Central Parking Corporation

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)


þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2005.


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___

Commission file number 001-13950

CENTRAL PARKING CORPORATION

(Exact Name of Registrant as Specified in Its Charter)


Tennessee		62-1052916

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


2401 21st Avenue South, Suite 200, Nashville, Tennessee		37212

(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code:		(615) 297-4255

Securities Registered Pursuant to Section 12(b) of the Act:		None

Securities Registered Pursuant to Section 12(g) of the Act:


Title of Each Class		Name of each Exchange on which registered

Common Stock, $0.01 par Value		New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes £ No R

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes £ No R

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 R NO £

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. £

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes £ No R

The aggregate market value of the Common Stock held by non-affiliates of the registrant, based on the closing price of the Common Stock on the New York Stock Exchange on March 31, 2005 (the last business day of the most recently completed second fiscal quarter) was $294,577,952. For purposes of this response, the registrant has assumed that its directors, executive officers, and beneficial owners of 5% or more of its Common Stock are the affiliates of the registrant.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.


Class		Outstanding at December 13, 2005

Common Stock, $0.01 par value		31,939,656

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement for the Annual Meeting of Shareholders to be held on February 21, 2006 are incorporated by reference into Part III, items 10, 11, 12, 13 and 14 of this Form 10-K.

IMPORTANT INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

Certain information discussed in this Annual Report on Form 10-K, including but not limited to, information under the captions “Business”; “Properties”; “Legal Proceedings”; “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and “Quantitative and Qualitative Disclosures About Market Risk”, and the information incorporated herein by reference, may constitute forward-looking statements for purposes of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks and uncertainties, including, without limitation, the factors set forth under the caption “Risk Factors.” Forward-looking statements include, but are not limited to, discussions regarding the Company’s strategic plan, operating strategy, growth strategy, acquisition strategy, cost savings initiatives, industry, economic conditions, financial condition, liquidity and capital resources, results of operations and impact of new accounting pronouncements. Such statements include, but are not limited to, statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “seeks,” “estimates,” “projects,” “objective,” “strategy,” “outlook,” “assumptions,” “guidance,” “forecasts,” “goal,” “intends,” “pursue,” “will likely result,” “will continue” or similar expressions. For those statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

The following important factors, in addition to those discussed elsewhere in this document, and the documents which are incorporated herein by reference, could affect the future financial results of the Company and could cause actual results to differ materially from those expressed in forward-looking statements contained in news release and other public statements by the Company and incorporated by reference in this document:

the Company’s ability to achieve the goals described in this report and other reports filed with the Securities and Exchange Commission, including but not limited to, the Company’s ability to

	-		increase cash flow by reducing operating costs, accounts receivable and indebtedness;

	-		cover the fixed costs of its leased and owned facilities and maintain adequate liquidity through its cash resources and credit facility;

	-		integrate future acquisitions, in light of challenges in retaining key employees, synchronizing business processes and efficiently integrating facilities, marketing, and operations;

	-		comply with the terms of its credit facility or obtain waivers of noncompliance;

	-		reduce operating losses at unprofitable locations;

	-		form and maintain strategic relationships with certain large real estate owners and operators; and

	-		renew existing insurance coverage and to obtain performance and surety bonds on favorable terms;

	-		successful implementation of the Company’s strategic plan and other operating strategies;

	-		interest rate fluctuations;

	-		the loss, or renewal on less favorable terms, of existing management contracts and leases and the failure to add new locations on favorable terms;

	-		the timing of property-related gains and losses;

	-		pre-opening, start-up and break-in costs of parking facilities;

	-		player strikes or other events affecting major league sports;

	-		changes in economic and business conditions at the local, regional, national or international levels;

	-		changes in patterns of air travel or automobile usage, including but not limited to the effects of weather and fuel prices on travel and transportation patterns;

	-		the impact of litigation;

	-		higher premium and claims costs relating to medical, liability, worker’s compensation and other insurance programs;

PART I

Item 1. Business

General

Central Parking Corporation (“Central Parking” or the “Company”) is a leading provider of parking and related services. As of September 30, 2005, Central Parking operated 3,399 parking facilities containing 1,564,356 spaces in 37 states, the District of Columbia, Canada, Puerto Rico, Mexico, Chile, Colombia, Peru, Venezuela, the United Kingdom, the Republic of Ireland, Spain, Germany, Poland, Greece and Switzerland.

Central Parking operates or manages multi-level parking facilities and surface lots. It also provides ancillary services, including parking consulting, shuttle bus, valet, parking meter collection and enforcement, and billing services. Central Parking operates parking facilities under three general types of arrangements: management contracts, leases and fee ownership. As of September 30, 2005, Central Parking operated 1,671 parking facilities under management contracts and 1,548 parking facilities under leases. In addition, the Company owned 180 parking facilities either independently or through joint ventures.

Parking Industry

The commercial parking services business is very fragmented, consisting of a few national companies and numerous small, privately held local and regional operators. Central Parking believes it has certain competitive advantages over many of these companies, including advantages of scale, financial resources and technology.

During the 1980’s, the high level of construction activity in the United States resulted in a significant increase in the number of parking facilities. Since that time, construction activity has slowed and the primary growth opportunity for parking companies has become “take-aways” or competing with other parking operators for existing locations. Although some growth in revenues from existing operations is possible through redesign, increased operational efficiency, or increased facility use and prices, such growth is ultimately limited by the size of a facility and market conditions.

Management believes that most commercial real estate developers and property owners view services such as parking as potential profit centers rather than cost centers. Many of these parties outsource parking operations to parking management companies in an effort to maximize profits or leverage the original rental value to a third-party lender. Parking management companies can increase profits by using managerial skills and experience, operating systems, and operating controls unique to the parking industry.

Management continues to view privatization of certain governmental operations and facilities as an opportunity for the parking industry. For example, privatization of on-street parking fee collection and enforcement in the United Kingdom has provided significant opportunities for private sector parking companies. In the United States, several cities have awarded on-street parking fee collection and enforcement and parking meter service contracts to private sector parking companies such as Central Parking.

Strategic Plan

In August 2005, the Company announced a new strategic plan designed to streamline operations and focus on core competencies and key markets with the greatest potential for growing profits. The plan includes the following components:

	•		Exit marginal and low growth markets (cities and countries). As a key component of our strategy to reduce costs and become more focused on high-growth markets, the Company plans to divest operations in up to 15 cities in the United States and up to eight foreign countries. Most of the operations to be divested in the United States are in small to medium-sized markets that management believes have limited growth potential. The Company intends to maintain a strong presence and focus its growth efforts in the major metropolitan areas throughout the United States. Internationally, the operations to be divested are primarily in countries in which the Company has a small market share and significant barriers to growth. The Company is seeking buyers for the operations to be divested and the sale process is expected to take up to 12 months. The operations that the Company plans to divest represent less than 4% of revenues.

	•		Reduce the number of marginal and unprofitable operating agreements. In its remaining markets, the Company intends to improve profit margins by reducing the number of marginal and unprofitable operating agreements and focus on fewer but more profitable locations. The Company will continue its program of seeking to eliminate unprofitable leases through renegotiation, operational improvements and selective buyouts. Low-margin management agreements and leases will be targeted for renegotiation or termination.

	•		Target national accounts and other market segments with high growth potential. The Company intends to place more focus on national accounts and other specialized parking market segments, including stadiums and arenas, airports, on-street and hospitality valet. Additional resources will be dedicated to these specialized markets. A senior-level manager has been named to focus on

			the stadium and arena market segment and a vice president for national accounts also has been named. In addition, the Company’s USA Parking subsidiary, which is focused on the high-end hospitality industry, is expanding its marketing activities outside of its traditional home base of Florida. The Company will continue its efforts to expand its share of the airport parking segment and will seek to grow its on-street business.

	•		Re-emphasize the importance of client relationships in retaining and growing the management contract segment. The Company intends to re-emphasize the importance of developing and maintaining strong client relationships at the local, regional and national levels through new training initiatives and incentives with the primary goals of improving the Company’s management contract retention rates and increasing its share of the management contract business.

	•		Expand the Operational Excellence initiative company-wide. Through its Operational Excellence, the Company seeks to improve revenues, margins and profits at the location level. The Company intends to dedicate additional resources to its Operational Excellence initiative to expand its operational audit and training programs and add Operational Excellence managers in several key markets.

	•		Increase investment in technology to reduce costs and improve operational efficiencies. The Company plans to deploy additional technology at the lot level, including automated pay stations and other revenue collection technology. In addition, the Company will continue to automate more field and corporate accounting processes. Management believes this investment will streamline payment processing, improve timeliness of reporting and drive operational efficiencies. In addition, management believes that the Company’s application of technology to its operations represents a competitive advantage over smaller operators with more limited resources.

	•		Continue to pursue opportunistic sales of real estate. The Company plans to continue its previously announced strategy of pursuing opportunistic sales of real estate in situations where the Company can achieve a purchase price that represents a substantial multiple to earnings. The Company has acquired a significant portfolio of real estate properties. In certain situations, some of these properties have increased in value significantly such that the best use for the property is something other than parking. In these situations, the Company will consider selling the property for development. During fiscal year 2005, the Company sold 10 properties for a total of $81.5 million and anticipates additional sales during next fiscal year.

The new strategic plan is designed to capitalize on Central Parking’s brand, experience and relationships to grow the profits of the Company. Implementation of the plan is expected to take approximately twelve months.

Operating Strategy

In addition to the strategic plan described above, Central Parking seeks to increase the revenues and profitability of its parking facilities through a variety of operating strategies, including the following:

Manage Costs

To provide competitively priced services, the Company must contain costs. Managers analyze staffing and cost control issues, and each is tracked on a monthly basis to determine whether financial results are within budgeted ranges. Because of the substantial performance-based components of their compensation, managers at the city level and above are motivated to contain the costs of their operations.

Emphasize Sales and Marketing Efforts

Central Parking’s management is actively involved in developing and maintaining business relationships and in exploring opportunities for growth. Central Parking’s marketing efforts are designed to expand its operations by developing lasting relationships with major real estate developers and asset managers, business and government leaders, and other clients. Central Parking encourages its managers to pursue new opportunities at the local level while simultaneously targeting key clients and projects at a national level. Management believes that Central Parking’s relative size, financial resources and systems give it a competitive advantage in winning new business and make it an attractive partner for joint venture and other opportunities. In addition, Central Parking believes that its performance-based compensation system, which is designed to reward managers for increasing profitability in their respective areas of responsibility, is an important element of this strategy.

Leverage Established Market Presence

Central Parking has an established presence in multiple markets, representing platforms from which it can build. Because of the relatively fixed nature of certain overhead at the city level and the resources that can be shared in specific markets, management believes it has the opportunity to increase the Company’s profit margins as it grows its presence in established markets.

Pursue Privatization Opportunities and Airports

The Company pursues privatization opportunities, including on-street parking fee collection and enforcement, shuttle services and airport parking management. The Company currently has contracts for parking meter collection and enforcement in 29 cities, including; Charlotte, North Carolina; Toledo, Ohio; Daytona Beach, Florida; and Edinburgh, Scotland. The Company currently provides airport parking management services to approximately 30 airports, including airports in Miami, New Orleans, Houston, and Detroit and Washington Dulles.

Empower Local Managers; Provide Corporate Support

The Company’s strategy is to establish a successful balance between centralized and decentralized management. Because its business is dependent, to some extent, on relationships with clients, Central Parking provides its managers with a significant degree of autonomy in order to encourage prompt and effective responses to local market demands. In conjunction with this local operational authority, the Company provides, through its corporate office, services that may not be readily available to independent operators such as management support, human resources management, marketing and business expertise, training, and financial and information systems. Services performed primarily at the corporate level include billing, quality improvement oversight, accounts payable, financial and accounting functions, human resources, legal services, policy and procedure development, systems design, real estate management and corporate acquisitions and development.

The Company’s operations are managed based on segments administered by executive vice presidents and senior vice presidents. These segments are generally organized geographically, with exceptions depending on the needs of specific regions. See Note 17 to the Consolidated Financial Statements for financial information regarding the Company’s business segments.

Utilize Performance-Based Compensation

Central Parking’s performance-based compensation system rewards managers at the general (city) manager level and above for the profitability of their respective areas of responsibility.

Maintain Well-Defined Professional Management Organization

In order to ensure professionalism and consistency in Central Parking’s operations, provide a career path opportunity for its managers, and achieve a balance between autonomy and accountability, Central Parking has established a structured management organization.

For its managerial positions, Central Parking seeks to recruit college graduates or people with previous parking services or hospitality industry experience, and requires that they undergo a training program. New managers typically are assigned to a particular facility where they are supervised as they manage one to five employees. The Company’s management trainee program teaches a wide variety of skills, including organizational skills and basic management techniques. As managers develop and gain experience, they have the opportunity to assume expanded responsibility, be promoted to higher management levels and increase the performance-based component of their compensation. This well-defined structure provides a career path that is designed to be an attractive opportunity for prospective new hires. In addition, management believes the training and advancement program has enabled Central Parking to instill a high level of professionalism in its employees.

Offer Ancillary Services

Central Parking provides services that are complementary to parking facility management. These services include consulting services (parking facility design, layout and utilization); on-street parking fee collection and enforcement services; shuttle bus and van services; and, accounts receivable billing systems and services. These ancillary services did not constitute a significant portion of Central Parking’s revenues in fiscal year 2005, but management believes that the provision of ancillary services can be important in obtaining new business and preparing the Company for future changes in the parking industry.

Focus on Retention of Patrons

For the Company to succeed, its parking patrons must have a positive experience at Company facilities. Accordingly, the Company seeks to have well lit, clean facilities and cordial employees. Each facility manager has primary responsibility for the environment at the facility, and is evaluated on his or her ability to retain parking patrons. The Company also monitors customer satisfaction through customer surveys.

Maintain Disciplined Facility Site Selection Analysis

In existing markets, the facility site selection process begins with identification of a possible facility site and the analysis of projected revenues and costs at the site by general managers and regional managers. The managers then typically conduct an examination of a location’s potential demand based on traffic patterns and counts, area demographics, and potential competitors. Pro forma financial statements are then developed and a Company representative will meet with the property owner to discuss the terms and structure of the agreement.

