Income, Comprehensive Income, earnings per share, total assets, or total liabilities have been made to the previously issued Condensed Consolidated Statements of Cash Flows to conform to the current periods presentation of the Company's Condensed Consolidated Financial Statements. Specifically, the Company reclassified its equity in earnings (losses) of unconsolidated entities from Other assets within the changes in operating assets and liabilities of the operating activities section of the Condensed Consolidated Statements of Cash Flows to Net equity in (earnings) losses of unconsolidated entities (net of distributions), which is a separate line within the operating activities section of the Condensed Consolidated Statements of Cash Flows.

Cash and cash equivalents
 
Cash equivalents represent funds temporarily invested in money market instruments with maturities of three months or less. Cash equivalents are stated at cost, which approximates fair value. Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements werewas $0.4 million and $0.3$1.7 million as of September 30, 20172019 and December 31, 2016,2018, respectively, and are included within Cash and cash equivalents within the Condensed Consolidated Balance Sheets.
 

Financial Instruments
 
The carrying values of cash, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these financial instruments. Book overdrafts of $26.5$26.0 million and $36.5$34.0 million are included within Accounts payable within the Condensed Consolidated Balance Sheets as of September 30, 20172019 and December 31, 2016,2018, respectively. Long-term debt has a carrying value that approximates fair value because these instruments bear interest at variable market rates.
 
Equity Investments in Unconsolidated Entities
 
The Company has ownership interests in 3230 active partnerships, joint ventures or similar arrangements that operate parking facilities, of which 2425 are consolidated under the VIE or voting interest models and 85 are unconsolidated where the Company’s ownership interests range from 30-50 percent and for which there are no indicators of control. The Company accounts for such investments under the equity method of accounting, and its underlying share of each investee’s equity is included in Equity investments in unconsolidated entities within the Condensed Consolidated Balance Sheets. As the operations of these entities are consistent with the Company’s underlying core business operations, the equity in earnings of these investments are included in Parking services revenue—LeaseServices revenue - lease type contracts within the Condensed Consolidated Statements of Income. The equity in earnings in these related investments which includes earnings of $8.5 million from for our proportionate share of the net gain of an equity method investees' sale of assets for the nine months September 30, 2017, was $0.6were $0.8 million and $0.7 million for the three months ended September 30, 20172019 and 2016,2018, respectively, and $10.6were $2.4 million and $1.8$1.9 million for the nine months ended September 30, 20172019 and 2016,2018, respectively.
 

In October 2014, the Company entered into an agreement to establish a joint venture with Parkmobile USA, Inc. (“Parkmobile USA”) and contributed all of the assets and liabilities of its proprietary Click and Park parking prepayment business in exchange for a 30 percent30% interest in the newly formed legal entity called Parkmobile, LLC (“Parkmobile”). The joint ventureOn January 3, 2018, the Company closed a transaction to sell the entire 30% interest in Parkmobile to Parkmobile USA, Inc. for a gross sale price of Parkmobile provides on-demand$19.0 million and prepaid transaction processing for on- and off-street parking and transportation services. The contribution of the Click and Park business in the joint venture resultedfirst quarter of 2018, the Company recognized a pre-tax gain of $10.1 million, net of closing costs, and included in a lossEquity in earnings from investment in unconsolidated entity within the Condensed Consolidated Statements of control ofIncome for the business, and therefore it was deconsolidated from the Company’s financial statements.nine months ended September 30, 2018. The Company accountshistorically accounted for its investment in the Parkmobile joint venture with Parkmobile using the equity method of accounting, and its underlying share of equity in Parkmobile iswas included in Equity investments in unconsolidated entities within the Condensed Consolidated Balance Sheets. The equity in losses (earnings) in the Parkmobile joint venture iswere historically included in Equity in lossesearnings from investment in unconsolidated entity within the Condensed Consolidated Statements of Income.


Non-ControllingNoncontrolling Interests
 
Noncontrolling interests represent the noncontrolling holders’ percentage share of income or losses from the subsidiaries in which the Company holds a majority, but less than 100 percent, ownership interest and the results of which are consolidated and included within the Condensed Consolidated Financial Statements.
 
Sale of Business
During the third quarter 2015, the Company signed an agreement to sell and subsequently sold portions of the Company’s security business primarily operating in the Southern California market to a third-party for a gross sales price of $1.8 million, which resulted in a gain on sale of business of $0.5 million, net of legal and other expenses. The assets under the sale agreement met the definition of a business as defined by ASC 805-10-55-4.  Cash consideration received during the third quarter 2015, net of legal and other expenses, was $1.0 million, with the remaining consideration for the sale of the business being classified as contingent consideration. Per the sales agreement, the contingent consideration was based on the performance of the business and retention of current customers over an eighteen-month period ending on February 2017. The contingent consideration was valued at fair value as of the date of sale of the business and resulted in the Company recognizing a contingent consideration receivable from the buyer in the amount of $0.5 million.  The buyer had sixty days from February 2017 to calculate and remit the remaining consideration. The Company received $0.6 million for the final earn out consideration from the buyer during the second quarter of 2017, which resulted in the Company recognizing an additional gain on sale of business of $0.1 million for the nine months ended September 30, 2017. See Note 6. Fair Value Measurement for the fair value of the contingent receivable as of December 31, 2016.
Interest Rate Swap Transactions
In October 2012, the Company entered into Interest Rate Swap transactions (collectively, the “Interest Rate Swaps”) with each of JPMorgan Chase Bank, N.A., Bank of America, N.A. and PNC Bank, N.A. in an initial aggregate Notional Amount of $150.0 million (the “Notional Amount”). The Interest Rate Swaps effectively fixed the interest rate on an amount of variable interest rate borrowings under the Company's credit agreements, originally equal to the Notional Amount at 0.7525% per annum plus the applicable margin rate for LIBOR loans under the Company's credit agreements, determined based upon the Company’s consolidated total debt to EBITDA ratio. The Notional Amount was subject to scheduled quarterly amortization that coincides with quarterly prepayments of principal under the Company's credit agreements. These Interest Rate Swaps are classified as cash flow hedges, and the Company assesses the effectiveness of the hedge on a monthly basis. The ineffective portion of the cash flow hedge was recognized in earnings as an increase of interest expense. As of September 30, 2017, no ineffectiveness of the hedge has been recognized in interest expense. The Interest Rate Swaps expired on September 30, 2017. See Note 6. Fair Value Measurement for the fair value of the interest rate swap as of December 31, 2016.

The Company does not enter into derivative instruments for any purpose other than for cash flow hedging purposes.

Recently Issued Accounting Pronouncements


Recently Adopted Accounting Pronouncements


In MarchFebruary 2016, the Financial Accounting Standards Board ("FASB")FASB issued Accounting Standards Update ("ASU")ASU No. 2016-09, Compensation - Stock Compensation2016-02, Leases (Topic 718): Improvements842). Topic 842 requires lessees to Employee Share-Based Payment Accounting. ASU 2016-09 simplifies several aspects ofrecord most leases on the balance sheet and recognize expense on the income statement. Additionally, the classification criteria and the accounting for share-based payment award transactionssales-type and their presentation indirect financing leases is modified for lessors. Under Topic 842, all entities are required to recognize "right-of-use" ("ROU") assets and lease liabilities on the financial statements. The new guidance requiresbalance sheet for all income tax effectsleases classified as either operating or finance leases. Lease classification will determine recognition of awards to be recognized inlease-related revenue and expense. Since the income statement whenrelease of Topic 842, the awards vest orFASB also issued the following additional ASUs updating the topic:

•
In January 2018, the FASB issued ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842
•
In July 2018, the FASB issued ASU No. 2018-11, Lease (Topic 842): Targeted Improvements
•
In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases
•
In December 2018, the FASB issued ASU No. 2018-20, Narrow Scope Improvements for Lessors
•
In March 2019, the FASB issued ASU No. 2019-01, Codification Improvements
Topic 842 and its related ASUs are settled, eliminating additional paid in capital ("APIC") pools. The guidance will also require companies to elect whether to account for forfeitures of share-based payments by (1) recognizing forfeitures of awards as they occur (e.g., when an award does not vest because the employee leaves the company) or (2) estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change, as is currently required. These and other requirements of ASU 2016-09 were effective for interim and annual reporting periods beginning after December 15, 2016.2018.


The Company adopted the provisions of ASU 2016-09 inTopic 842 on January 1, 2019 under the first quarter of 2017. The impact to the Company's financial position, results of operations, cash flow and financial statement disclosures are as follows:

On a modified retrospective basis,approach and has used the effective date as allowed by ASU 2016-09, the Company elected to account for forfeitures of share-based awards as they occur. As a result, beginning retained earnings includes a $0.3 million adjustment related to the recognition of estimated forfeitures previously not recognized as expense by the Company as of December 31, 2016.

The Company recognized excess tax benefits of $0.1 million and $0.7 million for the three and nine months ended September 30, 2017, respectively, related to shares issued and settled with employees during the respective periods.

ASU 2016-09 also requires the presentation of excess tax benefits on the statement of cash flows as an operating activity on either a prospective or retrospective basis. The Company elected to apply this guidance on a prospective basis. Priorinitial application date. Therefore, comparative periods have not been adjustedrecast and continue to reflect this adoption.be reported under the accounting standards in effect for those prior periods presented. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. 

The standard had a material impact in our Condensed Consolidated Balance Sheet, but did not have a material impact in the Company's Condensed Consolidated Income Statement and no impact in the Condensed Consolidated Statement of Cash Flow. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while the Company's accounting for finance leases remained substantially unchanged.


There was no significantThe impact to diluted weighted average shares outstanding for purposes of calculating net income per common share-diluted for the three and nine months endedstandard on the Condensed Consolidated Balance Sheet as of September 30, 2017,2019 is as a resultfollows:
  Impact of Changes in Accounting Policies as of September 30, 2019
(millions) (unaudited) As Reported Balances without Adoption of Topic 842 Impact of Adoption
Increase/(Decrease)
Assets      
Prepaid expenses and other (a) $15.7
 $16.7
 $(1.0)
Right-of-use assets (b) 444.5
 —
 444.5
Favorable acquired lease contracts, net (c) —
 14.9
 (14.9)
Cost of contracts, net (d) 4.5
 8.4
 (3.9)
Liabilities 

 

 

Accrued rent (e) $18.2
 $26.8
 $(8.6)
Short-term lease liabilities (f) 117.1
 —
 117.1
Long-term lease liabilities (g) 338.4
 —
 338.4
Unfavorable lease contracts, net (h) —
 20.2
 (20.2)
Other long-term liabilities (i) 59.3
 61.3
 (2.0)


(a) Represents prepaid rent reclassified to Right-of-use assets
(b) Represents capitalization of operating lease assets and reclassification of prepaid and deferred rent, lease incentives, favorable
and unfavorable acquired lease contracts, net and cost of contract balances on operating leases
(c) Represents favorable acquired lease contracts, net reclassified to Right-of-use assets
(d) Represents cost of contract, net reclassified to Right-of-use assets
(e) Represents short-term deferred rent reclassified to Right-of-use assets
(f) Represents the adoption.recognition of short-term operating lease liabilities

(g) Represents the recognition of long-term operating lease liabilities
(h) Represents unfavorable acquired lease contracts, net reclassified to Right-of-use assets
(i) Represents long-term deferred rent reclassified to Right-of-use assets

In March 2016,June 2018, the FASB issued ASU No. 2016-07, Investments - Equity Method2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. Under existing guidance, the accounting for nonemployee share-based payments differs from that applied to employee awards, particularly with regard to the measurement date and Joint Ventures (Topic 323): Simplifying the Transitionimpact of performance conditions. This ASU provides that existing employee guidance will apply to Equity Methodnonemployee share-based transactions (as long as the transaction is not effectively a form of Accountingfinancing), which eliminateswith the requirements to apply the equity methodexception of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. Under ASU 2016-08, the equity method of accounting should be applied prospectively from the date significant influence is obtained. The new standard also provides specific guidance for available-for-sale securities that become eligiblerelated to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the equity methodgoods or services. In addition, the contractual term will be able to be used in lieu of accounting. In those cases, any unrealized gain or loss recorded within accumulated other comprehensive income should be recognizedan expected term in earnings at the date the investment initially qualifiesoption-pricing model for the use of the equity method. The new standardnonemployee awards. ASU No. 2018-07 is effective for interim and annual periodsall companies for fiscal years beginning after December 15, 2016.2018 and interim periods within those fiscal years. The Company adopted thisthe standard as of January 1, 2017.2019. The standard did not have an impact on the Company's financial position, results of operation, cash flows and financial statement disclosures.

In March 2016, the FASB issued ASU No. 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. The new guidance clarifies that a change in the counterparty to a derivative contract, in and of itself, does not require the dedesignation of a hedging relationship. An entity will, however, still need to evaluate whether it is probable that the counterparty will perform under contract as part of its ongoing effectiveness assessment for hedge accounting. Therefore, a novation of a derivative to a counterparty with a sufficiently high credit risk could still result in the dedesignation of the hedging relationship. ASU 2016-05 is effective in fiscal years beginning after December 15, 2016, including interim periods within those years. The Company adopted this standard as of January 1, 2017. The standard did not have an impact on the Company's financial position, results of operation, cash flows and financial statement disclosures.

Accounting Pronouncements to be Adopted

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The ASU provides new guidance about income statement classification and eliminates the requirement to separately measure and report hedge ineffectiveness. The entire change in fair value for qualifying hedge instruments included in the effectiveness will be recorded in other comprehensive income (OCI) and amounts deferred in OCI will be reclassified to earnings in the same income statement line item in which the earnings effect of the hedged item is reported. The new guidance also amends the presentation and disclosure requirements. The intention is to more closely align hedge accounting with companies' risk management strategies, simplify the application of hedge accounting and increase transparency as to the scope and results of hedging programs. ASU 2017-12 is effective in fiscal years beginning after December 15, 2018, including interim periods within those years. Early adoption is permitted. The Company is currently assessing the impact of adopting this standard on the Company's financial position, results of operations, cash flows and financial statement disclosures.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill (i.e., Step 2 under current goodwill impairment test rules) to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on the Step 1 analysis under current guidance). The standard will be applied prospectively and is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019 for public business entities ("PBEs") that meet the definition of a Securities and Exchange Commission ("SEC") filer (i.e., for any impairment test performed by calendar-year entities in 2020). Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company is currently assessing the impact of adopting this standard on the Company’s financial position, results of operations, cash flows and financial statement disclosures.


In JanuaryAugust 2017, the FASB issued ASU No. 2017-01, Business Combinations2017-12, Derivatives and Hedging (Topic 805) - Clarifying815): Targeted Improvements to Accounting for Hedging Activities. This Update modifies accounting guidance for hedge accounting by making more hedge strategies eligible for hedge accounting, amending presentation and disclosure requirements, and changing how companies assess ineffectiveness. The intent is to simplify the Definitionapplication of a Business. Under ASU 2017-01,hedge accounting and increase transparency of information about an entity first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is not a business. If it’s not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. Under currententity’s risk management activities. The amended guidance a business consists of (1) inputs, (2) processes applied to those inputs and (3) the ability to create outputs. ASU 2017-01 is effective for PBE's for fiscal yearsannual periods beginning after December 15, 2017, and interim periods within those years. The ASU will be applied prospectively to any transactions occurring within the period of adoption.2018. The Company doesadopted the standard as of January 1, 2019. The standard did not expect the adoption of this ASU to have a materialan impact on itsthe Company’s financial position, results of operations, cash flows and financial statement disclosures.


In November 2016,October 2018, the FASB issued ASU No. 2016-18, Statement2018-16, Derivatives and Hedging (Topic 815): Inclusion of Cash Flows (Topic 230): Restricted Cashthe Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as Benchmark Interest Rate for Hedge Accounting Purposes. ASU 2016-18 clarifies how entities should present restricted cash and restricted cash equivalents inThis Update permits use of the statement of cash flows. The guidance requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. The guidance, which isOIS rate based on the SOFR as a consensus of the Emerging Issues Task Force (EITF),U.S. benchmark interest rate for hedge accounting purposes. This Update is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted.2018. The Company doesadopted the standard as of January 1, 2019. The standard did not expect the adoption of this ASU to have a materialan impact on itsthe Company’s financial position, results of operations, cash flows and financial statement disclosures.


Accounting Pronouncements to be Adopted

In August 2016,January 2017, the FASB issued ASU No. 2016-15, Statement of Cash Flows2017-04, Intangibles – Goodwill and Other (Topic 230)350): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 amendsSimplifying the Accounting for Goodwill Impairment. The new guidance in ASC 230 related tosimplifies the classification of certain cash receipts and payments in the statement of cash flows. The primary purposeaccounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. ASU is to reduce the diversity in practice that has resulted from the lack of consistent principles on this topic. The amendment adds or clarifies several statement of cash flow classification issues including: (i) debt prepayment or debt extinguishment costs, (ii) settlement of certain zero-coupon debt instruments, (iii) contingent consideration payments, (iv) proceeds from the settlement of insurance claims, (v) proceeds from the settlement of corporate-owned life insurance policies, (vi) distributions received from equity method investments, (vii) beneficial interest in securitization transactions, and (viii) separately identifiable cash flows and application of the predominance principle. The standardNo. 2017-04 is effective for annual or any interim and annual reporting periodsgoodwill impairment tests in fiscal years beginning after December 15, 2017.2019. Early adoption is permitted for interim or annual goodwill impairment tests. The Company doesstandard is not expect the adoption of this ASUexpected to have a materialan impact on itsthe Company’s financial position, results of operations, cash flows and financial statement disclosures.

In June 2016, the FASB issued ASU No. 2016-13, Credit Losses (Topic 326):- Measurement of Credit Losses on Financial Instruments (Topic 326). The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard is effective for interim and annual reporting periods beginning after December 15, 2019. The Company is currently assessing the impact of adopting this standard on the Company’sCompany's financial position, results of operations, cash flows and financial statement disclosures.


In February 2016,August 2018, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-22018-15, Intangibles – Goodwill and Other – Internal - Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The standard requires lesseesa customer in a cloud computing arrangement that is a service contract to move most leasesfollow the internal-use software guidance in Accounting Standards Codification (ASC) 350-40 to determine which implementation costs to capitalize as assets. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the balance sheet and recognize expense, similar to current accounting guidance, on the income statement. Additionally, the classification criteria and the accounting for sales-type and direct financing leases is modified for lessors. Under ASU 2016-2, all entities will classify leases to determine: (i) lease-related revenue and expense and (ii) for lessors, amount recorded on the balance sheet. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginningterm of the earliest comparative period inhosting arrangement, beginning when the financial statements, with full retrospective application being prohibited. ASU 2016-2module or component of the hosting arrangement is ready for its intended use. The standard is effective for interim and annual reporting periods beginning after December 15, 2018. These and other changes2019. The standard is not expected to accounting for leases under ASU 2016-02 are currently being evaluated byhave an impact on the Company for impacts to the Company'sCompany’s financial position, results of operations, cash flows and financial statement disclosures.


In January 2016,August 2018, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and2018-13, Fair Value Measurement of Financial Assets and Financial Liabilities(Topic 820). ASU 2016-1 amends various areas ofThis standard modifies the accounting for financial instruments. Key provisions of the amendment currently being evaluated by the Company require (i) equity investments to be measured atdisclosures on fair value (except those accountedmeasurements by removing the requirement to disclose the amount and reasons for under the equity method), (ii) the simplificationtransfers between Level 1 and Level 2 of equity investment impairment

determination, (iii) certain changes to the fair value measurementhierarchy and the policy for timing of financial instruments measured at amortized cost, (iv)such transfers. The ASU expands the separate presentation,disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income, of the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (given certain conditions), and (v) the evaluation for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the Company's other deferred tax assets. ASU 2016-01income. The standard is effective for interim and annual reporting periods beginning after December 15, 2017.2019. The Company doesstandard is not expect the adoption of this ASUexpected to have a materialan impact on itsthe Company’s financial position, results of operations, cash flows and financial statement disclosures.


In May 2017,
2. Leases

The Company leases parking facilities, office space, warehouses, vehicles and equipment and determines if an arrangement is a lease at inception. The Company rents or subleases certain real estate to third parties. The Company's sublease portfolio consists of operating leases for space within our leased parking facilities.
Prior to January 1, 2019, the FASB issued ASU No. 2017-10, Service Concession Arrangements (Topic 853): DeterminingCompany recognized lease expense related to operating leases on a straight-line basis over the Customerterms of the Operation Services. ASU 2017-10 clarifies howleases and, accordingly, recorded the difference between cash rent payments and recognition of rent expense as a deferred rent liability or prepaid rent. Landlord-funded leasehold improvements were also recorded as deferred rent liabilities and were amortized as a reduction of rent expense over the noncancelable term of the related operating entities should determinelease. For leases that included one or more options to renew, the customerexercise of operationsuch renewal options is at the Company's sole discretion or mutual agreement. Certain of the Company's lease agreements included variable rent consisting primarily of payments that are a percentage of parking services revenue based on contractual levels and rental payments adjusted periodically for transactionsinflation.

Upon adoption of Topic 842, ROU assets represent the Company's "right-of-use" over an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The ROU asset includes cumulative prepaid or accrued rent on adoption date, unamortized lease incentives, unamortized initial direct costs, unamortized favorable acquired lease contracts, net and unfavorable acquired lease contracts, net initially recognized prior to adoption of Topic 842. The short term lease exception has been applied to leases with an initial term of 12 months or less and these leases are not recorded on the balance sheet.

Service concession arrangements within the scope of this guidance. US GAAP does not currently address how an operating entity should determine the customer of the operation services for transactions within the scope of Topic 853. The amendment eliminates diversity in practice by clarifying that the grantor is the customer of the operation services in all cases for those arrangements. The amendments in this update should be adopted at the same time as adoption of Topic 606, as defined further below. Early adoption is permitted. The Company is currently assessing the impact of adopting this standard on the Company's financial position, results of operations, cash flows and financial statement disclosures, in conjunction with the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Since the release of ASU 2014-09, the FASB has issued the following additional ASUs updating the topic:

In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers
In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients
In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing
In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).
In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date

Collectively these standards create new accounting guidance for revenue recognition that supersedes most existing revenue recognition rules, including most industry specific revenue recognition guidance. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. Topic 606 also provides new guidance on the recognition of certain costs related to customer contracts, and changes the FASB guidance for revenue-related issues, such as how an entity is required to consider whether revenue should be reported gross or net basis. The amendments are effective for fiscal years and interim periods within those fiscal years beginning on or after December 15, 2017.

The Company's process for implementing Topic 606 includes, but is not limited to, identifying contracts within the scope of the standard, identifying distinct performance obligations within each contract, and applying the new guidance for measuring and recognizing revenue, to each performance obligation. The Company is also evaluating new disclosure requirements and identifying appropriate changes to business processes and controls to support recognition and disclosure under the new guidance. ASU No. 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services issued in May 2017, clarified how operating entities should determine the customer of operation services for transactions within, are excluded from the scope of this guidance. The Company has determined that revenue generated from service concession arrangements, which are currently accounted for as leasing type of arrangements, will be accounted for under the guidance of Topic 606 upon adoption of Topic 853 and will be adopted concurrently842. Lease costs associated with Topic 606. The Company expects that certain expenses related to these arrangements primarilyis recorded within Cost of parking services, will be presented as a reduction of revenue upon adoptionrevenue. See Note 5. Revenue for further discussion.


As most of Topic 853. The Company is currently evaluating the impact of this change to the Company's financial position, results of operations, cash flows and financial statement disclosures. Theleases do not provide an implicit rate, the Company expects to completeuses its incremental borrowing rate based on the implementation assessment of Topic 606 and Topic 853 in the fourth quarter of 2017 and will adopt Topic 606 using the modified retrospective method.

2. Legal and Other Commitments and Contingencies
The Company is subject to claims and litigation in the normal course of its business. The Company applies the provisions as defined in the guidance related to accounting for contingenciesinformation available at commencement date in determining the recognitionpresent value of lease payments. The Company uses the implicit rate when readily determinable. Lease expense is recognized on a straight-line basis over the lease term.

For leases that include one or more options to renew, the exercise of such renewal options is at the Company's sole discretion or mutual agreement. Equipment and measurementvehicle leases also include options to purchase the leased property. The depreciable life of potentialassets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Variable lease components comprising of payments that are a percentage of parking services revenue based on contractual levels and rental payments adjusted periodically for inflation are not included in lease liability. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of leased assets and liabilities associated with legal claims against the Company. Management uses guidance from internal and external legal counselclassification on the potential outcomeCondensed Consolidated Balance Sheet as of litigation in determiningSeptember 30, 2019 were as follows:
(millions) (unaudited)ClassificationSeptember 30, 2019
Assets  
OperatingRight-of-use assets$444.5
Finance
Leasehold improvements, equipment and construction in progress, net (a)
17.7
Total leased assets $462.2
Liabilities  
Current  
OperatingShort-term lease liability$117.1
FinanceCurrent portion of long-term obligations under credit facility and other long-term borrowings2.8
Noncurrent  
OperatingLong-term lease liability338.4
FinanceOther long-term borrowings15.1
Total lease liabilities $473.4

(a)Finance lease assets are recorded net of accumulated amortization of $2.1 million as of September 30, 2019
The components of lease cost and classification on the need to record liabilities for potential losses and the disclosureCondensed Consolidated Statement of pending legal claims.

