Central Parking Finance Trust PFD TR CV SECS 10Q 2005 Q3 Quarterly report

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, 2005

Commission file number: 000-50796

STANDARD PARKING CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware		16-1171179
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

900 N. Michigan Avenue, Suite 1600
Chicago, Illinois 60611-1542

(Address of Principal Executive Offices, Including Zip Code)

(312) 274-2000

(Registrant’s Telephone Number, Including Area Code)

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 ý NO o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES o NO ý

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

As of November 11, 2005, there were 10,126,482 shares of common stock of the registrant outstanding.

STANDARD PARKING CORPORATION

FORM 10-Q INDEX

Part I. Financial Information
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of September 30, 2005 (Unaudited) and December 31, 2004
	Condensed Consolidated Statements of Operations (Unaudited) for the three months ended September 30, 2005 and September 30, 2004 and the nine months ended September 30, 2005 and September 30, 2004
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2005 and September 30, 2004
	Notes to Condensed Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures about Market Risk
Item 4.	Controls and Procedures
Part II. Other Information
Item 1.	Legal Proceedings
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.	Exhibits
Signatures
Index to Exhibits

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

STANDARD PARKING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

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

	September 30, 2005			December 31, 2004
	(Unaudited)			(see Note)
ASSETS
Current assets:
Cash and cash equivalents	$	13,550		$	10,360
Notes and accounts receivable, net	37,214			34,608
Prepaid expenses and supplies	2,965			2,330
Deferred income taxes	5,571			—
Total current assets	59,300			47,298

Leaseholds and equipment, net	16,652			16,481
Long-term receivables, net	5,953			7,317
Advances and deposits	1,507			1,816
Goodwill	118,716			118,342
Intangible and other assets, net	3,375			3,848

Total assets	$	205,503		$	195,102

LIABILITIES AND COMMON STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	29,170		$	26,107
Accrued and other current liabilities	25,132			25,794
Current portion of long-term borrowings	3,375			3,512
Total current liabilities	57,677			55,413

Long-term borrowings, excluding current portion	99,733			106,238
Deferred income taxes	4,656			—
Other long-term liabilities	23,115			18,111
Convertible redeemable preferred stock, series D	1			1

Common stockholders’ equity:
Common stock, par value $.001 per share; 12,100,000 shares authorized; 10,126,482 shares issued and outstanding	10			10
Additional paid-in capital	189,075			193,565
Accumulated other comprehensive income	452			116
Accumulated deficit	(167,757		)	(178,352		)
Treasury stock, at cost, 80,377 shares	(1,459		)	—
Total common stockholders’ equity	20,321			15,339

Total liabilities and common stockholders’ equity	$	205,503		$	195,102

Note: The balance sheet at December 31, 2004 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

See Notes to Condensed Consolidated Financial Statements.

STANDARD PARKING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

	Three Months Ended						Nine Months Ended
	September 30, 2005			September 30, 2004			September 30, 2005			September 30, 2004
Parking services revenue:
Lease contracts	$	38,659		$	37,125		$	116,526		$	109,366
Management contracts	24,347			20,089			69,479			62,537
	63,006			57,214			186,005			171,903
Reimbursement of management contract expense	85,253			76,597			252,688			246,525
Total revenue	148,259			133,811			438,693			418,428

Cost of parking services:
Lease contracts	35,546			33,131			106,247			99,103
Management contracts	10,034			8,660			28,791			25,805
	45,580			41,791			135,038			124,908
Reimbursed management contract expense	85,253			76,597			252,688			246,525
Total cost of parking services	130,833			118,388			387,726			371,433

Gross profit:
Lease contracts	3,113			3,994			10,279			10,263
Management contracts	14,313			11,429			40,688			36,732
Total gross profit	17,426			15,423			50,967			46,995

General and administrative expenses	9,937			7,848			28,241			24,997
Depreciation and amortization	1,814			1,554			4,771			4,724
Management fee-parent company	—			—			—			1,500
Valuation allowance related to long-term receivables	—			—			900			—
Non-cash stock option compensation expense (1)	—			—			—			2,293

Operating income	5,675			6,021			17,055			13,481
Other expenses (income):
Interest expense	2,234			2,414			7,081			10,956
Interest income	(63		)	(78		)	(217		)	(420		)
Net gain from extinguishment of debt	—			27			—			(3,833		)
	2,171			2,363			6,864			6,703
Income before minority interest and income taxes	3,504			3,658			10,191			6,778
									��
Minority interest	62			54			270			296
Income tax expense	(799		)	19			(674		)	336

Net income before preferred stock dividends and increase in value of common stock subject to put/call rights	4,241			3,585			10,595			6,146

Preferred stock dividends	—			—			—			7,243

Increase in value of common stock subject to put/call rights	—			—			—			538
Net income (loss)	$	4,241		$	3,585		$	10,595		$	(1,635	)

Common Stock Data:
Net income (loss) per common share:
Basic	$	.42		$	.34		$	1.03		$	(.36	)
Diluted	$	.40		$	.33		$	1.00		$	(.36	)
Weighted average common shares outstanding:
Basic	10,191,044			10,464,888			10,312,219			4,564,902
Diluted	10,496,786			10,708,537			10,597,100			4,564,902

(1) Non-cash stock option expense of $2,293 relates entirely to General and administrative expenses

See Notes to Condensed Consolidated Financial Statements.

STANDARD PARKING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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

	Nine Months Ended
	September 30, 2005			September 30, 2004

Operating activities:
Net income (loss)	$	10,595		$	(1,635	)
Adjustments to reconcile net loss to net cash provided by (used in) operations:
Preferred stock dividends	—			7,243
Increase in value of common stock subject to put/call rights	—			538
Depreciation and amortization	4,771			4,724
Non-cash interest expense	—			279
Amortization of debt issuance costs	567			836
Amortization of carrying value in excess of principal	(124		)	(1,256		)
Non-cash stock compensation expense	—			2,407
Provision for losses on accounts receivable	262			752
Valuation allowance related to long-term receivables	900			—
Write-off of debt issuance costs	—			2,385
Write-off of carrying value in excess of principal related to the 14% senior subordinated second lien notes	—			(8,207		)
Deferred income taxes	(915		)	—
Change in operating assets and liabilities	4,534			(9,070		)
Net cash provided by (used in) operating activities	20,590			(1,004		)

Investing activities:
Purchase of leaseholds and equipment	(3,286		)	(908		)
Contingent purchase payments	(242		)	(557		)
Net cash used in investing activities	(3,528		)	(1,465		)

Financing activities:
Net proceeds from initial public offering	—			46,715
Repurchase of common stock subject to put/call rights	—			(6,250		)
Repurchase of common stock	(5,963		)	—
Proceeds from exercise of stock options	14			—
Proceeds from (payments on) senior credit facility	(5,000		)	22,350
Payments on long-term borrowings	(203		)	(96		)
Payments on joint venture borrowings	(457		)	(410		)
Payments of debt issuance costs	(118		)	(1,402		)
Payments on capital leases	(2,339		)	(1,714		)
Repurchase of 14% senior subordinated second lien notes	—			(57,734		)
Net cash (used in) provided by financing activities	(14,066		)	1,459

Effect of exchange rate changes on cash and cash equivalents	194			18

Increase (decrease) in cash and cash equivalents	3,190			(992		)
Cash and cash equivalents at beginning of period	10,360			8,470

Cash and cash equivalents at end of period	$	13,550		$	7,478
Supplemental disclosures:
Cash paid during the period for:
Interest	$	7,748		$	13,772
Income taxes	362			191
Supplemental disclosures of non-cash activity:
Debt issued for capital lease obligation	$	1,647		$	2,453
Issuance of 14% senior subordinated second lien notes	—			375

See Notes to Condensed Consolidated Financial Statements.

STANDARD PARKING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Standard Parking Corporation have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements.

In the opinion of management, all adjustments (consisting only of adjustments of a normal and recurring nature) considered necessary for a fair presentation of the financial position and results of operations have been included. Operating results for the three-month and nine-month periods ended September 30, 2005 are not necessarily indicative of the results that might be expected for any other interim period or the fiscal year ending December 31, 2005. The financial statements presented in this report should be read in conjunction with the consolidated financial statements and footnotes thereto included in our 2004 Annual Report on Form 10-K filed March 18, 2005.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures in which the Company has more than 50% ownership interest. Minority interest recorded in the consolidated statement of operations is the joint venture partner’s non-controlling interest in consolidated joint ventures. We have interests in 16 joint ventures, each of which operates between one and three parking facilities. Of the 16 joint ventures, nine are majority owned by us and are consolidated into our financial statements, and seven are single purpose entities where we have a 50% interest or a minority interest. Investments in joint ventures where the Company has a 50% or less non-controlling ownership interest are reported on the equity method. All significant intercompany profits, transactions and balances have been eliminated in consolidation.

