##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 2004 Commission file number 001-13950 CENTRAL PARKING CORPORATION 
  Tennessee
    
    62-1052916(State or Other Jurisdiction of Incorporation
or Organization)
    
    (I.R.S. Employer Identification No.)2401 21st Avenue South,Suite 200, Nashville, Tennessee
    
    37212(Address of Principal Executive Offices)
    
    (Zip Code)
 Registrants Telephone Number, Including Area Code: (615) 297-4255 Former name, address and fiscal year, if changed since last report: Not Applicable 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 [  ] Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES [X] NO [  ] Indicate the number of shares outstanding of each of the registrants classes
of common stock as of the latest practicable date. Class
    
    Outstanding at July 26, 2004Common Stock, $0.01 par value
    
    
    36,573,977




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INDEX CENTRAL PARKING CORPORATION AND SUBSIDIARIES PAGEPART I FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Consolidated Balance Sheets as of June 30, 2004 and September 30, 2003
    
    
    3Consolidated Statements of Operations for the three and nine months ended June 30, 2004 and 2003
    
    
    4Consolidated Statements of Cash Flows for the nine months ended June 30, 2004 and 2003
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosure about Market Risk
    
    
    22Item 4. Controls and Procedures
    
    
    22PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    23Item 6. Exhibits and Reports on Form 8-K
    
    
    24SIGNATURES
    
    
    26EX-10.1  SECOND AMENDMENT TO CREDIT AGREEMENTEX-31.1  SECTION 302 CEO CERTIFICATIONEX-31.2  SECTION 302 CFO CERTIFICATIONEX-32.1  SECTION 1350 CEO CERTIFICATIONEX-32.2  SECTION 1350 CFO CERTIFICATION




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##### Table of Contents



Part I. Financial Information 
 Item 1. Financial Statements CENTRAL PARKING CORPORATION AND SUBSIDIARIES 
 CONSOLIDATED BALANCE SHEETS
 UNAUDITED
 Amounts in thousands, except share data June 30,
    
    September 30,2004
    
    2003ASSETSCurrent assets:Cash and cash equivalents
    
    $
    29,988
    
    
    $
    31,572Management locations accounts receivable, net of allowance for doubtful accounts
of $2,986 and $3,720 at June 30, 2004 and September 30, 2003, respectively
    
    
    42,056
    
    
    
    34,174Accounts
receivable - other
    
    
    9,342
    
    
    
    15,440Current portion of notes receivable (including amounts due from related parties of
$2,176 at June 30, 2004 and $3,370 at September 30, 2003)
    
    
    5,446
    
    
    
    8,220Prepaid expenses
    
    
    15,405
    
    
    
    11,424Assets held for sale
    
    
    15,775
    
    
    
    39,417Refundable income taxes
    
    
    1,237
    
    
    
    5,483Total current assets
    
    
    119,249
    
    
    
    145,730Notes receivable, less current portion
    
    
    39,884
    
    
    
    40,879Property, equipment, and leasehold improvements, net
    
    
    392,934
    
    
    
    414,265Contracts and lease rights, net
    
    
    89,716
    
    
    
    102,315Goodwill, net
    
    
    232,562
    
    
    
    230,312Investment in and advances to partnerships and joint ventures
    
    
    9,531
    
    
    
    13,649Other assets
    
    
    44,447
    
    
    
    42,297Total assets
    
    $
    928,323
    
    
    $
    989,447LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt and capital lease obligations
    
    $
    15,461
    
    
    $
    3,623Trade accounts payable
    
    
    73,155
    
    
    
    80,128Accrued expenses
    
    
    44,666
    
    
    
    43,661Management locations accounts payable
    
    
    25,835
    
    
    
    22,392Total current liabilities
    
    
    159,117
    
    
    
    149,804Long-term debt and capital lease obligations, less current portion
    
    
    176,605
    
    
    
    266,961Subordinated convertible debentures
    
    
    78,085
    
    
    
    78,085Deferred rent
    
    
    25,273
    
    
    
    27,569Deferred income taxes
    
    
    6,465
    
    
    
    3,010Other liabilities
    
    
    14,900
    
    
    
    16,303Total liabilities
    
    
    460,445
    
    
    
    541,732Minority interest
    
    
    29,939
    
    
    
    31,189Shareholders equity:Common stock, $0.01 par value; 50,000,000 shares authorized, 36,568,144
and 36,170,274 shares issued and outstanding at June 30, 2004 and
September 30, 2003, respectively
    
    
    366
    
    
    
    362Additional paid-in capital
    
    
    249,459
    
    
    