Contracts Acquired in the Central Merger

Certain lease contracts acquired in the Central Merger (as defined below) include provisions allocating to the Company responsibility for the cost of certain structural and other repairs required to be made to the leased property, including improvement and repair

costs arising as a result of ordinary wear and tear. The Company recorded nil and $0.1 million of costsIncome for the three months ended September 30, 2017 and 2016, respectively, and $0.1 million and $0.4 million for the nine months ended September 30, 20172019 were as follows:
 
Three Months Ended Nine Months Ended
(millions) (unaudited)ClassificationSeptember 30, 2019 September 30, 2019
Operating lease cost (a)
Cost of services - lease type contracts$61.4
 $177.5
Operating lease cost (a) (b)
General and administrative expenses1.6
 3.9
Finance lease cost    
Amortization of leased assetsDepreciation and amortization0.9
 1.7
Interest on lease liabilitiesInterest expense0.2
 0.6
Net lease cost
$64.1
 $183.7

(a)Includes short-term leases and 2016, respectively, (net of expected recoveries of the totalvariable lease costs
(b)Operating lease cost recognized by the Company through the applicable indemnity discussed further belowincluded in General and in Note 3. Central Merger and Restructuring, Merger and Integration Costs) in Cost of parking services—Lease contracts within the Condensed Consolidated Statements of Income for structural and other repair costsadministrative expenses are related to certain lease contracts acquired in the Central Merger, whereby the Company has expensed repair costsleases for certain leases and engaged third-party general contractors to complete certain structural and other repair projects, and other indemnity related costs. Based on information available at this time, the Company believes that it has completed and incurred all additional costs for certain structural and other repair costs for certain lease contracts acquired in the Central Merger ("Structural and Repair Costs"). Additionally and as further described in Note 3. Central Merger and Restructuring, Merger and Integration Costs, the Company settled all outstanding matters between the former Central stockholders and the Company.office space


Holten Settlement

In March 2010, John V. Holten, a former indirect controlling shareholder of the Company, filed a lawsuit against the Company in the United States District Court, District of Connecticut. Mr. HoltenRent expense on operating leases was terminated as the Company's chairman in October 2009. The lawsuit alleged breach of his employment agreement$63.0 million and claimed that the agreement entitled Mr. Holten to payments worth more than $3.8 million. The Company filed an answer and counterclaim to Mr. Holten's lawsuit in 2010.

In March 2016, the Company and Mr. Holten settled all claims in connection with the original lawsuits ("Holten Settlement"). Per the settlement, the Company paid Mr. Holten $3.4 million, of which $1.9 million was recovered by the Company through the Company's directors and officer's liability insurance policies. The Company recognized an expense, net of insurance recoveries, related to the Holten Settlement of $1.5$181.4 million for the three and nine months ended September 30, 2016.2019, respectively. The following table presents information on short term and variable lease costs:


 Three Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2019 September 30, 2019
Short-term lease cost$7.5
 $25.4
Variable lease cost14.9
 43.3
Total short term and variable lease cost$22.4
 $68.7

3. Central Merger
Sublease income generated during the three and Restructuring, Merger and Integration Costsnine months ended September 30, 2019 was not material.

On October 2, 2012 ("Closing Date"), theThe Company completed the acquisition (the "Central Merger" or "Merger") of 100% of the outstanding common shares of KCPC Holdings, Inc., which was the ultimate parent of Central Parking Corporation (collectively, "Central"), for 6,161,332 shares of Company common stock and the assumption of approximately $217.7 million of Central's debt, net of cash acquired. Additionally, the Agreement and Plan of Merger dated February 28, 2012 with respect to the Central Merger ("Merger Agreement") provided that Central's former stockholders were entitled to receive cash consideration (the "Cash Consideration") in the amount equal to $27.0 million plus, if and to the extent the Net Debt Working Capital (as defined below) was less than $275.0 million (the "Lower Threshold")has entered into operating lease arrangements as of September 30, 2012, the2019 that are effective for future periods. The total amount by which the Net Debt Working Capital was below such amount (such sum, the "Cash Consideration Amount")of right-of-use assets and lease liabilities related to be paid three years after closing, to the extent the $27.0 million was not used to satisfy indemnity obligations pursuant to the Merger Agreement.these arrangements are immaterial.
Pursuant to the Merger Agreement, the Company was entitled to indemnification from Central's former stockholders (i) if and to the extent Central's combined net debt and the absolute value
Maturities of Central's working capital (as determined in accordance with the Merger Agreement) (the "Net Debt Working Capital") exceeded $285.0 million (the "Upper Threshold")lease liabilities as of September 30, 20122019 were as follows:
(millions) (unaudited)Operating 
Leases Liabilities		Finance
Leases Liabilities		Total
2019$36.0
$0.9
$36.9
2020131.0
3.6
134.6
2021100.9
3.6
104.5
202280.6
3.1
83.7
202354.1
2.3
56.4
After 2024126.0
7.1
133.1
Total lease payments528.6
20.6
549.2
Less: Imputed interest73.1
2.7
75.8
Present value of lease liabilities$455.5
$17.9
$473.4


Future sublease income for the above periods shown was excluded as the amounts are not material.

Lease term and (ii)discount rate information was as follows:
(unaudited)September 30, 2019
Weighted-average remaining lease term (years)
Operating leases5.6
Finance leases7.3
Weighted-average discount rate
Operating leases4.9%
Finance leases5.0%


Supplemental cash flow information related to leases was as follows:

Nine Months Ended
(millions) (unaudited)September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities 
Operating cash flows from operating leases$135.9
Operating cash flows from finance leases0.6
Financing cash flows from finance leases1.6
Leased assets obtained in exchange for new operating liabilities50.1
Leased assets obtained in exchange for new finance lease liabilities$5.2



3. Acquisition

On November 30, 2018, the Company acquired the outstanding shares (the "Acquisition") of ZWB Holdings, Inc. and Rynn's Luggage Corporation, their subsidiaries and affiliates (collectively, "Bags"). Bags is a leading provider of baggage delivery, remote airline check in, and other related services, primarily to airline, airport and hospitality clients. Subject to the terms and conditions of the Stock Purchase Agreement, as consideration for the acquisition of Bags, SP Plus paid to the Sellers total consideration of approximately $283.6 million. The consideration is comprised of $275.0 million of contractual cash consideration, $8.1 million related to the preliminary net working capital and cash acquired and $0.5 million for certain defined adverse consequences as set forthindividual taxes to be paid by the Seller (the “Cash Consideration”). As described in the Merger Agreement (including with respect to Structural and Repair Costs). Pursuant to the Merger Agreement, Central's former stockholders were required to satisfy certain indemnity obligations, which were capped at the Cash Consideration Amount (the "Capped Items") only through a reduction of the Cash Consideration. For certain other indemnity obligations set forth in the Merger Agreement, which were not capped at the Cash Consideration Amount (the "Uncapped Items")Note 17. Business Unit Segment Information, including the Net Debt Working Capital indemnity obligations described above, Central's former stockholders had the ability to satisfy any amount payable pursuant to such indemnity obligations as follows (provided that the Company reservesintegrated the right to reject the cashBags' operations into Segment Two (Aviation) for segment reporting purposes, effective November 30, 2018.

The Company's acquisition of Bags has been accounted for as a business combination, and stock alternatives available to the Companyassets acquired and choose to reduce the Cash Consideration):
Central's former stockholders could elect to pay such amount with cash;
Central's former stockholders could elect to pay such amount with the Company's common stock (valuedliabilities assumed were recorded at $23.64 per share, the market valuetheir estimated fair values. Goodwill as of the closingacquisition date is measured as the excess of consideration transferred, which is also generally measured at fair value or the net acquisition date fair values of the Merger Agreement); or
Central's former stockholders could elect to reduce the $27.0 million cash consideration by such amount, subject to the condition that the cash consideration remains at least $17.0 million to cover Capped Items.

Following the Closing Date, the Company and Central's former stockholders exchanged notices regarding indemnification matters, including with respect to the calculation of Net Debt Working Capital,assets acquired and the Company made adjustments for known matters as they arose, although Central’s former stockholders may not have agreed to the aggregateliabilities assumed. The results of such adjustments made by the Company. During such time, Central’s former stockholders continually requested additional documentation supporting the Company’s indemnification claims, including with respect to the Company’s calculation of Net Debt Working Capital. Furthermore, following the Company's notices of indemnification matters, the representative of Central's former stockholders indicated that they might make additional inquiries and raise issues with respect to the Company's indemnification claims (including, specifically, as to Structural and Repair Costs) and that they might assert various claims of their own relating to the Merger Agreement.

In early 2015, the Company and Central’s former stockholders engaged an independent public accounting firm for ultimate resolution, through binding arbitration, regarding their dispute as to the Company’s calculation of Net Debt Working Capital.


On February 19, 2016, the Company and Central’s former stockholders received a non-appealable and binding decision from the independent public accounting firm indicating that Net Debt Working Capital as of September 30, 2012 was $291.6 million, or $6.6 million above the Upper Threshold. Furthermore, as part of the independent public accounting firm’s decision over the calculation of Net Debt Working Capital as of September 30, 2012, it was determined by the independent public accounting firm and the Company that $1.5 million of Net Debt Working Capital claims were more appropriately claimable as an adverse consequence indemnification claim, as definedoperations are reflected in the Merger Agreement. As such and in conjunction with the independent public accounting firm’s decision on Net Debt Working Capital, the Company (i) reclassified $1.5 million of indemnification claims from the Net Debt Working Capital calculation to indemnification claims for certain adverse consequences; and (ii) recognized an expense of $1.6 million ($0.9 million, net of tax) in General and administrative expenses for certain of the other amounts disallowed under the Net Debt Working Capital calculation as of and for the year ended December 31, 2015 respectively. The independent public accounting firm also determined that an additional $1.6 million of Net Debt Working Capital claims were disallowed; however, these Net Debt Working Capital amounts claimed by the Company were not previously recognized by the Company as a cost recovery given their contingent nature and since these claims were not previously recognized as an expense by the Company, and therefore the independent public accounting firm’s decision to disallow these claims had no impact to the Company's consolidated financial statements as of and for the year ended December 31, 2015.

On March 11, 2016, the Company provided notification to Central's former stockholdersfrom the date of an additional indemnity claim for $1.6 million and further provided notification that its indemnity claims for certain defined adverse consequences aggregated to $26.5 million. The additional $1.6 million of indemnity claim made by the Company in the March 11, 2016 letter was not recognized as a cost recovery given the contingent nature and since this claim was not previously recognized by the Company as an expense.acquisition.


As previously discussed in Note 2. Legal and Other Commitments and Contingencies, certain lease contracts acquired in the Central Merger include provisions allocating to the Company responsibility for all or a defined portion of the costs of certain structural and other repair costs required on the property, including improvement and repair costs arising as a result of ordinary wear and tear. The Company reduced the Cash Consideration Amount by $6.6 million, representing the amount Net Debt Working Capital exceeded the Upper Threshold, and $18.8 million, representing the amount of indemnified claims for certain adverse consequences (including but not limited to Structural and Repair Costs) recognized by the Company as of September 30, 2016. Additionally, the Company submitted $7.7 million of additional indemnity claims for certain adverse consequences (including but not limited to Structural and Repair Costs) to Central's former stockholders, including claims as set for in the March 11, 2016 letter, but did not recognize these indemnity claims as a receivable or offset to the Cash Contingent Amount with a corresponding gain or reduction of costs incurred by the Company, as these claims were contingent in nature or represented costs which the Company had not yet incurred but which met the requirements of the indemnification provisions established in the Merger Agreement.

On September 27, 2016, the Company and Central's former stockholders agreed-upon non-binding terms to settle all outstanding matters between the parties relating to the Central Merger ("Settlement Terms") and on December 15, 2016 the Company and Central's former stockholders executed a settlement agreement ("Settlement Agreement") to settle all outstanding matters between the parties relating to the Central Merger (including the Company's claims as described above). Pursuant to the Settlement Agreement, the Company paid Central's former stockholders $2.5 million in aggregate, which effectively reduced the $27.0 million of Cash Consideration that would have been payable by the Company to Central's former stockholders under the Merger Agreement by $24.5 million. As a result of the Settlement Terms, the Company recorded $0.8 million ($0.5 million, net of tax) in General and administrative expense within the Condensed Consolidated Statements of Income in the third quarter 2016. Additionally and pursuant to the Settlement Agreement, the parties fully released one another from claims relating to the Central Merger, and therefore the Company has no further obligation to pay any additional Cash Consideration Amount to Central's former stockholders.

Restructuring, Merger and Integration Costs

Since the Central Merger, the Company has incurred certain restructuring, acquisition and integration costs associated with the transaction that were expensed as incurred and are reflected in the Condensed Consolidated Statements of Income. See Note 4. Acquisition, Restructuring and Integration Costs.

The Company believes that information gathered to date provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed but the company is waiting for additional information necessary to finalize those fair values. Thus, the provisional measurements of fair value set forth above are subject to change. As a result, during the measurement period, which may be up to one year from the acquisition date, adjustments to the assets acquired and liabilities assumed will be recorded with corresponding adjustments to goodwill. The Company expects to complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. The Company recorded measurement period adjustments during the nine months ended September 30, 2019 related to an increase in assumed workers' compensation liabilities.

The following estimated fair values of assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed:
(millions) (unaudited)As Initially Reported November 30, 2018Preliminary Measurement Period AdjustmentsAs Adjusted November 30, 2018
Cash and cash equivalents$5.9
$—
$5.9
Notes and accounts receivable13.2
—
13.2
Prepaid expenses and other2.0
—
2.0
Advances and deposits0.2
—
0.2
Leasehold improvements, equipment and construction in progress, net1.5
—
1.5
Other intangible assets, net118.0
—
118.0
Goodwill154.1
0.1
154.2
Accounts payable(6.5)—
(6.5)
Accrued expenses(4.1)(0.1)(4.2)
Other long-term liabilities(0.7)—
(0.7)
Net assets acquired and liabilities assumed$283.6
$—
$283.6


Goodwill amounting to $154.2 million represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The goodwill recognized is attributable primarily to expanded revenue synergies and expanded opportunities in the aviation and hospitality businesses, and other benefits that the Company believes will result from combining its operations with the operations of Bags. The goodwill acquired is deductible for tax purposes.


Other intangible assets, net acquired consist of the following:
(millions) (unaudited) 
Estimated Life (1)
Estimated Fair Value
Trade name 5.0 Years$5.6
Customer relationships 12.4 - 15.8 Years100.4
Existing technology 5.0 - 6.0 Years10.4
Non-compete agreement 5.0 Years1.6
Estimated fair value of other intangible assets $118.0
(1) Represents preliminary estimated life of assets acquired.

The fair value estimate for all identifiable intangible assets is based on assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset (i.e., its highest and best use). The estimated fair value of trade names was determined with the relief from royalty savings method, which is a commonly-used variation of the income approach.  The Company considered the return on assets and market comparable methods when estimating an appropriate royalty rate for the trade names. The estimated fair value of acquired customer relationships was determined with the excess earnings method, which is a variation of the income approach. This approach calculates the excess of the future cash inflows (i.e., revenue from customers generated from the relationships) over the related cash outflows (i.e., customer servicing expenses) generated over the useful life of the relationship. The estimated fair value of developed or existing technology was determined utilizing the relief from royalty savings method under the income approach with additional consideration given to asset deterioration rates.
The final determination of fair value of intangible assets, as well as estimated useful lives, remains subject to change. The finalization may have a material impact on the valuation of intangible assets and the purchase price allocation, which is expected to be finalized subsequent to the transaction but within the measurement period.

Pro forma financial information

The following unaudited pro forma results of operations for the three and nine months ended September 30, 2019 and 2018, assumes the Acquisition was completed on January 1, 2018, and as such Bags pre-acquisition results have been added to the Company’s historical results. The historical consolidated financial information of the Company and the acquisition have been adjusted in the pro forma information to give effect to pro forma events that are (1) directly attributable to the transaction, (2) factually supportable and (3) expected to have a continuing impact on the combined results. The pro forma results contained in the table below include adjustments for (i) amortization of acquired intangibles, (ii) reduced general and administrative expenses related to non-routine transaction expenses, (iii) increased interest expense related to the financing of the acquisition, and (iv) estimated income tax effect.

The unaudited pro forma condensed combined financial information is presented solely for informational purposes and is not necessarily indicative of the combined results of operations or financial position that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company. The unaudited pro forma condensed combined financial statements do not give effect to the potential impact of any anticipated benefits from revenue synergies, cost savings or operating synergies that may result from the Acquisition or to any future disynergies and integration related costs. Also, the unaudited pro forma condensed combined financial information does not reflect possible adjustments related to potential restructuring or integration activities that have yet to be determined or transaction or other costs following the combination that are not expected to have a continuing impact on the business of the combined company. Further, one-time transaction-related expenses anticipated to be incurred prior to, or concurrent with, the closing of the transaction are not included in the unaudited pro forma condensed combined statement of income as such transaction costs were determined not to be significant. Additionally, the pro forma financial information does not reflect the costs which the Company has incurred or may incur to integrate Bags.

 Three Months EndedNine Months Ended
(millions) (unaudited)September 30, 2019September 30, 2018September 30, 2019September 30, 2018
Total services revenue$418.6
$407.2
$1,242.2
$1,215.0
Net income attributable to SP Plus Corporation14.2
13.6
40.0
44.7


Services revenue related to Bags in 2019 that is included in the Condensed Consolidated Statements of Income was $46.3 million and $132.7 million for the three and nine months ended September 30, 2019, respectively. Net income related to Bags in 2019 that is included in the Condensed Consolidated Statements of Income was $3.1 million and $9.9 million for the three and nine months ended September 30, 2019, respectively. Services revenue and net income are included in Services revenue - Management type contracts and Net income attributable to SP Plus Corporation, respectively.


4. Acquisition, Restructuring and Integration Costs
Acquisition, Restructuring and Integration Costs
The Company has incurred certain acquisition, restructuring, and integration costs that were expensed as incurred, which include:
transaction costs and other acquisition related costs (primarily professional services and advisory services) primarily related to the Bags acquisition (included within General and administrative expenses within the Consolidated Statements of Income);
costs (primarily severance and relocation costs) related to a series of Company initiated workforce reductions to increase organizational effectiveness and provide cost savings that can be reinvested in the Company's growth initiatives, during 20162019 and second quarter 2017 (included within General and administrative expenses within the Condensed Consolidated Statements of Income);
costs related to the Selling Stockholders' underwritten public offerings of common stock of the Company incurred during the second quarter of 20172018 (included within General and administrative expenses within the Condensed Consolidated Statements of Income); and
consulting costs for integration-related activities related to the write-off of certain fixed assets and the acceleration of certain software assets directly as a result of the Central MergerBags acquisition (included within DepreciationGeneral and amortizationadministrative expenses within the Condensed Consolidated Statements of Income).;

The aggregate costs associated with the acquisition, restructuring, and integration related costs for the three and nine months ended September 30, 2019 and September 30, 2018 are summarized in the following table:


Three Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
General and administrative expenses$—
 $0.6
 $1.3
 $3.4

An accrual for acquisition, restructuring merger and integration costs of $3.0$0.2 million (of which, $2.2$0.2 million is included in Compensation and payroll withholdings $0.1 million in Accrued expenses and $0.7 million in Other long-term liabilities within the Condensed Consolidated Balance Sheets) and $5.4$3.3 million (of which, $3.6$1.0 million is included in Compensation and payroll withholdings, $0.3$2.1 million is included in Accrued expensesExpenses and $1.5$0.2 million is included in Other long-term liabilities within the Condensed Consolidated Balance Sheets) as of September 30, 20172019 and December 31, 2016,2018, respectively.
The aggregate costs associated with the As of September 30, 2019, all accruals for acquisition, restructuring, merger and integration costs are summarizedshort-term in the following table:

Three Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2017
September 30, 2016 September 30, 2017
September 30, 2016
General and administrative expenses$—

$0.2
 $1.1

$1.1
Depreciation and amortization—

—
 —

2.4
Total$—

$0.2
 $1.1

$3.5
nature.
4.5. Revenue

The Company accounts for revenue in accordance with Topics 606 and 853. Topic 606 requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services.
Contracts with customers and clients
The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable. Once a contract is identified, the Company evaluates whether the combined or single contract should be accounted for as more than one performance obligation. Substantially all of our revenues come from the following two types of arrangements: Lease type and Management type contracts.

Services revenue - lease type contracts 

Under lease type arrangements, the Company pays the property owner a fixed base rent or payment, percentage rent or payment that is tied to the facility’s financial performance, or a combination of both. The Company operates the parking facility and is responsible for most operating expenses, but typically is not responsible for major maintenance, capital expenditures or real estate taxes. Performance obligations for service revenues related to lease type contracts include parking for transient and monthly parkers. Revenue is recognized over time as the Company provides services. Certain expenses, primarily rental expense for the contractual arrangements that meet the definition of service concession arrangements, are recorded as a reduction of revenue for the three and nine months ended September 30, 2019 and 2018.


Services revenue - management type contracts  

Management type contract revenue consists of management fees, including both fixed and performance-based fees. In exchange for this consideration, the Company has a bundle of performance obligations that include services such as managing the parking facility as well as ancillary services such as accounting, equipment leasing, consulting, insurance and other value-added services. The Company believes that it can generally purchase required insurance for the facility and facility operations at lower rates than clients can obtain on their own because the Company is effectively self-insured for all liability, worker's compensation and health care claims by maintaining a large per-claim deductible. As a result, the Company generates operating income on the insurance provided under our management type contracts by focusing on risk management efforts and controlling losses. Management type contract revenues do not include gross customer collections at the managed locations as these revenues belong to the property owners rather than to the Company. Management type contracts generally provide the Company with management fees regardless of the operating performance of the underlying facilities. Revenue is recognized over time as the Company provides services.

Service concession arrangements

Service concession agreements within the scope of Topic 853 include both lease type and management type contracts. Revenue generated from service concession arrangements, is accounted for under the guidance of Topics 606 and 853. For the three and nine months ended September 30, 2019 and 2018, respectively, certain expenses (primarily rental expense) related to service concession arrangements and depreciation and amortization, have been recorded as a reduction of Service revenue - lease type contracts.

Contract modifications and taxes

Contracts are often modified to account for changes in contract specifications and requirements. The Company considers contract modifications to exist when the modification either changes the consideration due to the Company or creates new performance obligations or changes the existing scope of the contract and related performance obligations. Most contract modifications are for services that are not distinct from the existing contract due to the fact that the Company is providing a bundle of performance obligations that are highly inter-related in the context of the contract, and are therefore accounted for as if they were part of that existing contract. Typically, modifications are accounted for prospectively as part of the existing contract.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, which are collected by the Company from a customer, are excluded from revenue.

Reimbursed management type contract revenue and expense
The Company recognizes both revenues and expenses, in equal amounts, that are directly reimbursed from the property owner for operating expenses incurred under a management type contract. The Company has determined it is the principal in these transactions as the nature of our performance obligations is for the Company to provide the services on behalf of the customer. As the principal to these related transactions, the Company has control of the promised services before they are transferred to the customer.

Disaggregation of revenue

The Company disaggregates its revenue from contracts with customers by type of arrangement for each of our reportable segments. The Company has concluded that such disaggregation of revenue best depicts the overall economic nature, timing and uncertainty of the Company's revenue and cash flows affected by the economic factors of the respective contractual arrangement. See Note 17. Business Unit Segment Information for further information on disaggregation of our revenue by segment.

Performance obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer or client, and is the unit of account under Topic 606. The contract transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of the Company's contracts have a single performance obligation that is not separately identifiable from other promises in the contract and therefore not distinct, comprising the promise to provide a bundle of monthly performance obligations or parking services for transient or monthly parkers.
The contract price is generally deemed to be the transaction price. Some management type contracts include performance incentives that are based on variable performance measures. These incentives are constrained at contract inception and recognized once the customer has confirmed that the Company has met the contractually agreed upon performance measures as defined in the contract.
The Company's performance obligations are primarily satisfied over time as the Company provides the related services. Typically, revenue is recognized over time on a straight-line basis as the Company satisfies the related performance obligation. There are certain management type contracts where revenue is recognized based on costs incurred to date plus a reasonable margin. The Company has concluded this is a faithful depiction of how control is transferred to the customer. Performance obligations satisfied at a point in time for the three and nine months ended September 30, 2019 and 2018 were not significant.

The time between completion of the performance obligation and collection of cash is typically not more than 30 - 60 days. In certain contractual arrangements, such monthly parker contracts, cash is typically collected in advance of the Company commencing its performance obligations under the contractual arrangement.
On September 30, 2019, the Company had $135.3 million related to performance obligations that were unsatisfied or partially unsatisfied for which the Company expects to recognize revenue. This amount excludes variable consideration primarily related to contracts where the Company and customer share the gross revenues or operating profit for the location and contracts where transaction prices include performance incentives that are constrained at contract inception. These performance incentives are based on measures that are ascertained exclusively by future performance and therefore cannot be estimated at contract inception by the Company. The Company applies the practical expedient that permits exclusion of information about the remaining performance obligations that have original expected durations of one year or less. The Company expects to recognize the remaining performance obligations as revenue in future periods as follows:
(millions) (unaudited)Remaining Performance Obligations
2019$17.9
202050.2
202129.9
202214.6
202310.3
2024 and thereafter12.4
Total$135.3

Contract balances
The timing of revenue recognition, billings and cash collections results in accounts receivable, contract assets and contract liabilities. Accounts receivable represent amounts where the Company has an unconditional right to the consideration and therefore only the passage of time is required for the Company to receive consideration due from the customer. Both lease type and management type contracts have customers and clients where amounts are billed as work progresses or in advance in accordance with agreed-upon contractual terms. Billing may occur subsequent to or prior to revenue recognition, resulting in contract assets and contract liabilities. The Company, on occasion, receives advances or deposits from customers and clients, on both lease and management type contracts, before revenue is recognized, resulting in the recognition of contract liabilities.

Contract assets and contract liabilities are reported on a contract-by-contract basis and are included in Notes and accounts receivable, net and Accrued expenses, respectively, on the Condensed Consolidated Balance Sheets. Impairment charges related to accounts receivable for the three and nine months ended September 30, 2019 and 2018, were not significant. There were 0 impairment charges recorded on contract assets and contract liabilities for the three and nine months ended September 30, 2019 and 2018.

The following table provides information about accounts receivable, contract assets and contract liabilities with customers and clients as of September 30, 2019 (unaudited) and December 31, 2018:
(millions)September 30, 2019 December 31, 2018
Accounts receivable$139.7
 $139.3
Contract asset$10.3
 $11.4
Contract liability$(16.3) $(19.1)


Changes in contract assets include recognition of additional consideration due from the customer are offset by reclassifications of contract asset balances to accounts receivable when the Company obtains an unconditional right to consideration, thereby establishing an accounts receivable. The following table provides information about changes to contract asset balances for the nine-month periods ended September 30, 2019 and 2018:
 Nine Months Ended
(millions) (unaudited)September 30, 2019 September 30, 2018
Balance, beginning of period$11.4
 $12.2
Additional contract assets96.4
 100.0
Reclassification to accounts receivable(97.5) (101.4)
Balance, end of period$10.3
 $10.8



Changes in contract liability primarily include additional contract liabilities and liquidation of contract liabilities when revenue is recognized. The following table provides information about changes to contract liability balances for the nine-month periods ended September 30, 2019 and 2018:
 Nine Months Ended
(millions) (unaudited)September 30, 2019 September 30, 2018
Balance, beginning of period$19.1
 $20.5
Additional contract liabilities122.2
 128.6
Recognition of revenue from contract liabilities(125.0) (132.6)
Balance, end of period$16.3
 $16.5


Cost of contracts, net
Cost of contracts, net represents the cost of obtaining contractual rights associated with providing parking services for management type contracts. Incremental costs incurred to obtain service contracts are amortized on a straight line basis over the estimated life of the contracts, including anticipated renewals and terminations. This is consistent with the timing of when the Company satisfies the related performance obligations. Estimated lives are based on the contract life or anticipated lives of the contract.