Variable Interest Entities

Equity		Commencement of Operations		Nature of Activities		% Ownership		Locations
Other investments in VIE’s		Jan 92-March 05		Management of parking lots, shuttle operations and parking meters		38.25%-50.0%		Various states

The existing VIE’s in which we have a variable interest are not consolidated into our financial statements because we are not the primary beneficiary.

Stock-Based Compensation

We are required under Statement of Financial Accounting Standards (“SFAS”) No. 123, to disclose pro forma information regarding option grants made to our employees based on specific valuation techniques that produce estimated compensation charges. The pro forma information is as follows:

	Three Months Ended						Nine Months Ended
	September 30, 2005			September 30, 2004			September 30, 2005			September 30, 2004
	(in thousands except for per share data)
Net income (loss)-as reported	$	4,241		$	3,585		$	10,595		$	(1,635	)
Add: Non-cash stock option compensation expense included in the reported net income, net of related tax effects	—			—			—			2,293
Deduct: Stock-based employee compensation expense using the fair value method net of related tax effects	(83		)	(81		)	(251		)	(2,401		)
Pro-forma net income (loss)	$	4,158		$	3,504		$	10,344		$	(1,527	)

Basic net income per common share- as reported	$	.42		$	.34		$	1.03		$	(.36	)
Basic pro-forma net income per common share	$	.41		$	.33		$	1.00		$	(.36	)
Diluted net income per common share- as reported	$	.40		$	.33		$	1.00		$	(.38	)
Diluted pro-forma net income per common share	$	.40		$	.33		$	.98		$	(.38	)

Deductions for stock-based employee compensation expense in the above table were calculated using the Black-Scholes option pricing model. Allocation of compensation expense was made using historical option terms for option grants made to our employees and using our historical stock price volatility.

2. Net Income Per Common Share

In accordance with SFAS No.128, “Earnings Per Share (“EPS”),” 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. The weighted daily average number of shares of common stock excludes shares that have been exercised prior to vesting and are subject to repurchase by us and treasury shares. 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 using the treasury-stock method.

The following table sets forth the computation of basic and diluted net income per share:

	Three Months Ended				Nine Months Ended
	September 30, 2005		September 30, 2004		September 30, 2005		September 30, 2004
	(in thousands except for share and per share data)
Numerator:
Net income (loss)	$	4,241	$	3,585	$	10,595	$	(1,635	)
Denominator:
Denominator for basic net income per common share:
Weighted average basic shares outstanding	10,191,044		10,464,888		10,312,219		4,564,902
Weighted average of diluted shares outstanding	10,496,786		10,708,537		10,597,100		4,564,902

Basic net income per common share	$	.42	$	.34	$	1.03	$	(.36	)
Diluted net income per common share	$	.40	$	.33	$	1.00	$	(.36	)

There are no additional securities that could dilute basic EPS in the future that were not included in the computation of diluted EPS.

3. Recently Issued Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 123 (revised 2004), Share-Based Payment, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. Statement 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Generally, the approach in Statement 123(R) is similar to the approach described in Statement 123. However, Statement
123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. We will adopt Statement 123(R) on January 1, 2006.

We plan to adopt Statement 123 using the modified-prospective method. Accordingly, the adoption of Statement 123(R)’s fair value method will have a significant impact on our results of operations, although it will have no overall impact on our financial position. The impact of adoption of Statement 123(R) cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, based upon the current share based payments the impact would equate to approximately $333 in additional costs on an annual basis.

4. Goodwill and Intangible Assets

As of September 30, 2005 and December 31, 2004, our definite lived intangible assets, which consist principally of non-compete agreements, amounted to $2 and $56, respectively, net of accumulated amortization of $715 and $729, respectively. Amortization expense for intangible assets during the nine months ended September 30, 2005 was $54. Estimated amortization expense for the remainder of 2005 is $2.

The change in the carrying amount of goodwill is summarized as follows (in thousands):

Beginning balance at December 31, 2004	$	118,342
Effect of foreign currency translation	131
Contingent payments related to prior acquisitions	242
Ending balance at September 30, 2005	$	118,715

5. Long-term Receivables

Long-term receivables, net, consist of the following:

	Amount Outstanding
	September 30, 2005			December 31, 2004
	(in thousands)
Bradley International Airport
Deficiency payments	$	5,946		$	6,473
Other Bradley related, net	2,491			2,491
Valuation allowance	(2,484		)	(2,484		)
Net amount related to Bradley	5,953			6,480
Other long-term receivables, net	-0-			837
Total long-term receivables, net	$	5,953		$	7,317

We entered into a 25-year agreement with the State of Connecticut that expires on April 6, 2025, under which we operate the surface parking and 3,500 garage parking spaces at Bradley International Airport located in the Hartford, Connecticut metropolitan area. The parking garage was financed on April 6, 2000 through the issuance of $47.7 million of State of Connecticut special facility revenue bonds. The Bradley agreement provides that we deposit with a trustee for the bondholders all gross revenues collected from operations of the surface and garage parking, and from these gross revenues, the trustee pays debt service on the special facility revenue bonds, operating and capital maintenance expenses 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 $3.6 million in lease year 2002 to approximately $4.5 million in lease year 2025. Our annual guaranteed minimum payments to the State increase from approximately $8.3 million in lease year 2002 to approximately $13.2 million in lease year 2024.

To the extent that monthly gross receipts are not sufficient for the trustee to make the required payments we are obligated, pursuant to our guaranty agreement, to deliver the deficiency amount to the trustee within three business days of notice. We are responsible for these deficiency payments regardless of the amount of utilization for the Bradley parking facilities. We received net repayments of $0.5 million in the nine month period ended September 30, 2005 compared to making deficiency payments of $1.8 million in the nine month period ended September 30, 2004.

The deficiency payments represent contingent interest bearing advances to the trustee to cover operating cash flow requirements. The payments, if any, are recorded as a receivable by us for which we are reimbursed from time to time as provided in the trust agreement. As of September 30, 2005, we have advanced to the trustee $5.9 million, net of reimbursements. We believe these advances to be fully recoverable and therefore have not recorded a valuation allowance for them. We do not guarantee the payment of any principal or interest on any debt obligations of the State of Connecticut or the trustee.

We recorded $2.7 million as a valuation allowance related to long-term receivables during the year ended December 31, 2003. The amount was sufficient to cover all net receivables related to Bradley Airport other than the deficiency payments. In September 2004, we received payment of approximately $0.2 million which reduced the other Bradley related amount and we reversed an equal amount of the valuation allowance. It is anticipated that we will continue to reflect a valuation allowance against these receivables until the collectibility in the short term is readily apparent.

6. Borrowing Arrangements

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

	Interest Rate(s)	Due Date	Amount Outstanding
	Interest Rate(s)	Due Date	September 30, 2005		December 31, 2004
			(in thousands)

Senior Credit Facility	Various	June 2007	$	45,000	$	50,000
Senior Subordinated Notes	9 ¼%	March 2008	48,877		48,877
Carrying value in excess of principal	Various	Various	516		640
Joint venture debentures	11.00-15.00%	Various	850		1,308
Capital lease obligations	Various	Various	5,659		6,859
Obligations on Seller notes and other	Various	Various	2,206		2,066
			103,108		109,750
Less current portion			3,375		3,512
			$	99,733	$	106,238

The 9¹/₄% Senior Subordinated Notes (the “9¹/₄% Notes”) were issued in September of 1998 and are due in March of 2008. The 9¼% Notes and senior credit facility contain covenants that limit us from incurring additional indebtedness and issuing preferred stock, restrict dividend payments, limit transactions with affiliates and restrict certain other transactions. Substantially all of our net assets are restricted under these provisions and covenants (See Note 10).

A roll-forward schedule of the 9¹/₄% Notes and carrying value in excess of principal is as follows:

	9¹/₄% Notes		Carrying value in excess of principal
	(in thousands)

Balance at December 31, 2004	$	48,877	$	640
Amortization of carrying value	—		(124		)
Balance at September 30, 2005	$	48,877	$	516

We entered into a senior credit agreement as of June 2, 2004 with LaSalle Bank National Association, as agent and Wells Fargo Bank, N.A., as syndication agent. LaSalle and Wells Fargo have subsequently assigned a portion of their loans and rights as lender to Fifth Third Bank Chicago and U.S. Bank National Association.

The revolving senior credit facility consists of a $90.0 million revolving credit facility that will expire on June 2, 2007. The credit facility includes a letter of credit sub-facility with a sublimit of $30.0 million provided by Wells Fargo and a swing line sub-facility with a sublimit of $5.0 million.

The revolving credit facility bears interest, at our option, at either (1) LIBOR plus the applicable LIBOR Margin ranging between 2.50% and 3.25% depending on the ratio of our total funded indebtedness to our EBITDA from time to time (“Total Debt Ratio”) or (2) the Base Rate (as defined below) plus the applicable Base Rate Margin ranging between 1.00% and 1.75% depending on our Total Debt Ratio. We may elect interest periods of one, two, three or six months for LIBOR based borrowings. The Base Rate is the greater of (i) the rate publicly announced from time to time by LaSalle as its “prime rate”, or (ii) the overnight federal funds rate plus 0.50%.

