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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark one)

|  |  |                                                                                                                                
|- |  | -------------------------------------------------------------------------------------------------------------------------------
|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended December 31, 2002

or

|  |  |                                                                                                                                          
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934For The Transition Period From
               to

Commission File Number 1-15629

IMPERIAL PARKING
CORPORATION

(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 91-2161409                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                               |  |                                     
|601 West Cordova Street, Suite 300
Vancouver, BC Canada        |  | V6B 1G1                             
|                                                               |  |                                     
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number,
including area
code:                   (604) 681-7311

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

|                              |  |                         |  | 
|----------------------------- |  | ----------------------- |  | 
|                              |  | Name of Each Exchange  
|Title of Each Class           |  | On Which Registered    
|                              |  |                        
|Common Stock, $0.01 Par Value |  | American Stock Exchange

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



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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x
    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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. o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes o     No x

The aggregate market value of the Registrants Common Stock held by
non-affiliates of the Registrant on June 28, 2002 (based on the closing price
of the Registrants Common Stock on the American Stock Exchange on June 28,
2002) was approximately $20,563,000. Shares of the Registrants common stock
held by each executive officer and director and by each entity that owns 5% or
more of the Registrants outstanding common stock have been excluded in that
such persons may be deemed to be affiliates. This determination of affiliate
status is not necessarily a conclusive determination for other purposes.

The number of shares outstanding of the Registrants Common Stock at March 7,
2003 was 1,822,764.

Portions of the Registrants definitive Proxy Statement to be filed for its
2003 Annual Meeting of Stockholders are incorporated by reference into Part III
of this Report.





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##### 

TABLE OF CONTENTS



|                              |                                                                                               |  |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                       
|                              | Item 1. Business                                                                             
|                              | Item 2. Properties                                                                           
|                              | Item 3. Legal Proceedings                                                                    
|                              | Item 4. Submission of Matters To a Vote of Security Holders.                                 
|PART II.                     
|                              | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                
|                              | Item 6. Selected Financial Data                                                              
|                              | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 7a. Quantitative and Qualitative Disclosure About Market Risk                           
|                              | Item 8. Financial Statements and Supplementary Data                                          
|                              | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|Part III                     
|                              | Item 10. Directors and Executive Officers of the Registrant                                  
|                              | Item 11. Executive Compensation                                                              
|                              | Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|                              | Item 13. Certain Relationships and Related Transactions                                      
|Part IV                      
|                              | Item 14. Controls and Procedures                                                             
|                              | Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|                              | Signatures                                                                                   
|                              | CERTIFICATIONS                                                                               
|FINANCIAL STATEMENT SCHEDULES

TABLE OF CONTENTS
IMPERIAL PARKING CORPORATION

|               |  |                                                                                       |    |  |     |  |  | 
|-------------- |  | ------------------------------------------------------------------------------------- | -- |  | --- |  |  | 
|Item           |  | PART I                                                                                |    |  |     | 
|1.             |  | Business                                                                              |    |  | 4   | 
|2.             |  | Properties                                                                            |    |  | 10  | 
|3.             |  | Legal Proceedings                                                                     |    |  | 10  | 
|4.             |  | Submission of Matters to a Vote of Security Holders                                   |    |  | 12  | 
|               |  | PART II                                                                               |    |  |     | 
|5.             |  | Market for Registrants Common Equity and Related Stockholder Matters                 |    |  | 13  | 
|6.             |  | Selected Financial Data                                                               |    |  | 14  | 
|7.             |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |    |  | 17  | 
|7A.            |  | Quantitative and Qualitative Disclosures About Market Risk                            |    |  | 28  | 
|8.             |  | Financial Statements and Supplementary Data                                           |    |  | 29  | 
|9.             |  | Changes in the Disagreements with Accountants on Accounting and Financial Disclosure  |    |  | 29  | 
|               |  | PART III                                                                              |    |  |     | 
|10.            |  | Directors and Executive Officers of the Registrant                                    |    |  | 30  | 
|11.            |  | Executive Compensation                                                                |    |  | 30  | 
|12.            |  | Security Ownership of Certain Beneficial Owners and Management                        |    |  | 30  | 
|13.            |  | Certain Relationships and Related Transactions                                        |    |  | 30  | 
|               |  | PART IV                                                                               |    |  |     | 
|14.            |  | Controls and Procedures                                                               |    |  | 31  | 
|15.            |  | Exhibits, Financial Statements Schedules, and Reports on Form 8-K                     |    |  | 31  | 
|Signatures     |  |                                                                                       | 33 | 
|Certifications |  |                                                                                       | 34 | 
|               |  | FINANCIAL STATEMENT SCHEDULES                                                         |    |  |     | 
|               |  | Imperial Parking Corporation Financial Statement Schedules                            |    |  | F-1 | 

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Important Information Regarding Forward-Looking Statements

Certain matters discussed under the captions Business, Managements
Discussion and Analysis of Financial Condition and Results of Operations,
Quantitative and Qualitative Disclosures About Market Risk and elsewhere
in this Annual Report on Form 10-K and the information incorporated by
reference in this report 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 include statements related to our operating
strategy, growth strategy, cost savings initiatives, industry and economic
conditions and future financial performance and other matters related to the
future, and sometimes are preceded by, followed by or otherwise include the
words believes, expects, anticipates, intends, estimates or similar
expressions in these discussions. Our actual future performance,
achievements and may differ materially from those expressed or implied by
these forward-looking statements as a result of such known and unknown
risks, uncertainties, assumptions and other factors. Representative examples
of these factors include, without limitation:



| |  | successfully integrating past and future acquisitions in light of challenges in retaining key employees, synchronizing
business processes and efficiently integrating facilities, marketing, and operations;                                                                                                                                                                
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | successful implementation of our operating and growth strategy, including possible strategic acquisitions;                                                                                                                                                                                                                                                                  
| 
| |  | fluctuations in quarterly operating results caused by a variety of factors including the timing of gains on sales of owned
facilities, pre-opening costs, changes in our cost of borrowing, effect of weather on travel and transportation patterns,
player strikes or other events affecting major league sports and local, national and international economic conditions;
| 
| |  | our ability to form and maintain our strategic relationships with certain large real estate owners and operators;                                                                                                                                                                                                                                                           
| 
| |  | global and regional economic factors; and                                                                                                                                                                                                                                                                                                                                   
| 
| |  | compliance with laws and regulations, including, without limitation, environmental, antitrust and consumer protection laws
and regulations at the federal, state, provincial, local and international levels.                                                                                                                                                               

Additional factors are described in Item 7. Managements Discussion and
Analysis of Financial Condition and Results of Operations  Certain Factors
Affecting Future Operating Results.

Readers are cautioned that the Companys actual results could differ
materially from those set forth in such forward- looking statements.

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PART I




Item 1.   Business

General

Imperial Parking Corporation (as used in this report, the terms Impark,
we, us or the Company mean Imperial Parking Corporation, including its
consolidated subsidiaries), a Delaware corporation, is a leading provider of
parking services in North America. As of December 31, 2002, we managed,
leased or owned 1,343 parking lots in Canada and 294 parking lots in the
United States, containing more than 320,000 parking spaces in aggregate,
making us the leading parking provider in Canada and one of the four largest
in North America. We also provide parking lot patrolling, ticketing and
collection services for our own lots and for those operated by other
parties.

The Company resulted from the combination on March 27, 2000 of the Canadian
parking assets and operations of First Union Real Estate Equity and Mortgage
Investments (First Union) and the parking related business of First Union
Management, Inc. (FUMI). The businesses combined into Impark are referred
to in this report for periods prior to the combination as follows:



| |  |  | FUR Parking Business. The FUR Parking Business, constituting the
parking assets and operations of First Union, consisted primarily of 15
owned parking properties in Canada. Between April 1997 and March 2000,
subsidiaries of First Union operated this business, including leasing
the properties to FUMI for operations and management.                                                                                                                                                    
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | FUMI Parking Business. The FUMI Parking Business consisted of the
parking services and related ancillary activities that have been
continued into the Company. Between April 1997 and March 2000,
subsidiaries of FUMI carried on these activities. The operations of
FUMIs indirect subsidiaries, Imperial Parking Limited and Impark
Services Ltd., consisted of operating and managing parking facilities
in Canada and the United States and carrying on other parking related
activities.

The combination resulting in our formation was completed on March 27, 2000
following a series of transactions pursuant to a detailed plan of
organization. The final step of the series of transactions was the
distribution by First Union of substantially all of the outstanding shares
of our common stock to the shareholders of First Union.

Industry

The parking industry is highly fragmented and competitive. Industry
participants, the vast majority of which are privately held companies,
consist of a relatively few national companies and a large number of small
regional or local operators, including a substantial number of companies
providing parking as an ancillary service in connection with property
management or ownership. The parking industry has experienced consolidation
as smaller operators have found that they lack the capital, economies of
scale and sophisticated management techniques required to compete with
larger providers. We expect this trend to continue and to provide
opportunities for us to acquire smaller existing providers.

We expect a number of other trends in the commercial property management
business to continue to provide opportunities for large, specialized
providers of high-quality parking services. We believe that:



| |  |  | The trend toward consolidation of property management
companies favors larger, nationwide parking providers, as
increasingly centralized property management companies and property
owners seek to minimize the number of separate parking providers
they deal with;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | As the property management industry becomes increasingly
sophisticated and professional, property management companies and
property owners will likely seek to work with specialized,
professional parking service providers;                                       
|
| |  |  | Parking is increasingly seen by building owners as a profit
center, and owners are seeking parking providers who can help them
to maximize profitability, increase efficiency and reduce financial
unpredictability; and                                            

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| |  |  | The owners of premier properties, as they recognize that the
parking experience often provides both the first and last
impression of their properties to tenants and users, are seeking to
offer the highest possible level of quality in their parking
services as a means of distinguishing their properties from those
of competitors.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We believe that the industry trends toward outsourcing by private-sector
owners and privatization by government entities provide additional growth
opportunities for parking facility operators. Private-sector parking owners
have begun to move from owner-operator of their parking facilities to
outsourcing the management of operations to specialized operators. This
allows them to focus on their core competencies while increasing overall
returns on parking assets. In addition, governments and government
agencies, particularly cities and municipal authorities, sometimes retain
private firms to operate facilities and parking-related services in an
effort to reduce operating budgets and increase efficiency.

Operating Arrangements

We operate parking facilities under three general types of arrangements:
leases, management contracts, and fee ownership. As of December 31, 2002,
we leased 568 parking facilities, operated 1,054 parking facilities through
management contracts and owned 15 parking facilities.

The general terms and benefits of these types of arrangements are described
below:

Leases.Under a lease arrangement, we generally pay either a fixed
annual rent, a percentage of gross customer collections, or a combination
thereof to the property owner. We collect all revenues and are responsible
for most operating expenses, but are typically not responsible for major
maintenance. In contrast to management contracts, lease arrangements are
typically for terms of three to ten years and often have a renewal term, and
provide for a fixed payment to the facility owner regardless of the
operating earnings of the parking facility. As a result, leased facilities
generally require a longer commitment and a larger capital investment by us
than do managed facilities, but generally provide a greater opportunity for
long-term revenue growth and profitability.

Management Contracts.Under a management contract, we generally
receive a base monthly fee for managing the facilities and often receive an
incentive fee based on the achievement of facility revenues above a base
amount. We generally charge fees for various ancillary services such as
accounting, supervision, equipment leasing and consulting. Responsibilities
under a management contract include hiring, training and staffing parking
personnel, and providing collections, accounting, record-keeping, insurance
and facility marketing services. In general, the facility owner is
responsible for operating expenses such as taxes, license and permit fees,
insurance premiums, payroll, as well as, non-routine maintenance, repair
costs and capital improvements. The typical management contract is for a
term of one to three years (often the owner reserves the right to terminate,
without cause, on 30 days notice) and may contain a renewal clause.

Fee ownership.Under fee ownership arrangements, we own the property
and fixtures. Ownership of parking facilities typically requires a larger
capital investment than managed or leased facilities but provides maximum
control over the operation of the parking facility, and all increases in
revenue flow directly to us. Ownership provides the potential for realizing
capital gains from the appreciation in the value of the underlying real
estate, but it also subjects us to risks including reduction in value of the
property and additional potential liabilities, as well as additional costs
such as real estate taxes and structural, mechanical or electrical
maintenance or repairs.

Enforcement and Collections

Approximately 50% of our parking lots are operated with parking meters and
without parking lot attendants. We enforce user payment at these lots by
having patrollers circulate regularly through lots to identify delinquent
parkers and issue violation notices. We use technology which enables our
patrollers to monitor and identify first-time and repeat offenders using
hand-held computers. The hand-held computers are uploaded daily to
mainframe computers that track violation history. This hand-held equipment
generates violation notices for offenders. Payments on account of these
violation notices are handled by our collections operation and are included
in our revenues.

5



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Growth Strategy

Our strategy is to strengthen our position as the leading parking provider
in Canada while significantly expanding our presence into selected markets
in the United States. Key elements of this growth strategy include:

Increase penetration of existing core markets.We will seek to
leverage our long-standing relationships with real estate owners in cities
where we currently have significant operations. Our reputation for premium
service, our local market knowledge and our management infrastructure,
allows us to compete aggressively for new business in these core cities.
Because existing parking operations are sufficient to cover the costs of
local and regional personnel, we expect that additional parking operations
in these markets will provide a greater contribution to our profits than the
operations in new markets. As we compete for new business, we will also
strive to retain and improve the profitability of existing contracts.

Pursue aggressive growth in other urban markets.We have targeted
major cities in the United States where we currently have little or no
presence for aggressive expansion. In the past three years, we have added
New York, San Francisco, Chicago, Philadelphia, Cleveland, Atlanta and Miami
to our U.S. portfolio. We believe that continued expansion in the United
States is a key component to enhancing our overall profitability. The
United States is the largest parking market in the world, and members of our
management have significant experience in the United States. Also, there
are greater opportunities to bid for contracts in the United States than in
Canada where we are already a leader in our industry. Additionally, we
believe parking rates and average profits per facility can be higher in the
United States than in Canada. Our strategy is to enter a new market only if
we believe we can quickly gain a significant position in the market, with
sufficient critical mass to compete effectively and realize economies of
scale. Certain markets are dominated by national parking companies that
have established strong relationships through more advanced parking
techniques. However, where a market is fragmented by a number of smaller
less sophisticated parking operators we believe there is an opportunity to
gain market share by providing superior systems and controls to prospective
customers. We expect to pursue opportunities in these markets either
through acquisition or by establishing our own operations there. We believe
that there are several markets in the United States in which we anticipate
gaining market share over the next three to four years.

Pursue acquisition opportunities.We believe there are opportunities
to expand our business through the acquisition of smaller operators, both in
existing core markets and in other targeted cities where we believe we can
attain market share. The parking industry is highly fragmented and we
believe that many of our smaller competitors have limited access to capital
or do not have the systems or the scale to compete effectively. We have
completed seven acquisitions in the last eight years, adding approximately
375 facilities. Typically, we seek to acquire small to medium-sized local
operators with several years of experience in their market. We believe this
allows for the immediate understanding of the market and provides a platform
for increased penetration in the same city.

Operating Strategy

We seek to increase the revenues and profitability of our parking facilities
through a variety of operating strategies, including the following:

Focus on larger urban markets.We intend to focus on larger urban
markets. We believe that (i) urban markets are more resistant to economic
downturns, (ii) property owners and real estate asset managers in these
markets typically have a presence in other cities, which provides
opportunities to leverage these relationships to expand to new locations,
(iii) the typically higher prices charged in these markets can support our
premium service levels, and (iv) our senior management has significant
expertise in these markets. Together, Charles Huntzinger and Bryan Wallner
have over 35 years of parking experience in urban markets including New
York, Philadelphia, Baltimore, Washington, Boston, Richmond, Jacksonville,
Pittsburgh, Cleveland, Columbus, Cincinnati, Milwaukee, Denver, San
Francisco, Los Angeles, Seattle, St. Louis, and Indianapolis, as well as
Toronto and Ottawa in Canada.

Increase proportion of leased facilities.We intend over time to
increase the number of facilities we operate under lease relative to the
number we operate under management contracts. Historically, our net profits
have been higher on leased facilities than on managed facilities. Although
our net profits have been higher from leased facilities, typically these
profits increase year over year over the term of the leases. Therefore, we
experience lower profits and sometimes losses during the first one or two
years of a lease term. This is illustrated by the table below which groups
our leased locations that were active at December 31, 2002 by the year that
we opened the location.

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|            |  |               |     |                 |  |                              |        |             |  |   |       |   |  |  |      | 
|----------- |  | ------------- | --- | --------------- |  | ---------------------------- | ------ | ----------- |  | - | ----- | - |  |  | ---- | 
|            |  |               |     |                 |  | Year ended December 31, 2002
|            |  | Number of     |     |                
|Year opened |  | Locations (1) |     | Revenue ($'000) |  | Gross margin ($'000)         |        | Coverage(2)
|            |  |               |     |                 |  |                              |        |            
|Before 1998 |  |               | 300 |                 |  | $                            | 25,925 |             |  | $ | 4,965 |   |  |  | 1.24 | 
|1998        |  |               | 50  |                 |  |                              | 7,342  |             |  |   | 453   |   |  |  | 1.07 | 
|1999        |  |               | 25  |                 |  |                              | 2,314  |             |  |   | 363   |   |  |  | 1.19 | 
|2000        |  |               | 52  |                 |  |                              | 15,148 |             |  |   | 2,029 |   |  |  | 1.15 | 
|2001        |  |               | 88  |                 |  |                              | 24,250 |             |  |   | 251   |   |  |  | 1.01 | 
|2002        |  |               | 53  |                 |  |                              | 4,306  |             |  |   | (60   | ) |  |  | 0.99 | 
|            |  |               |     |                 |  |                              |        |             |  |   |       |   |  |  |      | 
|Total       |  |               | 568 |                 |  | $                            | 79,285 |             |  | $ | 8,001 |   |  |  | 1.11 | 
|            |  |               |     |                 |  |                              |        |             |  |   |       |   |  |  |      | 



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|(1) |  | Includes only those leased locations open as at December 31, 2002 and
does not include leased locations operated during the year, but closed by
year-end.                                                                                                                                                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Coverage is calculated by dividing Revenue by the amount that Revenue
exceeds Gross margin. Coverage should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with generally
accepted accounting principles. Coverage is not an accepted measure under
generally accepted accounting principles and other companies will use
different measures or different calculations of profitability.

Included in the 568 locations above were 90 locations which incurred a loss
for 2002 totaling $2.0 million. Of these 90 locations incurring a loss, 26
were opened in 2002 and incurred a total loss of $0.4 million.

Our goal is to increase the proportion of leased facilities to managed
facilities. We believe a more balanced mix of leased and managed parking
facilities will diversify our operations, providing us with a balance of
lower risk and lower profit managed operations, and higher risk and higher
profit leased and owned operations.

Provide consistently high level of service.Our goal is to provide a
uniformly high level of quality and service across all of the facilities we
manage, characterized by clean, well-lit, secure and pleasant surroundings,
attractive graphics and signage, and professional, courteous and well
dressed staff. We offer a wide range of optional premium services,
including valet parking, concierge services, car washing, dry cleaning drop
off and pick up and vehicle repair. These premium services are typically
offered to owners of first-class properties who seek to provide their
tenants with the highest possible level of service to help differentiate
their property from competing properties.

Continue to implement standardized systems and controls.As a result of
our experience in the parking management business, we have developed
sophisticated and comprehensive management systems and controls, which we
seek to implement uniformly at the facilities we manage. These systems
include accounting and financial management and reporting practices, general
operating procedures, training, employment policies, cash controls,
marketing procedures and visual image. We believe that our standardized
systems and controls enhance our ability to successfully expand our
operations into new markets.

Aggressively implement technology and automation.We believe that
automation and technology can enhance customer convenience, lower labor
costs, improve cash management and increase our overall profitability. We
have been a leader in the field of introducing automation and technology to
the parking business and we were among the first to widely adopt innovations
such as the use of credit card payment systems, payment using cellular
telephones at unmanned locations, hand held computers to track violators and
issue citations, bar-code scanners to ensure monthly parkers are using the
correct lot and are up-to-date in payment and entry and exit gates
incorporating sensing equipment that can automatically recognize and admit
authorized vehicles. We believe that our higher proportion of unmanned
facilities gives us a cost advantage as we compete for business. We have
also developed a sophisticated management information system that enables us
to track revenue and manage cash on a daily basis and generate a wide
variety of internal reports, as well as customized reports requested by our
clients.

Implement incentive compensation program.We have adopted a
performance-based compensation system for city managers, vice presidents and
others based on the profitability of each individuals area of
responsibility. We believe this program will enhance the entrepreneurship
of our management employees by tying their compensation directly to
improvements in the profitability of the operations they manage and we
believe these incentives will encourage them to improve operations and
control costs.

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Provide profitable patrol, enforcement and ticketing service.We seek
to increase the profitability of our overall operations by providing parking
lot patrol, enforcement and ticketing services, both at our own facilities
and at facilities operated by others. We believe there are opportunities to
market these services to facilities we do not operate, especially those
owned by municipalities or by suburban retail centers, who wish to
discourage all-day parkers by enforcing parking regulations which favor
short-term parkers.

Maintain strict cash control.Strict cash control is critical to our
success and that of our clients. Our cash control procedures are based on
an auditing system supervised by professional managers and auditors, and
include on-site spot checks, multiple daily cash deposits, reconciliation of
tickets and gate counts to cash collected, local audit functions, managerial
supervision and review, and internal audit procedures. We believe our cash
control procedures can be effective in minimizing loss of revenues at
parking facilities. With banks providing better access to account
information on a daily basis via the internet, we are able centrally to
independently review daily deposits and identify unusual trends for further
review.

Acquisitions

We continue to look for opportunities to acquire small or medium-sized
parking operators in target markets. However, none of the opportunities
reviewed in 2002 resulted in an acquisition being completed during the year.

Seasonality

We may experience fluctuations in our income from quarter to quarter caused
by fluctuations in revenues and related expenses due to the impact of
weather and calendar related events on travel and transportation patterns.
Additionally, we manage the parking for a number of sports stadiums and
arenas and our income from such facilities can be affected by the
seasonality of revenue and by the relative degree of success of various
sports teams. Historically, our results have been strongest during the
quarters that end on June 30 and September 30.

Competition

The parking industry is fragmented and highly competitive, with relatively
few barriers to entry. We compete regularly with a wide variety of parking
services providers to retain our existing operations and to expand our
operations in existing and new markets. We compete for clients based on the
pricing of our services and our ability to increase revenues and control
expenses for each of our clients parking facilities.

Our largest competitors in North America are Central Parking Corporation,
APCOA/Standard Parking, Inc. and Ampco System Parking. We are substantially
smaller in number of locations and revenue than Central Parking, but we
have approximately the same number of locations as APCOA/Standard and Ampco
System. We have lower revenues than APCOA/Standard because APCOA/Standard
are principally located in the United States where gross revenues generated
from a location are typically higher than in Canada. However, being
principally in Canada gives us a solid Canadian base as Canadian
corporations typically prefer to do business with an established Canadian
parking company. Additionally, since profit per location is generally lower
in Canada, most U.S. competitors have historically focused their efforts in
the U.S. marketplace where there is higher potential profit.

We also compete with many regional or local parking service providers, as
well as municipalities and other governmental entities, property owners and
others.

Regulation

Our business is not substantially affected by direct governmental
regulation, however, a number of state, provincial and local laws have been
passed in recent years that encourage car pooling and the use of mass
transit, including, for example, laws prohibiting employers from reimbursing
employees parking expenses. Laws and regulations that reduce the number of
cars and vehicles could negatively affect our business. Changes in personal
privacy or freedom of information legislation at the federal, state or
provincial level could also harm our business by making collections of
outstanding parking violations more difficult or costly. We are also
affected by laws and regulations (such as zoning ordinances and

8



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business taxes) that are common to any business that owns or leases real
estate and by regulations (such as labor and tax laws) that affect companies
with a large number of employees.

Under various federal, state, provincial 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. In
connection with ownership or operation of parking facilities, we may be
potentially liable for such costs. Although we are not currently aware of
any material environmental claims pending or threatened against us or any of
our owned or operated parking facilities, there can be no assurance that a
material environmental claim will not be asserted against us or against any
of our owned or operated parking facilities. The cost of defending against
claims of liability, or of remediating a contaminated property, could have a
material adverse effect on our financial condition or results of operations.

Various other governmental regulations affect our operations of parking
facilities, both directly and indirectly. In the United States, these
include the Americans with Disabilities Act, or the ADA. Under the ADA, all
public accommodations in the United States, including parking facilities,
are required to meet certain federal requirements related to access and use
by disabled persons. For example, the ADA requires parking facilities to
include handicapped spaces, headroom for wheelchair vans, attendants booths
that accommodate wheelchairs, and elevators that are operable by disabled
persons. We believe that the parking facilities we own and operate are in
substantial compliance with these requirements.

Employees

As of December 31, 2002, we employed approximately 3,500 individuals. We
believe that our employee relations are satisfactory. Approximately 34% of our
employees (some 1,203 employees) are represented by unions, including the
Construction and Specialized Workers Union (British Columbia), Christian
Labour Association of Canada (British Columbia), Service Employees
International Union (Regina), Saskatchewan Joint Board, Retail, Wholesale &
Department Store Union (Saskatoon), Manitoba Government and General
Employees Union (Winnipeg), Teamsters (Ottawa, San Francisco, New York City
and Chicago), SEIU, UFCW (Toronto), SEIU (London), and Garage Employees (New
York).

Segment Information

Information about our foreign and domestic operations appears in Note 13 to
our 2002 Consolidated Financial Statements that are included in response to
Item 8 and are listed in Item 14 to this Annual Report on Form 10-K.

