10-Q

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, 2014

Commission file number: 000-50796

SP Plus Corporation

(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, Illinois 60601-7702

(Address of Principal Executive Offices, Including Zip Code)

(312) 274-2000

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and
Former Fiscal Year, if Changed Since Last Report)

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 x  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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  YES x  NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES o  NO x

As of October 30, 2014, there were 22,020,094 shares of common stock of the registrant outstanding.

SP PLUS CORPORATION

TABLE OF CONTENTS

Part I. Financial Information	3
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets as of September 30, 2014 (unaudited) and December 31, 2013	3
Condensed Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2014 and 2013	4
Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2014 and 2013	5
Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2014 and 2013	6
Notes to Condensed Consolidated Interim Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3. Quantitative and Qualitative Disclosures about Market Risk	34
Item 4. Controls and Procedures	34
Part II. Other Information	35
Item 1. Legal Proceedings	35
Item 1A. Risk Factors	35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3. Defaults Upon Senior Securities	35
Item 4. Mine Safety Disclosures	35
Item 5. Other Information	35
Item 6. Exhibits	36
Signatures	37

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PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

SP PLUS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for share and per share data)

	September 30, 2014			December 31, 2013
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	18,165		$	23,158
Notes and accounts receivable, net	114,074			115,126
Prepaid expenses and other	10,936			20,645
Deferred taxes	10,317			10,317
Total current assets	153,492			169,246
Leasehold improvements, equipment, land and construction in progress, net	45,281			44,885
Other assets:
Advances and deposits	5,373			7,149
Intangible assets, net	94,846			106,222
Favorable acquired lease contracts, net	50,935			60,034
Other assets, net	24,962			24,574
Cost of contracts, net	10,433			10,762
Goodwill	439,473			439,503
	626,022			648,244
Total assets	$	824,795		$	862,375
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	97,852		$	115,493
Accrued and other current liabilities	105,650			102,350
Current portion of obligations under senior credit facility and other long-term debt obligations	30,481			24,632
Total current liabilities	233,983			242,475
Deferred taxes	10,117			17,348
Long-term borrowings, excluding current portion:
Obligations under senior credit facility	232,015			263,457
Other long-term debt obligations	784			577
	232,799			264,034
Unfavorable lease contracts, net	64,182			74,130
Other long-term liabilities	63,443			60,677
Stockholders’ equity:
Preferred Stock, par value $0.01 per share; 5,000,000 shares authorized as of September 30, 2014 and December 31, 2013; no shares issued	—			—
Common stock, par value $.001 per share; 50,000,000 shares authorized as of September 30, 2014 and December 31, 2013; 21,998,094 and 21,977,311 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively	22			22
Additional paid-in capital	243,392			240,665
Accumulated other comprehensive income	88			118
Accumulated deficit	(23,767		)	(37,679		)
Total SP Plus Corporation stockholders’ equity	219,735			203,126
Noncontrolling interest	536			585
Total equity	220,271			203,711
Total liabilities and stockholders’ equity	$	824,795		$	862,375

See Notes to Condensed Consolidated Interim Financial Statements.

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SP PLUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except for share and per share data, unaudited)

	Three Months Ended						Nine Months Ended
	September 30,2014			September 30,2013			September 30,2014			September 30,2013
Parking services revenue:
Lease contracts	$	129,004		$	122,771		$	370,597		$	367,088
Management contracts	77,878			77,681			252,764			256,435
	206,882			200,452			623,361			623,523
Reimbursed management contract revenue	173,405			154,858			507,122			472,737
Total revenue	380,287			355,310			1,130,483			1,096,260
Cost of parking services:
Lease contracts	116,520			115,696			340,583			339,828
Management contracts	46,741			44,680			155,971			157,250
	163,261			160,376			496,554			497,078
Reimbursed management contract expense	173,405			154,858			507,122			472,737
Total cost of parking services	336,666			315,234			1,003,676			969,815
Gross profit:
Lease contracts	12,484			7,075			30,014			27,260
Management contracts	31,137			33,001			96,793			99,185
Total gross profit	43,621			40,076			126,807			126,445
General and administrative expenses	24,123			20,494			75,185			75,310
Depreciation and amortization	7,630			7,959			22,523			23,704
Operating income	11,868			11,623			29,099			27,431
Other expenses (income):
Interest expense	4,162			4,818			13,782			14,421
Interest income	(144		)	(108		)	(336		)	(347		)
	4,018			4,710			13,446			14,074
Income before income taxes	7,850			6,913			15,653			13,357
Income tax provision (benefit)	2,763			2,448			(421		)	4,359
Net income	5,087			4,465			16,074			8,998
Less: Net income attributable to noncontrolling interest	785			721			2,162			2,070
Net income attributable to SP Plus Corporation	$	4,302		$	3,744		$	13,912		$	6,928
Common stock data:
Net income per share:
Basic	$	0.20		$	0.17		$	0.63		$	0.32
Diluted	$	0.19		$	0.17		$	0.62		$	0.31
Weighted average shares outstanding:
Basic	21,997,394			21,911,574			21,989,131			21,890,861
Diluted	22,426,787			22,285,723			22,392,572			22,226,030

See Notes to Condensed Consolidated Interim Financial Statements.

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SP PLUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands, unaudited)

	Three Months Ended					Nine Months Ended
	September 30,2014		September 30,2013			September 30,2014			September 30,2013
Net income	$	5,087	$	4,465		$	16,074		$	8,998
Other comprehensive income (loss)	163		(280		)	(30		)	609
Comprehensive income	5,250		4,185			16,044			9,607
Less: comprehensive income attributable to noncontrolling interest	785		721			2,162			2,070
Comprehensive income attributable to SP Plus Corporation	$	4,465	$	3,464		$	13,882		$	7,537

See Notes to Condensed Consolidated Interim Financial Statements.

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SP PLUS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

	Nine Months Ended
	September 30,2014			September 30,2013
Operating activities:
Net income	$	16,074		$	8,998
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	22,493			22,335
Net accretion of acquired lease contracts	(849		)	(2,526		)
Net loss on sale and abandonment of assets	105			1,431
Amortization of debt issuance costs	999			1,049
Amortization of original discount on borrowings	983			1,056
Non-cash stock-based compensation	2,806			3,472
Provisions for losses on accounts receivable	901			232
Excess tax benefit related to vesting of restricted stock units	79			—
Deferred income taxes	(7,148		)	(1,675		)
Net change in operating assets and liabilities	(652		)	(24,181		)
Net cash provided by operating activities	35,791			10,191
Investing activities:
Purchase of leasehold improvements and equipment	(10,409		)	(11,529		)
Acquisitions	(40		)	—
Cost of contracts purchased	(1,375		)	(365		)
Proceeds from sale of assets	366			143
Capitalized interest	(17		)	—
Contingent payments for businesses acquired	(6		)	(87		)
Net cash used in investing activities	(11,481		)	(11,838		)
Financing activities:
Tax benefit from vesting of restricted stock units	(79		)	—
Contingent payments for businesses acquired	(441		)	(142		)
(Payments) borrowing on senior credit facility	(1,850		)	15,350
Payments on term loan	(24,815		)	(16,875		)
Distribution to noncontrolling interest	(2,211		)	(2,156		)
Redemptions of convertible debentures	(13		)	—
Borrowing (payments) on other long-term debt obligations	153			(465		)
Net cash used in financing activities	(29,256		)	(4,288		)
Effect of exchange rate changes on cash and cash equivalents	(47		)	(240		)
Decrease in cash and cash equivalents	(4,993		)	(6,175		)
Cash and cash equivalents at beginning of period	23,158			28,450
Cash and cash equivalents at end of period	$	18,165		$	22,275
Supplemental disclosures:
Cash paid (received) during the period for:
Interest	$	10,665		$	12,465
Income taxes, net	(1,637		)	1,128

See Notes to Condensed Consolidated Interim Financial Statements.

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SP PLUS CORPORATION

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands except share and per share data, unaudited)

1. The Company

SP Plus Corporation (the “Company”) provides parking management, ground transportation and other ancillary services to commercial, institutional and municipal clients in the United States, Puerto Rico and Canada. Its services include a comprehensive set of on-site parking management and ground transportation services, which consist of training, scheduling and supervising all service personnel as well as providing customer service, marketing, maintenance, security and accounting and revenue control functions necessary to facilitate the operation of clients’ parking facilities. The Company also provides a range of ancillary services such as airport shuttle operations, valet services, taxi and livery dispatch services and municipal meter revenue collection and enforcement services.

2. 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 Consolidated Balance Sheet, Statements of Income, and Comprehensive Income and Cash Flows prepared in conformity with U.S. GAAP have been condensed or omitted as permitted by such rules and regulations

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, 2014 are not necessarily indicative of the results that might be expected for any other interim period or the fiscal year ended December 31, 2014. The financial statements presented in this report should be read in conjunction with the Company’s annual consolidated financial statements and notes thereto included in the Annual Report on Form 10-K filed on March 13, 2014.

Cash and cash equivalents

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements was $515 and $1,001 as of September 30, 2014 and December 31, 2013, respectively, and are included within Cash and Cash Equivalents in the Consolidated Balance Sheet.

Book overdrafts of $32,097 and $29,310 are included within Accounts Payable in the Consolidated Balance Sheet as of September 30, 2014 and December 31, 2013, respectively.

Adopted Accounting Pronouncements

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-11, Balance Sheet (Topic 210), Disclosures about Offsetting Assets and Liabilities. This update requires additional disclosures about offsetting and related arrangements on assets and liabilities to enable users of financial statements to understand the effect of such arrangements on an entity’s financial position as reported. This amendment is effective for fiscal 2014 and retrospective application is required.  The adoption of this guidance on January 1, 2014 did not have an impact to the Company’s financial position, results of operations or cash flows or financial statement disclosures.

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740), Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists to eliminate diversity in practice. Under this ASU, an unrecognized tax benefit, or a portion of an unrecognized tax benefit that exists at the reporting date, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if certain criteria are met. This amendment is effective for fiscal years and interim periods within those years beginning after December 15, 2013.  The adoption of this guidance on January 1, 2014 did not have an impact to the Company’s financial position, results of operations or cash flows or financial statement disclosures.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The amendments in ASU No. 2014-09 create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue

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Recognition, including most industry specific revenue recognition guidance. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts, and create a new Subtopic 340-40, Other Assets and Deferred Costs — Contracts with Customers. 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. The amendments are effective for fiscal years and interim periods within those fiscal years beginning on or after December 15, 2016. Early adoption is not permitted. The Company is currently assessing the impact on the Company’s financial position, results of operations, cash flows and financial statement disclosures.

3. Commitments and Contingencies

The Company is subject to litigation and other claims in the normal course of its business. The Company applies the provisions as defined in the guidance related to accounting for contingencies in determining the recognition and measurement of expense associated with legal claims against the Company. Management uses guidance from internal and external legal counsel on the potential outcome of litigation in determining the need to record liabilities for potential losses and the disclosure of pending legal claims.

The Company has contractual provisions under certain lease contracts to complete structural or other improvements to leased properties and incur repair costs, including improvements and repairs arising as a result of ordinary wear and tear.  The Company evaluates 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-Leases within the Consolidated Statements of Income.

Certain lease contracts acquired in the Central Merger (defined in Note 5. Acquisition) include provisions allocating to the Company responsibility for all or a defined portion of structural or other improvement and repair costs required on the leased property, including improvement and repair costs arising as a result of ordinary wear and tear. During the three and nine months ended September 30, 2014, we recorded $242 and $1,184, respectively, of costs (net of expected recovery of 80% of the total cost through the applicable indemnity discussed further below and in Note 5. Acquisition) in Cost of Parking Services-Leases within the Consolidated Statement of Income for structural and other improvement and repair costs related to certain lease contracts acquired in the Central Merger, whereby the Company has expensed repair costs for certain leases and has engaged a third-party general contractor to complete certain defined structural and other improvement and repair projects. The Company expects to incur substantial additional costs for certain structural or other improvement and repair costs pursuant to the contractual requirements of certain lease contracts acquired in the Central Merger (“Structural and Repair Costs”).    Based on information available at this time, the Company currently estimates the additional Structural and Repair Costs to be between $5,000 and $20,000; however, the Company is still in the process of determining the full extent of the required repairs and improvements required and estimated costs associated with these lease contracts acquired in the Central Merger.  The Company currently expects to recover 80% of the Structural and Repair Costs incurred prior to October 1, 2015 through the applicable indemnity discussed further in Note 5. Acquisition.  While the Company is unable to estimate with certainty when such costs will be incurred, it is expected that all or a substantial majority of these costs will be incurred in early- to mid-calendar year 2015 and prior to October 1, 2015.

4. Intangible Assets, net

The following presents a summary of intangible assets, net, as of September 30, 2014 and December 31, 2013:

	September 30, 2014			December 31, 2013
	(Unaudited)
Covenant not to compete	$	933		$	933
Trade names and trademarks	9,820			9,820
Proprietary know how	34,650			34,650
Management contract rights	81,000			81,000
Accumulated amortization	(31,557		)	(20,181		)
Intangible assets, net	$	94,846		$	106,222

Amortization expense related to intangible assets included in depreciation and amortization was $3,779 and $3,877 for the three months ended September 30, 2014 and 2013, respectively, and $11,376 and $12,853 for the nine months ended September 30, 2014 and 2013, respectively.

5. Acquisition

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 (collectively, “Central”), for 6,161,332 shares of Company common stock and the assumption of approximately $217,675 of Central’s debt, net of

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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 28, 2012 (the “Merger Agreement”).  The Company financed the acquisition through the issuance of its common stock and borrowings under the Senior Credit Facility (defined in Note 9. Borrowing Arrangements).

Pursuant to the Merger Agreement, the Company is entitled to indemnification from Central’s former stockholders (i) if and to the extent Central’s combined net debt and the absolute value of Central’s negative working capital (as determined in accordance with the Merger Agreement) (the “Net Debt Working Capital”) exceeded $285,000 as of September 30, 2012 and (ii) for certain defined adverse consequences as set forth in the Merger Agreement (including with respect to Structural and Repair Costs).  Pursuant to the Merger Agreement, Central’s former stockholders are required to satisfy certain indemnity obligations, which are capped at the $27,000 cash consideration (the “Capped Items”) only through a reduction of the $27,000 cash consideration.  For certain other indemnity obligations set forth in the Merger Agreement which are not capped at the $27,000 cash consideration (the “Uncapped Items”), including the Net Debt Working Capital indemnity obligations described above, Central’s former stockholders may satisfy any amount payable pursuant to such indemnity obligations as follows (provided that the Company reserves the right to reject the cash and stock alternatives and choose to reduce the $27,000 cash consideration):

·Central’s former stockholders can elect to pay such amount with cash;

·Central’s former stockholders can elect to pay such amount with the Company’s common stock (valued at $23.64 per share, the market value as of the closing date of the Merger Agreement); or

·Central’s former stockholders can elect to reduce the $27,000 cash consideration by such amount, subject to the condition that the cash consideration remains at least $17,000 to cover Capped Items.

The Company has determined and concluded that the Net Debt Working Capital was $296,399 as of September 30, 2012 and that; accordingly, the Net Debt Working Capital exceeded the threshold by $11,399.  In addition, the Company has determined that it currently has indemnity claims for certain defined adverse consequences (including indemnity claims with respect to Structural and Repair Costs incurred through September 30, 2014), which would reduce the cash consideration payable in three years from the acquisition date by $14,122. In addition, the Company expects to have additional indemnity claims in the future as new matters arise. The Company has periodically given Central’s former stockholders notice regarding indemnification matters since the closing date of the Merger and has made adjustments for known matters, although Central’s former stockholders have not agreed to such adjustments nor made any elections with respect to the payment of any Uncapped Items. Furthermore, following the Company’s notices of indemnification matters, the representative of Central’s former stockholders has indicated that they may make additional inquiries and potentially raise issues with respect to the Company’s indemnification claims (including, specifically, as to the Company’s Net Debt Working Capital calculation and as to Structural and Repair Costs) and that they may assert various claims of their own relating to the Merger Agreement.  Under the Merger Agreement, all post-closing claims and disputes, including as to indemnification matters, are ultimately subject to resolution through binding arbitration or, in the case of a dispute as to the calculation of Net Debt Working Capital, resolution by an independent public accounting firm.  The Company intends to pursue these dispute resolution processes, as applicable, in a timely manner, although the Company’s pursuit of these processes may be delayed by actions taken by representatives of Centrals former stockholders.

In determining the excess over the threshold of Net Debt Working Capital as of September 30, 2012 of $11,399 and the indemnity claims for certain defined adverse consequences of $14,122, the Company has evaluated the nature of the costs and related indemnity claims and has concluded that it is probable that such indemnified claims will sustain any challenge from Central’s former stockholders and recoverability of these indemnified claims are reasonably assured. As previously discussed in Note 3. Legal and Other Contingencies, certain lease contracts acquired in the Central Merger include provisions allocating to the Company responsibility for all or a defined portion of structural or other improvement and repair costs required on the property, including improvement and repair costs arising as a result of ordinary wear and tear.  As the Company incurs additional Structural and Repair Costs, that meet the indemnification provisions established in the Merger Agreement, the Company will seek indemnification for a significant portion, generally 80%, of these costs pursuant to the Merger Agreement and reduce the cash consideration payable in three years from the acquisition date by such amounts.

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The following table sets forth the adjustments to the cash consideration payable by the Company to the former stockholders of Central, based upon the foregoing determinations:

Cash consideration payable in three years from the acquisition date, pursuant to the Merger Agreement and prior to Central Net Debt Working Capital and indemnification of certain defined adverse consequences, net				$	27,000
Net Debt Working Capital at September 30, 2012 as defined in the Merger Agreement	$	(296,399	)
Threshold of Net Debt Working Capital, pursuant to the Merger Agreement	$	285,000
Excess over the threshold of Net Debt Working Capital				(11,399		)
Indemnification of certain defined adverse consequences, net				(14,122		)
Settled cash consideration				$	1,479
Present value of cash consideration liability as of September 30, 2014 (included within Other Long-Term Liabilities in the Consolidated Balance Sheet)				$	1,279

The acquisition has been accounted for using the acquisition method of accounting (in accordance with the provisions of Accounting Standards Codification (“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 finalized the purchase price allocation during the third quarter of 2013, which resulted in revision to the previously reported preliminary amounts, applied retrospectively back to the date of the acquisition.

The Company has incurred certain acquisition and integration costs associated with the transaction that have been expensed as incurred and reflected in the Consolidated Statements of Income. The Company recognized $2,989 and $1,893 of these costs in the Consolidated Statement of Income for the three months ended September 30, 2014 and 2013, respectively, in General and Administrative Expenses. The Company recognized $5,031 and $9,210 of these costs in the Consolidated Statement of Income for the nine months ended September 30, 2014 and 2013, respectively, in General and Administrative Expenses.

6. Stock-Based Compensation

Stock Options and Grants

There were no stock options granted during the nine months ended September 30, 2014 and 2013. The Company recognized no stock-based compensation expense related to stock options for the nine months ended September 30, 2014 and 2013, as all stock options previously granted were fully vested. As of September 30, 2014, there were no unrecognized compensation costs related to unvested stock options.

On April 22, 2014, the Company authorized vested stock grants to certain directors totaling 19,336 common shares. The total value of the grant, based on the fair value of common stock on the grant date, was $491 and is included in General and Administrative Expenses within the Consolidated Statement of Income.  On April 24, 2013, the Company authorized vested stock grants to certain directors totaling 21,949 common shares. The total value of the grant, based on the fair value of common stock on the grant date, was $465 and is included in General and Administrative Expenses within the Consolidated Statement of Income.

Restricted Stock Units

During the nine months ended September 30, 2014, the Company authorized certain one-time grants of 26,287 restricted stock units to certain executives that vest five years from date of issuance. During the nine months ended September 30, 2014 and 2013, 25,083 restricted stock units and 27,000 restricted stock units vested, respectively. During the nine months ended September 30, 2014, 26,101 restricted stock units were forfeited under the amended and restated Long-Term Incentive Plan and became available for reissuance. No restricted stock units were forfeited in the nine months ended September 30, 2013.

The Company recognized $679 and $1,003 of stock-based compensation expense related to the restricted stock units for the three months ended September 30, 2014 and 2013, respectively, which is included in General and Administrative Expenses within the Consolidated Statement of Income.  The Company recognized $2,129 and $3,062 of stock-based compensation expenses related to restricted stock units for the nine months ended September 30, 2014 and 2013, respectively, which is included in General and Administrative expenses within the Consolidated Statements of Income.  As of September 30, 2014, there was $5,109 of unrecognized

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stock-based compensation costs, net of estimated forfeitures, related to the restricted stock units that are expected to be recognized over a weighted average remaining period of approximately 3.9 years.

Performance Based Stock

In September 2014, the Board of Directors authorized a performance-based incentive program under the Company’s Long-Term Incentive Plan (“2014 Performance-Based Incentive Program”). 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 2014 Performance-Based Incentive Program provides participating executives with the opportunity to earn vested common stock if certain performance targets for pre-tax free cash flow are achieved over the cumulative three year period of 2014 through 2016 and recipients satisfy service-based vesting requirements. The stock-based compensation expense associated with unvested performance-based incentives 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 year period of 2014 through 2016.  Future compensation expense for currently outstanding awards under the 2014 Performance Based Incentive Program could reach a maximum of $3,200.