The table below shows amortization expense related to cost of contracts for the three and nine months ended September 30, 2019 and 2018. Amortization expense of cost of contracts related to service concession arrangements within the scope of Topic 853 and certain management type contracts are recorded as a reduction of revenue and were not significant for the three and nine months ended September 30, 2019 and 2018, respectively.
 Three Months EndedNine Months Ended
(millions) (unaudited)September 30, 2019 September 30, 2018September 30, 2019 September 30, 2018
Amortization expense related to cost of contract included in depreciation and amortization$0.3
 $0.8
$0.9
 $2.3

As of September 30, 2019 and December 31, 2018 cost of contracts net of accumulated amortization included on the Condensed Consolidated Balance Sheets under Cost of contract, net were $4.5 million and $9.2 million, respectively. NaN impairment charges were recorded for the three and nine months ended September 30, 2019 and 2018.

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

In determining the appropriate accounting for loss contingencies, the Company considers the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as its ability to reasonably estimate the amount of potential loss. The Company regularly evaluates current information available to determine whether an accrual should be established or adjusted. Estimating the probability that a loss will occur and estimating the amount of a potential loss or a range of potential loss involves significant estimation and judgment.


7. Other Intangible Assets, net


The following presents a summary of other intangible assets, net:
  September 30, 2017 (unaudited) December 31, 2016  September 30, 2019 (unaudited) December 31, 2018
(millions)Weighted
Average
Life (Years)		 Acquired
Intangible
Assets,
Gross (1)		 Accumulated
Amortization		 Acquired
Intangible
Assets,
Net		 Acquired
Intangible
Assets,
Gross (1)		 Accumulated
Amortization		 Acquired
Intangible
Assets,
Net		Weighted
Average
Life (Years)		 Acquired
Intangible
Assets,
Gross (1)		 Accumulated
Amortization		 Acquired
Intangible
Assets,
Net		 Acquired
Intangible
Assets,
Gross (1)		 Accumulated
Amortization		 Acquired
Intangible
Assets,
Net
Covenant not to compete1.8 $0.9
 $(0.9) $—
 $0.9
 $(0.9) $—
4.2 $1.6
 $(0.3) $1.3
 $1.6
 $—
 $1.6
Trade names and trademarks2.3 9.8
 (9.7) 0.1
 9.8
 (9.6) 0.2
4.2 5.6
 (0.9) 4.7
 6.3
 (0.7) 5.6
Proprietary know how2.3 34.7
 (34.6) 0.1
 34.7
 (32.6) 2.1
4.9 10.4
 (1.5) 8.9
 11.0
 (0.8) 10.2
Management contract rights11.7 81.0
 (25.8) 55.2
 81.0
 (22.0) 59.0
9.3 81.0
 (36.1) 44.9
 81.0
 (32.2) 48.8
Customer relationships14.2 100.4
 (5.6) 94.8
 100.4
 (0.6) 99.8
Acquired intangible assets, net (2)11.6 $126.4
 $(71.0) $55.4
 $126.4
 $(65.1) $61.3
11.8 $199.0
 $(44.4) $154.6
 $200.3
 $(34.3) $166.0


(1)  Excludes the original cost and accumulated amortization of fully amortized intangible assets.
(2)  Intangible assets have estimated usefulremaining lives between onefour and nineteenfifteen years.

 Three Months Ended
Nine Months Ended
(millions) (unaudited)September 30, 2017
September 30, 2016
September 30, 2017
September 30, 2016
Amortization expense related to other intangible assets included in depreciation and amortization$1.4

$3.8

$5.9

$11.4
The table below shows the amortization expense related to intangible assets for the three and nine months ended September 30, 2019 and September 30, 2018:

 Three Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Amortization expense related to other intangible assets included in depreciation and amortization$3.8
 $1.3
 $11.4

$4.0


5.8. Goodwill
 
The amounts for goodwill and changes to carrying value by operatingreportable segment are as follows:
(millions) (unaudited)Region
One		 Region
Two		 Total
Balance as of December 31, 2016 (1)$368.7
 $62.7
 $431.4
Foreign currency translation0.3
 —
 0.3
Balance as of September 30, 2017$369.0
 $62.7
 $431.7

(1) Due to the new segment reporting effective in the first quarter of 2017, goodwill allocated to previous reporting units of Region One and Region Three have been aggregated into a single operating segment, Region One. See also Note 14. Business Unit Segment Information for further discussion on certain organizational and executive leadership changes.
(millions) (unaudited)Segment One Segment Two Total
Balance as of December 31, 2018$368.7
 $216.8
 $585.5
Foreign currency translation0.1
 —
 0.1
Purchase price adjustments—
 0.1
 0.1
Balance as of September 30, 2019$368.8
 $216.9
 $585.7
 
The Company tests goodwill at least annually for impairment (the Company has elected to annually test for potential impairment of goodwill on the first day of the fourth quarter) and tests more frequently if indicators are present or changes in circumstances suggest that impairment may exist. The indicators include, among others, declines in sales, earnings or cash flows or the development of a material adverse change in business climate. The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component.

DueThe Company completed its annual goodwill impairment test as of October 1, 2018, using a qualitative test (Step Zero), to a change indetermine the Company’s segment reporting effective inlikelihood of impairment and if it was more likely than not that the first quarterfair value of 2017, the goodwill allocated to certain previous reporting units have been aggregated into a single operating segment. See also Note 14. Business Unit Segment Information for further disclosure onwere less than the Company’s change in reporting segments effective in the first quarter of 2017.
As a resultcarrying value of the change in internal reporting segment information, theunit. The Company completed an interim quantitative impairment analysis (Step One) for goodwill as of January 1, 2017 and concluded that the estimated fair values of each of the Company's reporting units exceeded its carrying amount of net assets assigned to the respectivethat reporting unit as of January 1, 2017 and immediately prior to the reorganization and, therefore, no further testing was required (Step Two)One). In conductingGenerally, the January 1, 2017 goodwill Step One analysis,more-likely-than-not threshold is a greater than a 50% likelihood that the Company analyzed actual and projected growth trendsfair value of a reporting unit is greater than the reporting units, gross margin, operating expenses and Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") (which also includes forecasted five-year income statement and working capital projection, a market-based weighted average cost of capital and terminal values after five years). The Company also assesses critical areas that may impact its business including economic conditions, market related exposures, competition, changes in service offerings and changes in key personnel.carrying value. As part of the JanuaryOctober 1, 20172018 goodwill assessment, the Company engaged a third-party to evaluate itsestimate a discount rate, which is a primary driver in the valuation of the Company's reporting units' fair values. No impairment was recorded as a result of the interim goodwill impairment test performed.
The Company monitors for indicators for goodwill impairment testing between annual tests. No adverse events occurred during the three and nine months ended September 30, 2019 that would cause the Company to test goodwill for impairment.

6.9. Fair Value Measurement
 
Fair Value Measurements-Recurring Basis
 
In determining fair value, the Company uses various valuation approaches within the fair value measurement framework. Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. Applicable accounting literature establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The fair value hierarchy is based on observable or unobservable inputs to valuation techniques that are used to measure fair value. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. Applicable accounting literature defines levels within the hierarchy based on the reliability of inputs as follows:
 
•Level 1: Inputs are quoted prices in active markets for identical assets or liabilities.

•Level 2: Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable and market-corroborated inputs, which are derived principally from or corroborated by observable market data.

•Level 3: Inputs that are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.


The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis and the basis of measurement at September 30, 20172019 and December 31, 2016:2018:

Fair Value Measurement

September 30, 2019 (unaudited) December 31, 2018
(millions)Level 1Level 2Level 3 Level 1Level 2Level 3
Assets


 


Cash and cash equivalents$29.6
$—
$—
 $39.9
$—
$—
Liabilities


 


Accrued expenses


 


Interest rate collars—
(1.2)—
 —
—
—
Total$29.6
$(1.2)$—
 $39.9
$—
$—
 Fair Value Measurement
 September 30, 2017 (unaudited) December 31, 2016
(millions)Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Assets 
  
  
  
  
  
Prepaid expenses and other 
  
  
  
  
  
Contingent consideration receivable$—
 $—
 $—
 $—
 $—
 $0.5
Interest rate swap—
 —
 —
 —
 0.1
 —
Total$—
 $—
 $—
 $—
 $0.1
 $0.5

  
Interest Rate SwapsCollars

The Company seeks to minimize risks from interest rate fluctuations through the use of interest rate swapcollar contracts and hedge only exposures in the ordinary course of business. Interest rate swapscollars are used to manage interest rate risk associated with our floating rate debt. Effective May 2019, the Company entered into 3 zero cost interest rate collar contracts with an aggregate notional amount of $222.3 million with maturity dates of April 2022. The notional amount amortizes consistent with the term loan portion of the Senior Credit Facility. See Note 10. Borrowing Arrangements for additional disclosure on interest rate collar contract transactions. The Company accounts for its derivative instruments at fair value, provided they meet certain documentary and analytical requirements to qualify for hedge accounting treatment. Hedge accounting creates the potential for an income statement match between the changes in fair values of derivatives and the changes in cost of the associated underlying transactions, in this case interest expense.value. Derivatives held by the Company are designated as hedges of specific exposures at inception, with an expectation that changes in the fair value will essentially offset the change in the underlying exposure. Discontinuance of hedge accounting is required whenever it is subsequently determined that an underlying transaction is not going to occur, with any gains or losses recognized in the Consolidated Statements of Income at such time, with any subsequent changes in fair value recognized currently in earnings. Fair values

The fair value of derivatives are determinedinterest rate collars is a Level 2 fair value measurement, based on quoted prices forof similar contracts.items in active markets. The effective portion of the change in fair value of the interest rate swapcollars is reported in Accumulated other comprehensive income, a component of Stockholders' equity, and is being recognized as an adjustment to interest expense or other (expense) income, respectively, over the same

period the related expenses are recognized in earnings. Ineffectiveness would occur when changes in the market value of the hedged transactions are not completely offset by changes in the market value of the derivative, and those related gainsGains and losses from cash flow hedging instruments reclassified from Accumulated other comprehensive income to earnings are reported as Cash provided by operating activities on derivatives representing hedge ineffectiveness or hedge components excluded from the assessmentCondensed Consolidated Statements of effectiveness are recognized in earnings when incurred. No ineffectiveness was recognizedCash Flows. The Company did not enter into derivative transactions during the nine months ended September 30, 20172018.

See Note 15. Comprehensive Income for amount of gain (loss) recognized in Other Comprehensive loss on the interest rate collars. NaN gain (loss) was reclassified from Accumulated Other Comprehensive loss during the three and 2016. The Interest Rate Swaps expired onnine months ended September 30, 2017.
Contingent Consideration Receivable
During the third quarter 2015, certain assets, which met the definition of a business, were sold to a third-party2019. NaN gain (loss) was recognized in an arms-length transaction (see also Note 1. Significant Accounting Policies and Practices for further detailincome on the sale of the business).  Under the sales agreement, 40% of the sale proceedsinterest rate collars resulting from hedge ineffectiveness or exclusion from the buyer was contingent in nature and scheduled to be received byassessment of hedge effectiveness.


The following table presents summarized information about the Company within sixty days of February 2017 or eighteen months from the date of the transaction; however, the buyer had sixty days from February 2017 to calculate and remit the remaining consideration, with the contingent consideration being based on financial and operational performance of the business sold. During the second quarter 2017, the Company received $0.6 million from the buyer for the final earn out consideration, which resulted in the Company recognizing an additional gain on sale of business of $0.1 million. The significant inputs historically used to derive the Level 3 fair value contingent consideration receivable was the probability of reaching certain revenue growth of the business sold and retention of current customers over an eighteen month period.  The fair value of the contingent receivable was $0.5 million as of December 31, 2016. There was no fair value of the contingent consideration receivable as of September 30, 2017.Company's interest rate collars:

Interest Rate Collars
September 30, 2019 (unaudited)

 Interest Rate Parameters
(millions)Maturity DateNotional AmountLIBOR CeilingLIBOR Floor
Collar 1April 2022$74.1
2.5%1.2%
Collar 2April 202274.1
2.5%1.3%
Collar 3April 202274.1
2.5%1.4%
Total $222.3




Nonrecurring Fair Value Measurements


Certain assets are measured at fair value on a nonrecurring basis; that is, the assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). Non-financial assets such as goodwill, intangible assets, and leasehold improvements, equipment and construction in progress are subsequently measured at fair value when there is an indicator of impairment and recorded at fair value only when impairment is recognized. The Company assesses the impairment of intangible assets annually or whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable. The fair value of its goodwill and intangible assets is not estimated if there is no change in events or circumstances that indicate the carrying amount of an intangible asset may not be recoverable. There were no0 impairment charges for the nine months ended September 30, 20172019 and 2016.2018.
 
Financial Instruments Not Measured at Fair Value
 
The following table presents the carrying amounts and estimated fair values of financial instruments not measured at fair value in the Condensed Consolidated Balance Sheets at September 30, 20172019 and December 31, 2016:2018: 
 September 30, 2019 (unaudited) December 31, 2018
(millions)Carrying
Amount		 Fair Value Carrying
Amount		 Fair Value
Credit Facility, net of original discount on borrowings and deferred financing costs$351.0
 $351.0
 $371.2
 $371.2
Other obligations$19.1
 $19.1
 $15.4
 $15.4
 September 30, 2017 (unaudited) December 31, 2016
(millions)Carrying
Amount		 Fair Value Carrying
Amount		 Fair Value
Cash and cash equivalents$23.4
 $23.4
 $22.2
 $22.2
Long-term borrowings 
  
  
  
Restated Credit Facility, net of original discount on borrowings and deferred financing costs$172.0
 $172.0
 $193.4
 $193.4
Other obligations1.4
 1.4
 1.7
 1.7

 
The carrying value of cash and cash equivalents approximates their fair value due to the short-term nature of these financial instruments and has been classified as a Level 1. The fair value of the Restated Credit Facility and Other obligations were estimated to not be materially different fromapproximates the carrying amount and are generally measured using a discounted cash flow analysis based on current marketdue to variable interest rates for similar types of financial instruments and would be classified as a Level 2. See Note 10. Borrowing Arrangements, for further information.



7.10. Borrowing Arrangements
 
Long-term borrowings, in order of preference, consist of:
   Amount Outstanding
(millions)Maturity Date September 30, 2019 December 31, 2018
 
 (unaudited) 

Credit facility, net of original discount on borrowings and deferred financing costsNovember 30, 2023 $351.0
 $371.2
Other borrowingsVarious 19.1
 15.5
Total obligations under credit facility and other borrowings  370.1
 386.7
Less: Current portion of obligations under credit facility and other borrowings  14.4
 13.2
Total long-term obligations under credit facility and other borrowings  $355.7
 $373.5
   Amount Outstanding
(millions)Maturity Date September 30, 2017 December 31, 2016
 
 (unaudited) 

Restated Credit Facility, net of original discount on borrowings and deferred financing costsFebruary 20, 2020 $172.0
 $193.4
Other borrowingsVarious 1.4
 1.7
Total obligations under Restated Credit Facility and other borrowings  173.4
 195.1
Less: Current portion of obligations under Restated Credit Facility and other borrowings  20.4
 20.4
Total long-term obligations under Restated Credit Facility and other borrowings  $153.0
 $174.7

 
Senior Credit Facility
On October 2, 2012, the Company entered into a credit agreement (“Credit Agreement”) with Bank of America, N.A. ("Bank of America"), as administrative agent, Wells Fargo Bank, N.A. ("Wells Fargo Bank") and JPMorgan Chase Bank, as co-syndication agents, U.S. Bank National Association, First Hawaiian Bank and General Electric Capital Corporation, as co-documentation agents, Merrill Lynch, Pierce, Fenner & Smith Inc., Wells Fargo Securities, LLC and J.P. Morgan Securities LLC, as joint lead arrangers and joint book managers, and the lenders party thereto.

Pursuant to the terms, and subject to the conditions, of the Credit Agreement, the Lenders made available to the Company a secured senior credit facility (the “Senior Credit Facility”) that permitted aggregate borrowings of $450.0 million consisting of (i) a revolving credit facility of up to $200.0 million at any time outstanding, which included a letter of credit facility that was limited to $100.0 million at any time outstanding, and (ii) a term loan facility of $250.0 million. The Senior Credit Facility was originally due to mature on October 2, 2017.

Former Amended and Restated Credit Facility
On February 20, 2015, (“Restatement Date”), the Company entered into an Amendedamended and Restated Credit Agreement (the “Restated Credit Agreement”) with Bank of America, as administrative agent, an issuing lender and swing-line lender; Wells Fargo Bank, N.A., as an issuing lender and syndication agent; U.S. Bank National Association, First Hawaiian Bank and BMO Harris Bank N.A., as co-documentation agents; Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as joint lead arrangers and joint book managers; and the lenders party thereto (the “Lenders”). The Restated Credit Agreement reflects modifications to, and an extension of, the Senior Credit Facility.
Pursuant to the terms, and subject to the conditions, of the Restated Credit Agreement, the Lenders have made available to the Company a senior securedrestated its credit facility (the “Restated"Former Restated Credit Facility”Facility") that permitspermitted aggregate borrowings of $400.0 million consisting of (i) a revolving credit facility of up to $200.0 million at any time outstanding, which includes a $100.0 million sublimit for letters of credit and a $20.0 million sublimit for swing-line loans, and (ii) a term loan facility of $200.0 million (reduced from $250.0 million under the million. The Former Restated Credit Facility was due to mature on February 20, 2020.
Senior Credit Facility)Facility
On November 30, 2018 (the "Closing Date") and in connection with the Acquisition, the Company entered into a credit agreement (the “Credit Agreement”) with Bank of America, N.A. (“Bank of America”), as Administrative Agent, swing-line lender and a letter of credit issuer; Wells Fargo Bank, N.A., as syndication agent; BMO Harris Bank N.A., JPMorgan Chase Bank, N.A., KeyBank National Association and U.S. Bank National Association, as co-documentation agents; Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as joint lead arrangers and joint bookrunners; and the lenders party thereto (the “Lenders”). The Company may request increasesPursuant to the terms, and subject to the conditions of the Credit Agreement, the Lenders have made available to the Company a new senior secured credit facility (the “Senior Credit Facility”) that permits aggregate borrowings of $550.0 million consisting of (i) a revolving credit facility in an aggregate additional principal amount of up to $325.0 million at any time outstanding, which includes a letter of credit facility that is limited to $100.0 million at any time outstanding, and (ii) a term loan facility of $225.0 million. The RestatedSenior Credit Facility matures on February 20, 2020.November 30, 2023.
The entire amount of the term loan portion of the RestatedSenior Credit Facility had beenwas drawn by the Company as ofon the RestatementClosing Date (including approximately $10.4 million drawn on such date) and is subject to scheduled quarterly amortization of principal as follows: (i) $15.0 million in installments equal to 1.25% of the first year, (ii) $15.0 million in the second year, (iii) $20.0 million in the third year, (iv) $20.0 million in the fourth year, (v) $20.0 million in the fifth year and (vi) $110.0 million in the sixth year.initial aggregate principal amount of such term loan. The Company also had outstanding borrowings of $147.3borrowed $174.8 million (including $53.4 million in letters of credit) under the revolving credit facility ason the Closing Date. The proceeds from these borrowings were used by the Company to pay the purchase price for the Acquisition (See Note 3. Acquisition), to pay other costs and expenses related to the acquisition of Bags and the Restatement Date.
related financing and to repay in full the obligations under the Former Restated Credit Facility. In addition, proceeds from the Senior Credit Facility may be used to finance working capital, capital expenditures and other acquisitions, payments and general corporate purposes.
Borrowings under the RestatedSenior Credit Facility bear interest, at the Company’s option, (i) at a rate per annum based on the Company’s consolidated total debt to EBITDA ratio for the 12-month period ending as of the last day of the immediately preceding fiscal quarter, determined in accordance with the applicable pricing levels set forth in the Restated Credit Agreement (the “Applicable Margin”), for London Interbank Offered Rate (or a comparable or successor rate approved by Bank of America) (“U.S. dollar LIBOR”) loans, plus the applicable U.S. dollar LIBOR rate or (ii) the Applicable Margin for base rate loans plus the highest of (x) the federal funds rate plus 0.5%, (y) the Bank of America prime rate and (z) a daily rate equal to the applicable U.S. dollar LIBOR rate plus 1.0% (the highest of (x), (y) and (z), the “Base Rate”), except that all swing-line loans will bear interest at the Base Rate plus the Applicable Margin.
.
Under the terms of the Restated Credit Agreement, the Company is required to maintain a maximum consolidated total debt to EBITDA ratio of not greater than 4.0 to 4.25:1.0 as ofwith certain step-downs described in the end of any fiscal quarter ending during the period from the Amended and Restatement Date through September 30, 2015, (ii) 3.75 to 1.0 as of the end of any fiscal quarter ending during the period from

October 1, 2015 through September 30, 2016, and (iii) 3.5 to 1.0 as of the end of any fiscal quarter ending thereafter.Credit Agreement. In addition, the Company is required to maintain a minimum consolidated fixed charge coverage ratio of not less than 1.25:1.0.
3.50:1.0 (with certain step-ups described in the Credit Agreement).
Events of default under the Restated Credit Agreement include failure to pay principal or interest when due, failure to comply with the financial and operational covenants, the occurrence of any cross default event, non-compliance with the other loan documents, the occurrence of a change of control event, and bankruptcy and other insolvency events. If an event of default occurs and is continuing, the Lenders holding a majorityAdministrative Agent can, with the consent of the commitments and outstanding term loan under the Restated Credit Agreement have the right,required Lenders, among others to (i) terminate the commitments under the Restated Credit Agreement, (ii) accelerate and require the Company to repay all the outstanding amounts owed under the Restated Credit Agreement, and (iii) require the Company to cash collateralize any outstanding letters of credit.
Each wholly owned domestic subsidiary of the Company (subject to certain exceptions set forth in the Restated Credit Agreement) has guaranteed all existing and future indebtedness and liabilities of the other guarantors and the Company arising under the Restated Credit Agreement. The Company’s obligations under the Restated Credit Agreement and such domestic subsidiaries’ guaranty obligations are secured by substantially all of their respective assets.
The Company wasis in compliance with allthe covenants under the Credit Agreement as of September 30, 2017.2019.
As ofAt September 30, 2017,2019, the Company had $129.4 million of borrowing availability under the Restated Credit Agreement, of which the Company could have borrowed $129.4 million on September 30, 2017 and remained in compliance with the above described covenants as of such date. The additional borrowing availability under the Restated Credit Agreement is limited only as of the Company’s fiscal quarter-end by the covenant restrictions described above. At September 30, 2017, the Company had $51.6$53.6 million of letters of credit outstanding under the Restated Senior Credit Facility, with aggregate borrowings against the Restated Senior Credit Facility aggregated to $354.0 million.
The weighted average interest rate on our Senior Credit Facility and Former Restated Credit Facility was 3.5% and 4.0% for the periods ended September 30, 2019 and December 31, 2018, respectively. The rate includes all outstanding U.S. dollar LIBOR contracts and letters of $174.1 million (excludingcredit. The weighted average interest rate on outstanding borrowings, not including letters of credit, was 3.8% and 4.3%, respectively, at September 30, 2019 and December 31, 2018.
In connection with and effective upon the execution and delivery of the Credit Agreement on November 30, 2018, the Company recognized losses on extinguishment of debt relating to debt discount and debt issuance costs. These losses were not significant.

Interest Rate Collars
In May 2019, the Company entered into three-year interest rate collar contracts with an aggregate $222.3 million notional amount. Interest rate collars are used to manage interest rate risk associated with variable interest rate borrowings under the Credit Agreement. The collars establish a range where the Company will pay the counterparties if the one-month U.S. dollar LIBOR rate falls below the established floor rate, and the counterparties will pay the Company if the one-month U.S. dollar LIBOR rate exceeds the established ceiling rate of $0.92.5%. The collars settle monthly through the termination date of April 2022. No payments or receipts are exchanged on the interest rate collar contracts unless interest rates rise above or fall below the pre-determined ceiling or floor rates. The notional amount amortizes consistent with the term loan portion of the Senior Credit Facility. These interest rate collars are classified as cash flow hedges, and the Company calculates the effectiveness of the hedge on a monthly basis. See Note 9. Fair Value Measurement for additional disclosure on interest rate collar contract transactions. As of December 31, 2018, the Company had no ongoing derivative transactions.
Subordinated Convertible Debentures
The Company acquired Subordinated Convertible Debentures ("Convertible Debentures") as a result of a prior acquisition. The subordinated debenture holders have the right to redeem the Convertible Debentures for $19.18 per share upon their stated maturity (April 1, 2028) or upon acceleration or earlier repayment of the Convertible Debentures. There were no redemptions of Convertible Debentures during the periods ended September 30, 2019 and December 31, 2018, respectively. The approximate redemption value of the Convertible Debentures outstanding at September 30, 2019 and December 31, 2018 is $1.1 million and deferred financing cost of $1.2 million).

$1.1 million, respectively.
8.11. Share Repurchase Plan


In May 2016, the Company's Board of Directors authorized the Company to repurchase, on the open market, shares of its outstanding common stock in an amount not to exceed $30.0 million in aggregate. In July 2019, the Company's Board of Director's authorized a new program to repurchase, on the open market, shares of its outstanding common stock in an amount not to exceed $50.0 million in aggregate. Purchases of the Company's common stock may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with RuleRules 10b-18 and 10b5-1 under the Securities Exchange Act of 1934 ("Exchange Act").1934. The share repurchase program does not obligate the Company to repurchase any particular amount of common stock, and has no fixed termination date.