The senior credit facility includes the following covenants; fixed charge ratio, senior debt to EBITDA ratio, total debt to EBITDA ratio and a limit on net annual capital expenditures, and limit on our ability to incur additional indebtedness, issue preferred stock or pay dividends and contain certain other restrictions on our activities. We are required to repay borrowings under the senior credit facility out of the proceeds of future issuances of debt or equity securities and asset sales, subject to certain exceptions. The senior credit facility is secured by a first lien on substantially all of our assets and any subsequently acquired assets (including a pledge of 100% of the stock of our existing and future domestic guarantor subsidiaries and 65% of the stock of our existing and future foreign subsidiaries). At September 30, 2005 we were in compliance with all of the covenants.

On March 14, 2005 we entered into a second amendment to our Credit Agreement, which permitted us to repurchase shares of our common stock during 2005, on the open market or through private repurchases, for a value not to exceed $6.0 million, provided that we meet certain financial tests.

On March 16, 2005, we entered into a third amendment to our Credit Agreement, pursuant to which the interest pricing of our LIBOR Margin, Base Rate Margin and our Letter of Credit Fee Rate has been reduced by 25 basis points across the entire interest rate pricing grid.

At September 30, 2005, we had $26.5 million of letters of credit outstanding under the senior credit facility, borrowings against the senior credit facility aggregated $45.0 million, and we had $18.5 million available under the senior credit facility.

Consolidated joint ventures have entered into four agreements for stand-alone development projects providing non-recourse funding. These joint venture debentures are collateralized by the specific contracts that were funded and approximate the net book value of the related assets.

We have entered into various financing agreements, which were used for the purchase of equipment.

7. Stock Repurchase

On March 4, 2005, the Board of Directors authorized us to repurchase shares of our common stock for a value not to exceed $6.0 million. We repurchased certain shares in open market transactions from time to time, and our majority shareholder agreed in each case to sell shares equal to its pro-rata ownership at the same price paid by us in each open market purchase. On March 15, 2005, we repurchased 93,170 shares at $15.60 per share on the open market. Our majority shareholder sold to us 99,136 shares at $15.60 per share. The total value of the transaction was approximately $3.0 million.

During the second quarter we repurchased 43,786 shares at an average price of $16.88 per share on the open market. Our majority shareholder sold to us 32,956 shares in the second quarter at an average price of $16.93. The total value of the second quarter transactions was $1.3 million.

During the third quarter we repurchased 39,735 shares at an average price of $18.17 per share on the open market. Our majority shareholder sold to us 52,921 shares in the third quarter at an average price of $17.79. The total value of the third quarter transactions was $1.7 million. The third quarter purchases completed the repurchase program authorized by the Board of Directors on March 4, 2005.

8. Domestic and Foreign Operations

Our business activities consist of domestic and foreign operations. Foreign operations are conducted in Canada. Revenue attributable to foreign operations were less than 10% of consolidated revenues for each of the periods ended September 30, 2005 and September 30, 2004.

A summary of information about our foreign and domestic operations is as follows (in thousands):

	For the three months ended				For the nine months ended
	September 30, 2005		September 30, 2004		September 30, 2005		September 30, 2004
Total revenues, excluding reimbursement of management contract expenses:
Domestic	$	62,256	$	56,716	$	183,958	$	170,569
Foreign	750		498		2,047		1,334
Consolidated	$	63,006	$	57,214	$	186,005	$	171,903

Operating income:
Domestic	$	5,329	$	5,862	$	16,180	$	12,494
Foreign	346		159		875		987
Consolidated	5,675		$	6,021	$	17,055	$	13,481

Net income (loss) before minority interest and income taxes:
Domestic	$	3,120	$	3,516	$	9,278	$	5,787
Foreign	384		142		913		991
Consolidated	$	3,504	$	3,658	$	10,191	$	6,778

	September 30, 2005		December 31, 2004
Identifiable assets:
Domestic	$	195,940	$	185,095
Foreign	9,563		10,007
Consolidated	$	205,503	$	195,102

9. Comprehensive Income

Comprehensive income consists of the following components:

	For the three months ended				For the nine months ended
	September 30, 2005		September 30, 2004		September 30, 2005		September 30, 2004
Net income (loss)	$	4,241	$	3,585	$	10,595	$	(1,635	)
Revaluation of interest rate cap	25		—		165		—
Effect of foreign currency translation	158		144		287		(215		)
Comprehensive income (loss)	$	4,424	$	3,729	$	11,047	$	(1,850	)

10. Income Taxes

Income Taxes:

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows:

	September 30, 2005			December 31, 2004
	(in thousands)
Deferred tax assets:
Net operating loss carry-forwards	$	25,727		$	28,189
Accrued expenses	7,800			7,752
Carrying value in excess of principal	201			250
Accrued compensation	4,120			4,697
Carry forwards	894			712
Book over tax depreciation and amortization	421			(376		)
Other	338			379
Gross deferred tax asset	39,501			41,603
Less: valuation allowance	(26,418		)	(30,938		)
Total deferred tax asset	13,083			10,665

Deferred tax liabilities:
Tax over book goodwill amortization	(12,168		)	(10,665		)
Total deferred tax liabilities	(12,168		)	(10,665		)
Net deferred tax asset	$	915		$	—

SFAS No. 109 “Accounting for Income Taxes” requires that we assess the realizability of our deferred tax assets at each reporting period.

During the quarter ended September 30, 2005, after examining a number of factors including projected future taxable income over a two year look forward period and the effects of the Section 382 limitation on our net operating carry-forwards, we determined that it was more likely than not that we would realize a portion of our deferred tax assets.

As a result of this analysis, we recognized a $915 net credit to income tax expense for the reduction in our valuation allowance during the quarter ended September 30, 2005. Although realization is not assured, management believes it is more likely than not that the $13,083 recorded deferred tax asset will be realized. Such estimates are reevaluated on a quarterly basis with the adjustment to the allowance recorded as an adjustment to the income tax expense generated by the quarterly operating results.

11. Legal Proceedings

Thomas J. Moriarty, Trustee on behalf of Teamsters Local Union No. 727 Pension Fund, Teamsters Local Union No. 727 Health and Welfare Fund and Teamsters Local Union No. 727 Legal and Educational Assistance Fund, Plaintiff, v. Standard Parking Corporation ILand Standard parking Corporation, Defendants, Case No. 03C 9403, United States District Court, Northern District of Illinois, Eastern Division.

This matter was filed on December 30, 2003 by Thomas J. Moriarty, trustee, on behalf of the Teamsters Local 727 Pension, Health and Welfare, and Legal and Educational Assistance Funds. The action was brought under the Labor Management Relations Act (LMRA) and the Employee Retirement Income Security Act of 1974 (ERISA); The lawsuit seeks to recover alleged unpaid contributions to the Teamsters Local 727 benefit funds that plaintiff claims are owed under the collective bargaining agreements in effect for the period January 1, 2000 through December 31, 2002. Plaintiff seeks to recover (1) unpaid contributions; (2) interest on the alleged delinquencies; (3) liquidated damages of 20% of the unpaid contributions, or the interest relating to these contributions (“double interest”); and 4) attorneys fees and audit costs. There have been no significant procedural events in the litigation.

The plaintiff’s final version of the underlying audit was not issued until August 4, 2005. The amount claimed on the audit (including interest, liquidated damages and auditors fees), is approximately $1.64 million. The Company disputes the plaintiff’s audit findings.

Limited discovery from the plaintiff’s auditing firm has been conducted since August 2005. The parties are continuing to review the audit prior to undertaking additional formal discovery. No significant court deadlines exist at the present time. Substantial formal discovery is expected to begin in early 2006 if the parties are unable to resolve the disputed amounts in the audit report.

We have not recorded an additional accrual for potential liabilities arising from this audit as we have disputed the findings, we have not reviewed the claim and we do not believe the amount is estimable at this time.