On September 30, 2014, certain participating executives became vested in the 2014 Performance-Based Incentive Program shares based on retirement eligibility and as a result $186 of stock-based compensation related to 9,687 shares were recognized in General and Administrative expenses within in the Consolidated Statements of Income, and which continue to be subject to achieving cumulative pre-tax free cash flow over the three year period of 2014 through 2016.

The Company recognized a cumulative $186 of stock-based compensation expense related to the 2014 Performance-Based Incentive Program, which includes expense of awards to fully vested retirement eligible executives for the three and nine months ended September 30, 2014 and is included in General and Administrative expenses. During the nine months ended September 30, 2014, no performance-based shares were forfeited.  There was no such program in place during 2013.   Stock-based compensation for the 2014 Performance-Based Incentive Program is expected to be recognized over a weighted average period of 2.3 years.

7. Net Income (Loss) 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 (unaudited):

	Three Months EndedSeptember 30,				Nine Months EndedSeptember 30,
	2014		2013		2014		2013
Weighted average common basic shares outstanding	21,997,394		21,911,574		21,989,131		21,890,861
Effect of dilutive stock options and restricted stock units	429,393		374,149		403,441		335,169
Weighted average common diluted shares outstanding	22,426,787		22,285,723		22,392,572		22,226,030
Net income (loss) per share:
Basic	$	0.20	$	0.17	$	0.63	$	0.32
Diluted	$	0.19	$	0.17	$	0.62	$	0.31

For the three and nine-months ended September 30, 2014 performance-based restricted stock was excluded in 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 September 30, 2014.   There was no performance-based incentive program in place during 2013.

There are no 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.

8. 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.

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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. Principal and interest on the Bradley special facility revenue bonds increase from approximately $3,600 in contract year 2002 to approximately $4,500 in contract year 2025. Annual guaranteed minimum payments to the State increase from approximately $8,300 in contract year 2002 to approximately $13,200 in contract year 2024. The annual minimum guaranteed payment to the State by the trustee for the twelve months ended December 31, 2014 and 2013 is $10,815 and was $10,593, 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 payments to the State of Connecticut, net of reimbursements, as of September 30, 2014 is are as follows:

	2014
	(Unaudited)
Balance at January 1, 2014	$	14,649
Deficiency payments made	25
Deficiency repayment received	(1,099		)
Balance at September 30, 2014	$	13,575

During the three months ended September 30, 2014, the Company received deficiency repayments (net of payments made) of $24, received and recorded interest of $134, with the net of these amounts recorded as a reduction in Cost of Parking Services within the Consolidated Statement of Income.  During the three months ended September 30, 2013, the Company made deficiency payments (net of repayments received) of $339, which was recorded as an increase in Cost of Parking Services within the Consolidated Statement of Income.  No premium income was received and recorded for the three months ended September 30, 2014 and 2013 and no interest was received and recorded for the three months ended September 30, 2013. During the nine months ended September 30, 2014 and 2013, the Company received deficiency repayments (net of payments made) of $1,074 and $18, respectively, received and recorded premium of $117 and $60, respective, and received and recorded interest of $134 and $nil, respectively, with the net of these amounts recorded as a reduction in Cost of Parking Services within the Consolidated Statement of Income.  The Company accrues for deficiency payments when the potential for future deficiency payments are both probable and estimable.  There were no amounts of estimated deficiency payments accrued as of September 30, 2014, as the Company concluded that the potential for future deficiency payments did not meet the criteria of both probable and estimable. The Company accrued $100 of estimated deficiency payments as of December 31, 2013.

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 unaffiliated 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) are paid, and after the repayment of all deficiency payments, including interest and premium. Cumulative management fees of approximately $14,483 and

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$13,733 have not been recognized as of September 30, 2014 and December 31, 2013, respectively, and no management fees were recognized as revenue for the nine months ended September 30, 2014 and 2013.

9. Borrowing Arrangements

Long-term borrowings, in order of preference, consist of:

		Amount Outstanding
	Maturity Date	September 30, 2014		December 31, 2013
		(Unaudited)
Obligations under Senior Credit Facility, net of original discount on borrowings	October 2, 2017	$	260,989	$	286,672
Other debt obligations	Various	2,291		1,994
Total debt obligations		263,280		288,666
Less: Current portion under Senior Credit Facility and other debt obligations		30,481		24,632
Total long-term borrowings		$	232,799	$	264,034

Senior Credit Facility

On October 2, 2012, the Company entered into a credit agreement (the “Credit Agreement”) with Bank of America, as administrative agent, Wells Fargo Bank, N.A. 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 (the “Lenders”).

Pursuant to the terms, and subject to the conditions, of the Credit Agreement, the Lenders have made available to the Company a new secured Senior Credit Facility (the “Senior Credit Facility”) that permits aggregate borrowings of $450,000 consisting of (i) a revolving credit facility of up to $200,000 at any time outstanding, which includes a letter of credit facility that is limited to $100,000 at any time outstanding, and (ii) a term loan facility of $250,000. The Senior Credit Facility matures on October 2, 2017.

The Company may be required to make mandatory repayments of principal within 90 days of each fiscal year-end provided that certain excess cash is available, as defined within the Credit Agreement.  In the event the Company is required to make mandatory repayments of principal pursuant to the Credit Agreement, the aggregate borrowings available under the Senior Credit Facility are reduced by the amount of mandatory principal repayments made by the Company.  In March 2014, the Company made a mandatory principal repayment of $7,940, as provided under the Credit Agreement.  There were no mandatory repayments of principal required under the Credit Agreement in 2013.

Events of default under the 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 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 majority of the commitments and outstanding term loan under the Credit Agreement have the right, among others, to (i) terminate the commitments under the Credit Agreement, (ii) accelerate and require the Company to repay all the outstanding amounts owed under the Credit Agreement and (iii) require the Company to cash collateralize any outstanding letters of credit.

Under the terms of the Credit Agreement, as of September 30, 2014, the Company is required to maintain a maximum consolidated total debt to EBITDA ratio of not greater than 3.75:1.0.  There are certain future step downs as described in the Credit Agreement; decreasing to 3.5:1.0 as of the end of each fiscal quarter ending after July 1, 2015 through and including June 30, 2016 and 3.25:1.0 as of the end of each fiscal quarter ending after July 1, 2016.   In addition, as of September 30, 2014, the Company is required to maintain a minimum consolidated fixed charge coverage ratio of not less than 1.35:1.0 for each fiscal quarter ending after July 1, 2014.

The Company was in compliance with all covenants as of September 30, 2014.

As of September 30, 2014, the Company had $78,364 of borrowing availability under the Credit Agreement, of which the Company could have borrowed $28,355 on September 30, 2014 and remained in compliance with the above described covenants as of such date.  The additional borrowing availability under the Credit Agreement is limited only as of the Company’s fiscal quarter-end by the covenant restrictions described above. At September 30, 2014, the Company had $55,136 of letters of credit outstanding under the

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Senior Credit Facility, with aggregate borrowings against the Senior Credit Facility of $263,560 (excluding original discount on borrowings of $2,571).

Interest Rate Swap Transactions

On October 25, 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 have an effective date of October 31, 2012 and a termination date of September 30, 2017. The Interest Rate Swaps effectively fix the interest rate on an amount of variable interest rate borrowings under the Credit Agreement, originally equal to the Notional Amount at 0.7525% per annum plus the applicable margin rate for LIBOR loans under the Credit Agreement, determined based upon the Company’s consolidated total debt to EBITDA ratio. The Notional Amount is subject to scheduled quarterly amortization that coincides with quarterly prepayments of principal under the Credit Agreement. 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 is recognized in earnings as an increase of interest expense. As of September 30, 2014, no ineffectiveness of the hedge has been recognized. See Note 12. Fair Value Measurement for the fair value of the interest rate swap as of September 30, 2014 and December 31, 2013.

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

10. Comprehensive Income

Comprehensive income consists of the following components, net of tax (unaudited):

	For the three months ended						For the nine months ended
	September 30,2014			September 30,2013			September 30,2014			September 30,2013
Net income	$	5,087		$	4,465		$	16,074		$	8,998
Effective portion of unrealized gain (loss) on cash flow hedge	293			(312		)	17			849
Foreign currency translation	(130		)	32			(47		)	(240		)
Comprehensive income	5,250			4,185			16,044			9,607
Less: comprehensive income attributable to noncontrolling interest	785			721			2,162			2,070
Comprehensive income attributable to SP Plus Corporation	$	4,465		$	3,464		$	13,882		$	7,537

Accumulated other comprehensive income is comprised of unrealized gains (losses) on cash flow hedges and foreign currency translation adjustments. The components of changes in accumulated comprehensive income (loss), net of tax, for the nine months ended September 30, 2014 were as follows (unaudited):

	Foreign Currency Translation Adjustments			Effective Portion of Unrealized Gain (Loss) on Cash Flow Hedge		Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2013	$	(368	)	$	486	$	118
Change in other comprehensive income (loss)	(47		)	17		(30		)
Balance at September 30, 2014	$	(415	)	$	503	$	88

11. Income Taxes

For the three months ended September 30, 2014, the Company recognized income tax expense of $2,763 on pre-tax earnings of $7,850 compared to $2,448 income tax expense on pre-tax earnings of $6,913 for the three months ended September 30, 2013. For the nine months ended September 30, 2014, the Company recognized income tax benefit of $421 on pre-tax earnings of $15,653 compared to $4,359 income tax expense on pre-tax earnings of $13,357 for the nine months ended September 30, 2013. The effective tax rate for the nine months ended September 30, 2014 was a benefit of 2.7%, primarily as a result of recognizing a $6,359 discrete benefit for the reversal of a valuation allowance for a deferred tax asset established for historical net operating losses attributable to the State of New York. The valuation allowance was reversed in the first quarter of 2014 due to the New York tax law changes effective March 31, 2014, which resulted in the Company determining that the future benefit of net operating loss carryforwards was more likely than not to be realized.

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As of September 30, 2014, 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, 2014 are shown below:

2011 – 2013	United States — federal income tax
2008 – 2013	United States — state and local income tax
2011 – 2013	Canada and Puerto Rico

12. 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, 2014 and December 31, 2013:

	Fair Value Measurement at September 30, 2014 (unaudited)					Fair Value Measurement at December 31, 2013
	Level 1	Level 2		Level 3		Level 1	Level 2		Level 3
Assets:
Prepaid expenses and other
Interest rate swap	—	$	853	—		—	$	824	—
Liabilities:
Accrued expenses
Contingent acquisition consideration	—	—			1,592	—	—			1,374
Other long term liabilities
Contingent acquisition consideration	—	—		$	210	—	—		$	163

The Company seeks to minimize risks from interest rate fluctuations through the use of interest rate swap contracts and hedge only exposures in the ordinary course of business. Interest rate swaps are used to manage interest rate risk associated with our floating rate debt. The Company accounts for its derivative instruments at fair value, provided it meets certain documentary and analytical requirements to qualify for hedge accounting treatment. Hedge accounting creates the potential for a Consolidated Statement of Operations match between the changes in fair values of derivatives and the changes in cost of the associated underlying transactions, in this case interest expense. 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 Statement of Operations at such time, and with any subsequent changes in fair value recognized currently in earnings. Fair values of derivatives are determined based on quoted prices for similar contracts. The effective portion of

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the change in fair value of the interest rate swap 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 gains and losses on derivatives representing hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized currently in earnings when incurred. No ineffectiveness was recognized during the nine months ended September 30, 2014 and 2013.

The significant inputs used to derive the fair value of the contingent acquisition consideration include financial forecasts of future operating results, the probability of reaching the forecast and the associated discount rate. The weighted average probability of the contingent acquisition consideration ranges from 20% to 40%, with a weighted average discount rate of 12%.

The following table provides a reconciliation of the beginning and ending balances for the contingent consideration liability measured at fair value using significant unobservable inputs (Level 3) (unaudited):

	Due to Seller
Balance at December 31, 2013	$	(1,537	)
Payment of contingent consideration	441
Contingent consideration on acquisition	(43		)
Change in fair value	(663		)
Balance at September 30, 2014	$	(1,802	)

Obligations related to contingent consideration for certain acquisitions were finalized in the third quarter of 2014 in the amount of $1,670, of which $300 and $1,370 were paid in September and October of 2014, respectively.

For the three months ended September 30, 2014 and 2013, the Company recognized an expense of $6 and a benefit of $62, respectively, and recognized the related expense and benefit in General and Administrative Expenses within the Consolidated Statement of Income due to the change in fair value measurements using a Level 3 valuation technique. For the nine months ended September 30, 2014 and 2013, the Company recognized an expense of $663 and a benefit of $370, respectively, and recognized the related expense and benefit in General and Administrative Expenses within the Consolidated Statement of Income due to the change in fair value measurements using a Level 3 valuation technique. These adjustments were the result of using revised forecasts of operating results, updates to the probability of achieving the revised forecasts and updated fair value measurements that revised the Company’s contingent consideration obligations related to the purchase of these businesses.

Nonrecurring Fair Value Measurements

Certain assets are measured at fair value on a nonrecurring basis; that is, the assets are 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 land 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 no impairment charges for the nine months ended September 30, 2014 and 2013.

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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 Consolidated Balance Sheet at September 30, 2014 (unaudited) and December 31, 2013:

	September 30, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial Assets:
Cash and cash equivalents	$	18,165	$	18,165	$	23,158	$	23,158
Financial Liabilities:
Debt obligations—
Senior Credit Facility, net of original discount on borrowings	260,989		260,989		286,672		286,672
Other debt obligations	2,291		2,291		1,994		1,994
Total debt obligations	$	263,280	$	263,280	$	288,666	$	288,666

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 measurement. The fair value of the Senior Credit Facility and other obligations was estimated to not be materially different from the carrying amount, as these instruments bear interest at variable market rates and are generally measured using a discounted cash flow analysis based on current market interest rates for similar types of financial instruments and have been classified as a Level 2 measurement.

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.

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The business is managed based on regions administered by executive vice presidents. The following is a summary of revenues (excluding reimbursed management contract revenue) and gross profit by regions for the three and nine months ended September 30, 2014 and 2013 (unaudited):

	For the three months ended										For the nine months ended
	September 30, 2014			Gross Margin%		September 30, 2013			Gross Margin%		September 30, 2014			Gross Margin%		September 30, 2013			Gross Margin%
Revenues (a):
Region One
Lease contracts	$	79,675				$	77,970				$	227,490				$	230,444
Management contracts (b)	23,058					23,733					73,647					80,473
Total Region One	102,733					101,703					301,137					310,917
Region Two
Lease contracts	1,094					1,065					3,550					3,396
Management contracts	4,845					8,467					20,870					24,344
Total Region Two	5,939					9,532					24,420					27,740
Region Three
Lease contracts	12,840					11,791					36,760					34,930
Management contracts	13,292					13,738					42,485					46,321
Total Region Three	26,132					25,529					79,245					81,251
Region Four
Lease contracts	12,716					10,602					35,299					33,075
Management contracts	23,141					22,988					78,150					73,815
Total Region Four	35,857					33,590					113,449					106,890
Region Five
Lease contracts	22,787					22,086					67,929					68,229
Management contracts	10,715					8,849					30,823					30,261
Total Region Five	33,502					30,935					98,752					98,490
Other
Lease contracts	(108		)			(743		)			(431		)			(2,986		)
Management contracts	2,827					(94		)			6,789					1,221
Total Other	2719					(837		)			6,358					(1,765		)
Total Revenues	206,882					200,452					623,361					623,523
Gross Profit:
Region One
Lease contracts	5,232			7	%	3,649			5	%	10,209			4	%	12,640			5	%
Management contracts	11,351			49	%	12,045			51	%	34,204			46	%	36,082			45	%
Total Region One	16,583					15,694					44,413					48,722
Region Two
Lease contracts	96			9	%	17			2	%	237			7	%	388			11	%
Management contracts	2,675			55	%	3,572			42	%	8,981			43	%	7,215			30	%
Total Region Two	2,771					3,589					9,218					7,603
Region Three
Lease contracts	1,687			13	%	1,402			12	%	3,938			11	%	3,578			10	%
Management contracts	5,876			44	%	4,947			36	%	16,504			39	%	17,706			38	%
Total Region Three	7,563					6,349					20,442					21,284
Region Four
Lease contracts	1,062			8	%	842			8	%	2,627			7	%	2,693			8	%
Management contracts	6,162			27	%	4,749			21	%	19,868			25	%	17,495			24	%
Total Region Four	7,224					5,591					22,495					20,188
Region Five
Lease contracts	4,639			20	%	3,867			18	%	14,280			21	%	12,778			19	%
Management contracts	5,078			47	%	4,200			47	%	14,305			46	%	12,247			40	%
Total Region Five	9,717					8,067					28,585					25,025
Other
Lease contracts	(232		)	215	%	(2,702		)	364	%	(1,277		)	296	%	(4,817		)	161	%
Management contracts	(5		)	0	%	3,488			-3,711	%	2,931			43	%	8,440			691	%
Total Other	(237		)			786					1,654					3,623
Total gross profit	43,621					40,076					126,807					126,445
General and administrative expenses	24,123					20,494					75,185					75,310
General and administrative expense percentage of gross profit	55		%			51		%			59		%			60		%
Depreciation and amortization	7,630					7,959					22,523					23,704
Operating income	11,868					11,623					29,099					27,431
Other expenses (income):
Interest expense	4,162					4,818					13,782					14,421
Interest income	(144		)			(108		)			(336		)			(347		)
	4,018					4,710					13,446					14,074
Income before income taxes	7,850					6,913					15,653					13,357
Income tax (benefit)	2,763					2,448					(421		)			4,359
Net income	5,087					4,465					16,074					8,998
Less: Net income attributable to noncontrolling interest	785					721					2,162					2,070
Net income attributable to SP Plus Corporation	$	4,302				$	3,744				$	13,912				$	6,928

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(a)Excludes reimbursed management contract revenue.

(b)The nine months ended September 30, 2013 included a net gain of $2,700 related to the sale of rights associated with a certain contract.

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, 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, New Mexico, 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.

14. Subsequent Events

On October 29, 2014, the Company entered into an agreement to establish a joint venture with Parkmobile USA, Inc. (“Parkmobile USA”) and effective October 31, 2014, the Company contributed all of the assets and liabilities of its proprietary Click and Park® parking prepayment business in exchange for a 30% interest in the newly formed legal entity called Parkmobile, LLC. The joint venture, Parkmobile, LLC, will provide on-demand 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 will result in the deconsolidation of the Click and Park® business and recognition of the Company’s equity investment in the newly formed joint venture at fair value.  The Company will account for its equity interest in the joint venture in Parkmobile, LLC using the equity method of accounting.  As a result of the transaction, the Company expects to recognize a pre-tax gain in the fourth quarter 2014, the amount of which the Company is currently unable to estimate.  The fiscal year-end of Parkmobile, LLC will be December 31, which is the fiscal year-end of the Company.

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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 consolidated financial statements and the notes thereto contained in this Quarterly Report on Form 10-Q and the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013.

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. These statements are typically accompanied by the words “expect,” “estimate,” “expect,” “intend”, ‘will,” “predict,” “project,” “may,” “should,” “could,” “believe,” “would,” “might,” “anticipates,” 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’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’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, 2013, 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.

Overview

Our Business

We provide parking management, ground transportation and other ancillary services to commercial, institutional and municipal clients in the United States, Puerto Rico and Canada. Our services include a comprehensive set of on-site parking management and ground transportation services, which consist of training, scheduling and supervising all service personnel as well as providing customer service, marketing, maintenance, security and accounting and revenue control functions necessary to facilitate the operation of clients’ parking facilities. We also provides a range of ancillary services such as airport shuttle operations, valet services, taxi and livery dispatch services and municipal meter revenue collection and enforcement services.

We operate our clients’ properties through two types of arrangements: management contracts and leases. Under a management contract, we typically receive a base monthly fee for managing the facility, and we may also receive an incentive fee based on the achievement of facility performance objectives. We also receive fees for ancillary services. Typically, all of the underlying revenue and expenses of the parking operations under a standard management contract flow through to our clients rather than to us. However, some management contracts, which are referred to as “reverse” management contracts, usually provide for larger management fees and require us to pay various costs. Under lease arrangements, we generally pay to the property owner either a fixed annual rent, a percentage of gross customer collections or a combination thereof. We collect all revenue under lease arrangements and we are responsible for most operating expenses, but we are typically not responsible for major maintenance, capital expenditures or real estate taxes. Margins for lease 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, 2014, we operated approximately 82% of our locations under management contracts and approximately 18% of our locations under leases. For the nine months ended September 30, 2014, we derived approximately 77% of our gross profit under management contracts and approximately 23% of our gross profit under lease contracts.

