##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

x
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended September 30, 2003


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


Commission File Number 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


---

Former name, former address and former fiscal year, if changed since last
report.


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

The number of shares outstanding of the registrants common stock, as of
November 7, 2003, was 1,824,639.





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##### 



INDEX
IMPERIAL PARKING CORPORATION

PagePART I.
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Consolidated balance sheetsSeptember 30, 2003 and December 31, 2002
    
    
    3Consolidated statements of operationsthree and nine months ended September 30, 2003 and 2002
    
    
    4Consolidated statement of stockholders equitynine months ended September 30, 2003
    
    
    5Consolidated statements of cash flowsnine months ended September 30, 2003 and 2002
    
    
    6Notes to consolidated financial statements
    
    
    7Item 2.
    
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3.
    
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    16Item 4.
    
    
    Controls and Procedures
    
    
    17PART II.
    
    OTHER INFORMATIONItem 1.
    
    
    Legal Proceedings
    
    
    18Item 2.
    
    
    Changes in Securities
    
    
    19Item 3.
    
    
    Defaults upon Senior Securities
    
    
    19Item 4.
    
    
    Submission of Matters to a Vote of Security Holders
    
    
    19Item 5.
    
    
    Other Information
    
    
    19Item 6.
    
    
    Exhibits and Reports on Form 8-K
    
    
    20Signatures
    
    
    
    
    22


2



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##### 



IMPERIAL PARKING CORPORATION

Consolidated Balance Sheets
Amounts in thousands of United States dollars, except share amounts


September 30
    
    December 312003
    
    2002(Unaudited)
    
    (restated  note 3)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    20,677
    
    
    $
    15,138Accounts receivable
    
    
    6,957
    
    
    
    6,408Current portion of recoverable development costs
    
    
    878
    
    
    
    781Inventory
    
    
    1,124
    
    
    
    960Deposits and prepaid expenses
    
    
    2,620
    
    
    
    1,347Deferred income taxes
    
    
    
    
    
    
    1,034Total current assets
    
    
    32,256
    
    
    
    25,668Recoverable development costs
    
    
    1,874
    
    
    
    2,435Fixed assets
    
    
    16,365
    
    
    
    14,350Management and lease agreements (note 5)
    
    
    666
    
    
    
    867Other assets
    
    
    5,537
    
    
    
    3,895Goodwill (note 6)
    
    
    50,786
    
    
    
    45,213$
    107,484
    
    
    $
    92,428LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Management accounts payable
    
    $
    7,816
    
    
    $
    5,889Trade accounts payable and other accrued liabilities
    
    
    9,426
    
    
    
    7,479Payables to employees and former employees
    
    
    2,891
    
    
    
    2,302Sales and other taxes payable
    
    
    2,603
    
    
    
    1,542Bank indebtedness
    
    
    5,869
    
    
    
    3,349Current portion of other long-term liabilities
    
    
    1,066
    
    
    
    1,581Deferred revenue
    
    
    2,215
    
    
    
    1,985Total current liabilities
    
    
    31,886
    
    
    
    24,127Other long-term liabilities
    
    
    3,556
    
    
    
    4,139Deferred income taxes
    
    
    2,072
    
    
    
    2,690Total liabilities
    
    
    37,514
    
    
    
    30,956Stockholders equity:Common stock, $.01 par value; 10,000,000 shares
authorized1,823,014 shares issued and outstanding
(2002  1,822,639)
    
    
    18
    
    
    
    18Additional paid-in capital
    
    
    60,937
    
    
    
    60,674Retained earnings
    
    
    5,102
    
    
    
    4,560Accumulated other comprehensive income (loss):Foreign currency translation adjustment
    
    
    3,913
    
    
    
    (3,780
    )Total stockholders equity
    
    
    69,970
    
    
    
    61,472$
    107,484
    
    
    $
    92,428


See accompanying notes to interim consolidated financial statements.

3



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##### 



IMPERIAL PARKING CORPORATION

Consolidated Statements of Operations
(Unaudited)
Amounts in thousands of United States dollars, except per share amounts


Three months ended
    
    Nine months endedSeptember 30
    
    September 302003
    
    2002
    
    2003
    
    2002(restated 
    
    
    
    
    
    (restated note 3)
    
    
    
    
    
    note 3)RevenuesParking and management contract
    
    $
    34,100
    
    
    $
    28,615
    
    
    $
    90,673
    
    
    $
    81,741Reimbursement of management contract
expenses
    
    
    8,067
    
    
    
    7,528
    
    
    
    24,847
    
    
    
    22,791Total revenues
    
    
    42,167
    
    
    
    36,143
    
    
    
    115,520
    
    
    
    104,532Direct costsCost of parking and management contracts
    
    
    27,924
    
    
    
    22,583
    
    
    
    73,608
    
    
    
    64,323Reimbursed management contract expenses
    
    
    8,067
    
    
    
    7,528
    
    
    
    24,847
    
    
    
    22,791Total direct costs
    
    
    35,991
    
    
    
    30,111
    
    
    
    98,455
    
    
    
    87,114Gross margin
    
    
    6,176
    
    
    
    6,032
    
    
    
    17,065
    
    
    
    17,418Other operating expenses (income):General and administrative
    
    
    4,131
    
    
    
    4,128
    
    
    
    12,690
    
    
    
    12,135Depreciation and amortization
    
    
    683
    
    
    
    600
    
    
    
    1,872
    
    
    
    1,733Equity share of limited liability
company (income) losses
    
    
    (138
    )
    
    
    9
    
    
    
    (149
    )
    
    
    84Total other operating expenses
    
    
    4,676
    
    
    
    4,737
    
    
    
    14,413
    
    
    
    13,952Operating income
    
    
    1,500
    
    
    
    1,295
    
    
    
    2,652
    
    
    
    3,466Other income (expenses)Interest income
    
    
    80
    
    
    
    229
    
    
    
    287
    
    
    
    397Interest expense
    
    
    (66
    )
    
    
    (93
    )
    
    
    (244
    )
    
    
    (323
    )Other expense (note 4)
    
    
    (262
    )
    
    
    
    
    
    
    (977
    )
    
    
    Other income (expense), net
    
    
    (248
    )
    
    
    136
    
    
    
    (934
    )
    
    
    74Earnings before income taxes
    
    
    1,252
    
    
    
    1,431
    
    
    
    1,718
    
    
    
    3,540Income tax expenseCurrent
    
    
    571
    
    
    
    76
    
    
    
    733
    
    
    
    308Deferred
    
    
    147
    
    
    
    795
    
    
    
    443
    
    
    
    1,710718
    
    
    
    871
    
    
    
    1,176
    
    
    
    2,018Net earnings
    
    $
    534
    
    
    $
    560
    
    
    $
    542
    
    
    $
    1,522Earnings per share:Basic
    
    $
    0.29
    
    
    $
    0.31
    
    
    $
    0.30
    
    
    $
    0.84Diluted
    
    $
    0.29
    
    
    $
    0.29
    
    
    $
    0.29
    
    
    $
    0.79


See accompanying notes to interim consolidated financial statements.

