Note B. Acquisitions

On October 2, 2012 ("Closing Date"), the Company completed its 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 ("Central") for 6,161,332 shares of Company common stock and the assumption of approximately $217,675 of Central's debt net of cash acquired. Additionally, Central's former stockholders will be entitled to receive cash consideration of $27,000 to be paid three years after closing, to the extent the $27,000 is not used to satisfy seller indemnity obligations pursuant to the Agreement and Plan of Merger dated February 12, 2012. The Company financed the acquisition through additional borrowings under the Senior Credit Facility (defined in Note I. Borrowing Arrangements).

Pursuant to the Central Merger agreement, the Company is entitled to indemnification from former stockholders of KCPC if and to the extent Central's combined net debt and the absolute value of Central's working capital (as determined in accordance with the Merger Agreement) (the "Net Debt Working Capital") exceeded $285,000 as of September 30, 2012 and for certain defined adverse consequences (net) that are indemnified pursuant to the Agreement and Plan Merger dated February 12, 2012. The Net Debt Working Capital was $298,386 as of September 30, 2012 and, accordingly, the Net Debt Working Capital exceeded the threshold by $13,386. Additionally, the Company has reduced the cash consideration payable in three years by $5,817 for the sellers' indemnification of certain defined adverse consequences. The Company has given the former stockholders of KCPC notice regarding indemnification matters in early 2013 and has made subsequent adjustments for known matters since that date.


Central Net Debt Working Capital at September 30, 2012 as defined in the Merger Agreement	$	(298,386	)
Threshold		285,000


Excess over the threshold		(13,386	)
Indemnification of certain defined adverse consequences, net		(5,817	)
Cash consideration payable in three years		27,000


Settled cash consideration	$	7,797




Present value of cash consideration as of December 31, 2013	$	6,332
Present value of cash consideration at the acquisition date	$	8,943

Accordingly, the fair value of the final consideration transferred to acquire all of Central's outstanding stock at the acquisition date is as follows:


Stock consideration	$	140,726
Present value of cash consideration to be issued as of December 31, 2013		6,332


Total consideration transferred	$	147,058

The Company incurred certain acquisition and integration costs associated with the transaction that were expensed as incurred and are reflected in the Consolidated Statements of Income. The Company recognized $10,918 and $28,036 of these costs in its Consolidated Statement of Income for the years ended December 31, 2013 and 2012, respectively, in General and Administrative Expenses. The Company incurred costs of $10,332 in 2012 related to obtaining the Credit Agreement. Of the total costs of $10,332, $5,149 was recognized as debt issuance costs and has been included in "Other assets, net" and $5,183 was recognized as a discount to borrowings. The entire cost is being amortized using the effective interest method to interest expense over the term of the loan.

The acquisition has been accounted for using the acquisition method of accounting (in accordance with the provisions of ASC 805, Business Combinations) which requires, among other things, that most assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date.

The purchase price has been allocated based on the estimated fair value of net assets acquired and liabilities assumed at the date of the acquisition. The Company has finalized the purchase price allocation, which resulted in revision to the previously reported preliminary amounts. The revisions to the purchase price allocation were applied retrospectively back to the date of the acquisition.

The following table summarizes the fair values of the assets acquired and liabilities assumed in the acquisition as previously reported based on the preliminary allocation and as finalized:

	Preliminary amounts(a)			Purchase Price Accounting Adjustment			Amounts as finalized

Net current liabilities	$	(28,041	)	$	2,597		$	(25,444	)
Leasehold improvements, equipment, land and construction in progress, net		24,154			627			24,781
Identified intangible assets:
Management contracts		81,000			—			81,000
Favorable lease contracts		51,650			28,585			80,235
Trade name / trademarks		14,900			(5,800	)		9,100
Existing technology		34,000			—			34,000
Non-competition agreements		2,600			—			2,600
Other noncurrent assets		17,748			—			17,748
Long-term debt		(237,223	)		—			(237,223	)
Unfavorable lease contracts		(69,316	)		(32,360	)		(101,676	)
Other noncurrent liabilities		(19,523	)		—			(19,523	)
Net long term deferred tax liability		(24,516	)		1,988			(22,528	)


Net (liabilities assumed)		(152,567	)		(4,363	)		(156,930	)
Goodwill		302,236			4,363			306,599


Total fair value of consideration transferred at acquisition date	$	149,669		$	—		$	149,669

(a): These amounts reflect the reclassification of net long term deferred tax liabilities of $24,434 from net current liabilities to net long term deferred tax liability.

The acquired management contracts are being amortized over a weighted average life of 16 years. The favorable and unfavorable acquired lease contracts are being amortized over a weighted average life of 10.1 and 8.9 years, respectively. The trade names and trademarks are being amortized over 4.0 years. The non-compete agreements are being amortized over primarily 1.0 year. The existing technology is being amortized over 4.5 years. See Note F, Other Intangible Assets, net and Note G, Favorable and Unfavorable Lease Contracts for amortization and accretion of the intangible assets and liabilities.

Goodwill is calculated as the excess of the consideration transferred over the net assets acquired. Goodwill is not amortized and is not deductible for tax purposes. Goodwill represents expected synergies with the Company's existing operations which include growth of new and existing customers, elimination of corporate overhead redundancies, and logistical improvements.

A single estimate of fair value results from a complex series of the Company's judgments about future events and uncertainties and relies heavily on estimates and assumptions. The Company's judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company's results of operations.

The results of Central's operations have been included in the Company's consolidated financial statements from the acquisition date. The following table presents information for Central that is included in the Company's Consolidated Statements of Income for the year ended December 31, 2012:

	Central's operations included in the Company's results for the year ended December 31, 2012

Total revenue	$	190,008




Operating loss(1)	$	(9,263	)

(1): Includes amortization and depreciation related to identifiable intangible and tangible assets of $5,944 and acquisition and integration costs of $10,007.

The following unaudited pro forma consolidated results of operations for 2012 and 2011 assume that the acquisition of Central was completed as of January 1, 2011:

	2012			2011

Revenue, excluding reimbursed management contract revenue	$	880,062		$	866,513




Net loss from continuing operations attributable to SP Plus stockholders	$	(26,889	)	$	(7,534	)




Earnings per share from continuing operations attributable to SP Plus stockholders
Basic	$	(1.23	)	$	(0.34	)
Diluted	$	(1.23	)	$	(0.34	)

The Company has assumed a 42% combined statutory federal and state tax rate when estimating the tax effects of the adjustments to the unaudited pro forma combined statements of income.