In evaluating our financial condition and operating performance, management’s primary focus is gross profit, total general and administrative expenses and general and administrative expenses as a percentage of our gross profit. 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 leases includes all gross customer collections derived from our leased locations (net of local parking taxes), whereas revenue from management contracts only includes our contractually agreed upon management fees and amounts attributable to ancillary services. Gross customer collections at facilities under management contracts, therefore, are not included in our revenue.

Accordingly, while a change in the proportion of our operating agreements that are structured as leases versus management 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, 2014, we operated approximately 82% of our locations under management contracts and we

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derived approximately 77% of our gross profit under management contracts. Only approximately 41% of total revenue (excluding reimbursed management contract revenue), however, was from management contracts because under those contracts the revenue collected from parking customers belongs to our clients. Therefore, gross profit and total general and administrative expenses, rather than revenue, are management’s primary focus.

On October 2, 2012, we completed our acquisition (the “Central Merger”) of Central Parking Corporation (“Central”) for 6,161,332 shares of our common stock and the assumption of $217.7 million of Central’s debt, net of cash acquired. Additionally, Central’s former stockholders will be entitled to receive $27.0 million to be paid three years after closing, to the extent the $27.0 million is not used to satisfy seller indemnity obligations pursuant to the Agreement and Plan of Merger dated February 28, 2012. Our consolidated results of operations for the three and nine months ended September 30, 2014 and 2013 include Central’s results of operations for the periods presented.

General Business Trends

We believe that sophisticated commercial real estate developers and property managers and owners recognize the opportunity for parking and related services to be a profit generator rather than a cost center. Often, the parking experience makes both the first and the last impressions on their properties’ tenants and visitors. By outsourcing these services, they are able to capture additional profit by leveraging the unique operational skills and controls that an experienced parking management company can offer. Our ability to consistently deliver a uniformly high level of parking and related services and maximize the profit to our clients improves our ability to win contracts and retain existing locations. Our location retention rate for the twelve-month period ending September 30, 2014 was approximately 90%, compared to approximately 88% for the twelve-month period ended September 30, 2013, excluding Central for the period of time in 2012 Central was not under our ownership and dispositions required by the Department of Justice in connection with the Central Merger.

Summary of Operating 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 facilities operated at the end of the periods indicated:

	September 30, 2014	December 31, 2013	September 30, 2013
Managed facilities	3,476	3,393	3,420
Leased facilities	789	850	857
Total facilities	4,265	4,243	4,277

Revenue

We recognize parking services revenue from lease and management contracts as the related services are provided. Substantially all of our revenue comes from the following two sources:

·Parking services revenue—lease contracts. Parking services revenue related to lease contracts consist of all revenue received at a leased facility, including parking receipts (net of local parking taxes), consulting and real estate development fees, gains on sales of contracts and payments for exercising termination rights.

·Parking services revenue—management contracts.Management contract revenue consists of management fees, including both fixed and performance-based fees, and amounts attributable to ancillary services such as accounting, equipment leasing, payments received for exercising termination rights, consulting, developmental fees, gains on sales of contracts, as well as insurance and other value-added services with respect to managed locations. 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’s compensation claims by maintaining a large per-claim deductible. As a result, we have generated operating income on the insurance provided under our management contracts by focusing on our risk management efforts and controlling losses. Management contract revenue does not include gross customer collections at the managed locations as this revenue belongs to the property owner rather than to us. Management contracts generally provide us with a management fee regardless of the operating performance of the underlying facility.

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.

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Reimbursed Management Contract Revenue

Reimbursed management contract revenue consists of the direct reimbursement from the property owner for operating expenses incurred under a management 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 contracts. The cost of parking services under a lease arrangement consists of contractual rental fees paid to the facility owner and all operating expenses incurred in connection with operating the leased facility. Contractual fees paid to the facility owner are generally based on either a fixed contractual amount or a percentage of gross revenue or a combination thereof. Generally, under a lease arrangement we are not responsible for major capital expenditures or real estate taxes.

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

Reimbursed Management Contract Expense

Reimbursed management contract expense consists of direct reimbursed costs incurred on behalf of property owners under a management 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 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

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.

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 periods presented have been restated to reflect the new reporting to the CODM.

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 our technology-based parking and traffic management systems.

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

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Region Four encompasses all major airport and transportation operations nationwide.

Region Five encompasses Alabama, Florida, Georgia, Louisiana, Mississippi, Missouri, Nebraska, New Mexico, 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.

The business is managed based on regions administered by executive vice presidents. The following is a summary of revenues (excluding reimbursed management contract revenue), cost of parking services and gross profit by regions for the three and nine months ended September 30, 2014 and 2013:

Three Months ended September 30, 2014 Compared to Three Months ended September 30, 2013

Segment revenue information is summarized as follows (unaudited):

	Three Months Ended September 30,
	Region One				Region Two				Region  Three					Region  Four				Region Five				Other					Total				Variance
	2014		2013		2014		2013		2014			2013		2014		2013		2014		2013		2014		2013			2014		2013		Amount			%
	(In millions)
Lease contract revenue:
New location	$	3.6	$	0.0	$	0.0	$	0.0	$	1.5		$	0.0	$	0.6	$	0.3	$	0.6	$	0.0	$	0.0	$	0.0		$	6.3	$	0.3	$	6.0		2000.0	%
Contract expirations	0.7		1.8		0.0		0.0		(0.2		)	1.1		0.0		0.9		0.1		0.5		0.0		0.0			0.6		4.3		(3.7		)	-86.0	%
Same location	75.1		75.3		1.1		1.1		11.5			10.7		9.8		9.4		22.0		21.6		0.1		(0.8		)	119.6		117.3		2.3			2.0	%
Conversions	0.2		0.9		0.0		0.0		0.0			0.0		2.3		0.0		0.0		0.0		0.0		0.0			2.5		0.9		1.6			177.8	%
Total lease contract revenue	$	79.6	$	78.0	$	1.1	$	1.1	$	12.8		$	11.8	$	12.7	$	10.6	$	22.7	$	22.1	$	0.1	$	(0.8	)	$	129.0	$	122.8	$	6.2		5.0	%
Management contract revenue:
New location	$	2.7	$	0.2	$	0.4	$	0.5	$	1.6		$	0.1	$	1.4	$	0.0	$	1.8	$	0.0	$	0.0	$	0.0		$	7.9	$	0.8	$	7.1		887.5	%
Contract expirations	0.2		2.0		0.0		0.3		0.1			1.3		0.0		0.1		0.2		0.8		0.0		(0.1		)	0.5		4.4		(3.9		)	-88.6	%
Same location	20.1		21.4		4.4		7.7		11.7			12.3		21.6		22.9		8.7		8.0		2.8		0.1			69.3		72.4		(3.1		)	-4.3	%
Conversions	0.1		0.1		0.0		0.0		0.0			0.1		0.1		0.0		0.0		0.0		0.0		(0.1		)	0.2		0.1		0.1			100.0	%
Total management contract revenue	$	23.1	$	23.7	$	4.8	$	8.5	$	13.4		$	13.8	$	23.1	$	23.0	$	10.7	$	8.8	$	2.8	$	(0.1	)	$	77.9	$	77.7	$	0.2		0.3	%

Parking services revenue—lease contracts.  Lease contract revenue increased $6.2 million, or 5.0%, to $129.0 million for the three months ended September 30, 2014, compared to $122.8 million for the three months ended September 30, 2013. The increase in lease contract revenue resulted primarily from increases of $6.0 million from new locations, $2.3 million from same locations and $1.6 from conversions, partially offset by a $3.7 million decrease in revenue from contract expirations. Same location revenue increases were primarily due to increases in short-term parking and monthly parking revenues.

From a reporting segment perspective, lease contract revenue increased primarily due to new locations in regions one, three, four and five, same location increases in three, four, five and other and conversions in region four. The increase in lease contract revenue was partially offset by decreases in lease contract revenue for contract expirations in regions one, three, four and five, same locations in region one and conversions for region one.  Same location revenue increases for the aforementioned regions were primarily due to increases in short-term parking and monthly parking revenue.

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—management contracts.  Management contract revenue increased $0.2 million, or 0.3%, to $77.9 million for the three months ended September 30, 2014, compared to $77.7 million for the three months ended September 30, 2013.  The increase in management contract revenue resulted primarily from increases of $7.1 from new locations and $0.1 from conversions, partially offset by a $3.9 million decrease from contract expirations and $3.1 million decrease in same locations. The decreases in same location revenue were primarily due to decreases in other ancillary services.

From a reporting segment perspective, management contract revenue increased primarily due to new locations in regions one, three, four and five, same locations increases in region five and other, contract expirations in other and conversions in region four and other, which was partially offset by decreases in revenue for contract expirations in all five regions, new locations in region two, same locations in regions one, two, three and four and conversions in region three.  The decreases in same location revenue for the aforementioned regions were primarily due to decreases in other ancillary services.

Revenue associated with contract expirations relates to contracts that have expired, however, we were operating the facility in the comparative period presented.

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Reimbursed management contract revenue. Reimbursed management contract revenue increased $18.5 million, or 12.0%, to $173.4 million for the three months ended September 30, 2014, compared to $154.9 million for the three months ended September 30, 2013. This increase resulted from additional reimbursements for costs incurred on behalf of owners.

Segment cost of parking services information is summarized as follows (unaudited):

	Three Months Ended September 30,
	Region One				Region Two				Region  Three					Region Four				Region Five				Other						Total				Variance
	2014		2013		2014		2013		2014			2013		2014		2013		2014		2013		2014			2013			2014		2013		Amount			%
	(In millions)
Cost of parking services lease contracts:
New location	$	3.2	$	0.0	$	0.0	$	0.0	$	1.3		$	0.0	$	0.5	$	0.2	$	0.6	$	0.0	$	0.1		$	0.0		$	5.7	$	0.2	$	5.5		2750.0	%
Contract expirations	0.1		1.6		0.0		0.0		(0.2		)	0.9		0.0		0.8		0.1		0.4		0.0			0.0			0.0		3.7		(3.7		)	-100.0	%
Same location	71.0		72.0		1.0		1.0		10.0			9.4		9.1		8.7		17.5		17.8		(0.1		)	2.1			108.5		111.0		(2.5		)	-2.3	%
Conversions	0.2		0.8		0.0		0.0		0.0			0.0		2.1		0.0		0.0		0.0		0.0			0.0			2.3		0.8		1.5			187.5	%
Total cost of parking services lease contracts	$	74.5	$	74.4	$	1.0	$	1.0	$	11.1		$	10.3	$	11.7	$	9.7	$	18.2	$	18.2	$	0.0		$	2.1		$	116.5	$	115.7	$	0.8		0.7	%
Cost of parking services management contracts:
New location	$	1.8	$	0.1	$	0.1	$	0.3	$	0.9		$	0.0	$	0.9	$	0.0	$	0.9	$	0.0	$	0.6		$	0.0		$	5.2	$	0.4	$	4.8		1200.0	%
Contract expirations	0.2		1.2		0.0		0.2		0.0			0.7		0.0		0.1		0.2		0.3		0.0			0.0			0.4		2.5		(2.1		)	-84.0	%
Same location	9.7		10.3		2.1		4.4		6.5			8.0		16.0		18.2		4.6		4.3		2.1			(3.6		)	41.0		41.6		(0.6		)	-1.4	%
Conversions	0.0		0.1		0.0		0.0		0.0			0.1		0.1		0.0		0.0		0.0		0.0			0.0			0.1		0.2		(0.1		)	-50	%
Total cost of parking services management contracts	$	11.7	$	11.7	$	2.2	$	4.9	$	7.4		$	8.8	$	17.0	$	18.3	$	5.7	$	4.6	$	2.7		$	(3.6	)	$	46.7	$	44.7	$	2.0		4.5	%

Cost of parking services—lease contracts.  Cost of parking services for lease contracts increased $0.8 million, or 0.7%, to $116.5 million for the three months ended September 30, 2014 compared to $115.7 million for the three months ended September 30, 2013.  The increase in cost of parking services for lease contracts resulted primarily from increases of $5.5 million from new locations and $1.5 million from conversions, partially offset by a $3.7 million decrease from contract expirations and a $2.5 million decrease for same location costs.  Same location costs decreased primarily due to reductions in operating expenses, partially offset by higher lease rent expense, primarily as a result of contingent rental payments on the increase in revenue for same locations structural and other repair costs related to certain lease contracts acquired in the Central Merger.

From a reporting segment perspective, cost of parking services for lease contracts increased primarily due to new locations in regions one, three, four, five and other, same locations in regions three and four and conversions in region four, partially offset by decreases in same locations in regions one, five and other, conversions in region one and contract expirations in regions one, three, four and five.  Same location costs decreased primarily due to reductions in operating expenses, partially offset by higher lease rent expense, primarily as a result of contingent rental payments on the increase in revenue for same locations and structural and other repair costs related to certain lease contracts acquired in the Central Merger.

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—management contracts.  Cost of parking services for management contracts increased $2.0 million, or 4.5%, to $46.7 million for the three months ended September 30, 2014, compared to $44.7 million for the three months ended September 30, 2013. The increases in cost of parking services for management contracts resulted primarily from increases of $4.8 million from new locations, partially offset by a $2.1 million decrease from contract expirations, and $0.6 million decrease in same location costs and conversions of $0.1 million. Same location cost decreased primarily due decreases in costs associated with reverse management contracts and cost of providing management services, partially offset by an increase in prior year insurance reserve adjustments and costs not specifically identifiable to a region.

From a reporting segment perspective, cost of parking services for management contracts increased primarily due to new locations in regions one, three, four, five and other, conversions in region four and same location in region five and other, partially offset by decreases in cost of parking services for management contracts for new locations in region two, same location in regions one, two, three and four, conversions in region one and three and contract expirations in all five regions.  Same location cost decreased primarily as a result of decreases in costs associated with reverse management contracts and cost of providing management services, partially offset by increases in the other region which was primarily attributed to prior year insurance reserve adjustments and costs that are not specifically identifiable to a region.

Revenue associated with contract expirations relates to contracts that have expired, however, we were operating the facility in the comparative period presented.

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Reimbursed management contract expense. Reimbursed management contract expense increased $18.5 million, or 12.0%, to $173.4 million for the three months ended September 30, 2014, compared to $154.9 million for the three months ended September 30, 2013. This increase resulted from additional reimbursements for costs incurred on behalf of owners.

Segment gross profit/gross profit percentage information is summarized as follows (unaudited):

	Three Months Ended September 30,
	Region One						Region Two						Region Three						Region Four						Region Five						Other						Total						Variance
	2014			2013			2014			2013			2014			2013			2014			2013			2014			2013			2014			2013			2014			2013			Amount			%
	(In millions)
Gross profit lease contracts:
New location	$	0.4		$	0.0		$	0.0		$	0.0		$	0.2		$	0.0		$	0.1		$	0.1		$	0.0		$	0.0		$	(0.1	)	$	0.0		$	0.6		$	0.1		$	0.5		500	%
Contract expirations	0.6			0.2			0.0			0.0			0.0			0.2			0.0			0.1			0.0			0.1			0.0			0.0			0.6			0.6			0.0			0.0	%
Same location	4.1			3.3			0.1			0.1			1.5			1.3			0.7			0.7			4.5			3.8			0.2			(2.9		)	11.1			6.3			4.8			76.2	%
Conversions	0.0			0.1			0.0			0.0			0.0			0.0			0.2			0.0			0.0			0.0			0.0			0.0			0.2			0.1			0.1			100	%
Total gross profit lease contracts	$	5.1		$	3.6		$	0.1		$	0.1		$	1.7		$	1.5		$	1.0		$	0.9		$	4.5		$	3.9		$	0.1		$	(2.9	)	$	12.5		$	7.1		$	5.4		76.1	%
	(Percentages)
Gross profit percentage lease contracts:
New location	11.1		%	0.0		%	0.0		%	0.0		%	13.3		%	0.0		%	16.7		%	33.3		%	0.0		%	0.0		%	0.0		%	0.0		%	9.5		%	33.3		%
Contract expirations	85.7		%	11.1		%	0.0		%	0.0		%	0.0		%	18.2		%	0.0		%	11.1		%	0.0		%	20.0		%	0.0		%	0.0		%	100		%	14.0		%
Same location	5.5		%	4.4		%	9.1		%	9.1		%	13.0		%	12.1		%	7.1		%	7.4		%	20.5		%	17.6		%	200.0		%	362.5		%	9.3		%	5.4		%
Conversions	0.0		%	11.1		%	0.0		%	0.0		%	0.0		%	0.0		%	8.7		%	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	8.0		%	11.1		%
Total gross profit percentage	6.4		%	4.6		%	9.1		%	9.1		%	13.3		%	12.7		%	7.9		%	8.5		%	19.8		%	17.6		%	100.0		%	0.0		%	9.7		%	5.8		%
	(In millions)
Gross profit management contracts:
New location	$	0.9		$	0.1		$	0.3		$	0.2		$	0.7		$	0.1		$	0.5		$	0.0		$	0.9		$	0.0		$	(0.6	)	$	0.0		$	2.7		$	0.4		$	2.3		575.0	%
Contract expirations	0.0			0.8			0.0			0.1			0.1			0.6			0.0			0.0			0.0			0.5			0.0			(0.1		)	0.1			1.9			(1.8		)	-94.7	%
Same location	10.4			11.1			2.3			3.3			5.2			4.3			5.6			4.7			4.1			3.7			0.7			3.7			28.3			30.8			(2.5		)	-8.1	%
Conversions	0.1			0.0			0.0			0.0			0.0			0.0			0.0			0.0			0.0			0.0			0.0			(0.1		)	0.1			(0.1		)	0.2			200	%
Total gross profit management contracts	$	11.4		$	12.0		$	2.6		$	3.6		$	6.0		$	5.0		$	6.1		$	4.7		$	5.0		$	4.2		$	0.1		$	3.5		$	31.2		$	33.0		$	(1.8	)	-5.5	%
	(Percentages)
Gross profit percentage management contracts:
New location	33.3		%	50.0		%	75.0		%	40.0		%	43.8		%	100.0		%	35.7		%	0.0		%	50.0		%	0.0		%	0.0		%	0.0		%	34.2		%	50.0		%
Contract expirations	0.0		%	40.0		%	0.0		%	33.3		%	100		%	46.2		%	0.0		%	0.0		%	0.0		%	62.5		%	0.0		%	100		%	20.0		%	43.2		%
Same location	51.7		%	51.9		%	52.3		%	42.9		%	44.4		%	35.0		%	25.9		%	20.5		%	47.1		%	46.3		%	25.0		%	3700.0		%	40.8		%	42.5		%
Conversions	100.0		%	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	100		%	50.0		%	-100.0		%
Total gross profit percentage	49.4		%	50.6		%	54.2		%	42.4		%	44.8		%	36.2		%	26.4		%	20.4		%	46.7		%	47.7		%	3.6		%	-3500.0		%	40.1		%	42.5		%

Gross profit—lease contracts.  Gross profit for lease contracts increased $5.4 million, or 76.1%, to $12.5 million for the three months ended September 30, 2014, compared to $7.1 million for three months ended September 30, 2013. Gross profit percentage for lease contracts increased to 9.7% for the three months ended September 30, 2014, compared to 5.8% for the three months ended September 30, 2013.  Gross profit for lease contracts increased primarily as a result of increases in gross profit for same location, new locations and conversions.  Same location increases were primarily due to increases in short-term and monthly parker.

From a reporting segment perspective, gross profit for lease contracts increased primarily due to new locations in regions one and three, same locations for regions one, three, five and other, contract expirations in region one and conversions in region four, partially offset by decreases to gross profit for new locations in other, contract expirations in regions three, four and five and conversions in region one.  Gross profit for lease contracts on same locations increased primarily due to increases in short-term and monthly parking revenue and lower operating expenses, partially offset by structural and other repair costs related to certain lease contracts acquired in the Central Merger and higher lease rent expense, primarily as a result of contingent rental payments on increased revenue.

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—management contracts.  Gross profit for management contracts decreased $1.8 million, or 5.5%, to $31.2 million for the three months ended September 30, 2014 compared to $33.0 million the three months ended September 30, 2013. Gross profit percentage for management contracts decreased to 40.1% for three months ended September 30, 2014, compared to 42.5% for September 30, 2014.  The decrease in gross profit for management contracts was primarily as a result of contract expirations and same locations, partially offset by increases in new locations and conversions.

From a reporting segment perspective, gross profit for management contracts decreased primarily due to contract expirations in region one, two, three and five, same locations in regions one, two and other, partially offset by increases to gross profit for new locations in all five regions, contract expirations in other, same locations in regions three, four and five and conversions in region one and other. Gross profit for management contracts decreased on same locations primarily as a result of decreases in revenue for other ancillary services, partially offset by decreases in costs for reverse management contracts and cost of providing management services. 

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The other region amounts in same location primarily represent prior year insurance reserve adjustments and amounts that are not specifically identifiable to a specific region.

Gross profit associated with contract expirations relates to contracts that have expired, however, we were operating the facility in the comparative period presented.

General and administrative expenses .General and administrative expenses increased $3.6 million, or 17.7%, to $24.1 million for the three months ended September 30, 2014, compared to $20.5 million for the three months ended September 30, 2013.  The increase was primarily related to increases in integration related costs incurred in connection with the Central Merger and increases in expected pay-out under our performance based compensation programs and increased compensation and benefit costs.