12. Subsidiary Guarantors

Substantially all of our direct or indirect wholly owned active domestic subsidiaries, fully, unconditionally, jointly and severally guarantee the senior credit facility and the 9¹/₄% Notes discussed in Note 7. Separate financial statements of the guarantor subsidiaries are not separately presented because, in our opinion, such financial statements are not material to investors. The non-guarantor subsidiaries include joint ventures, wholly owned subsidiaries organized under the laws of foreign jurisdictions and our inactive subsidiaries, all of which are included in the consolidated financial statements. The following is summarized combining financial information for our guarantor and non-guarantor subsidiaries (in thousands):

	Standard Parking Corporation		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
Balance Sheet Data:
September 30, 2005
Current assets:
Cash and cash equivalents	$	9,426	$	(93	)	$	4,217	$	—		$	13,550
Notes and accounts receivable, net	9,065		16,663			11,476		10			37,214
Prepaid expenses and supplies	2,931		—			34		—			2,965
Deferred income taxes	5,571		—			—		—			5,571
Total current assets	26,993		16,570			15,727		10			59,300
Leaseholds and equipment, net	13,852		1,709			1,091		—			16,652
Long term receivables, net	5,953		—			—		—			5,953
Advances and deposits	1,345		—			162		—			1,507
Goodwill	110,879		3,585			4,252		—			118,716
Intangible and other	3,040		—			335		—			3,375
Investment in subsidiaries	10,527		—			—		(10,527		)	—
Total assets	$	172,598	$	21,864		$	21,567	$	(10,517	)	$	205,503
Current liabilities:
Accounts payable	$	26,495	$	152		$	2,523	$	—		$	29,170
Accrued and other current liabilities	20,574		2,760			1,798		—			25,132
Current portion of long-term borrowings	2,676		—			699		—			3,375
Total current liabilities	49,745		2,912			5,020		—			57,677
Long-term borrowings, excluding current portion	99,159		3			571		—			99,733
Deferred income taxes	4,656		—			—		—			4,656
Other long-term liabilities	22,315		—			800		—			23,115
Convertible redeemable preferred stock, series D	1		—			—		—			1
Common stockholders’ equity:
Common stock, par value $.001 per share; 12,100,000 shares authorized; 10,126,482 shares issued and outstanding	10		—			—		—			10

Additional paid-in capital	189,071			2		2		—			189,075
Accumulated other comprehensive income	165			—		287		—			452
Accumulated (deficit) equity	(167,466		)	3,763		6,473		(10,527		)	(167,466		)
Treasury stock, at cost, 80,377 shares	(1,459		)	—		—		—			(1,459		)
Total common stockholders’ equity	20,321			3,765		6,762		(10,527		)	20,321
Total liabilities and common stockholders’ equity	$	196,197		$	6,680	$	13,153	$	(10,527	)	$	205,503
December 31, 2004
Current assets:
Cash and cash equivalents	$	8,262		$	—	$	2,098	$	—		$	10,360
Notes and accounts receivable, net	27,841			590		6,177		—			34,608
Prepaid expenses and supplies	2,290			29		11		—			2,330
Total current assets	38,393			619		8,286		—			47,298
Leaseholds and equipment, net	14,900			263		1,318		—			16,481
Long term receivables, net	7,317			—		—		—			7,317
Advances and deposits	1,590			—		226		—			1,816
Goodwill	110,637			3,585		4,120		—			118,342
Intangible and other	3,509			48		290		—			3,848
Investment in subsidiaries	11,319			—		—		(11,319		)	—
Total assets	$	187,665		$	4,515	$	14,241	$	(11,319	)	$	195,102
Current Liabilities:
Accounts payable	$	24,306		$	215	$	1,586	$	—		$	26,107
Accrued and other current liabilities	22,826			1,011		1,957		—			25,794
Current portion of long-term borrowings	2,708			—		804		—			3,512
Total current liabilities	49,840			1,226		4,347		—			55,413
Long-term borrowings, excluding current portion	105,153			10		1,075		—			106,238
Other long-term liabilities	17,332			—		779		—			18,111
Convertible redeemable preferred stock, series D	1			—		—		—			1
Common stockholders’ equity:
Common stock, par value $.001 per share; 12,100,000 shares authorized; 10,487,003 shares issued and outstanding	10			—		—		—			10

Additional paid-in-capital	193,562			2		1			—			193,565
Accumulated other comprehensive income	—			—		116			—			116
Accumulated (deficit) equity	(178,233		)	3,277		7,923			(11,319		)	(178,352		)
Total common stockholders’ equity	15,339			3,279		8,040			(11,319		)	15,339
Total liabilities and common stockholders’ equity	$	187,665		$	4,515	$	14,241		$	(11,319	)	$	195,102

Nine Months Ended September 30, 2005
Parking services revenue:
Lease contracts	$	91,911		$	15,749	$	8,866		$	—		$	116,526
Management contracts	64,716			94		4,669			—			69,479
	156,627			15,843		13,535			—			186,005
Reimbursement of management contract expense	252,688			—		—			—			252,688
Total revenue	409,315			15,843		13,535			—			438,693
Cost of parking services:
Lease contracts	84,021			14,512		7,714			—			106,247
Management contracts	26,381			44		2,366			—			28,791
	110,402			14,556		10,080			—			135,038
Reimbursed management contract expense	252,688			—		—			—			252,688
Total cost of parking services	363,090			14,556		10,080			—			387,726
Gross profit:
Lease contracts	7,890			1,237		1,152			—			10,279
Management contracts	38,335			50		2,303			—			40,688
Total gross profit	46,225			1,287		3,455			—			50,967

General and administrative expenses	27,366			—		875			—			28,241
Depreciation and amortization	4,125			179		467			—			4,771
Valuation allowance related to long-term receivables	900			—		—			—			900
Operating income	13,834			1,108		2,113			—			17,055
Other expenses (income):
Interest expense	6,977			—		104			—			7,081
Interest income	(171		)	—		(46		)	—			(217		)
	6,806			—		58			—			6,864

Income before minority interest and income taxes	7,028			1,108		2,055		—			10,191
Minority interest	99			—		171		—			270
Income tax expense	(826		)	—		152		—			(674		)
Equity in earnings of subsidiaries	2,840			—		—		—			2,840
Net income before preferred stock dividends and increase in value of common stock subject to put/call rights	10,595			1,108		1,732		(2,840		)	10,595
Preferred stock dividends	—			—		—		—			—
Increase in value of common stock subject to put/call rights	—			—		—		—			—
Net income	$	10,595		$	1,108	$	1,732	$	(2,840	)	$	10,595
Income Statement Data:
Nine Months Ended September 30, 2004
Parking services revenue:
Lease contracts	$	84,415		$	16,440	$	8,511	$	—		$	109,366
Management contracts	59,135			123		3,279		—			62,537
	143,550			16,563		11,790		—			171,903
Reimbursed management contract expense	246,525			—		—		—			246,525
Total revenue	390,075			16,563		11,790		—			418,428
Cost of parking services:
Lease contracts	76,647			15,099		7,357		—			99,103
Management contracts	24,586			53		1,166		—			25,805
	101,233			15,152		8,523		—			124,908
Reimbursed management contract expense	246,525			—		—		—			246,525
Total cost of parking services	347,758			15,152		8,523		—			371,433
Gross profit:
Lease contracts	7,768			1,341		1,154		—			10,263
Management contracts	34,549			70		2,113		—			36,732
Total gross profit	42,317			1,411		3,267		—			46,995

General and administrative expenses	24,370			—		627		—			24,997
Depreciation and amortization	4,078			161		485		—			4,724
Management fee-parent company	1,500			—		—		—			1,500

Non-cash stock option compensation expense	2,293			—			—			—			2,293
Operating income	10,076			1,250			2,155			—			13,481
Other expenses (income):
Interest expense	10,802			—			154			—			10,956
Interest income	(357		)	—			(63		)	—			(420		)
Gain on extinguishment of debt	(3,833		)	—			—			—			(3,833		)
	6,612			—			91			—			6,703
Income before minority interest and income taxes	3,464			1,250			2,064			—			6,778
Minority interest	129			—			167			—			296
Income tax expense	120			—			216			—			336
Equity in earnings of subsidiaries	2,931			—			—			(2,931		)	—
Net income before preferred stock dividends and increase in value of common stock subject to put/call rights	6,146			1,250			1,681			(2,931		)	6,146
Preferred stock dividends	7,243			—			—			—			7,243
Increase in value of common stock subject to put/call rights	538			—			—			—			538
Net (loss) income	$	(1,635	)	$	1,250		$	1,681		$	(2,931	)	$	(1,635	)

Cash Flow Data:
Nine Months Ended September 30, 2005
Operating activities:
Net income	$	10,595		$	1,108		$	1,732		$	(2,840	)	$	10,595
Adjustments to reconcile net income to net cash provided by (used in) operations
Depreciation and amortization	4,125			179			467			—			4,771
Amortization of debt issuance costs	567			—			—			—			567
Amortization of carrying value in excess of principal	(124		)	—			—			—			(124		)
Provision for losses on accounts receivable	251			2			9			—			262
Valuation allowance related to long-term receivables	900			—			—			—			900
Deferred income taxes	(915		)	—			—			—			(915		)
Change in operating assets and liabilities	1,175			(760		)	4,119			—			4,534
Net cash provided by (used in) operating activities	16,574			529			6,327			(2,840		)	20,590