Under this program, the Company has repurchased 305,1831,263,642 shares of common stock through September 30, 2017 at an average price of $24.43 per2019. The table below summarizes share resulting in $7.5 million in program-to-date purchases. Norepurchase activity during the three and nine months ended September 30, 2019.


Three Months Ended
Nine Months Ended
(millions, except for share and per share data) (unaudited)September 30, 2019
September 30, 2019
Total number of shares repurchased536,743

958,459
Average price paid per share$34.83

$33.73
Total value of shares repurchased$18.7

$32.3

NaN shares were repurchased during the three and nine months ended September 30, 2017.2018.

The following table summarizes the remaining authorized repurchase amount under the program as of September 30, 2019.
(millions) (unaudited)September 30, 2019
Total authorized repurchase amount$80.0
Total value of shares repurchased39.8
Total remaining authorized repurchase amount$40.2



9.12. Bradley Agreement
 
The Company entered into a 25-year agreement with the State of Connecticut (“State”) that expires on April 6, 2025, under which it operates the surface parking and 3,500 garage parking spaces at Bradley International Airport (“Bradley”) located in the Hartford, Connecticut metropolitan area.


The parking garage was financed through the issuance of State of Connecticut special facility revenue bonds and provides that the Company deposits, with the trustee for the bondholders, all gross revenues collected from operations of the surface and garage parking. From these gross revenues, the trustee pays debt service on the special facility revenue bonds outstanding, operating and capital maintenance expense of the surface and garage parking facilities, and specific annual guaranteed minimum payments to the State.state. Principal and interest on the Bradley special facility revenue bonds increase from approximately $3.6 million in contract year 2002 to approximately $4.5 million in contract year 2025. Annual guaranteed minimum payments to the State increase from approximately $8.3 million in contract year 2002 to approximately $13.2 million in contract year 2024. The annual minimum guaranteed payment to the State by the trustee for the twelve months ended December 31, 20172019 and 20162018 is $11.5$12.0 million and was $11.3$11.8 million, respectively. All of the cash flow from the parking facilities are pledged to the security of the special facility revenue bonds and are 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, the Company is obligated to deliver the deficiency amount to the trustee, with such deficiency payments representing interest bearing advances to the trustee. The Company does not directly guarantee the payment of any principal or interest on any debt obligations of the State of Connecticut or the trustee.

The following is the list of Guaranteed Payments:

Garage and surface operating expenses,
Principal and interest on the special facility revenue bonds,
Trustee expenses,
Major maintenance and capital improvement deposits, and
State minimum guarantee.

To the extent sufficient funds are available, the trustee is then directed to reimburse the Company for deficiency payments up to the amount of the calculated surplus, with the Company having the right to be repaid the principal amount of any and all deficiency payments, together with actual interest and premium, not to exceed 10% of the initial deficiency payment. The Company calculates and records interest and premium income along with deficiency principal repayments as a reduction of cost of parking services in the period the associated deficiency repayment is received from the trustee. The Company believes these advances to be fully recoverable as the Bradley Agreement places no time restriction on the Company’s right to reimbursement. The reimbursement of principal, interest and premium will be recognized when received.
 
The total deficiency repayments (net of payments made) tofrom the State as of September 30, 20172019 (unaudited) wereare as follows:
(millions)September 30, 2019
Balance as of December 31, 2018$3.9
Deficiency payments made—
Deficiency repayments received(2.8)
Balance as of September 30, 2019$1.1

(millions)2017
Balance at December 31, 2016$9.9
Deficiency payments made0.2
Deficiency repayment received(1.9)
Balance at September 30, 2017$8.2


The total deficiency repayments (net of payments made), interest and premium received and recordedrecognized for the three and nine months ended September 30, 20172019 and 2016 were2018 are as follows:
 Three Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Deficiency repayments$0.4
 $0.9
 $2.8
 $2.9
Interest$0.3
 $—
 $0.8
 $0.5
Premium$—
 $0.1
 $0.3
 $0.2

 Three Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2017
September 30, 2016 September 30, 2017
September 30, 2016
Deficiency repayments$0.5

$—
 $1.7

$1.2
Interest$—

$0.2
 $0.2

$0.3
Premium$—

$—
 $0.2

$0.2


Deficiency payments made are recorded as an increase in Cost of parking services— - management type contracts and deficiency repayments, interest and premium received are recorded as reductions to Cost of parking services—management. - management type contracts. The reimbursement of principal, interest and premium are recognized when received.

There were no0 amounts of estimated deficiency payments accrued as of September 30, 20172019 and December 31, 2016,2018, as the Company concluded that the potential for future deficiency payments did not meet the criteria of both probable and estimable.
 

In addition to the recovery of certain general and administrative expenses incurred, the Bradley Agreement provides for an annual management fee payment, which is based on operating profit tiers. The annual management fee is further apportioned 60% to the Company and 40% to an un-affiliated entity and the annual management fee will be paid to the extent funds are available for the trustee to make a distribution, and are paid after Guaranteed Payments (as defined in the Bradley Agreement), and after the repayment of all deficiency payments, including interest and premium. Cumulative management fees of approximately $17.5$19.5 million and $16.7$18.7 million have not been recognized as of September 30, 20172019 and December 31, 2016,2018, respectively, and no0 management fees were recognized as revenue for the three and nine months ended September 30, 20172019 and 2016.2018.


10.13. Stock-Based Compensation
 
Stock Grants
 
There were 16,42814,076 and 32,180 authorized vested12,736 stock grants to certain directors forgranted during the nine months ended September 30, 20172019 and 2016,2018, respectively.

The table below shows the Company'sCompany recognized $0.5 million of stock-based compensation expense related to the vested stock grants for the three and nine months ended September 30, 20172019 and 2016, respectively and is included in General and administrative expenses within the Condensed Consolidated Statements of Income.

Three Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Stock-based compensation expense$—
 $—
 $0.5
 $0.7
2018, respectively.
  
Restricted Stock Units
 
During the nine months ended September 30, 2017, no2019 and 2018, 37,235 and52,306 restricted stock units were authorized by the Company.Company, respectively. During the nine months ended September 30, 20172019 and 2016, 4,399,2018, 76,875 and 1,415129,706 restricted stock units vested, respectively. During the nine months ended September 30, 20172019 and 2016, 4,5372018, 7,978 and 4,1246,456 restricted stock units respectively, were forfeited under the Company's Long-Term Incentive Plan, as Amended and Restated Long-Term Incentive Plan(the "Plan") and became available for reissuance.reissuance, respectively.


The table below shows the Company's stock-based compensation expense related to the restricted stock units for the three and nine months ended September 30, 20172019 and 2016,2018, respectively, whichand is included in General and administrative expenses within the Condensed Consolidated Statements of Income.Income:
 Three Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Stock-based compensation expense$0.3
 $0.3
 $0.8

$0.6
 Three Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2017
September 30, 2016 September 30, 2017 September 30, 2016
Stock-based compensation expense$0.2

$0.2
 $0.6
 $0.6

 
As of September 30, 2017,2019, there was $1.1$2.0 million of unrecognized stock-based compensation costs related to the restricted stock units that are expected to be recognized over a weighted average remaining period of approximately 2.32.0 years.

Performance Share Units
 
In September 2014, the Board of Directors authorized a performance-based incentive program under the Company’s Amended and Restated Long-Term Incentive Plan (“Performance-Based Incentive Program”), whereby the Company will issue performance share units to certain executive management individualsexecutives that represent shares potentially issuable in the future. The objective of the Performance-Based Incentive Program is to link compensation to business performance, encourage ownership of Company stock, retain executive talent, and reward executive performance. The Performance-Based Incentive Program provides participating executive management individualsexecutives with the opportunity to earn vested common stock if certain performance targets for pre-tax free cash flow are achieved over a three yearyears performance period and recipients satisfy service-based vesting requirements. The stock-based compensation expense associated with unvested performance share units are recognized on a straight-line basis over the shorter of the vesting period or minimum service period and dependent upon the probable outcome of the number of shares that will ultimately be issued based on the achievement of pre-tax free cash flow over the cumulative three yearyears period. 

During the nine months ended September 30, 20172019 and 2016,2018, the Company granted 76,120144,097 and 98,07828,060 performance share units respectively, to certain individuals within executive management.executives, respectively. The grants during the nine months ended September 30, 2019 included an increase during the three months ended September 30, 2019 of 18,865 shares that are expected to be awarded based on the revised estimate of performance shares that are expected to vest. The grants during the nine months ended September 30, 2018 included a decrease during the three months ended September 30, 2018 of 70,661 shares based on the revised estimate of performance shares that are no longer expected to vest. NaN performance share units vested during the nine months ended September 30, 2019. During the nine months ended September 30, 2017 and 2016, 11,770 and 4,493,2018, 6,874 performance share units respectively, were forfeited under the Amended and Restated Long-Term Incentive Plan and became available for reissuance.  As of September 30, 2017, 14,195 shares were vested related to certain participating executives being eligible for retirement. During the nine months ended September 30, 2019 and 2018, 11,819 and 10,572 performance share units were forfeited under the Plan and became available for reissuance, respectively. 


The table below shows the Company's stock-based compensation expense (reduction of expense) related to the Performance-Based Incentive Program for the three and nine months ended September 30, 20172019 and 2016,2018, respectively, and is included in General and administrative expenses within the Condensed Consolidated Statements of Income.Income:
 Three Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Stock-based compensation expense$1.0
 $(0.4) $1.8

$0.7

 Three Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2017
September 30, 2016 September 30, 2017
September 30, 2016
Stock-based compensation expense$0.6

$0.5
 $1.8

$1.5


Future compensation expense for currently outstanding awards under the Performance-Based Incentive Program could reach a maximum of $9.0$15.0 million. Stock-based compensation for the Performance-Based Incentive Program is expected to be recognized over a weighted average period of 1.81.9 years.

Adoption of ASU 2016-09
Refer to Note 1. Significant Accounting Policies and Practices for the impact of adopting ASU 2016-09 on the Company's stock-based compensation, income taxes, and net income per common share.




11.14. Net Income per Common Share
 
Basic net income per share is computed by dividing net income by the weighted daily average number of shares of common stock outstanding during the period. Diluted net income per share is based upon the weighted daily average number of shares of common stock outstanding for the period plus dilutive potential common shares, including stock options and restricted stock units using the treasury-stock method.
 
A reconciliation of the weighted average basic common shares outstanding to the weighted average diluted common shares outstanding is as follows:
 Three Months Ended Nine Months Ended
(millions, except share and per share data) (unaudited)September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Net income attributable to SP Plus Corporation$14.2
 $13.5
 $40.0
 $44.1
Basic weighted average common shares outstanding21,945,129
 22,439,884
 22,277,852
 22,370,789
Dilutive impact of share-based awards93,776
 186,862
 134,113
 236,485
Diluted weighted average common shares outstanding22,038,905
 22,626,746
 22,411,965
 22,607,274
Net income per common share 
  
  
  
Basic$0.64
 $0.60
 $1.79
 $1.97
Diluted$0.64
 $0.60
 $1.78
 $1.95
 
 Three Months Ended
 Nine Months Ended
(millions, except share and per share data) (unaudited)September 30, 2017
September 30, 2016 September 30, 2017
September 30, 2016
Net income attributable to SP Plus Corporation$11.2

$7.0
 $33.4

$13.5
Basic weighted average common shares outstanding22,203,023

22,208,139
 22,186,556

22,293,776
Dilutive impact of share-based awards320,013

288,972
 314,822

278,157
Diluted weighted average common shares outstanding22,523,036

22,497,111
 22,501,378

22,571,933
Net income per common share 

 
  

 
Basic$0.51

$0.31
 $1.51

$0.60
Diluted$0.50

$0.31
 $1.48

$0.60

 
For the three and nine months ended September 30, 20172019 and 2016,2018, unvested performance share units were excluded from the computation of weighted average diluted common share outstanding because the number of shares ultimately issuable is contingent on the Company's performance goals, which were not achieved as of the reporting dates.date.
 
There are no0 additional securities that could dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share, other than those disclosed.

Adoption of ASU 2016-09
There was no significant impact to diluted weighted average shares outstanding for purposes of calculating net income per common share-diluted as a result of adopting ASU 2016-09. Refer to Note 1. Significant Accounting Policies and Practices for additional information on the impact of adopting ASU 2016-09 to the Company.

12.15. Comprehensive Income
 
Comprehensive income consists of the following components, net of tax:
 Three Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Net income$15.0
 $14.5
 $42.2
 $46.6
Effective portion of unrealized loss on cash flow hedge(0.1) —
 (0.9) —
Foreign currency translation (loss) gain(0.1) 0.1
 —
 (0.4)
Comprehensive income14.8
 14.6
 41.3
 46.2
Less: Comprehensive income attributable to noncontrolling interest0.8
 1.0
 2.2
 2.5
Comprehensive income attributable to SP Plus Corporation$14.0
 $13.6
 $39.1
 $43.7

 Three Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2017
September 30, 2016 September 30, 2017
September 30, 2016
Net income$12.0

$7.7
 $36.0

$15.7
Effective portion of unrealized loss on cash flow hedge(0.1)
0.2
 —

(0.1)
Foreign currency translation gain (loss)0.2

(0.1) 0.2

(0.1)
Comprehensive income12.1

7.8
 36.2

15.5
Less: Comprehensive income attributable to noncontrolling interest0.8

0.7
 2.6

2.2
Comprehensive income attributable to SP Plus Corporation$11.3

$7.1
 $33.6

$13.3



Accumulated other comprehensive loss is comprised of foreign currency translation adjustments and the effective portion of unrealized gains (losses)loss on cash flow hedges and foreign currency translation adjustments.hedges. The components of changes in accumulated comprehensive loss, net of tax, for the nine months ended September 30, 20172019 were as follows:
 (millions) (unaudited)Foreign Currency
Translation
Adjustments		 Effective Portion of
Unrealized Gain (Loss)
on Cash Flow Hedge		 Total Accumulated
Other
Comprehensive
Loss
Balance at December 31, 2016$(1.4) $—
 $(1.4)
Change in other comprehensive income0.2
 —
 0.2
Balance at September 30, 2017$(1.2) $—
 $(1.2)
 (millions) (unaudited)Foreign Currency
Translation
Adjustments		 Effective Portion of
Unrealized Loss on 
Cash Flow Hedge		 Total Accumulated
Other
Comprehensive
Loss
Balance as of December 31, 2018$(2.4) $—
 $(2.4)
Change in other comprehensive loss0.2
 —
 0.2
Balance as of March 31, 2019$(2.2) $—
 $(2.2)
Change in other comprehensive loss(0.1) (0.8) (0.9)
Balance as of June 30, 2019$(2.3) $(0.8) $(3.1)
Change in other comprehensive loss(0.1) (0.1) (0.2)
Balance as of September 30, 2019$(2.4) $(0.9) $(3.3)


13.16. Income Taxes

For the three months ended September 30, 2017,2019, the Company recognized an income tax expense of $7.3$5.7 million on pre-tax earnings of $19.3$20.7 million compared to $5.1$5.6 million income tax expense on pre-tax earnings of $12.8$20.1 million for the three months ended September 30, 2016.2018. For the nine months ended September 30, 2017,2019, the Company recognized an income tax expense of $21.3$14.6 million on pre-tax earnings of $57.3$56.8 million compared to $16.9 million income tax expense of $10.9 million on pre-tax earnings of $26.6$63.5 million for the nine months ended September 30, 2016.2018. The effective tax rate was approximately was 37.2%25.7% for the nine months ended September 30, 20172019 compared to approximately 41.0%26.6% for the nine months ended September 30, 2016.2018. The effective tax rate for the nine months ended September 30, 2017 was lower than the nine months ended September 30, 20162019 decreased primarily due to additional 2017 year-to-date federal employera decrease in state income tax credits recognized ($0.5 million) and the adoption of ASU 2016-09 and the related excess tax benefits now recognized as a reduction of income tax expense ($0.7 million).taxes.

As of September 30, 2017,2019, the Company has not identified any uncertain tax positions that would have a material impact on the Company’s financial position. The Company recognizes potential interest and penalties related to uncertain tax positions, if any, in income tax expense.
 
The tax years that remain subject to examination for the Company’s major tax jurisdictions at September 30, 20172019 are shown below:
 
20142016 – 20162018 United States — federal income tax
20072012 – 20162018 United States — state and local income tax
20132015 – 20162018 Canada and Puerto Rico

Adoption of ASU 2016-09

Refer to Note 1. Significant Accounting Policies and Practices for the impact of adopting ASU 2016-09 on the Company's stock-based compensation, income taxes, and net income per common share.


14.17. Business Unit Segment Information
 
Segment information is presented in accordance with a “management approach,” which designates the internal reporting used by the Company's Chief Operating Decision Maker (“CODM”) for making decisions and assessing performance as the source of the Company’s reportable segments. The Company’s segments are organized in a manner consistent with which discrete financial information is available and evaluated regularly by the Company’s CODM in deciding how to allocate resources and in assessing performance.
 
An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenue and incur expenses, and about which separate financial information is regularly evaluated by the Company’s CODM. The CODM is the Company’s chief executive officer.
 
Each of the operating segments isare directly responsible for revenue and expenses related to their operations including direct regionalsegment administrative costs. Finance, information technology, human resources, and legal are shared functions that are not allocated back to the two2 operating segments. The CODM assesses the performance of each operating segment using information about its revenue and gross profit as its primary measure of performance, 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.
In the first quarter of 2017, the Company changed its internal reporting segment information reported to its CODM. The operating segments are internally reported to the Company's CODM as RegionSegment One (Commercial) and RegionSegment Two (Airports)(Aviation). All prior periods presented have been restated to reflect the new internal reporting to the CODM.
RegionSegment One (Commercial) encompasses our services in healthcare facilities, municipalities, including meter revenue collection and enforcement services, government facilities, hotels, commercial real estate, residential communities, retail, colleges and universities, as well as ancillary services such as shuttle and ground transportation services, valet services, taxi and livery dispatch services and event planning, including shuttle and transportation services.
RegionSegment Two (Airports)(Aviation) encompasses our services at all majorin aviation (i.e., airports, airline and certain hospitality clients with baggage and parking services) as well as ancillary services, which includesinclude shuttle and ground transportation services, valet services, baggage handling, baggage repair and valetreplacement, remote airline check-in services, wheelchair assist services and other services.
"Other" consists of ancillary revenue that is not specifically identifiable to a regionSegments One or Two and certain unallocated items, such as and including prior year insurance reserve adjustmentsadjustments/costs and other corporate items.
The business is managed based on regionssegments administered by executive vice presidents. officers.

The following is a summary of revenues (excluding reimbursed management contract revenue) and gross profit by regionsoperating segment for the three and nine months ended September 30, 20172019 and 2016:2018:
 Three Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2019 Gross
Margin
%		 September 30, 2018 Gross
Margin
%		 September 30, 2019 Gross
Margin
%		 September 30, 2018 Gross
Margin
%
Services Revenue 
  
  
  
  
  
  
  
Segment One 
  
  
  
  
  
  
  
Lease type contracts$96.2
   $97.6
  
 $283.6
   $290.8
  
Management type contracts62.3
   59.4
  
 191.1
   191.1
  
Total Segment One158.5
   157.0
  
 474.7
  
 481.9
  
Segment Two 
  
  
  
  
  
  
  
Lease type contracts8.1
   6.9
  
 23.4
   20.3
  
Management type contracts68.1
   21.1
  
 198.0
   66.2
  
Total Segment Two76.2
   28.0
  
 221.4
  
 86.5
  
Other 
  
  
  
  
  
  
  
Lease type contracts0.3
   0.2
  
 0.6
   0.5
  
Management type contracts2.2
   2.1
  
 6.3
   7.5
  
Total Other2.5
   2.3
  
 6.9
  
 8.0
  
Reimbursed management type contract revenue181.4
   174.8
  
 539.2
   514.8
  
Total Services Revenue$418.6
   $362.1
  
 $1,242.2
  
 $1,091.2
  
Gross Profit 
  
  
  
  
  
  
  
Segment One 
  
  
  
  
  
  
  
Lease type contracts$7.7
 8% $7.7
 8% $22.1
 8% $19.5
 7%
Management type contracts25.8
 41% 24.1
 41% 73.0
 38% 71.8
 38%
Total Segment One33.5
  
 31.8
  
 95.1
  
 91.3
  
Segment Two 
  
  
  
  
  
  
  
Lease type contracts2.4
 30% 2.0
 29% 6.4
 27% 5.6
 28%
Management type contracts17.5
 26% 6.7
 32% 52.9
 27% 20.3
 31%
Total Segment Two19.9
  
 8.7
  
 59.3
  
 25.9
  
Other 
  
  
  
  
  
  
  
Lease type contracts1.5
 N/M
 0.8
 N/M
 4.6
 N/M
 3.3
 N/M
Management type contracts3.8
 N/M
 3.7
 N/M
 14.8
 N/M
 15.1
 N/M
Total Other5.3
  
 4.5
  
 19.4
  
 18.4
  
Total gross profit$58.7
   $45.0
   $173.8
   $135.6
  
General and administrative expenses26.0
   18.7
   80.8
   63.3
  
General and administrative expense percentage of gross profit44%   42%   46%   47%  
Depreciation and amortization7.3
   4.2
   21.8
   12.7
  
Operating income25.4
   22.1
   71.2
   59.6
  
Other expenses (income) 
  
  
  
  
  
  
  
Interest expense4.8
   2.1
  
 14.7
   6.5
  
Interest income(0.1)   (0.1)  
 (0.3)   (0.3)  
Equity earnings from investment in unconsolidated entity—
   —
  
 —
   (10.1)  
Total other expenses (income)4.7
   2.0
   14.4
   (3.9)  
Earnings before income taxes20.7
  
 20.1
  
 56.8
  
 63.5
  
Income tax expense5.7
   5.6
  
 14.6
   16.9
  
Net income15.0
  
 14.5
  
 42.2
  
 46.6
  
Less: Net income attributable to noncontrolling interest0.8
   1.0
  
 2.2
   2.5
  
Net income attributable to SP Plus Corporation$14.2
  
 $13.5
  
 $40.0
  
 $44.1
  


N/M - Not Meaningful

 Three Months Ended September 30, Nine Months Ended September 30,
(millions) (unaudited)2017 Gross
Margin
%		 2016 Gross
Margin
%		 2017 Gross
Margin
%		 2016 Gross
Margin
%
Parking Services Revenue 
  
  
  
  
  
  
  
Region One 
  
  
  
  
  
  
  
Lease contracts$108.9
  
 $104.9
  
 $326.0
  
 $316.6
  
Management contracts62.5
  
 61.1
  
 190.1
  
 185.5
  
Total Region One171.4
  
 166.0
  
 516.1
  
 502.1
  
Region Two 
  
  
  
  
  
  
  
Lease contracts32.0
  
 31.2
  
 96.6
  
 93.7
  
Management contracts22.2
  
 20.6
  
 66.4
  
 69.1
  
Total Region Two54.2
  
 51.8
  
 163.0
  
 162.8
  
Other 
  
  
  
  
  
  
  
Lease contracts—
  
 —
  
 —
  
 —
  
Management contracts2.0
  
 2.4
  
 6.3
  
 7.4
  
Total Other2.0
  
 2.4
  
 6.3
  
 7.4
  
Reimbursed management contract revenue165.1
  
 177.0
  
 512.7
 

 501.8
  
Total Parking Services Revenue$392.7
  
 $397.2
  
 $1,198.1
  
 $1,174.1
  
Gross Profit 
  
  
  
  
  
  
  
Region One 
  
  
  
  
  
  
  
Lease contracts$7.8
 7% $8.8
 8% $28.9
 9% $25.3
 8%
Management contracts25.3
 40% 24.4
 40% 74.7
 39% 70.7
 38%
Total Region One33.1
  
 33.2
  
 103.6
  
 96.0
  
Region Two 
  
  
  
  
  
  
  
Lease contracts1.6
 5% 1.5
 5% 4.9
 5% 4.0
 4%
Management contracts6.2
 28% 6.2
 30% 19.5
 29% 18.0
 26%
Total Region Two7.8
  
 7.7
  
 24.4
  
 22.0
  
Other 
  
  
  
  
  
  
  
Lease contracts0.5
 —% —
 —% 1.8
 —% 0.6
 —%
Management contracts4.5
 225% 3.0
 125% 14.1
 224% 10.7
 145%
Total Other5.0
  
 3.0
  
 15.9
  
 11.3
  
Total gross profit$45.9
 
 $43.9
 
 $143.9
 
 $129.3
 
General and administrative expenses19.6
 
 20.3
 
 63.3
 
 67.0
 
General and administrative expense percentage of gross profit43% 
 46% 
 44% 
 52% 
Depreciation and amortization4.9
 
 7.8
 
 16.3
 
 26.8
 
Operating income21.4
 
 15.8
 
 64.3
 
 35.5
 
Other expenses (income) 
  
  
  
  
  
 

  
Interest expense2.2
  
 2.7
  
 7.1
  
 8.1
  
Interest income(0.2)  
 (0.1)  
 (0.5)  
 (0.4)  
Gain on sale of business—
   —
   (0.1)   —
  
Equity in losses from investment in unconsolidated entity0.1
  
 0.4
  
 0.5
  
 1.2
  
Total other expenses (income)2.1
 

 3.0
 

 7.0
 

 8.9
 

Earnings before income taxes19.3
  
 12.8
  
 57.3
  
 26.6
  
Income tax expense7.3
  
 5.1
  
 21.3
  
 10.9
  
Net income12.0
  
 7.7
  
 36.0
  
 15.7
  
Less: Net income attributable to noncontrolling interest0.8
  
 0.7
  
 2.6
  
 2.2
  
Net income attributable to SP Plus Corporation$11.2
  
 $7.0
  
 $33.4
  
 $13.5
  

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion of our results of operations should be read in conjunction with the condensed consolidated financial statements and the notes thereto contained in this Quarterly Report on Form 10-Q and the condensed consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016.