Depreciation and amortization. Depreciation and amortization decreased $0.3 million, or 4.1%, to $7.6 million for the three months ended September 30, 2014, as compared to $8.0 million for the three months ended September 30, 2013. This decrease was a result of a reduction in amortization and depreciation for acquired tangible and intangible assets.

Interest expense. Interest expense was $4.2 million for the three months ended September 30, 2014 as compared to $4.8 million for the three months ended September 30, 2013.  The decrease in interest expense was primarily related to decreases in average borrowing rates and reductions in amounts outstanding under our Credit Facility.

Interest income. Interest income was $0.1 million for the three months ended September 30, 2014 and 2013.

Income tax expense. Income tax expense increased $0.3 million, or 12.9%, to $2.8 million for the three months ended September 30, 2014, as compared to $2.5 million for the three months ended September 30, 2013. An increase in our pre-tax income of $0.9 million for the three months ended September 20, 2014 when compared to the three months ended September 30, 2013 resulted in a $0.3 million increase in income tax expense. Our effective tax rate was 35.2% for the three months ended September 30, 2014 and 35.4% for the three months ended September 30, 2013.

Nine Months ended September 30, 2014 Compared to Nine Months ended September30, 2013

Segment revenue information is summarized as follows (unaudited):

	Nine Months Ended September 30,
	Region One				Region Two				Region Three				Region Four				Region Five				Other						Total				Variance
	2014		2013		2014		2013		2014		2013		2014		2013		2014		2013		2014			2013			2014		2013		Amount			%
	(In millions)
Lease contract revenue:
New location	$	10.2	$	1.2	$	0.0	$	0.0	$	4.6	$	0.5	$	1.8	$	0.3	$	1.8	$	0.1	$	0.0		$	0.0		$	18.4	$	2.1	$	16.3		776.2	%
Contract expirations	3.0		7.1		0.0		0.0		0.9		4.2		0.0		3.0		0.9		3.1		0.0			0.0			4.8		17.4		(12.6		)	-72.4	%
Same location	213.3		219.5		3.6		3.4		31.0		30.2		31.1		29.8		65.3		65.0		(0.5		)	(3.1		)	343.8		344.8		(1.0		)	-0.3	%
Conversions	1.1		2.7		0.0		0.0		0.2		0.1		2.3		0.0		0.0		0.0		0.0			0.0			3.6		2.8		0.8			28.6	%
Total lease contract revenue	$	227.6	$	230.5	$	3.6	$	3.4	$	36.7	$	35.0	$	35.2	$	33.1	$	68.0	$	68.2	$	(0.5	)	$	(3.1	)	$	370.6	$	367.1	$	3.5		1.0	%
Management contract revenue:
New location	$	9.4	$	1.9	$	3.3	$	0.5	$	4.3	$	0.8	$	3.9	$	0.1	$	5.1	$	1.1	$	0.0		$	0.0		$	26.0	$	4.4	$	21.6		490.9	%
Contract expirations	3.4		8.6		0.3		0.7		1.4		6.4		0.1		0.4		1.4		2.7		0.0			0.0			6.6		18.8		(12.2		)	-64.9	%
Same location	60.6		69.8		17.3		23.1		36.8		38.6		74.0		73.3		24.3		26.4		6.8			1.2			219.8		232.4		(12.6		)	-5.4	%
Conversions	0.2		0.2		0.0		0.0		0.0		0.6		0.1		0.0		0.1		0.0		0.0			0.0			0.4		0.8		(0.4		)	-50.0	%
Total management contract revenue	$	73.6	$	80.5	$	20.9	$	24.3	$	42.5	$	46.4	$	78.1	$	73.8	$	30.9	$	30.2	$	6.8		$	1.2		$	252.8	$	256.4	$	(3.6	)	-1.4	%

Parking services revenue—lease contracts.  Lease contract revenue increased $3.5 million, or 1.0%, to $370.6 million for the nine months ended September 30, 2014, compared to $367.1 million for the nine months ended September 30, 2013. The increase in lease contract revenue resulted primarily from increases in new locations of $16.3 million and conversions of $0.8 million, partially offset by decreases from contract expirations of $12.6 million and same locations of $1.0 million.

From a reporting segment perspective, lease contract revenue increased primarily due to new locations in regions one, three, four and five, same locations in regions two, three, four, five and other and conversions in regions three and four, partially offset by decreases in lease contract revenue for contract expirations in region one, three, four and five, conversions in region one and same locations in region one.  Same location revenue decreases for the aforementioned regions were primarily due to increases in short-term parking and valet services revenue, despite the adverse impact due of severe weather in the first quarter 2014.

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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—management contracts.  Management contract revenue decreased $3.6 million, or 1.4%, to $252.8 million for the nine months ended September 30, 2014, compared to $256.4 million for the nine months ended September 30, 2013.  The decrease in management contract revenue resulted primarily from decreases in contract expirations of $12.2 million, decreases in same locations of $12.6 million, and decreases in conversions of $0.4 million, partially offset by increases for new locations of $21.6 million. Same location revenue decreased primarily due to decreases in other ancillary services.

From a reporting segment perspective, management contract revenue decreased primarily due to contract expirations in all five regions, same locations in regions one, two, three and five and conversions in region three, partially offset by increases in new locations in all five regions, same locations in region four and other and conversions in regions four and five.   The decreases in same location revenue were primarily due to decreases in other ancillary services.

Revenue associated with contract expirations relates to contracts that have expired, however, we were operating the facility in the comparative period presented.

Reimbursed management contract revenue. Reimbursed management contract revenue increased $34.4 million, or 7.3%, to $507.2 million for the nine months ended September 30, 2014, compared to $472.7 million for the nine months ended September 30, 2013. This increase resulted from additional reimbursements for costs incurred on behalf of owners.

Segment cost of parking services information is summarized as follows (unaudited):

	Nine Months Ended September 30,
	Region One				Region Two				Region Three				Region Four				Region Five				Other					Total				Variance
	2014		2013		2014		2013		2014		2013		2014		2013		2014		2013		2014		2013			2014		2013		Amount			%
	(In millions)
Cost of parking services lease contracts:
New location	$	8.4	$	0.8	$	0.0	$	0.0	$	3.9	$	0.5	$	1.6	$	0.2	$	1.6	$	0.1	$	0.1	$	0.0		$	15.6	$	1.6	$	14.0		875.0	%
Contract expirations	1.8		6.3		0.0		0.0		0.7		3.8		0.0		2.6		0.8		2.6		0.0		0.0			3.3		15.3		(12.0		)	-78.4	%
Same location	206.1		208.2		3.3		3.0		28.0		27.0		29.0		27.5		51.2		52.8		0.9		1.9			318.5		320.4		(1.9		)	-0.6	%
Conversions	0.9		2.4		0.0		0.0		0.2		0.1		2.1		0.0		0.0		0.0		0.0		0.0			3.2		2.5		0.7			28.0	%
Total cost of parking services lease contracts	$	217.2	$	217.7	$	3.3	$	3.0	$	32.8	$	31.4	$	32.7	$	30.3	$	53.6	$	55.5	$	1.0	$	1.9		$	340.6	$	339.8	$	0.8		0.2	%
Cost of parking services management contracts:
New location	$	6.2	$	1.0	$	2.2	$	0.4	$	2.5	$	0.4	$	3.0	$	0.1	$	3.0	$	0.9	$	0.6	$	0.0		$	17.5	$	2.8	$	14.7		525.0	%
Contract expirations	2.5		4.3		0.1		0.4		0.9		3.8		0.1		0.3		0.8		1.1		0.0		0.0			4.4		9.9		(5.5		)	-55.6	%
Same location	30.7		39.0		9.7		16.4		22.6		24.2		55.1		55.9		12.7		16.1		3.0		(7.3		)	133.8		144.3		(10.5		)	-7.3	%
Conversions	0.1		0.1		0.0		0.0		0.0		0.2		0.1		0.0		0.1		0.0		0.0		0.0			0.3		0.3		0.0			0.0	%
Total cost of parking services management contracts	$	39.5	$	44.4	$	12.0	$	17.2	$	26.0	$	28.6	$	58.3	$	56.3	$	16.6	$	18.1	$	3.6	$	(7.3	)	$	156.0	$	157.3	$	(1.3	)	-0.8	%

Cost of parking services—lease contracts.  Cost of parking services for lease contracts increased $0.8 million, or 0.2%, to $340.6 million for the nine months ended September 30, 2014 compared to $339.8 million for the nine months ended September 30, 2013.  The increase in cost of parking services resulted primarily from increases of $14.0 million from new locations and $0.7 million from conversions, partially offset by decreases of $12.0 million from contract expirations and $1.9 million from same locations.  Same location costs decreased primarily due to lower operating costs, partially offset by increases primarily related to structural repair costs related to certain lease contracts acquired in the Central Merger and contingent rental payments on increased revenue from same locations.

From a reporting segment perspective, the increase in cost of parking services for lease contracts was primarily due to new locations in regions one, three, four, five and other, same locations in regions two, three and four and conversions in regions three and four, partially offset by reductions in cost of parking services in contract expirations in regions one, three, four and five, same locations in regions one, five and other and conversions in region one. Same location cost decreased due to higher lease rent expense, primarily as a result of contingent rental payments on increased revenue, and slightly lower operating costs, partially offset by structural repair costs related to certain lease contracts acquired in the Central Merger.

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.

27

Cost of parking services—management contracts.  Cost of parking services for management contracts decreased $1.3 million, or 0.8%, to $156.0 million for the nine months ended September 30, 2014, compared to $157.3 million for the nine months ended September 30, 2013. The decrease in cost of parking services for management contracts resulted primarily from decreases of $5.5 million from contract expirations, $10.5 million from same locations, partially offset by a $14.7 million increase from new locations. Same location cost decreases primarily resulted from lower costs associated with reverse management contracts and the cost of providing management services.

From a reporting segment perspective, cost of parking services for management contracts decreased primarily due to contract expirations in all five regions, decreases in cost of parking services within same locations for all five regions and conversions in region three, partially offset by new locations in all five regions and other, increases in cost of parking services within same location in other and conversions for regions four and five. Same location cost decreases primarily resulted from lower costs associated with reverse management contracts and the cost of providing management services, partially offset by an increase in prior year insurance reserve adjustments and costs not specifically identifiable to a region.

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.

Reimbursed management contract expense.  Reimbursed management contract expense increased $34.4 million, or 7.3%, to $507.2 million for the nine months ended September 30, 2014, compared to $472.7 million for the nine months ended September 30, 2013. This increase resulted from additional reimbursements for costs incurred on behalf of owners.

Segment gross profit/gross profit percentage information is summarized as follows (unaudited):

	Nine Months Ended September 30,
	Region One						Region Two						Region Three						Region Four						Region Five						Other						Total						Variance
	2014			2013			2014			2013			2014			2013			2014			2013			2014			2013			2014			2013			2014			2013			Amount			%
	(In millions)
Gross profit lease contracts:
New location	$	1.8		$	0.4		$	0.0		$	0.0		$	0.7		$	0.0		$	0.2		$	0.1		$	0.2		$	0.0		$	(0.1	)	$	0.0		$	2.8		$	0.5		$	2.3		460	%
Contract expirations	1.2			0.8			0.0			0.0			0.2			0.4			0.0			0.4			0.1			0.5			0.0			0.0			1.5			2.1			(0.6		)	-28.6	%
Same location	7.2			11.3			0.3			0.4			3.0			3.2			2.1			2.3			14.1			12.2			(1.4		)	(5.0		)	25.3			24.4			0.9			3.7	%
Conversions	0.2			0.3			0.0			0.0			0.0			0.0			0.2			0.0			0.0			0.0			0.0			0.0			0.4			0.3			0.1			33.3	%
Total gross profit lease contracts	$	10.4		$	12.8		$	0.3		$	0.4		$	3.9		$	3.6		$	2.5		$	2.8		$	14.4		$	12.7		$	(1.5	)	$	(5.0	)	$	30.0		$	27.3		$	2.7		9.9	%
	(Percentages)
Gross profit percentage lease contracts:
New location	17.6		%	33.3		%	0.0		%	0.0		%	15.2		%	0.0		%	11.1		%	33.3		%	11.1		%	0.0		%	0.0		%	0.0		%	15.2		%	23.8		%
Contract expirations	40.0		%	11.3		%	0.0		%	0.0		%	22.2		%	9.5		%	0.0		%	13.3		%	11.1		%	16.1		%	0.0		%	0.0		%	31.3		%	12.1		%
Same location	3.4		%	5.1		%	8.3		%	11.8		%	9.7		%	10.6		%	6.8		%	7.7		%	21.6		%	18.8		%	280.0		%	161.3		%	7.4		%	7.1		%
Conversions	18.2		%	11.1		%	0.0		%	0.0		%	0.0		%	0.0		%	8.7		%	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	11.1		%	10.7		%
Total gross profit percentage	4.6		%	5.6		%	8.3		%	11.8		%	10.6		%	10.3		%	7.1		%	8.5		%	21.2		%	18.6		%	300.0		%	161.3		%	8.1		%	7.4		%
	(In millions)
Gross profit management contracts:
New location	$	3.2		$	0.9		$	1.1		$	0.1		$	1.8		$	0.4		$	0.9		$	0.0		$	2.1		$	0.2		$	(0.6	)	$	0.0		$	8.5		$	1.6		$	6.9		431.3	%
Contract expirations	0.9			4.3			0.2			0.3			0.5			2.6			0.0			0.1			0.6			1.6			0.0			0.0			2.2			8.9			(6.7		)	-75.3	%
Same location	29.9			30.8			7.6			6.7			14.2			14.4			18.9			17.4			11.6			10.3			3.8			8.5			86.0			88.1			(2.1		)	-2.4	%
Conversions	0.1			0.1			0.0			0.0			0.0			0.4			0.0			0.0			0.0			0.0			0.0			0.0			0.1			0.5			(0.4		)	-80.0	%
Total gross profit management contracts	$	34.1		$	36.1		$	8.9		$	7.1		$	16.5		$	17.8		$	19.8		$	17.5		$	14.3		$	12.1		$	3.2		$	8.5		$	96.8		$	99.1		$	(2.3	)	-2.3	%
	(Percentages)
Gross profit percentage management contracts:
New location	34.0		%	47.4		%	33.3		%	20.0		%	41.9		%	50.0		%	23.1		%	0.0		%	41.2		%	18.2		%	0.0		%	0.0		%	32.7		%	36.4		%
Contract expirations	26.5		%	50.0		%	66.7		%	42.9		%	35.7		%	40.6		%	0.0		%	25.0		%	42.9		%	59.3		%	0.0		%	0.0		%	33.3		%	47.3		%
Same location	49.3		%	44.1		%	43.9		%	29.0		%	38.6		%	37.3		%	25.5		%	23.7		%	47.7		%	39.0		%	55.9		%	708.3		%	39.1		%	37.9		%
Conversions	50.0		%	50.0		%	0.0		%	0.0		%	0.0		%	66.7		%	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	25.0		%	62.5		%
Total gross profit percentage	46.3		%	44.8		%	42.6		%	29.2		%	38.8		%	38.4		%	25.4		%	23.7		%	46.3		%	40.1		%	47.1		%	708.3		%	38.3		%	38.7		%

Gross profit—lease contracts.  Gross profit for lease contracts increased $2.7 million, or 9.9%, to $30.0 million for the nine months ended September 30, 2014, compared to $27.3 million for nine months ended September 30, 2013. Gross profit percentage for lease contracts increased to 8.1% for the nine months ended September 30, 2014, compared to 7.4% for the nine months ended September 30, 2013.  Gross profit for lease contracts increased primarily as a result of increases in gross profit for new locations of $2.3 million, same locations of $0.9 million and conversions of $0.1 million, partially offset by decreases from contract expirations of $0.6 million.

28

From a reporting segment perspective, gross profit for lease contracts increased primarily due to new locations in region one, three, four and five, conversions in region four, same locations for region five and other and contract expirations in region one, partially offset by decreases to gross profit for same locations in regions one, two, three and four, conversions in region one, and contract expirations in regions three, four and five and new locations for other. Gross profit for lease contracts on same locations increased primarily due to increases in short-term and monthly parking revenue as a result of adverse weather experienced in the first quarter 2014.

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—management contracts.  Gross profit for management contracts decreased $2.3 million, or 1.4%, to $96.8 million for the nine months ended September 30, 2014, compared to $99.1 million for nine months ended September 30, 2013. The decrease in gross profit was primarily due to contract expirations of $6.7 million, same locations of $2.1 million and conversions of $0.4 million, partially offset by new locations of $6.9 million.

From a reporting segment perspective, gross profit for management contracts decreased primarily due to contract expirations in all five regions, same locations in regions one, three and other, conversions in region three and new locations in region other, partially offset by increases to gross profit for new locations in all five regions, same locations in regions two, four and five. Decreases in gross profit from management contracts for same locations were primarily the result of increases in costs associated with reverse management contracts and the cost of providing management services.  The other region amounts in same location primarily represent prior year insurance reserve adjustments and amounts that are not specifically identifiable to a region.

Gross profit associated with contract expirations relates to contracts that have expired however, we were operating the facility in the comparative period presented.

General and administrative expenses.  General and administrative expenses decreased $0.1 million, or 0.2%, to $75.2 million for the nine months ended September 30, 2014, compared to $75.3 million for the nine months ended September 30, 2013.  The decrease was primarily related to a  reduction in integration related costs incurred in connection with the Central Merger, partially offset by increases in contingent consideration obligations relating to previous acquisitions and increased compensation and benefit costs.

Depreciation and amortization. Depreciation and amortization decreased $1.2 million, or 5.0%, to $22.5 million for the nine months ended September 30, 2014, as compared to $23.7 million for the nine months ended September 30, 2013. This decrease was a result of a reduction in amortization and depreciation for acquired tangible and intangible assets from the Central Merger.

Interest expense. Interest expense was $13.8 million for the nine months ended September 30, 2014 as compared to$14.4 million for the nine months ended September 30, 2013.  The decrease in interest expense was primarily related to decreases in average borrowing rates and reductions in amounts outstanding under our Credit Facility.

Interest income. Interest income was $0.3 million for the nine months ended September 30, 2014 and 2013.

Income tax expense. Income tax expense decreased $4.8 million or 109.7%, to an income tax benefit of $0.4 million for the nine months ended September 30, 2014, as compared to an expense of $4.4 million for the nine months ended September 30, 2013. The effective tax rate for the nine months ended September 30, 2014 was a benefit of 2.7%, as compared to an expense of 32.6% for the nine months ended September 30, 2013. The income tax benefit for the nine months ended September 30, 2014 was primarily as a result of recognizing a $6.3 million discrete benefit for the reversal of a valuation allowance for a deferred tax asset established for historical net operating losses attributable to the State of New York. The valuation allowance was reversed in the first quarter 2014 due to the New York tax law changes effective March 31, 2014.

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Liquidity and Capital Resources

Outstanding Indebtedness

On September 30, 2014, we had total indebtedness of approximately $263.3 million, net of original discount on borrowings of $2.6 million, a decrease of $25.4 million from December 31, 2013.

The$263.3 million in total indebtedness as of September 30, 2014 includes:

·$261.0 million under our Senior Credit Facility, net of original discount on borrowings of $2.6 million; and

·$2.3 million of other debt obligations, which includes capital lease obligations and other indebtedness.

We believe that our cash flow from operations, combined with availability under our Senior Credit Facility which amounted to $28.4 million at September 30, 2014, will be sufficient to enable us to repay our indebtedness, and to fund other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before their respective maturities. We believe that we will be able to refinance our indebtedness on commercially reasonable terms.

Senior Credit Facility

On October 2, 2012, the Company entered into a credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, Wells Fargo Bank, N.A. 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 (the “Lenders”).

Pursuant to the terms, and subject to the conditions, of the Credit Agreement, the Lenders have made available to us a secured Senior Credit Facility (“Senior Credit Facility”) that permits aggregate borrowings of $450.0 million consisting of (i) a revolving credit facility of up to $200.0 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 $250.0 million. The Senior Credit Facility matures on October 2, 2017.

The Company may be required to make mandatory repayments of principal within 90 days of each fiscal year-end provided that certain excess cash is available, as defined within the Credit Agreement.  In the event the Company is required to make mandatory repayments of principal pursuant to the Credit Agreement, the aggregate borrowings available under the Senior Credit Facility is reduced by the amount of mandatory principal repayments made by the Company.  In March 2014, the Company made a mandatory principal repayment of $7.9 million, as provided under the Credit Agreement.  There were no mandatory repayments of principal required under the Credit Agreement in 2013.

Borrowings under the Senior Credit Facility bear interest, at our option, (i) at a rate per annum based on our 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 Credit Agreement (the “Applicable Margin”) for LIBOR loans, plus the applicable 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, N.A. prime rate and (z) a daily rate equal to the applicable LIBOR rate plus 1.0%.