    246,559Accumulated other comprehensive income, net
    
    
    2,336
    
    
    
    78Retained earnings
    
    
    186,483
    
    
    
    170,232Other
    
    
    (705
    )
    
    
    (705
    )Total shareholders equity
    
    
    437,939
    
    
    
    416,526Total liabilities and shareholders equity
    
    $
    928,323
    
    
    $
    989,447
 See accompanying notes to consolidated financial statements. 3




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CENTRAL PARKING CORPORATION AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 UNAUDITED
 Amounts in thousands, except per share data Three months ended June 30,
    
    Nine months ended June 30,2004
    
    2003
    
    2004
    
    2003Revenues:Parking
    
    $
    148,502
    
    
    $
    150,612
    
    
    $
    445,543
    
    
    $
    444,059Management locations contracts
    
    
    33,145
    
    
    
    30,273
    
    
    
    96,827
    
    
    
    89,599181,647
    
    
    
    180,885
    
    
    
    542,370
    
    
    
    533,658Reimbursement of management contract expenses
    
    
    113,590
    
    
    
    104,636
    
    
    
    340,149
    
    
    
    309,338Total revenues
    
    
    295,237
    
    
    
    285,521
    
    
    
    882,519
    
    
    
    842,996Costs and expenses:Cost of parking
    
    
    134,559
    
    
    
    140,348
    
    
    
    401,221
    
    
    
    411,940Cost of management locations contracts
    
    
    13,827
    
    
    
    16,516
    
    
    
    42,749
    
    
    
    48,531General and administrative
    
    
    18,026
    
    
    
    24,778
    
    
    
    55,005
    
    
    
    66,175166,412
    
    
    
    181,642
    
    
    
    498,975
    
    
    
    526,646Reimbursed management contract expenses
    
    
    113,590
    
    
    
    104,636
    
    
    
    340,149
    
    
    
    309,338Total costs and expenses
    
    
    280,002
    
    
    
    286,278
    
    
    
    839,124
    
    
    
    835,984Property-related gains (losses), net
    
    
    1,170
    
    
    
    (4,108
    )
    
    
    5,705
    
    
    
    (7,287
    )Operating earnings (loss)
    
    
    16,405
    
    
    
    (4,865
    )
    
    
    49,100
    
    
    
    (275
    )Other income (expenses):Interest income
    
    
    1,217
    
    
    
    1,139
    
    
    
    3,643
    
    
    
    3,489Interest expense
    
    
    (3,793
    )
    
    
    (4,841
    )
    
    
    (12,134
    )
    
    
    (13,389
    )Interest expense  subordinated debentures
    
    
    (1,045
    )
    
    
    (1,045
    )
    
    
    (3,134
    )
    
    
    (3,134
    )Gain on sale of non-operating assets
    
    
    
    
    
    
    38
    
    
    
    
    
    
    
    3,279Equity in partnership and joint venture (losses) earnings
    
    
    (402
    )
    
    
    293
    
    
    
    (2,389
    )
    
    
    1,824Earnings (loss) from continuing operations before minority interest and
income taxes
    
    
    12,382
    
    
    
    (9,281
    )
    
    
    35,086
    
    
    
    (8,206
    )Minority interest, net of tax
    
    
    (778
    )
    
    
    (884
    )
    
    
    (2,435
    )
    
    
    (3,244
    )Earnings (loss) from continuing operations before income taxes
    
    
    11,604
    
    
    
    (10,165
    )
    
    
    32,651
    
    
    
    (11,450
    )Income tax (expense) benefit
    
    
    (5,059
    )
    
    
    5,221
    
    
    
    (13,265
    )
    
    
    4,615Earnings (loss) from continuing operations
    
    
    6,545
    
    
    
    (4,944
    )
    
    
    19,386
    
    
    
    (6,835
    )Discontinued operations, net of tax
    
    
    (577
    )
    
    
    (184
    )
    
    
    (1,488
    )
    
    
    (578
    )Net earnings (loss)
    
    $
    5,968
    
    
    $
    (5,128
    )
    
    $
    17,898
    
    
    $
    (7,413
    )Basic earnings (loss) per share:Earnings (loss) from continuing operations
    
    $
    0.18
    
    
    $
    (0.13
    )
    
    $
    0.53
    
    
    $
    (0.19
    )Discontinued operations, net of tax
    
    
    (0.02
    )
    
    
    (0.01
    )
    
    
    (0.04
    )
    
    
    (0.02
    )Net earnings (loss)
    
    $
    0.16
    
    
    $
    (0.14
    )
    