9



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##### 






Item 2.   Properties

The following table summarizes certain information regarding our parking
facilities and surface lots as of December 31, 2002. We believe that our
owned facilities generally are in good condition and adequate for our
present needs.

|         |          |      |        |        |         |      |        |        |       |      |       |        |  |      |         |         |  |  |    |    |  |  |       |       |  |  |       |       |  |  |         |         | 
|-------- | -------- | ---- | ------ | ------ | ------- | ---- | ------ | ------ | ----- | ---- | ----- | ------ |  | ---- | ------- | ------- |  |  | -- | -- |  |  | ----- | ----- |  |  | ----- | ----- |  |  | ------- | ------- | 
|         |          |      | Leased |        | Managed |      | Owned  |        | Total
|         |          |      |        |        |         |      |        |        |      
|Location |          | Lots |        | Spaces |         | Lots |        | Spaces |       | Lots |       | Spaces |  | Lots |         | Spaces 
|         |          |      |        |        |         |      |        |        |       |      |       |        |  |      |         |        
|CANADA   |          |      |        |        |         |      |        |        |       |      |       |        |  |      |         |         |  |  |    |    |  |  |       |       |  |  |       |       |  |  |         |        
|         | Western  |      |        | 224    |         |      |        | 21,600 |       |      |       | 660    |  |      |         | 131,141 |  |  |    | 5  |  |  |       | 968   |  |  |       | 889   |  |  |         | 153,709 | 
|         | Prairies |      |        | 143    |         |      |        | 9,100  |       |      |       | 115    |  |      |         | 17,908  |  |  |    | 9  |  |  |       | 687   |  |  |       | 267   |  |  |         | 27,695  | 
|         | Eastern  |      |        | 61     |         |      |        | 5,553  |       |      |       | 125    |  |      |         | 62,858  |  |  |    | 1  |  |  |       | 50    |  |  |       | 187   |  |  |         | 68,461  | 
|         |          |      |        |        |         |      |        |        |       |      |       |        |  |      |         |         |  |  |    |    |  |  |       |       |  |  |       |       |  |  |         |        
|         | Total    |      |        | 428    |         |      |        | 36,253 |       |      |       | 900    |  |      |         | 211,907 |  |  |    | 15 |  |  |       | 1,705 |  |  |       | 1,343 |  |  |         | 249,865 | 
|         |          |      |        |        |         |      |        |        |       |      |       |        |  |      |         |         |  |  |    |    |  |  |       |       |  |  |       |       |  |  |         |        
|USA      |          |      |        |        |         |      |        |        |       |      |       |        |  |      |         |         |  |  |    |    |  |  |       |       |  |  |       |       |  |  |         |        
|         | Western  |      |        | 29     |         |      |        | 6,658  |       |      |       | 23     |  |      |         | 9,288   |  |  |    |   |  |  |       |      |  |  |       | 52    |  |  |         | 15,946  | 
|         | Mid-west |      |        | 61     |         |      |        | 10,947 |       |      |       | 50     |  |      |         | 20,509  |  |  |    |   |  |  |       |      |  |  |       | 111   |  |  |         | 31,456  | 
|         | Eastern  |      |        | 50     |         |      |        | 10,568 |       |      |       | 81     |  |      |         | 15,422  |  |  |    |   |  |  |       |      |  |  |       | 131   |  |  |         | 25,990  | 
|         |          |      |        |        |         |      |        |        |       |      |       |        |  |      |         |         |  |  |    |    |  |  |       |       |  |  |       |       |  |  |         |        
|         | Total    |      |        | 140    |         |      |        | 28,173 |       |      |       | 154    |  |      |         | 45,219  |  |  |    |   |  |  |       |      |  |  |       | 294   |  |  |         | 73,392  | 
|         |          |      |        |        |         |      |        |        |       |      |       |        |  |      |         |         |  |  |    |    |  |  |       |       |  |  |       |       |  |  |         |        
|TOTAL    |          |      | 568    |        |         |      | 64,426 |        |       |      | 1,054 |        |  |      | 257,126 |         |  |  | 15 |    |  |  | 1,705 |       |  |  | 1,637 |       |  |  | 323,257 |        
|         |          |      |        |        |         |      |        |        |       |      |       |        |  |      |         |         |  |  |    |    |  |  |       |       |  |  |       |       |  |  |         |        

The cities included in the regions listed above are as follows:



| |  |  | Western Canada  Vancouver, Kamloops, Kelowna, Edmonton, Calgary and Banff                                     
| | - |  | ---------------------------------------------------------------------------------------------------------------
|
| |  |  | Prairies (Canada)  Regina, Saskatoon and Winnipeg                                                             
|
| |  |  | Eastern Canada  Toronto, Hamilton, London, Ottawa, Windsor, Montreal, Halifax and St.Johns                   
|
| |  |  | Western USA  Seattle, San Francisco and Oakland                                                               
|
| |  |  | Mid-western USA  Minneapolis, Milwaukee, Chicago, Cleveland and Cincinnati                                    
|
| |  |  | Eastern USA  New York City, Buffalo, Philadelphia, Atlanta,
Washington DC, Wilmington, Atlantic City and Miami




Item 3.   Legal Proceedings

The provision of services to the public entails an inherent risk of
liability. We are engaged from time to time in routine litigation incidental
to our business. Other than cases involving Eau Claire Market, Sterling
Parking Ltd., and the City of Calgary in Calgary, Alberta, described below,
there is no legal proceeding to which we are a party which, if decided
adversely we anticipate could have a material adverse effect on our results
of operation or financial condition. We attempt to disclaim liability for
personal injury in facilities we operate. We also carry liability insurance
that we believe meets or exceeds industry standards as determined by our
landlords. We can provide no assurances, however, that any future legal
proceedings (including any related judgments, settlements or costs) will not
have a material adverse effect on our financial condition, liquidity or
results of operations. Other than the final conclusion of the Weitz Company
and Weitz Golf Construction matter, there has been no material change in the
status of the litigation described below since our quarterly report on Form
10-Q for the quarter ended September 30, 2002.

The Eau Claire Market litigation was filed in the Queens Bench of Alberta
on August 20, 1998. It involves a claim against a property in which Imperial
Parking Canada Corporation (Impark Canada), a subsidiary of the Company
and successor to Imperial Parking Limited by amalgamation, is the lessee.
The plaintiff MP Acquisitions Ltd. purchased the property and asserts that
it did not receive full disclosure of the terms of the Impark Canada lease.
The plaintiff claims that, as a result, it is entitled to priority over
Impark Canadas lease and to possession of the property. We believe that
this claim is without merit. If, however, we do not prevail in the
litigation, we may be forced to renegotiate the lease with the landlord, in
which case the rent could be substantially increased, and any such increase
could materially impact our results. The parties are currently in pre-trial
proceedings. A trial has been scheduled to begin on June 16, 2003. We
will also be making an application to the court to have the lawsuit
summarily dismissed on April 4, 2003.

10



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##### 



Impark Canada is a defendant in a lawsuit brought by Newcourt Financial Ltd.
(Newcourt) as the assignee of Oracle Corporation Canada Inc. (Oracle).
The suit was filed in Ontario Superior Court on September 11, 1999. The
co-defendant is First Union Management, Inc. (FUMI). At the time of the
material events alleged in the lawsuit, FUMI was an affiliate of Impark
Canada. The lawsuit alleges that Impark Canada and FUMI owe approximately
$825,000 under a software licence and services agreement, plus interest and
legal costs. We believe the claim is largely without merit. In response to
the claim, Impark Canada and FUMI have commenced their own action in British
Columbia, seeking a declaration that no amounts are owing to either Newcourt
or Oracle under the license and services agreement. The Ontario lawsuit has
been stayed pending the resolution of the B.C. action. The B.C. action is
in pre-trial proceedings. No trial date has been scheduled. First Union
Real Estate Equity and Mortgage Investments (FUR) has agreed in writing to
indemnify Impark Canada with respect to all liabilities and damages that may
be incurred by Impark with respect to this claim. FUR is an affiliate of
FUMI and is publicly listed on the New York Stock Exchange.

Impark Canada is a defendant in a lawsuit brought by Sterling Parking Ltd.,
which was filed April 3, 2001 in the Queens Bench of Alberta. The suit
involves an alleged breach by Impark Canada of a confidentiality agreement
entered into with Sterling in October 2000 relating to the potential
management by Impark Canada of certain Sterling lots in Calgary. The
agreement prohibited Impark Canada from bidding on any Sterling lots while
negotiations of such transaction were underway. During negotiations, Impark
Canada successfully bid on two Sterling lots. The proposed transaction with
Sterling was not completed. Sterling claims in the lawsuit that Impark
Canada wrongfully bid on the two lots and an additional three lots, as well
as improperly used Sterling confidential information, all in breach of the
confidentiality agreement. The total damages claimed by Sterling are
approximately $7.3 million (C$11.6 million). The lawsuit is in pre-trial
proceedings. No trial date has been set. We believe that Sterlings
allegations are largely without merit and that the amount of damages claimed
is far in excess of the actual damages suffered by Sterling, if any. We have
accrued at December 31, 2002 our best estimate of costs related to this
action; however; any damages awarded against Impark Canada in excess of this
amount could have a material effect on our financial position and results of
operation.

Impark Canada commenced a lawsuit against the City of Calgary in Alberta,
Canada in the Queens Bench of Alberta on April 12, 2001. The City of
Calgary had earlier passed a business tax bylaw in 2001 imposing a revised
method for calculating the business tax payable by commercial parking lot
operators in that city. The new bylaw imposes a business tax on the basis
of the square footage of the premises leased or operated, as opposed to the
historical method of assessing business taxes on the basis of rent paid by
the lessee. Impark Canada is applying for a court ruling that the 2001
bylaw is void for vagueness or that it is invalid because of its
discriminatory effect. Impark Canada is also appealing the increased
business taxes through the government assessment review process. We were
unsuccessful in our first stage of appeal of the 2001 business taxes at the
Calgary City Assessment Review Board (ARB) and again at our second stage
of appeal at the Alberta Municipal Government Board (MGB). We are
considering appealing the decision of the MGB to the Court of Queens Bench.
In February 2002, the City of Calgary passed a 2002 Business Tax Bylaw,
which approximately tripled the business tax for Impark operations in
Calgary for the 2002 calendar year to approximately $0.9 million (C$1.4
million). We were unsuccessful in our first stage of appeal of the 2002
business taxes at the ARB, and appealed this decision to the MGB in November
2002. We are awaiting the decision of the MGB. We have also amended our
lawsuit against the City of Calgary to include the 2002 assessment. The
lawsuit is currently in pre-trial proceedings and no trial date has been
set. In February 2003, the City of Calgary passed a 2003 Business Tax
Bylaw, which imposed the same rate and assessment method of business tax for
Impark operations in Calgary for the 2003 calendar year as was used in 2002,
at an amount of approximately $0.9 million (C$1.3 million). We have filed
an appeal of the 2003 business taxes with the ARB, and intend to amend our
lawsuit against the City of Calgary to include the 2003 assessment. We
believe that the Citys 2001, 2002 and 2003 business tax bylaws are void and
invalid. If we are unsuccessful in appealing the tax assessments, and if we
are unsuccessful in our lawsuit against the City of Calgary, then (a) we
will not be entitled to the return of any portion of the 2001 business tax
assessment, which we have already paid in 2001, (b) we will be required to
pay the full amount of the 2002 business tax assessment, currently $0.9
million, for which we have fully accrued such amount at December 31, 2002;
and (c) we will be required to pay the full amount of the 2003 business tax
assessment, currently $0.9 million.

On September 26, 2000, a lawsuit was filed by Ghilotti Brothers Construction
Inc. (Ghilotti) in the Superior Court of California against Imperial
Parking (U.S.), Inc. (a subsidiary of the Company and herein Impark U.S.),
Weitz Golf Construction Inc. and the surety (the Ghilotti Lawsuit). The
lawsuit alleges that Ghilotti incurred cost overruns of approximately
$610,000 relating to the construction of the Pacific Bell Park parking lots
in San Francisco in the winter and spring of 2000. On August 2, 2001, a
separate and related lawsuit was filed in the Superior Court of California
by Weitz Golf Construction, Inc. and The Weitz Company (collectively
Weitz) against Impark U.S. and the surety (the Weitz Lawsuit).

11



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##### 



Weitz and Impark U.S. had entered into contracts in November 1998 relating
to the demolition and construction of the Pacific Bell Park parking lots.
Weitz was the general contractor and Ghilotti was a subcontractor. Weitz
alleged that it incurred cost overruns related to both the demolition and
construction, and that it also suffered damages from the release of certain
mechanics liens that it had filed against the parking lots. Weitz claimed
damages in the aggregate of $3.2 million, which includes the amounts claimed
by Ghilotti against Weitz and Impark U.S. in the Ghilotti Lawsuit. Both the
Weitz Lawsuit and the Ghilotti Lawsuit were stayed, pending final and
binding arbitration involving all parties. On April 17, 2002, Impark U.S.
entered into an agreement with Weitz to settle the Weitz Lawsuit. The
material terms of the settlement agreement are that: (a) Impark U.S. has
paid $1.4 million to Weitz on May 1, 2002, (b) Weitz will be solely
responsible for resolving the Ghilotti Lawsuit, and Impark U.S. will
reimburse Weitz up to $150,000 of the amounts paid by Weitz in connection
with the final settlement or resolution of such lawsuit, based on a
specified formula; (c) Weitz has discontinued the Weitz Lawsuit. Further,
we sublease the parking lots from the China Basin Ballpark Company LLC
(CBBC), pursuant to which CBBC is required to share in any cost overruns.
On February 5, 2003, we reached an agreement with CBBC pursuant to which
CBBC paid to Impark U.S. $1,036,149 in full satisfaction of its portion of
the cost overruns, including all accrued interest thereon. This matter is
now closed.




Item 4.Submission of Matters To a Vote of Security Holders.

No matter was submitted to a vote of the Companys stockholders during the
fourth quarter of fiscal 2002.

12



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##### 






PART II.




Item 5.   Market for Registrants Common Equity and Related Stockholder Matters

The Companys common stock is listed on the American Stock Exchange
(AMEX). The following table sets forth for the periods indicated the high
and low sales prices for our common stock as reported by AMEX.

|               |  |      |       |     |  |  |       | 
|-------------- |  | ---- | ----- | --- |  |  | ----- | 
|Fiscal 2001    |  | High |       | Low
|               |  |      |       |    
|First quarter  |  |      | 23.10 |     |  |  | 17.75 | 
|Second quarter |  |      | 23.60 |     |  |  | 21.25 | 
|Third quarter  |  |      | 26.70 |     |  |  | 21.85 | 
|Fourth quarter |  |      | 26.00 |     |  |  | 22.00 | 

|               |  |      |       |     |  |  |       | 
|-------------- |  | ---- | ----- | --- |  |  | ----- | 
|Fiscal 2002    |  | High |       | Low
|               |  |      |       |    
|First quarter  |  |      | 27.09 |     |  |  | 25.50 | 
|Second quarter |  |      | 27.23 |     |  |  | 23.75 | 
|Third quarter  |  |      | 24.70 |     |  |  | 22.10 | 
|Fourth quarter |  |      | 22.99 |     |  |  | 21.15 | 

The number of holders of record of our common stock as of March 7, 2003, was
approximately 1,186.

No dividends have been declared on our common stock since their distribution
in March 2000. Our policy is to reinvest earnings to fund future growth.
Accordingly, we do not anticipate declaring dividends on our common stock in
the foreseeable future.

Equity Compensation Plan Information

The following table provides information as of December 31, 2002 regarding
shares of common stock of the Company that may be issued under our existing
equity compensation plans, including the Companys 2000 Stock Incentive
Plan.

|                                                           |  |                                      |         |                   |  |                   |       |                     |  |                     |        | 
|---------------------------------------------------------- |  | ------------------------------------ | ------- | ----------------- |  | ----------------- | ----- | ------------------- |  | ------------------- | ------ | 
|                                                           |  | Equity Compensation Plan Information
|                                                           |  |                                     
|                                                           |  |                                      |         |                   |  |                   |       |                     |  | Number of          
|                                                           |  |                                      |         |                   |  |                   |       |                     |  | securities         
|                                                           |  |                                      |         |                   |  |                   |       |                     |  | remaining available
|                                                           |  | Number of                            |         |                   |  |                   |       | for future issuance
|                                                           |  | securities to be                     |         |                   |  |                   |       | under equity       
|                                                           |  | issued upon                          |         | Weighted Average  |  | compensation plan
|                                                           |  | exercise of                          |         | exercise price of |  | (excluding       
|                                                           |  | outstanding                          |         | outstanding       |  | securities       
|                                                           |  | options, warrants                    |         | options, warrants |  | referenced in    
|Plan category                                              |  | and rights                           |         | and rights        |  | column (a))      
|                                                           |  |                                      |         |                   |  |                  
|                                                           |  |                                      | (a)     |                   |  |                   | (b)   |                     |  |                     | (c)    | 
|Equity compensation
plans approved by
security holders (1) |  |                                      | 270,405 |                   |  | $                 | 18.04 |                     |  |                     | 20,723 | 
|                                                           |  |                                      |         |                   |  |                   |       |                     |  |                     |        | 
|Equity compensation
plans not approved
by security holders |  |                                      |        |                   |  |                   |      |                     |  |                     |       | 
|                                                           |  |                                      |         |                   |  |                   |       |                     |  |                     |        | 
|Total                                                      |  |                                      | 270,405 |                   |  | $                 | 18.04 |                     |  |                     | 20,723 | 
|                                                           |  |                                      |         |                   |  |                   |       |                     |  |                     |        | 



---

|(1) |  | Consists of the 2000 Stock Incentive Plan
|--- |  | -----------------------------------------

13



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##### 






Item 6.   Selected Financial Data

The selected financial data presented below as at and for periods commencing
prior to January 1, 2000 has been calculated by combining information in the
combined financial statements of the FUR Parking Business and the FUMI
Parking Business. The selected financial data for these periods has been
extracted from audited financial statements. For further information on
these financial statements, refer to our Information Statement on Form 10
dated March 27, 2000 that was filed with the Securities and Exchange
Commission.

The selected financial data presented below for the year ended December 31,
2000 has been calculated by combining information in our audited
consolidated financial statements for fiscal 2000 with the unaudited
combined financial statements of the FUMI Parking Business for the three
months ended March 31, 2000. The selected balance sheet data as at December
31, 2000 has been extracted from our audited consolidated financial
statements at that date.

The selected financial data for all periods prior to 2001 is presented on a
pro forma basis after giving effect to the following pro forma transactions:



| | (i)   |  | the elimination of inter-entity lease fees and interest
costs;                                                                                                                                                                 
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  |  | the elimination of the asset management fee earned during the
period January 1, 1999 to March 27, 2000 for managing the United
States parking properties of First Union. The fee agreement was
cancelled on March 27, 2000; and
|
| | (iii) |  | the elimination of interest expense on long-term debt repaid
and the note payable capitalized on the combination on March 27,
2000.                                                                                            

For purposes of presenting selected financial data, an adjustment has not
been made for interest income on additional cash balances contributed on the
combination on March 27, 2000.

This financial data should be read in conjunction with the Consolidated
Financial Statements and Managements Discussion and Analysis of Financial
Condition and Results of Operations.

|                                         |           |   |                         |        |          |   |          |       |      |   |        |      |  |   |         |      |  |   |         |      | 
|---------------------------------------- | --------- | - | ----------------------- | ------ | -------- | - | -------- | ----- | ---- | - | ------ | ---- |  | - | ------- | ---- |  | - | ------- | ---- | 
|                                         |           |   | Year ended December 31,
|                                         |           |   |                        
|                                         |           |   | 1998 (1)                |        | 1999 (1) |   | 2000 (1) |       | 2001 |   | 2002  
|                                         |           |   |                         |        |          |   |          |       |      |   |       
|Statement of Operations Data             |           |   |                         |        |          |   |          |       |      |   |        |      |  |   |         |      |  |   |         |     
|Total revenues                           |           | $ | 76,516                  |        |          | $ | 83,531   |       |      | $ | 93,779 |      |  | $ | 117,898 |      |  | $ | 139,842 |     
|                                         |           |   |                         |        |          |   |          |       |      |   |        |      |  |   |         |      |  |   |         |     
|Parking and management contract revenues |           |   | 54,087                  |        |          |   | 59,065   |       |      |   | 67,809 |      |  |   | 90,548  |      |  |   | 109,351 |     
|                                         |           |   |                         |        |          |   |          |       |      |   |        |      |  |   |         |      |  |   |         |     
|Gross margin                             |           |   | 14,891                  |        |          |   | 14,706   |       |      |   | 17,121 |      |  |   | 20,521  |      |  |   | 22,191  |     
|                                         |           |   |                         |        |          |   |          |       |      |   |        |      |  |   |         |      |  |   |         |     
|Operating income (loss) (2)              |           |   | (5,524                  | )      |          |   | (557     | )     |      |   | 935    |      |  |   | 1,262   |      |  |   | 3,857   |     
|Interest expense                         |           |   | (784                    | )      |          |   |         |       |      |   |       |      |  |   | (298    | )    |  |   | (420    | )   
|Other income (expense) (3)               |           |   | (14,976                 | )      |          |   | (39      | )     |      |   | 744    |      |  |   | 577     |      |  |   | 514     |     
|Income tax expense                       |           |   | (908                    | )      |          |   | (240     | )     |      |   | (333   | )    |  |   | (822    | )    |  |   | (1,630  | )   
|                                         |           |   |                         |        |          |   |          |       |      |   |        |      |  |   |         |      |  |   |         |     
|Income (loss) from continuing operations |           | $ | (22,192                 | )      |          | $ | (836     | )     |      | $ | 1,346  |      |  | $ | 719     |      |  |   | 2,321   |     
|                                         |           |   |                         |        |          |   |          |       |      |   |        |      |  |   |         |      |  |   |         |     
|Per share data                           |           |   |                         |        |          |   |          |       |      |   |        |      |  |   |         |      |  |   |         |     
|Income (loss) from continuing operations |           |   |                         |        |          |   |          |       |      |   |        |      |  |   |         |      |  |   |         |     
|                                         | 
Basic   |   | $                       | (10.43 | )        |   | $        | (0.39 | )    |   | $      | 0.64 |  |   | $       | 0.40 |  |   | $       | 1.27 | 
|                                         |  Diluted |   |                         | (10.43 | )        |   |          | (0.39 | )    |   |        | 0.64 |  |   |         | 0.39 |  |   |         | 1.21 | 

14



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##### 



|                                        |  |   |                         |   |          |   |          |   |      |   |        |  |  |   |        |  |  |   |        |  | 
|--------------------------------------- |  | - | ----------------------- | - | -------- | - | -------- | - | ---- | - | ------ |  |  | - | ------ |  |  | - | ------ |  | 
|                                        |  |   | Year ended December 31,
|                                        |  |   |                        
|                                        |  |   | 1998 (1)                |   | 1999 (1) |   | 2000 (1) |   | 2001 |   | 2002  
|                                        |  |   |                         |   |          |   |          |   |      |   |       
|Balance Sheet Data (end of period)      |  |   |                         |   |          |   |          |   |      |   |        |  |  |   |        |  |  |   |        | 
|Cash and cash equivalents               |  | $ | 1,128                   |   |          | $ | 3,378    |   |      | $ | 5,615  |  |  | $ | 10,991 |  |  | $ | 15,138 | 
|Working capital                         |  |   | (8,181                  | ) |          |   | (30,144  | ) |      |   | 96     |  |  |   | 291    |  |  |   | 1,541  | 
|Goodwill                                |  |   | 45,379                  |   |          |   | 43,344   |   |      |   | 41,131 |  |  |   | 44,259 |  |  |   | 45,213 | 
|Total assets                            |  |   | 74,923                  |   |          |   | 76,176   |   |      |   | 79,391 |  |  |   | 89,245 |  |  |   | 92,428 | 
|Long-term liabilities                   |  |   | 55,219                  |   |          |   | 40,048   |   |      |   | 3,356  |  |  |   | 8,201  |  |  |   | 6,829  | 
|Total stockholders equity (deficiency) |  |   | (2,797                  | ) |          |   | (8,230   | ) |      |   | 60,029 |  |  |   | 58,261 |  |  |   | 61,472 | 
|                                        |  |   |                         |   |          |   |          |   |      |   |        |  |  |   |        |  |  |   |        | 
|Other information                       |  |   |                         |   |          |   |          |   |      |   |        |  |  |   |        |  |  |   |        | 
|Goodwill amortization (4)               |  |   | 1,691                   |   |          |   | 2,284    |   |      |   | 2,194  |  |  |   | 2,206  |  |  |   |       | 
|Write-down of goodwill (3)              |  |   | 14,976                  |   |          |   |         |   |      |   |       |  |  |   |       |  |  |   |       | 