Investing activities:
Purchase of leaseholds and equipment	(3,281		)	—		(5		)	—			(3,286		)
Contingent purchase payments	(242		)	—		—			—			(242		)
Net cash used in investing activities	(3,523		)	—		(5		)	—			(3,528		)
Financing activities:
Repurchase of common stock	(5,963		)	—		—			—			(5,963		)
Proceeds from exercise of stock options	14			—		—			—			14
Payments on senior credit facility	(5,000		)	—		—			—			(5,000		)
Payments on long-term borrowings	(160		)	—		(43		)	—			(203		)
Payments on joint venture borrowings	—			—		(457		)	—			(457		)
Payments on debt issuance costs	(118		)	—		—			—			(118		)
Payments on capital leases	(1,727		)	—		(612		)	—			(2,339		)
Net cash used in financing activities	(12,954		)	—		(1,112		)	—			(14,066		)
Effect of exchange rate changes on cash and cash equivalents	—			—		194			—			194
(Decrease) increase in cash and cash equivalents	97			529		5,404			(2,840		)	3,190
Cash and cash equivalents at beginning of period	5,875			1,847		2,638			—			10,360
Cash and cash equivalents at end of period	$	5,972		$	2,376	$	8,042		$	(2,840	)	$	13,550

Nine Months Ended September 30, 2004
Operating activities:
Net income:	$	(1,635	)	$	1,250	$	1,681		$	(2,931	)	$	(1,635	)
Adjustments to reconcile net income to net cash provided by (used in) operations
Preferred stock dividends	7,243			—		—			—			7,243
Increase in value of common stock subject to put/call rights	538			—		—			—			538
Depreciation and amortization	4,078			161		485			—			4,724
Non-cash interest expense	279			—		—			—			279
Amortization of debt issuance costs	836			—		—			—			836
Amortization of carrying value in excess of principal	(1,256		)	—		—			—			(1,256		)
Non-cash stock option compensation expense	2,407			—		—			—			2,407

Provision for losses on accounts receivable	696			28			28			—		752
Write-off debt issuance costs	2,385			—			—			—		2,385
Write-off carrying value in excess of principal related to the 14% senior subordinated second lien notes	(8,207		)	—			—			—		(8,207		)
Change in operating assets and liabilities	(9,668		)	(1,368		)	(965		)	2,931		(9,070		)
Net cash provided by operating activities	(2,304		)	71			1,229			—		(1,004		)
Investing activities:
Purchase of leaseholds and equipment	(908		)	—			—			—		(908		)
Contingent purchase payments	(557		)	—			—			—		(557		)
Net cash used in investing activities	(1,465		)	—			—			—		(1,465		)
Financing activities:
Net proceeds from initial public offering	46,715			—			—			—		46,715
Repurchase of common stock subject to put/call rights	(6,250		)	—			—			—		(6,250		)
Proceeds from senior credit facility	22,350			—			—			—		22,350
Payments on long-term borrowings	(56		)	—			(40		)	—		(96		)
Payments on joint venture borrowings	—			—			(410		)	—		(410		)
Payments on debt issuance costs	(1,402		)	—			—			—		(1,402		)
Payments on capital leases	(1,714		)	—			—			—		(1,714		)
Repurchase of 14% senior subordinated second lien notes	(57,734		)	—			—			—		(57,734		)
Net cash provided by (used in) financing activities	1,909			—			(450		)	—		1,459
Effect of exchange rate changes on cash and cash equivalents	—			—			18			—		18
Increase (decrease) in cash and cash equivalents	(1,860		)	71			797			—		(992		)
Cash and cash equivalents at beginning of period	6,660			78			1,732			—		8,470
Cash and cash equivalents at end of period	$	4,800		$	149		$	2,529		$	—	$	7,478

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion will assist in understanding our financial position and results of operations. The information below should be read in conjunction with the consolidated financial statements, the related notes to the consolidated financial statements and our Form 10-K for the year ended December 31, 2004.

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in this Quarterly Report generally. You should carefully review the risks described in this Quarterly Report as well as the risks described in other documents filed by us and from time to time with the Securities and Exchange Commission. In addition, when used in this Quarterly Report, the words “anticipates,” “plans,” “believes,” “estimates,” and “expects” and similar expressions are generally intended to identify forward-looking statements. Such statements are subject to a number of risks and uncertainties. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by these forward-looking statements or us. We undertake no obligation to revise these forward-looking statements to reflect any future events or circumstances.

We continue to be subject to certain factors that could cause our results to differ materially from expected and historical results (see the “Risk Factors” set forth in our 2004 Form 10-K filed on March 18, 2005, as supplemented or amended in our periodic reports, and our Form S-1 (333-112652) Registration Statement).

Overview

Our Business

We manage parking facilities in urban markets and at airports across the United States and in three Canadian provinces. We do not own any facilities, but instead enter into contractual relationships with property owners or managers.

We operate our clients’ parking 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 revenues and expenses 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 revenues 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, 2005, we operated 85% of our locations under management contracts and 15% under leases.

In evaluating our financial condition and operating performance, management’s primary focus is on our gross profit, total general and administrative expense and general and administrative expense 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 parking tax), 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 cost of parking services, that change will not artificially affect our gross profit. For example, as of September 30, 2005, 85% of our locations were operated under management contracts and 80% of our gross profit for the period ended September 30, 2005 was derived from management contracts. Only 37% of total revenue (excluding reimbursement of management contract expenses), 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 expense, rather than revenue, are management’s primary focus.

Our Initial Public Offering

In June 2004, we closed our initial public offering and the sale of 4,666,667 shares of common stock, including the underwriters’ exercise of an over-allotment option, at a price of $11.50 per share. We raised a total of $53.7 million in gross proceeds from this offering. After deducting the underwriting discount of $3.8 million, and offering expenses of $3.2 million, net proceeds to us were $46.7 million. In conjunction with this offering, we entered into a new $90.0 million senior credit facility and redeemed our 14% Notes in the amount of $57.7 million. In addition, we paid $1.6 million of interest premium on the 14% Notes, $0.8 million of interest previously deferred on the term loan for the old senior credit facility, $6.6 million to purchase the common stock subject to put/call rights and any remaining existing stock options of the common stock (plus a $5.0 million note assumed by our parent company), $1.4 million in debt issuance costs for the new senior credit facility and $0.3 million for professional fees related to the exchange of debt.

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, 2005	December 31, 2004	September 30, 2004

Managed facilities	1,631	1,589	1,570
Leased facilities	276	295	297

Total facilities	1,907	1,884	1,867

Revenue

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

• Parking services revenue—lease contracts. Parking services revenues related to lease contracts consist of all revenue received at a leased facility, including parking receipts (net of parking tax), 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, insurance and other value-added services with respect to managed locations. Development fees received from a customer for which we have provided certain consulting services as part of our offerings of ancillary management services and gains from sales of contracts for which we have no asset basis or ownership interest and would be received as part of a formula buy-out. 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 revenues do 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.

Reimbursement of Management Contract Expense

Reimbursement of management contract expense consists of the direct reimbursement from the property owner for operating expenses incurred under a management contract.

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.

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, chairman of the board 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 useful life.

Management Fee

We were a party to a management agreement with AP Holdings, our former parent company, that provided for periodic payment of annual management fees of $3.0 million. We paid the management fees from 2002 through the second quarter of 2004. The fee was terminated upon the closing of the initial public offering in June 2004.

Valuation Allowance related to Long-term Receivables

Valuation allowance related to long-term receivables is recorded when there is uncertainty of collection or an extended length of time estimated for collection of long-term receivables.

General Business Trends

We believe that sophisticated commercial real estate developers and property managers and owners recognize the potential 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 retention rate for the twelve month period ended September 30, 2005 was 91%, which also reflects our decision not to renew, or to terminate, unprofitable contracts.

We are also experiencing an increase in our ability to leverage existing relationships to increase the scope of services provided, thereby increasing the profit per location. For the quarter ended September 30, 2005 compared to the quarter ended September 30, 2004, we improved average gross profit per location by 10.6% from $8,261 to $9,140.

Results of Operations

Katrina

Our operations were impacted by Katrina in the third quarter. The impact is a $0.2 million reduction in net income and the recording of a $0.5 million provision to cover the deductible portion of our casualty insurance program that we expect to incur in connection with the hurricane related insurance claim that we will file. We estimate that we have sustained insured property damage from the hurricane in excess of $2.7 million and have assumed it will be considered damage caused by wind and not flood damage which has a higher deductible percentage.

We believe that we are entitled to recover the total amount of all losses sustained as a result of Katrina, less the deductible that we have accrued for of $0.5 million. No amounts have been recorded related to any expected recoveries from our insurance carriers.

Three Months ended September 30, 2005 Compared to Three Months ended September 30, 2004

Parking services revenue—lease contracts. Lease contract revenue increased $1.6 million, or 4.1%, to $38.7 million in the third quarter of 2005, compared to $37.1 million in the third quarter of 2004. This increase resulted from an increase of $3.0 million attributable in revenues from new locations that was offset by reductions in revenue attributable to contract expirations of $3.4 million. We experienced an increase in same location revenue of $2.0 million, or 6.0%, for the quarter ended September 30, 2005, compared to the year-ago period. This increase was due to increases in short-term parking revenue of $1.4 million, or 10.0%, and an increase in monthly parking revenue and other of $0.6 million, or 3.6%.