4



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##### 



IMPERIAL PARKING CORPORATION
Consolidated Statement of Stockholders Equity
Amounts in thousands of United States dollars, except number of common shares (Unaudited)

ForeignCommon stock
    
    Additional
    
    
    
    
    
    currencypaid-in
    
    Retained
    
    translation
    
    
    
    
    
    ComprehensiveNumber
    
    Amount
    
    capital
    
    earnings
    
    adjustment
    
    Total
    
    incomeBalance, December 31, 2002, as previously reported
    
    
    1,822,639
    
    
    $
    18
    
    
    $
    60,730
    
    
    $
    4,504
    
    
    $
    (3,780
    )
    
    $
    61,472Retroactive effect of adoption of new accounting
policy (note 3)
    
    
    
    
    
    
    
    
    
    
    (56
    )
    
    
    56
    
    
    
    
    
    
    
    Balance, December 31, 2002, as restated
    
    
    1,822,639
    
    
    
    18
    
    
    
    60,674
    
    
    
    4,560
    
    
    
    (3,780
    )
    
    
    61,472Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    542
    
    
    
    
    
    
    
    542
    
    
    
    542Foreign currency translation adjustment in period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,693
    
    
    
    7,693
    
    
    
    7,693Stock based compensation
    
    
    
    
    
    
    
    
    
    
    257
    
    
    
    
    
    
    
    
    
    
    
    257Options exercised
    
    
    375
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6Total stockholders equity at September 30, 2003
    
    
    1,823,014
    
    
    $
    18
    
    
    $
    60,937
    
    
    $
    5,102
    
    
    $
    3,913
    
    
    $
    69,970Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    8,235


See accompanying notes to interim consolidated financial statements.

5



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##### 



IMPERIAL PARKING CORPORATION

Consolidated Statements of Cash Flows
(Unaudited)


Amounts in thousands of United States dollars

Nine months ended September 302003
    
    2002(restated note 3)Cash flows from operating activities:Net earnings
    
    $
    542
    
    
    $
    1,522Adjustments to reconcile net earnings to cash provided by operating
activities:Depreciation and amortization
    
    
    1,872
    
    
    
    1,733Recovery of recoverable development costs
    
    
    468
    
    
    
    461Equity share of limited liability company (income) losses
    
    
    (149
    )
    
    
    84Stock-based compensation
    
    
    257
    
    
    
    246Non-cash interest expense
    
    
    162
    
    
    
    91Rent expense in excess of lease payments
    
    
    357
    
    
    
    257Deferred income taxes
    
    
    443
    
    
    
    1,710Discount on settlement of note receivable
    
    
    100
    
    
    
    Changes in non-cash working capital items, excluding acquisitions:Accounts receivable
    
    
    497
    
    
    
    1,061Inventory
    
    
    (12
    )
    
    
    18Deposits and prepaid expenses
    
    
    (779
    )
    
    
    (540
    )Management accounts payable
    
    
    1,082
    
    
    
    572Trade accounts payable and other accrued liabilities
    
    
    963
    
    
    
    (136
    )Payables to employees and former employees
    
    
    350
    
    
    
    533Sales and other taxes payable
    
    
    921
    
    
    
    559Deferred revenue
    
    
    43
    
    
    
    (241
    )Net cash provided by operating activities
    
    
    7,117
    
    
    
    7,930Cash flows from investing activitiesPurchase of fixed assets
    
    
    (1,774
    )
    
    
    (1,015
    )Change in other assets
    
    
    (2,864
    )
    
    
    (63
    )Settlement of note receivable
    
    
    1,036
    
    
    
    Increase in recoverable development costs
    
    
    
    
    
    
    (1,491
    )Acquisition of management and lease agreements
    
    
    
    
    
    
    (766
    )Additional consideration on acquisition of parking business
    
    
    (1,108
    )
    
    
    (1,836
    )Net cash used in investing activities
    
    
    (4,710
    )
    
    
    (5,171
    )Cash flows from financing activitiesProceeds from bank indebtedness
    
    
    3,000
    
    
    
    Repayment of bank indebtedness
    
    
    (482
    )
    
    
    (397
    )Change in other long-term liabilities
    
    
    (542
    )
    
    
    (94
    )Exercise of stock options
    
    
    6
    
    
    
    64Net cash provided by (used in) financing activities
    
    
    1,982
    
    
    
    (427
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    1,150
    
    
    
    (20
    )Increase in cash and cash equivalents
    
    
    5,539
    
    
    
    2,312Cash and cash equivalents, beginning of period
    
    
    15,138
    
    
    
    10,991Cash and cash equivalents, end of period
    
    $
    20,677
    
    
    $
    13,303Supplementary information:Interest paid
    
    
    70
    
    
    
    99Income taxes paid
    
    
    479
    
    
    
    335


See accompanying notes to interim consolidated financial statements.

6



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##### 



IMPERIAL PARKING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Imperial
Parking Corporation (Impark) do not include all of the information and
footnotes required by generally accepted accounting principles for a complete
set of annual financial statements. In the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) considered
necessary for a fair presentation of the financial position, results from
operations and cash flows as at September 30, 2003, and for all periods
presented, have been included. These financial statements should be read in
conjunction with the financial statements, and notes thereto, included in
Imparks annual report on Form 10-K for the fiscal year ended December 31,
2002. Except as indicated in note 3, the principles applied in the preparation
of these interim consolidated financial statements are consistent with those
applied in the consolidated financial statements included in the annual report
on Form 10-K. Operating results for the three and nine months ended September
30, 2003 are not necessarily indicative of the results that may by expected for
the fiscal year ending December 31, 2003.

2. EARNINGS PER SHARE

Basic earnings per share is computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding for
the period. Diluted earnings per share reflects the potential dilution that
would occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock, or if restricted shares of common stock were to become fully vested,
that then shared in the earnings of Impark.