The Company seeks to distinguish itself from its competitors by combining a reputation for professionalism and quality management with operating strategies designed to increase the revenues of parking operations for its clients. The Company’s clients include some of the nation’s largest owners, developers and managers of mixed-use projects, office buildings and hotels as well as municipalities and other governmental agencies and airport authorities. Parking facilities operated by the Company include, among others, certain terminals operated by BAA Heathrow International Airport (London), Houston Airport, Detroit Airport, Strategic Rail Authority Parking (London), the Prudential Center (Boston), Turner Field (Atlanta), Coors Field (Denver), and various parking facilities owned by the Hyatt and Westin hotel chains, Faison Associates, May Department Stores, Trizec Office Properties, Jones Lang LaSalle, Millenium Partners, Shorenstein and Crescent Real Estate. None of these clients accounted for more than 5% of the Company’s total revenues for fiscal year 2005.

Acquisitions

The Company’s acquisition strategy is very selective and focuses primarily on acquisitions that the Company believes will enable it to become a more efficient and cost-effective provider in selected markets. The strategy also focuses on businesses that have the potential to enhance future cash flows and can be acquired at reasonable valuations. Central Parking believes it has the opportunity to recognize certain economies of scale by making acquisitions in markets where the Company already has a presence. Management believes acquisitions also can be an effective means of entering new markets, thereby quickly obtaining both operating presence and management personnel. The Company acquired Sterling Parking LTD in May 2003. No acquisitions were completed in 2004 or 2005. See Note 2 to the Consolidated Financial Statements and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Sales and Marketing

Central Parking’s sales and marketing efforts are designed to expand its operations by developing and maintaining relationships with major real estate developers and asset managers, business and government leaders, and other clients. Central Parking encourages its managers to pursue new opportunities at the local level while selectively targeting key clients and projects at a national level.

Local

At the local level, Central Parking’s sales and marketing efforts are decentralized and directed towards identifying new expansion opportunities within a particular city or region. Managers are trained to develop the business contacts necessary to generate new opportunities and monitor their local markets for take-away and outsourcing opportunities. Central Parking provides its managers with a significant degree of autonomy in order to encourage prompt and effective responses to local market demands, which is complemented by management support and marketing training through Central Parking’s corporate offices. By developing business contacts locally, Central Parking’s managers often get the opportunity to bid on projects when asset managers and property owners are dissatisfied with other operators and also learn in advance of possible new projects.

National

At the national level, Central Parking’s marketing efforts are undertaken primarily by upper-level management, which targets developers, governmental entities, the hospitality industry, mixed-use projects, and medical facilities. These efforts are directed at

operations that generally have national name recognition, substantial demand for parking related services, and the potential for nationwide growth. For example, Central Parking’s current clients include, among other national real estate companies and hotel chains, Millennium Partners, Faison Associates, Shorenstein, May Department Stores, Crescent Real Estate, Trizec Office Properties, Jones Lang LaSalle, Westin Hotels, Ritz Carlton Hotels and Hyatt Hotels. Management believes that providing high-quality, efficient services to such companies can lead to additional opportunities as those clients expand their operations. Management believes outsourcing by parking facility owners will continue to be a source for additional facilities, and management believes the Company’s global presence, experience and reputation with large real estate asset managers give it a competitive advantage in this area.

International

Central Parking’s international operations began in the early 1990’s with the formation of an international division. The Company generally has entered foreign markets either through consulting projects or by forming joint ventures with established local entities. Consulting projects allow Central Parking to establish a presence and evaluate the prospects for growth in a given market without investing a significant amount of capital. Likewise, forming joint ventures with local partners allows Central Parking to enter new foreign markets with reduced operating and investment risks.

Operations in London began in 1991 with a single consulting agreement and, as of September 30, 2005, had grown to 105 locations in the United Kingdom including four airports, eight rail operating companies and parking meter enforcement and ticketing services for thirteen local governments that have privatized these services. Central Parking began expansion into Mexico in July 1994 by forming a joint venture with G. Accion, (formerly Fondo Opcion), an established Mexican developer, and as of September 30, 2005, operated 127 facilities in Mexico. In September 2005, the Company entered into a letter of intent to sell its 50% interest in its joint venture company in Mexico to its partner. The letter of intent is subject to the negotiation and execution of a definitive agreement and there can be no assurance that the transaction will be completed. As of September 30, 2005, Central Parking also operated 134 facilities in Canada, 5 facilities in Spain, 10 in Poland, 27 in Chile, 4 in Venezuela, 18 in Colombia, 12 in Peru, 2 in Switzerland, 7 in the Republic of Ireland, and 8 in Greece. The Company also operates on-street parking services in the United Kingdom, Germany and the Republic of Ireland. In 1996, Central Parking acquired a 50% equity interest in a joint venture, which operated 19 facilities in Germany as of September 30, 2005. To manage its international expansion efforts, the Company has allocated responsibilities for international operations to the President of International Operations.

Operating Arrangements

Central Parking operates parking facilities under three general types of arrangements: management contracts, leases, and fee ownership. The following table sets forth certain information regarding the number of managed, leased, or owned facilities as of the specified dates:


	September 30,
	2005		2004		2003
Managed		1,671		1,615		1,714
Leased		1,548		1,626		1,798
Owned		180		192		205

Total		3,399		3,433		3,717

See Item 2. “Properties” for certain information regarding the Company’s managed, leased and owned facilities. The general terms and benefits of these types of arrangements are discussed below. Financial information regarding these types of arrangements is set forth in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Management Contracts

Management contract revenues consist of management fees (both fixed and performance based) and fees for ancillary services such as insurance, accounting, benefits administration, equipment leasing, and consulting. The cost of management contracts includes insurance premiums and claims and other indirect overhead. The Company’s responsibilities under a management contract as a facility manager generally include hiring, training, and staffing parking personnel, and providing collections, accounting, record keeping and insurance. Most management contracts provide that the Company is reimbursed for out-of-pocket expenses. Central Parking is not responsible under most of its management contracts for structural, mechanical, or electrical maintenance or repairs, or for providing security or guard services or for paying property taxes. In general, management contracts are for terms of one to three years and are renewable for successive one-year terms, but are typically cancelable by the property owner on 30 days’ notice. With respect to insurance, the Company’s clients have the option of obtaining liability insurance on their own or having Central Parking provide insurance as part of the services provided under the management contract. Because of the Company’s size and claims experience, management believes it can purchase such insurance at lower rates than the Company’s clients can generally obtain on their own.

Leases

The Company’s leases generally require the payment of a fixed amount of rent, regardless of the amount of revenues or profitability generated by the parking facility. In addition, many leases also require the payment of a percentage of gross revenues above specified threshold levels. In general, leased facilities require a longer commitment, a larger capital investment for the Company, and represent a greater risk than managed facilities due to the relatively fixed nature of expenses. However, leased facilities often provide a greater opportunity for long-term growth in revenues and profits. The cost of parking includes rent, payroll and related benefits, depreciation, maintenance, insurance, and general operating expenses. Under its leases, the Company is typically responsible for all facets of the parking operations, including pricing, utilities, and routine maintenance. In short to medium term leases, the Company is generally not responsible for structural, mechanical or electrical maintenance or repairs, or property taxes. However, the Company does often have these responsibilities in longer-term leases. Lease arrangements are typically for terms of three to twenty years, and generally provide for increases in base rent that are either pre-determined and recognized on a straight-line basis or have contingent payments based on changes in indices, such as the Consumer Price Index, and are recognized when incurred.

Fee Ownership

Ownership of parking facilities, either independently or through joint ventures, typically requires a larger capital investment and greater risk than managed or leased facilities, but provides maximum control over the operation of the parking facility and the greatest profit potential of the three types of operating arrangements. All owned facility revenues flow directly to the Company, and the Company has the potential to realize benefits of appreciation in the value of the underlying real estate if the property is sold. The ownership of a parking facility brings the Company complete responsibility for all aspects of the property, including all structural, mechanical or electrical maintenance or repairs and property taxes.

Joint Ventures

The Company historically has sought joint venture partners who are established local or regional real estate developers. Joint ventures typically involve a 50% interest in a development where the parking facility is a part of a larger multi-use project, allowing the Company’s joint venture partners to benefit from a capital infusion to the project. Joint ventures offer the revenue growth potential of owned lots with lower capital requirements. The Company has interests in joint ventures that own or operate parking facilities located in the United States as well as several other countries.

DBE Partnerships

Central Parking is a party to a number of disadvantaged business enterprise partnerships. These are generally partnerships formed by Central Parking and a disadvantaged business person to manage a facility. Central Parking generally owns 60% to 75% of the partnership interests in each partnership and typically receives management fees before partnership distributions are made to the partners.

Competition

The parking industry is fragmented and highly competitive with relatively low barriers to entry. The Company competes with a variety of other companies to manage, lease and own parking facilities, and faces competition for customers and employees to operate parking facilities. Although there are relatively few large, national parking companies that compete with the Company, numerous companies, including real estate developers, hotel and property management companies, and national financial services companies either compete currently or have the potential to compete with parking companies. Municipalities and other governmental entities also operate parking facilities that compete with Central Parking. In addition, the Company faces competition from numerous regional and local parking companies and from owner-operators of facilities who are potential clients for the Company’s management services. Construction of new parking facilities near the Company’s existing facilities increases the competition for customers and employees and can adversely affect the Company’s business.

Management believes that it competes for management clients based on a variety of factors, including fees charged for services; ability to generate revenues and control expenses for clients; accurate and timely reporting of operational results; quality of customer service; and ability to anticipate and respond to industry changes. Factors that affect the Company’s ability to compete for leased and owned locations include the ability to make capital investments, pre-paid rent payments and other financial commitments; long-term financial stability; and the ability to generate revenues and control expenses. The Company competes for parking customers based primarily on rates charged for parking; convenience (location) of the facility; and quality of customer service. Factors affecting the Company’s ability to compete for employees include wages, benefits and working conditions.

Seasonality

The Company’s business is subject to a modest amount of seasonality. Historically, the Company’s results have been higher during the quarters that end on December 31 and June 30. The Company attributes the relative lower results of the quarters that end on March 31 and September 30 to, among other factors, winter weather and summer vacations. There can be no assurance that this

trend will continue in future years. For further discussion of this issue see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Insurance

Because of the size of the operations covered and its claims experience, the Company purchases liability insurance policies at prices that management believes represent a discount to the prices that would typically be charged to parking facility owners on a stand-alone basis. Pursuant to its management contracts, the Company charges its management clients for insurance at rates it believes are competitive. In each case, the Company’s management clients have the option of purchasing their own policies, provided the Company is named as an additional insured. A reduction in the number of clients that purchase insurance through the Company could have a material adverse effect on the operating earnings of the Company. In addition, a material increase in insurance costs due to an increase in the number of claims, higher claims costs or higher premiums paid by the Company could have a material adverse effect on the operating earnings of the Company. In this regard, the Company has experienced a substantial increase in the premiums it pays for insurance in recent years and the Company has experienced a significant increase in claims costs, including liability, group health, and worker’s compensation. These increased costs have adversely affected the Company’s profitability. The Company has been able to recover a portion of these increased costs through cost sharing programs, however, there can be no assurance the Company will be able to fully recover or reduce these increased costs.

Regulation

The Company’s business is subject to numerous federal, state and local laws and regulations, and in some cases, municipal and state authorities directly regulate parking facilities. The facilities in New York City are, for example, subject to extensive governmental restrictions concerning numbers of cars, pricing, structural integrity and certain prohibited practices. Many cities impose a tax or surcharge on parking services, which generally range from 10% to 50% of revenues collected. Several state and local laws have been passed in recent years that encourage car-pooling and the use of mass transit or impose certain restrictions on automobile usage. These types of laws have adversely affected the Company’s revenues and could continue to do so in the future. An example was the restrictions imposed by the City of New York in the wake of the September 11 terrorist attacks, which included street closures, traffic flow restrictions and a requirement for passenger cars entering certain bridges and tunnels to have more than one occupant during the morning rush hour. Although these restrictions have been eased, the City of New York has considered other actions, including higher tolls, increased taxes and vehicle occupancy requirements in certain circumstances, which could adversely impact the Company. The Company is also affected by zoning and use restrictions, increases in real estate taxes, and other laws and regulations that are common to any business that owns real estate.

The Company is subject to numerous federal, state and local employment and labor laws and regulations, including Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Family Medical Leave Act, wage and hour laws, and various state and local employment discrimination and human rights laws. Several cities in which the Company has operations either have adopted or are considering the adoption of so-called “living wage” ordinances which could adversely impact the Company’s profitability by requiring companies that contract with local governmental authorities and other employers to increase wages to levels substantially above the federal minimum wage. In addition, the Company is subject to provisions of the Occupational Safety and Health Act of 1970, as amended (“OSHA”) and related regulations. Various other governmental regulations affect the Company’s operation of parking facilities, both directly and indirectly, including the Americans with Disabilities Act (“ADA”). Under the ADA, public accommodations, including many parking facilities, are required to meet certain federal requirements related to access and use by disabled persons. For example, the ADA generally requires garages to include handicapped spaces, headroom for wheelchair vans, and elevators that are operable by disabled persons.

Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under or in such property. Such laws typically impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. In connection with the ownership or operation of parking facilities, the Company may be liable for any such costs. Although Central Parking is currently not aware of any material environmental claims pending or threatened against it, there can be no assurance that a material environmental claim will not be asserted against the Company. The cost

of defending against claims of liability, or remediating a contaminated property, could have a material adverse effect on the Company’s financial condition or results of operations.

The Company also is subject to various federal and state antitrust and consumer laws and regulations including the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), which requires notification filings and waiting periods in connection with certain mergers and acquisitions. In connection with the Company’s merger with Allright Corporation (“Allright”) in March 1999, the Antitrust Division of the United States Department of Justice filed a complaint in U.S. District Court for the District of Columbia seeking to enjoin the merger on antitrust grounds. In addition, the Company received notices from several states, including Tennessee, Texas, Illinois and Maryland, that the attorneys general of those states were reviewing the merger from an antitrust perspective. Several of these states also requested certain information relating to the merger and the operations of Central Parking and Allright in the form of civil investigative demands. Central Parking and Allright entered into a settlement agreement with the Antitrust Division on March 16, 1999, under which the two companies agreed to divest a total of 74 parking facilities in 18 cities, representing approximately 18,000 parking spaces. The settlement agreement also prohibited Central Parking and Allright from, among other things, operating any of the divested properties for a period of two years following the divestiture of each facility. The two-year prohibition on operating the divested properties has expired. None of the states that reviewed the transaction from an antitrust perspective became a party to the settlement agreement with the Antitrust Division and several of the states continued their investigation of the merger after the Allright merger was consummated. The completion of any future mergers or acquisitions by the Company is subject to the filing requirements described above and possible review by the Department of Justice or the Federal Trade Commission and various state attorneys general. Certain of the Company’s fee collection activities are subject to federal and state consumer protection or debt collection laws and regulations.

