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.