---

|(1) |  | The amounts presented for these captions have been accumulated as follows:
|--- |  | --------------------------------------------------------------------------

|                                         |  |                        |         |                        |  |             |        |       |  |      |         |     |  |             |         |       |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|---------------------------------------- |  | ---------------------- | ------- | ---------------------- |  | ----------- | ------ | ----- |  | ---- | ------- | --- |  | ----------- | ------- | ----- |  |  | ------- | - |  |  | ------- | - |  |  | ------- | - |  |  | ------- | -
|                                         |  | Year ended             |         | Year ended            
|                                         |  | December 31, 1998      |         | December 31, 1999     
|                                         |  |                        |         |                       
|                                         |  | FUMI                   |         | FUR                    |  | Elimination |        | Total |  | FUMI |         | FUR |  | Elimination |         | Total
|                                         |  |                        |         |                        |  |             |        |       |  |      |         |     |  |             |         |      
|                                         |  | (thousands of dollars) |         | (thousands of dollars)
|Statement of Operations Data             |  |                        |         |                        |  |             |        |       |  |      |         |     |  |             |         |       |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|Total revenues                           |  |                        | 76,516  |                        |  |             | 454    |       |  |      | (454    | )   |  |             | 76,516  |       |  |  | 84,611  |   |  |  | 582     |   |  |  | (1,662  | ) |  |  | 83,531  |  
|                                         |  |                        |         |                        |  |             |        |       |  |      |         |     |  |             |         |       |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|Parking and management contract revenues |  |                        | 54,087  |                        |  |             | 454    |       |  |      | (454    | )   |  |             | 54,087  |       |  |  | 60,145  |   |  |  | 582     |   |  |  | (1,662  | ) |  |  | 59,065  |  
|                                         |  |                        |         |                        |  |             |        |       |  |      |         |     |  |             |         |       |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|Gross margin                             |  |                        | 14,449  |                        |  |             | 442    |       |  |      |        |     |  |             | 14,891  |       |  |  | 15,206  |   |  |  | 580     |   |  |  | (1,080  | ) |  |  | 14,706  |  
|                                         |  |                        |         |                        |  |             |        |       |  |      |         |     |  |             |         |       |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|Operating income (loss)                  |  |                        | (5,921  | )                      |  |             | 397    |       |  |      |        |     |  |             | (5,524  | )     |  |  | (14     | ) |  |  | 537     |   |  |  | (1,080  | ) |  |  | (557    | )
|Interest expense                         |  |                        | (6,542  | )                      |  |             | (2,757 | )     |  |      | 8,515   |     |  |             | (784    | )     |  |  | (5,872  | ) |  |  | (3,044  | ) |  |  | 8,916   |   |  |  |        |  
|Other income (expense)                   |  |                        | (14,976 | )                      |  |             | 3,725  |       |  |      | (3,725  | )   |  |             | (14,976 | )     |  |  | (105    | ) |  |  | (14,902 | ) |  |  | 14,968  |   |  |  | (39     | )
|Income taxes                             |  |                        | (516    | )                      |  |             | (392   | )     |  |      |        |     |  |             | (908    | )     |  |  | (326    | ) |  |  | 86      |   |  |  |        |   |  |  | (240    | )
|                                         |  |                        |         |                        |  |             |        |       |  |      |         |     |  |             |         |       |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|Income (loss) from continuing
operations |  |                        | (27,955 | )                      |  |             | 973    |       |  |      | 4,790   |     |  |             | (22,192 | )     |  |  | (6,317  | ) |  |  | (17,323 | ) |  |  | 22,804  |   |  |  | (836    | )
|                                         |  |                        |         |                        |  |             |        |       |  |      |         |     |  |             |         |       |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|Balance Sheet Data (end of year)         |  |                        |         |                        |  |             |        |       |  |      |         |     |  |             |         |       |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|Cash and cash equivalents                |  |                        |        |                        |  |             | 1,128  |       |  |      |        |     |  |             | 1,128   |       |  |  | 1,394   |   |  |  | 1,984   |   |  |  |        |   |  |  | 3,378   |  
|Working capital                          |  |                        | (9,353  | )                      |  |             | 1,172  |       |  |      |        |     |  |             | (8,181  | )     |  |  | (33,218 | ) |  |  | 3,074   |   |  |  |        |   |  |  | (30,144 | )
|Goodwill                                 |  |                        | 45,379  |                        |  |             |       |       |  |      |        |     |  |             | 45,379  |       |  |  | 43,344  |   |  |  |        |   |  |  |        |   |  |  | 43,344  |  
|Total assets                             |  |                        | 65,229  |                        |  |             | 42,002 |       |  |      | (32,308 | )   |  |             | 74,923  |       |  |  | 65,109  |   |  |  | 30,113  |   |  |  | (19,046 | ) |  |  | 76,176  |  
|Long-term liabilities                    |  |                        | 63,052  |                        |  |             | 23,759 |       |  |      | (31,592 | )   |  |             | 55,219  |       |  |  | 48,292  |   |  |  | 28,085  |   |  |  | (36,329 | ) |  |  | 40,048  |  
|Total stockholders equity (deficiency)  |  |                        | (20,348 | )                      |  |             | 17,551 |       |  |      |        |     |  |             | (2,797  | )     |  |  | (28,601 | ) |  |  | 1,371   |   |  |  | 19,000  |   |  |  | (8,230  | )
|Other                                    |  |                        |         |                        |  |             |        |       |  |      |         |     |  |             |         |       |  |  |         |   |  |  |         |   |  |  |         |   |  |  |         |  
|Goodwill amortization                    |  |                        | 1,691   |                        |  |             |       |       |  |      |        |     |  |             | 1,691   |       |  |  | 2,284   |   |  |  |        |   |  |  |        |   |  |  | 2,284   |  
|Write-down of goodwill                   |  |                        | 14,976  |                        |  |             |       |       |  |      |        |     |  |             | 14,976  |       |  |  |        |   |  |  |        |   |  |  |        |   |  |  |        |  

15



---



##### 



|                                         |  |                        |        |         |  |             |        |       |  |  |        |   |  |  |        |  
|---------------------------------------- |  | ---------------------- | ------ | ------- |  | ----------- | ------ | ----- |  |  | ------ | - |  |  | ------ | -
|                                         |  | Year ended            
|                                         |  | December 31, 2000     
|                                         |  |                       
|                                         |  |                        |        |         |  | The         |        |       |  |  |        |   |  | 
|                                         |  | FUMI (6)               |        | Company |  | Elimination |        | Total
|                                         |  |                        |        |         |  |             |        |      
|                                         |  | (thousands of dollars)
|Statement of Operations Data             |  |                        |        |         |  |             |        |       |  |  |        |   |  |  |        |  
|Total revenues                           |  |                        | 21,298 |         |  |             | 72,878 |       |  |  | (397   | ) |  |  | 93,779 |  
|                                         |  |                        |        |         |  |             |        |       |  |  |        |   |  |  |        |  
|Parking and management contract
revenues |  |                        | 14,901 |         |  |             | 53,305 |       |  |  | (397   | ) |  |  | 67,809 |  
|                                         |  |                        |        |         |  |             |        |       |  |  |        |   |  |  |        |  
|Gross margin                             |  |                        | 3,904  |         |  |             | 13,487 |       |  |  | (270   | ) |  |  | 17,121 |  
|                                         |  |                        |        |         |  |             |        |       |  |  |        |   |  |  |        |  
|Operating income (loss)                  |  |                        | 186    |         |  |             | 1,019  |       |  |  | (270   | ) |  |  | 935    |  
|Interest expense                         |  |                        | (1,446 | )       |  |             | (786   | )     |  |  | 2,232  |   |  |  |       |  
|Other income (expense)                   |  |                        |       |         |  |             | 1,779  |       |  |  | (1,035 | ) |  |  | 744    |  
|Income taxes                             |  |                        | (61    | )       |  |             | (272   | )     |  |  |       |   |  |  | (333   | )
|                                         |  |                        |        |         |  |             |        |       |  |  |        |   |  |  |        |  
|Income (loss) from continuing
operations |  |                        | (1,321 | )       |  |             | 1,740  |       |  |  | 927    |   |  |  | 1,346  |  
|                                         |  |                        |        |         |  |             |        |       |  |  |        |   |  |  |        |  
|Balance Sheet Data (end of year)         |  |                        |        |         |  |             |        |       |  |  |        |   |  |  |        |  
|Cash and cash equivalents                |  |                        |       |         |  |             | 5,615  |       |  |  |       |   |  |  | 5,615  |  
|Working capital                          |  |                        |       |         |  |             | 96     |       |  |  |       |   |  |  | 96     |  
|Goodwill                                 |  |                        |       |         |  |             | 41,131 |       |  |  |       |   |  |  | 41,131 |  
|Total assets                             |  |                        |       |         |  |             | 79,391 |       |  |  |       |   |  |  | 79,391 |  
|Long-term liabilities                    |  |                        |       |         |  |             | 3,356  |       |  |  |       |   |  |  | 3,356  |  
|Total stockholders equity               |  |                        |       |         |  |             | 60,029 |       |  |  |       |   |  |  | 60,029 |  
|                                         |  |                        |        |         |  |             |        |       |  |  |        |   |  |  |        |  
|Other                                    |  |                        |        |         |  |             |        |       |  |  |        |   |  |  |        |  
|Goodwill amortization                    |  |                        | 493    |         |  |             | 1,701  |       |  |  |       |   |  |  | 2,194  |  
|Write-down of goodwill                   |  |                        |       |         |  |             |       |       |  |  |       |   |  |  |       |  



---

|(2) |  | The operating loss for 1998 includes a severance provision of $2.4
million and for 1999 includes a recovery of previously overprovided
amounts of $1.8 million.                                                                                      
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(3) |  | Other income (expense) principally includes gains or losses on the
sale or write-down of assets, and interest income. In the year ended
December 31, 1998, other income (expense) includes a write-down of
goodwill of $15.0 million.                
|   
|(4) |  | There was no amortization of goodwill in fiscal 2002. This is a
result of adopting Financial Accounting Statement No. 142, which does
not permit amortization of goodwill, but requires goodwill to be
reviewed annually for any impairment in value.
|   
|(5) |  | There were no cash dividends declared on common shares during any of
the periods disclosed in the Selected Financial Data table above.                                                                                                               
|   
|(6) |  | Results of the FUMI Parking Business for 2000 are for the three months
ended March 31, 2000.                                                                                                                                                         

16



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##### 






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

The following discussion of our historical results of operations and
financial condition should be read in conjunction with the Consolidated
Financial Statements and the Selected Financial Data, which are included in
this document.

Description of Financial Information

Impark resulted from the combination on March 27, 2000 of the parking
related businesses of FUMI and the Canadian parking facilities of First
Union. A brief description of the operations of each business combined is
as follows:

FUMI Parking Business.The FUMI Parking Business consisted of the
parking services and related ancillary activities that we acquired on March
27, 2000. From April 1997 to March 2000, subsidiaries of FUMI carried on
these activities. The operations of FUMIs indirect subsidiaries, Imperial
Parking Limited and Impark Services Ltd., consisted of operating and
managing parking facilities in Canada and the United States and carrying on
other parking related activities.

FUR Parking Business.The FUR Parking Business consisted primarily of
owning 15 parking properties in Canada. From April 1997 to March 2000,
subsidiaries of First Union operated this business, including leasing the
properties to FUMI for operation and management.

Periods Presented.The results of operations for the year ended
December 31, 2000 combine the results of the FUMI Parking Business and the
FUR Parking Business on a pro forma basis as if the March 27, 2000
transactions had been completed at the commencement of the earliest of the
periods presented. We have presented the information in this manner to
assist the reader, as we believe it is the most meaningful way to consider
and evaluate the Company in its current form. In doing this we are not
indicating what the results of operations would actually have been if the
businesses had been combined on those dates.

Overview

We operate parking facilities under leases, management contracts, and fee
ownership. These three types of arrangements are discussed further in this
report under Item 1. Business.

Revenues consist of parking revenues from leased and owned facilities, and
revenues earned in accordance with the terms of management contracts. The
following table sets out the revenues earned from each of the three
operating arrangements for each of the three years ended December 31, 2002:

|                                                  |  |                         |        |      |  |                        |       |   |  |   |         |  |  |  |       |   |  |   |         |  |  |  |       |  
|------------------------------------------------- |  | ----------------------- | ------ | ---- |  | ---------------------- | ----- | - |  | - | ------- |  |  |  | ----- | - |  | - | ------- |  |  |  | ----- | -
|                                                  |  | Year ended December 31,
|                                                  |  |                        
|                                                  |  | 2000(1)                 | 2001   | 2002
|                                                  |  |                         |        |     
|                                                  |  |                         |        |      |  | (dollars in thousands) |       |   |  |   |         |  |  | 
|Leased Facilities                                 |  | $                       | 57,586 |      |  |                        | 84.9  | % |  | $ | 74,279  |  |  |  | 82.0  | % |  | $ | 86,860  |  |  |  | 79.4  | %
|Managed Facilities                                |  |                         | 8,615  |      |  |                        | 12.7  | % |  |   | 14,601  |  |  |  | 16.1  | % |  |   | 20,796  |  |  |  | 19.0  | %
|Owned Facilities                                  |  |                         | 1,608  |      |  |                        | 2.4   | % |  |   | 1,668   |  |  |  | 1.9   | % |  |   | 1,695   |  |  |  | 1.6   | %
|                                                  |  |                         |        |      |  |                        |       |   |  |   |         |  |  |  |       |   |  |   |         |  |  |  |       |  
|Parking and
management contract
revenues          |  | $                       | 67,809 |      |  |                        | 100.0 | % |  | $ | 90,548  |  |  |  | 100.0 | % |  | $ | 109,351 |  |  |  | 100.0 | %
|                                                  |  |                         |        |      |  |                        |       |   |  |   |         |  |  |  |       |   |  |   |         |  |  |  |       |  
|Reimbursement of
management contract
expenses (2) |  |                         | 25,970 |      |  |                        |       |   |  |   | 27,350  |  |  |  |       |   |  |   | 30,491  |  |  |  |       |  
|                                                  |  |                         |        |      |  |                        |       |   |  |   |         |  |  |  |       |   |  |   |         |  |  |  |       |  
|Total revenues                                    |  | $                       | 93,779 |      |  |                        |       |   |  | $ | 117,898 |  |  |  |       |   |  | $ | 139,842 |  |  |  |       |  
|                                                  |  |                         |        |      |  |                        |       |   |  |   |         |  |  |  |       |   |  |   |         |  |  |  |       |  



---

|(1): |  | Pro forma. See footnote (1) to Item 6  Selected Financial Data.                                                                                                                                                                                                                                                                                                                                                          
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(2): |  | In January 2002, the Emerging Issues Task Force (EITF) released Issue
No.01-14, Income Statement Characterization of Reimbursements Received for
Out-of-Pocket Expenses Incurred,which we adopted in the second quarter of
fiscal 2002. This pronouncement requires us to recognize as both revenue and
expenses, in equal amounts, costs directly reimbursed from our management
clients. Previously, expenses directly

17



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##### 



| |  | reimbursed under management agreements were netted against the reimbursement
received. Prior periods have been reclassified to conform to the
presentation of these reimbursed expenses. Adoption of the pronouncement
resulted in an increase in total revenues and total direct costs, in equal
amounts, of $30.5 million, $27.4 million and $26.0 million for the years
ended December 31, 2002, 2001 and 2000, respectively. This accounting change
has no impact on operating earnings or net earnings.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The number of facilities operated as at each fiscal year end under each of
these arrangements is as follows:

|                   |  |                    |       |      |  |      |       |  |  |  |       | 
|------------------ |  | ------------------ | ----- | ---- |  | ---- | ----- |  |  |  | ----- | 
|                   |  | As at December 31,
|                   |  |                   
|                   |  | 2000               |       | 2001 |  | 2002
|                   |  |                    |       |      |  |     
|Leased Facilities  |  |                    | 502   |      |  |      | 559   |  |  |  | 568   | 
|Managed Facilities |  |                    | 948   |      |  |      | 1,025 |  |  |  | 1,054 | 
|Owned Facilities   |  |                    | 15    |      |  |      | 15    |  |  |  | 15    | 
|                   |  |                    |       |      |  |      |       |  |  |  |       | 
|                   |  |                    | 1,465 |      |  |      | 1,599 |  |  |  | 1,637 | 
|                   |  |                    |       |      |  |      |       |  |  |  |       | 

Results of Operations

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Total revenues for fiscal 2002 increased $21.9 million, or 18.6%, to $139.8
million from $117.9 million for fiscal 2001. The increase was due largely
to an increase in revenue on leased facilities in the U.S., and includes the
results for DLC, which was acquired effective July 1, 2001.

Revenues from leased facilities for fiscal 2002 increased to $86.9 million
from $74.3 million in fiscal 2001, an increase of $12.6 million, or 16.9%.
There was an increase of $12.9 million in the United States as a result of
starting operations in Atlanta (August 2001) and Chicago (November 2001) and
the acquisition of DLC in Philadelphia (July 2001). However, we have also
experienced a drop in volume and in rates in our established cities of
Minneapolis and Milwaukee as a result of layoffs by businesses operating
downtown and pressure from competitors to lower rates. Consequently, we
decided not to renew a significant lease in Minneapolis in the fourth
quarter of 2002. Revenue from these two cities declined $0.6 million in
2002 from 2001. There was a $0.3 million decrease in leased revenue in
Canada substantially due to a decline in the value of the Canadian dollar
from an average rate for fiscal 2001 of C$1.55 (= US$1.00) to C$1.57 for
2002, and to higher traffic volumes in fiscal 2001 as a result of public
transit strikes in Calgary, Alberta and Vancouver, B.C. Leased revenue in
Canada for fiscal 2001 also included the recovery of $0.2 million for taxes
previously provided on parking violation revenue.

Management contract revenues for fiscal 2002 increased by $6.2 million, or
42.4%, to $20.8 million from $14.6 million for fiscal 2001. $5.7 million of
the increase was due to a full year of operations from DLC, which was
acquired in July 2001.

The cost of parking and management contracts in 2002 increased to $87.2
million from $70.0 million in 2001, an increase of $17.2 million, or 24.5%.
Of this increase, $9.0 million was attributable to higher rent expense and
$8.2 million to other directs costs. Rent expense increased $9.0 million,
or 19.2%, from $46.8 million for 2001 to $55.8 million for 2002. Rent as a
percentage of leased revenues, increased to 64.2% in 2002 from 63.0% for
2001. The increase is due to many of the leases in the U.S. being in the
first or second year of their terms. As we continue to operate these leased
facilities, we would expect growth in revenue to exceed any growth in rent
and, therefore, rent as a percentage of revenues would decline. The
increase in other direct costs of $8.2 million, or 35.0%, from $23.2 million
to $31.4 million, is due to the acquisition of DLC and the increase in
leased revenues. The cost of parking and management contracts as a
percentage of revenues from parking and management contracts increased to
79.7% in fiscal 2002 from 77.3% in fiscal 2001. The increase is due to a
higher proportion of our business in 2002, compared to 2001, being generated
in the U.S. where we are in a start-up phase in many cities. We expect only
to be in a break-even position, or marginally profitable, in these new
cities during their first one or two years of operation. The current weak
U.S. economy may prolong this period, during which we may generate lower
than average returns in these new cities.

We are appealing our 2002 business tax assessment for our operations in
Calgary, Alberta. We have also applied for a court ruling that the
applicable business tax bylaw is void or invalid. The assessment for 2002 of
approximately $0.9 million is

18



---



##### 



three times the amount of our assessment for 2001 of approximately $0.3
million. We have accrued at December 31, 2002 for the full amount payable
under the assessment. We have provided further details of this issue in this
Annual Report in Part I, Item 3  Legal Proceedings.

General and administrative expenses increased $1.4 million, or 10.2%, from
$14.4 million for fiscal 2001 to $15.8 million for fiscal 2002. The
increase in general and administrative expenses is due, in large part, to
including DLC for a full year, which added $1.5 million of general and
administrative expenses and to an additional $0.2 million for cities started
during 2001. This was partially offset by a decrease in stock compensation
expense of $0.8 million from $0.8 million for fiscal 2001 to a recovery of
$65,000 for fiscal 2002, as a result of a decline in our stock price.
General and administrative expenses, as a percentage of total revenues,
decreased to 11.3% for fiscal 2002 compared to 12.2% for fiscal 2001.

In 2003, we will be recording stock compensation expense using the fair
value method of accounting for stock options which vest in 2003, and
thereafter. We will also be restating the results of prior periods to
assist in the comparison of results of operations between years. Had we
applied the fair value method of accounting for stock-based employee
compensation in 2002 and 2001, stock compensation expense would have been
$0.3 million for each year. We have provided further details on the
assumptions we used in determining the fair value amounts for 2002 and 2001
in Note 11 to our Consolidated Financial Statements.

There was no amortization of goodwill in fiscal 2002, compared to $2.2
million for fiscal 2001. This is a result of adopting Financial Accounting
Statement No. 142, which does not permit amortization of goodwill, but
requires goodwill to be reviewed annually for any impairment in value. On
adopting SFAS No. 142, an initial test for impairment in the carrying value
of goodwill was required as at the date of adoption, January 1, 2002.
During the second quarter of 2002, we completed the process of determining
the fair value of each of our reporting units and comparing that to their
carrying values. We concluded from this initial test that the fair market
value of each of our units exceeded their carrying values, and no further
work was required to test for impairment in the carrying value of goodwill
at January 1, 2002. In the fourth quarter of 2002, we completed an annual
test for impairment in the carrying value of goodwill as of November 30,
2002 and concluded that the fair market value of each of our units still
exceeded their carrying values at that date.

Interest income decreased $0.1 million from $0.6 million for fiscal 2001 to
$0.5 million for fiscal 2002 principally due to lower prevailing interest
rates. Interest expense of $0.4 million was incurred in fiscal 2002 on the
bank and other indebtedness to finance the DLC acquisition, which was $0.1
million more than the $0.3 million incurred in fiscal 2001. The expense in
2001 was for a partial year as the acquisition of DLC occurred during 2001.

Income tax expense for fiscal 2002 includes our current tax liability for
capital and state taxes, and a deferred tax expense as we utilize our
previously recognized benefits of net operating losses for tax purposes in
Canada. The deferred tax expense has been reduced by a deferred tax
recovery for operating losses in the U.S. for fiscal 2002. We expect that
we will have utilized all of our net operating losses in Canada by the third
quarter of 2003, at which time we will begin to incur a current, rather than
a deferred, tax liability for any operating profits in Canada. Accordingly,
the tax benefit of the Canadian losses we expect to realize in the next
twelve months, which is disclosed as a current asset on our balance sheet at
December 31, 2002, has decreased from the balance at December 31, 2001.

The net income for 2002 was $2.3 million, an increase of $1.6 million from
the net income for 2001 of $0.7 million. This increase is primarily due to
higher gross margin of $1.7 million; lower depreciation and amortization of
management and lease agreements of $0.1 million; and discontinuation of
goodwill amortization of $2.2 million; offset by higher general and
administrative expenses of $1.4 million; a decrease in net interest income
of $0.2 million and higher income tax expense of $0.8 million.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

Total revenues for fiscal 2001 increased $24.1 million, or 25.7%, to $117.9
million from $93.8 million for fiscal 2000. The increase was due largely to
an increase in revenue on leased facilities, and from including the results
for DLC which was acquired effective July 1, 2001.

Revenues from leased facilities for fiscal 2001 increased to $74.3 million
from $57.6 million in fiscal 2000, an increase of $16.7 million, or 29.0%.
$13.5 million of this increase was in the United States and resulted from
starting operations in San Francisco (April 2000), Cleveland (September
2000) and Atlanta (August 2001) and the acquisition of both E-Z Park in
Cincinnati (April 2000) and DLC in Philadelphia (July 2001). The increase
of $3.2 million in leased revenue in Canada

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included a recovery of $0.5 million related to our settlement of a dispute
over direct taxes on parking violation revenue. Fiscal 2000 included a
reduction of revenue of $0.3 million based on estimates of our tax liability
at the time. During fiscal 2001, we were successful in recovering $0.2
million during fiscal 2001 of the amount previously provided. We do not
expect any further benefits in the future from settling this tax liability.
The remainder of the increase in Canada of $2.7 million was due in part, to
parking rate increases and a public transit strike in Calgary, Alberta and
Vancouver, B.C.

Management contract revenues for fiscal 2001 increased to $14.6 million from
$8.6 million for fiscal 2000 an increase of $6.0 million, or 69.5%. The
increase was solely attributable to the acquired DLC contracts.

The cost of parking and management contracts in fiscal 2001 increased to
$70.0 million from $50.7 million in fiscal 2000, an increase of $19.3
million, or 38.2%. Of this increase, $6.1 million was from DLCs
operations; $10.5 million was attributable to higher rent expense; and $2.7
million to other directs costs. Rent expense, excluding amounts
attributable to DLC, increased $10.5 million, or 29.7%, from $35.4 million
for fiscal 2000 to $45.9 million for fiscal 2001. Rent as a percentage of
leased revenues, increased to 63.0% in fiscal 2001 from 61.5% in fiscal
2000. This increase is principally due to the leases in our new U.S.
operations being in the early phase of their terms. As we continue to
operate these new leased facilities, we would expect revenue growth to
exceed any growth in rent and, therefore, rent as a percentage of revenue to
decline. The increase in other direct costs of $2.7 million, or 17.6%, from
$15.3 million to $18.0 million, is due to the general increase in revenues.
The cost of parking and management contracts as a percentage of revenues
from parking and management contracts increased to 77.3% in fiscal 2001 from
74.8% in fiscal 2000.

General and administrative expenses increased $3.0 million, or 25.7%, from
$11.4 million for fiscal 2000 to $14.4 million for fiscal 2001. The
increase in general and administrative expenses is due, in part, to the
acquisition of DLC, which added $1.2 million of general and administrative
expenses, and expansion since last year in the United States, including $0.4
million for operations in San Francisco, Cincinnati, Cleveland, and Atlanta
and $0.4 million to establish a regional management infrastructure in the
United States. We also incurred $0.3 million of additional expense related
to being a public company and $0.7 million of increased stock compensation
expense, as discussed below. General and administrative expenses, as a
percentage of total revenues, remained at 12.2% for both fiscal 2001 and
2000.

Included in general and administrative expense is stock-based compensation
expense for fiscal 2001 of $0.8 million which includes an allocation of both
senior managements compensation related to our stock performance and
directors annual stock entitlement for services rendered. In fiscal 2000
there was $0.1 million of stock-based compensation for stock awarded to
directors, but no stock compensation expense for senior management. The
allocation for senior managements compensation is based on the 2000 Stock
Incentive Plan which was approved by the stockholders at our 2001 Annual
Meeting. The plan includes variable stock options whereby the exercise
price of the options increases during the term of the options. Accordingly,
any change in the intrinsic value of the options is reflected as a
compensation expense on a quarterly basis.

Depreciation and amortization decreased $0.1 million, or 0.7%, from $4.8
million in fiscal 2000 to $4.7 million in fiscal 2001. Included in these
amounts is goodwill amortization of $2.2 million for fiscal 2001 and $2.3
million for fiscal 2000. With the adoption of the Financial Accounting
Statement No. 142, goodwill will no longer be amortized effective fiscal
2002 onwards. However, the carrying value of goodwill is subject to a
regular impairment test.

The equity share in the limited liability company (LLC) losses represents
our 50% share in nine LLCs which each operate a parking facility in New
York, New York. The LLCs started operating these facilities in fiscal
2001.

Interest income of $0.6 million was earned in fiscal 2001 compared to $0.7
million in fiscal 2000. Although the interest income in 2000 was earned
during only a period of nine months from the combination in March 2000,
interest rates in 2000 were higher by approximately 1.5%.