Employees

As of September 30, 2005, the Company employed 23,957 individuals, including 18,000 full-time and 5,957 part-time employees. Approximately 4,801 U. S. employees are represented by labor unions. Various union locals represent parking attendants and cashiers at the New York City facilities. Other cities in which some of the Company’s employees are represented by labor unions include Washington, D.C., Miami, Detroit, Philadelphia, San Francisco, Jersey City, Newark, Atlantic City, Pittsburgh, Los Angeles, St. Louis, Columbus, Chicago and San Juan, Puerto Rico. The Company frequently is engaged in collective bargaining negotiations with various union locals. The Company’s employees in Pittsburgh (approximately 20 employees) currently are on strike but the Company has not experienced any significant labor strikes. Management believes that the Company’s employee relations are good.

Service Marks and Trademarks

The Company has registered the names CPC, Central Parking System and Central Parking Corporation, and its logo with the United States Patent and Trademark Office and has the right to use them throughout the United States except in certain areas, including the Chicago and Atlantic City areas where two other companies have the exclusive right to use the name “Central Parking.” The Company also owns registered trademarks for Square Industries, Kinney System, Allied Parking and Allright Parking and operates various parking locations under those names. The Company uses the name “Chicago Parking System” in Chicago and “CPS Parking” in Seattle and Milwaukee. The Company has registered the name “Control Plus” and its symbol in London and has registered that name and symbol in association with its on-street parking activities in Richmond, Virginia. The Company has registered, or intends to register, its name and logo in various international locations where it does business.

Foreign and Domestic Operations

For information about the Company’s foreign and domestic operations refer to Note 17 to the Consolidated Financial Statements.

Available Information

The Company files reports with the Securities and Exchange Commission (“SEC”), including annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. Copies of the Company’s reports filed with the SEC may be obtained by the public at the SEC’s Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. The public may obtain information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company files such reports with the SEC electronically, and the SEC maintains an Internet site at www.sec.gov that contains the Company’s reports, proxy and information statements, and other information filed electronically. The Company’s website address is www.parking.com. The Company also makes available, free of charge through the Company’s website, its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and other materials filed with the SEC as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The information provided on the Company’s website is not part of this report, and is therefore not incorporated by reference unless such information is otherwise specifically referenced elsewhere in this report.

Item 1A. Risk Factors

You should carefully consider the following specific risk factors as well as the other information contained or incorporated by reference in this report, as these are important factors, among others, that could cause our actual results to differ from our expected or historical results. It is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete statement of all of our potential risks or uncertainties.

Our financial performance is sensitive to changes in economic conditions that may impact employment and consumer spending and commercial office occupancy.

The most recent general economic slowdown in the United States adversely affected employment levels, consumer spending and commercial office occupancy, which, in turn, reduced the demand for parking. The reduced demand for parking negatively impacted our revenues and net income. Future economic conditions affecting disposable consumer income, employment levels, business conditions, fuel and energy costs, interest rates, and tax rates, are also likely to adversely affect our business.

Our concentration of operations in the Northeastern and Mid-Atlantic regions of the United States, particularly in New York City, increases the risk of negative financial fluctuations due to events or factors that affect these areas.

Our operations in the Northeastern and Mid-Atlantic regions of the United States, which includes the cities of New York, Newark, Boston, Philadelphia, Pittsburgh, Baltimore and Washington, D.C. generated approximately 43.5% of our total revenues (excluding reimbursement of management contract expenses) in fiscal year 2005. Revenues from our operations in New York City and surrounding areas accounted for approximately 26.2% of our total revenues (excluding reimbursement of management expenses) in fiscal 2005. The concentration of operations in these areas increases the risk that local or regional events or factors that affect these cities or regions such as severe winter weather, labor strikes, changes in local or state laws and regulations, economic conditions or acts of terrorism, can have a disproportionate impact on our operating results and financial condition.

We have found material weaknesses in our internal controls that require remediation and concluded, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, that our internal controls over financial reporting at September 30, 2005 were not effective.

As we disclose in Part II, Item 9A, “Controls and Procedures” of this Form 10-K, our CEO and CFO have concluded that our disclosure controls and procedures were not effective as of September 30, 2005. While we are taking immediate steps to correct our internal control weaknesses, the material weaknesses that have been discovered will not be considered remediated until the new and improved internal controls operate for a period of time, are tested and it is concluded that such new and improved internal controls are operating effectively. Pending the successful completion of such testing, we will perform mitigating procedures relating to our internal control weaknesses.

Any failure to implement and maintain the improvements in the controls over our financial reporting, or difficulties encountered in the implementation of these improvements in our controls, could cause us to fail to meet our reporting obligations. Any failure to improve our internal controls to address the identified material weakness could also cause investors to lose confidence in our reported financial information, which could have a negative impact on the trading price of our stock.

Changes in the insurance marketplace, including significantly higher premiums, higher deductibles and coverage restrictions and increased claims costs, have negatively impacted our net income in recent years and could have a material adverse effect on our results of operations and financial condition in the future.

We purchase insurance covering certain types of claims that occur at parking facilities we own, lease or manage. In addition, we purchase worker’s compensation, group health, director’s and officer’s liability and certain other insurance coverages. Due to changes in the insurance marketplace, we have experienced in recent years a substantial increase in the premiums we pay for most types of insurance coverage and an increase in the deductibles relating to such coverage. We also have experienced an increase in certain claims costs, including worker’s compensation, liability and group health. In addition, coverages of certain types of risk, such as terrorism coverage, have been significantly restricted or are no longer available at a reasonable cost. The changes in the insurance marketplace, including increased premium and claims costs, higher deductibles and coverage restrictions, have negatively impacted our earnings in recent years and could have a material adverse effect on our results of operations and financial condition in the future.

Acts of terrorism, such as the September 11, 2001 attacks, can have a significant adverse affect on our results of operations and financial condition.

We estimate that the terrorist attacks on September 11, 2001 reduced our revenues in the fourth quarter of fiscal year 2001 by approximately $5 million and approximately $10 million in the first half of fiscal year 2002. Not only did the attack cause physical damage to some of the parking facilities operated by us, but the reduction in the number of commuters parking in the areas affected, reduction in tourists and local consumers traveling to the area as well as the broader reduction in airplane travel and lower attendance at sporting events, concerts and other venues, also impacted our operations adversely. The closing of streets in the vicinity of the World Trade Center and other areas of New York City and the imposition of certain restrictions on traffic and other security measures in New York City and at the nation’s airports also had a negative impact on our operations. Our operations are concentrated heavily in the downtown areas of major U.S. cities and some are located near landmarks or other sites that have been mentioned as potential targets of terrorists. In addition, we manage the parking operations at approximately 30 airports. Additional terrorist attacks or the imposition of additional security measures, particularly in New York, Washington, D.C. or other major cities in which we have a significant presence, or at airports, could have a material adverse effect on our results of operations and financial condition.

The offer or sale of a substantial amount of our common stock by significant shareholders could have an adverse impact on the market price of our common stock.

In February 2001, we filed a registration statement on Form S-3 covering 7,381,618 shares of our common stock held by certain shareholders. These shares were registered pursuant to registration rights previously

granted to these shareholders. Although we believe a significant portion of these shares has been sold, these shareholders may sell any remaining shares that were registered on any stock exchange, market or trading facility on which the shares are traded, or in private transactions. Other substantial shareholders, including the Chairman of Central Parking, Monroe Carell, Jr., the Carell Children’s Trust, and other family members and related entities (the “Carell Family”), are permitted to sell significant amounts of our common stock under Rule 144 and other exemptions from registration under the federal securities laws. In addition, the Carell Family has certain rights to register substantially all of the shares held by the family and related entities. The offer or sale of substantial amounts of our common stock by these or other significant shareholders, particularly if such offers or sales occur simultaneously or relatively close in time, could have a significant negative impact on our stock’s market price.

We are dependent on the continued availability of capital to support our business.

We have significant working capital requirements, including but not limited to, repair and maintenance obligations for many of our parking facilities. We are dependant on the cash generated from our operations and Credit Facility to meet our working capital requirements. The Credit Facility contains covenants including those that require us to maintain certain financial ratios, restrict further indebtedness and certain acquisition activity and limit the amount of dividends paid. The primary ratios are a leverage ratio, senior leverage ratio and a fixed charge coverage ratio. Quarterly compliance is calculated using a four quarter rolling methodology and measured against certain targets. Our inability to meet debt covenants and debt service payments under the Credit Facility would have a material adverse effect on us.

We are subject to interest rate risk.

We are subject to market risk from exposure to changes in interest rates based upon our financing, investing and cash management activities. The Credit Facility bears interest at LIBOR plus a tier-based margin dependent upon certain financial ratios. There are separate tiers for the revolving loan and term loan. The weighted average margin as of September 30, 2005, was 185 basis points. The amount outstanding under our Credit Facility was $81.5 million with a weighted average interest rate of 4.4% as of September 30, 2005. We have reduced a portion of our interest rate risk by executing two interest rate swap transactions whereby we have fixed $87.5 million of floating rate debt. The term loan is required to be repaid in quarterly payments of $0.2 million through March 2008 and quarterly payments of $9.1 million from June 2008 through March 2010. An increase (decrease) in LIBOR of 1% would result in no increase (decrease) of annual interest expense since the swaps, which converted the rates to fixed, totaled $87.5 and the Credit Facility, which was all floating interest, was $81.5 million on September 30, 2005. We expect to pay both quarterly principle amortization and monthly interest payments out of operating cash flow.

Our large number of leased and owned facilities increases the risk that we may become unprofitable and that we may not be able to cover the fixed costs of our leased and owned facilities.

We leased or owned 1,728 facilities as of September 30, 2005. Although there is more potential for income from leased and owned facilities than from management contracts, they also carry more risk if there is a downturn in the economy, property performance or commercial real estate occupancy rates because a significant part of the costs to operate such facilities typically is fixed. For example, in the case of leases, there are typically minimum lease payments that must be made regardless of the revenues or profitability of the facility. In particular, it is difficult to forecast revenues of newly constructed parking facilities because these facilities do not have an operating history. Start-up costs, the length of the break –in period during which parking demand is built and economic conditions at the time the facility is opened, are very difficult to predict at the time the lease is executed (and the base rent is agreed upon), which is often two or more years prior to the opening of the facility.

In the case of owned facilities, there are the normal risks of ownership and costs of capital. In addition, operating expenses for both leased and owned facilities are borne by us and are not passed through to the owner, as is the case with management contracts. In the case of owned facilities and generally in the case of longer-term leased facilities, we also are responsible for property taxes and all maintenance and repair costs, including structural, mechanical and systems repairs. Performance of our parking facilities depends, in part, on our ability to negotiate favorable contract terms and control operating expenses, economic conditions prevailing generally and in areas where parking facilities are located, the nature and extent of competitive parking facilities in the area, weather conditions and the real estate market.

An increase in government regulation or taxation could have a negative effect on our profitability.

Our business is subject to numerous federal, state and local laws and regulations, and in some cases, municipal and state authorities directly regulate parking facilities. In addition, many cities impose a substantial tax or surcharge on parking services, which generally range from 10% to 50%. Substantial increases in the tax or surcharge on parking such as occurred in recent years in Pittsburgh and Miami can have a significant negative effect on profitability in a given city. The profitability of our business is also affected by increases in property taxes because the Company is responsible for paying property taxes on its owned properties and on many of its leased facilities. Several state and local laws have been passed in recent years that are designed to encourage car-pooling or the use of mass transit or impose certain restrictions on automobile usage. An example is the restrictions imposed by the City of New York in the wake of the September 11 terrorist attacks, which included street closures and a requirement for passenger cars entering certain bridges and tunnels to have more than one occupant during the morning rush hour. We also are subject to federal, state and local employment

and labor laws and regulations, and several cities in which we have operations either have adopted or are considering the adoption of so-called “living wage” ordinances. The adoption of such laws and regulations, the imposition of additional parking taxes or surcharges and increases in property and other taxes could adversely impact our profitability.

The sureties for our performance bond program may increase rates and require additional collateral to issue or renew performance bonds in support of certain contracts.

Under substantially all of our contracts with municipalities and government entities and airports, we are required to provide a performance bond to support our obligations under the contract. We are also required to provide performance bonds under certain leases and other contracts with non-governmental entities. Due to our financial results in recent years and the financial state of the surety bond industry, the sureties for our performance bond program have increased our rates and have required us to collateralize a greater percentage of our performance bonds with letters of credit. As a result, our working capital needs have increased and our borrowing capacity has decreased since letters of credit used by us to collateralize surety bonds reduces the availability of funds under our Credit Facility. Although we believe our performance bond program is adequate for its present needs, if we are unable to provide sufficient collateral in the future, our sureties may not issue or renew performance bonds to support our obligations under certain contracts.

As is customary in the industry, a surety provider can refuse to provide a bond principal with new or renewal surety bonds. If any existing or future surety provider refuses to provide us with surety bonds, there can be no assurance that we would be able to find alternate providers on acceptable terms, or at all. Our inability to provide surety bonds could result in the loss of existing contracts or future business, which could have a material adverse effect on our business and financial condition.

Our net income could be adversely affected if accruals for future insurance losses are not adequate.

We provide liability, medical and worker’s compensation insurance coverage. We are obligated to pay for each loss incurred up to the amount of a deductible specified in our insurance policies. Our financial statements reflect our anticipated costs based upon loss experience and guidance and evaluation we have received from third party insurance professionals, such as actuaries. There can be no assurance, however, that the ultimate amount of such costs will not exceed the amounts presently accrued, in which case we would need to increase accruals and pay additional expenses.

The operation of our business is dependent on key personnel.

Our success is, and will continue to be, substantially dependent upon the continued services of our management team. The loss of the services of one or more of the members of our senior management team could have a material adverse effect on our financial condition and the results of operations. Although we have entered into employment agreements with, and historically have been successful in retaining the services of our senior management, there can be no assurance that we will be able to retain these senior management people in the future. In addition, our future growth depends on our ability to attract and retain skilled operating managers and employees.

We have foreign operations that may be adversely affected by foreign currency exchange rate fluctuations.

