The following discussion of our results of operations should be read in conjunction with the "Selected Financial Data" and our consolidated financial statements and the related notes included elsewhere herein. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth in Item 1A "Risk Factors" and elsewhere herein.

Overview

Our Business

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

We operate our clients' properties through two types of arrangements:
management contracts and leases. Under a management contract, we typically receive a base monthly fee for managing the facility, and we may also receive an incentive fee based on the achievement of facility performance objectives. We also receive fees for ancillary services. Typically, all of the underlying revenues and expenses under a standard management contract flow through to our clients rather than to us. However, some management contracts, which are referred to as "reverse" management contracts, usually provide for larger management fees and require us to pay various costs. Under lease arrangements, we generally pay to the property owner either a fixed annual rent, a percentage of gross customer collections or a combination thereof. We collect all revenues under lease arrangements and we are responsible for most operating expenses, but we are typically not responsible for major maintenance, capital expenditures or real estate taxes. Margins for lease contracts vary significantly, not only due to operating performance, but also due to variability of parking rates in different cities and varying space utilization by parking facility type and location. As of December 31, 2008, we operated 90% of our locations under management contracts and 10% under leases.

In evaluating our financial condition and operating performance, management's primary focus is on our gross profit, total general and administrative expense and general and administrative expense as a percentage of our gross profit. Although the underlying economics to us of management contracts and leases are similar, the manner in which we are required to account for them differs. Revenue from leases includes all gross customer collections derived from our leased locations (net of parking tax), whereas revenue from management contracts only includes our contractually agreed upon management fees and amounts attributable to ancillary services. Gross customer collections at facilities under management contracts, therefore, are not included in our revenue. Accordingly, while a change in the proportion of our operating agreements that are structured as leases versus management contracts may cause significant fluctuations in reported revenue and expense of parking services, that change will not artificially affect our gross profit. For example, as of December 31, 2008, 90% of our locations were operated under management contracts and 84% of our gross profit for the year ended December 31, 2008 was derived from management contracts. Only 49% of total revenue (excluding reimbursement of management contract expenses), however, was from management contracts because under those contracts the revenue collected from parking customers belongs to our clients. Therefore, gross profit and total general and administrative expense, rather than revenue, are management's primary focus.

General Business Trends

We believe that sophisticated commercial real estate developers and property managers and owners recognize the potential for parking and related services to be a profit generator rather than a cost center. Often, the parking experience makes both the first and the last impressions on their

properties' tenants and visitors. By outsourcing these services, they are able to capture additional profit by leveraging the unique operational skills and controls that an experienced parking management company can offer. Our ability to consistently deliver a uniformly high level of parking and related services and maximize the profit to our clients improves our ability to win contracts and retain existing locations. Our location retention rate for the twelve month periods ended December 31, 2008 and December 31, 2007 was 89% and 91%, respectively, which also reflects our decision not to renew, or terminate, unprofitable contracts.

We are also experiencing an increase in our ability to leverage existing relationships to increase the scope of services provided, thereby increasing the profit per location. For the year ended December 31, 2008 compared to the year ended December 31, 2007, we improved average gross profit per location by 2.0% from $40.2 thousand to $41.0 thousand.

Summary of Operating Facilities

    We focus our operations in core markets where a concentration of locations
improves customer service levels and operating margins. The following table
reflects our facilities operated at the end of the years indicated:

                                December 31,    December 31,    December 31,
                                    2008            2007            2006
           Managed facilities           1,986           1,893           1,733
           Leased facilities              229             238             245

           Total facilities             2,215           2,131           1,978

Revenue

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

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

º •
º Parking services revenue-management contracts. Management contract revenue consists of management fees, including both fixed and performance-based fees, and amounts attributable to ancillary services such as accounting, equipment leasing, payments received for exercising termination rights, consulting, development fees, gains on sales of contracts, insurance and other value-added services with respect to managed locations. We believe we generally purchase required insurance at lower rates than our clients can obtain on their own because we effectively self-insure for all liability and worker's compensation claims by maintaining a large per-claim deductible. As a result, we have generated operating income on the insurance provided under our management contracts by focusing on our risk management efforts and controlling losses. Management contract revenues do not include gross customer collections at the managed locations as this revenue belongs to the property owner rather than to us. Management contracts generally provide us with a management fee regardless of the operating performance of the underlying facility.