During the third quarter 2017, we corrected reimbursed management contract revenue and reimbursed management contract expense for the previous periods presented, whereby, the Company had been overstating reimbursed management contract revenue and reimbursed management contract expense included within the Condensed Consolidated Statements of Income in equal and off-setting amounts. This correction resulted in the following: (i) a reduction of reimbursed management contract revenue of $11.9 million and $35.2 million and a reduction of reimbursed management contract expense by $11.9 million and $35.2 million for the three and nine months ended September 30, 2016, respectively, and (ii) a reduction of reimbursed management contract revenue of $24.4 million and a reduction reimbursed management contract expense of $24.4 million for the nine months ended September 30, 2017, which represents the correction of the over statement previously reported for the six-month period ended June 30, 2017. The correction had no impact to the Condensed Consolidated Balance Sheets, Statements of Income, Comprehensive Income or Cash Flows, except as described above and as it relates to reimbursed management contract revenue and reimbursed management contract expense.2018.
 
Important Information Regarding Forward-Looking Statements
 
This Quarterly Report on Form 10-Q is being filed by SP Plus Corporation (“we”, “SP Plus” or the “Company”) with the Securities and Exchange Commission (“SEC”) and contains forward-looking statements, which are based on our current assumptions and expectations, within the meaning of Section 27A of the Securities Act of 1933, as amended ("the Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").statements. These statements are typically accompanied by the words “expect,” “estimate,” “intend”, “will,” “predict,” “project,” “may,” “should,” “could,” “believe,” “would,” “might,” “anticipate,” or words of similar terms and phrases, but such words, terms and phrases are not the exclusive means of identifying such statements. These expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. These forward looking statements are made based on management'smanagement’s expectations, beliefs and projections concerning future events and are subject to uncertainties and factors relating to operations and the business environment, all of which are difficult to predict and many of which are beyond management'smanagement’s control. These forward looking statements are not guarantees of future performance and there can be no assurance that our expectations, beliefs and projections will be realized.
 
Although we believe there is a reasonable basis for the forward-looking statements, our actual results could be materially different. The most important factors which could cause our actual results to differ from our forward-looking statements are set forth on our description of risk factors in Item 1A. Risk Factors of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2018 and Item 1A. Risk Factors included in this Quarterly Report, which should be read in conjunction with the forward-looking statements in this report. Forward-looking statements speak only as of the date they are made, and except as expressly required by the federal securities laws, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances, future events or for any other reason.

Explanatory Note

On November 30, 2018, we completed the acquisition of ZWB Holdings, Inc. and Rynn's Luggage Corporation, their subsidiaries and affiliates (collectively, "Bags") and our consolidated results of operations for the three and nine months ended September 30, 2019 includes the results of operations related to Bags. Our consolidated operations for the three and nine months ended September 30, 2018 do not include amounts related to the Bags' results of operations. See Note 3. Acquisition, which is included in Part I, Item 1. "Financial Statements" for further discussion of the Bags acquisition.
 
Overview
 
Our Business
We facilitate the efficient movement of people, vehicles and personal belongings with the goal of enhancing the consumer experience while improving bottom line results for our clients. We provide professional parking management, ground transportation, remote baggage check-in and other ancillary services to commercial, institutional and municipal clients in urban markets and airports across the United States, Puerto Rico and Canada. Our services include a comprehensive set of on-site parking management and ground transportation services, which includehandling, facility maintenance, security, services, training, schedulingevent logistics, and supervising all service personnel, as well as providing customer service, marketing,other technology-driven mobility solutions to aviation, commercial, hospitality, healthcare and accounting and revenue control functions necessary to facilitate the operation of our clients' facilities or events. We also provide a range of ancillary services such as airport shuttle operations, valet services, taxi and livery dispatch services, security services and municipal meter revenue collection and enforcement services.government clients across North America. We typically enter into contractual relationships with property owners or managers as opposed to owning facilities.
We operate our clients’ properties throughunder two types of arrangements: management type contracts and leases.lease type contracts. Under a management type contract, we typically receive a basefixed and/or variable monthly fee for managing the facility,providing our services, and we may also receive an incentive fee based on the achievement of facilitycertain performance objectives. We also receive fees for ancillary services. Typically, all of the underlying revenuesrevenue and expenses under a standard management type contract flow through to our clientsclient rather than to us. However, some management type contracts, which are referred to as “reverse” management type contracts, usually provide for larger management fees and require us to pay various costs. Under a lease arrangements,type contract, we generally pay to the property ownerclient either a fixed annual rent, a percentage of gross customer collections, or a combination thereof. Weof both. Under a lease type contract, we collect all revenues under lease arrangementsrevenue and we are responsible for most operating expenses, but wetypically are typically not responsible for major maintenance, capital expenditures or real estate taxes. Margins for lease type 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 September 30, 2017,2019, we operated approximately 81% of our locations under management type contracts and approximately 19% under leases.lease type contracts.
 

In evaluating our financial condition and operating performance, management’s primary focus is on our gross profit and total general and administrative expense. Although the underlying economics to us of management contracts and leases are similar, the manner in which we are required to account for them differs. Revenue from leaseslease type contracts includes all gross customer collections derived from our leased locations (net of local parking taxes), whereas revenue from management type contracts only includes our contractually agreed upon management fees and amounts attributable to ancillary services. Gross customer collections at facilities under management type contracts, therefore, are not included in our revenue. Revenue from lease type contracts also includes a reduction of Services revenue - lease type contracts pursuant to ASU No. 2017-10, Service Concession Arrangements(Topic 853): Determining the Customer of the Operation Services, which requires rental expense be presented as a reduction of Services revenue - lease type contracts for those facilities (and corresponding contracts) that meet the criteria and definition of a service concession arrangement. Accordingly, while a change in the proportion of our operating agreements that are structured as leaseslease type contracts versus management type 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 September 30, 2017,2019, approximately 81% of our locations were operatedbusiness was operating under management type contracts and 75%81% of our gross profit for the nine months ended September 30, 20172019 was derived from management type contracts. Only 38%56% of total revenue (excluding reimbursed management type contract revenue), however, was from management type 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.

Bags Acquisition
On November 30, 2018, we acquired the outstanding shares of Bags for an all-cash purchase price of $277.9 million, net of $5.9 million of cash acquired. Bags is a leading provider of baggage services, remote airline check-in, and other related services, primarily to airline, airport and hospitality clients. Bags provides these services by combining exceptional customer service with innovative technologies. Based in Orlando, Florida, Bags operates in over 250 cities in North America with approximately 3,000 employees. Its clients include major airlines, airports, sea ports, cruise lines, and leading hotels and resorts. Bags handles more than 5.0 million checked bags annually.
General Business Trends


We believe that sophisticated commercial real estate developers andclients (which also include property managers and ownersowners) recognize the potential for parking services, parking management, ground transportation services, baggage handling and relatedother ancillary services to be a profit generator rather thanand/or a cost center. Often, the parking experience makes both the first and the last impressions onservice differentiator to their properties' tenants and visitors.customers. By outsourcing these services, they are able to capture additional profit and improve customer experience by leveraging the unique operational skills and controls that an experienced parking managementservices company can offer. Our ability to consistently deliver a uniformly high level of parking and related services to our clients, including the use of various technological enhancements, allows us to maximize the profit and/or customer experience to our clients and improves our ability to win contracts and retain existing locations.clients. Our focus on customer service and satisfaction is a key driver of our high location retention rate, which was approximately 92% and 87%89% for the twelve monthboth twelve-month periods ended September 30, 20172019 and 2016,2018, respectively.

This retention rate captures facilities in Segment One (Commercial).
Summary of OperatingSegment One (Commercial) 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 Segment One (Commercial) facilities (by contractual type) operated at the end of the periodsyears indicated:
September 30, 2017
 December 31, 2016
 September 30, 2016
September 30, 2019
 December 31, 2018
 September 30, 2018
Leased facilities683
 688
 696
617
 628
 628
Managed facilities2,964
 2,966
 2,993
2,556
 2,514
 2,572
Total facilities (1) (2)3,647
 3,654
 3,689
Total Segment One (Commercial) facilities (1)
3,173
 3,142
 3,200


(1) Includes partial ownership in two managed facilities acquired in the Central Merger.one leased facility.
(2) December 31, 2016 and September 30, 2016 facilities are adjusted for Click and Park locations due to the termination of the transition services agreement.


Revenue
 
We recognize parking services revenue from lease and management type contracts as the related services are provided. Substantially all of our revenue comes from the following two sources:
 
Parking servicesServices revenue—lease type contracts. Parking servicesServices revenue related to lease type contracts consistconsists of all revenue received at a leased facility,lease type locations, including parkinggross receipts (net of local parking tax)taxes), consulting and real estate development fees, gains on sales of contracts and payments for exercising termination rights.
 
Parking services
Services revenue—management type contracts. Management type contract revenue consists of management fees, including both fixed, andvariable and/or performance-based fees, and amounts attributable to ancillary services such as accounting, equipment leasing, baggage services, remote air check-in services, payments received for exercising termination rights, consulting, developmental fees, gains on sales of contracts, insurance and other value-added services with respect to managed locations.management type contracts. 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’sworkers' compensation and health care claims by maintaining a large per-claim deductible. As a result, we have generated operating income on the insurance provided under our management type contracts by focusing on our risk management efforts and controlling losses. Management type contract revenues do not include gross customer collections at the managed locations,type contracts as these revenues belong to the property ownerclient rather than to us. Management type contracts generally provide us with a management fee regardless of the operating performance of the underlying facilities.management type contract.
 
Conversions between types of contracts, lease or management, are typically determined by our client and not us. Although the underlying economics to us of management contracts and leases are similar, the manner in which we account for them differs substantially.




Reimbursed Management Type Contract Revenue
 
Reimbursed management type contract revenue consists of the direct reimbursement from the property owner for operating expenses incurred under a management type contract, which are reflected in our revenue.
 
Cost of Parking Services
 
Our cost of parking services consists of the following:
 
Cost of parking services—lease type contracts. The cost of parking services under a lease type arrangement consists of contractual rentalrents or fees paid to the facility ownerclient and all operating expenses incurred in connection with operating the leased facility. Contractual rents or fees paid to the facility ownerclient are generally based on either a fixed contractual amount or a percentage of gross revenue or a combination thereof. Generally, under a lease type arrangement we are not responsible for major capital expenditures or real estate taxes.

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


Reimbursed Management Type Contract Expense
 
Reimbursed management type contract expense consists of direct reimbursed costs incurred on behalf of property owners under a management type contract, which are reflected in our cost of parking services.
 
Gross Profit
 
Gross profit equals our revenue less the cost of generating such revenue. This is the key metric we use to examine our performance because it captures the underlying economic benefit to us of both lease contracts and management type contracts.
 
General and Administrative Expenses
 
General and administrative expenses include salaries, wages, payroll taxes, insurance, travel and office related expenses for our headquarters, field offices, supervisory employees, and board of directors.
 
Depreciation and Amortization
 
Depreciation is determined using a straight-line method over the estimated useful lives of the various asset classes, or in the case of leasehold improvements, over the initial term of the operating lease or its useful life, whichever is shorter. Intangible assets determined to have finite lives are amortized over their remaining estimated useful life.
 

Results of Operations

Impacts of Recent Hurricanes

Although we have significant operations in the areas impacted by Hurricanes Harvey, Irma and Maria, our business and financial results were not significantly impacted. The estimated impact to the Company's results was a $0.7 million reduction in gross profit for the periods ended September 30, 2017. We continue to assess the impact of the damage caused by the hurricanes on our operations and insured property and currently do not expect the impacts of the named hurricanes to be significant. We currently believe that we will be entitled to recover the total amount of insured losses sustained as a result of the named hurricanes, less related deductibles, if any. As of September 30, 2017, no amounts have been recorded related to the deductible portion of our insurance programs that we expect to incur in connection with any hurricane-related insurance claim we may file.
 
Segments


An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenue and incur expenses, and about which separate financial information is regularly evaluated by our chief operating decision maker (“CODM”), in deciding how to allocate resources. Our CODM is our chief executive officer.
In the first quarter of 2017, we changed the internal reporting segment information reported to our CODM. The operating segments are internally reported to our CODM as region oneSegment One (Commercial) and region two (Airports)Segment Two (Aviation). All prior periods presented have been restated to reflect the new internal reporting to the CODM.
Region oneSegment One (Commercial) encompasses our services in healthcare facilities, municipalities, including meter revenue collection and enforcement services, government facilities, hotels, commercial real estate, residential communities, retail, colleges and

universities, as well as ancillary services such as shuttle andground transportation services, valet services, taxi and livery dispatch services and event planning, including shuttle and transportation services.
Region two (Airports) encompasses our services at all major airports as well as ancillary services, which includes shuttle
•
Segment Two (Aviation) encompasses our services in aviation (e.g., airports, airline and certain hospitality clients with baggage and parking services) as well as ancillary services, which includes ground transportation services, and valet services, baggage handling, baggage repair and replacement, remote airline check-in services and other services.
"Other" consists of ancillary revenue that is not specifically identifiable to a regionSegments One or Two and certain unallocated items, such as and including prior year insurance reserve adjustmentsadjustments/costs and other corporate items.


The following istables are a summary of revenues (excluding reimbursed management type contract revenue), cost of parking services (excluding reimbursed management contract expense) and gross profit by regionssegment for the three and nine months ended September 30, 20172019 and 2016:2018:
 
Three Months Ended September 30, 20172019 Compared to Three Months September 30, 20162018
 
Segment revenue information is summarized as follows:
 Three Months Ended September 30,
 Region One Region Two Other Total Variance
(millions) (unaudited)2017 2016 2017 2016 2017 2016 2017 2016 Amount %
Lease contract revenue: 
  
  
  
  
  
  
  
  
  
New locations$12.1
 $2.5
 $0.7
 $0.2
 $—
 $—
 $12.8
 $2.7
 $10.1
 374.1 %
Contract expirations7.1
 13.0
 —
 1.2
 —
 —
 7.1
 14.2
 (7.1) (50.0)%
Same locations87.0
 87.4
 31.3
 29.8
 —
 —
 118.3
 117.2
 1.1
 0.9 %
Conversions2.7
 2.0
 —
 —
 —
 —
 2.7
 2.0
 0.7
 35.0 %
Total lease contract revenue$108.9
 $104.9
 $32.0
 $31.2
 $—
 $—
 $140.9
 $136.1
 $4.8
 3.5 %
Management contract revenue: 
  
  
  
  
  
  
  
  
  
New locations$8.6
 $5.5
 $4.3
 $2.0
 $—
 $—
 $12.9
 $7.5
 $5.4
 72.0 %
Contract expirations3.9
 6.2
 1.0
 4.5
 —
 —
 4.9
 10.7
 (5.8) (54.2)%
Same locations49.8
 49.3
 16.9
 14.1
 2.0
 2.4
 68.7
 65.8
 2.9
 4.4 %
Conversions0.2
 0.1
 —
 —
 —
 —
 0.2
 0.1
 0.1
 100.0 %
Total management contract revenue$62.5
 $61.1
 $22.2
 $20.6
 $2.0
 $2.4
 $86.7
 $84.1
 $2.6
 3.1 %
 Three Months Ended September 30,
 Segment One Segment Two Other Total Variance
(millions) (unaudited)2019 2018 2019 2018 2019 2018 2019 2018 Amount %
Lease type contract revenue: 
  
  
  
  
 

  
  
  
  
New/acquired business$1.7
 $—
 $0.9
 $—
 $—
 $—
 $2.6
 $—
 $2.6
 — %
Expired business1.0
 6.6
 —
 —
 —
 —
 1.0
 6.6
 (5.6) (84.8)%
Existing business91.4
 88.7
 7.2
 6.9
 0.3
 0.2
 98.9
 95.8
 3.1
 3.2 %
Conversions2.1
 2.3
 —
 —
 —
 —
 2.1
 2.3
 (0.2) (8.7)%
Total lease type contract revenue$96.2
 $97.6
 $8.1
 $6.9
 $0.3
 $0.2
 $104.6
 $104.7
 $(0.1) (0.1)%
Management type contract revenue: 
  
  
  
  
  
  
  
  
  
New/acquired business$7.4
 $0.6
 $46.8
 $—
 $—
 $—
 $54.2
 $0.6
 $53.6
 8,933.3 %
Expired business0.6
 4.7
 0.3
 0.1
 —
 —
 0.9
 4.8
 (3.9) (81.3)%
Existing business54.1
 54.0
 21.0
 21.0
 2.2
 2.1
 77.3
 77.1
 0.2
 0.3 %
Conversions0.2
 0.1
 —
 —
 —
 —
 0.2
 0.1
 0.1
 100.0 %
Total management type contract revenue$62.3
 $59.4
 $68.1
 $21.1
 $2.2
 $2.1
 $132.6
 $82.6
 $50.0
 60.5 %
 
Revenue associated with sameexisting business represents business that has been operating for at least one year and operating for the entire period in the comparative period being presented. Revenue associated with expired business relates to contracts that have expired, however, we were operating the location in the comparative period presented.

Services revenue—lease type contracts. Lease type contract revenue decreased $0.1 million, or 0.1%, to $104.6 million for the three months ended September 30, 2019, compared to $104.7 million for the three months ended September 30, 2018. The decrease in lease type contract revenue resulted primarily from a decrease of $5.6 million from expired business and $0.2 million from locations that converted from management type contracts during the periods presented, partially offset by increases of $3.1 million from existing business and $2.6 million from new/acquired business. Existing business revenue increased $3.1 million, or 3.2%, primarily due to monthly parking revenue and transient revenue.

From a reporting segment perspective, lease type contract revenue decreased primarily due to expired business in Segment One and conversions in Segment One, partially offset by increases in existing business in Segment One, Two, and Other, and new/acquired business in Segment One and Two. The Other amounts in existing business represent revenues not specifically identifiable to Segments One or Two.

Services revenue—management type contracts. Management type contract revenue increased $50.0 million, or 60.5%, to $132.6 million for the three months ended September 30, 2019, compared to $82.6 million for the three months ended September 30, 2018. The increase in management type contract revenue resulted primarily from an increase of $53.6 million from new/acquired business, primarily due to the Bags acquisition, $0.2 million from existing business, and $0.1 million from conversions, partially offset by a decrease of $3.9 million from expired business. Existing business increased $0.2 million, or 0.3%, primarily due to an increased management fees.

From a reporting segment perspective, management type contract revenue increased primarily due to increases from new/acquired business in Segment One and Two, existing business in Segment One and Other, expired business in Segment Two, and conversions in Segment One, partially offset by decreases in revenue from expired business in Segment One. The Other amounts in existing business represent revenues not specifically identifiable to Segment One or Two.
Reimbursed management type contract revenue. Reimbursed management type contract revenue increased $6.6 million, or 3.8%, to $181.4 million for the three months ended September 30, 2019, compared to $174.8 million for the three months ended September 30, 2018. This increase resulted from an increase in reimbursements for costs incurred on behalf of owners.

Segment cost of services information is summarized as follows:
 Three Months Ended September 30,
 Segment One Segment Two Other Total Variance
(millions) (unaudited)2019 2018 2019 2018 2019 2018 2019 2018 Amount %
Cost of services lease type contracts: 
  
  
  
  
  
  
  
  
  
New/acquired business$1.8
 $—
 $0.6
 $—
 $—
 $—
 $2.4
 $—
 $2.4
 — %
Expired business0.9
 6.6
 —
 —
 —
 —
 0.9
 6.6
 (5.7) (86.4)%
Existing business83.7
 81.1
 5.1
 4.9
 (1.2) (0.6) 87.6
 85.4
 2.2
 2.6 %
Conversions2.1
 2.2
 —
 —
 —
 —
 2.1
 2.2
 (0.1) (4.5)%
Total cost of services lease type contracts$88.5
 $89.9
 $5.7
 $4.9
 $(1.2) $(0.6) $93.0
 $94.2
 $(1.2) (1.3)%
Cost of services management type contracts: 
  
  
  
  
  
  
  
  
  
New/acquired business$4.6
 $0.4
 $37.0
 $—
 $—
 $—
 $41.6
 $0.4
 $41.2
 10,300.0 %
Expired business0.4
 3.0
 —
 —
 —
 —
 0.4
 3.0
 (2.6) (86.7)%
Existing business31.4
 31.9
 13.6
 14.4
 (1.6) (1.6) 43.4
 44.7
 (1.3) (2.9)%
Conversions0.1
 —
 —
 —
 —
 —
 0.1
 —
 0.1
 — %
Total cost of services management type contracts$36.5
 $35.3
 $50.6
 $14.4
 $(1.6) $(1.6) $85.5
 $48.1
 $37.4
 77.8 %
Cost of services associated with existing business represents locations that have been operating for at least one year and operating for the entire period in the comparative period being presented. Revenue associated with contract expirations relates to contracts that have expired, however, we were operating the facility in the comparative period presented.

Parking services revenue—lease contracts.  Lease contract revenue increased $4.8 million, or 3.5%, to $140.9 million for the three months ended September 30, 2017, compared to $136.1 million for the three months ended September 30, 2016. The increase in lease contract revenue resulted primarily from increases of $10.1 million from new locations, $1.1 million from same locations and $0.7 million from locations that converted from management contracts during the periods presented, partially offset by a $7.1 million decrease in revenue from contract expirations. Same location revenue increased $1.1 million, or 0.9%, primarily due to net increases in short term parking revenue, rental revenue and monthly parking revenue.

From a reporting segment perspective, lease contract revenue increased primarily due to new locations in regions one and two, same locations in region two and conversions in region one, partially offset by decreases in contract expirations in regions one and two and same locations in region one. The other region amounts in same location represent revenue not specifically identifiable to a region.
Parking services revenue—management contracts. Management contract revenue increased $2.6 million, or 3.1%, to $86.7 million for the three months ended September 30, 2017, compared to $84.1 million for the three months ended September 30, 2016.  The increase in management contract revenue resulted primarily from increases of $5.4 million from new locations, $2.9 million from same locations and $0.1 million from locations that converted from lease contracts during the periods presented, partially offset by a $5.8 million decrease in revenue from contract expirations. Same location revenue increased $2.9 million, or 4.4%, primarily due to change in contract terms for certain management contracts, whereby the contract terms converted from a management contract to a "reverse" management contract, which typically has higher management fees from the facility owner but requires us to pay certain operating costs associated with the facilities operation.

From a reporting segment perspective, management contract revenue increased primarily due to new locations in regions one and two, same locations in regions one and two and conversions in region one, partially offset by decreases in contract terminations in regions one and two and same locations in other. The other region amounts in same location represent revenue not specifically identifiable to a region.

Reimbursed management contract revenue. Reimbursed management contract revenue decreased $11.9 million, or 6.7%, to $165.1 million for the three months ended September 30, 2017, compared to $177.0 million for the three months ended September 30, 2016.

Segment cost of parking services information is summarized as follows:
 Three Months Ended September 30,
 Region One Region Two Other Total Variance
(millions) (unaudited)2017 2016 2017 2016 2017 2016 2017 2016 Amount %
Cost of parking services lease contracts: 
  
  
  
  
  
  
  
  
  
New locations$11.6
 $2.4
 $0.6
 $0.2
 $—
 $—
 $12.2
 $2.6
 $9.6
 369.2 %
Contract expirations6.0
 11.7
 —
 1.1
 —
 —
 6.0
 12.8
 (6.8) (53.1)%
Same locations80.8
 80.1
 29.8
 28.4
 (0.5) —
 110.1
 108.5
 1.6
 1.5 %
Conversions2.7
 1.9
 —
 —
 —
 —
 2.7
 1.9
 0.8
 42.1 %
Total cost of parking services lease contracts$101.1
 $96.1
 $30.4
 $29.7
 $(0.5) $—
 $131.0
 $125.8
 $5.2
 4.1 %
Cost of parking services management contracts: 
  
  
  
  
  
  
  
  
  
New locations$4.3
 $3.3
 $4.3
 $2.0
 $—
 $—
 $8.6
 $5.3
 $3.3
 62.3 %
Contract expirations2.8
 3.7
 0.9
 3.6
 —
 —
 3.7
 7.3
 (3.6) (49.3)%
Same locations30.1
 29.7
 10.8
 8.8
 (2.5) (0.6) 38.4
 37.9
 0.5
 1.3 %
Conversions—
 —
 —
 —
 —
 —
 —
 —
 —
 — %
Total cost of parking services management contracts$37.2
 $36.7
 $16.0
 $14.4
 $(2.5) $(0.6) $50.7
 $50.5
 $0.2
 0.4 %
Cost of parking services associated with same locations represents locations that have been operating for at least one year and operating for the entire period in the comparative period being present. Cost of parking services associated with contract expirationsexpired business relates to contacts that have expired, however, we were operating the facilitylocation in the comparative period presented.


Cost of parking services—lease type contracts. Cost of parking services for lease type contracts increased $5.2decreased $1.2 million, or 4.1%1.3%, to $131.0$93.0 million for the three months ended September 30, 2017,2019, compared to $125.8$94.2 million for the three months ended September 30, 2016.2018. The increasedecrease in cost of parking services for lease type contracts resulted primarily from increasesa decrease of $9.6$5.7 million from new locations, $1.6 million from same locationsexpired business and $0.8$0.1 million from locations that converted from management type contracts during the periods presented, partially offset by a decreaseincreases of $6.8$2.4 million from contract expirations. Same locationnew/acquired business and $2.2 million from existing business. Existing business costs increased $1.6$2.2 million, or 1.5%2.6%, primarily due to an increase in rent expense as a result of higher revenues for same locationsexisting business and overall net operatingan increase in compensation and benefit costs, partially offset by unallocated insurance reserve adjustments/costs and other unallocated corporate items.a decrease in overall net operating costs.

From a reporting segment perspective, cost of parking services for lease type contracts increaseddecreased primarily from new locationsexpired business in regions one and two, same locationsSegment One, existing business in regions one and twoOther, and conversions in region one,Segment One, partially offset by decreasesnew/acquired business in contract expirationsSegment One and Two and existing business in regions oneSegment One and two and same locations in other.Two. The other regionOther segment amounts in same locationexisting business represent costs not specifically identifiable to a region.Segment One or Two.

Cost of parking services—management type contracts. Cost of parking services for management type contracts increased $0.2$37.4 million, or 0.4%77.8%, to $50.7$85.5 million for the three months ended September 30, 2017,2019, compared to $50.5$48.1 million for the three months ended September 30, 2016.2018. The increase in cost of parking services for management type contracts resulted primarily from increases of $3.3$41.2 million from new locationsnew/acquired business, primarily due to the Bags acquisition, and $0.5$0.1 million from same locations that converted from lease type contracts during the periods presented, partially offset by a decrease of $3.6$2.6 million from contract expirations. Same location costs increased $0.5expired business and $1.3 million from existing business. Existing business decreased $1.3 million, or 1.3%2.9%, primarily due to an increasea decrease in costs due to change in contract terms for certain management contracts, whereby the contract terms converted from a management contract to a "reverse" management contract, which typically have higher operating costs associated with the facilities operation but allow us to have a higher management fee from the facility owner and overall net operating costs, partially offset by unallocated insurance reserve adjustments/costsan increase in compensation and other unallocated corporate items.benefit costs.