We operate in the United Kingdom, Germany, the Republic of Ireland and other countries. For the year ended September 30, 2005, revenues from foreign operations represented 4.1% of our total revenue, excluding reimbursement of management contract expenses. Our United Kingdom operations accounted for 9.0% of total revenues from foreign operations, excluding reimbursement of management contract expense and excluding earnings from joint ventures. We receive revenues and incur expenses in various foreign currencies in connection with our foreign operations and, as a result, we are subject to currency exchange rate fluctuations. We intend to continue to invest in certain foreign leased or owned parking facilities, either independently or through joint ventures, where appropriate, and may become increasingly exposed to foreign currency fluctuations. We believe we have currently limited exposure to foreign currency risk and do not have a foreign currency hedging program.

In connection with ownership or operation of parking facilities, we may be liable for environmental problems.

Under various federal, state, and local environmental laws, ordinances, and regulations, a current or previous owner or operator of real property may be liable for the cost of removal or remediation of hazardous or toxic substances on, under, or in such property. Such laws typically impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. There can be no assurance that a material environmental claim will not be asserted against us or against our owned or operated parking facilities. The cost of defending against claims of liability, or of remediating a contaminated property, could have a negative effect on our business and financial results.

If we cannot maintain positive relationships with labor unions representing our employees, a work stoppage may adversely affect our business.

Approximately 4,801 employees are represented by labor unions. There can be no assurance that we will be able to renew existing labor union contracts on acceptable terms. Employees could exercise their rights under these labor union contracts, which could include a strike or walk-out. In such cases, there are no assurances that we would be able to staff sufficient employees for its short-term needs. Any such labor strike or our inability to negotiate a satisfactory contract upon expiration of the current agreements could have a negative effect on our business and financial results.

The failure to successfully integrate future acquisitions could have a negative impact on our business and the market price of its common stock.

We completed the acquisition of Sterling LTD in fiscal year 2003 and may seek additional acquisition opportunities on a selective basis in the future. We can give no assurance that any acquired facility or company will be successfully integrated into our operations. Also, because of the purchase price paid by us or because of the performance of acquired operations after such acquisitions, there can be no assurance that the results of the acquired operations will not be dilutive to our per share earnings. Any acquisition contemplated or completed by us may result in adverse short-term effects on our reported operating results, divert management’s attention, introduce difficulties in retaining, hiring and training key personnel, and introduce risks associated with unanticipated problems or legal liabilities, some or all of which could have a negative effect on our business and financial results.

Item 2. Properties

The Company’s facilities, as of September 30, 2005, are organized into 8 segments which are subdivided into 23 regions as detailed below. Each region is supervised by a regional manager who reports directly to one of the executive vice presidents or senior vice presidents. Regional managers oversee four to six general managers who each supervise the Company’s operations in a particular city. The following table summarizes certain information regarding the Company’s operating locations as of September 30, 2005:


												Percentage
		Number of								Total		of Total
Segment	Cities	Locations		Managed		Leased		Owned		Spaces		Spaces
Segment 1
Los Angeles	Los Angeles, Orange County, San Diego, Burbank Airport		117		50		63		4		37,568		2.40	%
San Francisco	San Francisco, Oakland, Sacramento		88		51		37		0		23,981		1.53	%
Seattle	Salt Lake City, Seattle, Vancouver		76		30		46		0		14,461		0.92	%
Denver	Denver, Phoenix, Albuquerque, El Paso		175		71		93		11		52,343		3.35	%

	Total Segment 1		456		202		239		15		128,353		8.20	%


Segment 2
Boston	Boston, Hartford, Manchester, Providence		137		68		63		6		96,465		6.17	%
New York	New Jersey, New York City, Beacon, Stamford		425		210		204		11		167,239		10.69	%
Philadelphia	Philadelphia, Harrisburg Airport		76		31		40		5		50,104		3.20	%

	Total Segment 2		638		309		307		22		313,808		20.06	%


Segment 3
USA Parking			102		84		16		2		54,283		3.47	%

	Total Segment 3		102		84		16		2		54,283		3.47	%


Segment 4
Mexico	Mexico		127		77		50		0		74,081		4.74	%
South America	Chile, Venezuela, Colombia, Peru, San Juan		87		53		34		0		30,940		1.98	%
Europe	United Kingdom, Ireland, Spain, Poland, Greece, Switzerland, Germany		156		125		31		0		171,655		10.97	%

	Total Segment 4		370		255		115		0		276,676		17.69	%


Segment 5
Nashville	Nashville		96		34		51		11		50,980		3.26	%

	Total Segment 5		96		34		51		11		50,980		3.26	%


												Percentage
		Number of								Total		of Total
Segment	Cities	Locations		Managed		Leased		Owned		Spaces		Spaces
Segment 6
Cincinnati	Indianapolis, Louisville, Lexington, Boone Co. Airport, Cincinnati, Columbus, Cleveland, Columbus Airport		155		55		83		17		59,914		3.83	%
Canada	Detroit, Detroit Airport, Toronto, Ottawa, Montreal, Calgary, Toronto Pearson Airport		117		85		30		2		103,683		6.63	%
Chicago	Chicago, Chicago Parking LLC, Minneapolis, Milwaukee, Gen. Mitchell Airport		145		53		81		11		60,399		3.86	%
St. Louis	St. Louis, Kansas City, St. Louis Airport, Omaha, Memphis, Little Rock		175		65		98		12		51,208		3.27	%

	Total Segment 6		592		258		292		42		275,204		17.59	%


Segment 7
Washington, DC	Washington, DC, Washington Dulles Airport, Baltimore, Richmond, Roanoke, Lynchburg (VA), Roanoke Airport, Richmond Airport		242		112		115		15		100,343		6.41	%
Upper New York	Rochester, Buffalo, Binghamton, Syracuse, Pittsburgh, Wilkes-Barre, Charleston, WV		120		50		54		16		37,477		2.40	%

	Total Segment 7		362		162		169		31		137,820		8.81	%


Segment 8
Florida	Jacksonville, Tampa, Orlando		83		51		31		1		41,444		2.65	%
Atlanta	Atlanta, Miami		116		65		42		9		56,172		3.59	%
New Orleans	Mobile, New Orleans, Baton Rouge, New Orleans Airport, Jackson		129		46		78		5		40,424		2.58	%
Houston	Houston, Houston Airport, Oklahoma City, Tulsa, Dallas, Austin, Dallas-FT Worth Airport, San Antonio, Ft. Worth		292		123		134		35		136,660		8.74	%
Charlotte	Birmingham, Charlotte, Columbia, Charleston, SC, Knoxville, Chattanooga		163		82		74		7		52,532		3.36	%

	Total Segment 8		783		367		359		57		327,232		20.92	%

Total			3,399		1,671		1,548		180		1,564,356		100.00	%

The Company’s facilities include both surface lots and structured parking facilities (garages). Approximately 18% of the Company’s owned parking properties are in structured parking facilities, with the remainder in surface lots. Each year the Company expends significant funds to repair and maintain parking facilities. Management believes the Company’s owned facilities generally are in good condition and are adequate for its present needs.

A summary of the facilities operated domestically and internationally by Central Parking as of September 30, 2005 is as follows:


											Percent
	Managed		Leased		Owned		Total		Spaces		of Total
Total U.S. and Puerto Rico		1,372		1,371		178		2,921		1,265,943		80.93	%

United Kingdom		98		7		0		105		124,702		7.97	%
Mexico (1)		77		50		0		127		74,081		4.73	%
Canada		62		70		2		134		32,796		2.10	%
Venezuela (1)		3		1		0		4		3,783		0.24	%
Germany (1)		6		13		0		19		25,300		1.62	%
Chile		15		12		0		27		7,806		0.50	%
Greece (1)		7		1		0		8		7,445		0.48	%
Peru (1)		11		1		0		12		5,555		0.35	%
Spain		1		4		0		5		1,573		0.10	%
Poland (1)		5		5		0		10		1,867		0.12	%
Colombia(1)		6		12		0		18		2,737		0.17	%
Ireland		7		0		0		7		10,443		0.67	%
Switzerland		1		1		0		2		325		0.02	%

Total foreign		299		177		2		478		298,413		19.07	%

Total facilities		1,671		1,548		180		3,399		1,564,356		100.00	%


(1)		Operated through unconsolidated 50% owned joint ventures

The table below sets forth certain information regarding the Company’s managed, leased and owned facilities in the periods indicated.


	Year Ended September 30,
	2005			2004			2003
Managed Facilities:
Beginning of year		1,615			1,714			1,762

Acquired or merged during year		—			—			9
Added during year		354			225			236
Consolidated during year		(52	)		(18	)		(44	)
Deleted during year		(246	)		(306	)		(249	)

End of year		1,671			1,615			1,714

Renewal Rate (1)		87.6	%		84.2	%		87.5	%
Leased Facilities:
Beginning of year		1,626			1,798			1,886

Acquired or merged during year		—			—			9
Added during year		159			108			164
Consolidated during year		(18	)		(59	)		(33	)
Deleted during year		(219	)		(221	)		(228	)

End of year		1,548			1,626			1,798

Owned Facilities (2):
Beginning of year		192			205			214

Purchased during year		2			2			9
Sold during year		(14	)		(15	)		(18	)

End of year		180			192			205

Total facilities (end of year)		3,399			3,433			3,717

Net increase(reduction) in number of facilities:
Managed		3.5	%		(5.8	)%		(2.7	)%
Leased		(4.8	)%		(9.6	)%		(4.7	)%
Owned		(6.3	)%		(6.3	)%		(4.2	)%
Total facilities		(1.0	)%		(7.6	)%		(3.8	)%


(1)		The renewal rate calculation is 100% minus deleted locations divided by the sum of the beginning of the year, acquired and added during the year for management locations.

(2)		Includes the Company’s corporate headquarters in Nashville, Tennessee.

Item 3. Legal Proceedings

The ownership of property and provision of services to the public entails an inherent risk of liability. Although the Company is engaged in routine litigation incidental to its business, there is no legal proceeding to which the Company is a party which, in the opinion of management, is likely to have a material adverse effect upon the Company’s financial condition, results of operations, or liquidity. The Company carries liability insurance against certain types of claims such as bodily injury that management believes meets industry standards; however, there can be no assurance that any legal proceedings (including any related judgments, settlements or costs) will not have a material adverse effect on the Company’s financial condition, liquidity or results of operations.

In June and July 2003, four stockholders filed separate lawsuits against the Company, two former CEO’s, and a former CFO and its current Chairman in the U. S. District Court for the Middle District of Tennessee. The plaintiff in each case sought to represent a plaintiff class of purchasers of Central Parking’s Common Stock. The plaintiff in each case claimed that the defendants made material misrepresentations and/or omissions in connection with the Company’s financial statements for the quarter and fiscal year ended September 30, 2002 and about the Company’s internal controls in violation of the Securities Exchange Act of 1934, which allegedly caused the plaintiffs to buy Company stock at inflated prices. By order dated December 10, 2003, the Court consolidated the cases under the name, In re: Central Parking Corporation Securities Litigation, civil action No. 03-CV-0546, appointed two individuals as co-lead plaintiffs and approved their selection of counsel. The plaintiffs filed an amended complaint on February 13, 2004, in which plaintiffs added the Company’s Independent Registered Public Accountant as a defendant and in which the plaintiffs added a number of allegations. The amended complaint also sought to extend the putative class period during which investors purchased the Company’s Common Stock by approximately nine months (February 5, 2002 to February 13, 2003). On April 23, 2004, the defendants filed motions to dismiss the lawsuit. On August 11, 2004, the court dismissed all claims against the Company’s

Independent Registered Public Accountant, but denied the motion to dismiss with respect to the Company and the individual defendants. On January 27, 2005, the Company announced that an agreement in principle had been reached to settle the lawsuit. Under the agreement in principle, the Company’s primary liability insurance carrier agreed to fully fund a $4.9 million payment to be used to provide all benefits to shareholder class members and their counsel, and to cover related notice and administrative costs. A definitive settlement agreement was executed and, on April 8, 2005, the court entered an order granting preliminary approval of the negotiated settlement. Notice of the proposed settlement was mailed to all class members. The final hearing on the proposed settlement was held on June 10, 2005 and the settlement was approved on that date. The deadline for filing an appeal of the settlement was July 11, 2005. The settlement has been consummated, and this action is concluded.

On December 23, 2005, the Company entered into a settlement agreement with Rotala PLC, the Flights Group companies, Stuart Lawrenson, Paul Churchman and Michael Tackley resolving the Company’s claims arising from certain actions taken by former employees of the Company in the United Kingdom. The key terms of the settlement include: (1) 46,666,667 shares of Rotala stock indirectly owned by Lawrenson will be sold through a private placement anticipated to close in the first quarter of 2006, with the proceeds of such sale to be paid to the Company; (2) Rotala will issue promissory notes to the Company with a value of L800,000 payable in annual installments between December 31, 2006, and December 31, 2010; (3) in addition to amounts already received from Rotala for goods and services benefiting the Flights Group, Rotala will pay an additional L270,000 to the Company upon completion of a previously announced fundraising, (4) Rotala will grant to the Company a warrant to purchase 15,000,000 ordinary shares of Rotala stock at an exercise price of 1.5 pence per share, exercisable for a five year period; A(5) Stuart Lawrenson is obligated to pay to the Company L70,000 within fourteen days and to pay an additional L60,000 within a year, and (6) Paul Churchman and Michael Tackley are each obligated pay L10,000 to the Company within ninety days. Once the conditions of this settlement have been met, all claims between the parties will be released.

Item 4. Submission of Matters to a Vote of Security-Holders

No matter was submitted to a vote of the Company’s security-holders during the fourth quarter of the fiscal year ended September 30, 2005.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

(a) The Registrant’s common stock is listed on the NYSE under the symbol “CPC.” The following table sets forth, for the periods indicated, the high and low sales prices for the Company’s common stock as reported by the NYSE.


	High		Low
FISCAL YEAR 2005
First Quarter	$	15.72	$	12.55
Second Quarter		18.37		13.72
Third Quarter		17.76		13.21
Fourth Quarter		16.33		13.79
Twelve months		18.37		12.55

FISCAL YEAR 2004
First Quarter	$	15.32	$	11.27
Second Quarter		21.70		14.88
Third Quarter		21.26		17.18
Fourth Quarter		19.85		13.20
Twelve months		21.70		11.27

(b) There were, as of September 30, 2005, approximately 5,650 holders of the Company’s common stock, based on the number of record holders of the Company’s common stock and an estimate of the number of individual participants represented by security position listings.