º •
º Conversions. Conversions between type of contracts, lease or management, are typically determined by our clients and not us. Although the underlying economics to us of management contracts and leases are similar, the manner in which we account for them differs substantially.

Reimbursement of Management Contract Expense

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

Cost of Parking Services

Our cost of parking services consists of the following:

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

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

Gross Profit

Gross profit equals our revenue less the cost of generating such revenue. This is the key metric we use to examine our performance because it captures the underlying economic benefit to us of both lease contracts and management contracts.

General and Administrative Expenses

General and administrative expenses include salaries, wages, payroll taxes, insurance, travel and office related expenses for our headquarters, field offices, supervisory employees, chairman of the board and board of directors.

Depreciation and Amortization

Depreciation is determined using a straight-line method over the estimated useful lives of the various asset classes or in the case of leasehold improvements, over the initial term of the operating lease or its useful life, whichever is shorter. Intangible assets determined to have finite lives are amortized over their remaining useful life.

Valuation Allowance Related to Long-Term Receivables

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

Seasonality

During the first quarter of each year, seasonality impacts our performance with regard to moderating revenues, with the reduced levels of travel most clearly reflected in the parking activity associated with our airport and hotel businesses as well as increases in certain costs of parking services, such as snow removal, both of which negatively affect gross profit. Although our revenues and profitability are affected by the seasonality of the business, general and administrative costs are relatively stable throughout the fiscal year. See Item 6, "Selected Financial Data," for further information.

Results of Operations

Fiscal 2008 Compared to Fiscal 2007

    The following table presents the material factors that impact our revenue.

                                                          Year Ended
                                                         December 31,              Variance
                                                    2008          2007         Amount       %
                                                              (in millions)
Lease contract revenue:
       New location                                $   9.4     $         2.5    $  6.9     276.0
       Contract expirations                            4.1               8.9      (4.8 )   (53.9 )
       Same location:
              Short-term parking                      85.7              84.9       0.8       0.9
              Monthly parking                         41.8              39.8       2.0       5.0

       Total same location                           127.5             124.7       2.8       2.2
       Conversions                                     5.1               8.2      (3.1 )   (37.8 )
       Acquisitions                                    8.2               1.0       7.2     720.0

Total lease contract revenue                       $ 154.3     $       145.3    $  9.0       6.2

Management contract revenue:
       New location                                $  25.7     $         8.2    $ 17.5     213.4
       Contract expirations                            8.2              17.6      (9.4 )   (53.4 )
       Same location                                 102.3              91.7      10.6      11.6
       Conversions                                     0.3               0.2       0.1      50.0
       Acquisitions                                    9.3               1.9       7.4     389.5

Total management contract revenue                  $ 145.8     $       119.6    $ 26.2      21.9

Reimbursement of management contract expense       $ 400.6     $       356.8    $ 43.8      12.3

Parking services revenue-lease contracts. Lease contract revenue increased $9.0 million, or 6.2%, to $154.3 million for the year ended December 31, 2008, compared to $145.3 million in the year-ago period. The increase resulted primarily from our acquisitions, revenue from new locations exceeding decreases in revenue from contract expirations and fewer leased contracts that converted from management contracts during the current year. Same location revenue for those facilities, which as of December 31, 2008 have been operational a minimum of 24 months, increased 2.2%. Revenue associated with contract expirations relates to contracts that expired during the current period. In addition, we recorded $1.4 million in 2008 related to the Hurricane Katrina settlement, which was included in contract expirations.

Parking services revenue-management contracts. Management contract revenue increased $26.2 million, or 21.9%, to $145.8 million for the year ended December 31, 2008, compared to $119.6 million in the year-ago period. The increase resulted primarily from new locations and acquisitions which more than offset the decrease in revenue from contract expirations. Same locations revenue for those facilities, which as of December 31, 2008 have been operational a minimum of 24 months, increased 11.6%. In addition, we recorded $0.2 million related to the Hurricane Katrina settlement, which was included in contract expirations.

Reimbursement of management contract expense. Reimbursement of management contract expenses increased $43.8 million, or 12.3%, to $400.6 million for the year ended December 31, 2008, compared

to $356.8 million in the year-ago period. This increase resulted from additional reimbursements for costs incurred on behalf of owners.

The following table presents the material factors that impact our cost of parking services.