Interest expense of $0.3 million for fiscal 2001 represents interest on the
bank loan to finance the acquisition of DLC and imputed interest on the
portion of the purchase price that is deferred.

Income tax expense for fiscal 2001 includes our current tax liability for
capital and state taxes, and a deferred tax expense as we utilize our net
operating losses for tax purposes in Canada. The deferred tax expense has
been reduced by a deferred tax recovery for operating losses in the U.S. for
fiscal 2001. There was no corresponding deferred tax expense in fiscal 2000,
as we had not then recognized the Canadian tax losses for accounting
purposes.

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Net earnings for fiscal 2001 were $0.7 million  a decrease of $0.6 million
from the fiscal 2000 pro forma earnings of $1.3 million. This decrease is
primarily due to a $3.0 million increase in general and administrative
expenses; equity losses of $0.2 million in the LLCs; lower net interest
income of $0.4 million; and higher income tax expense of $0.5 million;
offset by a higher gross margin of $3.4 million and lower depreciation and
amortization expense of $0.1 million.

Liquidity and Capital Resources

As at December 31, 2002, we had cash and cash equivalents of $15.1 million.
This represents an increase of $4.1 million for fiscal 2002 from the balance
at December 31, 2001. The increase resulted from $10.6 million of cash
generated from operations, offset by $6.1 million used in investing
activities and $0.4 million used in financing activities. In the event of a
further downturn in the economy, we would expect the cash generated from our
operations to decrease.

The cash used in investing activities during fiscal 2002 included $0.7
million used to acquire the rights to a parking lot lease and two management
agreements in New York City, NY. We also paid $1.8 million to the former
shareholders of DLC during fiscal 2002. Of this, $0.2 million was for an
adjustment to the amount owed for the acquired working capital, and $1.6
million was the first of five annual deferred contingent payments. The
latter amount was calculated pursuant to the Amended and Restated Share
Purchase Agreement (Exhibit 10.8) and was based on the earnings of the
acquired operations for the year ended June 30, 2002. We had previously
accrued $1.2 million of this payment as part of our acquisition. The
difference of $0.6 million has been allocated to goodwill.

In April 2002, we reached a settlement with the contractor of the San
Francisco Giants development regarding final costs. Under the settlement we
paid the contractor $1.4 million and, based on claims now settled with a
sub-contractor, we are required to pay a further amount of less than $0.1
million. The settlement also resulted in the cancellation of a previously
outstanding letter of credit for $2.3 million. Following the settlement
with the contractor, we were able to calculate the Giants share of the
final development costs. The Giants share is $1.9 million, including
interest, of which we have been able to recover $0.8 million at December 31,
2002 from participation rent owing to the Giants. The balance of $1.1
million at December 31, 2002 is included on our Balance Sheet in other
assets, and the current portion in accounts receivable, with a corresponding
reduction in recoverable developments costs. In February 2003, we accepted
an early settlement of the balance owing from the Giants at a discounted
amount of $1.0 million in cash.

At December 31, 2002, we had $3.3 million of bank debt outstanding. After
borrowing these funds and using $1.4 million for outstanding letters of
credit, we have $14.7 million remaining of our credit facility with HSBC
Canada to fund working capital requirements, acquisitions and other capital
investment opportunities.

In 2002, and in previous years, we have not had a current tax liability for
income tax in Canada due to the availability of tax losses. We estimate
that these losses will be fully utilized during 2003. Assuming that the
taxable income in Canada in 2003 and 2004 were the same as 2002, we would
incur a current tax liability for Canadian income taxes of approximately
$1.1 million for 2003, payable in 2004, and approximately $2.5 million for
2004, payable in installments during 2004 and any balance in 2005.

In January 2003, we entered a standstill agreement with our principal
shareholder, Gotham Partners and its affiliated funds, which own
approximately 31% of the outstanding shares of the common stock of the
Company. Under the agreement, we have until May 23, 2003 to explore
alternatives available to us in the context of Gotham Partners decision to
sell its ownership interest in the company. We have engaged independent
advisors to assist us with this process and have committed to pay our
financial advisor a fee of not less than $0.5 million. In the event that a
transaction is consummated regarding the ownership of the Company, up to an
additional $1.0 million in fees could be payable to our advisors. The actual
amount is dependent on the nature of such a transaction. In addition, we
expect to incur legal and other expenses as we explore alternatives
available to us.

In the next 12 months, we anticipate the working capital necessary to
satisfy current obligations will be generated from operations, available
cash, and our bank facility.

Depending on the timing and magnitude of future investment opportunities,
which could be in the form of leased or purchased properties, joint ventures
or acquisitions, we anticipate the cash required to come from operations,
the bank credit facility, or an equity offering.

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In the future, if we identify investment opportunities requiring cash in
excess of operating cash flows and credit facilities, we may seek additional
sources of capital, including the sale or issuance of our common stock, or
amending our credit facility to obtain additional indebtedness. No
assurances can be given that such increases would be available at the time
needed to complete any such acquisition.

Contractual Obligations and Commercial Commitments

The following tables summarize our contractual obligations and commercial
commitments as of December 31, 2002:

Payments due by period
(amounts in thousands)

|                                   |  |       |         |        |  |           |        |           |               |   |        |  |  |   |        |  |  |   |        | 
|---------------------------------- |  | ----- | ------- | ------ |  | --------- | ------ | --------- | ------------- | - | ------ |  |  | - | ------ |  |  | - | ------ | 
|                                   |  |       |         |        |  | Less than |        |           |               |   |        |  |  |   |        |  |  |  
|                                   |  | Total |         | 1 year |  | 1-3 years |        | 4-5 years | After 5 years
|                                   |  |       |         |        |  |           |        |           |              
|Bank indebtedness (1)              |  | $     | 3,349   |        |  | $         | 3,349  |           |               | $ |       |  |  | $ |       |  |  | $ |       | 
|Operating leases                   |  |       | 180,454 |        |  |           | 43,379 |           |               |   | 62,256 |  |  |   | 28,199 |  |  |   | 46,620 | 
|Other long-term
obligations (2)    |  |       | 5,125   |        |  |           | 1,796  |           |               |   | 2,076  |  |  |   | 887    |  |  |   | 366    | 
|                                   |  |       |         |        |  |           |        |           |               |   |        |  |  |   |        |  |  |   |        | 
|Total contractual
cash obligations |  | $     | 188,928 |        |  | $         | 48,524 |           |               | $ | 64,332 |  |  | $ | 29,086 |  |  | $ | 46,986 | 
|                                   |  |       |         |        |  |           |        |           |               |   |        |  |  |   |        |  |  |   |        | 



---

|(1) |  | The bank indebtedness has been reflected as payable within one
year as it is repayable on demand. However, it is currently being
repaid in blended monthly installments of principal and interest of
$62,000 through December 2007.                                                                                                                                                        
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Other long-term obligations include an estimated $3.6 million
payable to the former shareholders of DLC. The amounts ultimately
payable to the former shareholders are calculated relative to the
actual operating results of the acquired business for the four
remaining annual periods ending June 30, 2006 and may differ from
the amount estimated at December 31, 2002 to be payable.

Amount of commitment expiration per period
(amounts in thousands)

|                             |  |       |       |        |  |           |       |           |  |               |   |  |  |  |   |  |  |  |   | 
|---------------------------- |  | ----- | ----- | ------ |  | --------- | ----- | --------- |  | ------------- | - |  |  |  | - |  |  |  | - | 
|                             |  |       |       |        |  | Less than |       |           |  |               |   |  |  |  |   |  |  | 
|                             |  | Total |       | 1 year |  | 1-3 years |       | 4-5 years |  | After 5 years
|                             |  |       |       |        |  |           |       |           |  |              
|Standby letters of credit    |  | $     | 1,444 |        |  |           | 1,444 |           |  |               |  |  |  |  |  |  |  |  |  | 
|Guarantees                   |  |       |      |        |  |           |      |           |  |               |  |  |  |  |  |  |  |  |  | 
|                             |  |       |       |        |  |           |       |           |  |               |   |  |  |  |   |  |  |  |   | 
|Total commercial
commitments |  | $     | 1,444 |        |  |           | 1,444 |           |  |               |  |  |  |  |  |  |  |  |  | 
|                             |  |       |       |        |  |           |       |           |  |               |   |  |  |  |   |  |  |  |   | 

Critical accounting policies

Impark is involved in the ownership, management and operation of parking
facilities in the United States and Canada. In preparing the consolidated
financial statements, estimates and judgments are applied that affect the
reported amounts of assets, liabilities, revenues and expenses and the
disclosure of contingent assets and liabilities for the reporting periods.
We base our estimates on historical experience and on various other
assumptions that are believed to be reasonable in the circumstances, the
results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily available from other
sources. On an on-going basis, we evaluate areas of estimate or judgment to
ensure they reflect currently available assessments and knowledge. Actual
results may differ from these estimates under different assumptions and
conditions.

We believe that the following critical accounting policies affect our more
significant judgments and estimates.

The consolidated financial statements reflect our estimates of the value of
goodwill, management agreements and fixed assets arising from historical
transactions. In assessing the underlying value of these assets, we
consider estimates of future cash flows to be generated from the assets over
their estimated useful life. Various factors, including customer demand,
weather, transit use and government policies, could change thereby impacting
these estimates, possibly materially. These

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factors are substantially outside of our control.

Beginning January 1, 2002, we have accounted for goodwill under the
provisions of SFAS No. 142 Goodwill and Other Intangible Assets. As of
December 31, 2002, we had $45.2 million of goodwill. The determination of
fair value of goodwill, and any impairment loss, utilizes cash flow
projections that assume certain future revenue and costs levels, assumed
earnings multiples based upon current market conditions and other valuation
factors, all of which involve the use of significant judgment and
estimation. Future events may indicate that judgments and estimates that we
made to support the carrying value of goodwill at December 31, 2002 are no
longer appropriate. This could, in turn, result in impairment charges in
the future. Future events that may result in impairment charges include
increases in interest rates, which would impact earnings multiples,
unfavourable economic conditions or other factors which could decrease
revenues and profitability of existing locations, and changes in the cost
structure of existing facilities. Factors that could potentially have an
unfavourable economic effect on our judgment and estimates include, among
others: changes imposed by government and regulatory agencies, such as
assessment of parking-related taxes; construction or other events that could
change traffic patterns; and terrorism or other catastrophic events.

The consolidated financial statements reflect deferred income tax assets
based on our assessment that we are more likely than not to be able to
utilize certain deductions in the future, primarily loss carry-forwards.
Changes in the timing of the recognition and amount of revenues and expenses
in the future may impact our ability to utilize these deductions. The
carrying value of our net deferred tax assets assumes that we 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, we will be required to adjust our deferred
tax valuation allowance.

Under the terms of the agreement to acquire DLC, we are required to make
annual payments to the former shareholders of DLC for each of the twelve
month periods ending June 30, 2003 through 2006. The payments are calculated
relative to the actual operating results of the acquired business determined
in accordance with generally accepted accounting principles. Each twelve
month period calculation is independent and separable from each other twelve
month period calculation. In making this calculation, a multiple of 6.5 is
applied to each future twelve month periods earnings before interest,
taxes, depreciation and amortization (EBITDA) less depreciation of any new
capital expenditure on the acquired parking facilities, and one-tenth of
that amount is payable in cash at that time. At December 31, 2002 we
estimated this liability, based on operating results of the acquired
business for 2002, to be approximately $1.0 million per annum for each of
the periods through June 30, 2006. We have accrued for this amount in our
Consolidated Financial Statements as at December 31, 2002. The actual
amount to be paid for any given year may differ significantly from our
estimate as it depends on the actual operating performance of DLC and is not
subject to any limit. However, the former shareholders of DLC are required
to make up any shortfall, up to $300,000, in the EBITDA of the acquired
business below $1.3 million for any of the twelve month periods through June
30, 2006. A change of 10% in our estimate of operating results would result
in a change of approximately $0.1 million per annum in the amount payable to
the former shareholders of DLC for each of the periods through June 30,
2006.

New Accounting Pronouncements

In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard No. 143 (SFAS 143), Accounting
for Asset Retirement Obligations which provides accounting requirements for
retirement obligation associated with tangible long-lived assets for which
the legal obligation to settle is a result of an existing legal obligation,
including those obligations to settle due to an existing or enacted law and
written or oral contract. Such an obligation would be recognized in the
period in which it meets the definition of a liability, and on initial
recognition, the liability would be measured at fair value. SFAS 143 does
not require the asset retirement obligation to be measured at fair value
each period. Instead, it requires the recognition of changes in the
liability resulting from the (a) the passage of time and (b) revisions in
cash flow estimates.

SFAS 143 also addresses the accounting for the costs associated with an
asset retirement obligation. An asset retirement cost is to be capitalized
as part of the cost of the related long-lived asset and charged to earnings
using a systematic and rational method.

SFAS 143 is effective for years beginning after June 15, 2002. The Company
has not yet determined the effect of SFAS 143 on the Consolidated Financial
Statements.

In July, 2002 the FASB released Statement of Financial Accounting No. 146
(SFAS 146), Accounting for Costs associated with exit or disposal
activities. SFAS 146 relates to the recognition of a liability for costs
associated with an

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exit or disposal activity and requires that a liability be recognized for
those costs only when the liability is incurred, that is, when it meets the
definition of a liability under the FASBs conceptual framework.
Previously, a liability for an exit cost was recognized when an exit plan
was committed to. SFAS 146 also established fair value as the objective for
initial measurement of liabilities related to exit or disposal activities.
As a result, SFAS 146 significantly reduces the ability to recognize a
liability for future expenses related to restructuring. Certain costs that
were recognized as liabilities at the date an exit plan was committed to,
will no be recognized at a later date. In addition, SFAS 146 provides
additional guidance for the recognition and measurement of certain costs
that are often associated with exit or disposal activities including
one-time termination benefits and other associated costs.

SFAS 146 is effective for exit and disposal activities initiated after
December 31, 2002. SFAS 146 will not have a material impact on the
Consolidated Financial Statements of the Company on adoption.

In December 2002, FASB approved the issue of Statement of Financial
Accounting Standard No. 148, (SFAS 148), Accounting for Stock-Based
Compensation  Transition and Disclosure. SFAS 148 provides for three
transition options for adopting the principles of SFAS 123 for measuring
stock-based compensation granted to employees. The provisions of SFAS 148
also increase the prominence and frequency of financial disclosure including
additional disclosures of stock-based compensation amounts in year end
financial statements and SFAS 148 will require that interim financial
statements include similar disclosure relating to stock-based compensation
as is presently required for year end financial statements including all of
the disclosure provisions of SFAS 123.

SFAS 148 is effective for years ending on or after December 15, 2002 and the
Company has provided the disclosures required in notes 2(o) and 11(b) to the
Consolidated Financial Statements.

Foreign Currency Exposure

We operate wholly-owned subsidiaries in Canada. Total historical revenues
(excluding reimbursement of management contract expenses) from Canadian
operations amounted to $53.5 million and $53.1 million for fiscal years 2001
and 2002, respectively. We intend to continue to invest in Canadian
facilities, and may identify expansion opportunities in other foreign
countries. Our exposure to foreign currency fluctuations is limited as the
Canadian dollar revenues have to date been significantly offset by Canadian
dollar operating costs. Our net earnings in Canada for 2002 were
approximately $3.5 million, or approximately C$5.5 million translated at the
average exchange rate for 2002 of US$1 = C$1.57. If the exchange rate used
in 2002 had been C$1.65 instead of C$1.57, the effect would be to reduce our
net earnings by approximately $0.2 million. Presently, we have no formal
hedging programs. We would consider implementing a hedging program if such
risk materially increases.

Impact of Inflation and Changing Prices

Our primary sources of revenues are parking revenues from owned and leased
locations and management contract revenue (net of expense reimbursements).
In the years ended December 31, 2001 and 2002 inflation had a limited impact
on our operations.

Quarterly Results

We may experience fluctuations in our income from quarter to quarter due to
fluctuations in revenues and related expenses due to acquisitions,
pre-opening costs, travel and transportation patterns affected by weather
and calendar related events, and local and national economic conditions.
Additionally, we manage the parking for a number of sports stadiums and
arenas and our income can be affected by the relative degree of success of
various sports teams. Information on our quarterly reported revenues, net
income(loss) and earnings(loss) per share is disclosed in Note 14 to the
Consolidated Financial Statements in this report.

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CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS

This Annual Report, including the information incorporated herein by
reference contain certain statements that may be considered forward-looking
statements under the Private Securities Litigation Reform Act of 1995. You
can identify forward-looking statements by the use of the words believe,
expect, anticipate, intend, estimate, assume, will, should, and
other expressions which predict or indicate future events or trends and
which do not relate to historical matters. The Companys actual results
could differ materially from those projected in the forward-looking
statements as a result of, among other factors, the factors discussed below,
our ability to successfully integrate past and future acquisitions, our
ability to form and maintain strategic relationships with certain large real
estate owners, and changes in assumptions used in making such
forward-looking statements. Readers should carefully review the factors
described on below and should not place undue reliance on our forward
looking statements. The Company assumes no obligations to update any
forward-looking statements.

A significant shareholder intends to sell their shareholding

Gotham Partners and its affiliated funds (Gotham) own approximately 31% of
the outstanding shares of the common stock of the Company. They have
decided to sell their ownership interest in the Company. We have entered
into a standstill agreement with Gotham that restricts their ability to
divest their ownership interest in the Company prior to May 23, 2003 without
the consent of the Board of Directors. The Board of Directors has appointed
a Special Committee of directors to explore strategic alternatives available
to the Company in the context of Gothams decision.

The sale of Gothams ownership interest may result in a number of changes,
including possibly changes in the control of the Company, the Board of
Directors, management, capital structure, growth and operating strategies.

The process to explore alternatives will also require managements time and
attention, and may mean less time devoted to following our stated growth
strategy.

We have also engaged independent advisors to assist us with the process and
have committed to pay our financial advisor a fee of not less than $0.5
million. In the event that a transaction is consummated regarding the
ownership of the Company, up to an additional $1.0 million in fees could be
payable to our advisors. The actual amount is dependent on the nature of
such a transaction. In addition, we may incur significant legal and other
expenses as we explore alternatives available to us. These costs could have
a materially adverse effect on our future results of operations and on our
financial condition.

Our growth strategy may not succeed

As part of our business strategy, we intend to pursue acquisitions of other
parking operators. In executing our acquisition strategy, we may be unable
to identify suitable acquisition candidates. In addition, we expect to face
competition from other parking providers for acquisition candidates, making
it more difficult to acquire suitable companies on favorable terms. If we
pursue any acquisition, our management could spend a significant amount of
time and effort in identifying and completing the acquisition. If we
complete an acquisition, we may have to devote a significant amount of
management resources to integrating the acquired business with our existing
business. An acquisition might not produce the revenue or earnings that we
anticipated, and an acquired operation may not perform as expected.
Accordingly, our acquisition efforts may not succeed. In addition, from an
accounting perspective, an acquisition may result in non-recurring charges
or involve significant write-offs of goodwill that could adversely affect
our operating results.

To pay for an acquisition, we might use capital stock or cash.
Alternatively, we might borrow money from a bank or other lender. If we use
capital stock, our stockholders may experience dilution. If we use cash or
debt financing, our financial liquidity would be reduced. We cannot be
certain that we will have sufficient access to capital to permit us to
implement our acquisition strategies.

We also intend to pursue aggressive growth in targeted major cities in the
United States. However, we may not be able to sign up parking contracts in
these cities due to competition from existing operators or reluctance from
landlords to enter into agreements with an operator who is new in the local
market. Furthermore, if we are able to add new facilities, we may incur
losses on these new locations during the first or second year of operations
as we attempt to achieve projected revenue targets by optimizing parking
rates and marketing the facility.

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Severe winter weather may adversely affect our business

The parking business depends on the free flow of vehicular traffic. Severe
winter weather conditions in Canada and the northern United States could
close or significantly slow roadways. This, in turn, may harm our business
and adversely affect our cash flow by reducing the demand for parking and
increasing our snow removal costs.

Changes in privacy legislation
could harm our business by making collections more difficult and costly

City Collection Company Limited (City Collections), an Impark subsidiary,
identifies vehicle owners in Canada through searches based on license plate
numbers. The license plate data are maintained by each province in Canada.
Although most provinces have enacted privacy legislation regulating access
to such data, City Collections has entered into access agreements with
several provinces. Should more restrictive privacy legislation be enacted
it could adversely affect City Collections business. In 2002, a committee
of the provincial government of Alberta made a recommendation to amend
existing legislation that would deny parking companies access to motor
vehicle records. If the Alberta legislature accepts such recommendation, it
could adversely impact our collection efforts and reduce the revenue we earn
from parking violations in Alberta, Canada. In addition, fees charged for
searches of motor vehicle registration are also set by provincial
governments and any increase in these fees will have an adverse effect on
City Collections business.

An increase in the cost of
insurance claims and changes in the insurance marketplace could increase our costs

We typically have a large number of small property or personal injury
claims. We have insurance to cover the cost of these claims, to the extent
such costs exceed a deductible amount. However, a major increase in the
number and cost of claims to the insurance company could significantly
increase the amount that we pay to insure against these claims.

Additionally, due to changes in the insurance marketplace, including changes
related to the terrorist attacks on September 11, 2001, we have experienced
an increase in the premiums we pay for most types of insurance coverage.
Changes in the insurance marketplace, including increased premium costs,
could have a material adverse effect on our future results of operations and
on our financial condition.

Currency fluctuations could adversely affect our financial results

While our consolidated financial statements are prepared in United States
dollars, many of our operations are conducted in Canadian dollars.
Fluctuations in exchange rates may have a material adverse effect on our
financial results, particularly our operating margins, and could also result
in exchange losses. To date we have not sought to hedge these risks, but
may undertake hedging transactions in the future. We cannot be certain,
however, that any hedging techniques would be successful in preventing or
limiting the adverse financial effects of exchange rate fluctuations.

We face risks associated with environmental regulations

Various federal, state, provincial and local environmental laws and
regulations impose liabilities on a current or previous owner or operator of
real property for the cost of removal or remediation of hazardous or toxic
substances on the property. These laws typically impose liability without
regard to whether the owner or operator knew of, or was responsible for, the
presence of the hazardous or toxic substances. In connection with our
ownership, operation or acquisition of parking facilities, we may be
potentially liable for such costs. Although we are currently not aware of
any material environmental claims pending or threatened against us or any of
our owned or operated parking facilities, we cannot give any assurance that
a material environmental claim will not be asserted against us or against
our owned or operated parking facilities. We could face significant costs
in defending against claims of liability or in remediating a contaminated
property.

An increase in government regulation or taxation could harm our business

The parking business is subject to a significant degree of government
regulation. The regulations include potentially costly matters such as
requiring improvements to meet civic by-laws, workers compensation
regulations and labor standards, as well as, environmental and other
potentially costly legislation. Any new or increased levels of regulation
could adversely impact our business.

The parking industry is also subject to increased taxation from the various
levels of government. Historically, it has been considered as an
environmentally unfriendly industry due to its primary purpose, which is to
park automobiles driven into

26



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##### 



downtown business districts. Consequently the parking industry has been the
subject of significant taxation including federal, state and provincial
sales taxes, property taxes, business taxes and federal and provincial/state
income taxes. Our business will be adversely affected by any significant
new tax legislation or increased levels of taxation, any of which could be
retroactive.

Various other governmental regulations affect our operation of parking
facilities, both directly and indirectly, including air quality laws,
licensing laws and the Americans with Disabilities Act of 1990. Under the
ADA, all public accommodations, including parking facilities, are required
to meet certain federal requirements related to access and use by disabled
persons. Although we believe that the parking facilities we own and operate
are in substantial compliance with these requirements, a determination that
we or the facility owner is not in compliance with the ADA could result in
the imposition of fines or damage awards against us.

In addition, several state, provincial and local laws have been passed in
recent years that encourage car pooling and the use of mass transit,
including, for example, laws prohibiting employers from reimbursing employee
parking expenses. Laws and regulations that reduce the number of cars and
vehicles being driven could hurt our business.

We have significant competition from a variety of sources

The parking industry is highly competitive. Our competitors range from
small single-lot operators to large regional and national multi-facility
operators, and include municipal and other governmental entities. Some of
our present and potential competitors have or may obtain greater financial
and marketing resources than we have. Furthermore, we compete for qualified
management personnel with other parking facility operators, with property
management companies and with property owners. We may encounter increased
competition in the future. Among other things, increased construction of
parking facilities could limit our ability to attract customers, expand our
business or maintain profitable pricing levels and could decrease our market
share. We compete for acquisitions with other parking facility operators,
real estate developers and real estate investment trusts. We may encounter
increased competition for acquisitions in the future, and this competition
could hurt our ability to complete acquisitions or have the effect of
increasing the prices we must pay for acquisitions.

We believe that there will be rapid business consolidation in the parking
services industry. If this occurs and we are unable to participate
successfully in the business consolidation, our business and financial
results could be harmed.

A labor strike could hurt our competitiveness

A significant number of our employees are members of labor unions. As a
result there is more risk of work stoppages due to strikes which could
potentially be costly to us because increased labor costs could adversely
affect our ability to retain management contracts and to remain competitive
in the marketplace.