(c) Since April 1997, Central Parking has distributed a quarterly cash dividend of $0.015 per share of Central Parking common stock. The Company’s Board currently intends to declare a cash dividend each quarter depending on Central Parking’s profitability and future capital requirements. Central Parking reserves the right, however, to retain all or a substantial portion of its earnings to finance the operation and expansion of Central Parking’s business. As a result, the future payment of dividends will depend upon, among other things, the Company’s profitability, capital requirements, financial condition, growth, business opportunities, and other factors that the Central Parking Board may deem relevant, including restrictions in any then-existing credit agreement. The Company’s existing credit facility contains certain covenants including those that require the Company to maintain certain financial ratios, restrict further indebtedness, and limit the amount of dividends payable; however, the Company does not believe these restrictions limit its ability to pay currently anticipated cash dividends. In addition, Central Parking Finance Trust (the “Trust”), a Delaware statutory business trust, of which all of the common securities are owned by the Company, has issued preferred securities (the “Trust Issued Preferred Securities”) and has invested the proceeds thereof in an equivalent amount of 5.25% Convertible Subordinated Debentures (“Convertible Debentures”) of the Company. Pursuant to the Convertible Debentures, the Company is prohibited from paying dividends on its common stock if the quarterly distributions on the Trust Issued Preferred Securities are not made. See Note 10 to the Consolidated Financial Statements.

(d) The following table is for the presentation of securities authorized for issuance under equity compensation plans as of September 30, 2005.

Number of securities

Number of securities remaining

to be issued upon

Weighted-average

available for future issuance under

exercise of

exercise price of

equity compensation plans

outstanding options,

(excluding securities reflected in

warrants and rights

column (a))

Plan Category

(a)

(b)

(c)

Equity compensation plans approved by securities holders

4,453,206

17.86

2,151,807

Equity compensation plans not approved by securities holders

—

Total

4,453,206

17.86

2,151,807

Item 6. Selected Financial Data

Selected financial data of the Company is set forth below for each of the periods indicated. Certain of the statement of operations, per share, and balance sheet data were derived from the audited consolidated financial statements of the Company. All of the information set forth below should be read in conjunction with Item 8. “Financial Statements and Supplementary Data” and with Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Amounts in thousands, except share and employee data


	Year Ended September 30,															2005 vs. 2004
	2005			2004			2003			2002			2001			Increase (Decrease)
				(5)			(5)			(5)			(5)
STATEMENT OF OPERATIONS DATA:
Revenues:
Parking	$	550,782		$	572,878		$	575,969		$	565,497		$	571,019		$	(22,096	)		(3.9	)%
Management contract and other		118,611			124,672			117,428			115,484			97,663			(6,061	)		(4.9	)

		669,393			697,550			693,397			680,981			668,682			(28,157	)		(4.0	)
Reimbursement of management contract expenses		464,423			418,565			418,058			390,306			373,413			45,858			11.0

Total revenues		1,133,816			1,116,115			1,111,455			1,071,287			1,042,095			17,701			1.6
Expenses:
Total before reimbursed management contract expenses		648,722			651,450			687,167			619,480			605,943			(2,728	)		(0.4	)
Reimbursed management contract expenses		464,423			418,565			418,058			390,306			373,413			45,858			11.0
Property-related gains (losses), net		53,570			7,654			(7,560	)		(4,329	)		(7,024	)		45,916			599.9
Impairment of goodwill		(454	)		—			—			—			—			(454	)		—

Operating earnings (losses)		73,787			53,754			(1,330	)		57,172			55,715			20,033			37.3
Percentage of operating earnings (losses) to total revenues, excluding reimbursement of management contract expenses		11.0	%		7.7	%		(0.2	)%		8.4	%		8.3	%
Interest expense, net		(13,203	)		(15,593	)		(17,164	)		(10,147	)		(16,989	)		2,390			15.3
Gain on repurchase of subordinated convertible debentures		—			—			—			9,245			—			—			—
Gain on sale of non-operating assets		—			—			3,279			—			—			—			—
Gain on derivative instruments		3,006			—			—			—			—			3,006			—
Equity in partnership and joint venture (losses) earnings		(474	)		(2,984	)		2,212			2,702			3,151			2,510			84.1

Earnings (loss) from continuing operations before income taxes, minority interest and cumulative effect of accounting changes		63,116			35,177			(13,003	)		58,972			41,877			27,939			79.4
Minority interest		(1,331	)		(2,999	)		(4,052	)		(4,765	)		(3,502	)		1,668			55.6

Earnings (loss) from continuing operations before income taxes and cumulative effect of accounting changes		61,785			32,178			(17,055	)		54,207			38,375			29,607			92.0
Income tax (expense) benefit		(27,969	)		(13,776	)		6,903			(17,689	)		(16,217	)		(14,193	)		(103.0	)
Income tax percentage of earnings (loss) from continuing operations before income taxes and cumulative effect of accounting changes		45.3	%		42.8	%		40.5	%		32.6	%		42.3	%		N/A			N/A
Cumulative effect of accounting changes, net of tax (1)		—			—			—			(9,341	)		(259	)		—		NM

Earnings (loss) from continuing operations		33,816			18,402			(10,152	)		27,177			21,899			15,414			83.8

Discontinued operations, net of tax		(19,546	)		(1,409	)		5,625			6,591			3,954			(18,137	)		(1,287.2	)

Net earnings (loss)	$	14,270		$	16,993		$	(4,527	)	$	33,768		$	25,853		$	(2,723	)		(16.0	)

Percentage of net earnings (loss) to total revenues, excluding reimbursement of management contract expenses		2.1	%		2.4	%		(0.7	)%		5.0	%		3.9	%


	Year Ended September 30,															2005 vs. 2004
	2005			2004			2003			2002			2001			Increase (Decrease)
				(5)			(5)			(5)			(5)
PER SHARE DATA:
Earnings (loss) from continuing operations before cumulative effect of accounting changes – basic	$	0.92		$	0.51		$	(0.32	)	$	1.02		$	0.62		$	0.41		80.4	%
Cumulative effect of accounting changes, net of tax		—			—			—			(0.26	)		(0.01	)		—		—
Discontinued operations, net of tax		(0.53	)		(0.04	)		0.19			0.18			0.11			(0.49	)	(1,225.0	)

Net earnings (loss) – basic	$	0.39		$	0.47		$	(0.13	)	$	0.94		$	0.72		$	(0.08	)	(17.0	)


Earnings (loss) from continuing operations before cumulative effect of accounting changes – diluted	$	0.92		$	0.51		$	(0.32	)	$	1.01		$	0.62		$	0.41		80.4	%
Cumulative effect of accounting changes, net of tax		—			—			—			(0.26	)		(0.01	)		—		—
Discontinued operations, net of tax		(0.53	)		(0.04	)		0.19			0.18			0.11			(0.49	)	(1,225.0	)

Net earnings (loss) –diluted	$	0.39		$	0.47		$	(0.13	)	$	0.93		$	0.72		$	(0.08	)	(17.0	)


Basic weighted average common shares outstanding		36,626			36,346			36,034			35,849			35,803			280		0.8	%
Diluted weighted average common shares outstanding		36,762			36,555			36,034			36,211			36,015			207		0.6	%
Dividends per common share	$	0.06		$	0.06		$	0.06		$	0.06		$	0.06
Net book value per common share outstanding at September 30	$	12.30		$	11.89		$	11.56		$	11.57		$	10.63


	As of September 30,													2005 vs 2004
	2005		2004			2003		2002			2001			Increase (Decrease)
BALANCE SHEET DATA:
Cash and cash equivalents	$	26,055	$	27,628		$	31,572	$	33,498		$	41,849		$	(1,573	)	(5.7	)%
Working capital		5,476		(54,759	)		11,882		(92,805	)		(79,251	)		60,235		110.0
Goodwill		232,443		232,562			230,312		242,141			250,630			(119	)	(0.1	)
Total assets		867,814		929,628			1,001,177		998,884			986,881			(61,814	)	(6.6	)
Long-term debt and capital lease obligations, less current portion		98,212		159,188			266,961		207,098			208,885			(60,976	)	(38.3	)
Subordinated convertible debentures		78,085		78,085			78,085		78,085			110,000			—		—
Shareholders’ equity		452,061		435,033			416,526		415,804			381,446			17,028		3.9


	Year Ended September 30,															2005 vs. 2004
	2005			2004			2003			2002			2001			Increase (Decrease)
OTHER DATA:
Depreciation and amortization	$	29,497		$	32,635		$	35,173		$	34,500		$	44,263		$	(3,138	)	(9.6	)%
Employees (2)		23,957			22,537			21,187			18,100			18,800			1,420		6.3
Number of shareholders (2)		5,650			6,862			8,400			7,100			6,500			(1,212	)	(17.7	)
Market capitalization (in millions) (3)	$	550,000		$	484,000		$	443,000		$	724,000		$	501,000		$	66,000		13.6
Return on average equity (4)		3.2	%		4.0	%		(1.1	)%		8.5	%		6.9	%


(1)		Reflects the Company’s adoption in 2002 of Statement of Financial Accounting Standards (SFAS) No. 142 for the transitional impairment of goodwill of $9.3 million, net of tax of $28 thousand. Reflects the Company’s adoption in 2001 of Staff Accounting Bulletin (SAB) 101 related to revenue recognition of $259 thousand, net of tax of $171 thousand.

(2)		Reflects information as of September 30 of the respective fiscal year.

(3)		Based on number of shares outstanding and closing market price as of September 30.

(4)		Reflects return on equity calculated using fiscal year net earnings (loss) divided by average shareholders’ equity for the fiscal year.

(5)		The Company’s prior period results were reclassified to reflect the operations of the locations discontinued in fiscal year 2005 as well as the locations designated as held-for-sale during fiscal year 2005 but not yet sold, as discontinued operations net of related income taxes.

NM		Not meaningful

N/A		Not Applicable

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Company operates parking facilities under three types of arrangements: leases, fee ownership, and management contracts. Revenues from leased and owned properties are categorized in the Company’s financial statements as parking revenues. Cost of parking relates to both leased and owned facilities and includes rent, payroll and related benefits, depreciation, maintenance, insurance and general operating expenses. The Company experienced a net decline in the number of leased and owned locations in 2005 of 90 locations (161 additional leased and owned locations offset by 233 lost or sold locations and 18 locations that were converted to management agreements or consolidated with existing locations). Management contract revenues consist of management fees (both fixed and performance based) and fees for ancillary services such as insurance, accounting, benefits administration, equipment leasing, and consulting. The cost of management contracts includes insurance premiums and claims and other indirect overhead. The Company experienced a net increase in the number of managed facilities in 2005 of 56 locations (354 additional managed locations offset by 298 lost locations during the year). In addition to management fees, many of the management agreements provide for the reimbursement of expenses incurred by the Company to manage the locations. The reimbursement of expenses is presented as a component of revenue and costs in accordance with EITF No. 01-14.

Critical Accounting Policies

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. Accounting estimates are an integral part of the preparation of the financial statements and the financial reporting process and are based upon current judgments. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Certain accounting policies and estimates are particularly sensitive because of their complexity and the possibility that future events affecting them may differ materially from the Company’s current judgments and estimates.

The following listing of critical accounting policies is not intended to be a comprehensive list of all of the Company’s accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by U. S. generally accepted accounting principles, with no need for management’s judgment regarding accounting policy. The Company believes that of its significant accounting policies, as discussed in Note 1 to the consolidated financial statements included herein for the year ended September 30, 2005, the following involve a higher degree of judgment and complexity:

Impairment of Long-Lived Assets and Goodwill

As of September 30, 2005, the Company’s long-lived assets were comprised primarily of $327.4 million of property, equipment and leasehold improvements and $80.1 million of contract and lease rights. In accounting for the Company’s long-lived assets, other than goodwill and other intangible assets, the Company applies the provisions of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. As of September 30, 2005, the Company had $232.4 million of goodwill. The Company accounts for goodwill and other intangible assets under the provisions of SFAS No. 142, Goodwill and Other Intangible Assets.

The determination and measurement of an impairment loss under these accounting standards require the significant use of judgment and estimates. The determination of fair value of these assets utilizes cash flow projections that assume certain future revenue and cost levels, assumed discount rates based upon current market conditions and other valuation factors, all of which involve the use of significant judgment and estimation. The Company recorded impairment losses of approximately $6.7 million in property related losses and an additional $7.2 million in discontinued operations during the year ended September 30, 2005 as a result of certain locations that were either under performing, terminated, disposed, or prematurely closed. Future events may indicate differences from management’s judgments and estimates which could, in turn, result in increased impairment charges in the future. Future events that may result in increased impairment charges include increases in interest rates, which would impact discount rates, unfavorable economic conditions or other factors which could decrease revenues and profitability of existing locations, and changes in the cost structure of existing facilities. For the fiscal year ended September 30, 2004, the Company recorded $2.2 million of impairment charges related to long-lived assets in continuing operations and $2.3 million of impairment charges related to long-lived assets in discontinued operations.

Contract and Lease Rights

As of September 30, 2005, the Company had $80.1 million of contract and lease rights. The Company capitalizes payments made to third parties, which provide the Company the right to manage or lease facilities. Lease rights and management contract rights which are purchased individually are amortized on a straight-line basis over the terms of the related agreements, which range from 5 to 30 years. Management contract rights acquired through acquisition of an entity are amortized as a group over the estimated term of the contracts, including anticipated renewals and terminations based on the Company’s historical experience (typically 15 years). If the renewal rate of contracts within an acquired group is less than initially estimated, accelerated amortization or impairment may be necessary.

Allowance for Doubtful Accounts

As of September 30, 2005, the Company had $77.7 million of trade receivables, including management accounts receivable and accounts receivable – other. Additionally, the Company had a recorded allowance for doubtful accounts of $10.3 million. The Company reports management accounts receivable, net of an allowance for doubtful accounts, to represent its estimate of the amount that ultimately will be realized in cash. The Company reviews the adequacy of its allowance for doubtful accounts on an ongoing basis, using historical collection trends, analyses of receivable portfolios by region and by source, aging of receivables, as well as review of specific accounts, and makes adjustments in the allowance as necessary. Changes in economic conditions, specifically in the Northeast United States, could have an impact on the collection of existing receivable balances or future allowance considerations. As of September 30, 2004, the Company had $61.6 million of trade receivables, including management accounts receivable and accounts receivable – other.

Lease Termination Costs

The Company has recognized lease termination costs related to disposal activities initiated after December 31, 2002 in accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, in its financial statements. Lease termination costs related to disposal activities initiated prior to December 31, 2002, were recognized in accordance with Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). Lease termination costs are based upon certain estimates of liabilities related to costs to exit an activity. Liability estimates may change as a result of future events, such as the settlement of a lease termination for an amount less than the amount contractually required.