Under the terms of the Credit Agreement, as of September 30, 2014, we are required to maintain a maximum consolidated total debt to EBITDA ratio of not greater than 3.75:1.0.  There are certain future step downs as described in the Credit Agreement; decreasing to 3.5:1.0 as of the end of each fiscal quarter ending after July 1, 2015 through and including June 30, 2016 and 3.25:1.0 as of the end of each fiscal quarter ending after July 1, 2016. In addition, as of June 30, 2014, the Company is required to maintain a minimum consolidated fixed charge coverage ratio of not less than 1.35:1.0 for each fiscal quarter ending after July 1, 2014.

Events of default under the 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 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 majority of the commitments and outstanding term loan under the Credit Agreement have the right, among others, to (i) terminate the commitments under the Credit Agreement, (ii) accelerate and require us to repay all the outstanding amounts owed under the Credit Agreement and (iii) require us to cash collateralize any outstanding letters of credit.

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Each of our wholly owned domestic subsidiaries (subject to certain exceptions set forth in the Credit Agreement) has guaranteed all existing and future indebtedness and liabilities of the other guarantors and SP Plus arising under the Credit Agreement.

We were in compliance with all of our covenants as of September 30, 2014.

We amended the covenants in November 2013 in connection with our restatement and based on the amendment, we will continue to treat the Bradley Agreement consistent with our prior accounting for purposes of the covenants.

At September 30, 2014, the Company had $78.4 million of borrowing availability under the Credit Agreement, of which the Company could have borrowed $28.4 million on September 30, 2014 and remained in compliance with the above described covenants as of such date. The additional borrowing availability under the Credit Agreement is limited only as of the Company’s fiscal quarter-end by the covenant restrictions described above.   At September 30, 2014, the Company had $55.1 million of letters of credit outstanding under the Senior Credit Facility, with aggregate borrowings against the Senior Credit Facility of $263.6 million (excluding original discount on borrowings of $2.6 million).

Commitments and contingencies

While the Company has contractual provisions under certain lease contracts to complete structural or other improvements to leased properties and incur repair costs, including improvements and repairs arising as a result of ordinary wear and tear, the Company evaluates 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-Leases within the Consolidated Statements of Income.

Certain lease contracts acquired in the Central Merger include provisions allocating to the Company responsibility for all or a defined portion of structural or other improvement and repair costs required on the leased property, including improvement and repair costs arising as a result of ordinary wear and tear. During the three and nine months ended September 30, 2014, we recorded $0.2 million and $1.2 million, respectively, of costs (net of expected recovery of 80% of the total cost through the applicable indemnity discussed in Note 5. Acquisition) in Cost of Parking Services-Leases within the Consolidated Statement of Income for structural and other improvement and repair costs related to certain lease contracts acquired in the Central Merger, whereby the Company has expensed repair costs for certain leases and has engaged a third-party general contractor to complete certain defined structural and other improvement and repair projects. The Company expects to incur substantial additional costs for certain structural or other improvement and repair costs pursuant to the contractual requirements of certain lease contracts acquired in the Central Merger.  Based on information available at this time, the Company currently estimates the total structural and other improvement and repair costs related to these lease contracts acquired in the Central Merger to be between $5.0 million and $20.0 million; however, the Company is still in the process of determining the full extent of the required repairs and improvements required and estimated costs associated with these lease contracts acquired in the Central Merger.  The Company currently expects to recover at least 80% of the total costs incurred prior to October 1, 2015 through the applicable indemnity discussed in Note 5. Acquisition.  While the Company is unable to estimate with certainty when such costs will be incurred, it is expected that all or a substantial majority of these costs will be incurred in early- to mid-calendar year 2015 and prior to October 1, 2015.

Interest Rate Swap Transactions

On October 25, 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 have an effective date of October 31, 2012 and a termination date of September 30, 2017. The Interest Rate Swaps effectively fix the interest rate on an amount of variable interest rate borrowings under the Credit Agreement, originally equal to the Notional Amount at 0.7525% per annum plus the applicable margin rate for LIBOR loans under the Credit Agreement, determined based upon the Company’s consolidated total debt to EBITDA ratio. The Notional Amount is subject to scheduled quarterly amortization that coincides with quarterly prepayments of principal under the Credit Agreement. These Interest Rate Swaps are classified as cash flow hedges, and we calculate the effectiveness of the hedge on a monthly basis. The ineffective portion of the cash flow hedge is recognized in earnings as an increase of interest expense. As of September 30, 2014, no ineffectiveness of the hedge has been recognized. The fair value of the Interest Rate Swaps at September 30, 2014 and December 31, 2013 was an asset of $0.9 million and $0.8 million, respectively, and is included in Prepaid Expenses and Other within the Consolidated Balance Sheet.

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

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Deficiency Payments

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. Principal and interest on the Bradley special facility revenue bonds increase from approximately $3,600 in contract year 2002 to approximately $4,500 in contract year 2025. Annual guaranteed minimum payments to the State increase from approximately $8,300 in contract year 2002 to approximately $13,200 in contract year 2024. The annual minimum guaranteed payment to the State by the trustee for the twelve months ended December 31, 2014 and 2013 is $10,815 and was $10,593, 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 deficiency payments represent contingent interest bearing advances to the trustee to cover operating cash flow requirements. As of September 30, 2014, we made $13.6 million of cumulative deficiency payments to the trustee, net of reimbursements. Deficiency payments made are recorded as increases to cost of parking 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 the deficiency repayments when received.

During the three months ended September 30, 2014, the Company received deficiency repayments (net of payments made) of $0.1 million, received and recorded interest of $0.1 million, with the net of these amounts recorded as a reduction in Cost of Parking Services within the Consolidated Statement of Income.  During the three months ended September 30, 2013, the Company made deficiency payments (net of repayments received) of $0.3 million, which was recorded as an increase in Cost of Parking Services within the Consolidated Statement of Income.  No premium income was received and recorded for the three months ended September 30, 2014 and 2013 and no interest was received and recorded for the three months ended September 30, 2013. During the nine months ended September 30, 2014 and 2013, the Company received deficiency repayments (net of payments made) of $1.1 million and $0.1 million, respectively, received and recorded premium of $0.1 million and $0.1 million, respectively, and received and recorded interest of $0.1 million and $nil, respectively, with the net of these amounts recorded as a reduction in Cost of Parking Services within the Consolidated Statement of Income.  The Company accrues for deficiency payments when the potential for future deficiency payments are both probable and estimable.  There were no amounts of estimated deficiency payments accrued as of September 30, 2014, as the Company concluded that the potential for future deficiency payments did not meet the criteria of both probable and estimable. The Company accrued $0.1 million of estimated deficiency payments as of December 31, 2013.

Daily Cash Collections

As a result of day-to-day activity at our parking locations, we collect significant amounts of cash. Lease 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 contracts, some clients 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. Some clients 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 Senior Credit Facility.

Net Cash Provided by Operating Activities

Our primary sources of funds are cash flows from operating activities and changes in working capital. Net cash provided by operating activities totaled $35.8 million for the nine-months ended September 30, 2014. Cash provided by operating activities for the nine months ended September 30, 2014 included cash provided from operations of $36.5 million, partially offset by changes in operating assets and liabilities of $0.7 million. The net decrease in changes in operating assets and liabilities resulted primarily from; (i) a net

32

decrease in prepaid and other assets of $10.1 million partially as a result of receiving an income tax refund in the first quarter of 2014 and reduction of prepaid compensation and benefits; (ii) a decrease in notes and accounts receivables of $0.4 million due to timing on payments from our clients; (iii) an increase in accrued liabilities of $6.5 million primarily related to the increases in accrued rent accruals, property tax accruals, insurance loss estimates and non-qualified deferred compensation, partially offset by a decrease in accrued compensation, including performance-based compensation, and payroll withholding accruals offset by (iv) a decrease in accounts payable of $17.6 million, primarily as a result of a reduction in trade accounts payable and payments owed to our clients that are under management contracts as described under “Daily Cash Collections”.

Our primary sources of funds are cash flows from operating activities and changes in working capital. Net cash provided by operating activities totaled $10.2 million for the nine-months ended September 30, 2013. Cash provided by operating activities for the nine-months ended September 30, 2013 included cash provided from operations of $34.4 million, partially offset by changes in operating assets and liabilities of $24.2 million. The net change in operating assets and liabilities resulted primarily from (i) a decrease of $18.5 million in accounts payable due primarily to the timing on payments to our clients and new business under management contracts as described under “Daily Cash Collections”; (ii) a decrease of $6.0 million in other liabilities primarily related to the $3.7 million payment of our performance-based compensation accrual in the first quarter of 2013, $6.0 million in reductions to insurance reserves, $3.4 million for payments on divestitures, partially offset by an increase of $4.6 million for accrued rent and an increase of $2.5 for non-qualified deferred compensation and accrued other expenses; (iii) a net decrease of $11.4 million in prepaid expenses and other assets, partially offset by (iv) an increase of $11.1 million in notes and accounts receivable due to timing of customer collections.

Net Cash Used in Investing Activities

Net cash used in investing activities totaled $11.5 million in the nine-months ended September 30, 2014. Cash used in investing activities for the nine-months ended September 30, 2014 included $10.4 million for capital investments needed to secure and/or extend lease facilities and investment in information system enhancements and infrastructure and $1.4 million of cost of contract purchases, partially offset by $0.4 million for proceeds from sale of assets.

Net cash used in investing activities totaled $11.8 million in the nine-months ended September 30, 2013. Cash used in investing activities for the nine-months ended September 30, 2013 included capital expenditures of $11.5 million for capital investments needed to secure and/or extend leased facilities and investments in information system enhancements and infrastructure and cost of contract purchases of $0.4 million, partially offset by proceeds from sale of assets of $0.1 million.

Net Cash Used in Financing Activities

Net cash used in financing activities totaled $29.3 million in the nine-months ended September 30, 2014. Cash used in financing activities for the nine-months ended September 30, 2014 included $26.7 million of net payments against our Senior Credit Facility, $0.4 million of contingent payments for businesses acquired, $0.1 million of tax benefit from vesting of restricted stock units, $2.2 million of distributions to noncontrolling interest, partially offset by $0.2 million borrowings on other long-term debt obligations.

Net cash used in financing activities totaled $4.3 million in the nine-months ended September 30, 2013. Cash used in financing activities for the nine-months ended September 30, 2013 included $0.1 million for contingent payments on businesses acquired, $1.5 million for net payments on our Senior Credit Facility, $0.1 million for payments on other long-term borrowings, $0.4 million for payments on capital leases, and $2.2 million for distributions to noncontrolling interest.

Cash and Cash Equivalents

We had cash and cash equivalents of $18.2 million and $23.2 million at September 30, 2014 and December 31, 2013, respectively.

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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, 2013.

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 officer 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 of the Securities Exchange Act of 1934, as amended (Exchange Act). Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2014. 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 Securities and Exchange Commission (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, principal financial officer and principal accounting officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

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 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to litigation and other claims in the normal course of our business. The outcomes of 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. 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 determining the appropriate accounting for 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 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 loss or a range of loss involves significant judgment. In addition, the Company is subject to various legal proceedings, claims and other matters that arise in the ordinary course of business. In the opinion of management, the amount of the liability, if any, with respect to these matters will not materially affect the Company’s consolidated financial statements. We maintain liability insurance coverage to assist in protecting our assets from losses arising from or related to activities associated with business operations.

Item 1A. Risk Factors

There have been no material changes to the risk factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Item 2. Unregistered Sales of Equity and Use of Proceeds

There were no sales or repurchases of stock in the nine months ended September 30, 2014.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6.Exhibits

INDEX TO EXHIBITS

Exhibit Number	Description
10.1	Employment Agreement between the Company and Hector Chevalier dated July 14, 2014 and made effective as of July 1, 2014(incorporated by reference to exhibit 10.1 of the Company’s Current Report on Form 8-K filed on July 17, 2014).
31.1*	Section 302 Certification dated November 6, 2014 for James A. Wilhelm, Director and Chief Executive Officer (Principal Executive Officer).
31.2*	Section 302 Certification dated November 6, 2014 for Vance C. Johnston, Chief Financial Officer and Treasurer (Principal Financial Officer).
31.3*	Section 302 Certification dated November 6, 2014 for Kristopher H. Roy, 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 6, 2014.
101.INS*	XBRL Instance 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

36

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 6, 2014	By:	/s/ JAMES A. WILHELM
		James A. Wilhelm
		Director and Chief Executive Officer
		(Principal Executive Officer)
Dated: November 6, 2014	By:	/s/ VANCE C. JOHNSTON
		Vance C. Johnston
		Executive Vice President, Chief Financial Officer and Treasurer
		(Principal Financial Officer)
Dated: November 6, 2014	By:	/s/ KRISTOPHER H. ROY
		Kristopher H. Roy
		Vice President, Corporate Controller
		and Assistant Treasurer
		(Principal Accounting Officer and Duly Authorized Officer)

37

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, James A. Wilhelm, certify that:

1. I have reviewed this Form 10-Q of SP Plus Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ JAMES A. WILHELM
	James A. Wilhelm,
	Director and Chief Executive Officer
	(Principal Executive Officer)

Date: November 6, 2014

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Vance C. Johnston, certify that:

1. I have reviewed this Form 10-Q of SP Plus Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ VANCE C. JOHNSTON
	Vance C. Johnston,
	Executive Vice President, Chief Financial Officer and Treasurer
	(Principal Financial Officer)

Date: November 6, 2014

EX-31.3

Exhibit 31.3

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Kristopher H. Roy, certify that:

1. I have reviewed this Form 10-Q of SP Plus Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ KRISTOPHER H. ROY
	Kristopher H. Roy,
	Vice President, Corporate Controller
	and Assistant Treasurer
	(Principal Accounting Officer and
	Duly Authorized Officer)

Date: November 6, 2014

EX-32

Exhibit 32

Certification pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of SP Plus Corporation (the “Company”) for the quarterly period ended September 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1) the Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended; and

2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ JAMES A. WILHELM
	Name:	James A. Wilhelm,
	Title:	Director and Chief Executive Officer
		(Principal Executive Officer)
Date: November 6, 2014
	/s/ VANCE C. JOHNSTON
	Name:	Vance C. Johnston,
	Title:	Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
Date: November 6, 2014
	/s/  KRISTOPHER H. ROY
	Name:	Kristopher H. Roy,
	Title:	Vice President, Corporate Controller and Assistant Treasurer (Principal Accounting Officer and Duly Authorized Officer)

Date: November 6, 2014

A signed original of this written statement required by section 906 has been provided by the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Borrowing Arrangements (Details 2) (Cash flow hedge, Interest rate swaps, USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Oct. 25, 2012
Cash flow hedge | Interest rate swaps
Interest rate swaps
Aggregate starting notional amount			$ 150,000
Fixed rate (as a percent)	0.7525%
Variable rate basis	LIBOR
Ineffective portion of cash flow hedges recognized	$ 0	$ 0

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Business Unit Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 item	Sep. 30, 2013
Business Unit Segment Information
Number of operating segments			4
Revenues:
Lease contracts	$ 129,004	$ 122,771	$ 370,597	$ 367,088
Management contracts	77,878	77,681	252,764	256,435
Total parking services revenue	206,882	200,452	623,361	623,523
Reimbursed management contract revenue	173,405	154,858	507,122	472,737
Total revenue	380,287	355,310	1,130,483	1,096,260
Gross profit
Lease contracts	12,484	7,075	30,014	27,260
Management contracts	31,137	33,001	96,793	99,185
Total gross profit	43,621	40,076	126,807	126,445
Gross Margin
General and administrative expenses	24,123	20,494	75,185	75,310
General and administrative expense percentage of gross profit	55.00%	51.00%	59.00%	63.00%
Depreciation and amortization	7,630	7,959	22,523	23,704
Operating income	11,868	11,623	29,099	27,431
Other expenses (income):
Interest expense	4,162	4,818	13,782	14,421
Interest income	(144)	(108)	(336)	(347)
Total other expenses (income)	4,018	4,710	13,446	14,074
Income before income taxes	7,850	6,913	15,653	13,357
Income tax (benefit)	2,763	2,448	(421)	4,359
Net income	5,087	4,465	16,074	8,998
Less: Net income attributable to noncontrolling interest	785	721	2,162	2,070
Net income attributable to SP Plus Corporation	4,302	3,744	13,912	6,928
Region One
Other expenses (income):
Net gain related to sale of rights associated with certain contracts				2,700
Operating segment | Region One
Revenues:
Lease contracts	79,675	77,970	227,490	230,444
Management contracts	23,058	23,733	73,647	80,473
Total parking services revenue	102,733	101,703	301,137	310,917
Gross profit
Lease contracts	5,232	3,649	10,209	12,640
Management contracts	11,351	12,045	34,204	36,082
Total gross profit	16,583	15,694	44,413	48,722
Gross Margin
Lease contracts (as a percent)	7.00%	5.00%	4.00%	5.00%
Management contracts (as a percent)	49.00%	51.00%	46.00%	45.00%
Operating segment | Region Two
Revenues:
Lease contracts	1,094	1,065	3,550	3,396
Management contracts	4,845	8,467	20,870	24,344
Total parking services revenue	5,939	9,532	24,420	27,740
Gross profit
Lease contracts	96	17	237	388
Management contracts	2,675	3,572	8,981	7,215
Total gross profit	2,771	3,589	9,218	7,603
Gross Margin
Lease contracts (as a percent)	9.00%	2.00%	7.00%	11.00%
Management contracts (as a percent)	55.00%	42.00%	43.00%	30.00%
Operating segment | Region Three
Revenues:
Lease contracts	12,840	11,791	36,760	34,930
Management contracts	13,292	13,738	42,485	46,321
Total parking services revenue	26,132	25,529	79,245	81,251
Gross profit
Lease contracts	1,687	1,402	3,938	3,578
Management contracts	5,876	4,947	16,504	17,706
Total gross profit	7,563	6,349	20,442	21,284
Gross Margin
Lease contracts (as a percent)	13.00%	12.00%	11.00%	10.00%
Management contracts (as a percent)	44.00%	36.00%	39.00%	38.00%
Operating segment | Region Four
Revenues:
Lease contracts	12,716	10,602	35,299	33,075
Management contracts	23,141	22,988	78,150	73,815
Total parking services revenue	35,857	33,590	113,449	106,890
Gross profit
Lease contracts	1,062	842	2,627	2,693
Management contracts	6,162	4,749	19,868	17,495
Total gross profit	7,224	5,591	22,495	20,188
Gross Margin
Lease contracts (as a percent)	8.00%	8.00%	7.00%	8.00%
Management contracts (as a percent)	27.00%	21.00%	25.00%	24.00%
Operating segment | Region Five
Revenues:
Lease contracts	22,787	22,086	67,929	68,229
Management contracts	10,715	8,849	30,823	30,261
Total parking services revenue	33,502	30,935	98,752	98,490
Gross profit
Lease contracts	4,639	3,867	14,280	12,778
Management contracts	5,078	4,200	14,305	12,247
Total gross profit	9,717	8,067	28,585	25,025
Gross Margin
Lease contracts (as a percent)	20.00%	18.00%	21.00%	19.00%
Management contracts (as a percent)	47.00%	47.00%	46.00%	40.00%
Operating segment | Other
Revenues:
Lease contracts	(108)	(743)	(431)	(2,986)
Management contracts	2,827	(94)	6,789	1,221
Total parking services revenue	2,719	(837)	6,358	(1,765)
Gross profit
Lease contracts	(232)	(2,702)	(1,277)	(4,817)
Management contracts	(5)	3,488	2,931	8,440
Total gross profit	$ (237)	$ 786	$ 1,654	$ 3,623
Gross Margin
Lease contracts (as a percent)	215.00%	364.00%	296.00%	161.00%
Management contracts (as a percent)	0.00%	(3711.00%)	43.00%	691.00%

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Intangible Assets, net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Intangible assets, net
Accumulated amortization	$ 31,557		$ 31,557		$ 20,181
Intangible assets, net	94,846		94,846		106,222
Amortization expense	3,779	3,877	11,376	12,853
Covenant not to compete
Intangible assets, net
Intangible assets	933		933		933
Trade names and trademarks
Intangible assets, net
Intangible assets	9,820		9,820		9,820
Proprietary know how
Intangible assets, net
Intangible assets	34,650		34,650		34,650
Management contract rights
Intangible assets, net
Intangible assets	$ 81,000		$ 81,000		$ 81,000

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Bradley Agreement (Tables)

9 Months Ended

Sep. 30, 2014

Bradley Agreement

Schedule of deficiency payments made, net of reimbursements

	2014
	(Unaudited)
Balance at January 1, 2014	$	14,649
Deficiency payments made	25
Deficiency repayment received	(1,099		)
Balance at September 30, 2014	$	13,575