The large number of leased facilities increases the risk that we may not be able to cover the fixed costs of our leased facilities

We leased 568 and owned 15 facilities as of December 31, 2002. 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 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, and in the case of owned facilities, there are the normal risks of
ownership and costs of capital. In addition, maintenance and 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.
Generally, performance of our parking facilities depend, in part, on our
ability to negotiate favorable contract terms, our ability to control
operating expenses, financial 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 generally. The relative significance of our leases can be viewed in
relation to the term remaining on currently active leases and the extent to
which the direct costs of operating those leased facilities historically
have been covered by revenue generated by the facilities. This is
illustrated by the table below, which groups our leased locations that were
active at December 31, 2002 by the year that the related agreement will
expire, as follows:

27



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##### 



|                    |  |                                  |                  |              |  |   |        |  |  |  |      | 
|------------------- |  | -------------------------------- | ---------------- | ------------ |  | - | ------ |  |  |  | ---- | 
|                    |  | Year ended December 31, 2002 (1)
|                    |  |                                 
|Term expires        |  | Revenue                          | Direct costs (2) | Coverage (3)
|                    |  |                                  |                  |             
|2003                |  | $                                | 18,935           |              |  | $ | 16,505 |  |  |  | 1.15 | 
|2004                |  |                                  | 14,597           |              |  |   | 12,945 |  |  |  | 1.13 | 
|2005                |  |                                  | 10,038           |              |  |   | 9,145  |  |  |  | 1.10 | 
|2006                |  |                                  | 8,430            |              |  |   | 7,155  |  |  |  | 1.18 | 
|2007 and thereafter |  |                                  | 27,285           |              |  |   | 25,534 |  |  |  | 1.07 | 
|                    |  |                                  |                  |              |  |   |        |  |  |  |      | 
|Total               |  | $                                | 79,285           |              |  | $ | 71,284 |  |  |  | 1.11 | 
|                    |  |                                  |                  |              |  |   |        |  |  |  |      | 



---

|(1) |  | For leased locations that were open as at December 31, 2002.                                                                                                                                                                                                                                                                                                                                                 
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Direct costs included minimum rental payments, contingent payments
based upon a percentage of revenues, property taxes and other
operating expenses.                                                                                                                                                                                                                                                         
|   
|(3) |  | Coverage is calculated by dividing Revenue by Direct costs.
Coverage should not be considered in isolation or as a substitute of
measures of performance prepared in accordance with generally
accepted accounting principles. Coverage is not an accepted measure
under generally accepted accounting principles and other companies
will use different measures or different calculations of
profitability.

Several of our locations are dependent on sports-related traffic

Several of our leased facilities are located beside or in the vicinity of
major sporting arenas. A significant proportion of the revenue earned at
these locations occurs during regular and post-season games. In 2002,
approximately 7% of our revenue was earned from customers attending baseball
games. A player strike or other work stoppage leading to the cancellation of
games, or a reduction in attendance at games, would substantially reduce the
revenue earned at these locations. However, our fixed rent commitments on
these locations would be unchanged. As a result, the profit we earn from
these facilities would decrease significantly.

The declaration of war in the
Middle East, or related terrorist activity, could affect demand for parking

Consumer confidence may be affected by the declaration of war in the Middle
East. A loss of confidence may lead to the public being less likely to incur
discretionary spending on restaurants, sporting events and theatres, which in turn means less
demand and lower revenues at adjacent parking facilities.

Furthermore, the threat of, or actual, terrorist activity in urban
centres in North America may lead to restrictions on access to streets or
buildings in the downtown areas. This may result in the access to parking
facilities being more difficult, or not permitted at all, which will have
an adverse effect on revenue generated from those facilities.




Item 7a.   Quantitative and Qualitative Disclosure about Market Risk

To December 31, 2002, we have not entered into significant derivative
instruments either for hedging or speculative purposes. As of December 31,
2002, we had no such instruments outstanding. We will periodically hold
excess available cash in cash equivalents which are short-term deposits at
major financial institutions with terms to maturity at the date of
acquisition of three months or less.

Interest Rates:

Our primary exposure to market risk consists of changes in interest rates on
cash invested in short-term deposits which are all included in cash
equivalents on our consolidated balance sheet. As of December 31, 2002, we
had approximately $2.5 million invested in short-term deposits, earning
approximately 0.9% in interest. Changes in interest rates could impact our
anticipated real rate of return. However, due to the short-term nature of
such investments, the risk of loss to market is not expected to be
significant.

28



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##### 



Our bank indebtedness of $3.3 million at December 31, 2002 bears interest at
rates which vary with changes in the London Interbank Offered Rate
(LIBOR). Based on our current borrowing level, a 1% change in LIBOR would
impact net income by less than $0.1 million annually.

Foreign Currency Exposure:

We operate wholly-owned subsidiaries in Canada. Total revenues (excluding
reimbursement of management contract expenses) from Canadian operations
amounted to $53.5 million for the year ended December 31, 2002 as detailed
in Note 14 to the Financial Statements. We intend to continue to invest in
Canadian facilities, and may identify expansion opportunities in other
foreign countries. We believe that our exposure to foreign currency
fluctuations is limited because our Canadian dollar revenues have to date
been significantly offset by Canadian dollar operating costs. Our net
earnings in Canada for 2002 were approximately $3.5 million, or
approximately C$5.5 million translated at the average exchange rate for 2002
of US$1 = C$1.57. If the exchange rate used in 2002 had been C$1.65 instead
of C$1.57, the effect would be to reduce our net earnings by approximately
$0.2 million. Presently, we have no formal hedging programs, other than
investing any excess Canadian cash in U.S. Treasury bills. We would
consider implementing a hedging program if such risk materially increases.




Item 8.   Financial Statements and Supplementary Data

The consolidated financial statements listed in Item 14(a)1 and 14(a)2 are
included in this report on pages F-1 through F-6.




Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

29



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##### 






Part III




Item 10.   Directors and Executive Officers of the Registrant

Information concerning this Item is incorporated by reference to the
Companys definitive proxy materials for the Companys 2003 Annual Meeting
of Shareholders.




Item 11.   Executive Compensation

Information concerning this Item is incorporated by reference to the
Companys definitive proxy materials for the Companys 2003 Annual Meeting
of Shareholders.




Item 12.   Security Ownership of Certain Beneficial Owners and Management

Information concerning this Item is incorporated by reference to the
Companys definitive proxy materials for the Companys 2003 Annual Meeting
of Shareholders.




Item 13.   Certain Relationships and Related Transactions

Information concerning this Item is incorporated by reference to the
Companys definitive proxy materials for the Companys 2003 Annual Meeting
of Shareholders.

30



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##### 






Part IV




Item 14.   Controls and Procedures

Disclosure Controls and Procedures

We conducted an evaluation of the effectiveness of the design and operation
of our disclosure controls and procedures (as defined in Rules 13a-14(c) and
15d-14(c) under the Securities Exchange Act of 1934) under the supervision
of our chief executive officer and chief financial officer within 90 days of
the filing date of this Annual Report on Form 10-K. Based on that
evaluation, the chief executive officer and chief financial officer have
concluded that our disclosure controls and procedures are designed to ensure
that information required to be disclosed by us in the reports that we file
or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms and
are operating in an effective manner.

Internal Controls

There were no significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the
date of their most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.




Item 15.   Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)   1.   Financial Statements

The following financial statements are filed as part of this report:

|                                   |                                                                                         |  |      |     | 
|---------------------------------- | --------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                   |                                                                                         |  | Page
|                                   |                                                                                         |  |     
|Independent Auditors Report       |                                                                                         |  | F-1  |    
|Consolidated Financial Statements: |                                                                                         |  |      |    
|                                   | Balance Sheets as of December 31, 2002 and 2001                                         |  |      | F-2 | 
|                                   | Statements of Operations for the years ended December 31, 2002, 2001 and 2000           |  |      | F-3 | 
|                                   | Statements of Stockholders Equity for the years ended December 31, 2002, 2001 and 2000 |  |      | F-4 | 
|                                   | Statement of Cash Flows for the years ended December 31, 2002, 2001 and 2000            |  |      | F-5 | 
|                                   | Notes to Consolidated Financial Statements                                              |  |      | F-7 | 

2. Financial Statements Schedules

None

Financial statement schedules have been omitted because they are not
applicable.

3. Exhibits

Each exhibit listed below in the Index to Exhibits is filed as a part of
this report. Exhibits not incorporated by reference to a prior filing are
designated by an asterisk (*); all exhibits not so designated are
incorporated herein by reference to a prior filing as indicated.

31



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##### 



Index to Exhibits

|            |  |                                                                                                                                                                                                                                                                                                                                         
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                             
|            |  |                                                                                                                                                                                                                                                                                                                                         
|2.1         |  | Memorandum of Understanding regarding the Distribution
between First Union Real Estate Equity and Mortgage Investments
(First Union) and the Registrant (Incorporated by reference to
Exhibit 2.1 to the Companys Registration Statement No. 001-15629
on Form 10/A as filed on March 2, 2000).                                      
|            |  |                                                                                                                                                                                                                                                                                                                                         
|3.1         |  | Amended and Restated Certificate of Incorporation of the
Registrant (Incorporated by reference to Exhibit 3.1 to the
Companys Registration Statement No. 001-15629 on Form 10/A as
filed on March 2, 2000).                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                                                         
|3.2         |  | Amended and Restated By-Laws of the Registrant (Incorporated
by reference to Exhibit 3.2 to the Companys Registration
Statement No. 001-15629 on Form 10/A as filed on March 2, 2000).                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                         
|4.1         |  | Specimen certificate for shares of common stock of the
Registrant (Incorporated by reference to Exhibit 4.1 to the
Companys Registration Statement No. 001-15629 on Form 10/A as
filed on March 2, 2000).                                                                                                                              
|            |  |                                                                                                                                                                                                                                                                                                                                         
|10.1        |  | 2000 Stock Incentive Plan of the Registrant (Incorporated by
reference to Exhibit 10.1 to the Companys Registration Statement
No. 001-15629 on Form 10/A as filed on March 2, 2000).                                                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                                                                                         
|10.2        |  | Indemnification Agreement (Incorporated by reference to
Exhibit 10.4 to the Companys Registration Statement No. 001-15629
on Form 10/A as filed on March 2, 2000) and First Amendment to
Indemnification Agreement. (Incorporated by reference to Exhibit
10.2 to the Companys Annual Report on Form 10-K as filed on March
26, 2002).
|            |  |                                                                                                                                                                                                                                                                                                                                         
|10.3        |  | Huntzinger Employment Agreement (Incorporated by reference
to Exhibit 10.6 to the Companys Registration Statement No.
001-15629 on Form 10/A as filed on March 21, 2000).                                                                                                                                                              
|            |  |                                                                                                                                                                                                                                                                                                                                         
|10.4        |  | Wallner Employment Agreement (Incorporated by reference to
Exhibit 10.7 to the Companys Registration Statement No. 001-15629
on Form 10/A as filed on March 21, 2000).                                                                                                                                                                 
|            |  |                                                                                                                                                                                                                                                                                                                                         
|10.5*       |  | Newsome Employment Agreement (attached herewith).                                                                                                                                                                                                                                                                                       
|            |  |                                                                                                                                                                                                                                                                                                                                         
|10.6        |  | $20.0 million Credit Facility (Incorporated by reference to Exhibit
10.10 to the Companys Annual Report on Form 10-K as filed on
March 28, 2001).                                                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                                                         
|10.7        |  | Restricted Stock Agreement for Annual Stock Grant to
Directors (Incorporated by reference to Exhibit 10.11 to the
Companys Quarterly Report on Form 10-Q as filed on November 13,
2001).                                                                                                                                               
|            |  |                                                                                                                                                                                                                                                                                                                                         
|10.8        |  | Amended and Restated Share Purchase Agreement between
Imperial Parking (U.S.), Inc. and the shareholders of DLC
(Incorporated by reference to Exhibit 2.1 to the Companys Current
Report on Form 8-K as filed on July 12, 2001).                                                                                                       
|            |  |                                                                                                                                                                                                                                                                                                                                         
|10.9        |  | Standstill Agreement between Gotham Partners and the
Registrant (Incorporated by reference to Exhibit 99.2 to the
Companys Current Report on Form 8-K as filed on January 23,
2003).                                                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                                                                                         
|21.1        |  | Subsidiaries of the Registrant (Incorporated by reference to
Exhibit 21.1 to the Companys Quarterly Report on Form 10-Q as
filed on November 13, 2001).                                                                                                                                                                                

(b)  Report on Form 8-K

We did not file any reports on Form 8-K during the last quarter of fiscal
year ended December 31, 2002.

32



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##### 






Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

|                     |  |                                         
|-------------------- |  | ----------------------------------------
|                     |  | IMPERIAL PARKING CORPORATION            
|                     |  |                                         
|                     |  |                                         
|Date: March 26, 2003 |  | By: /s/ J. BRUCE NEWSOME                
|                     |  |                                         
|                     |  | J. Bruce Newsome
Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.

|                                               |  |                                                                                                         |  |               
|---------------------------------------------- |  | ------------------------------------------------------------------------------------------------------- |  | --------------
|Name                                           |  | Title                                                                                                   |  | Date          
|                                               |  |                                                                                                         |  |               
|                                               |  |                                                                                                         | 
|                                               |  |                                                                                                         | 
|
|/s/ CHARLES E. HUNTZINGERCharles E. Huntzinger |  | President, Chief Executive Officer
and Director
(Principal Executive Officer)                           |  | March 26, 2003
|                                              
|                                               |  |                                                                                                         |  |               
|                                              
|/s/ J. BRUCE NEWSOMEJ. Bruce Newsome           |  | Senior Vice President, Finance
and Chief Financial Officer
(Principal Financial and Accounting Officer) |  | March 26, 2003
|                                              
|                                               |  |                                                                                                         |  |               
|                                              
|/s/ WILLIAM A. ACKMANWilliam A. Ackman         |  | Chairman of the Board of Directors                                                                      |  | March 26, 2003
|                                              
|                                               |  |                                                                                                         |  |               
|                                              
|/s/ DANIEL P. FRIEDMANDaniel P. Friedman       |  | Vice-Chairman of the Board of Directors                                                                 |  | March 26, 2003
|                                              
|                                               |  |                                                                                                         |  |               
|                                              
|/s/ TALTON R. EMBRYTalton R. Embry             |  | Director                                                                                                |  | March 26, 2003
|                                              
|                                               |  |                                                                                                         |  |               
|                                              
|/s/ ARMAND E. LASKYArmand E. Lasky             |  | Director                                                                                                |  | March 26, 2003
|                                              
|                                               |  |                                                                                                         |  |               
|                                              
|/s/ BETH A. STEWARTBeth A. Stewart             |  | Director                                                                                                |  | March 26, 2003
|                                              
|                                               |  |                                                                                                         |  |               
|                                              
|/s/ MARY ANN TIGHEMary Ann Tighe               |  | Director                                                                                                |  | March 26, 2003
|                                              
|                                               |  |                                                                                                         |  |               
|                                              
|/s/ DAVID J. WOODSDavid J. Woods               |  | Director                                                                                                |  | March 26, 2003

33



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##### 






CERTIFICATION PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002

I, Charles Huntzinger, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of Imperial Parking
Corporation;                                                                                                                                                                                                                                        
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                               



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the
audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  |                                                                                                                                                                                                                                                                                                                                                                                       

|                     |  |                                           
|-------------------- |  | ------------------------------------------
|Date: March 26, 2003 |  | /s/ Charles Huntzinger                    
|                     |  |                                           
|                     |  | Charles Huntzinger
Chief Executive Officer

34



---



##### 



CERTIFICATION PURSUANT TO SECTION 302(a)
OF THE SARBANES-OXLEY ACT OF 2002

I, J. Bruce Newsome, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of Imperial Parking
Corporation;                                                                                                                                                                                                                                        
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                               



| | a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which
this annual report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the
audit committee of registrants board of directors (or persons
performing the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  |                                                                                                                                                                                                                                                                                                                                                                                       

|                     |  |                                         
|-------------------- |  | ----------------------------------------
|Date: March 26, 2003 |  | /s/ J. Bruce Newsome                    
|                     |  |                                         
|                     |  | J. Bruce Newsome
Chief Financial Officer

35



---



##### 






AUDITORS REPORT TO THE SHAREHOLDERS

We have audited the consolidated balance sheets of Imperial Parking Corporation
as at December 31, 2002 and 2001 and the related consolidated statements of
operations, stockholders equity and cash flows for each of the years in the
three year period ended December 31, 2002. These consolidated financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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 Imperial Parking
Corporation as at December 31, 2002 and 2001 and the results of its operations
and its cash flows for each of the years in the three year period ended
December 31, 2002, in conformity with accounting principles generally accepted
in the United States of America.

As discussed in note 2(i) to the consolidated financial statements, effective
January 1, 2002, the Company adopted the provisions of Statement of Financial
Accounts Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, as
required for goodwill and intangible assets resulting from business
combinations consummated prior to July 1, 2001.

KPMG LLP

Chartered Accountants

Vancouver, Canada

January 31, 2003







F-1



---



##### 



IMPERIAL PARKING CORPORATION
Consolidated Balance Sheets
(Stated in thousands of United States dollars)

December 31, 2002 and 2001

|                                         |                                                  |   |        |        |      |   |        |        | 
|---------------------------------------- | ------------------------------------------------ | - | ------ | ------ | ---- | - | ------ | ------ | 
|                                         |                                                  |   | 2002   |        | 2001
|                                         |                                                  |   |        |        |     
|Assets                                   |                                                  |   |        |        |      |   |        |       
|Current assets:                          |                                                  |   |        |        |      |   |        |       
|                                         | Cash and cash equivalents                        |   | $      | 15,138 |      |   | $      | 10,991 | 
|                                         | Accounts receivable                              |   |        | 6,408  |      |   |        | 6,875  | 
|                                         | Current portion of recoverable development costs |   |        | 781    |      |   |        | 880    | 
|                                         | Inventory                                        |   |        | 960    |      |   |        | 781    | 
|                                         | Deposits and prepaid expenses                    |   |        | 1,347  |      |   |        | 1,135  | 
|                                         | Deferred income taxes (note 10)                  |   |        | 1,034  |      |   |        | 2,412  | 
|                                         |                                                  |   |        |        |      |   |        |        | 
|                                         |                                                  |   | 25,668 |        |      |   | 23,074 |       
|Recoverable development costs            |                                                  |   | 2,435  |        |      |   | 3,940  |       
|Fixed assets (note 4)                    |                                                  |   | 14,350 |        |      |   | 14,661 |       
|Management and lease agreements (note 5) |                                                  |   | 867    |        |      |   | 336    |       
|Other assets (note 6)                    |                                                  |   | 3,895  |        |      |   | 2,975  |       
|Goodwill (note 7)                        |                                                  |   | 45,213 |        |      |   | 44,259 |       
|                                         |                                                  |   |        |        |      |   |        |        | 
|                                         |                                                  | $ | 92,428 |        |      | $ | 89,245 |       
|                                         |                                                  |   |        |        |      |   |        |        | 

|                                     |                                                             |                                                                   |        |        |        |      |        |        |        |  
|------------------------------------ | ----------------------------------------------------------- | ----------------------------------------------------------------- | ------ | ------ | ------ | ---- | ------ | ------ | ------ | -
|                                     |                                                             |                                                                   |        | 2002   |        | 2001
|                                     |                                                             |                                                                   |        |        |        |     
|Liabilities and Stockholders Equity |                                                             |                                                                   |        |        |        |      |        |       
|Current liabilities:                 |                                                             |                                                                   |        |        |        |      |        |       
|                                     | Management agreements payable                               |                                                                   | $      | 5,889  |        |      | $      | 6,434  |       
|                                     | Trade accounts payable and other accrued liabilities        |                                                                   |        | 7,479  |        |      |        | 5,861  |       
|                                     | Payable to employees and former employees                   |                                                                   |        | 2,302  |        |      |        | 1,936  |       
|                                     | Sales tax payable                                           |                                                                   |        | 1,542  |        |      |        | 1,367  |       
|                                     | Bank indebtedness (note 8)                                  |                                                                   |        | 3,349  |        |      |        | 3,900  |       
|                                     | Current portion of other long-term liabilities              |                                                                   |        | 1,581  |        |      |        | 1,204  |       
|                                     | Deferred revenue                                            |                                                                   |        | 1,985  |        |      |        | 2,081  |       
|                                     |                                                             |                                                                   |        |        |        |      |        |        |       
|                                     |                                                             |                                                                   | 24,127 |        |        |      | 22,783 |       
|Other long-term liabilities (note 9) |                                                             |                                                                   | 4,139  |        |        |      | 4,921  |       
|Deferred income taxes (note 10)      |                                                             |                                                                   | 2,690  |        |        |      | 3,280  |       
|                                     |                                                             |                                                                   |        |        |        |      |        |        |       
|                                     |                                                             |                                                                   | 30,956 |        |        |      | 30,984 |       
|Stockholders equity (note 11):      |                                                             |                                                                   |        |        |        |      |        |       
|                                     | Common stock $0.01 par value; 10,000,000 shares authorized: |                                                                   |        |        |        |      |        |        |       
|                                     |                                                             | 1,822,639 (2001 - 1,818,017 shares) shares issued
and outstanding |        |        | 18     |      |        |        | 18     |  
|                                     | Additional paid-in capital                                  |                                                                   |        | 60,730 |        |      |        | 60,718 |       
|                                     | Retained earnings                                           |                                                                   |        | 4,504  |        |      |        | 2,183  |       
|                                     | Accumulated other comprehensive loss:                       |                                                                   |        |        |        |      |        |        |       
|                                     |                                                             | Foreign currency translation adjustment                           |        |        | (3,780 | )    |        |        | (4,658 | )
|                                     |                                                             |                                                                   |        |        |        |      |        |        |       
|                                     |                                                             |                                                                   | 61,472 |        |        |      | 58,261 |       
|                                     |                                                             |                                                                   |        |        |        |      |        |        |       
|                                     |                                                             | $                                                                 | 92,428 |        |        | $    | 89,245 |       
|                                     |                                                             |                                                                   |        |        |        |      |        |        |       

Commitments and contingencies (note 16)
Subsequent events (note 18)

See accompanying notes to consolidated financial statements.



F-2



---



##### 



IMPERIAL PARKING CORPORATION
Consolidated Statements of Operations
(Stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000

|                                   |                                                                  |   |        |         |      |   |        |         |   |   |        |        |  
|---------------------------------- | ---------------------------------------------------------------- | - | ------ | ------- | ---- | - | ------ | ------- | - | - | ------ | ------ | -
|                                   |                                                                  |   | 2002   |         | 2001 |   | 2000  
|                                   |                                                                  |   |        |         |      |   |       
|Revenues:                          |                                                                  |   |        |         |      |   |        |         |   |   |        |       
|                                   | Parking and management contract                                  |   | $      | 109,351 |      |   | $      | 90,548  |   |   | $      | 53,305 |  
|                                   | Reimbursement of management contract expenses                    |   |        | 30,491  |      |   |        | 27,350  |   |   |        | 19,573 |  
|                                   |                                                                  |   |        |         |      |   |        |         |   |   |        |        |  
|                                   | Total revenues                                                   |   |        | 139,842 |      |   |        | 117,898 |   |   |        | 72,878 |  
|Direct costs:                      |                                                                  |   |        |         |      |   |        |         |   |   |        |       
|                                   | Cost of parking and management contracts                         |   |        | 87,160  |      |   |        | 70,027  |   |   |        | 39,818 |  
|                                   | Reimbursed management contract expenses                          |   |        | 30,491  |      |   |        | 27,350  |   |   |        | 19,573 |  
|                                   |                                                                  |   |        |         |      |   |        |         |   |   |        |        |  
|                                   | Total direct costs                                               |   |        | 117,651 |      |   |        | 97,377  |   |   |        | 59,391 |  
|                                   |                                                                  |   |        |         |      |   |        |         |   |   |        |        |  
|Gross margin                       |                                                                  |   | 22,191 |         |      |   | 20,521 |         |   |   | 13,487 |       
|Other expenses:                    |                                                                  |   |        |         |      |   |        |         |   |   |        |       
|                                   | General and administrative                                       |   |        | 15,821  |      |   |        | 14,362  |   |   |        | 8,758  |  
|                                   | Depreciation and amortization of management
and lease agreements |   |        | 2,397   |      |   |        | 2,523   |   |   |        | 2,009  |  
|                                   | Amortization of goodwill                                         |   |        |        |      |   |        | 2,206   |   |   |        | 1,701  |  
|                                   | Equity share of limited liability company losses                 |   |        | 116     |      |   |        | 168     |   |   |        |       |  
|                                   |                                                                  |   |        |         |      |   |        |         |   |   |        |        |  
|                                   |                                                                  |   | 18,334 |         |      |   | 19,259 |         |   |   | 12,468 |       
|                                   |                                                                  |   |        |         |      |   |        |         |   |   |        |        |  
|Operating income                   |                                                                  |   | 3,857  |         |      |   | 1,262  |         |   |   | 1,019  |       
|Other income (expense):            |                                                                  |   |        |         |      |   |        |         |   |   |        |       
|                                   | Interest income                                                  |   |        | 514     |      |   |        | 577     |   |   |        | 744    |  
|                                   | Interest income on notes receivable from
related companies       |   |        |        |      |   |        |        |   |   |        | 1,035  |  
|                                   | Interest expense on note payable to First Union                  |   |        |        |      |   |        |        |   |   |        | (786   | )
|                                   | Other interest expense                                           |   |        | (420    | )    |   |        | (298    | ) |   |        |       |  
|                                   |                                                                  |   |        |         |      |   |        |         |   |   |        |        |  
|                                   |                                                                  |   | 94     |         |      |   | 279    |         |   |   | 993    |       
|                                   |                                                                  |   |        |         |      |   |        |         |   |   |        |        |  
|Earnings before income taxes       |                                                                  |   | 3,951  |         |      |   | 1,541  |         |   |   | 2,012  |       
|Income taxes (note 10):            |                                                                  |   |        |         |      |   |        |         |   |   |        |       
|                                   | Current                                                          |   |        | 346     |      |   |        | 173     |   |   |        | 272    |  
|                                   | Deferred                                                         |   |        | 1,284   |      |   |        | 649     |   |   |        |       |  
|                                   |                                                                  |   |        |         |      |   |        |         |   |   |        |        |  
|                                   |                                                                  |   | 1,630  |         |      |   | 822    |         |   |   | 272    |       
|                                   |                                                                  |   |        |         |      |   |        |         |   |   |        |        |  
|Net earnings                       |                                                                  |   | 2,321  |         |      |   | 719    |         |   |   | 1,740  |       
|Other comprehensive income (loss): |                                                                  |   |        |         |      |   |        |         |   |   |        |       
|                                   | Foreign currency translation adjustments                         |   |        | 878     |      |   |        | (3,214  | ) |   |        | (782   | )
|                                   |                                                                  |   |        |         |      |   |        |         |   |   |        |        |  
|Comprehensive income (loss)        |                                                                  | $ | 3,199  |         |      | $ | (2,495 | )       |   | $ | 958    |       
|                                   |                                                                  |   |        |         |      |   |        |         |   |   |        |        |  
|Earnings per share (note 12)       |                                                                  |   |        |         |      |   |        |         |   |   |        |       
|                                   | Basic                                                            |   | $      | 1.27    |      |   | $      | 0.40    |   |   | $      | 0.83   |  
|                                   | Diluted                                                          |   | $      | 1.21    |      |   | $      | 0.39    |   |   | $      | 0.83   |  
|                                   |                                                                  |   |        |         |      |   |        |         |   |   |        |        |  

See accompanying notes to consolidated financial statements.