From a reporting segment perspective, cost of parking services for management type contracts increased primarily from increasesdue to new/acquired business in new locationsSegment One and Two, and conversions in regions one and two and same locations in regions one and two,Segment One, partially offset by decreasesa decrease in contract expirationsexpired business in regions oneSegment One, and twoexisting business in Segment One and same locations in other.Two. The other regionOther segment amounts in same locationexisting business represent costs not specifically identifiable to a region.Segment One or Two.
 
Reimbursed management type contract expense. Reimbursed management type contract expense decreased $11.9increased $6.6 million, or 6.7%3.8%, to $165.1$181.4 million for the three months ended September 30, 2017,2019, compared to $177.0$174.8 million for the three months ended September 30, 2016.2018. This increase resulted from an increase in reimbursements for costs incurred on behalf of owners.


Segment gross profit/gross profit percentage information is summarized as follows:
 Three Months Ended September 30,
 Region One Region Two Other Total Variance
(millions) (unaudited)2017 2016 2017 2016 2017 2016 2017 2016 Amount %
Gross profit lease contracts: 
  
  
  
  
  
  
  
  
  
New locations$0.5
 $0.1
 $0.1
 $—
 $—
 $—
 $0.6
 $0.1
 $0.5
 500.0 %
Contract expirations1.1
 1.3
 —
 0.1
 —
 —
 1.1
 1.4
 (0.3) (21.4)%
Same locations6.2
 7.3
 1.5
 1.4
 0.5
 —
 8.2
 8.7
 (0.5) (5.7)%
Conversions—
 0.1
 —
 —
 —
 —
 —
 0.1
 (0.1) — %
Total gross profit lease contracts$7.8
 $8.8
 $1.6
 $1.5
 $0.5
 $—
 $9.9
 $10.3
 $(0.4) (3.9)%
 (Percentages)
Gross profit percentage lease contracts: 
  
  
  
  
  
  
  
  
  
New locations4.1% 4.0% 14.3% —% —% —% 4.7% 3.7%    
Contract expirations15.5% 10.0% —% 8.3% —% —% 15.5% 9.9%    
Same locations7.1% 8.4% 4.8% 4.7% —% —% 6.9% 7.4%    
Conversions—% 5.0% —% —% —% —% —% 5.0%    
Total gross profit percentage7.2% 8.4% 5.0% 4.8% —% —% 7.0% 7.6%    
Gross profit management contracts: 
  
  
  
  
  
  
  
  
  
New locations$4.3
 $2.2
 $—
 $—
 $—
 $—
 $4.3
 $2.2
 $2.1
 95.5 %
Contract expirations1.1
 2.5
 0.1
 0.9
 —
 —
 1.2
 3.4
 (2.2) — %
Same locations19.7
 19.6
 6.1
 5.3
 4.5
 3.0
 30.3
 27.9
 2.4
 8.6 %
Conversions0.2
 0.1
 —
 —
 —
 —
 0.2
 0.1
 0.1
 100.0 %
Total gross profit management contracts$25.3
 $24.4
 $6.2
 $6.2
 $4.5
 $3.0
 $36.0
 $33.6
 $2.4
 7.1 %
 (Percentages)
Gross profit percentage management contracts: 
  
  
  
    
  
  
  
  
New locations50.0% 40.0% —% —% —% —% 33.3% 29.3%    
Contract expirations28.2% 40.3% 10.0% 20.0% —% —% 24.5% 31.8%    
Same locations39.6% 39.8% 36.1% 37.6% 225.0% 125.0% 44.1% 42.4%    
Conversions100.0% 100.0% —% —% —% —% 100.0% 100.0%    
Total gross profit percentage40.5% 39.9% 27.9% 30.1% 225.0% 125.0% 41.5% 40.0%    
 Three Months Ended September 30,
 Segment One Segment Two Other Total Variance
(millions) (unaudited)2019 2018 2019 2018 2019 2018 2019 2018 Amount %
Gross profit lease type contracts: 
  
  
  
  
  
  
  
  
  
New/acquired business$(0.1) $—
 $0.3
 $—
 $—
 $—
 $0.2
 $—
 $0.2
 — %
Expired business0.1
 —
 —
 —
 —
 —
 0.1
 —
 0.1
 — %
Existing business7.7
 7.6
 2.1
 2.0
 1.5
 0.8
 11.3
 10.4
 0.9
 8.7 %
Conversions—
 0.1
 —
 —
 —
 —
 —
 0.1
 (0.1) (100.0)%
Total gross profit lease type contracts$7.7
 $7.7
 $2.4
 $2.0
 $1.5
 $0.8
 $11.6
 $10.5
 $1.1
 10.5 %
 (Percentages)
Gross profit percentage lease type contracts: 
  
  
  
  
  
  
  
  
  
New/acquired business(5.9)% —% 33.3% —% —% —% 7.7% —%    
Expired business10.0 % —% —% —% —% —% 10.0% —%    
Existing business8.4 % 8.6% 29.2% 29.0% 500.0% 400.0% 11.4% 10.9%    
Conversions— % 4.3% —% —% —% —% —% 4.3%    
Total gross profit percentage8.0 % 7.9% 29.6% 29.0% 500.0% 400.0% 11.1% 10.0%    
Gross profit management type contracts: 
  
  
  
  
  
  
  
  
  
New/acquired business$2.8
 $0.2
 $9.8
 $—
 $—
 $—
 $12.6
 $0.2
 $12.4
 6,200.0 %
Expired business0.2
 1.7
 0.3
 0.1
 —
 —
 0.5
 1.8
 (1.3) (72.2)%
Existing business22.7
 22.1
 7.4
 6.6
 3.8
 3.7
 33.9
 32.4
 1.5
 4.6 %
Conversions0.1
 0.1
 —
 —
 —
 —
 0.1
 0.1
 —
 — %
Total gross profit management type contracts$25.8
 $24.1
 $17.5
 $6.7
 $3.8
 $3.7
 $47.1
 $34.5
 $12.6
 36.5 %
 (Percentages)
Gross profit percentage management type contracts: 
  
  
  
    
  
  
  
  
New/acquired business37.8 % 33.3% 20.9% —% —% —% 23.2% 33.3%    
Expired business33.3 % 36.2% 100.0% 100.0% —% —% 55.6% 37.5%    
Existing business42.0 % 40.9% 35.2% 31.4% 172.7% 176.2% 43.9% 42.0%    
Conversions50.0 % 100.0% —% —% —% —% 50.0% 100.0%    
Total gross profit percentage41.4 % 40.6% 25.7% 31.8% 172.7% 176.2% 35.5% 41.8%    
 
Gross profit associated with same locations represents locations that have been operating for at least one year and operating for the entire period in the comparative period being present. Gross profit associated with contract expirations relates to contracts that have expired, however, we were operating the facility in the comparative period presented.

Gross profit—lease contracts. Gross profit for lease contracts decreased $0.4 million, or 3.9%, to $9.9 million for the three months ended September 30, 2017, compared to $10.3 million for three months ended September 30, 2016. Gross profit percentage for lease contracts decreased to 7.0% for the three months ended September 30, 2017, compared to 7.6% for the three months ended September 30, 2016. Gross profit for lease contracts decreased as a result of decreases in gross profit for same locations, contract expirations, and locations that converted from management contracts during the periods presented, partially offset by increase in gross profit for new locations. Gross profit for same locations decreased primarily due to net decreases in rent expense as a result of higher revenues for same locations and overall net operating costs, partially offset by increases in short term parking revenue, rental revenue, monthly parking revenue and unallocated insurance reserve adjustments/costs and other unallocated corporate items.
From a reporting segment perspective, gross profit for lease contracts decreased primarily due to decreases in contract expirations in regions one and two, same locations in region one and conversions in region one, partially offset by increases in new locations in regions one and two and same locations in region two and other.
Gross profit—management contracts. Gross profit for management contracts increased $2.4 million, or 7.1%, to $36.0 million for the three months ended September 30, 2017, compared to $33.6 million for the three months ended September 30, 2016. Gross profit percentage for management contracts increased to 41.5% for three months ended September 30, 2017, compared to 40.0% for three months ended September 30, 2016. Gross profit for management contracts increased as a result of an increase in gross profit for new locations, same locations and locations that converted from lease contracts during the periods presented, partially

offset by a decrease in gross profit for contract expirations. Gross profit for same locations increased primarily due to higher operating profits and unallocated insurance reserve adjustments/costs and other unallocated corporate items.
From a reporting segment perspective, gross profit for management contracts increased primarily from new locations in region one, same locations in regions one and two and other and conversions in region one, partially offset by decreases from contract expirations in regions one and two.

Although we have significant operations in the areas impacted by Hurricanes Harvey, Irma and Maria, ourexisting business and financial results were not significantly impacted. Our results were impacted by an estimated $0.7 million reduction in gross profit, primarily related to lease contracts, for the three months ended September 30, 2017.
General and administrative expenses. General and administrative expenses decreased $0.7 million, or 3.4%, to $19.6 million for the three months ended September 30, 2017, compared to $20.3 million for the three months ended September 30, 2016. The decrease in general and administrative expenses was primarily due to a decrease in performance-based compensation costs, a decrease in compensation and benefit costs related to prior year cost reduction initiatives, merger and integration costs (primarily related to severance and relocation costs in the prior year comparable period) and overall better expense control, partially offset by investments related to supporting our various initiatives, which include implementing a vertical market strategy and re-aligning the organization.

Depreciation and amortization. Depreciation and amortization decreased $2.9 million, or 37.2%, to $4.9 million for the three months ended September 30, 2017, compared to $7.8 million for the three months ended September 30, 2016. This decrease was primarily a result of accelerated depreciation of software during the three months ended September 30, 2016 and the three months ended September 30, 2017 did not include amortization of certain intangible assets as they were fully amortized during the fourth quarter of 2016.
Interest expense. Interest expense decreased $0.5 million, or 18.5%, to $2.2 million for the three months ended September 30, 2017, compared to $2.7 million for the three months ended September 30, 2016.  The decrease in interest expense was primarily related to reductions in amounts outstanding under our Restated Credit Facility, partially offset by an increase in average borrowing rates.

Interest income. Interest income was $0.2 million and $0.1 million for the three months ended September 30, 2017 and 2016, respectively.

Equity in losses from investment in unconsolidated entity. Equity in losses from investment in unconsolidated entity was $0.1 million and $0.4 million for the three months ended September 30, 2017 and 2016, respectively.
Income tax expense. Income tax expense increased $2.2 million, or 43.1%, to $7.3 million for the three months ended September 30, 2017, compared to $5.1 million for the three months ended September 30, 2016. Our effective tax rate was 37.7% for the three months ended September 30, 2017, compared to 39.8% for the three months ended September 30, 2016. The effective tax rate for the three months ended September 30, 2017 was lower primarily due to additional federal employer income tax credits recognized ($0.3 million) and the adoption of ASU 2016-09 and the related excess tax benefits now recognized as a reduction of income tax expense ($0.1 million). See Note 1. Significant Accounting Policies and Practices of the Condensed Consolidated Financial Statements for further discussion of the impact of ASU 2016-09.


Nine Months Ended September 30, 2017 Compared to Nine Months September 30, 2016
Segment revenue information is summarized as follows:
 Nine Months Ended September 30,
 Region One Region Two Other Total Variance
(millions) (unaudited)2017 2016 2017 2016 2017 2016 2017 2016 Amount %
Lease contract revenue: 
  
  
  
  
  
  
  
  
  
New locations$27.4

$3.8

$2.2

$0.2

$—

$—

$29.6

$4.0

$25.6

640.0 %
Contract expirations10.2

33.6

—

3.7

—

—

10.2

37.3

(27.1)
(72.7)%
Same locations281.2

272.8

94.4

89.8

—

—

375.6

362.6

13.0

3.6 %
Conversions7.2

6.4

—

—

—

—

7.2

6.4

0.8

12.5 %
Total lease contract revenue$326.0

$316.6

$96.6

$93.7

$—

$—

$422.6

$410.3

$12.3

3.0 %
Management contract revenue: 
  
  
  
  
  
  
  
  
  
New locations$28.3

$9.8

$10.9

$4.6

$—

$—

$39.2

$14.4

$24.8

172.2 %
Contract expirations6.3

20.1

2.4

20.4

—

—

8.7

40.5

(31.8)
(78.5)%
Same locations155.1

155.3

53.1

44.1

6.3

7.4

214.5

206.8

7.7

3.7 %
Conversions0.4

0.3

—

—

—

—

0.4

0.3

0.1

33.3 %
Total management contract revenue$190.1

$185.5

$66.4

$69.1

$6.3

$7.4

$262.8

$262.0

$0.8

0.3 %
Revenue associated with same locations represents locations that have been operating for at least one year and operating for the entire period in the comparative period being presented. Revenue associated with contract expirations relates to contracts that have expired, however, we were operating the facility in the comparative period presented.

Parking services revenue—lease contracts.  Lease contract revenue increased $12.3 million, or 3.0%, to $422.6 million for the nine months ended September 30, 2017, compared to $410.3 million for the nine months ended September 30, 2016. The increase in lease contract revenue resulted primarily from increases of $25.6 million from new locations, $13.0 million from same locations and $0.8 million from locations that converted from management contracts during the periods presented, partially offset by a decrease of $27.1 million from contract expirations. Same location revenue increased $13.0 million, or 3.6%, primarily due to earnings of $8.5 million for our proportionate share of the net gain of an equity method investees' sale of assets and net increases in monthly parking revenue, rental revenue and short term revenue.
From a reporting segment perspective, lease contract revenue increased primarily due to new locations in regions one and two, same locations in regions one and two and conversions in region one, partially offset by decreases from contract expirations in regions one and two. The other region amounts in same location represent revenue not specifically identifiable to a region.
Parking services revenue—management contracts. Management contract revenue increased $0.8 million, or $0.3%, to $262.8 million for the nine months ended September 30, 2017, compared to $262.0 million for the nine months ended September 30, 2016.  The increase in management contract revenue resulted primarily from increases of $24.8 from new locations, $7.7 million from same locations and $0.1 million from locations that converted from lease contracts during the periods presented, partially offset by a decrease of $31.8 from contract expirations. Same location revenue increased $7.7 million, or 3.7%, primarily due to change in contract terms for certain management contracts, whereby the contract terms converted from a management contract to a "reverse" management contract, which typically has higher management fees from the facility owner but require us to pay certain operating costs associated with the facilities operation.

From a reporting segment perspective, management contract revenue increased primarily due to new locations in regions one and two, same locations in region two and conversions in region one, partially offset by decreases in contract expirations in regions one and two and same locations in region one and other. The other region amounts in same location represent revenues not specifically identifiable to a region.
Reimbursed management contract revenue. Reimbursed management contract revenue increased $10.9 million, or 2.2%, to $512.7 million for the nine months ended September 30, 2017, compared to $501.8 million for the nine months ended September 30, 2016.

Segment cost of parking services information is summarized as follows:
 Nine Months Ended September 30,
 Region One Region Two Other Total Variance
(millions) (unaudited)2017 2016 2017 2016 2017 2016 2017 2016 Amount %
Cost of parking services lease contracts: 
  
  
  
  
  
  
  
  
  
New locations$25.8

$3.6

$1.9

$0.2

$—

$—

$27.7

$3.8

$23.9

628.9 %
Contract expirations9.2

31.8

—

3.5

—

—

9.2

35.3

(26.1)
(73.9)%
Same locations255.0

249.9

89.8

86.0

(1.8)
(0.6)
343.0

335.3

7.7

2.3 %
Conversions7.1

6.0

—

—

—

—

7.1

6.0

1.1

18.3 %
Total cost of parking services lease contracts$297.1

$291.3

$91.7

$89.7

$(1.8)
$(0.6)
$387.0

$380.4

$6.6

1.7 %
Cost of parking services management contracts: 
  
  
  
  
  
  
  
  
  
New locations$15.9

$5.9

$10.6

$4.5

$—

$—

$26.5

$10.4

$16.1

154.8 %
Contract expirations4.6

13.0

2.0

19.2

—

—

6.6

32.2

(25.6)
(79.5)%
Same locations94.8

95.8

34.3

27.4

(7.8)
(3.3)
121.3

119.9

1.4

1.2 %
Conversions0.1

0.1

—

—

—

—

0.1

0.1

—

— %
Total cost of parking services management contracts$115.4

$114.8

$46.9

$51.1

$(7.8)
$(3.3)
$154.5

$162.6

$(8.1)
(5.0)%
Cost of parking services associated with same locations represents locations that have been operating for at least one year and operating for the entire period in the comparative period being present. Cost of parking services associated with contract expirations relates to contacts that have expired, however, we were operating the facility in the comparative period presented.

Cost of parking services—lease contracts.  Cost of parking services for lease contracts increased $6.6 million, or 1.7%, to $387.0 million for the nine months ended September 30, 2017, compared to $380.4 million for the nine months ended September 30, 2016.  The increase in cost of parking services for lease contracts resulted primarily from increases of $23.9 million from new locations, $7.7 million from same locations and $1.1 million from locations that converted from management contracts during the periods presented, partially offset by a decrease of $26.1 million from contract expirations. Same location costs increased $7.7 million, or 2.3%, primarily due to an increase in rent expense as a result of higher revenues for same locations and overall net operating costs, partially offset by unallocated insurance reserve adjustments/costs and other unallocated corporate items.
From a reporting segment perspective, cost of parking services for lease contracts increased primarily due to increases from new locations in regions one and two, same locations in regions one and two, and conversions in region one, offset by decreases in contract expirations in regions one and two and same locations in other. The other region amounts in same location represent costs not specifically identifiable to a region.
Cost of parking services—management contracts.  Cost of parking services for management contracts decreased $8.1 million, or 5.0%, to $154.5 million for the nine months ended September 30, 2017, compared to $162.6 million for the nine months ended September 30, 2016. The decrease in cost of parking services for management contracts resulted primarily from decreases of $25.6 million from contract expirations, partially offset by increases of $16.1 million from new locations and $1.4 million from same locations. Same location costs increased $1.4 million, or 1.2%, primarily due to an increase in costs due to change in contract terms for certain management contracts, whereby the contract terms converted from a management contract to a "reverse" management contract, which typically have higher operating costs associated with the facilities operation but allow us to have a higher management fee from the facility owner and overall net operating costs, partially offset by unallocated insurance reserve adjustments/costs and other unallocated corporate items.
From a reporting segment perspective, cost of parking services for management contracts decreased primarily from contract expirations in regions one and two, same locations in region one and other, partially offset by increases from new locations in regions one and two and same locations in region two. The other region amounts in same location represent costs not specifically identifiable to a region.
Reimbursed management contract expense. Reimbursed management contract expense increased $10.9 million, or 2.2%, to $512.7 million for the nine months ended September 30, 2017, compared to $501.8 million for the nine months ended September 30, 2016.

Segment gross profit/gross profit percentage information is summarized as follows:
 Nine Months Ended September 30,
 Region One Region Two Other Total Variance
(millions) (unaudited)2017 2016 2017 2016 2017 2016 2017 2016 Amount %
Gross profit lease contracts: 
  
  
  
  
  
  
  
  
  
New locations$1.6
 $0.2
 $0.3
 $—
 $—
 $—
 $1.9
 $0.2
 $1.7
 850.0 %
Contract expirations1.0
 1.8
 —
 0.2
 —
 —
 1.0
 2.0
 (1.0) (50.0)%
Same locations26.2
 22.9
 4.6
 3.8
 1.8
 0.6
 32.6
 27.3
 5.3
 19.4 %
Conversions0.1
 0.4
 —
 —
 —
 —
 0.1
 0.4
 (0.3) (75.0)%
Total gross profit lease contracts$28.9
 $25.3
 $4.9
 $4.0
 $1.8
 $0.6
 $35.6
 $29.9
 $5.7
 19.1 %
 (Percentages)
Gross profit percentage lease contracts: 
  
  
  
  
  
  
  
  
  
New locations5.8% 5.3% 13.6% —% —% —% 6.4% 5.0%    
Contract expirations9.8% 5.4% —% 5.4% —% —% 9.8% 5.4%    
Same locations9.3% 8.4% 4.9% 4.2% —% —% 8.7% 7.5%    
Conversions1.4% 6.3% —% —% —% —% 1.4% 6.3%    
Total gross profit percentage8.9% 8.0% 5.1% 4.3% —% —% 8.4% 7.3%    
Gross profit management contracts: 
  
  
  
  
  
  
  
  
  
New locations$12.4
 $3.9
 $0.3
 $0.1
 $—
 $—
 $12.7
 $4.0
 $8.7
 217.5 %
Contract expirations1.7
 7.1
 0.4
 1.2
 —
 —
 2.1
 8.3
 (6.2) (74.7)%
Same locations60.3
 59.5
 18.8
 16.7
 14.1
 10.7
 93.2
 86.9
 6.3
 7.2 %
Conversions0.3
 0.2
 —
 —
 —
 —
 0.3
 0.2
 0.1
 50.0 %
Total gross profit management contracts$74.7
 $70.7
 $19.5
 $18.0
 $14.1
 $10.7
 $108.3
 $99.4
 $8.9
 9.0 %
 (Percentages)
Gross profit percentage management contracts: 
  
  
  
    
  
  
  
  
New locations43.8% 39.8% 2.8% 2.2% —% —% 32.4% 27.8%    
Contract expirations27.0% 35.3% 16.7% 5.9% —% —% 24.1% 20.5%    
Same locations38.9% 38.3% 35.4% 37.9% 223.8% 144.6% 43.4% 42.0%    
Conversions75.0% 66.7% —% —% —% —% 75.0% 66.7%    
Total gross profit percentage39.3% 38.1% 29.4% 26.0% 223.8% 144.6% 41.2% 37.9%    
Gross profit associated with same locations represents locations that have been operating for at least one year and operating for the entire period in the comparative period being presented. Gross profit associated with contract expirationsexpired business relates to contracts that have expired, however, we were operating the facilitylocation in the comparative period presented.

Gross profit—lease type contracts. Gross profit for lease type contracts increased $5.7$1.1 million, or 19.1%10.5%, to $35.6$11.6 million for the ninethree months ended September 30, 2017,2019, compared to $29.9$10.5 million for ninethree months ended September 30, 2016.2018. Gross profit percentage for lease type contracts increased to 8.4%11.1% for the ninethree months ended September 30, 2017,2019, compared to 7.3%10.0% for the ninethree months ended September 30, 2016.2018. Gross profit for lease type contracts increased as a result of increases in gross profit for new locationsexisting business, new/acquired business, and same locations,expired business, partially offset by contract expirations anddecreases locations that converted from management type contracts during the periods presented. Gross profit for same locationsexisting business increased primarily due to earnings of $8.5 million for our proportionate share of the net gain of an equity method investees' sale of assets and a net increases in monthly parking revenue rentaland transient revenue and short term parking revenuea decrease in overall net operating costs, partially offset by an increase in compensation and benefit costs and rent expense.
From a reporting segment perspective, gross profit for lease type contracts increased primarily due to increases in new/acquired business in Segment Two, existing business in Segment One, Two, and Other, and expired business in Segment One, partially offset by decreases in gross profit from new/acquired business in Segment One, and conversions in Segment One. The Other amounts in existing business represent gross profit not specifically identifiable to Segment One or Two.

Gross profit—management type contracts. Gross profit for management type contracts increased $12.6 million, or 36.5%, to $47.1 million for the three months ended September 30, 2019, compared to $34.5 million for the three months ended September 30, 2018. Gross profit percentage for management type contracts decreased to 35.5% for three months ended September 30, 2019, compared to 41.8% for three months ended September 30, 2018. Gross profit for management type contracts increased as a result of increases in gross profit for new/acquired business, primarily due to the Bags acquisition, and existing business, partially offset by a decrease in expired business. Existing business gross profit increased $1.5 million, or 4.6%, primarily due to increased management fees.
From a reporting segment perspective, gross profit for management type contracts increased primarily due to new/acquired business in Segment One and Two, existing business in Segment One, Two, and Other, and expired business in Segment Two, partially offset by decreases in expired business in Segment One. The Other amounts in existing business represent gross profit not specifically identifiable to Segment One or Two.

General and administrative expenses. General and administrative expenses increased $7.3 million, or 39.0%, to $26.0 million for the three months ended September 30, 2019, compared to $18.7 million for the three months ended September 30, 2018. The increase in General and administrative expenses was primarily related to the Bags acquisition and higher compensation and benefit costs, including costs associated with our performance-based compensation program.

Depreciation and amortization. Depreciation and amortization increased $3.1 million, or 73.8%, to $7.3 million for the three months ended September 30, 2019, compared to $4.2 million for the three months ended September 30, 2018. This increase was primarily a result of additional amortization relating to certain unallocated insurance reserve adjustments/costs and other unallocated corporate items,intangible assets recognized in the acquisition of Bags.
Interest expense. Interest expense increased $2.7 million, or 128.6%, to $4.8 million for the three months ended September 30, 2019, compared to $2.1 million for the three months ended September 30, 2018. This increase resulted primarily from an increase in borrowings used to fund the acquisition of Bags, partially offset by a decrease in the weighted average interest rate.

Interest income. Interest income was $0.1 million for the three months ended September 30, 2019 and 2018.

Equity in earnings from investment in unconsolidated entity. There were no Equity in earnings from investment in unconsolidated entity for the three months ended September 30, 2019 and 2018.
Income tax expense. Income tax expense increased $0.1 million to $5.7 million for the three months ended September 30, 2019, as compared to $5.6 million for the three months ended September 30, 2018. Our effective tax rate was 27.5% for the three months ended September 30, 2019 and 27.7% for the three months ended September 30, 2018. The effective tax rate for the three months ended September 30, 2019 decreased primarily due to a decrease in state income taxes. 