Parking services revenue—management contracts. Management contract revenue increased $4.2 million, or 21.2%, to $24.3 million in the third quarter of 2005 compared to $20.1 million in the third quarter of 2004. This increase resulted from a net increase of $0.9 million attributable to $2.6 million in revenues from new locations that was partially offset by reductions in revenue attributable to contract expirations of $1.7 million. We experienced an increase in same location revenue of $3.3 million, or 18.1%, for the quarter ended September 30, 2005, compared to the year-ago period. This increase was primarily due to additional fees from reverse management locations and ancillary services.

Reimbursement of management contract expense. Reimbursement of management contract expenses increased $8.7 million, or 11.3%, to $85.3 million for the quarter ended September 30, 2005, as compared to $76.6 million for the year-ago period. This increase resulted from additional reimbursements for costs incurred on the behalf of owners.

Cost of parking services—lease contracts. Cost of parking services for lease contracts increased $2.4 million, or 7.3%, to $35.5 million for the third quarter of 2005, compared to $33.1 million in the third quarter of 2004. This increase resulted from an increase of $2.8 million in costs from new locations that was offset by reductions in costs attributable to contract expirations of $3.3 million. We experienced an increase in same location costs of $2.9 million, or 10.3% for the quarter ended September 30, 2005, compared to the year-ago period. This increase was due to increases in rent expense of $2.3 million, or 11.3%, due to percentage rental payments from increased revenue, $0.1 million, or 0.4% for increases in other operating costs and $0.5 million for a provision for the deductible portion of our casualty loss related to the impact of Katrina.

Cost of parking services—management contracts. Cost of parking services for management contracts increased $1.3 million, or 15.9%, to $10.0 million for the third quarter of 2005, compared to $8.7 million in the third quarter of 2004. This increase resulted from a net increase of $0.4 million attributable to $1.6 million in costs from new locations that was partially offset by reductions in costs attributable to contract expirations of $1.2 million. We experienced an increase in same location costs of $0.9 million, or 13.2%, for the quarter ended September 30, 2005 compared to the year-ago period. This increase was due to increases attributable to our reverse management locations for payroll and payroll related expenses of $0.6 million, or 10.0% and increases in operating expenses of $0.3 million or 17.7%.

Reimbursed management contract expense. Reimbursed management contract expenses increased $8.7 million, or 11.3%, to $85.3 million for the quarter ended September 30, 2005, as compared to $76.6 million for the year-ago period. This increase resulted from additional reimbursed costs incurred on the behalf of owners.

Gross profit—lease contracts. Gross profit for lease contracts decreased $0.9 million, or 22.1%, to $3.1 million in the third quarter of 2005 as compared to $4.0 million in the third quarter of 2004. Gross margin for lease contracts decreased to 8.1% in the third quarter of 2005 as compared to 10.8% in the third quarter of 2004. The margin decrease was due to the $0.5 million for a provision for the deductible portion of our casualty loss related to the impact of Katrina and $0.2 million in operations.

Gross profit—management contracts. Gross profit for management contracts increased $2.9 million, or 25.2%, to $14.3 million in the third quarter of 2005 as compared to $11.4 million in the third quarter of 2004. Gross margin for management contracts increased to 58.8% in the third quarter of 2005 as compared to 56.9% in the third quarter of 2004. The margin increase was due to increased revenue on our reverse management contracts.

General and administrative expenses. General and administrative expenses increased $2.1 million, or 26.6%, to $9.9 million for the third quarter of 2005, compared to $7.8 million for the third quarter of 2004. This increase resulted primarily from increases in consulting and accounting fees incurred for regulation 404 certification of $0.4 million, professional fees related to the pending acquisition of the Illinois and Wisconsin operation of Systems Parking, Inc. of $0.1 million, a previously announced one-time bonus to executive management of $0.3 million and increases in payroll and payroll related expenses of $0.9 million. In addition, in the third quarter of 2004, we recorded a benefit of $0.2 million related to a key-man insurance policy and a $0.2 million collection of a receivable that had been previously reserved, which were not repeated in the third quarter of 2005.

Interest expense. Interest expense decreased $0.2 million, or 7.4%, to $2.2 million for the third quarter of 2005, compared to $2.4 million for the third quarter of 2004. The decrease resulted primarily from lower borrowings on the senior credit facility.

Income tax expense. Income tax expense decreased $0.8 million to a credit of $0.8 million for the third quarter of 2005 as compared to no provision in the third quarter of 2004. The credit for 2005 reflects the reduction on our valuation allowance of $0.9 million for deferred tax assets as we recognize a portion of our $72.0 million net operating loss carry forwards.

Nine Months ended September 30, 2005 Compared to Nine Months ended September 30, 2004

Parking services revenue—lease contracts. Lease contract revenue increased $7.1 million, or 6.5%, to $116.5 million in the first nine months of 2005, compared to $109.4 million in the first nine months of 2004. This increase resulted from an increase of $11.6 million attributable in revenues from new locations that was offset by reductions in revenue attributable to contract expirations of $9.6 million. We experienced an increase in same location revenue of $5.1 million, or 5.7%, for the nine months ended September 30, 2005, compared to the year-ago period. This increase was due to increases in short-term parking revenue of $4.8 million, or 14.2%, and an increase in monthly parking revenue of $0.3 million, or 1.2%.

Parking services revenue—management contracts. Management contract revenue increased $7.0 million, or 11.1%, to $69.5 million in the first nine months of 2005 compared to $62.5 million in the first nine months of 2004. This increase resulted from a net increase of $1.9 million attributable to $7.0 million in revenues from new locations that was partially offset by reductions in revenue attributable to contract expirations of $5.1 million. We experienced an increase in same location revenue of $5.1 million, or 9.4%, for the first nine months ended September 30, 2005, compared to the year-ago period. This increase was primarily due to additional fees from reverse management locations and ancillary services.

Reimbursement of management contract expense. Reimbursement of management contract expenses increased $6.2 million, or 2.5%, to $252.7 million for the first nine months ended September 30, 2005, as compared to $246.5 million for the year-ago period. This increase resulted from increased reimbursements for costs incurred on the behalf of owners.

Cost of parking services—lease contracts. Cost of parking services for lease contracts increased $7.1 million, or 7.2%, to $106.2 million for the first nine months of 2005, compared to $99.1 million in the first nine months of 2004. This increase resulted from an increase of $11.0 million in costs from new locations that was offset by reductions in costs attributable to contract expirations of $8.9 million. We experienced an increase in same location costs of $5.1 million, or 6.2% for the first nine months ended September 30, 2005, compared to the year-ago period. This increase was due to increases in rent expense of $3.1 million, or 5.3%, due to percentage rental payments from increased revenue, $1.5 million, or 11.0% for increases in operating expenses and other costs and $0.5 million for a provision for the deductible portion of our casualty loss related to the impact of Katrina.

Cost of parking services—management contracts. Cost of parking services for management contracts increased $3.0 million, or 11.6%, to $28.8 million for the first nine months of 2005, compared to $25.8 million in the first nine months of 2004. This increase resulted from a net increase of $1.0 million attributable to $4.5 million in costs from new locations that was partially offset by reductions in costs attributable to contract expirations of $3.5 million. We experienced an increase in same location costs of $2.0 million, or 10.3%, for the first nine months ended September 30, 2005 compared to the year-ago period. This increase was due to increases attributable to our reverse management locations for payroll and payroll related expenses of $1.6 million, or 11.0%. In addition, favorable changes to loss reserves recognized in the first nine months of 2004 of $0.8 million, did not re-occur in the first nine months of 2005.

Reimbursed management contract expense. Reimbursed management contract expenses increased $6.2 million, or 2.5%, to $252.7 million for the first nine months ended September 30, 2005, as compared to $246.5 million for the year-ago period. This increase resulted from increased reimbursed costs incurred on the behalf of owners.

Gross profit—lease contracts. Gross profit for lease contracts was $10.3 million in the first nine months of 2005 and first nine months of 2004. Gross margin for lease contracts decreased to 8.8% in the first nine months of 2005 as compared to 9.4% in the first nine months of 2004. The margin decrease was due to the $0.5 million for a provision for the deductible portion of our casualty loss and $0.2 million in operations related to the impact of Katrina.

Gross profit—management contracts. Gross profit for management contracts increased $4.0 million, or 10.8%, to $40.7 million in the first nine months of 2005 as compared to $36.7 million in the first nine months of 2004. Gross margin for management contracts decreased slightly to 58.6% in the first nine months of 2005 as compared to 58.7% in the first nine months of 2004. The margin decrease was due to increases in costs on our reverse management contracts and favorable changes to loss reserves in the first nine months of 2004 of $0.8 million that did not re-occur in the first half of 2005.