The following tables set forth the computation of basic and diluted earnings
per share:

Three Months Ended September 302003
    
    2002Income
    
    Common
    
    
    
    
    
    Income
    
    Commonavailable
    
    shares
    
    Per share
    
    available
    
    shares
    
    Per share($000's)
    
    (000's)
    
    amount
    
    ($000's)
    
    (000's)
    
    amountBasic earnings per shareNet earnings
    
    $
    534
    
    
    
    1,823
    
    
    $
    0.29
    
    
    $
    560
    
    
    
    1,820
    
    
    $
    0.31Effect of dilutive stock options
    
    
    
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    (0.02
    )Diluted earnings per share
    
    $
    534
    
    
    
    1,873
    
    
    $
    0.29
    
    
    $
    560
    
    
    
    1,900
    
    
    $
    0.29


Nine months Ended September 302003
    
    2002Income
    
    Common
    
    
    
    
    
    Income
    
    Commonavailable
    
    shares
    
    Per share
    
    available
    
    shares
    
    Per share($000's)
    
    (000's)
    
    amount
    
    ($000's)
    
    (000's)
    
    amountBasic earnings per shareNet earnings
    
    $
    542
    
    
    
    1,823
    
    
    $
    0.30
    
    
    $
    1,522
    
    
    
    1,822
    
    
    $
    0.84Effect of dilutive stock options
    
    
    
    
    
    
    50
    
    
    
    (0.01
    )
    
    
    
    
    
    
    95
    
    
    
    (0.05
    )Diluted earnings per share
    
    $
    542
    
    
    
    1,873
    
    
    $
    0.29
    
    
    $
    1,522
    
    
    
    1,917
    
    
    $
    0.79


7



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##### 



3. STOCK OPTIONS

The Company has a stock incentive plan pursuant to which the Company grants
stock options to executives and management. Prior to 2003, the Company
accounted for those plans under the recognition and measurement provisions of
APB 25, Accounting for Stock Issued to Employees, and related interpretations.
Stock-based compensation for fixed stock option plans was recorded at the grant
date only if the current market price of the underlying stock exceeded the
exercise price. Compensation for variable stock option plans was recorded on
an ongoing basis based on the change in intrinsic value of the options.

Effective January 1, 2003, the Company adopted the fair value recognition
provisions of Statement of Financial Accounting No. 123 (SFAS 123),
Accounting for Stock-Based Compensation, for stock-based employee compensation.
In accordance with Statement of Financial Accounting No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure, the Company has elected to
adopt the recognition and measurement provisions of SFAS 123 retroactively and
all prior periods presented have been restated to reflect the compensation
costs that would have been recognized had the recognition provisions of SFAS
123 been applied to all awards granted to employees after December 15, 1994.

Adoption of the recognition and measurement provisions of SFAS 123 resulted in
a decrease of $454,000 in additional paid in capital as at January 1, 2002, an
increase of $454,000 in opening retained earnings as at January 1, 2002 and an
increase in stock based compensation expense recognized of $166,000 for the
three months ended September 30, 2002, and an increase of $302,000 for the nine
months ended September 30, 2002, from the amounts previously reported. For the
year ended December 31, 2002, adoption of the recognition provisions of SFAS
123 resulted in an increase in stock based compensation expense of $398,000, a
decrease in additional paid in capital of $56,000 as at December 31, 2002 and
an increase of $56,000 in retained earnings as at December 31, 2002.

4. OTHER EXPENSES

In January 2003, a Special Committee of the Companys Board of Directors 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 Special Committee has engaged professional
advisors to assist it in this review. The Company incurred $262,000 in
professional fees payable to the advisors during the three months ended
September 30, 2003 (2002  nil), and $977,000 for the nine months ended
September 30, 2003 (2002  nil), which expenses have been expensed as
incurred.

5. MANAGEMENT AND LEASE AGREEMENTS

Management and lease arrangements 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.

SFAS 142 requires that a recognized intangible asset, such as these management
and lease agreements, be amortized over its useful life to an enterprise,
unless the life is determined to be indefinite. As the agreements have limited
terms, the carrying value of the agreements are being amortized over the period
of the related agreement.

September 30, 2003
    
    December 31, 2002Cost
    
    $
    2,101
    
    
    $
    1,982Accumulated amortization
    
    
    (1,435
    )
    
    
    (1,115
    )$
    666
    
    
    $
    867


8



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##### 



6. GOODWILL

September 30, 2003Carrying value, beginning of period
    
    $
    45,213Effect of exchange rates
    
    
    5,708Adjustment to prior year acquisitions on payment of contingent consideration
    
    
    (135
    )Carrying value, end of period
    
    $
    50,786


7. 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.

Three Months Ended September 302003
    
    2002Canada
    
    U.S.
    
    Total
    
    Canada
    
    U.S.
    
    TotalParking and management
contract revenue
    
    $
    15,414
    
    
    $
    18,686
    
    
    $
    34,100
    
    
    $
    13,264
    
    
    $
    15,351
    
    
    $
    28,615Total revenue
    
    
    21,377
    
    
    
    20,790
    
    
    
    42,167
    
    
    
    18,634
    
    
    
    17,509
    
    
    
    36,143Depreciation and
amortization
    
    
    343
    
    
    
    340
    
    
    
    683
    
    
    
    317
    
    
    
    283
    
    
    
    600Operating income (loss)
    
    
    1,512
    
    
    
    (12
    )
    
    
    1,500
    
    
    
    1,659
    
    
    
    (364
    )
    
    
    1,295Income tax expense
    
    
    648
    
    
    
    70
    
    
    
    718
    
    
    
    645
    
    
    
    226
    
    
    
    871Goodwill
    
    
    41,621
    
    
    
    9,165
    
    
    
    50,786
    
    
    
    35,709
    
    
    
    9,300
    
    
    
    45,009Long-lived assets
    
    
    15,440
    
    
    
    7,128
    
    
    
    22,568
    
    
    
    13,749
    
    
    
    5,498
    
    
    
    19,247Total assets
    
    
    72,808
    
    
    
    34,676
    
    
    
    107,484
    
    
    
    59,985
    
    
    
    31,375
    
    
    
    91,360


Nine months Ended September 302003
    
    2002Canada
    
    U.S.
    
    Total
    
    Canada
    
    U.S.
    