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Fair Value Measurement (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended			9 Months Ended
	Sep. 30, 2014 Cash flow hedge Interest rate swaps	Sep. 30, 2013 Cash flow hedge Interest rate swaps	Sep. 30, 2014 Contingent acquisition consideration	Sep. 30, 2014 Level 3 Contingent acquisition consideration	Sep. 30, 2014 Level 3 Contingent acquisition consideration Minimum	Sep. 30, 2014 Level 3 Contingent acquisition consideration Maximum	Sep. 30, 2014 Recurring basis Level 2 Prepaid expenses and other	Dec. 31, 2013 Recurring basis Level 2 Prepaid expenses and other	Sep. 30, 2014 Recurring basis Level 3 Contingent acquisition consideration Accrued expenses	Dec. 31, 2013 Recurring basis Level 3 Contingent acquisition consideration Accrued expenses	Sep. 30, 2014 Recurring basis Level 3 Contingent acquisition consideration Other long term liabilities	Dec. 31, 2013 Recurring basis Level 3 Contingent acquisition consideration Other long term liabilities
Assets:
Interest Rate Swaps							$ 853	$ 824
Liabilities:
Contingent acquisition consideration			(43)						1,592	1,374	210	163
Fair Value Inputs
Probability of contingent consideration (as a percent)					20.00%	40.00%
Ineffective portion of cash flow hedges recognized	$ 0	$ 0
Weighted average discount rate (as a percent)				12.00%

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Bradley Agreement (Details) (USD $) In Thousands, unless otherwise specified	1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Apr. 30, 2000	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 item	Sep. 30, 2013	Dec. 31, 2014	Dec. 31, 2013
Deficiency payments
Deficiency payments:
Balance at the beginning of the year				$ 14,649		$ 14,649
Deficiency payments made				25
Deficiency repayment received				1,099
Balance at the end of the year		13,575		13,575
Bradley International Airport parking facilities operating agreement
Agreement
Agreement period with the State of Connecticut for operation of parking spaces	25 years
Number of garage parking spaces at Bradley International Airport operated				3,500
Annual minimum guaranteed payment to the State by the trustee						10,815	10,593
Deficiency payments:
Interest Income Received on Deficiency Payments		134	0
Maximum premium percentage on initial deficiency payment				10.00%
Net deficiency payments received (paid)		(24)	339	1,074	18
Premium income on deficiency payment received from trustee		134	0	117	60
Estimated accrued deficiency payments		0		0			100
Compensation
Management fee apportioned to the entity (as a percent)				60.00%
Management fee apportioned to an unaffiliated entity (as a percent)				40.00%
Unrecognized cumulative management fees		14,483		14,483			13,733
Management fees				0	0
Bradley International Airport parking facilities operating agreement | Low end of the range
Agreement
Annual minimum guaranteed payment to the State by the trustee				8,300
Bradley International Airport parking facilities operating agreement | High end of the range
Agreement
Annual minimum guaranteed payment to the State by the trustee				13,200
Bradley International Airport parking facilities operating agreement | State of Connecticut special facility revenue bonds | Low end of the range
Agreement
Annual principal and interest on revenue bonds		3,600		3,600
Bradley International Airport parking facilities operating agreement | State of Connecticut special facility revenue bonds | High end of the range
Agreement
Annual principal and interest on revenue bonds		$ 4,500		$ 4,500

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Subsequent Events (Details) (Subsequent Events, Parkmobile LLC)	0 Months Ended
	Oct. 29, 2014
Subsequent Events | Parkmobile LLC
Subsequent Events
Ownership percentage	30.00%

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies

Commitments and Contingencies

3. Commitments and Contingencies

The Company is subject to litigation and other claims in the normal course of its business. The Company applies the provisions as defined in the guidance related to accounting for contingencies in determining the recognition and measurement of expense associated with legal claims against the Company. Management uses guidance from internal and external legal counsel on the potential outcome of litigation in determining the need to record liabilities for potential losses and the disclosure of pending legal claims.

The Company has contractual provisions under certain lease contracts to complete structural or other improvements to leased properties and incur repair costs, including improvements and repairs arising as a result of ordinary wear and tear.  The Company evaluates 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-Leases within the Consolidated Statements of Income.

Certain lease contracts acquired in the Central Merger (defined in Note 5. Acquisition) include provisions allocating to the Company responsibility for all or a defined portion of structural or other improvement and repair costs required on the leased property, including improvement and repair costs arising as a result of ordinary wear and tear. During the three and nine months ended September 30, 2014, we recorded $242 and $1,184, respectively, of costs (net of expected recovery of 80% of the total cost through the applicable indemnity discussed further below and in Note 5. Acquisition) in Cost of Parking Services-Leases within the Consolidated Statement of Income for structural and other improvement and repair costs related to certain lease contracts acquired in the Central Merger, whereby the Company has expensed repair costs for certain leases and has engaged a third-party general contractor to complete certain defined structural and other improvement and repair projects. The Company expects to incur substantial additional costs for certain structural or other improvement and repair costs pursuant to the contractual requirements of certain lease contracts acquired in the Central Merger (“Structural and Repair Costs”).    Based on information available at this time, the Company currently estimates the additional Structural and Repair Costs to be between $5,000 and $20,000; however, the Company is still in the process of determining the full extent of the required repairs and improvements required and estimated costs associated with these lease contracts acquired in the Central Merger.  The Company currently expects to recover 80% of the Structural and Repair Costs incurred prior to October 1, 2015 through the applicable indemnity discussed further in Note 5. Acquisition.  While the Company is unable to estimate with certainty when such costs will be incurred, it is expected that all or a substantial majority of these costs will be incurred in early- to mid-calendar year 2015 and prior to October 1, 2015.

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Fair Value Measurement (Details 2) (Contingent acquisition consideration, USD $) In Thousands, unless otherwise specified	1 Months Ended		3 Months Ended		9 Months Ended
	Oct. 31, 2014	Sep. 30, 2014	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Contingent acquisition consideration
Reconciliation of the beginning and ending balances for the liabilities measured at fair value using significant unobservable inputs (Level 3)
Balance at the beginning of the period	$ (1,802)				$ (1,537)
Payment of contingent consideration	1,370	300			(441)
Change in fair value			6	62	(663)	370
Contingent consideration		(43)	(43)		(43)
Balance at the end of the period		$ (1,802)	$ (1,802)		$ (1,802)

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Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Measurement

Schedule of financial assets and liabilities measured at fair value on a recurring basis and basis of measurement

	Fair Value Measurement at September 30, 2014 (unaudited)					Fair Value Measurement at December 31, 2013
	Level 1	Level 2		Level 3		Level 1	Level 2		Level 3
Assets:
Prepaid expenses and other
Interest rate swap	—	$	853	—		—	$	824	—
Liabilities:
Accrued expenses
Contingent acquisition consideration	—	—			1,592	—	—			1,374
Other long term liabilities
Contingent acquisition consideration	—	—		$	210	—	—		$	163

Schedule of reconciliation of the beginning and ending balances for liabilities measured at fair value using significant unobservable inputs (level 3)

	Due to Seller
Balance at December 31, 2013	$	(1,537	)
Payment of contingent consideration	441
Contingent consideration on acquisition	(43		)
Change in fair value	(663		)
Balance at September 30, 2014	$	(1,802	)

Schedule of carrying and estimated fair values of the Company's financial instruments

	September 30, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial Assets:
Cash and cash equivalents	$	18,165	$	18,165	$	23,158	$	23,158
Financial Liabilities:
Debt obligations—
Senior Credit Facility, net of original discount on borrowings	260,989		260,989		286,672		286,672
Other debt obligations	2,291		2,291		1,994		1,994
Total debt obligations	$	263,280	$	263,280	$	288,666	$	288,666

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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2014

Income Taxes

Schedule of tax years that remain subject to examination for the Company's major tax jurisdictions

The tax years that remain subject to examination for the Company’s major tax jurisdictions at September 30, 2014 are shown below:

2011 – 2013	United States — federal income tax
2008 – 2013	United States — state and local income tax
2011 – 2013	Canada and Puerto Rico

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Fair Value Measurement (Details 3) (Nonrecurring, USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Nonrecurring
Fair Value Measurement
Impairment charges	$ 0	$ 0

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Business Unit Segment Information (Tables)

9 Months Ended

Sep. 30, 2014

Business Unit Segment Information

Summary of revenues (excluding reimbursed management contract revenue) and gross profit by regions

	For the three months ended										For the nine months ended
	September 30, 2014			Gross Margin%		September 30, 2013			Gross Margin%		September 30, 2014			Gross Margin%		September 30, 2013			Gross Margin%
Revenues (a):
Region One
Lease contracts	$	79,675				$	77,970				$	227,490				$	230,444
Management contracts (b)	23,058					23,733					73,647					80,473
Total Region One	102,733					101,703					301,137					310,917
Region Two
Lease contracts	1,094					1,065					3,550					3,396
Management contracts	4,845					8,467					20,870					24,344
Total Region Two	5,939					9,532					24,420					27,740
Region Three
Lease contracts	12,840					11,791					36,760					34,930
Management contracts	13,292					13,738					42,485					46,321
Total Region Three	26,132					25,529					79,245					81,251
Region Four
Lease contracts	12,716					10,602					35,299					33,075
Management contracts	23,141					22,988					78,150					73,815
Total Region Four	35,857					33,590					113,449					106,890
Region Five
Lease contracts	22,787					22,086					67,929					68,229
Management contracts	10,715					8,849					30,823					30,261
Total Region Five	33,502					30,935					98,752					98,490
Other
Lease contracts	(108		)			(743		)			(431		)			(2,986		)
Management contracts	2,827					(94		)			6,789					1,221
Total Other	2719					(837		)			6,358					(1,765		)
Total Revenues	206,882					200,452					623,361					623,523
Gross Profit:
Region One
Lease contracts	5,232			7	%	3,649			5	%	10,209			4	%	12,640			5	%
Management contracts	11,351			49	%	12,045			51	%	34,204			46	%	36,082			45	%
Total Region One	16,583					15,694					44,413					48,722
Region Two
Lease contracts	96			9	%	17			2	%	237			7	%	388			11	%
Management contracts	2,675			55	%	3,572			42	%	8,981			43	%	7,215			30	%
Total Region Two	2,771					3,589					9,218					7,603
Region Three
Lease contracts	1,687			13	%	1,402			12	%	3,938			11	%	3,578			10	%
Management contracts	5,876			44	%	4,947			36	%	16,504			39	%	17,706			38	%
Total Region Three	7,563					6,349					20,442					21,284
Region Four
Lease contracts	1,062			8	%	842			8	%	2,627			7	%	2,693			8	%
Management contracts	6,162			27	%	4,749			21	%	19,868			25	%	17,495			24	%
Total Region Four	7,224					5,591					22,495					20,188
Region Five
Lease contracts	4,639			20	%	3,867			18	%	14,280			21	%	12,778			19	%
Management contracts	5,078			47	%	4,200			47	%	14,305			46	%	12,247			40	%
Total Region Five	9,717					8,067					28,585					25,025
Other
Lease contracts	(232		)	215	%	(2,702		)	364	%	(1,277		)	296	%	(4,817		)	161	%
Management contracts	(5		)	0	%	3,488			-3,711	%	2,931			43	%	8,440			691	%
Total Other	(237		)			786					1,654					3,623
Total gross profit	43,621					40,076					126,807					126,445
General and administrative expenses	24,123					20,494					75,185					75,310
General and administrative expense percentage of gross profit	55		%			51		%			59		%			60		%
Depreciation and amortization	7,630					7,959					22,523					23,704
Operating income	11,868					11,623					29,099					27,431
Other expenses (income):
Interest expense	4,162					4,818					13,782					14,421
Interest income	(144		)			(108		)			(336		)			(347		)
	4,018					4,710					13,446					14,074
Income before income taxes	7,850					6,913					15,653					13,357
Income tax (benefit)	2,763					2,448					(421		)			4,359
Net income	5,087					4,465					16,074					8,998
Less: Net income attributable to noncontrolling interest	785					721					2,162					2,070
Net income attributable to SP Plus Corporation	$	4,302				$	3,744				$	13,912				$	6,928

(a) Excludes reimbursed management contract revenue.

(b) The nine months ended September 30, 2013 included a net gain of $2,700 related to the sale of rights associated with a certain contract.

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Basis of Presentation (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Basis of Presentation
Restricted cash and cash equivalents	$ 515	$ 1,001
Book overdrafts	$ 32,097	$ 29,310

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Basis of Presentation

9 Months Ended

Sep. 30, 2014

Basis of Presentation

Basis of Presentation

2. 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 Consolidated Balance Sheet, Statements of Income, and Comprehensive Income and Cash Flows prepared in conformity with U.S. GAAP have been condensed or omitted as permitted by such rules and regulations

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, 2014 are not necessarily indicative of the results that might be expected for any other interim period or the fiscal year ended December 31, 2014. The financial statements presented in this report should be read in conjunction with the Company’s annual consolidated financial statements and notes thereto included in the Annual Report on Form 10-K filed on March 13, 2014.

Cash and cash equivalents

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements was $515 and $1,001 as of September 30, 2014 and December 31, 2013, respectively, and are included within Cash and Cash Equivalents in the Consolidated Balance Sheet.

Book overdrafts of $32,097 and $29,310 are included within Accounts Payable in the Consolidated Balance Sheet as of September 30, 2014 and December 31, 2013, respectively.

Adopted Accounting Pronouncements

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-11, Balance Sheet (Topic 210), Disclosures about Offsetting Assets and Liabilities. This update requires additional disclosures about offsetting and related arrangements on assets and liabilities to enable users of financial statements to understand the effect of such arrangements on an entity’s financial position as reported. This amendment is effective for fiscal 2014 and retrospective application is required.  The adoption of this guidance on January 1, 2014 did not have an impact to the Company’s financial position, results of operations or cash flows or financial statement disclosures.

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740), Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists to eliminate diversity in practice. Under this ASU, an unrecognized tax benefit, or a portion of an unrecognized tax benefit that exists at the reporting date, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if certain criteria are met. This amendment is effective for fiscal years and interim periods within those years beginning after December 15, 2013.  The adoption of this guidance on January 1, 2014 did not have an impact to the Company’s financial position, results of operations or cash flows or financial statement disclosures.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The amendments in ASU No. 2014-09 create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry specific revenue recognition guidance. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts, and create a new Subtopic 340-40, Other Assets and Deferred Costs — Contracts with Customers. 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. The amendments are effective for fiscal years and interim periods within those fiscal years beginning on or after December 15, 2016. Early adoption is not permitted. The Company is currently assessing the impact on the Company’s financial position, results of operations, cash flows and financial statement disclosures.

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Commitments and Contingencies (Details) (Central Merger, USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014
Commitments and contingencies
Structural or other improvement and repair costs incurred	$ 242	$ 1,184
Expected recovery through applicable indemnity of cost incurred expressed as percentage of total cost	80.00%
Minimum
Commitments and contingencies
Estimated total structural and other improvement and repair costs related to lease contracts acquired in the Central Merger		5,000
Maximum
Commitments and contingencies
Estimated total structural and other improvement and repair costs related to lease contracts acquired in the Central Merger		$ 20,000

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Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Comprehensive Income
Net income	$ 5,087	$ 4,465	$ 16,074	$ 8,998
Effective portion of unrealized gain (loss) on cash flow hedge	293	(312)	17	849
Foreign currency translation	(130)	32	(47)	(240)
Comprehensive income	5,250	4,185	16,044	9,607
Less: comprehensive income attributable to noncontrolling interest	785	721	2,162	2,070
Comprehensive income attributable to SP Plus Corporation	4,465	3,464	13,882	7,537
Accumulated Other Comprehensive Income
Balance at the beginning of the period			118
Change in other comprehensive income (loss)			(30)
Balance at the end of the period	88		88
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income
Balance at the beginning of the period			(368)
Change in other comprehensive income (loss)			(47)
Balance at the end of the period	(415)		(415)
Effective Portion of Unrealized Gain (Loss) on Cash Flow Hedge
Accumulated Other Comprehensive Income
Balance at the beginning of the period			486
Change in other comprehensive income (loss)			17
Balance at the end of the period	$ 503		$ 503

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 18,165	$ 23,158
Notes and accounts receivable, net	114,074	115,126
Prepaid expenses and other	10,936	20,645
Deferred taxes	10,317	10,317
Total current assets	153,492	169,246
Leasehold improvements, equipment, land and construction in progress, net	45,281	44,885
Other assets:
Advances and deposits	5,373	7,149
Intangible assets, net	94,846	106,222
Favorable acquired lease contracts, net	50,935	60,034
Other assets, net	24,962	24,574
Cost of contracts, net	10,433	10,762
Goodwill	439,473	439,503
Other assets	626,022	648,244
Total assets	824,795	862,375
Current liabilities:
Accounts payable	97,852	115,493
Accrued and other current liabilities	105,650	102,350
Current portion of obligations under senior credit facility and other long-term debt obligations	30,481	24,632
Total current liabilities	233,983	242,475
Deferred taxes	10,117	17,348
Long-term borrowings, excluding current portion:
Obligations under senior credit facility	232,015	263,457
Other long-term debt obligations	784	577
Long-term borrowings, excluding current portion	232,799	264,034
Unfavorable lease contracts, net	64,182	74,130
Other long-term liabilities	63,443	60,677
Stockholders' equity:
Preferred Stock, par value $0.01 per share; 5,000,000 shares authorized as of September 30, 2014 and December 31, 2013; no shares issued
Common stock, par value $.001 per share; 50,000,000 shares authorized as of September 30, 2014 and December 31, 2013; 21,998,094 and 21,977,311 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively	22	22
Additional paid-in capital	243,392	240,665
Accumulated other comprehensive income	88	118
Accumulated deficit	(23,767)	(37,679)
Total SP Plus Corporation stockholders' equity	219,735	203,126
Noncontrolling interest	536	585
Total equity	220,271	203,711
Total liabilities and stockholders' equity	$ 824,795	$ 862,375

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Fair Value Measurement (Details 4) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financial Liabilities:
Debt obligations	$ (263,280)	$ (288,666)
Senior credit facility, net of original discount on borrowings
Financial Liabilities:
Debt obligations	(260,989)	(286,672)
Other debt obligations
Financial Liabilities:
Debt obligations	(2,291)	(1,994)
Carrying Amount
Financial Assets:
Cash and cash equivalents	18,165	23,158
Financial Liabilities:
Debt obligations	263,280	288,666
Carrying Amount | Senior credit facility, net of original discount on borrowings
Financial Liabilities:
Debt obligations	(260,989)	286,672
Carrying Amount | Other debt obligations
Financial Liabilities:
Debt obligations	(2,291)	1,994
Fair Value
Financial Assets:
Cash and cash equivalents	18,165	23,158
Financial Liabilities:
Debt obligations	263,280	288,666
Fair Value | Senior credit facility, net of original discount on borrowings
Financial Liabilities:
Debt obligations	(260,989)	286,672
Fair Value | Other debt obligations
Financial Liabilities:
Debt obligations	$ (2,291)	$ 1,994

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Operating activities:
Net income	$ 16,074	$ 8,998
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization	22,493	22,335
Net accretion of acquired lease contracts	(849)	(2,526)
Net loss on sale and abandonment of assets	105	1,431
Amortization of debt issuance costs	999	1,049
Amortization of original discount on borrowings	983	1,056
Non-cash stock-based compensation	2,806	3,472
Provisions for losses on accounts receivable	901	232
Excess tax benefit related to vesting of restricted stock units	79
Deferred income taxes	(7,148)	(1,675)
Net change in operating assets and liabilities	(652)	(24,181)
Net cash provided by operating activities	35,791	10,191
Investing activities:
Purchase of leasehold improvements and equipment	(10,409)	(11,529)
Acquisitions	(40)
Cost of contracts purchased	(1,375)	(365)
Proceeds from sale of assets	366	143
Capitalized interest	(17)
Contingent payments for businesses acquired	(6)	(87)
Net cash used in investing activities	(11,481)	(11,838)
Financing activities:
Tax benefit from vesting of restricted stock units	(79)
Contingent payments for businesses acquired	(441)	(142)
(Payments) borrowings on senior credit facility	(1,850)	15,350
Payments on term loan	(24,815)	(16,875)
Distribution to noncontrolling interest	(2,211)	(2,156)
Redemptions of convertible debentures	(13)
Borrowing (payments) on other long-term debt obligations	153	(465)
Net cash used in financing activities	(29,256)	(4,288)
Effect of exchange rate changes on cash and cash equivalents	(47)	(240)
Decrease in cash and cash equivalents	(4,993)	(6,175)
Cash and cash equivalents at beginning of period	23,158	28,450
Cash and cash equivalents at end of period	18,165	22,275
Cash paid (received) during the period for:
Interest	10,665	12,465
Income taxes, net	$ (1,637)	$ 1,128

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Stock-Based Compensation (Details) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended		3 Months Ended		9 Months Ended			0 Months Ended			9 Months Ended
	Sep. 30, 2014 Stock Options	Sep. 30, 2013 Stock Options	Sep. 30, 2014 Restricted Stock Units	Sep. 30, 2013 Restricted Stock Units	Sep. 30, 2014 Restricted Stock Units	Sep. 30, 2013 Restricted Stock Units	Sep. 30, 2014 Restricted stock units granted in March 2019	Apr. 22, 2014 Vested stock grants Long-term incentive plan Directors	Apr. 24, 2013 Vested stock grants Long-term incentive plan Directors	Sep. 30, 2014 Performance Shares [Member]	Sep. 30, 2014 Performance Shares [Member]	Sep. 30, 2014 Performance Shares [Member] Maximum [Member]
Stock-Based Compensation
Granted (in shares)	0	0
Recognized stock-based compensation expense	$ 0	$ 0	$ 679	$ 1,003	$ 2,129	$ 3,062				$ 186
Unrecognized compensation costs related to unvested stock options	5,109											3,200
Vested stock grants to directors (in shares)								19,336	21,949
Value of vested stock grants to directors								491	465
Units granted (in shares)							26,287,000
Vesting period					5 years
Vested (in shares)					25,083	27,000				9,687
Forfeited (in shares)					26,101	0					0
Unrecognized stock-based compensation costs			$ 5,211		$ 5,211
Weighted average remaining recognition period of unrecognized stock-based compensation costs					2 years 10 months 24 days						2 years 3 months 18 days