General and administrative expenses. General and administrative expenses increased $3.2 million, or 13.0%, to $28.2 million for the first nine months of 2005, compared to $25.0 million for the first nine months of 2004. This increase resulted primarily from increases in consulting and accounting fees incurred for regulation 404 certification of $0.6 million, increased costs of being a public company for the full nine months of $0.6 million, professional fees related to the pending acquisition of the Illinois and Wisconsin operation of Systems Parking, Inc. of $0.1 million, a previously announced one-time bonus to executive management of $0.3 million and increases in payroll, payroll related expenses, and other costs of $1.2 million. In addition, in the third quarter of 2004, we recorded a benefit of $0.2 million related to a key-man insurance policy and a $0.2 million collection of a receivable that had been previously reserved, which were not repeated in the third quarter of 2005.

Management fee—parent company. We recorded no management fee in the first nine months of 2005. The fee was terminated upon the closing of the initial public offering in June 2004. We recorded $1.5 million in management fee for the first nine months of 2004.

Valuation allowance related to long-term receivables. We recorded $0.9 million as a valuation allowance related to long term receivables for the first nine months of 2005, compared to no allowance in the first nine months of 2004. The valuation allowance relates to a long-term receivable for a facility in Minnesota where a breakdown in negotiations to restructure the contract has occurred. The allowance was recorded due to the uncertainty of future collections.

Interest expense. Interest expense decreased $3.9 million, or 35.4%, to $7.1 million for the first nine months of 2005, compared to $11.0 million for the first nine months of 2004. The decrease resulted primarily from the redemption of the 14% Notes and refinancing our senior credit facility, in conjunction with our initial public offering in June 2004.

Income tax expense. Income tax expense decreased $1.0 million to a credit of $0.7 million for the first nine months of 2005 compared to a provision of $0.3 million for the first nine months of 2004. The credit for 2005 reflects the reduction on our valuation allowance of $0.9 million for deferred tax assets as we recognize a portion of our $72.0 million net operating loss carry forwards.

Liquidity and Capital Resources

Net Cash Provided by Operating Activities

Net cash provided by operating activities totaled $20.6 million for the first nine months of 2005. Cash provided included $9.7 million from operations, a net increase in operating assets and liabilities of $4.5 million due to an increase in accounts payable of $3.1 million, an increase of $4.2 in other liabilities relating to our casualty insurance program, which was partially offset by increases in accounts receivable of $2.4 and prepaid expenses of $0.4.

Net cash used in operating activities totaled $1.0 million for the first nine months of 2004. Cash used during the first nine months of 2004 included an increase in long-term accounts receivable of $1.7 million, a net increase in prepaid related to our casualty insurance program of $1.5 million, a net decrease in accrued liabilities of $4.6 million primarily related to the interest payments of $4.6 million on the senior subordinated notes, $2.6 million of interest on the 14% Notes, which was the final interest payment on the 14% Notes, offset by an increase in accounts payable of $0.5 million.

Net Cash Used in Investing Activities

Net cash used in investing activities totaled $3.5 million in the first nine months of 2005. Cash used in investing for 2005 included capital expenditures of $3.3 million for capital investments needed to secure and/or extend leased facilities, investment in information system enhancements and infrastructure and $0.2 million for contingent payments on previously acquired contracts.

Net cash used in investing activities totaled $1.5 million in the first nine months of 2004. Cash used in investing for 2004 included capital expenditures of $0.9 million for capital investments needed to secure and/or extend leased facilities, investment in information system enhancements and infrastructure and $0.6 million for contingent payments on previously acquired contracts.

Net Cash Used in Financing Activities

Net cash used in financing activities totaled $14.1 million in the first nine months of 2005. The 2005 activity included $6.0 million to repurchase our common stock, $5.0 million in payments on the senior credit facility, $2.3 million for payments on capital leases and $0.8 million for cash used on joint venture, debt issuance costs and other long-term borrowings.

Net cash provided by financing activities totaled $1.5 million in the first nine months of 2004. The 2004 activity included $46.7 million in net proceeds from the initial public offering, $22.4 million in borrowings on the senior credit facility offset by cash used of $57.7 million for repurchase of the 14% senior subordinated second lien notes, $6.3 million used for the purchase of common stock subject to put/call rights, $1.4 million used for debt issuance costs on the new senior credit facility, $1.7 million used for payments on capital leases and $0.5 million for cash used on joint venture and other long-term borrowings.

Cash and Cash Equivalents

We had cash and cash equivalents of $13.6 million at September 30, 2005, compared to $10.4 million at December 31, 2004. At September 30, 2005, we had $2.7 million in overnight investments.

Outstanding Indebtedness

On September 30, 2005, we had total indebtedness of approximately $103.1 million, a reduction of $6.7 million from December 31, 2004. The $103.1 million includes:

• $45.0 million under our senior credit facility;

• $49.4 million of 9¹/₄% Notes, including $0.5 million in carrying value in excess of principal, which are due in March 2008; and

• $8.7 million of other debt including joint venture debentures, capital lease obligations and obligations on seller notes and other indebtedness.

We believe that our cash flow from operations, combined with additional borrowings under our senior credit facility will be available in an amount sufficient to enable us to pay our indebtedness, or to fund other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the 9¹/₄% Notes, on or before their respective maturities. We believe that we will be able to refinance our indebtedness, including the senior credit facility and the 9¹/₄% Notes, on commercially reasonable terms.

Senior Credit Facility

We entered into a credit agreement as of June 2, 2004 with LaSalle Bank National Association, as agent and Wells Fargo Bank, N.A., as syndication agent. LaSalle and Wells Fargo have subsequently assigned a portion of their loans and rights as lender to FifthThird Bank Chicago and U.S. Bank National Association.

The senior credit facility consists of a $90.0 million revolving credit facility that will expire on June 2, 2007, provided in the following commitments:

• $30.0 million by LaSalle

• $30.0 million by Wells Fargo

• $20.0 million by US Bank

• $10.0 million by Fifth Third

The revolving credit facility includes a letter of credit sub-facility with a sublimit of $30.0 million provided by Wells Fargo and a swing line sub-facility with a sublimit of $5.0 million.

The revolving credit facility bears interest, at our option, at either (1) LIBOR plus the applicable LIBOR Margin ranging between 2.50% and 3.25% depending on the ratio of our total funded indebtedness to our EBITDA from time to time (“Total Debt Ratio”) or (2) the Base Rate (as defined below) plus the applicable Base Rate Margin raging between 1.00% and 1.75% depending on our Total Debt Ratio. We may elect interest periods of one, two, three or six months for LIBOR based borrowings. The Base Rate is the greater of (i) the rate publicly announced from time to time by LaSalle as its “prime rate”, or (ii) the overnight federal funds rate plus 0.50%.

The senior credit facility includes the covenants; fixed charge ratio, senior debt to EBITDA ratio, total debt to EBITDA ratio and a limit on our net annual capital expenditures, that limit our ability to incur additional indebtedness, issue preferred stock or pay dividends and contain certain other restrictions on our activities. We are required to repay borrowings under the new senior credit facility out of the proceeds of future issuances of debt or equity securities and asset sales, subject to certain customary exceptions. The senior credit facility is secured by substantially all of our assets and all assets acquired in the future (including a pledge of 100% of the stock of our existing and future domestic guarantor subsidiaries and 65% of the stock of our existing and future foreign subsidiaries).

At September 30, 2005, we were in compliance with all of our covenants.

On March 16, 2005 we entered into a third amendment to our Credit Agreement, pursuant to which the interest pricing of our LIBOR Margin, Base Rate Margin and our Letter of Credit Fee Rate has been reduced by 25 basis points across the entire interest rate pricing grid.

At September 30, 2005, we had $26.5 million letters of credit outstanding under the senior credit facility, borrowings against the senior credit facility aggregated $45.0 million and we had $18.5 million available under the senior credit facility.

Interest Rate Cap Transactions

We use a variable rate senior credit facility to finance our operations. This facility exposes us to variability in interest payments due to changes in interest rates. If interest rates increase, interest expense increases and conversely, if interest rates decrease, interest expense also decreases. We believe that it is prudent to limit the exposure of an increase in interest rates.

To meet this objective, we entered into two interest rate cap transactions with LaSalle Bank National Association (“LaSalle”), allowing us to continue to take advantage of LIBOR based pricing under our Credit Agreement while hedging our interest rate exposure on a portion of our borrowings under the Credit Agreement (“Rate Cap Transactions”). Under each Rate Cap Transaction, we will receive payments from LaSalle at the end of each quarterly period to the extent that the prevailing three month LIBOR during that period exceeds our cap rate of 2.5%. The first Rate Cap Transaction caps our interest rate on a $30.0 million principal balance at 2.5% for a total of 18 months. The second Rate Cap Transaction caps our interest rate on a $15.0 million principal balance at 2.5% for a total of nine months. Each Rate Cap Transaction began as of January 12, 2005 and will settle each quarter on a date that coincides with our quarterly interest payment dates under the credit agreement. The underlying terms of the interest rate cap, including the notional amounts, the duration and reset dates are identical to the associated debt instruments and therefore hedging results in no ineffectiveness. The interest rate caps are reported at their fair values and are included as prepaid and other assets on the face of the consolidated balance sheet.