Insurance

The Company purchases comprehensive liability insurance covering certain claims that occur at parking facilities it owns, leases or manages. The primary amount of such coverage is $1 million per occurrence and $2 million in the aggregate per facility. In addition, the Company purchases umbrella/excess liability coverage. The Company’s various liability insurance policies have deductibles of up to $350,000 that must be met before the insurance companies are required to reimburse the Company for costs incurred relating to covered claims. In addition, the Company’s worker’s compensation program has a deductible of $250,000. The Company also provides health insurance for many of its employees and purchases a stop-loss policy with a deductible of $150,000 per claim. As a result, the Company is, in effect, self-insured for all claims up to the deductible levels. The Company applies the provisions of SFAS No. 5, Accounting for Contingencies, in determining the timing and amount of expense recognition associated with claims against the Company. The expense recognition is based upon management’s determination of an unfavorable outcome of a claim being deemed as probable and reasonably estimable, as defined in SFAS No. 5. This determination requires the use of judgment in both the estimation of probability and the amount to be recognized as an expense. The Company engages an actuary to assist in determining the estimated liabilities for customer injury, employee medical costs and worker’s compensation claims. Management utilizes historical experience with similar claims along with input from legal counsel in determining the likelihood and extent of an unfavorable outcome for certain general litigation. Future events may indicate differences from these judgments and estimates and result in increased expense recognition in the future.

Income Taxes

The Company uses the asset and liability method of SFAS No. 109, Accounting for Income Taxes, to account for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company has certain net operating loss carry forwards which expire between 2006 and 2024. The valuation allowance was established for certain net operating loss carry forwards where their recoverability is deemed to be uncertain. The carrying value of the Company’s net deferred tax assets assumes that the Company will be able to generate sufficient future taxable income in certain tax jurisdictions, based on estimates and assumptions. If these estimates and related assumptions change in the future, the

Company will be required to adjust its deferred tax valuation allowances. The valuation allowance was increased during 2005 to reflect net operating loss carry forwards in foreign operations and in certain states where management has determined that it is more likely than not that the deferred tax asset will not be realized.

Restatement

During the fourth quarter of 2005, management of the Company became aware that certain employees in its United Kingdom operation had engaged in unauthorized related party transactions utilizing Company assets and had made improper and inaccurate accounting entries that resulted in the over accrual of revenues and understatement of expenses during the first three quarters of fiscal 2005. On September 29, 2005, the Audit Committee of the Board of Directors and senior management decided to restate the Company’s financial statements for the quarterly periods ended December 31, 2004, March 31, 2005 and June 30, 2005 to reflect the correction of these accounting errors. In addition, during the fourth quarter, the Company has reassessed its accounting for interest rate swap agreements related to its credit facility and has restated its quarterly financial statements for the first three quarters of fiscal 2005. See Management’s Discussion and Analysis of Financial Condition and Results of Operations – Quarterly Results. The Company has not amended and does not intend to amend its previously filed Reports on Form 10-Q for each of the first three quarters in the year ended September 30, 2005. For this reason, the consolidated financial statements and related financial information for the affected periods contained in such reports should not be relied upon.

Results of Operations

Year Ended September 30, 2005 Compared to Year Ended September 30, 2004

Parking revenues in fiscal year 2005 decreased to $550.8 million from $572.9 million in fiscal year 2004, a decrease of $22.1 million, or 3.9%. The decrease resulted from the conversion of certain contracts from lease agreements to management agreements which totaled $14.6 million and closed locations of $33.0 million, partially offset by $16.1 million in revenues from new locations. The Company experienced an increase in same store sales of $9.5 million for fiscal year 2005 compared to fiscal year 2004.

Management contract and other revenues (excluding reimbursement of management contract expenses) decreased in fiscal year 2005 to $118.6 million from $124.7 million in fiscal year 2004, a decrease of $6.1 million, or 4.9%. The majority of the decrease is due to a decrease of $5.8 million for lots closed during the year, a decrease in same store sales of $5.2 million, offset by new locations and other of $4.9 million.

Cost of parking in fiscal year 2005 decreased to $504.6 million or 91.6% of parking revenues from $521.7 million or 91.1% of parking revenues in fiscal year 2004, a decrease of $17.1 million, or 3.3%. The decrease is primarily due to a decrease in payroll expense of $4.0 million, lower rent expense of $9.8 million, $2.4 million decrease in property taxes, $2.3 million decrease in depreciation expense and $1.6 million in other expenses; offset by an increase of $1.5 million liability insurance claims expense and $1.5 million increase in snow removal.

Cost of management contracts in fiscal year 2005 increased to $60.5 million from $57.9 million in fiscal year 2004. The cost of management contracts, as a percentage of management contract and other revenues, excluding reimbursement of management contract expenses, was 51.0% in fiscal year 2005 compared to 46.4% in fiscal year 2004. The increase in cost was primarily caused by an increase of $2.8 million in bad debt expense, an increase in commercial and employment claims of $1.0 million and an increase of $1.2 million of liability insurance expense; offset by a $1.2 million decrease in group insurance, a decrease of $0.6 million in consulting expenses and a decrease of $0.6 million in other expenses.

General and administrative expenses increased to $83.6 million in 2005 from $71.9 million in 2004, an increase of $11.7 million, or 16.3%. This increase is due to an increase of $1.4 million in severance expense, $3.4 million in compensation expense, and $6.9 million in professional fees and other expenses related primarily to Sarbanes-Oxley compliance efforts. General and administrative expenses increased as a percentage of total revenue (excluding reimbursement of management contract expenses) to 12.5% in 2005 from 10.3% in 2004.

Net property-related gains for fiscal year 2005 were $53.6 million compared to $7.7 million in fiscal year 2004. The $53.6 million gain was comprised of a gain on the sale of property of $60.2 million, comprised primarily of $38.4 million on the sale of a lease in New York, $9.6 million on the sale of a property in New York, $5.7 million gain on a property in Denver, $1.9 million on a property in Seattle, $1.2 million on a property in Chicago and $3.4 million related to other miscellaneous sales. The Company incurred $6.7 million of impairments of leasehold improvements, contract rights and other intangible assets primarily related to two locations in segment two, one location in segment four, two locations in segment six, one location in segment seven and one location in segment eight. Based on current operating results, the Company’s recent forecast for the next fiscal year, required capital improvements, and certain lease term uncertainties, management determined that the projected cash flows for these locations would not be enough to recover the remaining value of the assets. The $7.7 million gain in 2004 was comprised of a $6.3 million gain on the sale of property in New York and $3.6 million of gains on other properties sold, which the Company plans to continue to operate. The gains on the sale of property were offset by $2.2 million of impairments of contract rights, deferred expenses and leasehold

improvements related to locations which management plans to continue to operate. The loss on the impairment charges recognized in fiscal year 2005 and 2004 were based on estimated fair values using projected cash flows of the applicable parking facility discounted at the Company’s average cost of funds. Management determined that the projected cash flows for these locations would not be enough to recover the remaining value of the assets.

The Company adopted the provisions of SFAS No. 144 on October 1, 2002. In addition to providing enhanced guidance on identifying and measuring impairments of long-lived assets, SFAS No. 144 requires that the operating results from certain disposals of a parking facility be reflected as discontinued operations. SFAS No. 144 also requires that gains, losses and impairments resulting from the designation of a parking facility as held-for-sale be reflected as discontinued operations. For fiscal year 2005, the Company either disposed of or designated as held-for-sale or disposal certain locations, resulting in a loss from discontinued operations of $19.5 million. Included in discontinued operations in 2005 is $1.2 million of losses from the sale of property and $7.2 million of impairment charges related to certain properties held for sale and loss from discontinued operations of $11.1 million. The Company’s 2004 and 2003 results were reclassified to reflect the operations of these locations as discontinued operations, net of related income taxes.

During 2005, the Company determined that $454,000 of the goodwill recorded in segment seven was impaired based on evaluation performed by a third party.

Interest income in fiscal year 2005 decreased to $4.7 million from $4.9 million in fiscal year 2004. Interest expense decreased in fiscal year 2005 to $17.9 million from $20.5 million in fiscal year 2004 due primarily to a decrease in the average balance outstanding in 2005. The weighted average balance outstanding for the Company’s debt obligations and subordinated convertible debentures was $261.9 million during the fiscal year ended September 30, 2005, at a weighted average interest rate of 6.3% compared to a weighted average balance outstanding of $306.3 million at a weighted average rate of 5.9% during the fiscal year ended September 30, 2004. Deferred finance costs were included in the calculation of the weighted average interest rate.

The Company recognized a $3.0 million gain on derivative instruments equal to the fair market value of both interest rate swaps at September 30, 2005 of which $1.6 million represents the correction of 2004 and 2003 gains previously recognized in accumulated other comprehensive income.

Equity in partnership and joint venture (losses) earnings was a loss of $0.5 million in fiscal year 2005 compared to a loss of $3.0 million in fiscal year 2004. The decrease is primarily related to operating results for the Company’s 50% owned, non-consolidated affiliate in Mexico. During the second quarter of fiscal 2004, the Company’s Mexican affiliate reported to the Company that the affiliate would be taking certain impairments and losses as part of the year-end audit performed by independent auditors. As the entity is a 50% owned, non-consolidated investment, results are recorded on the equity method. The 2004 losses reported to us were mostly non-cash, and totaled $2.6 million. $1.5 million of the losses was related to the second quarter of fiscal year 2004 and $1.1 million related to prior periods. The $1.5 million quarter 2004 impact was the result of non-cash impairments, primarily related to notes receivable and other assets. The $1.1 million prior-period impact was due to corrections in the recording of equipment leases, and interest-expense accruals. Due to the immateriality of the effect on any one prior period and the second quarter of 2004, the corrections were made in the second quarter of Fiscal year 2004. During the fourth quarter of 2005, the Company reached a tentative agreement to sell its fifty percent interest in its joint venture in Mexico, for a cash payment at closing of $325,000 and a secured promissory note of approximately $3.7 million in repayment of the joint venture’s indebtedness to the Company. Based on the tentative agreement, the Company recognized a $1.7 million impairment charge on its investment in the joint venture during the fourth quarter of 2005. This transaction is subject to the negotiation and execution of a definitive agreement, and there can be no assurance that the transaction will be completed or that it will be completed on the terms described above.

The Company’s effective income tax rate on earnings from continuing operations before income taxes was 45.3% in fiscal year 2005 compared to 42.8% in fiscal year 2004. The increase in the effective tax rate is primarily attributable to a decrease in jobs credit and the effect of an increase in the deferred income tax valuation allowance related to certain state and foreign operating losses. The Company’s effective tax rate is expected to be approximately 40.0% before discontinued operations for fiscal year 2006. See footnote 13. Income taxes for further discussion.

Year Ended September 30, 2004 Compared to Year Ended September 30, 2003

Parking revenues in fiscal year 2004 decreased to $572.9 million from $576.0 million in fiscal year 2003, a decrease of $3.1 million, or 0.5%. The decrease resulted from the conversion of certain contracts from lease agreements to management agreements which totaled $15.3 million, partially offset by $11.6 million in revenues from new locations. The Company experienced an increase in same store sales of $4.0 million for fiscal year 2004 compared to fiscal year 2003 for the entire Company.

Management contract and other revenues (excluding reimbursement of management contract expenses) increased in fiscal year 2004 to $124.7 million from $117.4 million in fiscal year 2003, an increase of $7.2 million, or 6.2%. The majority of the increase is due to the conversion of certain contracts from lease arrangements to management agreements and $3.8 million of new business and increased ancillary income.

Cost of parking in fiscal year 2004 decreased to $521.7 million or 91.1% of parking revenues from $538.2 million or 93.4% of parking revenues in fiscal year 2003, a decrease of $16.5 million, or 3.1%. The decrease is primarily due to a decrease in payroll expense of $6.9 million, lower rent expense of $4.8 million, $1.6 million decrease in depreciation expense, $1.6 million decrease in supplies, $0.7 million decrease in snow removal, $0.3 million decrease in repairs and maintenance and, $0.6 million decrease in other expenses.

Cost of management contracts in fiscal year 2004 decreased to $57.9 million from $65.6 million in fiscal year 2003. The cost of management contracts, as a percentage of management contract and other revenues, excluding reimbursement of management contract expenses, was 46.4% in fiscal year 2004 compared to 55.8% in fiscal year 2003. The decrease in cost was primarily caused by a decrease of $3.9 million in bad debt expense, a decrease of $2.5 million of liability insurance expense, and $1.3 million decrease in other miscellaneous costs.

General and administrative expenses decreased to $71.9 million in 2004 from $83.4 million in 2003, a decrease of $11.5 million, or 13.8%. This decrease is due to a reduction of $5.3 million in severance expense, $4.8 million in compensation expense, and $1.4 million in professional fees and other expenses. General and administrative expenses decreased as a percentage of total revenue (excluding reimbursement of management contract expenses) to 10.3% in 2004 from 12.0% in 2003.

Net property-related gains for fiscal year 2004 were $7.7 million compared to losses of $7.6 million in fiscal year 2003. The $7.7 million gain was comprised of a $6.3 million gain on the sale of property in New York and $3.6 million of gains on other properties sold, which the Company plans to continue to operate. The gains on the sale of property were offset by $2.2 million of impairments of contract rights, deferred expenses and leasehold improvements related to locations which management plans to continue to operate. The $7.6 million loss in 2003 was comprised of impairments of $3.6 million of contract rights and deferred expenses and $4.0 million of leasehold improvements related to locations which management plans to continue to operate. Impairment charges recognized in fiscal year 2004 and 2003 were based on estimated fair values using projected cash flows of the applicable parking facility discounted at the Company’s average cost of funds. Management determined that the projected cash flows for these locations would not be enough to recover the remaining value of the assets.

For fiscal year 2004, the Company either disposed of or designated as held-for-sale or disposal certain locations, resulting in loss from discontinued operations of $1.4 million. Included in discontinued operations in 2004 is $1.8 million of losses from the sale of property and $2.3 million of impairment charges related to certain properties held for sale, offset by earnings from discontinued operations of $2.6 million. The Company’s 2003 results were reclassified to reflect the operations of these locations as discontinued operations, net of related income taxes.

Interest income in fiscal year 2004 increased to $4.9 million from $4.7 million in fiscal year 2003. Interest expense decreased in fiscal year 2004 to $20.5 million from $21.9 million in fiscal year 2003 due primarily to a decrease in the average balance outstanding in 2004. The weighted average balance outstanding for the Company’s debt obligations and subordinated convertible debentures was $306.3 million during the fiscal year ended September 30, 2004, at a weighted average interest rate of 5.9% compared to a weighted average balance outstanding of $361.0 million at a weighted average rate of 5.8% during the fiscal year ended September 30, 2003. Deferred finance costs were included in the calculation of the weighted average interest rate.