Nine Months Ended September 30, 2019 Compared to Nine Months September 30, 2018
Segment revenue information is summarized as follows:
 Nine Months Ended September 30,
 Segment One Segment Two Other Total Variance
(millions) (unaudited)2019 2018 2019 2018 2019 2018 2019 2018 Amount %
Lease type contract revenue:                   
New/acquired business$6.8
 $1.4
 $2.2
 $—
 $—
 $—
 $9.0
 $1.4
 $7.6
 542.9 %
Expired business6.5
 26.9
 —
 —
 —
 —
 6.5
 26.9
 (20.4) (75.8)%
Existing business259.8
 252.1
 21.2
 20.3
 0.6
 0.5
 281.6
 272.9
 8.7
 3.2 %
Conversions10.5
 10.4
 —
 —
 —
 —
 10.5
 10.4
 0.1
 1.0 %
Total lease type contract revenue$283.6
 $290.8
 $23.4
 $20.3
 $0.6
 $0.5
 $307.6
 $311.6
 $(4.0) (1.3)%
Management type contract revenue:                   
New/acquired business$18.4
 $2.7
 $132.7
 $0.6
 $—
 $—
 $151.1
 $3.3
 $147.8
 4,478.8 %
Expired business4.8
 21.3
 3.0
 0.8
 —
 —
 7.8
 22.1
 (14.3) (64.7)%
Existing business167.3
 166.6
 62.3
 64.8
 6.3
 7.5
 235.9
 238.9
 (3.0) (1.3)%
Conversions0.6
 0.5
 —
 —
 —
 —
 0.6
 0.5
 0.1
 20.0 %
Total management type contract revenue$191.1
 $191.1
 $198.0
 $66.2
 $6.3
 $7.5
 $395.4
 $264.8
 $130.6
 49.3 %
Revenue associated with existing business represents business that has been operating for at least one year and operating for the entire period in the comparative period being presented. Revenue associated with expired business relates to contracts that have expired, however, we were operating the location in the comparative period presented.

Services revenue—lease type contracts. Lease type contracts revenue decreased $4.0 million, or 1.3%, to $307.6 million for the nine months ended September 30, 2019, compared to $311.6 million for the nine months ended September 30, 2018. The decrease in lease type contracts revenue resulted primarily from decreases of $20.4 million from expired business, partially offset by an increase of $8.7 million from existing business, $7.6 million from new/acquired business, and $0.1 million from business that converted from management type contracts during the periods presented. Existing business revenue increased $8.7 million, or 3.2%, primarily due to an increase in fees for transient revenue.
From a reporting segment perspective, lease type contract revenue decreased primarily due to expired business in Segment One, partially offset by increases from existing business in Segment One, Two, and Other, new/acquired business in Segment One and Two, and conversions in Segment One. The Other segment amounts in existing business represent revenue not specifically identifiable to Segment One or Two.
Services revenue—management type contracts. Management type contract revenue increased $130.6 million, or 49.3%, to $395.4 million for the nine months ended September 30, 2019, compared to $264.8 million for the nine months ended September 30, 2018. The increase in management type contract revenue resulted primarily from an increase of $147.8 million from new/acquired business primarily due to the Bags acquisition and $0.1 million from conversions, partially offset by a decrease of $14.3 million from expired business and $3.0 million from existing business. Existing business decreased $3.0 million, or 1.3%, primarily due to change in contract terms for certain management type contracts, whereby the contract terms converted from a "reverse" management type contract to a management type contract, which typically has lower management fees from the facility owner but do not require us to pay certain operating costs associated with the facilities operation, partially offset by increased management fees.

From a reporting segment perspective, management type contract revenue increased primarily due to increases from new/acquired business in Segment One and Segment Two, existing business in Segment One, expired business in Segment Two, and conversions in Segment One, partially offset by decreases in revenue from expired business in Segment One and existing business in Segment Two and Other. The Other amounts in existing business represent revenues not specifically identifiable to Segment One or Segment Two.
Reimbursed management type contract revenue. Reimbursed management type contract revenue increased $24.4 million, or 4.7%, to $539.2 million for the nine months ended September 30, 2019, compared to $514.8 million for the nine months ended September 30, 2018. This increase resulted from an increase in reimbursements for costs incurred on behalf of owners.


Segment cost of services information is summarized as follows:
 Nine Months Ended September 30,
 Segment One Segment Two Other Total Variance
(millions) (unaudited)2019 2018 2019 2018 2019 2018 2019 2018 Amount %
Cost of services lease type contracts: 
  
  
  
  
  
  
  
  
  
New/acquired business$6.7
 $1.3
 $1.6
 $—
 $—
 $—
 $8.3
 $1.3
 $7.0
 538.5 %
Expired business5.6
 27.4
 —
 —
 —
 —
 5.6
 27.4
 (21.8) (79.6)%
Existing business238.8
 232.8
 15.4
 14.7
 (4.0) (2.8) 250.2
 244.7
 5.5
 2.2 %
Conversions10.4
 9.8
 —
 —
 —
 —
 10.4
 9.8
 0.6
 6.1 %
Total cost of services lease type contracts$261.5
 $271.3
 $17.0
 $14.7
 $(4.0) $(2.8) $274.5
 $283.2
 $(8.7) (3.1)%
Cost of services management type contracts:                   
New/acquired business$10.7
 $1.6
 $104.6
 $0.5
 $—
 $—
 $115.3
 $2.1
 $113.2
 5,390.5 %
Expired business3.2
 14.2
 —
 0.5
 —
 —
 3.2
 14.7
 (11.5) (78.2)%
Existing business104.0
 103.4
 40.5
 44.9
 (8.5) (7.6) 136.0
 140.7
 (4.7) (3.3)%
Conversions0.2
 0.1
 —
 —
 —
 —
 0.2
 0.1
 0.1
 100.0 %
Total cost of services management type contracts$118.1
 $119.3
 $145.1
 $45.9
 $(8.5) $(7.6) $254.7
 $157.6
 $97.1
 61.6 %
Cost of services associated with existing business represents business that has been operating for at least one year and operating for the entire period in the comparative period being presented. Cost of services associated with expired business relates to contacts that have expired, however, we were operating the location in the comparative period presented.

Cost of services—lease type contracts. Cost of services for lease type contracts decreased $8.7 million, or 3.1%, to $274.5 million for the nine months ended September 30, 2019, compared to $283.2 million for the nine months ended September 30, 2018. The decrease in cost of services for lease type contracts resulted primarily from a decrease of $21.8 million from expired business, partially offset by increases of $7.0 million from new/acquired business, $5.5 million from existing business, and $0.6 million from business that converted from management type contracts during the periods presented. Existing business costs increased $5.5 million, or 2.2%, primarily due to an increase in rent expense as a result of higher revenues for same locationsexisting business and an increase in compensation and benefits costs, partially offset by a decrease in overall net operating costs.
 
From a reporting segment perspective, gross profitcost of services for lease type contracts increaseddecreased primarily due to increasesfrom expired business in new locationsSegment One and existing business in regions one and two, same locations in regions one and two and other,Other, partially offset by decreasesnew/acquired business in contract expirationsSegment One and Two, existing business in regions oneSegment One and twoTwo and conversions in region one.

Segment One. The Other segment amounts in existing business represent costs not specifically identifiable to Segment One or Two.
 


Gross profit—Cost of services—management type contracts. Gross profit Cost of services for management type contracts increased $8.9$97.1 million, or 9.0%61.6%, to $108.3$254.7 million for the nine months ended September 30, 2017,2019, compared to $99.4$157.6 million for the nine months ended September 30, 2016. Gross

profit percentage2018. The increase in cost of services for management type contracts resulted primarily from increases of $113.2 million from new/acquired business, primarily due to the Bags acquisition, and $0.1 million from locations that converted from lease type contracts during the periods presented, partially offset by a decrease of $11.5 million from expired business and $4.7 million from existing business. Existing business decreased $4.7 million, or 3.3%, primarily due to a decrease in overall net operating costs, change in contract terms for certain management type contracts, whereby the contract terms converted from a "reverse" management type contract to a management type contract, which typically has lower management fees from the facility owner but do not require us to pay certain operating costs associated with the facilities operation, partially offset by an increase in compensation and benefit costs.

From a reporting segment perspective, cost of services for management type contracts increased primarily due to 41.2% for nine months ended September 30, 2017, comparednew/acquired business in Segment One and Two, existing business in Segment One, and conversions in Segment One, partially offset by a decrease in expired business in Segment One and Two, and existing business in Segment Two and Other. The Other segment amounts in existing business represent costs not specifically identifiable to 37.9%Segment One or Two.
Reimbursed management type contract expense. Reimbursed management type contract expense increased $24.4 million, or 4.7%, to $539.2 million for the nine months ended September 30, 2016.2019, compared to $514.8 million for the nine months ended September 30, 2018. This increase resulted from an increase in reimbursements for costs incurred on behalf of owners.


Segment gross profit/gross profit percentage information is summarized as follows:
 Nine Months Ended September 30,
 Segment One Segment Two Other Total Variance
(millions) (unaudited)2019 2018 2019 2018 2019 2018 2019 2018 Amount %
Gross profit lease type contracts: 
  
  
  
  
  
  
  
  
  
New/acquired business$0.1
 $0.1
 $0.6
 $—
 $—
 $—
 $0.7
 $0.1
 $0.6
 600.0 %
Expired business0.9
 (0.5) —
 —
 —
 —
 0.9
 (0.5) 1.4
 (280.0)%
Existing business21.0
 19.3
 5.8
 5.6
 4.6
 3.3
 31.4
 28.2
 3.2
 11.3 %
Conversions0.1
 0.6
 —
 —
 —
 —
 0.1
 0.6
 (0.5) (83.3)%
Total gross profit lease type contracts$22.1
 $19.5
 $6.4
 $5.6
 $4.6
 $3.3
 $33.1
 $28.4
 $4.7
 16.5 %
 (Percentages)
Gross profit percentage lease type contracts: 
  
  
  
  
  
  
  
  
  
New/acquired business1.5% 7.1 % 27.3% —% —% —% 7.8% 7.1 %    
Expired business13.8% (1.9)% —% —% —% —% 13.8% (1.9)%    
Existing business8.1% 7.7 % 27.4% 27.6% 766.7% 660.0% 11.2% 10.3 %    
Conversions1.0% 5.8 % —% —% —% —% 1.0% 5.8 %    
Total gross profit percentage7.8% 6.7 % 27.4% 27.6% 766.7% —% 10.8% 9.1 %    
Gross profit management type contracts: 
  
  
  
  
  
  
  
  
  
New/acquired business$7.7
 $1.1
 $28.1
 $0.1
 $—
 $—
 $35.8
 $1.2
 $34.6
 2,883.3 %
Expired business1.6
 7.1
 3.0
 0.3
 —
 —
 4.6
 7.4
 (2.8) (37.8)%
Existing business63.3
 63.2
 21.8
 19.9
 14.8
 15.1
 99.9
 98.2
 1.7
 1.7 %
Conversions0.4
 0.4
 —
 —
 —
 —
 0.4
 0.4
 —
 — %
Total gross profit management type contracts$73.0
 $71.8
 $52.9
 $20.3
 $14.8
 $15.1
 $140.7
 $107.2
 $33.5
 31.3 %
 (Percentages)
Gross profit percentage management type contracts: 
  
  
  
    
  
  
  
  
New/acquired business41.8% 40.7 % 21.2% 16.7% —% —% 23.7% 36.4 %    
Expired business33.3% 33.3 % 100.0% 37.5% —% —% 59.0% 33.5 %    
Existing business37.8% 37.9 % 35.0% 30.7% 234.9% 201.3% 42.3% 41.1 %    
Conversions66.7% 80.0 % —% —% —% —% 66.7% 80.0 %    
Total gross profit percentage38.2% 37.6 % 26.7% 30.7% 234.9% 201.3% 35.6% 40.5 %    
Gross profit associated with existing business represents business that has been operating for at least one year and operating for the entire period in the comparative period being presented. Gross profit associated with expired business relates to contracts that have expired, however, we were operating the location in the comparative period presented.

Gross profit—lease type contracts. Gross profit for managementlease type contracts increased $4.7 million, or 16.5%, to $33.1 million for the nine months ended September 30, 2019, compared to $28.4 million for nine months ended September 30, 2018. Gross profit percentage for lease type contracts increased to 10.8% for the nine months ended September 30, 2019, compared to 9.1% for the nine months ended September 30, 2018. Gross profit for lease type contracts increased as a result of increases in gross profit for new locations, same locationsexisting business, new/acquired business, and locations that converted from lease contracts during the periods presented,expired business, partially offset by decreases in contract expirations.business that converted from management type contracts during the periods presented. Gross profit for same locationsexisting business increased primarily due to higher operating profitsincreases in transient revenue, partially offset by an increase in compensation and unallocated insurance reserve adjustments/benefit costs and other unallocated corporate items.rent expense.

From a reporting segment perspective, gross profit for lease type contracts increased primarily due to increases in existing business in Segment One, Two, and Other, new/acquired business in Segment Two, and expired business in Segment One, partially offset by decreases in gross profit from conversions in Segment One. The Other amounts in existing business represent gross profit not specifically identifiable to Segment One or Two.

Gross profit—management type contracts. Gross profit for management type contracts increased $33.5 million, or 31.3%, to $140.7 million for the nine months ended September 30, 2019, compared to $107.2 million for the nine months ended September 30, 2018. Gross profit percentage for management type contracts decreased to 35.6% for nine months ended September 30, 2019, compared to 40.5% for nine months ended September 30, 2018. Gross profit for management type contracts increased as a result of increases in gross profit for new/acquired business, primarily due to the Bags acquisition, and existing business, partially offset by a decrease in expired business. Existing business gross profit increased $1.7 million, or 1.7%, primarily due to decreases in net operating costs and increased management fees.
 

From a reporting segment perspective, gross profit for management type contracts increased primarily from new locationsdue to new/acquired business in region oneSegment One and two, same locationsSegment Two, existing business in regions oneSegment One and twoTwo, and other and conversionsexpired business in region one,Segment Two, partially offset by decreases in contract expirationsexpired business in regions oneSegment One, and two.existing business in Other.

Although we have significant operations in the areas impacted by Hurricanes Harvey, IrmaGeneral and Maria, our businessadministrative expenses. General and financial results were not significantly impacted. Our results were impacted by an estimated $0.7administrative expenses increased $17.5 million, reduction in gross profit, primarily relatedor 27.6%, to lease contracts,$80.8 million for the nine months ended September 30, 2017.
General and administrative expenses. General and administrative expenses decreased $3.7 million, or 5.5%,2019, compared to $63.3 million for the nine months ended September 30, 2017, compared2018. The increase in General and administrative expenses was primarily related to $67.0the Bags acquisition, a $1.7 million cost recovery from a vendor partner recognized in the second quarter of 2018, and higher compensation and benefit costs, including costs associated with our performance-based compensation program.

Depreciation and amortization. Depreciation and amortization increased $9.1 million, or 71.7%, to $21.8 million for the nine months ended September 30, 2016. The decrease in general and administrative expenses was due primarily2019, compared to a decrease in compensation and benefit costs related to cost reduction initiatives, merger and integration costs (net of compensation and benefit costs for restructuring, merger and integration initiatives, primarily related to severance and relocation costs) and overall better expense control, partially offset by an increase in costs associated with an underwritten public offering of common stock by selling stockholders, which was a required expense of the Company pursuant to the Central Merger documentation, investments related to supporting our various initiatives, which include implementing a vertical market strategy and re-aligning the organization and an increase in performance-based compensation costs. Additionally, the nine months ended September 30, 2016 included costs related to the settlement of litigation with a former indirect controlling shareholder of the Company for $1.5 million, net of insurance recoveries.

Depreciation and amortization. Depreciation and amortization decreased $10.5 million, or 39.2%, to $16.3$12.7 million for the nine months ended September 30, 2017, compared2018. This increase was primarily a result of additional amortization relating to $26.8intangible assets recognized in the acquisition of Bags.
Interest expense. Interest expense increased $8.2 million, or 126.2%, to $14.7 million for the nine months ended September 30, 2016. This decrease was primarily a result of accelerated depreciation of software during the nine months ended September 30, 2016, and the nine months ended September 30, 2017 did not include amortization of certain intangible assets as they were fully amortized during the fourth quarter of 2016.
Interest expense. Interest expense decreased $1.0 million, or 12.3%,2019, compared to $7.1$6.5 million for the nine months ended September 30, 2017, compared2018. This increase resulted primarily from an increase in borrowings used to $8.1fund the acquisition of Bags, partially offset by a decrease in the weighted average interest rate.

Interest income. Interest income was $0.3 million for the nine months ended September 30, 2016.  The decrease2019 and 2018.

Equity in interest expenseearnings from investment in unconsolidated entity. There were no Equity in earnings from investment in unconsolidated entity for the nine months ended September 30, 2019. Equity in earnings from investment in unconsolidated entity was primarily related to reductions in amounts outstanding under our Restated Credit Facility, partially offset by an increase in average borrowing rates.

Interest income. Interest income was $0.5 million and $0.4$10.1 million for the nine months ended September 30, 2017 and 2016, respectively.

Gain2018. The decrease in earnings were primarily related to our $10.1 million net gain on the sale of business. Duringour entire 30% equity interest in Parkmobile during the nine months ended September 30, 2017, we recognized $0.12018.
Income tax expense. Income tax expense decreased $2.3 million of gain on sale of a portion of our security business primarily operating in the Southern California market. The Company received $0.6 million for the final earn out consideration from the buyer during the second quarter of 2017, which resulted in the Company recognizing an additional gain on sale of business of $0.1 million, as the Company's historical estimate for the fair value of earn-out consideration receivable was $0.5 million.

Equity in losses from investment in unconsolidated entity. Equity in losses from investment in unconsolidated entity was $0.5 million and $1.2to $14.6 million for the nine months ended September 30, 2017 and 2016, respectively.
Income tax expense. Income tax expense increased $10.4 million, or 95.4%,2019, as compared to $21.3$16.9 million for the nine months ended September 30, 2017, compared to $10.9 million2018. Our effective tax rate was 25.7% for the nine months ended September 30, 2016. Our effective tax rate was 37.2%2019 and 26.6% for the nine months ended September 30, 2017, compared to 41.0% for the nine months ended September 30, 2016.2018. The effective tax rate for the nine months ended September 30, 2017 was lower than the nine months ended September 30, 20162019 decreased primarily due to additional 2017 year-to-date federal employera decrease in state income tax credits recognized ($0.5 million) and the adoption of ASU 2016-09 and the related excess tax benefits now recognized as a reduction of income tax expense ($0.7 million). See Note 1. Significant Accounting Policies and Practices of the Condensed Consolidated Financial Statements for further discussion of the impact of ASU 2016-09.taxes.



Liquidity and Capital Resources
 
General
We continually project anticipated cash requirements for our operating, investing, and financing needs as well as cash flows generated from operating activities available to meet these needs. Our operating needs can include, among other items, commitments for cost of services, operating leases, payroll payments, insurance claims payments, interest payments and legal settlements. Our investing and financing spending can include payments for acquired businesses, joint ventures, capital expenditures, cost of contracts purchased, commitments for capital leases, distributions to noncontrolling interests and payments on our outstanding indebtedness.
Outstanding Indebtedness
 
On September 30, 2017,2019, we had total indebtedness of approximately $173.4$370.1 million, a decrease of $21.7$16.6 million from December 31, 2016.2018. The $173.4$370.1 million in total indebtedness as of September 30, 20172019 includes:
 
▪$172.0351.0 million under our RestatedSenior Credit Facility, net of original discount on borrowings of $0.9$1.3 million and deferred financing costs of $1.2$1.8 million; and
▪$1.419.1 million of other debt obligations, which includes capitalincluding finance lease obligations, obligations on seller notes and other indebtedness.
Senior Credit Facility
On October 2, 2012, we entered into a credit agreement (“Credit Agreement”) with Bank of America, N.A. ("Bank of America"), as administrative agent, Wells Fargo Bank, N.A. ("Wells Fargo Bank") and JPMorgan Chase Bank, N.A., as co-syndication agents, U.S. Bank National Association, First Hawaiian Bank and General Electric Capital Corporation, as co-documentation agents, Merrill Lynch, Pierce, Fenner & Smith Inc., Wells Fargo Securities, LLC and J.P. Morgan Securities LLC, as joint lead arrangers and joint book managers, and the lenders party thereto.
Pursuant to the terms, and subject to the conditions, of the Credit Agreement, the lenders made available to the Company a secured Senior Credit Facility (the “Senior Credit Facility”) that permitted aggregate borrowings of $450.0 million consisting of (i) a revolving credit facility of up to $200.0 million at any time outstanding, which included a letter of credit facility that was limited to $100.0 million at any time outstanding, and (ii) a term loan facility of $250.0 million. The Senior Credit Facility was due to originally mature on October 2, 2017.
Former Amended and Restated Credit Facility
On February 20, 2015, (“Restatement Date”), we entered into an Amendedamended and Restated Credit Agreement (the "Restated Credit Agreement") with Bank of America, N.A. (“Bank of America”), as administrative agent, an issuing lender and swing-line lender; Wells Fargo Bank, N.A., as an issuing lender and syndication agent; U.S. Bank National Association, First Hawaiian Bank and BMO Harris Bank N.A., as co-documentation agents; Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as joint lead arrangers and joint book managers; and the lenders party thereto (the “Lenders”). The Restated Credit Agreement reflects modifications to, and an extension of, the Senior Credit Facility.

Pursuant to the terms, and subject to the conditions of the Restated Credit Agreement, the Lenders have made available to the Company a senior securedrestated our credit facility (the “Restated"Former Restated Credit Facility”Facility") that permitspermitted aggregate borrowings of $400.0 million consisting of (i) a revolving credit facility of up to $200.0 million at any time outstanding, which includes a $100.0 million sublimit for letters of credit and a $20.0 million sublimit for swing-line loans, and (ii) a term loan facility of $200.0 million (reduced from $250.0 million under the million. The Former Restated Credit Facility was due to mature on February 20, 2020.
Senior Credit Facility)Facility
On November 30, 2018 (the "Closing Date") and in connection with the Acquisition, we entered into a credit agreement (the “Credit Agreement”) with Bank of America, N.A. (“Bank of America”), as Administrative Agent, swing-line lender and a letter of credit issuer; Wells Fargo Bank, N.A., as syndication agent; BMO Harris Bank N.A., JPMorgan Chase Bank, N.A., KeyBank National Association and U.S. Bank National Association, as co-documentation agents; Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as joint lead arrangers and joint bookrunners; and the lenders party thereto (the “Lenders”). The Company may request increasesPursuant to the terms, and subject to the conditions, of the Credit Agreement, the Lenders have made available to us a new senior secured credit facility (the “Senior Credit Facility”) that permits aggregate borrowings of $550.0 million consisting of (i) a revolving credit facility in an aggregate additional principal amount of up to $325.0 million at any time outstanding, which includes a letter of credit facility that is limited to $100.0 million at any time outstanding, and (ii) a term loan facility of $225.0 million. The RestatedSenior Credit Facility matures on February 20, 2020.November 30, 2023.
The entire amount of the term loan portion of the RestatedSenior Credit Facility had beenwas drawn by us on the Company as of the RestatementClosing Date (including approximately $10.4 million drawn on such date) and is subject to scheduled quarterly amortization of principal as follows: (i) $15.0in installments equal to 1.25% of the initial aggregate principal amount of such term loan. We also borrowed $174.8 million in the first year, (ii) $15.0 million in the second year, (iii) $20.0 million in the third year, (iv) $20.0 million in the fourth year, (v) $20.0 million in the fifth year and (vi) $110.0 million in the sixth year. The Company also had outstanding borrowings of $147.3 million (including $53.4 million in letters of credit) under the revolving credit facility ason the Closing Date. The proceeds from these borrowings were used by us to pay the purchase price for the Acquisition (See Note 3. Acquisition), to pay other costs and expenses related to the acquisition of Bags and the Restatement Date.
related financing and to repay in full the obligations under the Former Restated Credit Facility. In addition, proceeds from the Senior Credit Facility may be used to finance working capital, capital expenditures and other acquisitions, payments and general corporate purposes.
Borrowings under the RestatedSenior Credit Facility bear interest, at the Company’sour option, (i) at a rate per annum based on the Company’sour consolidated total debt to EBITDA ratio for the 12-month period ending as of the last day of the immediately preceding fiscal quarter, determined in accordance with the applicable pricing levels set forth in the Restated Credit Agreement (the “Applicable Margin”), for London Interbank Offered Rate (or a comparable or successor rate selected by the parties) (“U.S. dollar LIBOR”) loans, plus the applicable U.S. dollar LIBOR rate or (ii) the Applicable Margin for base rate loans plus the highest of (x) the federal funds rate plus 0.5%, (y) the Bank of America prime rate and (z) a daily rate equal to the applicable U.S. dollar LIBOR rate plus 1.0% (the highest of (x), (y) and (z), the “Base Rate”), except that all swing-line loans will bear interest at the Base Rate plus the Applicable Margin.
.
Under the terms of the Restated Credit Agreement, we are required to maintain a maximum consolidated total debt to EBITDA ratio of not greater than 4.0 to 4.25:1.0 as ofwith certain step-downs described in the end of any fiscal quarter ending during the period from the Restatement Date through September 30, 2015, (ii) 3.75 to 1.0 as of the end of any fiscal quarter ending during the period from October 1, 2015 through September 30, 2016, and (iii) 3.5 to 1.0 as of the end of any fiscal quarter ending thereafter.Credit Agreement. In addition, the Company iswe are required to maintain a minimum consolidated fixed charge coverage ratio of not less than 1:25:1.0.
3.50:1.0 (with certain step-ups described in the Credit Agreement).
Events of default under the Restated Credit Agreement include failure to pay principal or interest when due, failure to comply with the financial and operational covenants, the occurrence of any cross default event, non-compliance with the other loan documents, the occurrence of a change of control event, and bankruptcy and other insolvency events. If an event of default occurs and is continuing, the Lenders holding a majorityAdministrative Agent can, with the consent of the commitments and outstanding term loan under the Restated Credit Agreement have the right,required Lenders, among others to (i) terminate the commitments under the Restated Credit Agreement, (ii) accelerate and require

the Company to repay all the outstanding amounts owed under the Restated Credit Agreement, and (iii) require the Company to cash collateralize any outstanding letters of credit.