    TotalParking and management
contract revenue
    
    $
    44,197
    
    
    $
    46,476
    
    
    $
    90,673
    
    
    $
    39,316
    
    
    $
    42,425
    
    
    $
    81,741Total revenue
    
    
    61,825
    
    
    
    53,695
    
    
    
    115,520
    
    
    
    55,392
    
    
    
    49,140
    
    
    
    104,532Depreciation and
amortization
    
    
    952
    
    
    
    920
    
    
    
    1,872
    
    
    
    906
    
    
    
    827
    
    
    
    1,733Operating income (loss)
    
    
    4,333
    
    
    
    (1,681
    )
    
    
    2,652
    
    
    
    4,972
    
    
    
    (1,506
    )
    
    
    3,466Income tax expense
    
    
    1,549
    
    
    
    (373
    )
    
    
    1,176
    
    
    
    1,789
    
    
    
    229
    
    
    
    2,018Goodwill
    
    
    41,621
    
    
    
    9,165
    
    
    
    50,786
    
    
    
    35,709
    
    
    
    9,300
    
    
    
    45,009Long-lived assets
    
    
    15,440
    
    
    
    7,128
    
    
    
    22,568
    
    
    
    13,749
    
    
    
    5,498
    
    
    
    19,247Total assets
    
    
    72,808
    
    
    
    34,676
    
    
    
    107,484
    
    
    
    59,985
    
    
    
    31,375
    
    
    
    91,360


8. CONTINGENCIES

The Company is the defendant in a lawsuit filed by Sterling Parking Ltd.
(Sterling) in April 2001. Sterling is claiming damages of $7.9 million
(Canadian $11.6 million) as a result of a failed agreement to manage certain of
Sterlings locations by Impark. The Company believes that the claim is largely
without merit and, regardless, the amount claimed is excessive. The Company
will continue to defend itself against the claim. The Company has accrued at
September 30, 2003 its best estimate of the costs related to this action, but
in the event the Company is unsuccessful, any damages awarded to Sterling in
excess of this amount could have a material effect on our financial position or
results of operations.

9



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In February 2002, the City of Calgary (the City) passed a 2002 Business Tax
Bylaw, which approximately tripled the business tax for the Companys
operations in Calgary for the 2002 calendar year to approximately $1.0 million
(Canadian $1.4 million). In February 2003, the City passed a 2003 Business Tax
Bylaw, which imposed the same rate and assessment method of business tax for
the Companys operations for 2003 as was used in 2002, at an amount of
approximately $0.9 million (C$1.3 million). The Company is appealing the
assessments through the assessment review process and also applying for a court
ruling that the bylaws are void or invalid. In July 2003, the Alberta Municipal
Government Board (MGB) determined that the assessment method used by the City
in 2002 was not assessed fairly in that year. If the City does not appeal this
decision of the MGB by December 31, 2003, the Company will be entitled to a
refund of a substantial portion of the assessed taxes for 2002. With respect to
the 2002 business tax assessment, if the City appeals the July 2003 decision of
the MGB and the Company is unsuccessful in defending the appeal, and if the
Company is unsuccessful in its lawsuit against the City, it will be required to
pay the full amount of the 2002 assessment, currently $1.0 million. With
respect to the 2003 business tax assessment, if the Company is unsuccessful in
appealing the assessment and if it is unsuccessful in its lawsuit against the
City, it will be required to pay the full amount of the 2003 assessment,
currently $0.9 million. At September 30, 2003, the Company has accrued the full
assessment for 2002 and the proportionate amount for the year of the 2003
assessment, and has paid approximately 60% of the amounts accrued.

10



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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE

This report includes various forward-looking statements regarding the Company
that are subject to risks and uncertainties, including, without limitation, the
factors set forth below and under the caption Certain Factors Affecting Future
Operating Results in the Managements Discussion and Analysis of Financial
Condition and Results of Operations section in the Companys Annual Report on
Form 10-K for the year ended December 31, 2002. Forward-looking statements
include, but are not limited to, discussions regarding the Companys operating
strategy, growth strategy, acquisition strategy, cost savings initiatives,
industry, economic conditions, financial condition, liquidity and capital
resources and results of operations. Such statements include, but are not
limited to, statements preceded by, followed by or that otherwise include the
words believes, expects, anticipates, intends, estimates or similar
expressions. For those statements, the Company claims the protection of the
safe harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.

The following important factors, in addition to those discussed elsewhere in
this report, the Companys Annual Report on Form 10-K for the year ended
December 31, 2002 and the documents which are incorporated herein by reference,
could affect the future financial results of the Company and could cause actual
results to differ materially from those expressed in forward-looking statements
contained or incorporated by reference in this document:



| |  | 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 the Companys 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 the Companys 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;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | the ability of the Company to form and maintain its strategic
relationships with certain large real estate owners and property
managers;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  | global and/or regional economic factors; and
|- |  | --------------------------------------------



| |  | compliance with laws and regulations, including, without limitation,
environmental, antitrust and consumer protection laws and regulations
at the federal, state, local and international levels.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CRITICAL ACCOUNTING POLICIES

The Company makes certain estimates and assumptions that affect the reported
amounts of assets and liabilities and the reported amounts of revenues and
expenses. The critical accounting policies and estimates used to prepare the
unaudited consolidated financial statements included in this report are, except
as described in note 3 of these interim consolidated financial statements,
consistent with those used to prepare the audited consolidated financial
statements included in the Companys Annual Report on Form 10-K. The accounting
policies described in the notes to our audited consolidated financial
statements, included as part of our Form 10-K, are those that the Company
considers critical in preparing its consolidated financial statements. These
policies include significant estimates made by management using information
available at the time the estimates are made, including estimates relating to
deferred income tax assets, obligations to the former shareholders of DLC
Management Group, Inc. (DLC), and valuation of goodwill. However, these
estimates could change materially if different information or assumptions were
used. The Company encourages you to review these notes in connection with the
financial statements included in this report.

11



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OVERVIEW

We operate parking facilities under three types of arrangements: leases,
management contracts and fee ownership. Revenues consist of parking revenues
from leased and owned facilities, and revenues earned in accordance with the
terms of management contracts. Direct costs relate typically to leased and
owned facilities and include rent, payroll and related benefits, maintenance,
insurance, and general operating expenses. Direct costs also include expenses
associated with management contracts that are not recoverable from the property
owner.