                                                      Year Ended
                                                     December 31,              Variance
                                                2008          2007         Amount       %
                                                          (in millions)
 Cost of parking services lease contracts:
      New location                             $   9.0     $         2.5    $  6.5     260.0
      Contract expirations                         2.0               5.9      (3.9 )   (66.1 )
      Same location:
           Rent                                   89.3              86.8       2.5       2.9
           Payroll and payroll related            17.3              17.1       0.2       1.2
           Other operating costs                  10.8               9.0       1.8      20.0

      Total same location                        117.4             112.9       4.5       4.0
      Conversions                                  4.4               7.4      (3.0 )   (40.5 )
      Acquisitions                                 7.3               0.9       6.4     711.1

 Total cost of parking services lease          $ 140.1     $       129.6    $ 10.5       8.1
 contracts

 Cost of parking services management
 contracts:
      New locations                            $  15.7     $         5.6    $ 10.1     180.4
      Contract expirations                         5.1              10.6      (5.5 )   (51.9 )
      Same location:
           Payroll and payroll related            26.0              26.6      (0.6 )    (2.3 )
           Other operating expenses               16.2               5.7      10.5     184.2

      Total same location                         42.2              32.3       9.9      30.7
      Conversions                                    -                 -         -         -
      Acquisitions                                 6.3               1.2       5.1     425.0

 Total cost of parking services management     $  69.3     $        49.7    $ 19.6      39.4
 contracts

 Reimbursed management contract expense        $ 400.6     $       356.8    $ 43.8      12.3

Cost of parking services-lease contracts. Cost of parking services for lease contracts increased $10.5 million, or 8.1%, to $140.1 million for the year ended December 31, 2008, compared to $129.6 million in the year-ago period. The increase resulted primarily from new locations and acquisitions which more than offset the decreases in costs from contract expirations and fewer locations that converted from management contracts during the current year. Same locations costs for those facilities which as of December 31, 2008 have been operational a minimum of 24 months increased 4.0%. Same location rent expense for lease contracts increased primarily as a result of contingent rental payments on the increase in revenue for same locations. The increase in other operating costs for lease contracts primarily result from increases in snow removal costs and garage supplies.

Cost of parking services-management contracts. Cost of parking services for management contracts increased $19.6 million, or 39.4%, to $69.3 million for the year ended December 31, 2008, compared to $49.7 million in the year-ago period. The increase resulted primarily from new locations and acquisitions which more than offset the decrease in costs from contract expirations. There was no impact on costs for those management contracts which converted to a lease contract. Same location costs for those facilities, which as of December 31, 2008 have been operational a minimum of

24 months, increased 30.7%. Same location increase in operating expenses for management contracts primarily result from increases in snow removal costs and garage supplies.

Reimbursed management contract expense. Reimbursed management contract expense increased $43.8 million, or 12.3%, to $400.6 million for the year ended December 31, 2008, compared to $356.8 million in the year-ago period. This increase resulted from additional reimbursed cost incurred on the behalf of owners.

The following table presents the material changes to the gross profit and gross profit percentage on our lease and management contracts.

                                                     Year Ended
                                                    December 31,              Variance
                                               2008          2007         Amount       %
                                                         (in millions)
 Gross profit lease contracts:
        New location                          $   0.4     $           -    $  0.4     100.0
        Contract expirations                      2.1               3.0      (0.9 )   (30.0 )
        Same location                            10.1              11.8      (1.7 )   (14.4 )
        Conversions                               0.7               0.8      (0.1 )   (12.5 )
        Acquisitions                              0.9               0.1       0.8     800.0

 Total gross profit lease contracts           $  14.2     $        15.7    $ (1.5 )    (9.6 )

 Gross profit percentage lease contracts:
        New location                              4.3 %               -
        Contract expirations                     51.2 %            33.7 %
        Same location                             7.9 %             9.5 %
        Conversions                              13.7 %             9.8 %
        Acquisitions                             11.0 %            10.0 %

 Total gross profit percentage lease              9.2 %            10.8 %
 contracts

 Gross profit management contracts:
        New location                          $  10.0     $         2.6    $  7.4     284.6
        Contract expirations                      3.1               7.0      (3.9 )   (55.7 )
        Same location                            60.1              59.4       0.7       1.2
        Conversions                               0.3               0.2       0.1      50.0
        Acquisitions                              3.0               0.7       2.3     328.6

 Total gross profit management contracts      $  76.5     $        69.9    $  6.6       9.4

 Gross profit percentage management
 contracts:
        New location                             38.9 %            31.7 %
        Contract expirations                     37.8 %            39.8 %
        Same location                            58.7 %            64.8 %
        Conversions                             100.0 %           100.0 %
        Acquisitions                             32.3 %            36.8 %