F-3



---



##### 



IMPERIAL PARKING CORPORATION
Consolidated Statements of Stockholders Equity
(Stated in thousands of United States dollars)

Years ended December 31, 2002, 2001 and 2000

|                                                       |                                                                                |  |              |   |            |   |          |   |                  |   |            |        |       |   |         |   |  |   |        |   |  |   |        |        | 
|------------------------------------------------------ | ------------------------------------------------------------------------------ |  | ------------ | - | ---------- | - | -------- | - | ---------------- | - | ---------- | ------ | ----- | - | ------- | - |  | - | ------ | - |  | - | ------ | ------ | 
|                                                       |                                                                                |  | Common stock |   | Additional |   | Retained |   | Foreign currency |   |            |        |      
|                                                       |                                                                                |  |              |   | paid-in    |   | earnings |   | translation      |   |            |        |      
|                                                       |                                                                                |  | Number       |   | Amount     |   | capital  |   | (deficit)        |   | adjustment |        | Total
|                                                       |                                                                                |  |              |   |            |   |          |   |                  |   |            |        |      
|Balance, December 31, 1999                             |                                                                                |  |             |   |            | $ |         |   |                  | $ | 17,017     |        |       | $ | (14,984 | ) |  | $ | (662   | ) |  | $ | 1,371  |       
|Contributions by First Union:                          |                                                                                |  |              |   |            |   |          |   |                  |   |            |        |       |   |         |   |  |   |        |   |  |   |        |       
|                                                       | To repay outstanding credit facility                                           |  |              |  |            |   |          |  |                  |   |            | 26,369 |       |   |         |  |  |   |        |  |  |   |        | 26,369 | 
|                                                       | Interest in limited liability company                                          |  |              |  |            |   |          |  |                  |   |            | 3,413  |       |   |         |  |  |   |        |  |  |   |        | 3,413  | 
|                                                       | Cash for working capital and to fund future
costs of limited liability company |  |              |  |            |   |          |  |                  |   |            | 5,879  |       |   |         |  |  |   |        |  |  |   |        | 5,879  | 
|                                                       | In settlement of obligations to related parties                                |  |              |  |            |   |          |  |                  |   |            | 8,020  |       |   |         |  |  |   |        |  |  |   |        | 8,020  | 
|                                                       | To acquire net assets of FUMI parking related business                         |  |              |  |            |   |          |  |                  |   |            | 18,604 |       |   |         |  |  |   |        |  |  |   |        | 18,604 | 
|Net earnings                                           |                                                                                |  |             |   |            |   |         |   |                  |   |           |        |       |   | 1,740   |   |  |   |       |   |  |   | 1,740  |       
|Foreign currency translation adjustment                |                                                                                |  |             |   |            |   |         |   |                  |   |           |        |       |   |        |   |  |   | (782   | ) |  |   | (782   | )     
|Capitalization of Impark, par value of $0.01 per share |                                                                                |  | 2,121,318    |   |            |   | 21       |   |                  |   | (14,708    | )      |       |   | 14,708  |   |  |   |       |   |  |   | 21     |       
|Shares issued to directors                             |                                                                                |  | 6,444        |   |            |   |         |   |                  |   | 114        |        |       |   |        |   |  |   |       |   |  |   | 114    |       
|Purchase of fractional shares                          |                                                                                |  |             |   |            |   |         |   |                  |   | (24        | )      |       |   |        |   |  |   |       |   |  |   | (24    | )     
|                                                       |                                                                                |  |              |   |            |   |          |   |                  |   |            |        |       |   |         |   |  |   |        |   |  |   |        |       
|                                                       |                                                                                |  | 2,127,762    |   |            |   | 21       |   |                  |   | 64,684     |        |       |   | 1,464   |   |  |   | (1,444 | ) |  |   | 64,725 |       
|Shares repurchased                                     |                                                                                |  | (284,762     | ) |            |   | (3       | ) |                  |   | (4,693     | )      |       |   |        |   |  |   |       |   |  |   | (4,696 | )     
|                                                       |                                                                                |  |              |   |            |   |          |   |                  |   |            |        |       |   |         |   |  |   |        |   |  |   |        |       
|Balance, December 31, 2000                             |                                                                                |  | 1,843,000    |   |            |   | 18       |   |                  |   | 59,991     |        |       |   | 1,464   |   |  |   | (1,444 | ) |  |   | 60,029 |       
|Net earnings for the period                            |                                                                                |  |             |   |            |   |         |   |                  |   |           |        |       |   | 719     |   |  |   |       |   |  |   | 719    |       
|Foreign currency translation adjustment in period      |                                                                                |  |             |   |            |   |         |   |                  |   |           |        |       |   |        |   |  |   | (3,214 | ) |  |   | (3,214 | )     
|Stock-based compensation                               |                                                                                |  |             |   |            |   |         |   |                  |   | 1,186      |        |       |   |        |   |  |   |       |   |  |   | 1,186  |       
|Options exercised                                      |                                                                                |  | 5,875        |   |            |   |         |   |                  |   | 84         |        |       |   |        |   |  |   |       |   |  |   | 84     |       
|Shares repurchased                                     |                                                                                |  | (30,858      | ) |            |   |         |   |                  |   | (543       | )      |       |   |        |   |  |   |       |   |  |   | (543   | )     
|                                                       |                                                                                |  |              |   |            |   |          |   |                  |   |            |        |       |   |         |   |  |   |        |   |  |   |        |       
|Balance, December 31, 2001                             |                                                                                |  | 1,818,017    |   |            |   | 18       |   |                  |   | 60,718     |        |       |   | 2,183   |   |  |   | (4,658 | ) |  |   | 58,261 |       
|Net earnings for the period                            |                                                                                |  |             |   |            |   |         |   |                  |   |           |        |       |   | 2,321   |   |  |   |       |   |  |   | 2,321  |       
|Foreign currency translation adjustment in period      |                                                                                |  |             |   |            |   |         |   |                  |   |           |        |       |   |        |   |  |   | 878    |   |  |   | 878    |       
|Stock-based compensation                               |                                                                                |  |             |   |            |   |         |   |                  |   | (65        | )      |       |   |        |   |  |   |       |   |  |   | (65    | )     
|Options exercised                                      |                                                                                |  | 4,622        |   |            |   |         |   |                  |   | 77         |        |       |   |        |   |  |   |       |   |  |   | 77     |       
|                                                       |                                                                                |  |              |   |            |   |          |   |                  |   |            |        |       |   |         |   |  |   |        |   |  |   |        |       
|Total stockholders equity, December 31, 2002          |                                                                                |  | 1,822,639    |   |            | $ | 18       |   |                  | $ | 60,730     |        |       | $ | 4,504   |   |  | $ | (3,780 | ) |  | $ | 61,472 |       
|                                                       |                                                                                |  |              |   |            |   |          |   |                  |   |            |        |       |   |         |   |  |   |        |   |  |   |        |       

See accompanying notes to consolidated financial statements.

F-4



---



##### 



IMPERIAL PARKING CORPORATION
Consolidated Statements of Cash Flows
(Stated in thousands of United States dollars)

Years ended December 31, 2002, 2001 and 2000

|                            |                                                                               |                                                                  |        |        |       |      |        |        |        |   |         |         |        |  
|--------------------------- | ----------------------------------------------------------------------------- | ---------------------------------------------------------------- | ------ | ------ | ----- | ---- | ------ | ------ | ------ | - | ------- | ------- | ------ | -
|                            |                                                                               |                                                                  |        | 2002   |       | 2001 |        | 2000  
|                            |                                                                               |                                                                  |        |        |       |      |        |       
|Cash provided by (used in): |                                                                               |                                                                  |        |        |       |      |        |        |        |   |         |        
|Operations:                 |                                                                               |                                                                  |        |        |       |      |        |        |        |   |         |        
|                            | Net earnings                                                                  |                                                                  | $      | 2,321  |       |      | $      | 719    |        |   | $       | 1,740   |       
|                            | Adjustments to reconcile net income to cash
provided by operating activities: |                                                                  |        |        |       |      |        |        |        |   |         |         |       
|                            |                                                                               | Depreciation and amortization of
management and lease agreements |        |        | 2,397 |      |        |        | 2,523  |   |         |         | 2,009  |  
|                            |                                                                               | Amortization of goodwill                                         |        |        |      |      |        |        | 2,206  |   |         |         | 1,701  |  
|                            |                                                                               | Recovery of recoverable development costs                        |        |        | 640   |      |        |        | 1,057  |   |         |         | 811    |  
|                            |                                                                               | Equity share of limited liability company losses                 |        |        | 116   |      |        |        | 168    |   |         |         |       |  
|                            |                                                                               | Non-cash interest expense                                        |        |        | 128   |      |        |        | 154    |   |         |         |       |  
|                            |                                                                               | Rent expense in excess of lease payments                         |        |        | 370   |      |        |        |       |   |         |         |       |  
|                            |                                                                               | Stock-based compensation                                         |        |        | (65   | )    |        |        | 780    |   |         |         | 114    |  
|                            |                                                                               | Deferred income taxes                                            |        |        | 1,284 |      |        |        | 649    |   |         |         |       |  
|                            |                                                                               | Interest income capitalized to note
receivable                   |        |        |      |      |        |        |       |   |         |         | (697   | )
|                            |                                                                               | Interest expense capitalized to note
payable to First Union      |        |        |      |      |        |        |       |   |         |         | 786    |  
|                            | Changes in non-cash working capital items:                                    |                                                                  |        |        |       |      |        |        |        |   |         |         |       
|                            |                                                                               | Restricted cash                                                  |        |        |      |      |        |        | 2,688  |   |         |         | (2,688 | )
|                            |                                                                               | Accounts receivable                                              |        |        | 843   |      |        |        | (1,026 | ) |         |         | (714   | )
|                            |                                                                               | Inventory                                                        |        |        | (171  | )    |        |        | (80    | ) |         |         | 135    |  
|                            |                                                                               | Deposits and prepaid expenses                                    |        |        | (214  | )    |        |        | (126   | ) |         |         | (156   | )
|                            |                                                                               | Management agreements payable                                    |        |        | (591  | )    |        |        | 270    |   |         |         | (397   | )
|                            |                                                                               | Trade accounts payable and other
accrued liabilities             |        |        | 3,082 |      |        |        | 879    |   |         |         | 571    |  
|                            |                                                                               | Payable to employees and former
employees                        |        |        | 348   |      |        |        | (486   | ) |         |         | (11    | )
|                            |                                                                               | Sales tax payable                                                |        |        | 164   |      |        |        | (97    | ) |         |         | (1,578 | )
|                            |                                                                               | Deferred revenue                                                 |        |        | (106  | )    |        |        | 444    |   |         |         | (4,211 | )
|                            |                                                                               | Interest receivable on notes receivable
from related parties     |        |        |      |      |        |        |       |   |         |         | 8      |  
|                            |                                                                               | Receivables from related parties                                 |        |        |      |      |        |        |       |   |         |         | (127   | )
|                            |                                                                               |                                                                  |        |        |       |      |        |        |        |   |         |         |       
|                            |                                                                               |                                                                  | 10,546 |        |       |      | 10,722 |        |        |   | (2,704  | )      
|Investments:                |                                                                               |                                                                  |        |        |       |      |        |        |        |   |         |        
|                            | Purchase of fixed assets                                                      |                                                                  |        | (1,675 | )     |      |        | (2,624 | )      |   |         | (1,115  | )     
|                            | Acquisition of parking business, net of cash
acquired (note 3(a))             |                                                                  |        | (1,836 | )     |      |        | (4,601 | )      |   |         | (1,219  | )     
|                            | Change in other assets                                                        |                                                                  |        | (233   | )     |      |        | (686   | )      |   |         | 1,597   |       
|                            | Increase in recoverable development costs                                     |                                                                  |        | (1,491 | )     |      |        | (266   | )      |   |         | (1,852  | )     
|                            | Acquisition of management and lease agreements                                |                                                                  |        | (828   | )     |      |        |       |        |   |         |        |       
|                            | Acquisition of minority interest in FUMI parking
related business             |                                                                  |        |       |       |      |        |       |        |   |         | (453    | )     
|                            | Repayment of outstanding credit facilities                                    |                                                                  |        |       |       |      |        |       |        |   |         | (26,369 | )     
|                            | Cash portion of business acquired                                             |                                                                  |        |       |       |      |        |       |        |   |         | 8,123   |       
|                            |                                                                               |                                                                  |        |        |       |      |        |        |        |   |         |         |       
|                            |                                                                               |                                                                  | (6,063 | )      |       |      | (8,177 | )      |        |   | (21,288 | )      

F-5



---



##### 



IMPERIAL PARKING CORPORATION
Consolidated Statements of Cash Flows, (Continued)
(Stated in thousands of United States dollars)

Years ended December 31, 2002, 2001 and 2000

|                                                             |                                 |                                                              |        |      |     |      |        |       |   |   |        |        |     | 
|------------------------------------------------------------ | ------------------------------- | ------------------------------------------------------------ | ------ | ---- | --- | ---- | ------ | ----- | - | - | ------ | ------ | --- | 
|                                                             |                                 |                                                              |        | 2002 |     | 2001 |        | 2000 
|                                                             |                                 |                                                              |        |      |     |      |        |      
|Financing:                                                   |                                 |                                                              |        |      |     |      |        |       |   |   |        |       
|                                                             | Options exercised               |                                                              |        | 77   |     |      |        | 84    |   |   |        |       |    
|                                                             | Proceeds from bank indebtedness |                                                              |        |     |     |      |        | 3,900 |   |   |        |       |    
|                                                             | Repayment of bank indebtedness  |                                                              |        | (552 | )   |      |        |      |   |   |        |       |    
|                                                             | Change in other liabilities     |                                                              |        | 122  |     |      |        | (75   | ) |   |        | (25    | )  
|                                                             | Purchase of common shares       |                                                              |        |     |     |      |        | (543  | ) |   |        | (4,720 | )  
|                                                             | Cash contributions              |                                                              |        |     |     |      |        |      |   |   |        | 32,701 |    
|                                                             |                                 |                                                              |        |      |     |      |        |       |   |   |        |        |    
|                                                             |                                 |                                                              | (353   | )    |     |      | 3,366  |       |   |   | 27,956 |       
|Effect of exchange rate changes on cash and cash
equivalents |                                 |                                                              | 17     |      |     |      | (535   | )     |   |   | (333   | )     
|                                                             |                                 |                                                              |        |      |     |      |        |       |   |   |        |        |    
|Increase in cash and cash equivalents                        |                                 |                                                              | 4,147  |      |     |      | 5,376  |       |   |   | 3,631  |       
|Cash and cash equivalents, beginning of year                 |                                 |                                                              | 10,991 |      |     |      | 5,615  |       |   |   | 1,984  |       
|                                                             |                                 |                                                              |        |      |     |      |        |       |   |   |        |        |    
|Cash and cash equivalents, end of year                       |                                 | $                                                            | 15,138 |      |     | $    | 10,991 |       |   | $ | 5,615  |       
|                                                             |                                 |                                                              |        |      |     |      |        |       |   |   |        |        |    
|Supplementary information:                                   |                                 |                                                              |        |      |     |      |        |       |   |   |        |       
|                                                             | Interest paid                   |                                                              | $      | 129  |     |      | $      | 87    |   |   | $      |       |    
|                                                             | Income taxes paid               |                                                              |        | 402  |     |      |        | 254   |   |   |        | 491    |    
|                                                             | Non-cash transactions:          |                                                              |        |      |     |      |        |       |   |   |        |        |    
|                                                             |                                 | Participation rent payable applied to reduce
note receivable |        |      | 829 |      |        |       |  |   |        |        |    | 
|                                                             |                                 | Interest income capitalized to notes
receivable              |        |      |    |      |        |       |  |   |        |        | 697 | 
|                                                             |                                 | Interest expense capitalized to note payable                 |        |      |    |      |        |       |  |   |        |        | 786 | 
|                                                             |                                 |                                                              |        |      |     |      |        |       |   |   |        |        |    

See accompanying notes to consolidated financial statements.

F-6



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|1. |  | Operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Imperial Parking Corporation (the Company) is the corporation, which
resulted from the combination, on March 27, 2000, of the Canadian parking
facilities of First Union Real Estate Equity and Mortgage Investments (the
FUR Parking Business) and the parking related businesses of First Union
Management, Inc. (the FUMI Parking Business) which consisted of the
following:                                                                                                    
|  
|   |  | FUR Parking Business  The FUR Parking Business, constituting the parking
assets and operations of First Union Real Estate Equity and Mortgage
Investments (First Union), consisted primarily of 15 owned parking
properties in Canada. Since April 1997, subsidiaries of First Union
operated this business, including leasing the properties to First Union
Management, Inc. (FUMI) for operations and management.                                                                  
|  
|   |  | FUMI Parking Business  The FUMI Parking Business consisted of the parking
services and related ancillary activities that have been continued into the
Company. Since April 1997, subsidiaries of FUMI carried on these
activities. The continuing operations of FUMIs indirect subsidiaries,
Imperial Parking Limited and Impark Services Ltd., consisted of operating
and managing parking facilities in Canada and the United States and carrying
on other parking related activities.
|  
|   |  | For financial reporting purposes, the Company is considered to be a
continuation of the FUR Parking Business and the fiscal 2000 financial
statements reflect its operations consolidated with those of the FUMI
Parking Business from the date of its acquisition, which has been accounted
for with effect from the close of business on March 31, 2000 (note 3(b)).                                                                                                                    
|  
|2. |  | Significant accounting policies:                                                                                                                                                                                                                                                                                                                                                                                                                                                          



| | (a) |  | Basis of presentation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | These financial statements are prepared on a consolidated basis to
present the financial positions and results of operations of the Company
and its subsidiaries all of which are wholly owned. The results of
parking business acquired in the year are included in these financial
statements from the date of their acquisition. All significant
intercompany balances and transactions have been eliminated. Limited
liability companies over which the Company exercises significant
influence are accounted for by the equity method.
|
| |     |  | These consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States.                                                                                                                                                                                                                                                                                                                                                                                                

F-7



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##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|2. |  | Significant accounting policies (continued):
|-- |  | --------------------------------------------



| | (b) |  | Use of estimates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The preparation of financial statements in conformity with United States
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 reporting period. Significant areas requiring the
use of management estimates relate to assessment of the outcome of
contingencies, valuation of goodwill, estimation of the useful lives of
fixed assets and management and lease agreements in determining
depreciation and amortization, and the extent and timing of
recoverability of deferred tax assets. Actual amounts may differ from
the estimates applied in the preparation of these financial statements.
|
| | (c) |  | Cash equivalents:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |     |  | Cash equivalents includes certificates of deposit and other highly liquid
instruments with original terms to maturity of three months or less when
acquired.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | (d) |  | Inventory:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |     |  | The Companys inventory consists of equipment parts and supplies and is
recorded at the lower of cost, determined on a first-in, first-out basis,
and replacement cost.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| | (e) |  | Fixed assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |     |  | Fixed assets are recorded at cost. Depreciation and amortization is
provided as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

|                           |  |                   |  |              
|-------------------------- |  | ----------------- |  | -------------
|Asset                      |  | Basis             |  | Rate         
|                           |  |                   |  |              
|Buildings and improvements |  | straight-line     |  | over 40 years
|Furniture and fixtures     |  | declining-balance |  | 20%          
|Equipment                  |  | declining-balance |  | 30%          
|Automotive equipment       |  | declining-balance |  | 30%          



| |  |  | Leasehold improvements are depreciated straight-line over the shorter of
the lease term or the estimated useful life of the asset. Routine
maintenance and repairs are expensed as incurred.
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-8



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|2. |  | Significant accounting policies (continued):
|-- |  | --------------------------------------------



| | (f) |  | Management and lease agreements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Management and lease agreements are recorded at cost and represent the
Companys investment in parking lot agreements. Cost is based upon the
estimated fair value of the agreements at the time of acquisition
determined using the discounted estimated future cash flow from these
agreements. Amortization is provided over the lives of the related
agreements in amounts equal to the discounted future cash flows used to
measure their original cost.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (g) |  | Impairment of fixed assets and management and lease agreements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |     |  | The Company assesses impairment of long-lived assets including certain
identifiable intangibles whenever events or changes in circumstances
indicate that the carrying value of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison
of the carrying value of the asset to future net cash flows expected to
be generated by the asset. If such assets are considered to be impaired,
the impairment to be recognized is measured by the amount by which the
carrying amount of the asset exceeds its fair value. Assets to be
disposed of are reported at the lower of their carrying value or fair
value less costs to sell.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (h) |  | Recoverable development costs:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |     |  | Recoverable development costs are recoverable from landlords on a
straight-line basis over the term of the related parking lot leases which
range from 1.5 to 9.5 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (i) |  | Goodwill:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |     |  | Goodwill represents the excess of cost over the value assigned to the net
assets acquired on business acquisitions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |     |  | In June 2001, the FASB issued SFAS No.141, Business Combinations, and
SFAS No.142, Goodwill and Other Intangible Assets. SFAS No.141
specifies criteria that intangible assets acquired in a business
combination must meet to be recognized and reported separately from
goodwill. SFAS No.142 requires, in part, that recorded goodwill be
tested at least annually for impairment rather than being amortized over
the estimated useful life of the underlying business. The Company
adopted the provisions of SFAS No.141 as of July 1, 2001, and SFAS No.142
effective January 1, 2002. Goodwill acquired in a purchase business
combination completed after June 30, 2001, but before SFAS No.142 was
adopted in full, was not amortized. Goodwill acquired in business
combinations completed before July 1, 2001 continued to be amortized and
tested for impairment prior to the full adoption of SFAS No.142.
Accordingly, amortization of all goodwill ceased as of January 1, 2002.
Upon adoption of SFAS No.142, the Company evaluated its existing
intangible assets and goodwill that were acquired in purchase business
combinations, and considered whether any necessary reclassifications were
required in order to conform with the new classification criteria in SFAS
No.141 for recognition separate from goodwill. No such reclassifications
were required.

F-9



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|2. |  | Significant accounting policies (continued):
|-- |  | --------------------------------------------



| | (i) |  | Goodwill (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | In connection with goodwill impairment evaluation, SFAS No.142 requires
the Company to perform an assessment of whether there is an indication
that goodwill is impaired as of the date of adoption. To accomplish this
the Company identified its reporting units and determines the carrying
value of each reporting unit by assigning the assets and liabilities,
including the existing goodwill and intangible assets, to those reporting
units as of the date of adoption. As a result of this process, the
Company has identified reporting units by geographical operations for
Canada and the United States. Within the United States, separate
reporting units have been identified based on operational characteristics
and, as they are one level below an operating segment, discrete financial
information exists and segment management directly reviews these units.
The Company has determined the fair value of its reporting units and
compared them to each reporting units carrying amount. As the fair
value of each of the companys reporting units exceeded their carrying
value, there was no indication that any reporting units goodwill was
impaired. Therefore the Company was not required to perform the second
step of the transitional impairment test. The Company completes an
annual test of impairment in the book value of goodwill on November 30 of
each fiscal year, commencing in 2002. The completion of the annual
impairment test indicated that no impairment provision against goodwill
in any of the Companys reporting units is required.
|
| | (j) |  | Income taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |     |  | Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to (i) differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and (ii) operating loss and tax credit carry
forwards. 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
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. To
the extent that it is not more likely than not that deferred tax assets
will be realized, a valuation allowance is provided.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| | (k) |  | Revenue recognition:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |     |  | Revenues consist of the parking revenues from managed and leased
locations. Revenues from managed locations represent revenues (both
fixed fees and additional payments based upon parking revenues) from
facilities managed for other parties and miscellaneous management fees
for accounting, insurance and other ancillary services such as consulting
and transportation management services. Parking and management contract
revenues are recognized when earned in accordance with the terms of the
agreements. Revenues from leased locations are recognized in accordance
with the terms of the agreements. Deferred revenue primarily represents
revenue received in advance of its due date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

F-10



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##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|2. |  | Significant accounting policies (continued):
|-- |  | --------------------------------------------



| | (k) |  | Revenue recognition (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Effective January 1, 2002, the Company adopted the provisions of Emerging
Issues Task Force issue No. 01-14 (EITF 01-14), Income Statement
Classification of Reimbursement of Out-of-Pocket Expenses Incurred.
EITF 01-14 requires that the Company classify the reimbursement of costs
incurred on behalf of managed parking facilities as revenue from
reimbursement of management contract expenses, and the costs incurred on
behalf of the owners of managed parking facilities as reimbursed
management contract expenses. These costs relate primarily to payroll
and other operating costs of managed parking facilities where the Company
is the manager of the facility. Comparative financial statements for
prior periods have been reclassified to conform with the presentation
adopted in the 2002 financial statements.
|
| | (l) |  | Foreign currency translation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |     |  | The functional currency of the Companys operations in the United States
is the United States dollar. For facilities and operations located in
Canada, the functional currency is the Canadian dollar (CDN).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |     |  | The assets and liabilities of the Canadian operations are translated into
United States dollars at exchange rates in effect at the balance sheet
date. Revenue and expense items are translated at the rates of exchange
prevailing during the year. The gains or losses resulting from these
translations are excluded from the determination of income and included
in the separate foreign currency translation account within shareholders
equity. Other exchange gains and losses are included in the
determination of income.                                                                                                                                                                                                                                                                                                         
|
| | (m) |  | Comprehensive income (loss):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |     |  | To the Company, comprehensive income (loss) consists of net earnings and
the change in the foreign currency translation adjustment amount for the
year. Comprehensive income does not affect the Companys financial
position, results of operations or earnings per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | (n) |  | Earnings per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |     |  | Basic earnings per common share is calculated by dividing net earnings by
the weighted average number of common shares outstanding during the year.
Diluted earnings per common share is calculated by adjusting the
weighted average number of outstanding shares by that number which
assumes that the proceeds received on exercise of dilutive securities is
applied to the repurchase of common shares at the average market price
for the period. The weighted average number of shares outstanding gives
retroactive effect to the shares issued on the formation of the Company.                                                                                                                                                                                                                                                     

F-11



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|2. |  | Significant accounting policies (continued):
|-- |  | --------------------------------------------



| | (o) |  | Stock option plan:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Company applies the intrinsic value-based method of accounting
prescribed by Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations,
in accounting for stock options granted to employees and directors. As
such, compensation expense for fixed stock option plans is recorded on
the date of grant only if the current market price of the underlying
stock exceeded the exercise price. Compensation for variable stock
option plans is recorded on an ongoing basis based on the change in
intrinsic value of the options. For accounting purposes, the date of the
stockholder approval is considered to be the date on which the
measurement of any compensatory effect occurs. SFAS No. 123, Accounting
for Stock-Based Compensation, established accounting and disclosure
requirements using a fair value-based method of accounting for
stock-based employee compensation plans. As allowed by SFAS 123, the
Company has elected to apply the intrinsic value-based method of
accounting described above, and adopt only the disclosure requirements of
SFAS No. 123 (note 11(b)).
|
| | (p) |  | Comparative figures:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |     |  | Certain comparative figures have been reclassified to conform with the
presentation adopted in the current year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



|3. |  | Acquisition of businesses:
|-- |  | --------------------------



| | (a) |  | DLC Management Group, Inc.:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Effective July 1, 2001, the Company acquired all of the issued and
outstanding shares of DLC Management Group, Inc. (DLC) for net cash of
$4.6 million, including acquisition costs of $0.2 million. The former
shareholders of DLC are also entitled to additional cash consideration
equal to a proportion of the actual operating results of the acquired
business, calculated in accordance with the acquisition agreement, for
each of the twelve month periods ending June 30, 2002 through 2006. The
present value of these future payments at July 1, 2001 was estimated to
be $4.4 million and has been included in the cost of the acquisition.
The liability for these payments has been included on the Companys
balance sheet in other long-term liabilities as it is more likely than
not at December 31, 2002 that these amounts will be payable.