Revenue earned from each type of arrangement for the three and nine months
ended September 30, 2003 and 2002, and the number of facilities operated as at
September 30, 2003 and 2002, are as follows:

Revenue# of locations at
    
    Three months ended
    
    Nine months endedSeptember 30
    
    September 30
    
    September 302003
    
    2002
    
    2003
    
    2002
    
    2003
    
    2002(thousands of United States dollars)Parking and
management contract
revenueLeased
    
    
    598
    
    
    
    569
    
    
    $
    27,909
    
    
    $
    23,221
    
    
    $
    72,828
    
    
    $
    65,217Managed
    
    
    1,087
    
    
    
    1,047
    
    
    
    5,705
    
    
    
    4,990
    
    
    
    16,414
    
    
    
    15,266Owned
    
    
    15
    
    
    
    15
    
    
    
    486
    
    
    
    404
    
    
    
    1,431
    
    
    
    1,2581,700
    
    
    
    1,631
    
    
    
    34,100
    
    
    
    28,615
    
    
    
    90,673
    
    
    
    81,741Reimbursement of
management contract
expenses
    
    
    
    
    
    
    
    
    
    
    8,067
    
    
    
    7,528
    
    
    
    24,847
    
    
    
    22,791Total revenues
    
    
    
    
    
    
    
    
    
    $
    42,167
    
    
    $
    36,143
    
    
    $
    115,520
    
    
    $
    104,532


THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 2002

Total revenues for the third quarter of fiscal 2003 increased $6.0 million, or
16.7%, to $42.1 million from $36.1 million for the third quarter of fiscal
2002. Excluding an increase of $0.5 million in the reimbursement of management
contract expenses, which are directly offset by an equivalent increase in
reimbursed management contract expenses within direct costs, there was an
increase of $5.5 million in revenues. This increase was generally as a result
of continuing to open new facilities and from a stronger Canadian dollar. If
the Canadian dollar exchange rate in 2003 had remained the same as it was in
2002, total revenues for the third quarter of fiscal 2003 would have increased
by only $3.6 million, or 10.0%.

Revenues from leased facilities for the third quarter of fiscal 2003 increased
to $27.9 million from $23.2 million in the third quarter of fiscal 2002, an
increase of $4.7 million, or 20.2%. There was an increase of $3.2 million in
the United States largely as a result of opening new locations, notably in
Milwaukee, with Miller Park  the baseball stadium for the Milwaukee Brewers,
and in Miami, which increased its number of leased facilities from five at
September 30, 2002 to thirteen at September 30, 2003. This increase in revenue
in the U.S. is net of a decrease of $1.0 million in Chicago and Minneapolis.
The decrease in these cities was largely the result of the sale, by a landlord,
of a significant leased facility in Chicago and the subsequent renewal of the
agreement by the new landlord as a management contract effective January 2003,
and our decision not to renew an unprofitable lease in Minneapolis in the
fourth quarter of 2002. These two facilities contributed approximately $1.6
million of leased revenue in the third quarter of fiscal 2002. In Canada,
there was a $1.5 million increase in leased revenue, which was largely due to a
stronger Canadian dollar. The average exchange rate for the third quarter of
2003 was C$1.00 = US$0.72, compared to US$0.64 for the third quarter of 2002.
In local currency terms, leased revenue in Canada increased C$0.1 million for
the third quarter of 2003, compared to the same period in 2002, largely as a
result of adding new locations.

Management contract revenues for the third quarter of fiscal 2003 increased by
$0.7 million, or 14.3%, to $5.7 million from $5.0 million for the third quarter
of fiscal 2002. Of this increase, approximately $0.3 million is due to the
stronger Canadian dollar and $0.4 million to new contracts.

12



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The direct costs incurred in providing services under parking and management
contracts in the third quarter of 2003 increased to $27.9 million from $22.6
million in the third quarter of 2002, an increase of $5.3 million, or 23.7%.
Rent expense increased by $3.7 million, or 25.2%, to $18.6 million the third
quarter of 2003 from $14.9 million for the third quarter of 2002. Rent as a
percentage of leased revenues, increased to 66.7% in the third quarter of 2003
from 64.0% in the same quarter of 2002. The increase is due to an increase in
Canada in rent as a percentage of leased revenues. We opened several new lease
locations in Toronto, and as with any new lease we expect that rent as a
percentage of leased revenues will be higher at the start of the lease term.
Furthermore, in Calgary an increase in office vacancy rates in certain areas of
downtown combined with lease renewals at higher rent produced an increase in
rent as a percentage of leased revenue. The increase in other direct costs of
$1.6 million, or 20.6%, from $7.7 million to $9.3 million, includes $0.4
million of costs associated with operating the new contracts at the Mirabel and
Dorval airports in Montreal, Quebec, and Miller Park in Milwaukee; and $0.4
million for the effect of the stronger Canadian dollar on other direct costs.
The cost of parking and management contracts as a percentage of revenue from
parking and management contracts increased to 81.9% in the third quarter of
fiscal 2003 from 78.9% in the third quarter of fiscal 2002.

We are appealing our 2002 and 2003 business tax assessments for our operations
in Calgary, Alberta. We have also applied for a court ruling that the
applicable business tax bylaws are void or invalid. The assessment for 2002 of
approximately $0.9 million is three times the amount of our assessment for 2001
of approximately $0.3 million. The assessment for 2003 is approximately
equivalent to the assessment for 2002. In July 2003, the Alberta Municipal
Government Board (MGB) determined that the assessment method used by the City
of Calgary in 2002 was not assessed fairly in that year. If the City does not
appeal this decision of the MGB, we will be entitled to a refund of a
substantial portion of the assessed taxes for 2002. We are still determining
the impact, if any, of this decision upon amounts paid to the City in 2001 and
2003 as well. We have accrued at September 30, 2003 the proportionate amount
for the year of the 2003 assessment and the full assessment for 2002. We have
paid approximately 60% of the amounts accrued. We have provided further details
of this issue in this quarterly report in Part II, Item 1  Legal Proceedings.

General and administrative expenses remained unchanged at $4.1 million for both
the third quarter of fiscal 2003 and 2002. A realized foreign exchange gain of
$0.1 million in the third quarter of fiscal 2003 was offset by a $0.1 million
increase in Canadian general and administrative expenses resulting from the
stronger Canadian dollar. General and administrative expenses, as a percentage
of total revenues, decreased to 9.8% for the third quarter of fiscal 2003
compared to 11.4% for the third quarter of fiscal 2002.

Prior to 2003, we accounted for stock options issued to employees using the
intrinsic value method in accordance with the provisions of APB 25, Accounting
for Stock Issued to Employees, and related interpretations, and recognized
compensation expense to the extent the current market price of the underlying
stock exceeded the exercise price. Effective January 1, 2003, we adopted the
fair value recognition provisions of Statement of Financial Accounting No. 123
(SFAS 123), Accounting for Stock-Based Compensation, for stock-based employee
compensation. All prior periods presented have been restated to reflect the
compensation costs that would have been recognized had the recognition
provisions of SFAS 123 been applied to all awards granted to employees after
December 15, 1994. The effect of restating the results for the third quarter
of fiscal 2002 is that stock-based compensation expense for the quarter, which
is included in general and administrative expenses, increased by $166,000 from
a recovery of $80,000, as previously reported, to an expense of $86,000.