 Total gross profit percentage management        52.5 %            58.4 %
 contracts

Gross profit-lease contracts. Gross profit for lease contracts decreased $1.5 million, or 9.6%, to $14.2 million for the year ended December 31, 2008, compared to $15.7 million in the year-ago period. Gross profit percentage for lease contracts decreased to 9.2% for the year ended December 31, 2008, compared to 10.8% in the year-ago period. Gross profit lease contracts decreases on same locations

were primarily the result of increases in other operating costs as described under the cost of parking services lease contracts. Gross profit percentage on acquisitions were higher than our average for lease contracts however, were not sufficient to offset the decline in same locations.

Gross profit-management contracts. Gross profit for management contracts increased $6.6 million, or 9.4%, to $76.5 million for the year ended December 31, 2008, compared to $69.9 million in the year-ago period. Gross profit percentage for management contracts decreased to 52.5% for the year ended December 31, 2008, compared to 58.4% in the year-ago period. Gross profit for management contracts increases were primarily the result of our new locations and our acquisitions. Gross profit percentage on same locations accounted for most of the decline on a percentage basis.

General and administrative expenses. General and administrative expenses increased $2.8 million, or 6.3%, to $47.6 million for the year ended December 31, 2008, compared to $44.8 million in the year-ago period. This increase resulted from increases in payroll and payroll related expenses of $1.7 million, increases resulting from acquisitions of $1.2 million and a $0.1 decrease in other operating expenses, which included $0.4 million from the Hurricane Katrina settlement.

Interest expense. Interest expense decreased $0.6 million, or 8.4%, to $6.5 million for the year ended December 31, 2008, as compared to $7.1 million in the year-ago period. This decrease resulted primarily from the decrease in the borrowing rate on our senior credit facility.

Interest Income. Interest Income decreased $0.4 million, or 66.7%, to $0.2 million for the year ended December 31, 2008, as compared to $0.6 million in the year-ago period. This decrease resulted from reduction of repayments received in 2007 for interest bearing guarantor payments related to Bradley International Airport.

Income tax expense. Income tax expense increased $0.3 million, or 2.7%, to $11.6 million for the year ended December 31, 2008, as compared to $11.3 million in the year-ago period. This increase resulted from taxes on increased earnings partially offset by a reduction in our effective tax rate. The effective tax rate for the year ended December 31, 2008 was 37.9% compared to 39.3% for the year-ago period.

Segments

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information ("SFAS 131"), establishes annual and interim reporting standards for an enterprise's operating segments and related disclosures about its products, services, geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, and about which separate financial information is regularly evaluated by the Chief Operating Decision Maker ("CODM") in deciding how to allocate resources. The CODM, as defined by SFAS 131, is our President and Chief Executive Officer ("CEO").

The Company is managed based on regions administered by executive vice presidents. Three regions are generally organized geographically with the fourth region encompassing major airports and transportation operations nationwide. The following is a summary of revenues (excluding reimbursement of management contract expenses) by region for the years ended December 31, 2008 and 2007. Information related to prior years has been recast to conform to the new region alignment.

Region One encompasses Delaware, District of Columbia, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio, Rhode Island, Vermont, Virginia, and Wisconsin.

Region Two encompasses Alabama, British Columbia, Florida, Georgia, Louisiana, Ontario, Tennessee, and Texas.

Region Three encompasses Arizona, California, Colorado, Hawaii, Nevada, Utah, Washington, and Wyoming.

Region Four encompasses all major airport and transportation operations nationwide.

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

The following tables present the material factors that impact our financial statements on an operating segment basis.

Segment revenue information is summarized as follows:

                                                                  Year Ended December 31,
                          Region One        Region Two        Region Three       Region Four          Other              Total
                         2008     2007     2008     2007     2008      2007     2008     2007     2008     2007     2008      2007
                                                                       (in millions)
Lease contract
revenue:
     New location       $  5.1   $  2.1   $  3.5   $  0.1    $  0.8   $  0.3   $    -   $    -   $    -   $    -   $   9.4   $   2.5
     Contract
     expirations           1.0      3.1      2.1      1.2       0.9      3.7        -      0.5      0.1      0.4       4.1       8.9
     Same location        57.0     54.5     11.9     11.7      17.0     16.9     41.6     41.6        -        -     127.5     124.7
. . .