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Intangible Assets, net (Tables)

9 Months Ended

Sep. 30, 2014

Intangible Assets, net

Summary of intangible assets, net

	September 30, 2014			December 31, 2013
	(Unaudited)
Covenant not to compete	$	933		$	933
Trade names and trademarks	9,820			9,820
Proprietary know how	34,650			34,650
Management contract rights	81,000			81,000
Accumulated amortization	(31,557		)	(20,181		)
Intangible assets, net	$	94,846		$	106,222

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Net Income (Loss) Per Common Share (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013 item
Net Income (Loss) Per Common Share
Weighted average common basic shares outstanding	21,997,394	21,911,574	21,989,131	21,890,861
Effect of dilutive stock options and restricted stock units	429,393	374,149	403,441	335,169
Weighted average common diluted shares outstanding	22,426,787	22,285,723	22,392,572	22,226,030
Net income (loss) per share:
Basic (in dollars per share)	$ 0.20	$ 0.17	$ 0.63	$ 0.32
Diluted (in dollars per share)	$ 0.19	$ 0.17	$ 0.62	$ 0.31
Anti-dilutive securities excluded from computation of diluted earnings per share amount (in shares)			0
Performance-based incentive programs				0

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Net Income (Loss) Per Common Share (Tables)

9 Months Ended

Sep. 30, 2014

Net Income (Loss) Per Common Share

Schedule of reconciliation of the weighted average basic common shares outstanding to weighted average diluted common shares outstanding

	Three Months EndedSeptember 30,				Nine Months EndedSeptember 30,
	2014		2013		2014		2013
Weighted average common basic shares outstanding	21,997,394		21,911,574		21,989,131		21,890,861
Effect of dilutive stock options and restricted stock units	429,393		374,149		403,441		335,169
Weighted average common diluted shares outstanding	22,426,787		22,285,723		22,392,572		22,226,030
Net income (loss) per share:
Basic	$	0.20	$	0.17	$	0.63	$	0.32
Diluted	$	0.19	$	0.17	$	0.62	$	0.31

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The Company

9 Months Ended

Sep. 30, 2014

The Company

The Company

1. The Company

SP Plus Corporation (the “Company”) provides parking management, ground transportation and other ancillary services to commercial, institutional and municipal clients in the United States, Puerto Rico and Canada. Its services include a comprehensive set of on-site parking management and ground transportation services, which consist of training, scheduling and supervising all service personnel as well as providing customer service, marketing, maintenance, security and accounting and revenue control functions necessary to facilitate the operation of clients’ parking facilities. The Company also provides a range of ancillary services such as airport shuttle operations, valet services, taxi and livery dispatch services and municipal meter revenue collection and enforcement services.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	21,998,094	21,977,311
Common stock, shares outstanding	21,998,094	21,977,311

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Income Taxes

9 Months Ended

Sep. 30, 2014

Income Taxes

Income Taxes

11. Income Taxes

For the three months ended September 30, 2014, the Company recognized income tax expense of $2,763 on pre-tax earnings of $7,850 compared to $2,448 income tax expense on pre-tax earnings of $6,913 for the three months ended September 30, 2013. For the nine months ended September 30, 2014, the Company recognized income tax benefit of $421 on pre-tax earnings of $15,653 compared to $4,359 income tax expense on pre-tax earnings of $13,357 for the nine months ended September 30, 2013. The effective tax rate for the nine months ended September 30, 2014 was a benefit of 2.7%, primarily as a result of recognizing a $6,359 discrete benefit for the reversal of a valuation allowance for a deferred tax asset established for historical net operating losses attributable to the State of New York. The valuation allowance was reversed in the first quarter of 2014 due to the New York tax law changes effective March 31, 2014, which resulted in the Company determining that the future benefit of net operating loss carryforwards was more likely than not to be realized.

As of September 30, 2014, 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, 2014 are shown below:

2011 – 2013	United States — federal income tax
2008 – 2013	United States — state and local income tax
2011 – 2013	Canada and Puerto Rico

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Oct. 30, 2014
Document and Entity Information
Entity Registrant Name	SP Plus Corp
Entity Central Index Key	0001059262
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		22,020,094
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

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Fair Value Measurement

9 Months Ended

Sep. 30, 2014

Fair Value Measurement

Fair Value Measurement

12. 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, 2014 and December 31, 2013:

	Fair Value Measurement at September 30, 2014 (unaudited)					Fair Value Measurement at December 31, 2013
	Level 1	Level 2		Level 3		Level 1	Level 2		Level 3
Assets:
Prepaid expenses and other
Interest rate swap	—	$	853	—		—	$	824	—
Liabilities:
Accrued expenses
Contingent acquisition consideration	—	—			1,592	—	—			1,374
Other long term liabilities
Contingent acquisition consideration	—	—		$	210	—	—		$	163

The Company seeks to minimize risks from interest rate fluctuations through the use of interest rate swap contracts and hedge only exposures in the ordinary course of business. Interest rate swaps are used to manage interest rate risk associated with our floating rate debt. The Company accounts for its derivative instruments at fair value, provided it meets certain documentary and analytical requirements to qualify for hedge accounting treatment. Hedge accounting creates the potential for a Consolidated Statement of Operations match between the changes in fair values of derivatives and the changes in cost of the associated underlying transactions, in this case interest expense. 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 Statement of Operations at such time, and with any subsequent changes in fair value recognized currently in earnings. Fair values of derivatives are determined based on quoted prices for similar contracts. The effective portion of the change in fair value of the interest rate swap 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 gains and losses on derivatives representing hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized currently in earnings when incurred. No ineffectiveness was recognized during the nine months ended September 30, 2014 and 2013.

The significant inputs used to derive the fair value of the contingent acquisition consideration include financial forecasts of future operating results, the probability of reaching the forecast and the associated discount rate. The weighted average probability of the contingent acquisition consideration ranges from 20% to 40%, with a weighted average discount rate of 12%.

The following table provides a reconciliation of the beginning and ending balances for the contingent consideration liability measured at fair value using significant unobservable inputs (Level 3) (unaudited):

	Due to Seller
Balance at December 31, 2013	$	(1,537	)
Payment of contingent consideration	441
Contingent consideration on acquisition	(43		)
Change in fair value	(663		)
Balance at September 30, 2014	$	(1,802	)

Obligations related to contingent consideration for certain acquisitions were finalized in the third quarter of 2014 in the amount of $1,670, of which $300 and $1,370 were paid in September and October of 2014, respectively.

For the three months ended September 30, 2014 and 2013, the Company recognized an expense of $6 and a benefit of $62, respectively, and recognized the related expense and benefit in General and Administrative Expenses within the Consolidated Statement of Income due to the change in fair value measurements using a Level 3 valuation technique. For the nine months ended September 30, 2014 and 2013, the Company recognized an expense of $663 and a benefit of $370, respectively, and recognized the related expense and benefit in General and Administrative Expenses within the Consolidated Statement of Income due to the change in fair value measurements using a Level 3 valuation technique. These adjustments were the result of using revised forecasts of operating results, updates to the probability of achieving the revised forecasts and updated fair value measurements that revised the Company’s contingent consideration obligations related to the purchase of these businesses.

Nonrecurring Fair Value Measurements

Certain assets are measured at fair value on a nonrecurring basis; that is, the assets are 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 land 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 no impairment charges for the nine months ended September 30, 2014 and 2013.

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 Consolidated Balance Sheet at September 30, 2014 (unaudited) and December 31, 2013:

	September 30, 2014				December 31, 2013
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial Assets:
Cash and cash equivalents	$	18,165	$	18,165	$	23,158	$	23,158
Financial Liabilities:
Debt obligations—
Senior Credit Facility, net of original discount on borrowings	260,989		260,989		286,672		286,672
Other debt obligations	2,291		2,291		1,994		1,994
Total debt obligations	$	263,280	$	263,280	$	288,666	$	288,666

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 measurement. The fair value of the Senior Credit Facility and other obligations was estimated to not be materially different from the carrying amount, as these instruments bear interest at variable market rates and are generally measured using a discounted cash flow analysis based on current market interest rates for similar types of financial instruments and have been classified as a Level 2 measurement.

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Parking services revenue:
Lease contracts	$ 129,004	$ 122,771	$ 370,597	$ 367,088
Management contracts	77,878	77,681	252,764	256,435
Total parking services revenue	206,882	200,452	623,361	623,523
Reimbursed management contract revenue	173,405	154,858	507,122	472,737
Total revenue	380,287	355,310	1,130,483	1,096,260
Cost of parking services:
Lease contracts	116,520	115,696	340,583	339,828
Management contracts	46,741	44,680	155,971	157,250
Total cost of parking services, gross	163,261	160,376	496,554	497,078
Reimbursed management contract expense	173,405	154,858	507,122	472,737
Total cost of parking services	336,666	315,234	1,003,676	969,815
Gross profit:
Lease contracts	12,484	7,075	30,014	27,260
Management contracts	31,137	33,001	96,793	99,185
Total gross profit	43,621	40,076	126,807	126,445
General and administrative expenses	24,123	20,494	75,185	75,310
Depreciation and amortization	7,630	7,959	22,523	23,704
Operating income	11,868	11,623	29,099	27,431
Other expenses (income):
Interest expense	4,162	4,818	13,782	14,421
Interest income	(144)	(108)	(336)	(347)
Total other expenses (income)	4,018	4,710	13,446	14,074
Income before income taxes	7,850	6,913	15,653	13,357
Income tax provision (benefit)	2,763	2,448	(421)	4,359
Net income	5,087	4,465	16,074	8,998
Less: Net income attributable to noncontrolling interest	785	721	2,162	2,070
Net income attributable to SP Plus Corporation	$ 4,302	$ 3,744	$ 13,912	$ 6,928
Net income per share:
Basic (in dollars per share)	$ 0.20	$ 0.17	$ 0.63	$ 0.32
Diluted (in dollars per share)	$ 0.19	$ 0.17	$ 0.62	$ 0.31
Weighted average shares outstanding:
Basic (in shares)	21,997,394	21,911,574	21,989,131	21,890,861
Diluted (in shares)	22,426,787	22,285,723	22,392,572	22,226,030

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2014

Stock-Based Compensation

Stock-Based Compensation

6. Stock-Based Compensation

Stock Options and Grants

There were no stock options granted during the nine months ended September 30, 2014 and 2013. The Company recognized no stock-based compensation expense related to stock options for the nine months ended September 30, 2014 and 2013, as all stock options previously granted were fully vested. As of September 30, 2014, there were no unrecognized compensation costs related to unvested stock options.

On April 22, 2014, the Company authorized vested stock grants to certain directors totaling 19,336 common shares. The total value of the grant, based on the fair value of common stock on the grant date, was $491 and is included in General and Administrative Expenses within the Consolidated Statement of Income.  On April 24, 2013, the Company authorized vested stock grants to certain directors totaling 21,949 common shares. The total value of the grant, based on the fair value of common stock on the grant date, was $465 and is included in General and Administrative Expenses within the Consolidated Statement of Income.

Restricted Stock Units

During the nine months ended September 30, 2014, the Company authorized certain one-time grants of 26,287 restricted stock units to certain executives that vest five years from date of issuance. During the nine months ended September 30, 2014 and 2013, 25,083 restricted stock units and 27,000 restricted stock units vested, respectively. During the nine months ended September 30, 2014, 26,101 restricted stock units were forfeited under the amended and restated Long-Term Incentive Plan and became available for reissuance. No restricted stock units were forfeited in the nine months ended September 30, 2013.

The Company recognized $679 and $1,003 of stock-based compensation expense related to the restricted stock units for the three months ended September 30, 2014 and 2013, respectively, which is included in General and Administrative Expenses within the Consolidated Statement of Income.  The Company recognized $2,129 and $3,062 of stock-based compensation expenses related to restricted stock units for the nine months ended September 30, 2014 and 2013, respectively, which is included in General and Administrative expenses within the Consolidated Statements of Income.  As of September 30, 2014, there was $5,109 of unrecognized stock-based compensation costs, net of estimated forfeitures, related to the restricted stock units that are expected to be recognized over a weighted average remaining period of approximately 3.9 years.

Performance Based Stock

In September 2014, the Board of Directors authorized a performance-based incentive program under the Company’s Long-Term Incentive Plan (“2014 Performance-Based Incentive Program”). 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 2014 Performance-Based Incentive Program provides participating executives with the opportunity to earn vested common stock if certain performance targets for pre-tax free cash flow are achieved over the cumulative three year period of 2014 through 2016 and recipients satisfy service-based vesting requirements. The stock-based compensation expense associated with unvested performance-based incentives 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 year period of 2014 through 2016.  Future compensation expense for currently outstanding awards under the 2014 Performance Based Incentive Program could reach a maximum of $3,200.

On September 30, 2014, certain participating executives became vested in the 2014 Performance-Based Incentive Program shares based on retirement eligibility and as a result $186 of stock-based compensation related to 9,687 shares were recognized in General and Administrative expenses within in the Consolidated Statements of Income, and which continue to be subject to achieving cumulative pre-tax free cash flow over the three year period of 2014 through 2016.

The Company recognized a cumulative $186 of stock-based compensation expense related to the 2014 Performance-Based Incentive Program, which includes expense of awards to fully vested retirement eligible executives for the three and nine months ended September 30, 2014 and is included in General and Administrative expenses. During the nine months ended September 30, 2014, no performance-based shares were forfeited.  There was no such program in place during 2013.   Stock-based compensation for the 2014 Performance-Based Incentive Program is expected to be recognized over a weighted average period of 2.3 years.

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Acquisition

9 Months Ended

Sep. 30, 2014

Acquisition

Acquisition

5. Acquisition

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 (collectively, “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 28, 2012 (the “Merger Agreement”).  The Company financed the acquisition through the issuance of its common stock and borrowings under the Senior Credit Facility (defined in Note 9. Borrowing Arrangements).

Pursuant to the Merger Agreement, the Company is entitled to indemnification from Central’s former stockholders (i) if and to the extent Central’s combined net debt and the absolute value of Central’s negative working capital (as determined in accordance with the Merger Agreement) (the “Net Debt Working Capital”) exceeded $285,000 as of September 30, 2012 and (ii) for certain defined adverse consequences as set forth in the Merger Agreement (including with respect to Structural and Repair Costs).  Pursuant to the Merger Agreement, Central’s former stockholders are required to satisfy certain indemnity obligations, which are capped at the $27,000 cash consideration (the “Capped Items”) only through a reduction of the $27,000 cash consideration.  For certain other indemnity obligations set forth in the Merger Agreement which are not capped at the $27,000 cash consideration (the “Uncapped Items”), including the Net Debt Working Capital indemnity obligations described above, Central’s former stockholders may satisfy any amount payable pursuant to such indemnity obligations as follows (provided that the Company reserves the right to reject the cash and stock alternatives and choose to reduce the $27,000 cash consideration):

· Central’s former stockholders can elect to pay such amount with cash;

· Central’s former stockholders can elect to pay such amount with the Company’s common stock (valued at $23.64 per share, the market value as of the closing date of the Merger Agreement); or

· Central’s former stockholders can elect to reduce the $27,000 cash consideration by such amount, subject to the condition that the cash consideration remains at least $17,000 to cover Capped Items.

The Company has determined and concluded that the Net Debt Working Capital was $296,399 as of September 30, 2012 and that; accordingly, the Net Debt Working Capital exceeded the threshold by $11,399.  In addition, the Company has determined that it currently has indemnity claims for certain defined adverse consequences (including indemnity claims with respect to Structural and Repair Costs incurred through September 30, 2014), which would reduce the cash consideration payable in three years from the acquisition date by $14,122. In addition, the Company expects to have additional indemnity claims in the future as new matters arise. The Company has periodically given Central’s former stockholders notice regarding indemnification matters since the closing date of the Merger and has made adjustments for known matters, although Central’s former stockholders have not agreed to such adjustments nor made any elections with respect to the payment of any Uncapped Items. Furthermore, following the Company’s notices of indemnification matters, the representative of Central’s former stockholders has indicated that they may make additional inquiries and potentially raise issues with respect to the Company’s indemnification claims (including, specifically, as to the Company’s Net Debt Working Capital calculation and as to Structural and Repair Costs) and that they may assert various claims of their own relating to the Merger Agreement.  Under the Merger Agreement, all post-closing claims and disputes, including as to indemnification matters, are ultimately subject to resolution through binding arbitration or, in the case of a dispute as to the calculation of Net Debt Working Capital, resolution by an independent public accounting firm.  The Company intends to pursue these dispute resolution processes, as applicable, in a timely manner, although the Company’s pursuit of these processes may be delayed by actions taken by representatives of Centrals former stockholders.

In determining the excess over the threshold of Net Debt Working Capital as of September 30, 2012 of $11,399 and the indemnity claims for certain defined adverse consequences of $14,122, the Company has evaluated the nature of the costs and related indemnity claims and has concluded that it is probable that such indemnified claims will sustain any challenge from Central’s former stockholders and recoverability of these indemnified claims are reasonably assured. As previously discussed in Note 3. Legal and Other Contingencies, certain lease contracts acquired in the Central Merger include provisions allocating to the Company responsibility for all or a defined portion of structural or other improvement and repair costs required on the property, including improvement and repair costs arising as a result of ordinary wear and tear.  As the Company incurs additional Structural and Repair Costs, that meet the indemnification provisions established in the Merger Agreement, the Company will seek indemnification for a significant portion, generally 80%, of these costs pursuant to the Merger Agreement and reduce the cash consideration payable in three years from the acquisition date by such amounts.

The following table sets forth the adjustments to the cash consideration payable by the Company to the former stockholders of Central, based upon the foregoing determinations:

Cash consideration payable in three years from the acquisition date, pursuant to the Merger Agreement and prior to Central Net Debt Working Capital and indemnification of certain defined adverse consequences, net				$	27,000
Net Debt Working Capital at September 30, 2012 as defined in the Merger Agreement	$	(296,399	)
Threshold of Net Debt Working Capital, pursuant to the Merger Agreement	$	285,000
Excess over the threshold of Net Debt Working Capital				(11,399		)
Indemnification of certain defined adverse consequences, net				(14,122		)
Settled cash consideration				$	1,479
Present value of cash consideration liability as of September 30, 2014 (included within Other Long-Term Liabilities in the Consolidated Balance Sheet)				$	1,279

The acquisition has been accounted for using the acquisition method of accounting (in accordance with the provisions of Accounting Standards Codification (“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 finalized the purchase price allocation during the third quarter of 2013, which resulted in revision to the previously reported preliminary amounts, applied retrospectively back to the date of the acquisition.

The Company has incurred certain acquisition and integration costs associated with the transaction that have been expensed as incurred and reflected in the Consolidated Statements of Income. The Company recognized $2,989 and $1,893 of these costs in the Consolidated Statement of Income for the three months ended September 30, 2014 and 2013, respectively, in General and Administrative Expenses. The Company recognized $5,031 and $9,210 of these costs in the Consolidated Statement of Income for the nine months ended September 30, 2014 and 2013, respectively, in General and Administrative Expenses.