Other non-operating expenses in the third quarter of fiscal 2003 include $0.3
million of professional fees, which we incurred in exploring the alternatives
available to the Company in the context of the decision by Gotham Partners
(Gotham), our principal shareholder, to sell its ownership interest. We
expect that we will continue to incur professional advisor fees until the
Gotham matter has been resolved.

Income tax expense for fiscal 2003 includes our current tax liability for
Canadian operating profits, and capital and state taxes, and a deferred tax
expense as we utilized the balance of 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
2003. During the third quarter of 2003, we utilized all of our net operating
losses in Canada, and have now started to incur a current, rather than a
deferred, tax liability for any operating profits in Canada.

Earnings for the third quarter of 2003 were $0.5 million  unchanged from
third quarter earnings in 2002 of $0.5 million. A higher gross margin of $0.1
million; an improvement in our share of Limited Liability company results of
$0.1 million; and lower income tax expense of $0.2 million; was offset by lower
net interest income of $0.1 million; and $0.3 million of Special Committee
expenses.

13



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##### 



NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 2002

Total revenues for the first nine months of fiscal 2003 increased $11.0
million, or 10.5%, to $115.5 million from $104.5 million for the first nine
months of fiscal 2002. Excluding an increase of $2.1 million in the
reimbursement of management contract expenses, which are directly offset by an
equivalent increase in reimbursed management contract expenses within direct
costs, there was an increase of $8.9 million in revenues. This was generally as
a result of continuing to open new facilities and from a stronger Canadian
dollar. If the Canadian dollar exchange rate in 2003 had remained the same as
it was in 2002, total revenues for the third quarter of fiscal 2003 would have
increased by only $5.4 million, or 5.2%.

Revenues from leased facilities for the first nine months of fiscal 2003
increased to $72.8 million from $65.2 million in the first nine months of
fiscal 2002, an increase of $7.6 million, or 11.7 %. There was an increase of
$4.5 million in the United States largely as a result of opening new locations,
notably in Milwaukee, with Miller Park  the baseball stadium for the
Milwaukee Brewers, and in Miami, which increased its number of leased
facilities from five at September 30, 2002 to thirteen at September 30, 2003.
This increase in revenue in the U.S. is net of a decrease of $3.7 million in
Chicago and Minneapolis. The decrease in these cities was the result of the
sale, by a landlord, of a significant leased facility in Chicago and the
subsequent renewal of the agreement by the new landlord as a management
contract effective January 2003, and our decision not to renew an unprofitable
lease in Minneapolis in the fourth quarter of 2002. These two facilities
contributed approximately $4.8 million of leased revenue in the first nine
months of fiscal 2002. In Canada, there was a $3.1 million increase in leased
revenue, which was largely due to a stronger Canadian dollar. The average
exchange rate for the first nine months of 2003 was C$1.00 = US$0.70, compared
to US$0.64 for the first nine months of 2002. In local currency terms however,
leased revenue in Canada decreased C$0.3 million for the first nine months of
2003, compared to the same period in 2002. An increase of C$1.6 million in
Toronto, largely from adding four new lease locations from September 30, 2002
to September 30, 2003, was offset by a decrease of C$1.9 million in other
Canadian cities as a result of severe winter weather in 2003 and a decline in
hotel, tourism and other traffic.

Management contract revenues for the first nine months of fiscal 2003 increased
by $1.1 million, or 7.5%, to $16.4 million from $15.3 million for the first
nine months of fiscal 2002. Of this increase, approximately $0.6 million is due
to the stronger Canadian dollar and $0.5 million to new contracts.

The direct costs incurred in providing services under parking and management
contracts in the first nine months of 2003 increased to $73.6 million from
$64.3 million in the first nine months of 2002, an increase of $9.3 million, or
14.4 %. Rent expense increased by $5.8 million, or 14.0%, to $47.5 million for
the first nine months of 2003 from $41.7 million for the first nine months of
2002. Rent as a percentage of leased revenues, increased to 65.3% in the first
nine months of 2003 from 64.0% in the same period of 2002. The increase is due
to an increase in Canada in rent as a percentage of leased revenues. We opened
several new lease locations in Toronto, and as with any new lease we expect
that rent as a percentage of leased revenues will be higher at the start of the
lease term. Furthermore, in Western Canada leased revenue declined 6.8% in
local currency terms for the first nine months of 2003 compared to 2002,
producing an increase in rent as a percentage of revenue because of the usually
fixed nature of rent expense for leases. The increase in other direct costs of
$3.4 million, or 15.2%, from $22.6 million to $26.0 million, includes an
increase in snow clearing and removal costs of $0.2 million from the harsher
winter in 2003; $1.0 million of costs associated with operating the new
contracts at the Mirabel and Dorval airports in Montreal, Quebec and Miller
Park in Milwaukee; $0.8 million for the effect of the stronger Canadian dollar
on other direct costs; a discount of $0.1 million granted on the early
settlement of the outstanding balance due from the San Francisco Giants for
their share of development costs; and $0.3 million of increased business taxes
in Calgary. Although the business tax assessment for our lots in Calgary for
2003 is approximately the same as 2002, we were in the initial stages of
appealing it in the first nine months of 2002 and had not fully accrued at the
time for the increase over the prior year. The increases in other direct costs
for the first nine months of fiscal 2003 were offset by a recovery of $0.3
million for an amount previously accrued in 2002 for a property tax assessment,
which we successfully appealed in 2003. The cost of parking and management
contracts as a percentage of revenue from parking and management contracts
increased to 81.2% in the first nine months of fiscal 2003 from 78.7% in the
first nine months of fiscal 2002.

We are appealing our 2002 and 2003 business tax assessments for our operations
in Calgary, Alberta. We have also applied for a court ruling that the
applicable business tax bylaws are void or invalid. The assessment for 2002 of
approximately $0.9 million is three times the amount of our assessment for 2001
of approximately $0.3 million. The assessment for 2003 is approximately
equivalent to the assessment for 2002. In July 2003, the MGB determined that
the assessment method used by the City of Calgary in 2002 was not assessed
fairly in that year. If the City does not appeal this decision of the MGB, we
will be entitled to a refund of a substantial portion of the assessed taxes for
2002. We are

14



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##### 



still determining the impact, if any, of this decision upon amounts paid to the
City in 2001 and 2003 as well. We have accrued at September 30, 2003 the
proportionate amount for the year of the 2003 assessment and the full
assessment for 2002. We have paid approximately 60% of the amounts accrued. We
have provided further details of this issue in this quarterly report in Part
II, Item 1  Legal Proceedings.