Equity in partnership and joint venture (losses) earnings was a loss of $3.0 million in fiscal year 2004 compared to earnings of $2.2 million in fiscal year 2003. The decrease is primarily related to operating results for the Company’s 50% owned, non-consolidated affiliate in Mexico. As previously discussed, during the second quarter of fiscal 2004, the Company’s Mexican affiliate reported to the Company that the affiliate would be taking certain impairments and losses as part of the year-end audit performed by independent auditors. As the entity is a 50% owned, non-consolidated investment, results are recorded on the equity method. The losses reported to us were mostly non-cash, and totaled $2.6 million.

The Company’s effective income tax rate on earnings from continuing operations before income taxes was 42.8% in fiscal year 2004 compared to 40.5% in fiscal year 2003. The increase in the effective tax rate is primarily attributable to a decrease in jobs credit.

Quarterly Results

The quarterly 2005, as reported and 2004 statement of operations data set forth below was derived from unaudited financial statements of the Company and includes all adjustments (including reclassifications between continuing and discontinuing operations) which the Company considers necessary for a fair presentation thereof.

During the fourth quarter 2005, management of the Company became aware that certain employees in its United Kingdom operation had engaged in unauthorized related party transactions which resulted in the unauthorized transfer and utilization of Company assets and improper and inaccurate accounting entries that resulted in the over accrual of revenues and understatement of expenses during the first three quarters of fiscal 2005. On September 29, 2005, the Audit Committee of the Board of Directors and senior management decided to restate the Company’s financial statements for the quarterly periods ended December 31, 2004, March 31, 2005, and June 30, 2005 to reflect the correction of these accounting errors. In addition, during the fourth quarter, the Company has reassessed its accounting for interest rate swap agreements related to its credit facility and has restated its quarterly financial statements related to these interest rate swap agreements.

Corrections were made to reduce revenues excluding reimbursement of management contract expenses by $1.0 million (an increase of $0.1 million and $0.5 million in the first and second quarters, respectively, reduced by $1.6 million in the third quarter) for the inappropriate over accrual of revenues. Corrections were made to reduce earnings from continuing operations, net of tax by $4.5 million (an increase of $0.1 million in the first quarter, reduced by $0.3 million in the second quarter and, reduced by $4.3 million in the third quarter) for the inappropriate over accrual of revenues and the inappropriate capitalization and under recording of expenses. Additionally, corrections were made to increase earnings from continuing operations, net of tax by $0.5 million (an increase of $0.3 million and $0.7 million in the first and second quarters, respectively, reduced by $0.5 million in the third quarter) to record the change in fair value of the swap agreements. Corrections were made to reduce earnings from discontinued operations, net of tax by $5.5 million (a decrease of $1.0 million in the first quarter, an increase of $0.9 million in the second quarter, and a decrease of $5.4 million in the third quarter) for the inappropriate over accrual of revenues and inappropriate capitalization and under recording of expenses. As a result of these corrections net earnings and retained earnings were reduced by $9.5 million (a decrease of $0.6 million in the first quarter, an increase of $1.3 million in the second quarter, and a decrease of $10.2 million in the third quarter). The restatements had no impact on previously reported cash balances or total cash flows from operating, investing or financing activities for each of the applicable 2005 quarters.

Amounts in thousands, except per share data


2005 Quarters	December 31						March 31
(Unaudited)	As Reported			Restated			As Reported			Restated
Total revenues, excluding reimbursement of management contract expenses	$	171,511		$	171,579		$	164,567		$	165,061
Property related gains, net		1,881			1,881			14,755			14,755
Operating earnings		13,169			13,234			16,376			15,999
Earnings from continuing operations, net of tax		5,727			6,106			6,628			7,018
Discontinued operations, net of tax		(2,247	)		(3,235	)		(364	)		532
Net earnings		3,480			2,871			6,264			7,550

Earnings from continuing
operations, net of tax per share - basic	$	0.16		$	0.17		$	0.18		$	0.19
Discontinued operations, net of tax		(0.06	)		(0.09	)		(0.01	)		0.02

Net earnings – basic	$	0.10		$	0.08		$	0.17		$	0.21


Earnings from continuing
operations, net of tax per share – dilutive	$	0.16		$	0.17		$	0.18		$	0.19
Discontinued operations, net of tax		(0.06	)		(0.09	)		(0.01	)		0.02

Net earnings - dilutive	$	0.10		$	0.08		$	0.17		$	0.21


	June 30						September 30
	As Reported			Restated
Total revenues, excluding reimbursement of management contract expenses	$	168,658		$	167,063		$	165,690
Property related gains, net		(1,171	)		(1,171	)		38,105
Operating earnings		12,475			6,104			38,450
Earnings from continuing operations, net of tax		7,973			3,192			17,500
Discontinued operations, net of tax		(3,093	)		(8,528	)		(8,315	)
Net earnings (loss)		4,880			(5,336	)		9,185

Earnings from continuing operations, net of tax per share – basic	$	0.22		$	0.09		$	0.47
Discontinued operations, net of tax		(0.08	)		(0.23	)		(0.23	)

Net earnings (loss) – basic	$	0.14		$	(0.14	)	$	0.24


Earnings from continuing operations, net of tax per share – dilutive	$	0.22		$	0.09		$	0.47
Discontinued operations, net of tax		(0.08	)		(0.23	)		(0.23	)

Net earnings (loss) – dilutive	$	0.14		$	(0.14	)	$	0.24


2004 Quarters
(Unaudited)	December 31			March 31		June 30			September 30
Total revenues, excluding reimbursement of management contract expenses	$	179,063		$	172,578	$	176,629		$	169,280
Property related gains, net		1,243			3,293		1,433			1,685
Operating earnings		17,970			12,755		16,082			6,947
Earnings from continuing operations, net of tax		8,529			2,770		6,028			1,075
Discontinued operations, net of tax		(134	)		765		(60	)		(1,980	)
Net earnings		8,395			3,535		5,968			(905	)

Earnings from continuing operations, net of tax per share – basic	$	0.24		$	0.08	$	0.16		$	0.03
Discontinued operations, net of tax		(0.01	)		0.02		(0.00	)		(0.05	)

Net earnings – basic	$	0.23		$	0.10	$	0.16		$	(0.02	)


Earnings from continuing operations, net of tax per share – dilutive	$	0.24		$	0.08	$	0.16		$	0.03
Discontinued operations, net of tax		(0.01	)		0.02		(0.00	)		(0.05	)

Net earnings - dilutive	$	0.23		$	0.10	$	0.16		$	(0.02	)

Fourth quarter 2005 results from continuing operations, net of tax were higher due primarily to a $23.0 million gain, net of tax, on the sale of a lease right in New York. General and administrative expenses were significantly higher due to $2.2 of professional fees as a result of the Company’s investigation of and resolution of certain inappropriate accounting entries and misappropriation of assets in the United Kingdom, and for costs to comply with the requirements of the Section 404 of the Sarbanes Oxley Act of 2002. Fourth quarter earnings from continuing operations, net of tax for 2005 were also reduced by $1.7 million for the impairment of the Company’s investment in the Mexican joint venture and $0.5 million for the impairment of goodwill. The fourth quarter earnings from continuing operations, net of tax were increased by $0.5 million to record a correction of 2004 and 2003 gains previously recognized in accumulated other comprehensive income for the change in the recognition of swap agreements and reduced by $0.5 million related to the correction of prior period rent expense for certain locations. The Company also increased its worker’s compensation and general liability reserves by $1.2 million due to higher claims cost.

Liquidity and Capital Resources

Net cash provided by operating activities for fiscal year 2005 was $3.2 million, a decrease of $38.4 million from net cash provided by operating activities of $41.6 million during fiscal year 2004. The primary factor which contributed to this change was the decrease in revenue in 2005.

Net cash provided by investing activities was $101.7 million for fiscal year 2005 compared to $52.4 million of net cash provided by investing activities in fiscal year 2004. This change was primarily due to an increase in proceeds from the disposition of property and equipment during 2005 and the collection of notes receivable related to the Edison partnership.

Net cash used by financing activities for fiscal year 2005 was $106.6 million compared to cash used of $97.7 million in fiscal year 2004. Net cash used by financing activities in fiscal year 2005 primarily consisted of debt repayment of $121.4 million.

On February 28, 2003, the Company entered into a credit facility (the “Credit Facility”) initially providing for an aggregate availability of up to $350 million consisting of a five-year $175 million revolving loan, including a sub-limit of $60 million for standby letters of credit, and a $175 million seven-year term loan. The facility is secured by the stock of certain subsidiaries of the Company, certain real estate assets, and domestic personal property assets of the Company and certain subsidiaries. Proceeds from the Credit Facility were used to refinance a previous credit facility.

The Company amended the Credit Facility in June 2004. The amendment reduced the margin applied to the term loan by 75 basis points, and increased the standby letters of credit sub-limit by $30.0 million to $90.0 million. The Company uses its revolving loan to collateralize outstanding letters of credit. All other terms and conditions remained the same.

On January 25, 2005, the Company completed an amendment to the Credit Facility. The amended facility reduced the aggregate availability to $300 million consisting of a $225 million revolving loan and a $75 million term loan. The maturity dates remained the same, February 28, 2008, for the revolver and June 30, 2010, for the term loan. Additionally, the interest rate margins were reduced for both the revolver and term loans. The quarterly amortization schedule was also amended. The new schedule requires the term loan payments in the amount of $187,500 for the quarters ended March 2005 through March 2008 and $9.1 million for the quarters ended June 2008 through March 2010. The revolving loan is required to be repaid in February 2008. The aggregate availability under the Credit Facility was $172.8 million at September 30, 2005, which is a net of $45.1 million of stand-by letters of credit.

The Credit Facility bears interest at LIBOR plus a tier-based margin dependent upon certain financial ratios. There are separate tiers for the revolving loan and term loan. The weighted average margin as of September 30, 2005 was 185 basis points. The amount outstanding under the Company’s Credit Facility was $81.5 million with a weighted average interest rate of 4.4% as of September 30, 2005. The aggregate availability under the Credit Facility was $172.8 million at September 30, 2005, which is net of $45.1 million of stand-by letters of credit. The Company had deferred financing costs related to the Credit Facility of $5.9 million as of September 30, 2005 and $6.7 million as of September 30, 2004. The Company amortizes these costs over the term of the credit facility.

The Company is required under the Credit Facility to enter into and maintain interest rate protection agreements designed to limit the Company’s exposure to increases in interest rates. On May 30, 2003, the Company entered into two interest rate swap transactions for a total of $87.5 million. Both transactions swapped the Company’s floating LIBOR interest rates for fixed interest of 2.45% until June 30, 2007. Because not all of the terms are consistent with the credit facility, the derivatives do not qualify as a cash flow hedge.

The weighted average interest rate on the Company’s Credit Facility at September 30, 2005 was 4.4%. The 4.4% rate includes all outstanding LIBOR contracts and swap agreements at September 30, 2005. An increase (decrease) in LIBOR of 1% would result in no increase (decrease) of annual interest expense since the swaps, which converted the rates to fixed, totaled $87.5 million and the Credit Facility, which was all floating interest, was $81.5 million on September 30, 2005.

The Credit Facility contains covenants including those that require the Company to maintain certain financial ratios, restrict further indebtedness and certain acquisition activity and limit the amount of dividends paid. The primary ratios are a leverage ratio, senior leverage ratio and a fixed charge coverage ratio. Quarterly compliance is calculated using a four quarter rolling methodology and measured against certain targets. As of September 30, 2005, the Company is in compliance with all of the Credit Facility covenants.

Depending on the timing and magnitude of the Company’s future investments (either in the form of leased or purchased properties, joint ventures, or acquisitions), the working capital necessary to satisfy current obligations is anticipated to be generated from operations and the Credit Facility over the next twelve months. In the ordinary course of business, Central Parking is required to maintain and, in some cases, make capital improvements to the parking facilities it operates. If Central Parking identifies investment opportunities or has needs requiring cash in excess of Central Parking’s cash flows and the existing Credit Facility, Central Parking may seek additional sources of capital, including seeking to amend the Credit Facility to obtain additional debt capacity; however, there can be no assurance such additional capacity or sources of capital could be obtained. The current market value of Central Parking common stock also could have an impact on Central Parking’s ability to complete significant acquisitions or raise additional capital.

Future Cash Commitments

In August of 2005 the Company made an offer to its shareholders to purchase up to 4,400,000 shares of common stock at a price no greater than $16.75 nor lower than $14.50 per share. The transaction was structured as a modified Dutch Auction tender offer. The company funded the transaction with $75.3 million borrowed under the Credit Facility.

The offer was amended to reduce the range from a price no higher than $16.00 and no lower than $14.00 per share. The transaction was concluded on October 14, 2005 at which time the Company accepted and purchased 4,859,674 shares at a price of $15.50 per share, totaling $75.3 million in cash payments. The company exercised its right to purchase an additional number of shares without extending or modifying the offer.

The Company routinely makes capital expenditures to maintain or enhance parking facilities under its control. The Company expects such capital expenditures for fiscal year 2006 to be approximately $19 to $22 million.

Historically, the Company has paid dividends on its common stock and expects to pay dividends in the future. Common stock dividends of $2.1 million were paid during fiscal year 2005.

The following tables summarize the Company’s total contractual obligations and commercial commitments as of September 30, 2005 (amounts in thousands):


			Payments due by period
			Less than		1-3		3-5		After 5
	Total		1 Year		Years		Years		Years
Long-term debt and capital lease obligations	$	99,976	$	1,764	$	43,220	$	54,854	$	138
Subordinated debentures		78,085		—		—		—		78,085
Operating leases		1,041,825		182,833		271,050		165,814		422,128

Total contractual cash obligations	$	1,219,886	$	184,597	$	314,270	$	220,668	$	500,351


	Amount of commitment expiration per period
			Less than		1-3		3-5		After 5
	Total		1 Year		Years		Years		Years
Unused lines of credit	$	172,850	$	—	$	172,850	$	—	$	—

Unused lines of credit as of September 30, 2005 are reduced by $45.1 million of standby letters of credit.