Stock Repurchase

On March 4, 2005, the Board of Directors authorized us to repurchase shares of our common stock for a value not to exceed $6.0 million. We intend to repurchase certain shares in open market transactions from time to time, and our majority shareholder has agreed in each case to sell shares equal to its pro-rata ownership at the same price paid by us in each open market purchase. On March 15, 2005, we repurchased 93,170 shares at $15.60 per share on the open market. Our majority shareholder sold to us 99,136 shares at $15.60 per share. The total value of the transaction was approximately $3.0 million.

Letters of Credit

We are required under certain contracts to provide performance bonds. These bonds are typically renewed on an annual basis. As of September 30, 2005, we provided $0.8 million in letters of credit to collateralize our performance bond program.

At September 30, 2005, we provided letters of credit totaling $25.5 million to our casualty insurance carriers to collateralize our casualty insurance program.

Deficiency Payments

Pursuant to our obligations with respect to the parking garage operations at Bradley International Airport, we are required to make certain payments for the benefit of the State of Connecticut and for holders of special facility revenue bonds. The deficiency payments represent contingent interest bearing advances to the trustee to cover operating cash flow requirements. The payments, if any, are recorded as a receivable by us for which we are reimbursed from time to time as provided in the trust agreement. As of September 30, 2005 we have advanced to the trustee $5.9 million, net of reimbursements. We believe these advances to be fully recoverable and therefore have not recorded a valuation allowance for them. We do not guarantee the payment of any principal or interest on any debt obligations of the State of Connecticut or the trustee.

We received repayments (net of deficiency payments) of $0.5 million in the first nine months of 2005 compared to making deficiency payments of $1.8 million in the first nine months of 2004.

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 accounts and the clients then reimburse us for operating expenses and pay our management fee subsequent to month-end. Some clients require a segregated account for the receipts and disbursements at locations.

Gross daily collections are collected by us and deposited into banks using one of three methods, which impact our investment in working capital:

• locations with revenues deposited into our bank accounts reduce our investment in working capital,

• locations that have segregated accounts generally require no investment in working capital, and

• accounts where the revenues are deposited into the clients’ accounts increase our investment in working capital.

Our average investment in working capital depends on our contract mix. For example, an increase in contracts that require all cash deposited in our bank accounts reduces our investment in working capital and improves our liquidity. During the first nine months of 2005 and the first nine months of 2004, there were no material changes in these types of contracts. In addition, our clients may accelerate monthly distributions to them and have an estimated distribution occur in the current month. During the first nine months of 2005 and the first nine months of 2004, there were no material changes in the timing of current month distributions.

Our liquidity also fluctuates on an intra-month and intra-year basis depending on the contract mix and timing of significant cash payments, such as our scheduled interest payments on our notes. 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, we, from time to time, carry a significant cash balance, while also utilizing our senior credit facility.

Risk Factors

Additional funds would need to be reserved for future insurance losses if such losses are worse than expected.

We provide liability and worker’s compensation insurance coverage consistent with our obligations to our clients under our various management contracts and leases. We are obligated to reimburse our insurance carrier for each loss incurred in the current policy year up to the amount of a deductible specified in our insurance policies. The deductible for our various liability and workers’ compensation policies is $250,000. We also purchase property insurance that provides coverage for loss or damage to our property, and in some cases our clients’ property, as well as business interruption coverage for lost operating income and certain associated expenses. The deductible applicable to any given loss under our property insurance policy varies based upon the insured values and the peril that causes the loss. Our financial statements reflect our funding of all such obligations based upon guidance and evaluation we have received from third party insurance professionals. There can be no assurance, however, that the ultimate amount of our obligations will not exceed the amount presently funded or accrued, in which case we would need to set aside additional funds to reserve for any such excess. Our obligations could increase if we receive a greater number of insurance claims or the cost of claims generally increases. A material increase in insurance costs due to a change in the number of claims, claims costs or premiums paid by us could have a material adverse effect on our operating income.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rates

Our primary market risk exposure consists of risk related to changes in interest rates. We use a variable rate senior credit facility to finance our operations. This facility exposes us to variability in interest payments due to changes in interest rates. If interest rates increase, interest expense increases and conversely, if interest rates decrease, interest expense also decreases. We believe that it is prudent to limit the exposure of an increase in interest rates.

To meet this objective, we entered into two interest rate cap transactions with LaSalle Bank National Association (“LaSalle”), allowing us to continue to take advantage of LIBOR based pricing under our Credit Agreement while hedging our interest rate exposure on a portion of our borrowings under the Credit Agreement (“Rate Cap Transactions”). Under each Rate Cap Transaction, we will receive payments from LaSalle at the end of each quarterly period to the extent that the prevailing three month LIBOR during that period exceeds our cap rate of 2.5%. The first Rate Cap Transaction caps our interest rate on a $30.0 million principal balance at 2.5% for a total of 18 months. The second Rate Cap Transaction caps our interest rate on a $15.0 million principal balance at 2.5% for a total of nine months. Each Rate Cap Transaction began as of January 12, 2005 and will settle each quarter on a date that coincides with our quarterly interest payment dates under the credit agreement. The underlying terms of the interest rate cap, including the notional amounts, the duration and reset dates are identical to the associated debt instruments and therefore hedging results in no ineffectiveness. Historically, we have not used derivative financial instruments for speculative or trading purposes.

Our $90.0 million senior credit facility provides for a $90.0 million variable rate revolving facility. Interest expense on such borrowing is sensitive to changes in the market rate of interest. If we were to borrow the entire $90.0 million available under the facility, a 1% increase in the average market rate would result in an increase in our annual interest expense of $0.9 million.

This amount is determined by considering the impact of the hypothetical interest rates on our borrowing cost, but does not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Due to the uncertainty of the specific changes and their possible effects, the foregoing sensitivity analysis assumes no changes in our financial structure.

Foreign Currency Risk

Our exposure to foreign exchange risk is minimal. All foreign investments are denominated in U.S. dollars, with the exception of Canada. We had approximately $4.4 million and $0.3 million of Canadian dollar denominated cash and debt instruments, respectively, at September 30, 2005. We do not hold any hedging instruments related to foreign currency transactions. We monitor foreign currency positions and may enter into certain hedging instruments in the future should we determine that exposure to foreign exchange risk has increased.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Within the 90-day period prior to the filing date of this report, our chief executive officer and chief financial officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-14 of the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon their evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were adequate and effective and designed to ensure that material information relating to us (including our consolidated subsidiaries) required to be disclosed by us in the reports we file under the Exchange Act is recorded, processed, summarized and reported within the required time periods.

Changes in Internal Controls

There were no significant changes in our internal controls or any other factors that could significantly affect these controls subsequent to the date of the evaluation referred to above.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table contains detail related to the repurchase of common stock based on the date of trade during the quarter ended September 30, 2005.

Quarter Ended September 30, 2005	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan or Program
					($ in thousands)
From July 1 to July 30	12,279	$	16.63	12,279	$	1,496
From August 1 to August 31	23,516	17.70		23,516	1,080
From September 1 to September 30	56,861	18.34		56,861	37

Total for the quarter ended September 30	92,656	$	17.95	92,656	$	37

Item 6. Exhibits

Exhibit Number		Description

31.1		Section 302 Certification dated November 11, 2005 for James A. Wilhelm, Chief Executive Officer and President
31.2		Section 302 Certification dated November 11, 2005 for G. Marc Baumann, Executive Vice President, Chief Financial Officer and Treasurer
31.3		Section 302 Certification dated November 11, 2005 for Daniel R. Meyer, Senior Vice President, Corporate Controller and Assistant Treasurer
32.1		Certification pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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.

	STANDARD PARKING CORPORATION


Dated: November 11, 2005	By:	/s/ DANIEL R. MEYER
		Daniel R. Meyer Senior Vice President, Corporate Controller and Assistant Treasurer (Principal Accounting Officer and Duly Authorized Officer)


Dated: November 11, 2005	By:	/s/ G. MARC BAUMANN
		G. Marc Baumann Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)

INDEX TO EXHIBITS

Exhibit Number		Description

31.1		Section 302 Certification dated November 11, 2005 for James A. Wilhelm, Chief Executive Officer and President
31.2		Section 302 Certification dated November 11, 2005 for G. Marc Baumann, Executive Vice President, Chief Financial Officer and Treasurer
31.3		Section 302 Certification dated November 11, 2005 for Daniel R. Meyer, Senior Vice President, Corporate Controller and Assistant Treasurer
32.1		Certification pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Good

Central Parking Finance Trust PFD TR CV SECS (CRLKP) 10-Q2005 Q3 Quarterly report

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