Business Unit Segment Information

3 Months Ended

Mar. 31, 2014

Business Unit Segment Information

Business Unit Segment Information

13. Business Unit Segment Information

Segment information is presented in accordance with a “management approach,” which designates the internal reporting used by the 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 separate 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 is directly responsible for revenue and expenses related to their operations including direct regional administrative costs. Finance, information technology, human resources, and legal are shared functions that are not allocated back to the four operating segments. The CODM assesses the performance of each operating segment using information about its revenue and operating income (loss) before interest, taxes, and depreciation and amortization, but does not evaluate segments using discrete asset information. There are no inter-segment transactions and the Company does not allocate interest and other income, interest expense, depreciation and amortization or taxes to operating segments. The accounting policies for segment reporting are the same as for the Company as a whole.

On November 1, 2013, the Company changed its internal reporting segment information reported to its CODM. The Company now reports Ontario, Manitoba and Quebec in Region One and Missouri, Nebraska, North Carolina and South Carolina in Region Five. All prior periods presented have been restated to reflect the new internal reporting to the CODM.

The business is managed based on regions administered by executive vice presidents. The following is summary of revenues (excluding reimbursed management contract revenue) and gross profit by regions for the three months ended March 31, 2014 and 2013 (unaudited):

	Three Months Ended March 31, 2014			Gross Margin %		Three Months Ended March 31, 2013			Gross Margin %
Revenues(a):
Region One
Lease contracts	70,014					72,083
Management contracts (b)	24,988					28,447
Total Region One	95,002					100,530
Region Two
Lease contracts	1,197					1,326
Management contracts	12,720					10,215
Total Region Two	13,917					11,541
Region Three
Lease contracts	11,879					11,413
Management contracts	14,126					15,821
Total Region Three	26,005					27,234
Region Four
Lease contracts	11,350					11,265
Management contracts	26,528					24,728
Total Region Four	37,878					35,993
Region Five
Lease contracts	22,387					25,050
Management contracts	10,227					11,311
Total Region Five	32,614					36,361
Other
Lease contracts	(192		)			(52		)
Management contracts	1,366					(427		)
Total Other	1,174					(479		)
Reimbursed management contract revenue	169,178					159,477
Total revenues	375,768					370,657
Gross Profit
Region One
Lease contracts	(130		)	0	%	2,270			3	%
Management contracts	11,672			47	%	13,469			47	%
Total Region One	11,542					15,739
Region Two
Lease contracts	135			11	%	266			0	%
Management contracts	3,047			24	%	2,277			22	%
Total Region Two	3,182					2,543
Region Three
Lease contracts	599			5	%	778			7	%
Management contracts	5,186			37	%	5,888			37	%
Total Region Three	5,785					6,666
Region Four
Lease contracts	645			6	%	751			7	%
Management contracts	8,178			31	%	5,500			22	%
Total Region Four	8,823					6,251
Region Five
Lease contracts	3,447			15	%	4,885			20	%
Management contracts	3,901			38	%	4,772			42	%
Total Region Five	7,349					9,657
Other
Lease contracts	(145		)	76	%	17			100	%
Management contracts	(1,243		)	(91	)%	(548		)	128	%
Total Other	(1,388		)			(531		)
Total gross profit	35,292					40,325
General and administrative expenses	26,066					27,948
General and administrative expense percentage of gross profit	74		%			69		%
Depreciation and amortization	7,163					7,493
Operating income	2,063					4,884
Other expenses (income):
Interest expense	4,809					4,840
Interest income	(98		)			(111		)
	4,711					4,729
(Loss) income before income taxes	(2,648		)			155
Income tax (benefit)	(7,438		)			(154		)
Net income	4,790					309
Less: Net income attributable to noncontrolling interest	487					569
Net income (loss) attributable to SP Plus Corporation	$	4,303				$	(260	)

(a) Excludes reimbursed management contract revenue.

(b) The three months ended March 31, 2013 included a net gain of $2,700 related to the sale of rights associated with certain contracts.

Region One encompasses operations in Connecticut, Delaware, District of Columbia, Illinois, Indiana, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Virginia, West Virginia, Wisconsin and the Canadian provinces of Manitoba, Ontario, and Quebec.

Region Two encompasses event planning and transportation, and the Company’s technology-based parking and traffic management systems.

Region Three encompasses operations in Arizona, California, Colorado, Hawaii, New Mexico, Oregon, Utah, Washington and the Canadian province of Alberta.

Region Four encompasses all major airport and transportation operations nationwide.

Region Five encompasses Alabama, Florida, Georgia, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, and Texas.

Other consists of ancillary revenue that is not specifically identifiable to a region and insurance reserve adjustments related to prior years.