General and administrative expenses increased $0.6 million, or 4.6%, from $12.1
million for the first nine months of fiscal 2002 to $12.7 million for the first
nine months of fiscal 2003. $0.4 million of the increase resulted from the
stronger Canadian dollar. The remainder of the increase largely occurred in our
U.S. expansion cities of Chicago, Miami and San Francisco, and from relocating
our U.S. head office to Philadelphia, offset by a realized foreign exchange
gain of $0.1 million. General and administrative expenses, as a percentage of
total revenues, decreased to 11.0% for first nine months of fiscal 2003 from
11.6% for the first nine months of fiscal 2002.

Prior to 2003, we accounted for stock options issued to employees using the
intrinsic value method in accordance with the provisions of APB 25, Accounting
for Stock Issued to Employees, and related interpretations, and recognized
compensation expense to the extent the current market price of the underlying
stock exceeded the exercise price. Effective January 1, 2003, we adopted the
fair value recognition provisions of Statement of Financial Accounting No. 123
(SFAS 123), Accounting for Stock-Based Compensation, for stock-based employee
compensation. All prior periods presented have been restated to reflect the
compensation costs that would have been recognized had the recognition
provisions of SFAS 123 been applied to all awards granted to employees after
December 15, 1994. The effect of restating the results for the first nine
months of fiscal 2002 is that stock-based compensation expense for the period,
which is included in general and administrative expenses, increased by $302,000
from a recovery of $56,000, as previously reported, to an expense of $246,000.

Other non-operating expenses in the first nine months of fiscal 2003 include
$1.0 million of professional fees, which we incurred in exploring the
alternatives available to the Company in the context of the decision by Gotham
Partners (Gotham), our principal shareholder, to sell its ownership
interest. We expect that we will continue to incur professional advisor fees
until the Gotham matter has been resolved.

Income tax expense for fiscal 2003 includes our current tax liability for
Canadian operating profits, and capital and state taxes, and a deferred tax
expense as we utilized the balance of 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
2003. During the third quarter of 2003, we utilized all of our net operating
losses in Canada, and have now started to incur a current, rather than a
deferred, tax liability for any operating profits in Canada.

Earnings for the first nine months of 2003 were $0.5 million  a decrease of
$1.0 million from earnings for the first nine months of 2002 of $1.5 million.
This decrease is primarily due to lower gross margin of $0.3 million; higher
general and administrative expenses of $0.6 million; higher depreciation and
amortization of $0.1 million; $1.0 million of Special Committee expenses;
offset by an improvement in our share of Limited Liability company results of
$0.2 million; and lower income tax expense of $0.8 million.

LIQUIDITY AND CAPITAL RESOURCES

As at September 30, 2003, we had cash and cash equivalents of $20.7 million.
This represents an increase of $5.5 million for the first nine months of fiscal
2003 from the balance at December 31, 2002. The increase resulted from $7.1
million of cash generated from operations, $2.0 million provided by financing
activities and $1.1 million for the effect of exchange rate changes on cash;
offset by $4.7 million used in investing activities.

The cash generated from operations for the first nine months of fiscal 2003
includes the majority of the annual revenue we expect to generate from the
parking facilities at the PacBell and Miller Park baseball stadiums, as the
regular baseball season ends at the end of September. However, some of the rent
payable under the lease agreements for these facilities is not due until the
fourth quarter of 2003 or the first quarter of 2004. At September 30, 2003,
approximately $2.0 million was payable in respect of these agreements, and is
included in accrued liabilities on our Balance Sheet.

September was also a strong month for collecting revenue on our management
accounts. The end of the summer vacation period for many employees increased
traffic in many downtown cores and students return to colleges and universities
where we manage the parking. The net revenue collected on management accounts
is typically remitted to our landlords the following month, so Septembers net
revenue will typically be paid in October and is included in management
accounts payable on our Balance Sheet.

In the third quarter of fiscal 2003 we utilized the remaining net operating
losses that we had in Canada to offset taxable income. Accordingly, we started
to accrue for income taxes payable in Canada during the third quarter and had
accrued $0.3 million at September 30, 2003 in respect of the portion of third
quarter profits in Canada that were taxable. We

15



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##### 



expect to start paying tax instalments in Canada in the fourth quarter of
fiscal 2003 on account of income taxes payable for fiscal 2003.

The cash used in investing activities during the first nine months of fiscal
2003 included $3.0 million in respect of an advance license fee under a ten
year license agreement to manage the parking operations at Miller Park in
Milwaukee, Wisconsin. This prepayment is included in other assets and is being
amortized on a straight-line basis over the term of the agreement. We also paid
$1.1 million to the former shareholders of DLC during the first nine months of
fiscal 2003. This was the second of five annual deferred payments and 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, 2003. We had previously accrued this payment as part of
our acquisition. The difference of $135,000 from the amount previously accrued
has been allocated to goodwill. We also received during the first nine months
of fiscal 2003, $1.0 million from the San Francisco Giants in early settlement
of the outstanding balance due from them of $1.1 million for their share of the
parking facility development costs. The discount of $0.1 million was expensed
in the first nine months of fiscal 2003. The balance was originally to be
recovered from any future participation rent payable to the Giants.

At September 30, 2003, we had $5.9 million of bank debt outstanding. We
borrowed $3.0 million under our credit facility during the first nine months of
2003 to fund the advance license fee for Miller Park. After originally drawing
down $6.9 million on the non-revolving loan facility and using $2.2 million for
outstanding letters of credit, we have $10.9 million remaining of a $20.0
million credit facility with HSBC Canada to fund working capital requirements,
acquisitions and other capital investment opportunities.

In April 2003, under the terms of the acquisition agreement for the purchase of
E-Z Park Company Ltd., LLC in April 2000, we repaid the note payable of $0.5
million, including accrued interest, due to the vendor as deferred
consideration.

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.

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 a rights
offering, 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

With the exception of the $3.0 million of additional bank indebtedness, which
is included in current liabilities, there have been no material changes in our
contractual obligations and commercial commitments as at September 30, 2003
from those at December 31, 2002, which were disclosed in our Annual Report on
Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Interest Rates

The Companys primary exposure to market risk consists of changes in interest
rates on cash invested in short-term deposits. Although, as of September 30,
2003, we did not have any cash invested in short-term deposits, we may take the
opportunity in the future to invest in short-term deposits if interest rates
increase from present levels. Changes in interest rates could impact the
Companys anticipated interest income.

Our bank indebtedness of $5.9 million at September 30, 2003 bears interest at
rates that vary with changes in the London Interbank Offered Rate (LIBOR).
Based on our current borrowing level, a 1% change in LIBOR would impact net
earnings by less than $0.1 million annually.