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Acquisition (Tables)

9 Months Ended

Sep. 30, 2014

Acquisition

Schedule of present value of cash consideration

Cash consideration payable in three years from the acquisition date, pursuant to the Merger Agreement and prior to Central Net Debt Working Capital and indemnification of certain defined adverse consequences, net				$	27,000
Net Debt Working Capital at September 30, 2012 as defined in the Merger Agreement	$	(296,399	)
Threshold of Net Debt Working Capital, pursuant to the Merger Agreement	$	285,000
Excess over the threshold of Net Debt Working Capital				(11,399		)
Indemnification of certain defined adverse consequences, net				(14,122		)
Settled cash consideration				$	1,479
Present value of cash consideration liability as of September 30, 2014 (included within Other Long-Term Liabilities in the Consolidated Balance Sheet)				$	1,279

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Business Unit Segment Information

9 Months Ended

Sep. 30, 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 a summary of revenues (excluding reimbursed management contract revenue) and gross profit by regions for the three and nine months ended September 30, 2014 and 2013 (unaudited):

	For the three months ended										For the nine months ended
	September 30, 2014			Gross Margin%		September 30, 2013			Gross Margin%		September 30, 2014			Gross Margin%		September 30, 2013			Gross Margin%
Revenues (a):
Region One
Lease contracts	$	79,675				$	77,970				$	227,490				$	230,444
Management contracts (b)	23,058					23,733					73,647					80,473
Total Region One	102,733					101,703					301,137					310,917
Region Two
Lease contracts	1,094					1,065					3,550					3,396
Management contracts	4,845					8,467					20,870					24,344
Total Region Two	5,939					9,532					24,420					27,740
Region Three
Lease contracts	12,840					11,791					36,760					34,930
Management contracts	13,292					13,738					42,485					46,321
Total Region Three	26,132					25,529					79,245					81,251
Region Four
Lease contracts	12,716					10,602					35,299					33,075
Management contracts	23,141					22,988					78,150					73,815
Total Region Four	35,857					33,590					113,449					106,890
Region Five
Lease contracts	22,787					22,086					67,929					68,229
Management contracts	10,715					8,849					30,823					30,261
Total Region Five	33,502					30,935					98,752					98,490
Other
Lease contracts	(108		)			(743		)			(431		)			(2,986		)
Management contracts	2,827					(94		)			6,789					1,221
Total Other	2719					(837		)			6,358					(1,765		)
Total Revenues	206,882					200,452					623,361					623,523
Gross Profit:
Region One
Lease contracts	5,232			7	%	3,649			5	%	10,209			4	%	12,640			5	%
Management contracts	11,351			49	%	12,045			51	%	34,204			46	%	36,082			45	%
Total Region One	16,583					15,694					44,413					48,722
Region Two
Lease contracts	96			9	%	17			2	%	237			7	%	388			11	%
Management contracts	2,675			55	%	3,572			42	%	8,981			43	%	7,215			30	%
Total Region Two	2,771					3,589					9,218					7,603
Region Three
Lease contracts	1,687			13	%	1,402			12	%	3,938			11	%	3,578			10	%
Management contracts	5,876			44	%	4,947			36	%	16,504			39	%	17,706			38	%
Total Region Three	7,563					6,349					20,442					21,284
Region Four
Lease contracts	1,062			8	%	842			8	%	2,627			7	%	2,693			8	%
Management contracts	6,162			27	%	4,749			21	%	19,868			25	%	17,495			24	%
Total Region Four	7,224					5,591					22,495					20,188
Region Five
Lease contracts	4,639			20	%	3,867			18	%	14,280			21	%	12,778			19	%
Management contracts	5,078			47	%	4,200			47	%	14,305			46	%	12,247			40	%
Total Region Five	9,717					8,067					28,585					25,025
Other
Lease contracts	(232		)	215	%	(2,702		)	364	%	(1,277		)	296	%	(4,817		)	161	%
Management contracts	(5		)	0	%	3,488			-3,711	%	2,931			43	%	8,440			691	%
Total Other	(237		)			786					1,654					3,623
Total gross profit	43,621					40,076					126,807					126,445
General and administrative expenses	24,123					20,494					75,185					75,310
General and administrative expense percentage of gross profit	55		%			51		%			59		%			60		%
Depreciation and amortization	7,630					7,959					22,523					23,704
Operating income	11,868					11,623					29,099					27,431
Other expenses (income):
Interest expense	4,162					4,818					13,782					14,421
Interest income	(144		)			(108		)			(336		)			(347		)
	4,018					4,710					13,446					14,074
Income before income taxes	7,850					6,913					15,653					13,357
Income tax (benefit)	2,763					2,448					(421		)			4,359
Net income	5,087					4,465					16,074					8,998
Less: Net income attributable to noncontrolling interest	785					721					2,162					2,070
Net income attributable to SP Plus Corporation	$	4,302				$	3,744				$	13,912				$	6,928

(a) Excludes reimbursed management contract revenue.

(b) The nine months ended September 30, 2013 included a net gain of $2,700 related to the sale of rights associated with a certain contract.

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, 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, New Mexico, 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.

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Borrowing Arrangements

9 Months Ended

Sep. 30, 2014

Borrowing Arrangements

Borrowing Arrangements

9. Borrowing Arrangements

Long-term borrowings, in order of preference, consist of:

		Amount Outstanding
	Maturity Date	September 30, 2014		December 31, 2013
		(Unaudited)
Obligations under Senior Credit Facility, net of original discount on borrowings	October 2, 2017	$	260,989	$	286,672
Other debt obligations	Various	2,291		1,994
Total debt obligations		263,280		288,666
Less: Current portion under Senior Credit Facility and other debt obligations		30,481		24,632
Total long-term borrowings		$	232,799	$	264,034

Senior Credit Facility

On October 2, 2012, the Company entered into a credit agreement (the "Credit Agreement") with Bank of America, as administrative agent, Wells Fargo Bank, N.A. 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 (the “Lenders”).

Pursuant to the terms, and subject to the conditions, of the Credit Agreement, the Lenders have made available to the Company a new secured Senior Credit Facility (the “Senior Credit Facility”) that permits aggregate borrowings of $450,000 consisting of (i) a revolving credit facility of up to $200,000 at any time outstanding, which includes a letter of credit facility that is limited to $100,000 at any time outstanding, and (ii) a term loan facility of $250,000. The Senior Credit Facility matures on October 2, 2017.

The Company may be required to make mandatory repayments of principal within 90 days of each fiscal year-end provided that certain excess cash is available, as defined within the Credit Agreement.  In the event the Company is required to make mandatory repayments of principal pursuant to the Credit Agreement, the aggregate borrowings available under the Senior Credit Facility are reduced by the amount of mandatory principal repayments made by the Company.  In March 2014, the Company made a mandatory principal repayment of $7,940, as provided under the Credit Agreement.  There were no mandatory repayments of principal required under the Credit Agreement in 2013.

Events of default under the 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 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 majority of the commitments and outstanding term loan under the Credit Agreement have the right, among others, to (i) terminate the commitments under the Credit Agreement, (ii) accelerate and require the Company to repay all the outstanding amounts owed under the Credit Agreement and (iii) require the Company to cash collateralize any outstanding letters of credit.

Under the terms of the Credit Agreement, as of September 30, 2014, the Company is required to maintain a maximum consolidated total debt to EBITDA ratio of not greater than 3.75:1.0.  There are certain future step downs as described in the Credit Agreement; decreasing to 3.5:1.0 as of the end of each fiscal quarter ending after July 1, 2015 through and including June 30, 2016 and 3.25:1.0 as of the end of each fiscal quarter ending after July 1, 2016.   In addition, as of September 30, 2014, the Company is required to maintain a minimum consolidated fixed charge coverage ratio of not less than 1.35:1.0 for each fiscal quarter ending after July 1, 2014.

The Company was in compliance with all covenants as of September 30, 2014.

As of September 30, 2014, the Company had $78,364 of borrowing availability under the Credit Agreement, of which the Company could have borrowed $28,355 on September 30, 2014 and remained in compliance with the above described covenants as of such date.  The additional borrowing availability under the Credit Agreement is limited only as of the Company’s fiscal quarter-end by the covenant restrictions described above. At September 30, 2014, the Company had $55,136 of letters of credit outstanding under the Senior Credit Facility, with aggregate borrowings against the Senior Credit Facility of $263,560 (excluding original discount on borrowings of $2,571).

Interest Rate Swap Transactions

On October 25, 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 have an effective date of October 31, 2012 and a termination date of September 30, 2017. The Interest Rate Swaps effectively fix the interest rate on an amount of variable interest rate borrowings under the Credit Agreement, originally equal to the Notional Amount at 0.7525% per annum plus the applicable margin rate for LIBOR loans under the Credit Agreement, determined based upon the Company’s consolidated total debt to EBITDA ratio. The Notional Amount is subject to scheduled quarterly amortization that coincides with quarterly prepayments of principal under the Credit Agreement. 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 is recognized in earnings as an increase of interest expense. As of September 30, 2014, no ineffectiveness of the hedge has been recognized. See Note 12. Fair Value Measurement for the fair value of the interest rate swap as of September 30, 2014 and December 31, 2013.

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

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Net Income (Loss) Per Common Share

9 Months Ended

Sep. 30, 2014

Net Income (Loss) Per Common Share

Net Income (Loss) Per Common Share

7. Net Income (Loss) 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 (unaudited):

	Three Months EndedSeptember 30,				Nine Months EndedSeptember 30,
	2014		2013		2014		2013
Weighted average common basic shares outstanding	21,997,394		21,911,574		21,989,131		21,890,861
Effect of dilutive stock options and restricted stock units	429,393		374,149		403,441		335,169
Weighted average common diluted shares outstanding	22,426,787		22,285,723		22,392,572		22,226,030
Net income (loss) per share:
Basic	$	0.20	$	0.17	$	0.63	$	0.32
Diluted	$	0.19	$	0.17	$	0.62	$	0.31

For the three and nine-months ended September 30, 2014 performance-based restricted stock was excluded in 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 September 30, 2014.   There was no performance-based incentive program in place during 2013.

There are no 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.

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Bradley Agreement

9 Months Ended

Sep. 30, 2014

Bradley Agreement

Bradley Agreement

8. 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. Principal and interest on the Bradley special facility revenue bonds increase from approximately $3,600 in contract year 2002 to approximately $4,500 in contract year 2025. Annual guaranteed minimum payments to the State increase from approximately $8,300 in contract year 2002 to approximately $13,200 in contract year 2024. The annual minimum guaranteed payment to the State by the trustee for the twelve months ended December 31, 2014 and 2013 is $10,815 and was $10,593, 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 payments to the State of Connecticut, net of reimbursements, as of September 30, 2014 is are as follows:

	2014
	(Unaudited)
Balance at January 1, 2014	$	14,649
Deficiency payments made	25
Deficiency repayment received	(1,099		)
Balance at September 30, 2014	$	13,575

During the three months ended September 30, 2014, the Company received deficiency repayments (net of payments made) of $24, received and recorded interest of $134, with the net of these amounts recorded as a reduction in Cost of Parking Services within the Consolidated Statement of Income.  During the three months ended September 30, 2013, the Company made deficiency payments (net of repayments received) of $339, which was recorded as an increase in Cost of Parking Services within the Consolidated Statement of Income.  No premium income was received and recorded for the three months ended September 30, 2014 and 2013 and no interest was received and recorded for the three months ended September 30, 2013. During the nine months ended September 30, 2014 and 2013, the Company received deficiency repayments (net of payments made) of $1,074 and $18, respectively, received and recorded premium of $117 and $60, respective, and received and recorded interest of $134 and $nil, respectively, with the net of these amounts recorded as a reduction in Cost of Parking Services within the Consolidated Statement of Income.  The Company accrues for deficiency payments when the potential for future deficiency payments are both probable and estimable.  There were no amounts of estimated deficiency payments accrued as of September 30, 2014, as the Company concluded that the potential for future deficiency payments did not meet the criteria of both probable and estimable. The Company accrued $100 of estimated deficiency payments as of December 31, 2013.

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 unaffiliated 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) are paid, and after the repayment of all deficiency payments, including interest and premium. Cumulative management fees of approximately $14,483 and $13,733 have not been recognized as of September 30, 2014 and December 31, 2013, respectively, and no management fees were recognized as revenue for the nine months ended September 30, 2014 and 2013.

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Comprehensive Income

9 Months Ended

Sep. 30, 2014

Comprehensive Income

Comprehensive Income

10. Comprehensive Income

Comprehensive income consists of the following components, net of tax (unaudited):

	For the three months ended						For the nine months ended
	September 30,2014			September 30,2013			September 30,2014			September 30,2013
Net income	$	5,087		$	4,465		$	16,074		$	8,998
Effective portion of unrealized gain (loss) on cash flow hedge	293			(312		)	17			849
Foreign currency translation	(130		)	32			(47		)	(240		)
Comprehensive income	5,250			4,185			16,044			9,607
Less: comprehensive income attributable to noncontrolling interest	785			721			2,162			2,070
Comprehensive income attributable to SP Plus Corporation	$	4,465		$	3,464		$	13,882		$	7,537

Accumulated other comprehensive income is comprised of unrealized gains (losses) on cash flow hedges and foreign currency translation adjustments. The components of changes in accumulated comprehensive income (loss), net of tax, for the nine months ended September 30, 2014 were as follows (unaudited):

	Foreign Currency Translation Adjustments			Effective Portion of Unrealized Gain (Loss) on Cash Flow Hedge		Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2013	$	(368	)	$	486	$	118
Change in other comprehensive income (loss)	(47		)	17		(30		)
Balance at September 30, 2014	$	(415	)	$	503	$	88

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Acquisition (Details) (KCPC, USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	3 Months Ended			9 Months Ended
	Oct. 02, 2012	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2014	Sep. 30, 2013
Acquisitions
Interest acquired (as a percent)	100.00%
Common stock issued (in shares)	6,161,332
Assumption of debt, net of cash acquired	$ 217,675
Contingent cash consideration	27,000			27,000
Period after which contingent cash consideration to be paid	3 years
Price of share at which former stockholders of acquiree can elect to pay applicable amount (in dollars per share)	$ 23.64
Minimum cash consideration to cover capped indemnities	17,000
Settlement reducing cash consideration
Period in which reduction in cash consideration payable for the seller's indemnification made				3 years
Cash consideration payable in three years from the acquisition date, pursuant to the Merger Agreement and prior to Central Net Debt Working Capital and indemnification of certain defined adverse consequences, net	27,000			27,000
Net Debt Working Capital as defined in the Merger Agreement				(296,399)
Threshold of Net Debt Working Capital, pursuant to the Merger Agreement				285,000
Excess over the threshold of Net Debt Working Capital				(11,399)
Indemnification of certain defined adverse consequences, net				(14,122)
Indemnification of cost pursuant to merger agreement		80.00%
Settled cash consideration				1,479
Acquisition and integration related costs included in general and administrative expenses		2,989	1,893		5,031	9,210
Fair Value
Settlement reducing cash consideration
Present value of cash consideration liability to be issued		$ 1,279			$ 1,279

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2014

Basis of Presentation

Cash and cash equivalents

Cash and cash equivalents

Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements was $515 and $1,001 as of September 30, 2014 and December 31, 2013, respectively, and are included within Cash and Cash Equivalents in the Consolidated Balance Sheet.

Book overdrafts of $32,097 and $29,310 are included within Accounts Payable in the Consolidated Balance Sheet as of September 30, 2014 and December 31, 2013, respectively.

Adopted Accounting Pronouncements

Adopted Accounting Pronouncements

In December 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-11, Balance Sheet (Topic 210), Disclosures about Offsetting Assets and Liabilities. This update requires additional disclosures about offsetting and related arrangements on assets and liabilities to enable users of financial statements to understand the effect of such arrangements on an entity’s financial position as reported. This amendment is effective for fiscal 2014 and retrospective application is required.  The adoption of this guidance on January 1, 2014 did not have an impact to the Company’s financial position, results of operations or cash flows or financial statement disclosures.

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740), Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists to eliminate diversity in practice. Under this ASU, an unrecognized tax benefit, or a portion of an unrecognized tax benefit that exists at the reporting date, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if certain criteria are met. This amendment is effective for fiscal years and interim periods within those years beginning after December 15, 2013.  The adoption of this guidance on January 1, 2014 did not have an impact to the Company’s financial position, results of operations or cash flows or financial statement disclosures.

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Borrowing Arrangements (Tables)

9 Months Ended

Sep. 30, 2014

Borrowing Arrangements

Schedule of long-term borrowings

		Amount Outstanding
	Maturity Date	September 30, 2014		December 31, 2013
		(Unaudited)
Obligations under Senior Credit Facility, net of original discount on borrowings	October 2, 2017	$	260,989	$	286,672
Other debt obligations	Various	2,291		1,994
Total debt obligations		263,280		288,666
Less: Current portion under Senior Credit Facility and other debt obligations		30,481		24,632
Total long-term borrowings		$	232,799	$	264,034

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Taxes
Income tax expense (benefit) recognized on pre-tax earnings	$ 2,763	$ 2,448	$ (421)	$ 4,359
Pre-tax earnings	7,850	6,913	15,653	13,357
Effective tax rate before discrete benefits and true-up adjustments (as a percent)			2.70%
Discrete benefits for retroactive extension of tax credit programs			$ 6,359

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 5,087	$ 4,465	$ 16,074	$ 8,998
Other comprehensive income (loss)	163	(280)	(30)	609
Comprehensive income	5,250	4,185	16,044	9,607
Less: comprehensive income attributable to noncontrolling interest	785	721	2,162	2,070
Comprehensive income attributable to SP Plus Corporation	$ 4,465	$ 3,464	$ 13,882	$ 7,537

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Intangible Assets, net

9 Months Ended

Sep. 30, 2014

Intangible Assets, net

Intangible Assets, net

4. Intangible Assets, net

The following presents a summary of intangible assets, net, as of September 30, 2014 and December 31, 2013:

	September 30, 2014			December 31, 2013
	(Unaudited)
Covenant not to compete	$	933		$	933
Trade names and trademarks	9,820			9,820
Proprietary know how	34,650			34,650
Management contract rights	81,000			81,000
Accumulated amortization	(31,557		)	(20,181		)
Intangible assets, net	$	94,846		$	106,222

Amortization expense related to intangible assets included in depreciation and amortization was $3,779 and $3,877 for the three months ended September 30, 2014 and 2013, respectively, and $11,376 and $12,853 for the nine months ended September 30, 2014 and 2013, respectively.

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Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2014

Comprehensive Income

Schedule of components of comprehensive income, net of tax

	For the three months ended						For the nine months ended
	September 30,2014			September 30,2013			September 30,2014			September 30,2013
Net income	$	5,087		$	4,465		$	16,074		$	8,998
Effective portion of unrealized gain (loss) on cash flow hedge	293			(312		)	17			849
Foreign currency translation	(130		)	32			(47		)	(240		)
Comprehensive income	5,250			4,185			16,044			9,607
Less: comprehensive income attributable to noncontrolling interest	785			721			2,162			2,070
Comprehensive income attributable to SP Plus Corporation	$	4,465		$	3,464		$	13,882		$	7,537

Components of accumulated other comprehensive income (loss), net of tax

	Foreign Currency Translation Adjustments			Effective Portion of Unrealized Gain (Loss) on Cash Flow Hedge		Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2013	$	(368	)	$	486	$	118
Change in other comprehensive income (loss)	(47		)	17		(30		)
Balance at September 30, 2014	$	(415	)	$	503	$	88

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Borrowing Arrangements (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Mar. 31, 2014	Dec. 31, 2013
Borrowing arrangements
Total debt obligations	$ 263,280		$ 288,666
Less: Current portion under Senior Credit Facility and other debt obligations	30,481		24,632
Long-term borrowings, excluding current portion	232,799		264,034
Obligations under Senior Credit Facility, net of original discount on borrowings
Borrowing arrangements
Total debt obligations	260,989		286,672
Senior Credit Facility
Maximum borrowing capacity	450,000
Period after end of each fiscal year mandatory repayment of principal required to be made	90 days
Repayment of mandatory principal		7,940	0
Available borrowing capacity	78,364
Amount that could be borrowed	28,355
Letters of credit outstanding	55,136
Borrowings excluding debt discount	263,560
Original discount on borrowings	2,571
Obligations under Senior Credit Facility, net of original discount on borrowings | Maximum
Senior Credit Facility
Total debt to EBITDA ratio that is required to be maintained	3.75
Obligations under Senior Credit Facility, net of original discount on borrowings | Maximum | End of each fiscal quarter ending after July 1, 2014 through and including June 30, 2016
Senior Credit Facility
Total debt to EBITDA ratio that is required to be maintained	3.5
Obligations under Senior Credit Facility, net of original discount on borrowings | Maximum | End of each fiscal quarter ending after July 1, 2016
Senior Credit Facility
Total debt to EBITDA ratio that is required to be maintained	3.25
Obligations under Senior Credit Facility, net of original discount on borrowings | Minimum
Senior Credit Facility
Fixed charge coverage ratio that is required to be maintained	1.35
Obligations under Senior Credit Facility, net of original discount on borrowings | Minimum | End of each fiscal quarter ending after July 1, 2014
Senior Credit Facility
Fixed charge coverage ratio that is required to be maintained	1.35
Revolving credit facility
Senior Credit Facility
Maximum borrowing capacity	200,000
Letter of credit facility
Senior Credit Facility
Maximum borrowing capacity	100,000
Term loan facility
Senior Credit Facility
Maximum borrowing capacity	250,000
Other debt obligations
Borrowing arrangements
Total debt obligations	$ 2,291		$ 1,994

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Subsequent Events

9 Months Ended

Sep. 30, 2014

Subsequent Events

Subsequent Events

14. Subsequent Events

On October 29, 2014, the Company entered into an agreement to establish a joint venture with Parkmobile USA, Inc. (“Parkmobile USA”) and effective October 31, 2014, the Company contributed all of the assets and liabilities of its proprietary Click and Park® parking prepayment business in exchange for a 30% interest in the newly formed legal entity called Parkmobile, LLC. The joint venture, Parkmobile, LLC, will provide on-demand 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 will result in the deconsolidation of the Click and Park® business and recognition of the Company’s equity investment in the newly formed joint venture at fair value.  The Company will account for its equity interest in the joint venture in Parkmobile, LLC using the equity method of accounting.  As a result of the transaction, the Company expects to recognize a pre-tax gain in the fourth quarter 2014, the amount of which the Company is currently unable to estimate.  The fiscal year-end of Parkmobile, LLC will be December 31, which is the fiscal year-end of the Company.