Each wholly owned domestic subsidiary of the Companyours (subject to certain exceptions set forth in the Restated Credit Agreement) has guaranteed all existing and future indebtedness and liabilities of the other guarantors and the Companyus arising under the Restated Credit Agreement. The Company'sOur obligations under the Restated Credit Agreement and such domestic subsidiaries’ guaranty obligations are secured by substantially all of their respective assets.
We wereare in compliance with allthe covenants under the Credit Agreement as of September 30, 2017.
2019.
As of September 30, 2017,2019, we had $129.4$133.9 million of borrowing availability under the RestatedSenior Credit Agreement, of which we could have borrowed $129.4 million on September 30, 2017 and remained in compliance with the above described covenants as of such date. The additionalFacility. Our borrowing availability under the Restated Credit Agreement is limited only as of the Company’sour fiscal quarter-end by the covenant restrictions described above. As ofAt September 30, 2017,2019, we had $51.6$53.6 million of letters of credit outstanding under the RestatedSenior Credit Facility with aggregateand borrowings against the RestatedSenior Credit Facility of $174.1aggregated $354.0 million (excluding originaldebt discount on borrowings of $0.9$1.3 million and deferred financing costs of $1.2$1.8 million).

Contractual Obligations and Commitments
As of September 30, 2019, other than changes related to adoption of the new lease accounting standard as described in Note 1. Significant Accounting Policies and Practices, there were no material changes to our contractual obligations and commitments outside the ordinary course of business since December 31, 2018, as reported in our 2018 Form 10-K. See Note 2. Leases, for further information regarding our contractual obligations and commitments.
Share Repurchases


In May 2016, our Board of Directors authorized us to repurchase shares of our common stock in the open market of up to $30.0 million in aggregate. Purchases of our common stock may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with Rules 10b-18 and 10b5-1 under the Securities Exchange Act of 1934 ("Exchange Act").1934. The share repurchase program does not obligate us to repurchase any particular amount of common stock, and has no fixed termination date.


Under this program, wethe Company has repurchased 305,1831,263,642 shares of common stock through September 30, 2017 at an average price of $24.43 per2019. The table below summarizes share resulting in $7.5 million in program-to-date repurchases. repurchase activity during the three and nine months ended September 30, 2019.


Three Months Ended
Nine Months Ended
(millions, except for share and per share data) (unaudited)September 30, 2019
September 30, 2019
Total number of shares repurchased536,743

958,459
Average price paid per share$34.83

$33.73
Total value of shares repurchased$18.7

$32.3

No shares were repurchased during the three and nine months ended September 30, 2017.2018.


Commitments and Contingencies
Central Merger

We have contractual provisionsThe following table summarizes the remaining authorized repurchase amount under certain lease contracts to complete structural or other improvements to leased properties and incur repair costs, including improvements and repairs arisingthe program as a result of ordinary wear and tear, and evaluate the nature of those costs when incurred and either capitalizes the costs as leasehold improvements, as applicable, or recognizes the costs as repair expenses within Cost of parking services—Lease contracts within the Condensed Consolidated Statements of Income.
Certain lease contracts acquired in the Central Merger include provisions allocating to us responsibility for the cost of certain structural and other repairs required to be made to the leased property, including improvement and repair costs arising as a result of ordinary wear and tear. We recorded nil and $0.1 million in costs during the three months ended September 30, 2017 and 2016, respectively, and $0.1 million and $0.4 million during the nine months ended September 30, 2017 and 2016, respectively, (net of expected recoveries of the total cost recognized by the Company through the applicable indemnity discussed further in Note 3. Central Merger and Restructuring, Merger and IntegrationCosts of our Condensed Consolidated Financial Statements) in Cost of parking services—Lease contracts within the Condensed Consolidated Statements of Income for structural and other repair costs related to certain lease contracts acquired in the Central Merger, whereby we have expensed repair costs for certain leases and engaged third-party general contractors to complete certain structural and other repair projects, and other indemnity related costs. Based on information available at this time, the Company believes that it has completed and incurred all additional costs for certain structural and other repair costs for certain lease contracts acquired in the Central Merger ("Structural and Repair Costs"). Additionally and as further described in Note 3. Central Merger and Restructuring, Merger and Integration Costs, the Company settled all outstanding matters between the former Central stockholders and the Company.2019.


Holten Settlement

(millions) (unaudited)September 30, 2019
Total authorized repurchase amount$80.0
Total value of shares repurchased39.8
Total remaining authorized repurchase amount$40.2
In March 2010, John V. Holten, a former indirect controlling shareholder of the Company, filed a lawsuit against us in the United States District Court, District of Connecticut. Mr. Holten was terminated as the chairman in October 2009. The lawsuit alleged breach of his employment agreement and claimed that the agreement entitled Holten to payments worth more than $3.8 million. We filed an answer and counterclaim to Mr. Holten's lawsuit in 2010.

In March 2016, we settled all claims in connections with the original lawsuits ("Holten Settlement"). Per the settlement, we paid Mr. Holten $3.4 million of which $1.9 million was recovered by us through our directors and officers liability insurance policies. We recognized an expense, net of insurance recoveries, related to the Holten settlement of $1.5 million for the nine months ended September 30, 2016.





Interest Rate SwapsCollars

On October 25, 2012,In May 2019, we entered into Interest Rate Swap transactions (collectively, the “Interest Rate Swaps”) with each of JPMorgan Chase Bank, N.A., Bank of America, N.A. and PNC Bank, N.A. in an initial aggregate Notional Amount of $150.0 million (the “Notional Amount”). The Interest Rate Swaps had a termination date of September 30, 2017. The Interest Rate Swaps effectively fixed thethree-year interest rate oncollar contracts with an amount ofaggregate $222.3 million notional amount. Interest rate collars are used to manage interest rate risk associated with variable interest rate borrowings under our credit agreements, originally equal to the Notional Amount at 0.7525% per annum plusCredit Agreement. The collars establish a range where the applicable marginCompany will pay the counterparties if the one-month U.S. dollar LIBOR rate forfalls below the established floor rate, and the counterparties will pay the Company if the one-month U.S. dollar LIBOR loans under our credit agreements determined based upon our consolidated total debt to EBITDA ratio.rate exceeds the established ceiling rate of 2.5%. The Notional Amount was subject to scheduled quarterly amortization that coincidescollars settle monthly through the termination date of April 2022. No payments or receipts are exchanged on the interest rate collar contracts unless interest rates rise above or fall below the pre-determined ceiling or floor rates. The notional amount amortizes consistent with quarterly prepaymentspay down of principal under our credit agreements.the term loan portion of the Senior Credit Facility. These Interest Rate Swapsinterest rate collars are classified as cash flow hedges, and we calculatedthe Company calculates the effectiveness of the hedge on a monthly basis. The ineffective portion of the cash flow hedge was recognized in earnings as an increase of interest expense. As of September 30, 2017, no ineffectiveness of the hedge has been recognized in interest expense. The Interest Rate Swaps expired on September 30, 2017. The fair value of the Interest Rate Swaps at December 31, 2016 was an asset of $0.1 million, and is included in2018, the line item "Other assets, net" within the Condensed Consolidated Balance Sheets.Company had no ongoing derivative transactions.


We do not enter into derivative instruments for any purpose other than for cash flow hedging purposes.


Deficiency Payments


Pursuant to our obligations with respect to the parking garage operations at Bradley International Airport, we are required to make certain deficiency payments for the benefit of the State of Connecticut and for holders of special facility revenue bonds. The deficiency payments represent contingent interest bearing advances to the trustee to cover operating cash flow requirements. As of September 30, 2017,2019, we had made $8.2received $1.1 million of cumulative deficiency repayments from the trustee, net of payments. Deficiency payments made are recorded as increases to cost parkingof services and the reimbursements are recorded as reductions to cost of parking services. We believe these advances to be fully recoverable and will recognize the principal, interest and premium payments related to these deficiency payments when they are received. We do not directly guarantee the payment of any principal or interest on any debt obligations of the State of Connecticut or the trustee.


The total deficiency repayments (net of payments made), interest and premium received and recordedrecognized for the three and nine months ended September 30, 20172019 and 2016 were2018 are as follows:
Three Months Ended Nine Months EndedThree Months Ended Nine Months Ended
(millions) (unaudited)September 30, 2017
September 30, 2016 September 30, 2017
September 30, 2016September 30, 2019 September 30, 2018 September 30, 2019 September 30, 2018
Deficiency repayments$0.5

$—
 $1.7

$1.2
$0.4
 $0.9
 $2.8
 $2.9
Interest$—

$0.2
 $0.2

$0.3
$0.3
 $—
 $0.8
 $0.5
Premium$—

$—
 $0.2

$0.2
$—
 $0.1
 $0.3
 $0.2


Daily Cash Collections


As a result of day-to-day activity at our parking locations, we collect significant amounts of cash. Lease type contract revenue is generally deposited into our local bank accounts, with a portion remitted to our clients in the form of rental payments according to the terms of the leases. Under management type contracts, clients may require us to deposit the daily receipts into one of our local bank accounts, with the cash in excess of our operating expenses and management fees remitted to the clients at negotiated intervals. Other clients require us to deposit the daily receipts into client designated bank accounts and the clients then reimburse us for operating expenses and pay our management fee subsequent to month-end or may require segregated bank accounts for the receipts and disbursements at locations. Our working capital and liquidity may be adversely affected if a significant number of our clients require us to deposit all parking revenues into their respective accounts.
 
Our liquidity also fluctuates on an intra-month and intra-year basis depending on the contract mix and timing of significant cash payments. Additionally, our ability to utilize cash deposited into our local accounts is dependent upon the availability and movement of that cash into our corporate account. For all these reasons, from time to time, we carry a significant cash balance, while also utilizing our Restated Credit Facility.credit facility.
 

Summary of Cash Flows
Nine Months EndedNine Months Ended
(millions) (unaudited)September 30, 2017 September 30, 2016September 30, 2019 September 30, 2018
Net cash provided by operating activities$21.4
 $30.6
$54.8
 $35.6
Net cash provided by (used in) investing activities$4.4
 $(9.9)
Net cash (used in) provided by investing activities$(8.2) $12.0
Net cash used in financing activities$(24.9) $(20.0)$(56.9) $(49.8)
 
Operating Activities
 
Our primary sources of funds are cash flows from operating activities and changes in operating assets and liabilities.


Net cash provided by operating activities totaled $21.4$54.8 million for the nine months ended September 30, 2017.2019. Cash provided by operating activities for the first nine months of 20172019 included $46.0$69.5 million from operations;operations, partially offset by changes in operating assets and liabilities that resulted in a use of $24.6$14.7 million. The net increase in operating assets and liabilities was a result of (i) a decrease in notes and accounts receivable of $0.2 million primarily related to timing of collections; (ii) a $7.6 million decrease in accounts payable primarily due to timing of payments to our clients as described under "Daily Cash Collections"; (iii) a net increase in prepaid and other assets of $0.7 million primarily due to increases in prepaid insurance and the value of Company-owned life insurance policies; (iv) a $95.4 million decrease in right-of-use assets due to the amortization of Right-of-use assets; (v) a $99.0 million decrease in long-term lease liabilities due to operating lease payments; and (vi) a $3.0 decrease in accrued liabilities primarily due to timing of payments.


Net cash provided by operating activities totaled $35.6 million for the nine months ended September 30, 2018. Cash provided by operating activities for the first nine months of 2018 included $52.4 million from operations, partially offset by changes in operating assets and liabilities that resulted in a cash use of $16.8 million. The net decrease in operating assets and liabilities was a result of (i) an increase in notes and accounts receivable of $4.6$14.4 million due to recognizing a contract asset upon adoption of Topic 606 (effective January 1, 2018) and timing of collections; (ii) a net decrease in prepaid and other assets of $1.6$1.7 million mainly due to decreases in prepaid payrolltaxes, partially offset by increases in prepaid insurance and annual software maintenance;prepaid rent; (iii) a $14.1$9.2 million decrease in accounts payable due to timing of payments to our clients as described under "Daily Cash Collections";, partially offset by recognizing a contract liability upon the adoption of Topic 606 (effective January 1, 2018) and (iv) a $7.5$5.1 million net decrease in accrued liabilities primarily related to timing of payments including payment of our 2016 performance-based compensation accrual as well as a reduction in customer deposits and the reduction of insurance reserves.

Net cash provided by operating activities totaled $30.6 million for nine months ended September 30, 2016. Cash provided by operating activities for the first nine months of 2016 included $47.9 million from operations; partially offset by changes in operating assets and liabilities that resulted in a use of $17.3 million. The net increase in operating assets and liabilities resulted primarily from (i) an increase in notes and accounts receivable of $15.6 million due to timing of collections; (ii) a net increase in prepaid and other assets of $4.1 million due to prepaid operating expenses and an increase in our deferred tax asset; (iii) a $0.4 million net increase in accrued liabilities primarily related to timing of payments; and (iv) a $2.0 million increase in accounts payable due to timing of payments to our clients as described under "Daily Cash Collections".payments.

Investing Activities
Net cash used in investing activities totaled $8.2 million for the nine months ended September 30, 2019. Cash used in investing activities for the nine months ended September 30, 2019 included (i) $6.4 million primarily for capital investments needed to secure and/or extend lease facilities and investments in information system enhancements and infrastructure and (ii) $2.1 million for cost of contract purchases, partially offset by (iii) $0.3 million of proceeds from the sale of assets and contract terminations.
 
Net cash provided by investing activities totaled $4.4$12.0 million for the nine months ended September 30, 2017.2018. Cash provided by investing activities for the nine months ended September 30, 20172018 included (i) $8.4$19.3 million inof proceeds received from the sale of an equity method investee's sale of assets;investments, and (ii) $0.9$0.2 million of proceeds from the sale of assetsequipment and contract terminations; and (iii) $0.6 million of proceeds received and relating to the final earn-out payment from buyer for the security business sold in 2015;terminations, partially offset by (iv) $4.9(iii) $6.7 million for capital investments needed to secure and/or extend lease facilities and investments in information system enhancements and infrastructure and (v) $0.6(ii) $0.8 million for cost of contract purchases.

Financing Activities

Net cash used in investingfinancing activities totaled $9.9$56.9 million in the nine months ended September 30, 2016. Cash used in investing activities for the nine months ended September 30, 2016 included (i) $10.8 million for capital investments needed to secure and/or extend lease facilities and investments in information system enhancements and infrastructure; and (ii) $2.0 million for cost of contract purchases; offset by (iii) $2.9 million of proceeds from the sale of assets and contract terminations.
Financing Activities

Net cash used in financing activities totaled $24.9 million in the nine months ended September 30, 2017.2019. Cash used in financing activities for the nine months ended September 30, 20172019 included (i) $15.0$20.9 million net payments on the credit facility; (ii) $32.0 million on payments for the repurchase of common stock; (iii) $1.6 million for payments on other long-term debt obligations; and (iv) $2.4 million of distributions to noncontrolling interest.
Net cash used in financing activities totaled $49.8 million in the nine months ended September 30, 2018. Cash used in financing activities for the nine months ended September 30, 2018 included (i) $3.2 million net proceeds on the Restated Credit Facility; (ii) $50.0 million for payments on the Restated Credit Facility term loan; (ii) net payments of $7.2 million on the Restated Credit Facility revolver; (iii) $2.4$2.6 million of distributions to noncontrolling interest; (iv) $0.2$0.3 million for payments on other long-term debt obligations; and (v) $0.1 million on payments for debt issuance costs.
Net cash used in financing activities totaled $20.0 million in the nine months ended September 30, 2016. Cash used in financing activities for the nine months ended September 30, 2016 included (i) net payments on the Restated Credit Facility revolver of $0.5 million; (ii) $2.6 million of distributions to noncontrolling interest; (iii) $11.2 million for payments on the Restated Credit Facility term loan; (iv) $0.2 million for payments on other long-term borrowings; (v) $0.1 million on payments for debt issuance costs; and (vi) $5.4 million on the repurchase of common stock.


Cash and Cash Equivalents
 
We had cashCash and cash equivalents of $23.4$29.6 million and $22.2$39.9 million at September 30, 20172019 and December 31, 2016,2018, respectively.  Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements were $0.4 million and $0.3$1.7 million as of September 30, 20172019 and December 31, 2016,2018, respectively, and are included within Cash and cash equivalents within the Condensed Consolidated Balance Sheets.



Item 3. Quantitative and Qualitative Disclosures about Market Risk
 
There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our Form 10-K for the year-ended December 31, 2016.2018.
 

Item 4. Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures
 
As of the end of the period covered by this quarterly report, we conducted an evaluation, under supervision and with the participation of management, including the chief executive officer chief financial officerand senior vice president and corporate controller, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15(the "Evaluation") at a reasonable assurance level as of the Securities Exchange Actlast day of 1934, as amended ("Exchange Act"). Based upon that evaluation, our chief executive officer, chief financial officer and corporate controller concluded that our disclosure controls and procedures were effective as of September 30, 2017. the period covered by this Form 10-Q.

Disclosure controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act as controls and other procedures that are designed to ensure that information required to be disclosed by us in reports filed with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer, principal financial officer and principal accounting officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.disclosures.

Based on the Evaluation, our chief executive officer and senior vice president, corporate controller concluded that our disclosure controls and procedures were effective as of September 30, 2019.

Management's assessment of internal control over financial reporting as of December 31, 2018 excludes internal control over financial reporting related to Bags (acquired on November 30, 2018).
 
Changes in Internal Controls Over Financial Reporting
 
There have been no significant changes in our internal control over financial reporting that occurred during the last fiscal quarter ended September 30, 2019, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting. We implemented internal controls to ensure we adequately evaluated our contracts and properly assessed the impact of the new lease accounting standard, Topic 842, that the Company adopted on January 1, 2019. There were no significant changes to our internal control over financial reporting due to the adoption of the standard.Management's assessment and conclusions on the effectiveness of internal control over financial reporting did not include the internal controls of Bags, which is included in the three and nine months ended September 30, 2019 Quarterly Financial Statements of SP Plus Corporation. We will incorporate Bags into our annual evaluation of internal control over financial reporting for the year ending December 31, 2019.
 
LimitationsInherent limitations of the Effectiveness of Internal Control
 
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.

PART II. OTHER INFORMATION
 
Item 1. Legal Proceedings
We are subject to claims and litigation in the normal course of our business. The outcomes of claims and legal proceedings and claims brought against us and other loss contingencies are subject to significant uncertainty. We accrue a charge against income when our management determines that it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. When a loss is probable, we record an accrual based on the reasonably estimable loss or range of loss. When no point of loss is more likely than another, we record the lowest amount in the estimated range of loss and disclose the estimated range. We do not record liabilities for reasonably possible loss contingencies, but do disclose a range of reasonably possible losses if they are material and we are able to estimate such a range. If we cannot provide a range of reasonably possible losses, we explain the factors that prevent us from determining such a range. In addition, we accrue for the authoritative judgments or assertions made against us by government agencies at the time of their rendering regardless of our intent to appeal. In addition, we are from time-to-time party to litigation, administrative proceedings and union grievances that arise in the normal course of business, and occasionally pay non-material amounts to resolve claims or alleged violations of regulatory requirements. There are no "normal course" matters that separately or in the aggregate, would, in the opinion of management, have a material adverse effect on our operations, financial condition or cash flow.
In determining the appropriate loss contingencies, we consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of potential loss. We regularly evaluate current information available to us to determine whether an accrual should be established or adjusted. Estimating the probability that a loss will occur and estimating the amount of a potential loss or a range of potential loss involves significant estimation and judgment.
See Note 2. Legal and Other Commitments and Contingencies to the Condensed Consolidated Financial Statements included in Item 1. "Financial Statements" for disclosures related to the Holten Settlement reached in March 2016.
See Note 3. Central Merger and Restructuring, Merger and Integration Costs to the Condensed Consolidated Financial Statements included in Item 1. "Financial Statements" for disclosures related to the Settlement Agreement with former Central Stockholders in December 2016.
Item 1A. Risk Factors
 
There have been no material changes toInvestors should carefully consider the riskdiscussion of risks factors and the other information described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2018. New risks may emerge at any time and we cannot predict such risks or estimate the extent to which they may affect our financial performance. The following risk factor supplements and/or updates risk factors previously disclosed and should be considered in conjunction with the other information included in, or incorporated by reference in, this quarterly report on Form 10-Q.
The phase-out of the London Interbank Offered Rate (“LIBOR”) could affect interest rates under our existing credit facility agreement, hedging activity, as well as our ability to seek future debt financing.

LIBOR is the basic rate of interest used in lending between banks on the London interbank market and is widely used as a reference for setting the interest rates on loans globally. We generally use U.S. dollar LIBOR as a reference rate to calculate interest rates under our credit facility agreement (the “Senior Credit Facility”) and to establish the floor and ceiling ranges for the interest rate collar contracts that the Company has entered into to manage interest rate risk associated with the Senior Credit Facility.
In 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. Regulators in various jurisdictions have been working to replace LIBOR and other interbank offered rates with reference interest rates that are more firmly based on actual transactions. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, has identified the Secured Overnight Financing Rate (“SOFR”) that is calculated using short-term repurchase agreements backed by Treasury securities, as its preferred alternative to U.S. dollar LIBOR. The Financial Accounting Standards Board ("FASB") added the Overnight Index Swap Rate based on the SOFR to the list of U.S. benchmark interest rates eligible to be hedged under US GAAP and has issued a proposal for consideration that would help facilitate the market transition from existing reference interest rates to alternatives.
It is expected that a transition away from the widespread use of U.S. dollar LIBOR to alternative rates will occur over the course of the next few years. If a published U.S. dollar LIBOR is unavailable after 2021, the interest rates under our Senior Credit Facility which is indexed to LIBOR will be determined using various alternative methods, any of which may not be as favorable to us as those in effect prior to any LIBOR phase-out. In addition, the transition process to an alternative method may involve, among other things, increased volatility or illiquidity in markets for instruments that currently rely on U.S. dollar LIBOR and may also result in reductions in the value of certain instruments or the effectiveness of related transactions such as hedges, increased borrowing costs, uncertainty under applicable documentation, or difficult and costly consent processes. Any such effects of the transition away from U.S. dollar LIBOR, as well as other unforeseen effects, may result in expenses, difficulties, complications or delays in connection with future financing efforts, which could have a material adverse impact on our business, financial condition and results of operations.
 

Item 2. Unregistered Sales of Equity and Use of Proceeds
 
There were no sales or repurchases of stock inThe following table provides information about purchases we made during the three monthsquarter ended September 30, 2017.2019 of equity securities that are registered by us pursuant Section 12 of the Exchange Act:
(millions, except for share and per share data) (unaudited)Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Approximate Dollar Value of Shares That May Yet be Purchased Under the Plan
07/01/2019 through 07/31/2019193,094
 $33.64
 193,094
 $52.4
08/01/2019 through 08/31/2019180,724
 34.58
 180,724
 46.2
09/01/2019 through 09/30/2019162,925
 36.51
 162,925
 40.2
Total536,743
 $34.83
 536,743
 $40.2

In May 2016, our Board of Directors authorized us to repurchase in the open market shares of our outstanding common stock in an amount not to exceed $30.0 million. In July 2019, the Company's Board of Director's authorized a new program to repurchase, on the open market, shares of its outstanding common stock in an amount not to exceed $50.0 million in aggregate. Purchases of the Company's common stock may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with Rules 10b-18 and 10b5-1 under the Securities Exchange Act of 1934 at time and prices considered to be appropriate at the discretion of the Company. The share repurchase program does not obligate the Company to repurchase any particular amount of common stock, has no fixed termination date and the program may be suspended at any time at the Company's discretion.

During the third quarter of 2019, we repurchased 536,743 shares in the open market at an average price of $34.83 per share and average commissions of $0.03 per share. The total value of the third quarter transactions was $18.7 million. At September 30, 2019, 1,263,642 shares were held as treasury stock.

As of September 30, 2019, $40.2 million remained available for repurchase under the July 2019 stock repurchase program. The share repurchase program has no fixed termination date.

Item 3. Defaults Uponupon Senior Securities
 
Not applicable.
 
Item 4. Mine Safety Disclosures
 
Not applicable.
 
Item 5. Other Information
 
Not applicable.



Item 6. Exhibits
 
Index to Exhibits
Incorporated by Reference
Exhibit
Number
 DescriptionFormExhibitFiling Date/Period End Date
   
10.1*
31.1*Second Amendment to Credit Agreement, dated as of October 30, 2019, by and among the Company, as the borrower; certain subsidiaries of the Company, as guarantors; Bank of America, N.A., as administrative agent, swing-line lender and a letter of credit issuer; Wells Fargo Bank, N.A., as syndication agent; BMO Harris Bank N.A., JPMorgan Chase Bank, N.A., KeyBank National Association, and U.S. Bank National Association, as co-documentation agents.
 
31.1*
Section 302 Certification dated November 2, 2017October 31, 2019 for G Marc Baumann, Director, President and Chief Executive Officer (Principal Executive Officer).
   
31.2*
 
31.2*
Section 302 Certification dated November 2, 2017October 31, 2019 for Vance C. Johnston,Kristopher H. Roy, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer).
   
31.3*
 Section 302 Certification dated November 2, 2017 for Kristopher H. Roy, Senior Vice President, Corporate Controller and Assistant Treasurer (Principal Accounting Officer).
   
32**
 
Certification pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated November 2, 2017.October 31, 2019.
   
101.INS* XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH* XBRL Taxonomy Extension Schema
101.CAL* XBRL Taxonomy Extension Calculation Linkbase
101.DEF* XBRL Taxonomy Extension Definition Linkbase
101.LAB* XBRL Taxonomy Extension Label Linkbase
101.PRE* XBRL Taxonomy Extension Presentation Linkbase
*Filed herewith
**Furnished herewith



SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 SP PLUS CORPORATION
   
Dated: November 2, 2017Date: October 31, 2019By:/s/ G MARC BAUMANN
  G Marc Baumann
  Director, President and Chief Executive Officer and President
  (Principal Executive Officer)
   
Dated: November 2, 2017By:/s/ VANCE C. JOHNSTON
Vance C. Johnston
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
Dated: November 2, 2017Date: October 31, 2019By:/s/ KRISTOPHER H. ROY
  Kristopher H. Roy
  Senior Vice President, Corporate Controller
and Assistant TreasurerChief Financial Officer
  (Principal Financial Officer, Principal Accounting Officer and Duly Authorized Officer)




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