F-12



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|3. |  | Acquisition of businesses (continued):
|-- |  | --------------------------------------



| | (a) |  | DLC Management Group, Inc. (continued):                                                                                                                                                                                                                                              
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The acquisition of DLC has been accounted for by the purchase method and
accordingly the aggregate purchase price, including related costs, has
been allocated to assets acquired and liabilities assumed based on their
estimated fair values as of the acquisition date as follows:

|                                                 |                                                                         |   |       |       | 
|------------------------------------------------ | ----------------------------------------------------------------------- | - | ----- | ----- | 
|Cost of acquisition:                             |                                                                         |   |       |      
|                                                 | Cash                                                                    |   | $     | 4,601 | 
|                                                 | Present value of future payments to former
shareholders of DLC (note 9) |   |       | 4,386 | 
|                                                 |                                                                         |   |       |       | 
|                                                 |                                                                         | $ | 8,987 |      
|                                                 |                                                                         |   |       |       | 
|Working capital, including cash acquired of $259 |                                                                         | $ | 796   |      
|Fixed assets                                     |                                                                         |   | 558   |      
|Management and lease agreements                  |                                                                         |   | 344   |      
|Goodwill                                         |                                                                         |   | 7,289 |      
|                                                 |                                                                         |   |       |       | 
|                                                 |                                                                         | $ | 8,987 |      
|                                                 |                                                                         |   |       |       | 



| |  |  | During the year ended December 31, 2002, the Company paid additional
consideration of $1.8 million, of which $1.2 million was accrued when the
purchase was initially recorded. The remaining $0.6 million of this
contingent payment was recorded during the year ended December 31, 2002.
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The results of operations of DLC from July 1, 2001, being the effective
date of acquisition by the Company, are included in these consolidated
financial statements.                                                                                                                       

F-13



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|3. |  | Acquisition of businesses (continued):
|-- |  | --------------------------------------



| | (b) |  | FUMI Parking Business:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | On March 27, 2000 the Company was formed through a series of transactions
involving the combination of the FUR Parking Business and the FUMI
Parking Business. For accounting purposes the FUR Parking Business has
been treated as acquiring the FUMI Parking Business with effect from the
close of business on March 31, 2000 and has accounted for the acquisition
using the purchase method. The fair value of the assets acquired and
liabilities assumed of the FUMI Parking Business were as follows:

|                                  |  |   |         |  
|--------------------------------- |  | - | ------- | -
|Working capital deficit           |  | $ | (10,281 | )
|Other assets and liabilities, net |  |   | 6,276   |  
|Fixed assets                      |  |   | 5,659   |  
|Management and lease agreements   |  |   | 763     |  
|Goodwill                          |  |   | 42,556  |  
|                                  |  |   |         |  
|                                  |  |   | 44,973  |  
|Indebtedness                      |  |   | (26,369 | )
|                                  |  |   |         |  
|                                  |  | $ | 18,604  |  
|                                  |  |   |         |  



| |     |  | Included in the working capital deficit was $8.1 million of cash in the
FUMI Parking Business. Results from April 1, 2000 onwards are included
in the consolidated results of the Company.                                                                                                                                                                                                                                                                                   
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (c) |  | E-Z Park Company, Ltd. LLC:                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |     |  | Effective April 1, 2000, the Company purchased the business of E-Z Park
Company, Ltd. LLC for cash consideration of $1.2 million and a note
payable of $0.4 million. The purchase price has been allocated as to
$1.5 million to goodwill and $0.1 million to management and lease
agreements. The acquisition has been accounted for by the purchase
method with the results of operations included in these consolidated
financial statements from the date of acquisition.



|4. |  | Fixed assets:
|-- |  | -------------

|                           |  |      |        |              |  |             |       |          |  |   |        | 
|-------------------------- |  | ---- | ------ | ------------ |  | ----------- | ----- | -------- |  | - | ------ | 
|                           |  |      |        |              |  | Accumulated |       | Net book
|2002                       |  | Cost |        | depreciation |  | value      
|                           |  |      |        |              |  |            
|Land                       |  | $    | 6,508  |              |  | $           |      |          |  | $ | 6,508  | 
|Buildings and improvements |  |      | 1,970  |              |  |             | 236   |          |  |   | 1,734  | 
|Leasehold improvements     |  |      | 4,060  |              |  |             | 1,913 |          |  |   | 2,147  | 
|Furniture and fixtures     |  |      | 410    |              |  |             | 155   |          |  |   | 255    | 
|Equipment                  |  |      | 6,487  |              |  |             | 3,085 |          |  |   | 3,402  | 
|Automotive equipment       |  |      | 593    |              |  |             | 289   |          |  |   | 304    | 
|                           |  |      |        |              |  |             |       |          |  |   |        | 
|                           |  | $    | 20,028 |              |  | $           | 5,678 |          |  | $ | 14,350 | 
|                           |  |      |        |              |  |             |       |          |  |   |        | 

F-14



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|4. |  | Fixed assets (continued):
|-- |  | -------------------------

|                           |  |      |        |              |  |             |       |          |  |   |        | 
|-------------------------- |  | ---- | ------ | ------------ |  | ----------- | ----- | -------- |  | - | ------ | 
|                           |  |      |        |              |  | Accumulated |       | Net book
|2001                       |  | Cost |        | depreciation |  | value      
|                           |  |      |        |              |  |            
|Land                       |  | $    | 6,446  |              |  | $           |      |          |  | $ | 6,446  | 
|Buildings and improvements |  |      | 1,582  |              |  |             | 183   |          |  |   | 1,399  | 
|Leasehold improvements     |  |      | 3,980  |              |  |             | 1,280 |          |  |   | 2,700  | 
|Furniture and fixtures     |  |      | 374    |              |  |             | 92    |          |  |   | 282    | 
|Equipment                  |  |      | 5,359  |              |  |             | 1,909 |          |  |   | 3,450  | 
|Automotive equipment       |  |      | 500    |              |  |             | 116   |          |  |   | 384    | 
|                           |  |      |        |              |  |             |       |          |  |   |        | 
|                           |  | $    | 18,241 |              |  | $           | 3,580 |          |  | $ | 14,661 | 
|                           |  |      |        |              |  |             |       |          |  |   |        | 



|5. |  | Management and lease agreements:
|-- |  | --------------------------------

|                         |  |      |        |      |  |   |       |  
|------------------------ |  | ---- | ------ | ---- |  | - | ----- | -
|                         |  | 2002 |        | 2001
|                         |  |      |        |     
|Cost                     |  | $    | 1,982  |      |  | $ | 1,140 |  
|Accumulated amortization |  |      | (1,115 | )    |  |   | (804  | )
|                         |  |      |        |      |  |   |       |  
|                         |  | $    | 867    |      |  | $ | 336   |  
|                         |  |      |        |      |  |   |       |  



| |  | Amortization expense related to management and lease agreements for the year
ended December 31, 2002 was $311,000 (2001 - $300,000; 2000 - $425,000).
The estimated annual amortization for each of the next 5 years is as
follows:
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|     |  |   |     | 
|---- |  | - | --- | 
|2003 |  | $ | 267 | 
|2004 |  |   | 179 | 
|2005 |  |   | 152 | 
|2006 |  |   | 152 | 
|2007 |  |   | 117 | 
|     |  |   |     | 
|     |  | $ | 867 | 
|     |  |   |     | 



| |  | Under certain parking management agreements, the Company is committed to pay
fees to landlords based on either a fixed monthly rate, a percentage of
gross parking revenues or a percentage of net income. These fees payable
are recognized in accordance with the terms of the specific agreement.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-15



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|6. |  | Other assets:
|-- |  | -------------

|                    |  |      |       |      |  |   |       | 
|------------------- |  | ---- | ----- | ---- |  | - | ----- | 
|                    |  | 2002 |       | 2001
|                    |  |      |       |     
|Note receivable (a) |  | $    | 1,890 |      |  | $ | 1,900 | 
|Note receivable (b) |  |      | 781   |      |  |   |      | 
|Other               |  |      | 1,224 |      |  |   | 1,075 | 
|                    |  |      |       |      |  |   |       | 
|                    |  | $    | 3,895 |      |  | $ | 2,975 | 
|                    |  |      |       |      |  |   |       | 



| | (a) |  | The note is receivable from a director of a subsidiary of the
Company and bears interest at 8% per annum to April 2004 and 9.25%
thereafter. Principal repayments of $19,000 are required each quarter.
In addition, one principal payment of $0.4 million is required on
April 30, 2004 and monthly blended interest and principal repayments of
$14,000 until April 30, 2004 and $16,000 from May 1, 2004 until the
note matures on April 30, 2009. The note is secured by all issued and
outstanding shares of Robbins Parking Limited.
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | The note is receivable from a landlord in connection with the
recovery of deferred development costs. The note will be repaid by the
landlord through offset of participation rent payable under various
lease agreements expiring at various dates through November 2009. The
note receivable bears interest at prime plus 1%.                                                                                                                                                                                                           



|7. |  | Goodwill:
|-- |  | ---------

|                                                                         |  |      |        |      |  |   |        |  
|------------------------------------------------------------------------ |  | ---- | ------ | ---- |  | - | ------ | -
|                                                                         |  | 2002 |        | 2001
|                                                                         |  |      |        |     
|Carrying value, beginning of year                                        |  | $    | 44,259 |      |  | $ | 41,131 |  
|Acquisition of businesses                                                |  |      |       |      |  |   | 7,289  |  
|Adjustments to prior year acquisitions on payment of
contingent payments |  |      | 631    |      |  |   | 203    |  
|Amortization                                                             |  |      |       |      |  |   | (2,206 | )
|Effect of exchange rates                                                 |  |      | 323    |      |  |   | (2,158 | )
|                                                                         |  |      |        |      |  |   |        |  
|Carrying value, end of year                                              |  | $    | 45,213 |      |  | $ | 44,259 |  
|                                                                         |  |      |        |      |  |   |        |  

F-16



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|7. |  | Goodwill (continued):                                                                                                                                                                                                                                                        
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | As of December 31, 2002, the Companys unamortized goodwill amounted to
$45.2 million. The effects of adoption of SFAS No.142 (note 2(i)) on
results of operations for the years ended December 31, 2002, 2001 and 2000
are as follows (in thousands, except per share data):

|                            |                                 |  |                        |       |      |  |      |       |  |  |   |       | 
|--------------------------- | ------------------------------- |  | ---------------------- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                            |                                 |  | Year ended December 31
|                            |                                 |  |                       
|                            |                                 |  | 2002                   |       | 2001 |  | 2000
|                            |                                 |  |                        |       |      |  |     
|Net earnings:               |                                 |  |                        |       |      |  |      |       |  |  |   |      
|                            | Reported net earnings           |  | $                      | 2,321 |      |  | $    | 719   |  |  | $ | 1,740 | 
|                            | Add back: Goodwill amortization |  |                        |      |      |  |      | 2,206 |  |  |   | 1,701 | 
|                            |                                 |  |                        |       |      |  |      |       |  |  |   |       | 
|                            | Adjusted net earnings           |  | $                      | 2,321 |      |  | $    | 2,925 |  |  | $ | 3,441 | 
|                            |                                 |  |                        |       |      |  |      |       |  |  |   |       | 
|Basic earnings per share:   |                                 |  |                        |       |      |  |      |       |  |  |   |      
|                            | Reported net earnings per share |  | $                      | 1.27  |      |  | $    | 0.40  |  |  | $ | 0.83  | 
|                            | Goodwill amortization           |  |                        |      |      |  |      | 1.21  |  |  |   | 0.81  | 
|                            |                                 |  |                        |       |      |  |      |       |  |  |   |       | 
|                            | Adjusted net earnings per share |  | $                      | 1.27  |      |  | $    | 1.61  |  |  | $ | 1.64  | 
|                            |                                 |  |                        |       |      |  |      |       |  |  |   |       | 
|Diluted earnings per share: |                                 |  |                        |       |      |  |      |       |  |  |   |      
|                            | Reported net earnings per share |  | $                      | 1.21  |      |  | $    | 0.39  |  |  | $ | 0.83  | 
|                            | Goodwill amortization           |  |                        |      |      |  |      | 1.18  |  |  |   | 0.81  | 
|                            |                                 |  |                        |       |      |  |      |       |  |  |   |       | 
|                            | Adjusted net earnings per share |  | $                      | 1.21  |      |  | $    | 1.57  |  |  | $ | 1.64  | 
|                            |                                 |  |                        |       |      |  |      |       |  |  |   |       | 



|8. |  | Bank indebtedness:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company has a credit facility (the Credit Facility) providing for
borrowings of up to $20 million, consisting of a $12.5 million non-revolving
loan; a $5 million revolving credit facility; and $2.5 million for standby
letters of credit. The non-revolving loan facility bears interest at LIBOR
plus 1.625% per annum and is repayable on demand. The revolving credit
facility bears interest at the lending banks prime rate. The amount
outstanding under the Companys Credit Facility as of December 31, 2002 was
$3.3 million with a weighted average interest rate of 3.4%. This is solely
comprised of amounts drawn under the non-revolving loan facility and is
currently being repaid in blended monthly payments of principal and interest
of $62,000 through December 2007. The remaining amount available under the
Credit Facility was $14.7 million at December 31, 2002.
|  
|   |  | The bank credit facilities are secured by a general assignment by the
Company in favour of the bank, debentures over certain real property,
assignment of rents and leases, securities pledge agreements and assignment
of insurance. Advances require certain conditions precedent to be met and
are subject to the banks written approval.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

F-17



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|9. |  | Other long-term liabilities:
|-- |  | ----------------------------

|                                                                   |  |      |       |      |  |   |       | 
|------------------------------------------------------------------ |  | ---- | ----- | ---- |  | - | ----- | 
|                                                                   |  | 2002 |       | 2001
|                                                                   |  |      |       |     
|Present value of future payments to former
shareholders of DLC (a) |  | $    | 3,612 |      |  | $ | 4,540 | 
|Other                                                              |  |      | 2,108 |      |  |   | 1,585 | 
|                                                                   |  |      |       |      |  |   |       | 
|                                                                   |  |      | 5,720 |      |  |   | 6,125 | 
|Current portion                                                    |  |      | 1,581 |      |  |   | 1,204 | 
|                                                                   |  |      |       |      |  |   |       | 
|                                                                   |  | $    | 4,139 |      |  | $ | 4,921 | 
|                                                                   |  |      |       |      |  |   |       | 



| | (a) |  | The present value of future payments represents the estimated
additional cash consideration required to be paid in future years
pursuant to the DLC purchase agreement (note 3(a)). Interest on the
balance is accrued at 7% per annum.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10. |  | Income taxes:                             
|--- |  | ------------------------------------------
|   
|    |  | Income tax expense (recovery) consists of:

|                              |               |   |              |        |         |   |                    |     |       |   |       |        |   |   |       |        |  
|----------------------------- | ------------- | - | ------------ | ------ | ------- | - | ------------------ | --- | ----- | - | ----- | ------ | - | - | ----- | ------ | -
|                              |               |   |              |        |         |   | Income tax expense
|                              |               |   | Net earnings |        |        
|                              |               |   | before tax   |        | Current |   | Deferred           |     | Total
|                              |               |   |              |        |         |   |                    |     |      
|Year ended December 31, 2002: |               |   |              |        |         |   |                    |     |       |   |       |        |   |   |       |       
|                              | Canada        |   | $            | 5,787  |         |   | $                  | 106 |       |   | $     | 2,184  |   |   | $     | 2,290  |  
|                              | United States |   |              | (1,836 | )       |   |                    | 240 |       |   |       | (900   | ) |   |       | (660   | )
|                              |               |   |              |        |         |   |                    |     |       |   |       |        |   |   |       |        |  
|                              |               | $ | 3,951        |        |         | $ | 346                |     |       | $ | 1,284 |        |   | $ | 1,630 |       
|                              |               |   |              |        |         |   |                    |     |       |   |       |        |   |   |       |        |  
|Year ended December 31, 2001: |               |   |              |        |         |   |                    |     |       |   |       |        |   |   |       |       
|                              | Canada        |   | $            | 3,325  |         |   | $                  | 86  |       |   | $     | 2,192  |   |   | $     | 2,278  |  
|                              | United States |   |              | (1,784 | )       |   |                    | 87  |       |   |       | (1,543 | ) |   |       | (1,456 | )
|                              |               |   |              |        |         |   |                    |     |       |   |       |        |   |   |       |        |  
|                              |               | $ | 1,541        |        |         | $ | 173                |     |       | $ | 649   |        |   | $ | 822   |       
|                              |               |   |              |        |         |   |                    |     |       |   |       |        |   |   |       |        |  
|Year ended December 31, 2000: |               |   |              |        |         |   |                    |     |       |   |       |        |   |   |       |       
|                              | Canada        |   | $            | 2,892  |         |   | $                  | 153 |       |   | $     |       |   |   | $     | 153    |  
|                              | United States |   |              | (880   | )       |   |                    | 119 |       |   |       |       |   |   |       | 119    |  
|                              |               |   |              |        |         |   |                    |     |       |   |       |        |   |   |       |        |  
|                              |               | $ | 2,012        |        |         | $ | 272                |     |       | $ |      |        |   | $ | 272   |       
|                              |               |   |              |        |         |   |                    |     |       |   |       |        |   |   |       |        |  

F-18



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|10. |  | Income taxes (continued):                                                                                                                                                                                                
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Income tax expense attributable to income from continuing operations
differed from the amounts computed by applying the U.S. federal income tax
rate of 35% to earnings before income taxes as a result of the following:

|                                                     |                                                                            |   |       |      |      |   |      |        |   |   |     |        |  
|---------------------------------------------------- | -------------------------------------------------------------------------- | - | ----- | ---- | ---- | - | ---- | ------ | - | - | --- | ------ | -
|                                                     |                                                                            |   | 2002  |      | 2001 |   | 2000
|                                                     |                                                                            |   |       |      |      |   |     
|Computed expected tax expense                      |                                                                            | $ | 1,383 |      |      | $ | 539  |        |   | $ | 698 |       
|Increase (reduction) in income taxes resulting from: |                                                                            |   |       |      |      |   |      |        |   |   |     |       
|                                                     | Impact of difference between U.S. federal and
Canadian effective tax rates |   |       | 198  |      |   |      | 326    |   |   |     | 223    |  
|                                                     | Effect of change in enacted tax rates                                      |   |       |     |      |   |      | 445    |   |   |     |       |  
|                                                     | Change in valuation allowance                                              |   |       | (266 | )    |   |      | (829   | ) |   |     | (1,683 | )
|                                                     | Reduction in deferred income tax liability
on inter-company debt           |   |       |     |      |   |      | (5,219 | ) |   |     |       |  
|                                                     | Income from Canadian subsidiary taxable
in the United States               |   |       |     |      |   |      | 4,434  |   |   |     |       |  
|                                                     | Amortization of non-deductible goodwill                                    |   |       |     |      |   |      | 954    |   |   |     | 765    |  
|                                                     | Corporation capital and state tax                                          |   |       | 346  |      |   |      | 173    |   |   |     | 272    |  
|                                                     | Other                                                                      |   |       | (31  | )    |   |      | (1     | ) |   |     | (3     | )
|                                                     |                                                                            |   |       |      |      |   |      |        |   |   |     |       
|                                                     |                                                                            | $ | 1,630 |      |      | $ | 822  |        |   | $ | 272 |       
|                                                     |                                                                            |   |       |      |      |   |      |        |   |   |     |       



| |  | The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 2002 and 2001 are as follows:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                               |                                                                   |   |        |        |      |   |        |        |  
|------------------------------ | ----------------------------------------------------------------- | - | ------ | ------ | ---- | - | ------ | ------ | -
|                               |                                                                   |   | 2002   |        | 2001
|                               |                                                                   |   |        |        |     
|Deferred tax assets:           |                                                                   |   |        |        |      |   |        |       
|                               | Loss carry forwards                                               |   | $      | 1,239  |      |   | $      | 3,656  |  
|                               | Accrued liabilities                                               |   |        | 269    |      |   |        | 247    |  
|                               | Management agreements                                             |   |        | 245    |      |   |        | 333    |  
|                               |                                                                   |   |        |        |      |   |        |        |  
|                               |                                                                   |   | 1,753  |        |      |   | 4,236  |       
|Valuation allowance            |                                                                   |   |       |        |      |   | (266   | )     
|                               |                                                                   |   |        |        |      |   |        |        |  
|Net deferred tax assets        |                                                                   |   | 1,753  |        |      |   | 3,970  |       
|Deferred tax liabilities:      |                                                                   |   |        |        |      |   |        |       
|                               | Long-lived assets, principally due to differences in depreciation |   |        | (292   | )    |   |        | (507   | )
|                               | Income from Canadian subsidiary taxable in the
United States      |   |        | (2,758 | )    |   |        | (3,952 | )
|                               | Other assets                                                      |   |        | (359   | )    |   |        | (379   | )
|                               |                                                                   |   |        |        |      |   |        |        |  
|Total deferred tax liabilities |                                                                   |   | (3,409 | )      |      |   | (4,838 | )     
|                               |                                                                   |   |        |        |      |   |        |        |  
|Net deferred tax liability     |                                                                   | $ | (1,656 | )      |      | $ | (868   | )     
|                               |                                                                   |   |        |        |      |   |        |        |  

F-19



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|10. |  | Income taxes (continued):
|--- |  | -------------------------

|                                         |                                     |   |        |        |      |   |      |        |  
|---------------------------------------- | ----------------------------------- | - | ------ | ------ | ---- | - | ---- | ------ | -
|                                         |                                     |   | 2002   |        | 2001
|                                         |                                     |   |        |        |     
|Reflected on consolidated balance sheet: |                                     |   |        |        |      |   |      |       
|                                         | Current deferred asset, net         |   | $      | 1,034  |      |   | $    | 2,412  |  
|                                         | Non-current deferred liability, net |   |        | (2,690 | )    |   |      | (3,280 | )
|                                         |                                     |   |        |        |      |   |      |        |  
|Net deferred tax liability               |                                     | $ | (1,656 | )      |      | $ | (868 | )     
|                                         |                                     |   |        |        |      |   |      |        |  



| |  | In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected
future taxable income, and tax planning strategies in making this
assessment.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Companys Canadian subsidiaries had total income tax losses and
deductions of approximately $2.7 million available at December 31, 2002 to
reduce future income taxes payable in Canada which are available and expire
as follows:                                                                                                                                                                                                                                                                                                        

|     |  |   |       | 
|---- |  | - | ----- | 
|2006 |  | $ | 2,694 | 
|2008 |  |   | 18    | 
|     |  |   |       | 
|     |  | $ | 2,712 | 
|     |  |   |       | 



|11. |  | Stockholders equity:
|--- |  | ---------------------



| | (a) |  | Treasury stock:
| | --- |  | ---------------



| | (i)   |  | In June 2000, the Board of Directors approved a voluntary
Odd-Lot Tender program, whereby shareholders, on closing at June 13,
2000, owning less than 100 shares, could sell their shares of common
stock at $16.00 without incurring brokerage commissions.
| | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |       |  | The program closed on July 27, 2000 with shareholders tendering 38,298
shares at a cost of $632,901, including expenses.                                                                                                                                    
|
| | (ii)  |  | In October 2000, the Board of Directors authorized $1,000,000
for the repurchase of the Companys outstanding common stock. Under
this buy-back authorization, the Company repurchased 31,370 shares
in October 2000 at a cost of $511,000.                 
|
| | (iii) |  | In December 2000, the Board of Directors authorized the
repurchase of 215,094 shares in December 2000 at a cost of
$3,553,000.                                                                                                                              