International Foreign Currency Exposure

The Company operates wholly-owned subsidiaries in the United Kingdom, Canada and Spain. Total revenues from wholly-owned foreign operations amounted to 4.1%, 6.9% and 6.6% of total revenues (excluding reimbursement of management contract expenses) for the years ended September 30, 2005, 2004 and 2003, respectively. Additionally, as of September 30, 2005, the Company operated through joint ventures in Mexico, Germany, Poland, Greece, Venezuela, Colombia and Peru. The Company intends to continue to invest in foreign leased or owned facilities, and may become increasingly exposed to foreign currency fluctuations. The Company, in limited circumstances, has

denominated contracts in U.S. dollars to limit currency exposure. Presently, the Company has limited exposure to foreign currency risk and has no hedging programs related to such risk. The Company anticipates implementing a hedging program if such risk materially increases. For the year ended September 30, 2005, revenues from operations in the United Kingdom and Canada represented 9.0% and 50.8%, respectively, of total revenues generated by foreign operations, excluding reimbursement of management contract expenses.

Impact of Inflation and Changing Prices

The primary sources of revenues to the Company are parking revenues from owned and leased locations and management contract revenue on managed parking facilities. The Company believes that inflation has had a limited impact on its overall operations for the fiscal years ended September 30, 2005, 2004 and 2003 and does not expect inflation to have a material effect on its overall operations in fiscal year 2006.

Off Balance Sheet Arrangements

The Company has various ownership interests in certain unconsolidated partnerships and joint ventures. See Notes 1 and 8 to the Consolidated Financial Statements for information regarding the Company’s investments in unconsolidated partnerships and joint ventures.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R, Share-Based Payment. SFAS No. 123R requires the company to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Beginning October 1, 2005, the Company adopted SFAS 123R, using the modified prospective method, which requires the fair value of stock options to be expensed during the vesting period. The Company estimates the expense for fiscal year 2006 to be approximately $475 thousand.

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

Interest Rates

The Company’s primary exposure to market risk consists of changes in interest rates on variable rate borrowings. As of September 30, 2005, the Company had $81.5 million of variable rate debt outstanding under the Credit Facility, priced at LIBOR plus a weighted average 185 basis points.

The weighted average interest rate on the Company’s Credit Facility at September 30, 2005 was 4.4%. The 4.4% rate includes all outstanding LIBOR contracts and swap agreements at September 30, 2005. An increase (decrease) in LIBOR of 1% would result in no increase (decrease) of annual interest expense since the swaps, which converted the rates to fixed, totaled $87.5 and the Credit Facility, which was all floating interest, was $81.5 million on September 30, 2005.

Foreign Currency Exposure

The Company’s exposure to foreign exchange risk is minimal. As of September 30, 2005, the Company has approximately GBP 0.7 million (USD $1.2 million) of cash and cash equivalents denominated in British pounds, EUR 2.1 million (USD $2.5 million) denominated in euros, CAD 0.7 million (USD $0.6 million) denominated in Canadian dollars, and USD $1.0 million denominated in various other foreign currencies. The Company also has EUR 0.7 million (USD $0.8 million) of notes payable denominated in euros and GBP 4.8 million (USD $8.6 million) of notes payable denominated in pounds at September 30, 2005. These notes bear interest at a floating rate of 4.12% as of September 30, 2005, and require monthly principal and interest payments through 2012. The Company does not hold any hedging instruments related to foreign currency transactions. The Company monitors foreign currency positions and may enter into certain hedging instruments in the future should it determine that exposure to foreign exchange risk has increased. Based on the Company’s overall currency rate exposure as of September 30, 2005, management does not believe a near-term change in currency rates, based on historical currency movements, would materially affect the Company’s financial statements.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Central Parking Corporation:

We have audited the accompanying consolidated balance sheets of Central Parking Corporation and subsidiaries as of September 30, 2005 and 2004, and the related consolidated statements of operations, shareholders’ equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended September 30, 2005. In connection with our audits of the consolidated financial statements, we also have audited the financial statement Schedule II — Valuation Qualifying Accounts and financial statement schedule IV — Mortgage Loans on Real Estate as of September 30, 2005 and for each of the years in the three year period ended September 30, 2005. These consolidated financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Central Parking Corporation and subsidiaries as of September 30, 2005 and 2004, and the results of their operations and their cash flows for each of the years in the three-year period ended September 30, 2005, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Central Parking Corporation and subsidiaries’ internal control over financial reporting as of September 30, 2005, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated December 29, 2005 expressed an unqualified opinion on management’s assessment of, and an adverse opinion on the effective operation of, internal control over financial reporting as of September 30, 2005.

/s/ KPMG LLP

Nashville, Tennessee
December 29, 2005

CENTRAL PARKING CORPORATION and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

Amounts in thousands, except share and per share data


	September 30,
	2005			2004
ASSETS
Current assets:
Cash and cash equivalents	$	26,055		$	27,628
Management accounts receivable, net of allowance for doubtful accounts of $10,268 and $3,206 at September 30, 2005 and 2004, respectively		51,931			43,776
Accounts receivable - other		15,537			14,594
Current portion of notes receivable (including amounts due from related parties of $937 in 2005 and $1,617 in 2004)		5,818			6,010
Prepaid expenses		8,630			13,045
Assets held for sale		49,048			23,724
Available for sale securities		4,606			4,364
Refundable income taxes		—			1,461
Deferred income taxes		19,949			11,177

Total current assets		181,574			145,779
Notes receivable, less current portion		10,480			41,940
Property, equipment, and leasehold improvements, net		327,391			380,256
Contract and lease rights, net		80,064			89,015
Goodwill, net		232,443			232,562
Investment in and advances to partnerships and joint ventures		4,443			7,824
Other assets		31,419			32,252

Total Assets	$	867,814		$	929,628


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and capital lease obligations	$	1,764		$	46,867
Accounts payable		83,604			82,224
Accrued expenses		52,809			46,807
Management accounts payable		25,532			24,640
Income taxes payable		12,389			—

Total current liabilities		176,098			200,538
Long-term debt and capital lease obligations, less current portion		98,212			159,188
Subordinated convertible debentures		78,085			78,085
Deferred rent		22,113			24,450
Deferred income taxes		19,565			17,293
Other liabilities		21,152			14,977

Total liabilities		415,225			494,531

Minority interest		528			64

Shareholders’ equity:
Common stock, $0.01 par value; 50,000,000 shares authorized, 36,759,155 and 36,582,808 shares issued and outstanding at September 30, 2005 and 2004, respectively		368			366
Additional paid-in capital		251,784			249,452
Accumulated other comprehensive income, net		3,432			879
Retained earnings		197,182			185,041
Other		(705	)		(705	)

Total shareholders’ equity		452,061			435,033

Total Liabilities and Shareholders’ Equity	$	867,814		$	929,628

See accompanying notes to consolidated financial statements.

CENTRAL PARKING CORPORATION and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Amounts in thousands, except per share data


	Year Ended September 30,
	2005			2004			2003
Revenues:
Parking	$	550,782		$	572,878		$	575,969
Management contract and other		118,611			124,672			117,428

		669,393			697,550			693,397
Reimbursement of management contract expenses		464,423			418,565			418,058

Total revenues		1,133,816			1,116,115			1,111,455

Costs and expenses:
Cost of parking		504,648			521,682			538,158
Cost of management contracts		60,493			57,904			65,600
General and administrative		83,581			71,864			83,409

		648,722			651,450			687,167
Reimbursed management contract expenses		464,423			418,565			418,058

Total costs and expenses		1,113,145			1,070,015			1,105,225

Property-related gains (losses), net		53,570			7,654			(7,560	)
Impairment of goodwill		(454	)		—			—

Operating earnings (losses)		73,787			53,754			(1,330	)
Other income (expenses):
Interest income		4,741			4,883			4,733
Interest expense		(17,944	)		(20,476	)		(21,897	)
Gain on sale of non-operating assets		—			—			3,279
Gain on derivative instruments		3,006			—			—
Equity in partnership and joint venture (losses) earnings		(474	)		(2,984	)		2,212

Earnings (loss) from continuing operations before minority interest, and income taxes		63,116			35,177			(13,003	)
Minority interest		(1,331	)		(2,999	)		(4,052	)

Earnings (loss) from continuing operations before income taxes		61,785			32,178			(17,055	)
Income tax (expense) benefit:
Current		(32,057	)		(11,186	)		(5,051	)
Deferred		4,088			(2,590	)		11,954

Total income tax (expense) benefit		(27,969	)		(13,776	)		6,903

Earnings (loss) from continuing operations		33,816			18,402			(10,152	)

Discontinued operations, net of tax		(19,546	)		(1,409	)		5,625


Net earnings (loss)	$	14,270		$	16,993		$	(4,527	)


Basic earnings (loss) per share:
Earnings (loss) from continuing operations	$	0.92		$	0.51		$	(0.28	)
Discontinued operations, net of tax		(0.53	)		(0.04	)		0.15

Net earnings (loss)	$	0.39		$	0.47		$	(0.13	)


Diluted earnings (loss) per share:

Earnings (loss) from continuing operations	$	0.92		$	0.51		$	(0.28	)
Discontinued operations, net of tax		(0.53	)		(0.04	)		0.15

Net earnings (loss)	$	0.39		$	0.47		$	(0.13	)

See accompanying notes to consolidated financial statements.

CENTRAL PARKING CORPORATION and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
and COMPREHENSIVE INCOME (LOSS)

Amounts in thousands, except per share data


							Accumulated
					Additional		Other						Other
	Number of		Common		Paid-in		Comprehensive			Retained			Shareholders’
	Shares		Stock		Capital		Income (Loss), net			Earnings			Equity			Total
Balance at September 30, 2002		35,952	$	360	$	242,112	$	(2,377	)	$	176,924		$	(1,215	)	$	415,804

Issuance under restricted stock plan and employment agreements		13		1		215		—			—			—			216
Issuance under Employee Stock Purchase Plan		164		1		3,550		—			—			—			3,551
Common stock dividends, $0.06 per share		—		—		—		—			(2,165	)		—			(2,165	)
Exercise of stock options and warrants and related tax benefits		41		—		682		—			—			—			682
Amortization of deferred compensation		—		—		—		—			—			510			510
Comprehensive income (loss):
Net loss		—		—		—		—			(4,527	)		—			(4,527	)
Foreign currency translation adjustment		—		—		—		629			—			—			629
Unrealized gain on available-for-sale securities		—		—		—		168			—			—			168
Unrealized gain on fair value of derivatives		—		—		—		1,658			—			—			1,658

Total comprehensive loss																	(2,072	)

Balance at September 30, 2003		36,170		362		246,559		78			170,232			(705	)	$	416,526

Issuance under restricted stock plan and employment agreements		16		—		323		—			—			—			323
Issuance under Employee Stock Purchase Plan		71		1		591		—			—			—			592
Common stock dividends, $0.06 per share		—		—		—		—			(2,184	)		—			(2,184	)
Exercise of stock options and related tax benefits		130		1		1,612		—			—			—			1,613
Issuance of deferred stock units		196		2		367		—			—			—			369
Comprehensive income (loss):
Net earnings		—		—		—		—			16,993			—			16,993
Foreign currency translation adjustment		—		—		—		(276	)		—			—			(276	)
Unrealized loss on available-for-sale securities		—		—		—		(5	)		—			—			(5	)
Unrealized gain on fair value of derivatives		—		—		—		1,082			—			—			1,082

Total comprehensive income																	17,794

Balance at September 30, 2004		36,583		366		249,452		879			185,041			(705	)	$	435,033

Issuance under restricted stock plan and employment agreements		14		—		197		—			—			—			197
Issuance under Employee Stock Purchase Plan		39		—		569		—			—			—			569
Common stock dividends, $0.06 per share		—		—		—		—			(2,129	)		—			(2,129	)
Exercise of stock options and related tax benefits		123		2		1,566		—			—			—			1,568
Comprehensive income (loss):
Net earnings		—		—		—		—			14,270			—			14,270
Foreign currency translation adjustment		—		—		—		3,259			—			—			3,259
Unrealized gain on available-for-sale securities		—		—		—		54			—			—			54
Unrealized loss on fair value of derivatives		—		—		—		(760	)		—			—			(760	)

Total comprehensive income																	16,823

Balance at September 30, 2005		36,759	$	368	$	251,784	$	3,432		$	197,182		$	(705	)	$	452,061

See accompanying notes to consolidated financial statements.

	-		compliance with, or changes in, local, state, national and international laws and regulations, including, without limitation, local regulations, restrictions and taxation on real property, parking and automobile usage, security measures, environmental, anti-trust and consumer protection laws;

	-		changes in current parking rates and pricing of services to clients;

	-		extraordinary events affecting parking facilities that the Company manages, including labor strikes, emergency safety measures, military or terrorist attacks and natural disasters;

	-		the loss of key employees; and

	-		the other factors discussed under the heading Item 1A. “Risk Factors” included elsewhere in this Form 10-K.

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Part I
Item 1. Business	3
Item 1A. Risk Factors	11
Item 2. Properties	14
Item 3. Legal Proceedings	16
Item 4. Submission of Matters to a Vote of Security-Holders	17

Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18
Item 6. Selected Financial Data	19
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7a. Quantitative and Qualitative Disclosures about Market Risk	29
Item 8. Financial Statements and Supplementary Data	30
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	58
Item 9a. Controls and Procedures	58

Part III
Item 10. Directors and Executive Officers of the Registrant	64
Item 11. Executive Compensation	64
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	64
Item 13. Certain Relationships and Related Transactions	64
Item 14. Principal Accounting Fees and Services	64

Part IV.
Item 15. Exhibits and Financial Statement Schedules	64

Signatures	66
Ex-10.1(P) Amendment No. 1 to Employment Agreement
Ex-10.28 Waiver Agreement dated October 12, 2005
Ex-21 Subsidiaries of the Registrant
Ex-23 Consent of KPMG LLP
Ex-31.1 Section 302 Certifications of the CEO
Ex-31.2 Section 302 Certifications of the CFO
Ex-32.1 Section 906 Certifications of the CEO
Ex-32.2 Section 906 Certifications of the CFO


	PAGE
Report of Independent Registered Public Accounting Firm		31
Consolidated Balance Sheets as of September 30, 2005 and 2004		32
Consolidated Statements of Operations for the Years Ended September 30, 2005, 2004 and 2003		33
Consolidated Statements of Shareholders’ Equity and Comprehensive Income (Loss) for the Years Ended September 30, 2005, 2004 and 2003		34
Consolidated Statements of Cash Flows for the Years Ended September 30, 2005, 2004 and 2003		35
Notes to Consolidated Financial Statements		37
Schedule II – Valuation and Qualifying Accounts		65
Schedule IV – Mortgage Loans on Real Estate		65