Foreign Currency Exposure

We operate wholly owned subsidiaries in Canada. Total revenues from Canadian
operations amounted to $21.4 million and $18.6 million for the three months
ended September 30, 2003 and 2002, respectively, and $61.8 million and $55.4
million for the nine months ended September 30, 2003 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

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fluctuations is mitigated as the Canadian dollar revenues are offset by
Canadian dollar operating costs. In limited circumstances we have denominated
Canadian contracts in U.S. dollars to limit currency exposure. Our net
earnings in Canada for the nine months ended September 30, 2003 were
approximately $2.1 million, or C$3.0 million translated at the average exchange
rate for the period of C$1.00 = US$0.70. If the exchange rate used for the nine
months ended September 30, 2003 had been US$0.66 instead of US$0.70, the effect
would be to decrease our net earnings by less than $0.1 million. Presently, we
have no formal hedging programs and have no outstanding derivative contracts.
We would consider implementing a hedging program if such risk materially
increases.

ITEM 4. CONTROLS AND PROCEDURES.

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as
amended (the Exchange Act), the Companys management conducted an evaluation
with the participation of the Companys Chief Executive Officer and Chief
Financial Officer, regarding the effectiveness of the Companys disclosure
controls and procedures, as of the end of the last fiscal quarter. In
designing and evaluating the Companys disclosure controls and procedures, the
Company and its management recognize that any controls and procedures, no
matter how well designed and operated, can provide only a reasonable assurance
of achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating and implementing possible controls
and procedures. Based upon that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that they believe the Companys disclosure
controls and procedures are reasonably effective to ensure that information
required to be disclosed by the Company in the reports it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commissions rules
and forms. We intend to continue to review and document our disclosure
controls and procedures, including our internal controls and procedures for
financial reporting, and we may from time to time make changes to the
disclosure controls and procedures to enhance their effectiveness and to ensure
that our systems evolve with our business.

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PART II  OTHER INFORMATION

ITEM 1. 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 Sterling Parking Ltd. and the City of
Calgary in Calgary, Alberta and certain employees in Seattle, Washington,
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. Apart from developments in the City of Calgary business tax
matter and the addition of the Seattle matter, which are discussed below, 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 June 30, 2003.

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 commenced their own action in British Columbia on November 12,
1999, 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 $7.9 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 September 30, 2003 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).
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 $1.0 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. The MGB released its
decision in July 2003 and determined that the assessment method used by the
City in 2002 was not assessed fairly in that year. If the City does not appeal
this decision of the MGB, Impark Canada will be entitled to a refund of a
substantial portion of the assessed taxes for 2002. We are still determining
the impact, if any, of this decision upon amounts paid to the City in 2001 and
2003 as

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well. 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 were unsuccessful in
our first stage of appeal of the 2003 business taxes at the ARB in April 2003
and have appealed this decision to the MGB, which we expect will hear the
appeal in November 2003. We have amended our lawsuit against the City of
Calgary to include the 2002 and 2003 assessments. The lawsuit is currently in
pre-trial proceedings and no trial date has been set. We believe that the
Citys 2001, 2002 and 2003 business tax bylaws are void and invalid. With
respect to the 2001 business tax assessment, if we are unsuccessful in our
lawsuit against the City of Calgary, then we will not be entitled to the return
of any portion of the 2001 business tax assessment, which we have already paid
in 2001. With respect to the 2002 business tax assessment, if the City appeals
the July 2003 decision of the MGB and we are unsuccessful in defending the
appeal, and if we are unsuccessful in our lawsuit against the City of Calgary,
we will be required to pay the full amount of the 2002 assessment, currently
$1.0 million, for which we have fully accrued such amount at September 30,
2003. With respect to the 2003 business tax assessment, if we are unsuccessful
in appealing the assessment and if we are unsuccessful in our lawsuit against
the City of Calgary, we will be required to pay the full amount of the 2003
assessment, currently $0.9 million, for which we have accrued the proportionate
amount for the year at September 30, 2003.

On February 13, 2003, three former employees of Imperial Parking (U.S.), Inc.
(Impark US) in Seattle, Washington started a lawsuit against Impark US in
respect of alleged violations of the Washington Industrial Welfare Act. The
plaintiffs are seeking to have the lawsuit certified as a class action on
behalf of all current and former parking attendants of Impark US in Seattle.
The plaintiffs allege that Impark US, during the three year period prior to the
lawsuit and continuing to date: (a) failed to provide attendants with one
ten-minute paid rest break for each four hours of work, and (b) failed to pay
overtime pay to attendants. The plaintiffs seek monetary damages, statutory
penalties and injunctive relief on behalf of the class. The total damages
claimed by the plaintiffs are unspecified at this time and are stated to be
proven at trial. The lawsuit is in pre-trial proceedings. No trial date has
been set. We believe that the plaintiffs allegations are without merit, the
lawsuit should not be certified as a class action, and that the actual damages
suffered by the plaintiffs, if any, are minimal. We have accrued at September
30, 2003 our best estimate of costs related to this action; however; any
damages awarded against Impark US in excess of this amount could have a
material effect on our financial position and results of operation.

ITEM 2. CHANGES IN SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

There were no matters submitted to a vote of security holders during the
quarter.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



|(a) |  | List of 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.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Index to Exhibits
| | -----------------

Exhibit No.
    
    Description2.1
    
    
    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 (Incorporated by reference to
Exhibit 10.5 to the Companys Annual Report on Form 10-K as filed on
March 27, 2003).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 on 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).10.10
    
    
    Gottlin Employment Agreement (Incorporated by reference to
Exhibit 10.10 on the Companys Quarterly Report on Form 10-Q as filed
on May 12, 2003).21.1*
    
    
    Subsidiaries of the Registrant
(Attached herewith).31.1*
    
    
    Certification of Chief Executive Officer pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934 (Attached herewith)


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Exhibit No.
    
    Description31.2*
    
    
    Certification of Chief Financial Officer pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934 (Attached herewith)32.1*
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (Attached herewith)32.2*
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (Attached herewith)




|(b) |  | Reports on Form 8-K
|--- |  | -------------------



| |  | The following reports were filed on Form 8-K during the quarter ended
September 30, 2003.
| |  | -----------------------------------------------------------------------------------------



| |  | August 15, 2003  Item 12. Results of Operations and Financial Condition  Announcement of second quarter earnings
| |  | ------------------------------------------------------------------------------------------------------------------

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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 CORPORATIONDate: November 12, 2003
    
    /s/ J. Bruce Newsome
J. Bruce Newsome
Chief Financial Officer
(Authorized officer)


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