F-20



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|11. |  | Stockholders equity (continued):
|--- |  | ---------------------------------



| | (a) |  | Treasury stock (continued):
| | --- |  | ---------------------------



| | (iv) |  | In January 2001, the Board of Directors of the Company
increased the authorization limit for the repurchase of the
Companys outstanding common stock from $1,000,000 to $1,250,000.
Under the buy back authorization, the Company repurchased 30,858
shares in January 2001 at a cost of $543,500.
| | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (v)  |  | In September 2001, the Board of Directors increased the
authorization limit for the repurchase of the Companys outstanding
common stock from $1,250,000 to $2,000,000.                                                                                                                            



| | (b) |  | Stock options:                                                                                                                                                                                                                                                                                                                                                 
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | In May 2001, the stockholders of the Company approved the 2000 Stock
Incentive Plan allowing the Company to grant stock options to executives
and management. The plan includes variable stock options whereby the
exercise price of the options increases during the term of the options.
A total of 315,000 shares were reserved for issuance under the plan.
|
| |     |  | A summary of the status of the Companys stock option plan as of December
31, 2002 and changes during the two years then ended is presented below:                                                                                                                                                                                                             

|                             |  |                     |         |                |  |                  |       | 
|---------------------------- |  | ------------------- | ------- | -------------- |  | ---------------- | ----- | 
|                             |  |                     |         |                |  | Weighted average
|                             |  | Options outstanding |         | Exercise price
|                             |  |                     |         |               
|Balance at January 1, 2001   |  |                     |        |                |  | $                |      | 
|Options granted              |  |                     | 272,652 |                |  |                  | 13.04 | 
|Options exercised            |  |                     | (5,875  | )              |  |                  | 14.09 | 
|Options cancelled/forfeited  |  |                     | (2,750  | )              |  |                  | 12.81 | 
|                             |  |                     |         |                |  |                  |       | 
|Balance at January 1, 2002   |  |                     | 264,027 |                |  | $                | 15.71 | 
|Options granted              |  |                     | 16,250  |                |  |                  | 23.91 | 
|Options exercised            |  |                     | (4,622  | )              |  |                  | 16.20 | 
|Options cancelled/forfeited  |  |                     | (5,250  | )              |  |                  | 18.05 | 
|                             |  |                     |         |                |  |                  |       | 
|Balance at December 31, 2002 |  |                     | 270,405 |                |  | $                | 18.04 | 
|                             |  |                     |         |                |  |                  |       | 

F-21



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|11. |  | Stockholders equity (continued):
|--- |  | ---------------------------------



| | (b) |  | Stock options:                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Company measures employee stock compensation expense in these
consolidated financial statements based on the intrinsic value of the
options. Had compensation expense been determined using the fair value
method in accordance with SFAS No. 123, Accounting for Stock Based
Compensation, the Companys net earnings and earnings per share would
have been as follows (there would be no effect on the year ended December
31, 2000):

|                                                                  |             |  |      |       |      |  |   |       | 
|----------------------------------------------------------------- | ----------- |  | ---- | ----- | ---- |  | - | ----- | 
|                                                                  |             |  | 2002 |       | 2001
|                                                                  |             |  |      |       |     
|Net earnings:                                                     |             |  |      |       |      |  |   |      
|                                                                  | As reported |  | $    | 2,321 |      |  | $ | 719   | 
|                                                                  | Pro forma   |  |      | 1,923 |      |  |   | 1,173 | 
|Net earnings per share:                                           |             |  |      |       |      |  |   |      
|                                                                  | As reported |  |      | 1.27  |      |  |   | 0.40  | 
|                                                                  | Pro forma   |  |      | 1.05  |      |  |   | 0.65  | 
|Diluted net earnings per share:                                   |             |  |      |       |      |  |   |      
|                                                                  | As reported |  |      | 1.21  |      |  |   | 0.39  | 
|                                                                  | Pro forma   |  |      | 1.01  |      |  |   | 0.63  | 
|Stock-based compensation expense (recovery)
included in earnings: |             |  |      |       |      |  |   |      
|                                                                  | As reported |  |      | (65   | )    |  |   | 780   | 
|                                                                  | Pro forma   |  |      | 333   |      |  |   | 326   | 
|                                                                  |             |  |      |       |      |  |   |       | 



| |  | The Company used the Black-Scholes option pricing model to determine the
fair value of grants made in fiscal 2001 and 2002. The following
assumptions were applied in determining the pro forma compensation cost:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                |  |      |      |      |  |   |      |  
|--------------------------------------------------------------- |  | ---- | ---- | ---- |  | - | ---- | -
|                                                                |  | 2002 |      | 2001
|                                                                |  |      |      |     
|Risk-free interest rate                                         |  |      | 4.07 | %    |  |   | 4.04 | %
|Expected dividend yield                                         |  |      | 0.00 | %    |  |   | 0.00 | %
|Expected option life (years)                                    |  |      | 5    |      |  |   | 5    |  
|Expected stock price volatility                                 |  |      | 12.0 | %    |  |   | 22.0 | %
|Weighted average fair value of options granted at market prices |  | $    | 5.11 |      |  | $ | 3.97 |  
|                                                                |  |      |      |      |  |   |      |  

F-22



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|11. |  | Stockholders equity (continued):                                                             
|--- |  | ----------------------------------------------------------------------------------------------
|   
|    |  | The following table summarizes stock options outstanding and exercisable at
December 31, 2002:

|                     |  |         |         |         |  |                   |     |          |  |                |       |             |  |          |         |  |  |   |       | 
|-------------------- |  | ------- | ------- | ------- |  | ----------------- | --- | -------- |  | -------------- | ----- | ----------- |  | -------- | ------- |  |  | - | ----- | 
|                     |  |         |         |         |  | Outstanding       |     |          |  |                |       | Exercisable
|                     |  |         |         |        
|                     |  |         |         |         |  | Weighted          |     |          |  |                |       |             |  |          |         |  |  |  
|                     |  |         |         |         |  | average remaining |     | Weighted |  |                |       |             |  | Weighted
|                     |  |         |         |         |  | contractual life  |     | average  |  |                |       |             |  | average 
|Exercise price range |  | Options |         | (years) |  | exercise price    |     | Options  |  | exercise price
|                     |  |         |         |         |  |                   |     |          |  |               
|$16.40 - $20.56      |  |         | 229,655 |         |  |                   | 7.3 |          |  | $              | 16.41 |             |  |          | 154,284 |  |  | $ | 16.41 | 
|$22.22 - 27.51       |  |         | 24,500  |         |  |                   | 8.7 |          |  |                | 26.84 |             |  |          | 7,563   |  |  |   | 26.55 | 
|$24.28 - 29.09       |  |         | 16,250  |         |  |                   | 9.4 |          |  |                | 27.77 |             |  |          | 2,156   |  |  |   | 27.94 | 
|                     |  |         |         |         |  |                   |     |          |  |                |       |             |  |          |         |  |  |   |       | 
|                     |  |         | 270,405 |         |  |                   | 7.5 |          |  | $              | 18.04 |             |  |          | 164,003 |  |  | $ | 17.02 | 
|                     |  |         |         |         |  |                   |     |          |  |                |       |             |  |          |         |  |  |   |       | 



| | 12. |  | Earnings per share:                                                                    
| | --- |  | ---------------------------------------------------------------------------------------
|
| |     |  | The following table sets forth the computation of basic and diluted earnings
per share:

|                          |                                       |                   |   |           |   |        |  |           |    |           |   |          |       |           |   |           |   |        |  |           |    |        |   |      |       |   |   |       |   |  |  |       |   |  |   |      |   | 
|------------------------- | ------------------------------------- | ----------------- | - | --------- | - | ------ |  | --------- | -- | --------- | - | -------- | ----- | --------- | - | --------- | - | ------ |  | --------- | -- | ------ | - | ---- | ----- | - | - | ----- | - |  |  | ----- | - |  | - | ---- | - | 
|                          |                                       |                   |   | 2002      |   | 2001   |  | 2000     
|                          |                                       |                   |   |           |   |        |  |          
|                          |                                       |                   |   | Earnings  |   | Common |  |           |    |           |   | Earnings |       | Common    |   |           |   |        |  | Earnings  |    | Common |   |      |       |  
|                          |                                       |                   |   | available |   | shares |  | Per share |    | available |   | shares   |       | Per share |   | available |   | shares |  | Per share
|                          |                                       |                   |   | ($000s)   |   | (000s) |  | amount    |    | ($000s)   |   | (000s)   |       | amount    |   | ($000s)   |   | (000s) |  | amount   
|                          |                                       |                   |   |           |   |        |  |           |    |           |   |          |       |           |   |           |   |        |  |          
|Basic earnings per share: |                                       |                   |   |           |   |        |  |           |    |           |   |          |       |           |   |           |   |        |  |           |    |        |   |      |       |   |   |       |   |  |  |       |   |  |   |     
|                          | Net earnings                          |                   | $ | 2,321     |   |        |  | 1,821     |    |           | $ | 1.27     |       |           | $ | 719       |   |        |  | 1,816     |    |        | $ | 0.40 |       |   | $ | 1,740 |   |  |  | 2,100 |   |  | $ | 0.83 |  
|                          | Effect of dilutive
stock and options: |                   |   |           |   |        |  |           |    |           |   |          |       |           |   |           |   |        |  |           |    |        |   |      |       |   |   |       |   |  |  |       |   |  |   |      |  
|                          |                                       | Stock option plan |   |           |  |        |  |           | 92 |           |   |          | (0.06 | )         |   |           |  |        |  |           | 45 |        |   |      | (0.01 | ) |   |       |  |  |  |       |  |  |   |      |  | 
|                          |                                       |                   |   |           |   |        |  |           |    |           |   |          |       |           |   |           |   |        |  |           |    |        |   |      |       |   |   |       |   |  |  |       |   |  |   |      |  
|                          | Diluted earnings per
share            |                   | $ | 2,321     |   |        |  | 1,913     |    |           | $ | 1.21     |       |           | $ | 719       |   |        |  | 1,861     |    |        | $ | 0.39 |       |   | $ | 1,740 |   |  |  | 2,100 |   |  | $ | 0.83 |  
|                          |                                       |                   |   |           |   |        |  |           |    |           |   |          |       |           |   |           |   |        |  |           |    |        |   |      |       |   |   |       |   |  |  |       |   |  |   |      |  



| | 13. |  | Business segments:                                                                                                                                                                                                  
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Senior management of the Company reviews the revenue and overall results of
operations by geographic regions. The following table summarizes the
revenue, operating results and assets for these geographic regions:

|                                              |  |        |        |      |  |       |        |        |  |      |         |       |  |        |        |      |  |       |        |   |  |   |         |  |  |   |        |  |  |   |        |   |  |   |        | 
|--------------------------------------------- |  | ------ | ------ | ---- |  | ----- | ------ | ------ |  | ---- | ------- | ----- |  | ------ | ------ | ---- |  | ----- | ------ | - |  | - | ------- |  |  | - | ------ |  |  | - | ------ | - |  | - | ------ | 
|                                              |  | 2002   |        | 2001 |  | 2000 
|                                              |  |        |        |      |  |      
|                                              |  | Canada |        | U.S. |  | Total |        | Canada |  | U.S. |         | Total |  | Canada |        | U.S. |  | Total
|                                              |  |        |        |      |  |       |        |        |  |      |         |       |  |        |        |      |  |      
|Revenue (excluding
reimbursement of
expenses) |  | $      | 53,085 |      |  | $     | 56,266 |        |  | $    | 109,351 |       |  | $      | 53,451 |      |  | $     | 37,097 |   |  | $ | 90,548  |  |  | $ | 38,338 |  |  | $ | 14,967 |   |  | $ | 53,305 | 
|Total revenue                                 |  |        | 74,593 |      |  |       | 65,249 |        |  |      | 139,842 |       |  |        | 74,938 |      |  |       | 42,960 |   |  |   | 117,898 |  |  |   | 54,666 |  |  |   | 18,212 |   |  |   | 72,878 | 
|Depreciation and
amortization                 |  |        | 1,249  |      |  |       | 1,148  |        |  |      | 2,397   |       |  |        | 3,785  |      |  |       | 944    |   |  |   | 4,729   |  |  |   | 3,162  |  |  |   | 548    |   |  |   | 3,710  | 
|Operating income                              |  |        | 6,283  |      |  |       | (2,426 | )      |  |      | 3,857   |       |  |        | 3,641  |      |  |       | (2,379 | ) |  |   | 1,262   |  |  |   | 1,063  |  |  |   | (44    | ) |  |   | 1,019  | 
|Income tax expense                            |  |        | 2,290  |      |  |       | (660   | )      |  |      | 1,630   |       |  |        | 2,278  |      |  |       | (1,456 | ) |  |   | 822     |  |  |   | 153    |  |  |   | 119    |   |  |   | 272    | 
|Goodwill                                      |  |        | 35,913 |      |  |       | 9,300  |        |  |      | 45,213  |       |  |        | 35,591 |      |  |       | 8,668  |   |  |   | 44,259  |  |  |   | 39,677 |  |  |   | 1,454  |   |  |   | 41,131 | 
|Long-lived assets                             |  |        | 13,943 |      |  |       | 5,169  |        |  |      | 19,112  |       |  |        | 12,135 |      |  |       | 5,837  |   |  |   | 17,972  |  |  |   | 13,164 |  |  |   | 4,390  |   |  |   | 17,554 | 
|Total assets                                  |  |        | 65,734 |      |  |       | 26,694 |        |  |      | 92,428  |       |  |        | 60,870 |      |  |       | 28,375 |   |  |   | 89,245  |  |  |   | 63,405 |  |  |   | 15,986 |   |  |   | 79,391 | 
|                                              |  |        |        |      |  |       |        |        |  |      |         |       |  |        |        |      |  |       |        |   |  |   |         |  |  |   |        |  |  |   |        |   |  |   |        | 

F-23



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|14. |  | Unaudited quarterly financial information:                                                                            
|--- |  | ----------------------------------------------------------------------------------------------------------------------
|   
|    |  | The following tables sets forth selected unaudited quarterly information for
the Companys last eight fiscal quarters.

|                                               |  |                         |        |              |  |         |        |          |  |   |        |  |  |   |        |  
|---------------------------------------------- |  | ----------------------- | ------ | ------------ |  | ------- | ------ | -------- |  | - | ------ |  |  | - | ------ | -
|                                               |  | Fiscal 2002 Quarter End
|                                               |  |                        
|                                               |  | December 31             |        | September 30 |  | June 30 |        | March 31
|                                               |  |                         |        |              |  |         |        |         
|Revenues (excluding reimbursement
of expenses) |  | $                       | 27,610 |              |  | $       | 28,615 |          |  | $ | 28,317 |  |  | $ | 24,809 |  
|Gross margin                                   |  |                         | 4,773  |              |  |         | 6,032  |          |  |   | 6,612  |  |  |   | 4,774  |  
|Net income (loss) for the period               |  |                         | 497    |              |  |         | 726    |          |  |   | 1,159  |  |  |   | (61    | )
|Net income (loss) per share, basic             |  |                         | 0.26   |              |  |         | 0.40   |          |  |   | 0.64   |  |  |   | (0.03  | )
|Net income (loss) per share, diluted           |  |                         | 0.26   |              |  |         | 0.37   |          |  |   | 0.61   |  |  |   | (0.03  | )
|                                               |  |                         |        |              |  |         |        |          |  |   |        |  |  |   |        |  

|                                               |  |                         |        |              |  |         |        |          |  |   |        |  |  |   |        |  
|---------------------------------------------- |  | ----------------------- | ------ | ------------ |  | ------- | ------ | -------- |  | - | ------ |  |  | - | ------ | -
|                                               |  | Fiscal 2001 Quarter End
|                                               |  |                        
|                                               |  | December 31             |        | September 30 |  | June 30 |        | March 31
|                                               |  |                         |        |              |  |         |        |         
|Revenues (excluding reimbursement
of expenses) |  | $                       | 24,971 |              |  | $       | 25,211 |          |  | $ | 22,306 |  |  | $ | 18,060 |  
|Gross margin                                   |  |                         | 5,037  |              |  |         | 5,547  |          |  |   | 6,104  |  |  |   | 3,833  |  
|Net income (loss) for the period               |  |                         | (133   | )            |  |         | 292    |          |  |   | 936    |  |  |   | (376   | )
|Net income (loss) per share, basic             |  |                         | (0.07  | )            |  |         | 0.16   |          |  |   | 0.52   |  |  |   | (0.21  | )
|Net income (loss) per share, diluted           |  |                         | (0.07  | )            |  |         | 0.15   |          |  |   | 0.51   |  |  |   | (0.21  | )
|                                               |  |                         |        |              |  |         |        |          |  |   |        |  |  |   |        |  



|15. |  | Fair value of financial instruments:                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The fair values of cash and cash equivalents, accounts receivable,
management agreements payable, trade accounts payable and accrued
liabilities, payable to employees and former employees and sales tax payable
are estimated to equal their carrying value due to their short-term to
maturity or ability for prompt liquidation. The carrying value of the bank
indebtedness and other long-term liabilities approximate their fair values
based on market rates of interest.
|   
|    |  | The fair value of notes receivable is not readily determinable due to the
nature of the relationship between the Company and the other parties.                                                                                                                                                                                                                                                                                                                                  

F-24



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|16. |  | Commitments and contingencies:
|--- |  | ------------------------------



| | (a) |  | Operating lease commitments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | The Company and its subsidiaries conduct a significant portion of their
operations on leased premises under operating leases expiring at various
dates through 2020. Lease agreements provide for minimum payments or
contingent payments based upon either a fixed annual rent, a percentage
of gross customer collections, or a combination thereof to the property
owner. The aggregate annual minimum lease commitments under operating
leases on premises originally for a period of more than one year in each
of the next five years are as follows:

|     |  |   |        | 
|---- |  | - | ------ | 
|2003 |  | $ | 40,700 | 
|2004 |  |   | 33,151 | 
|2005 |  |   | 24,903 | 
|2006 |  |   | 16,496 | 
|2007 |  |   | 10,076 | 
|     |  |   |        | 



| |  |  | The Company also leases certain of its office premises, automobiles and
office equipment under long-term operating leases. The aggregate annual
minimum lease payments required under operating leases in each of the
next five years are as follows:
| |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|     |  |   |       | 
|---- |  | - | ----- | 
|2003 |  | $ | 2,679 | 
|2004 |  |   | 2,328 | 
|2005 |  |   | 1,874 | 
|2006 |  |   | 1,013 | 
|2007 |  |   | 614   | 
|     |  |   |       | 



| |  |  | Total minimum and contingent lease payments included in results from
operations for the year ended December 31, 2002 were $57.6 million (2001
- $48.1 million; 2000 - $28.7 million).
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-25



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|16. |  | Commitments and contingencies (continued):
|--- |  | ------------------------------------------



| | (b) |  | Contingencies:
| | --- |  | --------------



| | (i)  |  | As part of its regular operations, the Company periodically
becomes involved with legal claims or potential claims related to
damage to vehicles or personal injuries for which the Company
carries insurance, or disagreements with individual employees or on
the interpretation of management or lease agreements. In the
opinion of management, the resolution of these matters will not have
a material effect on the financial condition, results of operations,
or cash flows of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii) |  | Imperial Parking Canada Corporation, a wholly owned
subsidiary of the Company, is a defendant in a lawsuit filed by
Sterling Parking Ltd. (Sterling) in April 2001, in the Queens
Bench of Alberta. The suit involves an alleged breach by Imperial
Parking Canada Corporation of a confidentiality agreement entered
into with Sterling in October 2000 relating to the potential
management of certain Sterling lots in Calgary. The proposed
transaction with Sterling was not completed and Sterling claims in
the lawsuit that Imperial Parking Canada Corporation wrongfully bid
on certain lots and improperly used Sterling confidential
information, all in breach of the confidentiality agreement. The
total damages claimed by Sterling are approximately $7.3 million
(CDN$11.6 million). The Company believes that Sterlings
allegations are largely without merit and that the amount of damages
claimed is far in excess of the actual damages suffered by Sterling,
if any. The parties are currently negotiating a settlement. If a
settlement is not reached, the Company intends to defend itself
vigorously. The Company expects that any damages awarded against
Imperial Parking Canada Corporation will not have a material effect
on its financial position or results of operations.



| | (c) |  | Letters of credit:                                                   
| | --- |  | ---------------------------------------------------------------------
|
| |     |  | The Company has outstanding letters of credit totalling $1.4
million.



|17. |  | Related parties:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Company leased three properties from an entity controlled by the
Companys Vice-Chairman and an employee of the Company. One of the
properties was sold by the entity to a third party during the year. The
terms of the two remaining leases are up to five years and minimum annual
rent for the two properties is $1.4 million, increasing to $1.6 million over
the lease terms. Percentage rent is also payable. The Company also
sub-leases a portion of its office premises in New York City to the same
entity, with rent revenue of $0.2 million per annum. The net amount paid in
2002 under the terms of these leases was $2.8 million (2001  $1.6 million).
In 2002, the Company incurred a combined operating loss of $50,000 (2001 -
$97,000 profit) from operating these three properties.

F-26



---



##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|17. |  | Related parties (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Company leased three properties and operated one property under a
management agreement from entities controlled by a director of the Company.
The leased properties have combined minimum annual rent of $3.1 million,
increasing to $3.6 million during the terms of the leases which are up to 20
years. Under the management agreement, which has a one year term, the
Company is entitled to an annual management fee of $30,000. In 2002, the
Company paid $3.0 million (2001 - $2.4 million) under the terms of these
agreements. The Company also recorded in 2002 a contribution of $0.1
million (2001 - nil) from one of the entities towards the operating expenses
of one of the leased properties. In 2002, the Company incurred a combined
operating loss of $0.6 million (2001 - $0.1 million) from operating these
four properties.
|   
|    |  | The Company operated one property under a management agreement from an
entity controlled by the Chairman of the Company and leased one property
from an entity in which the Chairman has a beneficial interest. Under the
management agreement, which is on a month-to-month basis, the Company is
entitled to a management fee based on operating performance of the property.
The Company earned $19,000 in fees in 2002 (2001 - nil) under the
agreement. The leased property has minimum annual rent of $60,000 and the
lease term is for one year, although either party may terminate the lease
upon 30 days notice. In 2002, the Company paid $45,000 (2001 - nil) under
the terms of the lease agreement. In 2002, the Company generated a combined
operating profit of $10,000 (2001 - nil) from operating these two
properties.             
|   
|    |  | In 1999, the Company entered into a ten year exclusive agreement for outdoor
advertising on its parking facilities in Canada with an entity whose
President at such time was and is now also a director of the Company. The
director is no longer an employee of that entity. In 2002, the Company
received $0.5 million (2001 - $0.4 million) pursuant to this agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | The Company purchased $0.6 million (2001 - $1.0 million) of parking
equipment and supplies from a subsidiary of an entity whose chairman, in
2002 and 2001, was also the Companys Chairman.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | Management believes that the transactions above have been on terms no less
favourable to the Company than those that could have been obtained from
unaffiliated persons at the time the transactions were entered into. The
Board of Directors also approved all of the above transactions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|18. |  | Subsequent events:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|    |  | On January 31, 2003, a Special Committee of the Companys Board of Directors
engaged a leading global investment and advisory firm as its independent
financial advisor. The Special Committee was formed for the purpose of
exploring strategic alternatives available to the Company in the context of
the decision by Gotham Partners to sell its ownership interest in the
Company. The Company is committed to payments of not less than $0.5 million
in 2003 to the financial advisors.                                                                                                                                                                                                                                                                                                                                                         

F-27



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##### 



IMPERIAL PARKING CORPORATION
Notes to Consolidated Financial Statements
(Tabular dollar amounts stated in thousands of United States dollars, except per share amounts)

Years ended December 31, 2002, 2001 and 2000



|19. |  | Recent accounting pronouncements:
|--- |  | ---------------------------------



| | (a) |  | In August 2001, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standard No. 143 (SFAS 143),
Accounting for Asset Retirement Obligationswhich provides accounting
requirements for retirement obligations associated with long-lived
assets for which the legal obligation to settle is a result of an
existing legal obligation, including those obligations to settle due to
an existing or enacted law and written or oral contract. Such an
obligation would be recognized in the period in which it meets the
definition of a liability, and on initial recognition, the liability
would be measured at fair value. SFAS 143 requires the recognition of
changes in the liability resulting from (a) the passage of time and (b)
revisions in cash flow estimates.                                                                                                                                                                                                                                                                                                                                                                                     
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | SFAS 143 is effective for years beginning after June 15, 2002. The
Company has not yet determined the effect of SFAS 143 on the consolidated
financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | (b) |  | In July 2002 the FASB released Statement of Financial Accounting
No. 146 (SFAS 146), Accounting for Costs associated with exit or
disposal activities.SFAS 146 relates to the recognition of a
liability for costs associated with an exit or disposal activity and
requires that a liability be recognized for those costs only when the
liability is incurred, that is, when it meets the definition of a
liability under the FASBs conceptual framework. Previously, a
liability for an exit cost was recognized when an exit plan was
committed to. SFAS 146 also established fair value as the objective
for initial measurement of liabilities related to exit or disposal
activities. As a result, SFAS 146 significantly reduces the ability to
recognize a liability for future expenses related to restructuring.
Certain costs that were recognized as liabilities at the date an exit
plan was committed to, will no be recognized at a later date. In
addition, SFAS 146 provides additional guidance for the recognition and
measurement of certain costs that are often associated with exit or
disposal activities including one-time termination benefits and other
associated costs.
|
| |     |  | SFAS 146 is effective for exit and disposal activities initiated after
December 31, 2002. SFAS 146 is not expected to have a material impact on
the consolidated financial statements of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| | (c) |  | In December 2002, FASB approved the issue of Statement of Financial
Accounting Standard No. 148, (SFAS 148), Accounting for Stock-Based
Compensation  Transition and Disclosure. SFAS 148 provides for three
transition options for adopting the principles of SFAS 123 for
measuring stock-based compensation granted to employees. The
provisions of SFAS 148 also increase the prominence and frequency of
financial disclosure including additional disclosures of stock-based
compensation amounts in year end financial statements and SFAS 148 will
require that interim financial statements include similar disclosure
relating to stock-based compensation as is presently required for year
end financial statements including all of the disclosure provisions of
SFAS 123.                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |     |  | SFAS 148 is effective for years ending on or after December 15, 2002 and
the Company has provided the disclosures required in notes 2(a) and
11(b).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

F-28