    $
    0.49
    
    
    $
    (0.21
    )Diluted earnings (loss) per share:Earnings (loss) from continuing operations
    
    $
    0.18
    
    
    $
    (0.13
    )
    
    $
    0.53
    
    
    
    (0.19
    )Discontinued operations, net of tax
    
    
    (0.02
    )
    
    
    (0.01
    )
    
    
    (0.04
    )
    
    
    (0.02
    )Net earnings (loss)
    
    $
    0.16
    
    
    $
    (0.14
    )
    
    $
    0.49
    
    
    $
    (0.21
    )Weighted average shares used for basic per share data
    
    
    36,435
    
    
    
    36,078
    
    
    
    36,277
    
    
    
    36,008Effect of dilutive common stock options
    
    
    300
    
    
    
    
    
    
    
    211
    
    
    
    Weighted average shares used for dilutive per share data
    
    
    36,735
    
    
    
    36,078
    
    
    
    36,488
    
    
    
    36,008
 See accompanying notes to consolidated financial statements. 4




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CENTRAL PARKING CORPORATION AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 UNAUDITED
 Amounts in thousands Nine months ended June 30,2004
    
    2003Cash flows from operating activities:Net earnings (loss)
    
    $
    17,898
    
    
    $
    (7,413
    )Loss from discontinued operations
    
    
    1,488
    
    
    
    578Earnings (loss) from continuing operations
    
    
    19,386
    
    
    
    (6,835
    )Adjustments to reconcile earnings (loss) from continuing operations to net cash provided by operating activities:Depreciation and amortization
    
    
    24,781
    
    
    
    24,754Equity in partnership and joint venture losses (earnings)
    
    
    2,389
    
    
    
    (1,824
    )Distributions from partnerships and joint ventures
    
    
    1,237
    
    
    
    1,375Gain on sale of non-operating assets
    
    
    
    
    
    
    (3,279
    )Property-related (gains) losses, net
    
    
    (5,705
    )
    
    
    7,287Decrease in fair value of derivatives
    
    
    
    
    
    
    630Deferred income tax expense (benefit)
    
    
    4,346
    
    
    
    (9,866
    )Minority interest, net of tax
    
    
    2,435
    
    
    
    3,244Changes in operating assets and liabilities:Management locations accounts receivable
    
    
    (7,882
    )
    
    
    3,612Accounts receivable  other
    
    
    6,098
    
    
    
    2,317Prepaid expenses
    
    
    (3,981
    )
    
    
    (1,613
    )Other assets
    
    
    (7,478
    )
    
    
    12,600Trade accounts payable, accrued expenses and other liabilities
    
    
    (13,319
    )
    
    
    4,940Management locations accounts payable
    
    
    3,443
    
    
    
    1,511Deferred rent
    
    
    (2,296
    )
    
    
    (1,130
    )Refundable income taxes
    
    
    4,246
    
    
    
    (10,904
    )Income taxes payable
    
    
    
    
    
    
    (9,851
    )Net cash provided by operating activities  continuing operations
    
    
    27,700
    
    
    
    16,968Net cash provided (used) by operating activities  discontinued operations
    
    
    973
    
    
    
    (515
    )Net cash provided by operating activities
    
    
    28,673
    
    
    
    16,453Cash flows from investing activities:Proceeds from disposition of property and equipment
    
    
    62,026
    
    
    
    17,918Purchases of equipment and leasehold improvements
    
    
    (10,442
    )
    
    
    (51,952
    )Purchases of property
    
    
    (1,725
    )Purchases of contracts and lease rights
    
    
    (4,530
    )
    
    
    (7,186
    )Acquisitions, net of cash acquired
    
    
    
    
    
    
    (1,997
    )Other investing activities
    
    
    4,248
    
    
    
    4,963Net cash provided (used) by investing activities
    
    
    49,577
    
    
    
    (38,254
    )Cash flows from financing activities:Dividends paid
    
    
    (1,647
    )
    
    
    (1,623
    )Net repayments under revolving credit agreement
    
    
    (59,000
    )
    
    
    (74,500
    )Proceeds from issuance of notes payable, net of issuance costs
    
    
    1,864
    
    
    
    176,332Principal repayments on long-term debt and capital lease obligations
    
    
    (21,382
    )
    
    
    (78,299
    )Payment to minority interest partners
    
    
    (3,224
    )
    
    
    (3,914
    )Proceeds from issuance of common stock and exercise of stock options
    
    
    2,904
    
    
    
    2,995Net cash (used) provided by financing activities
    
    
    (80,485
    )
    
    
    20,991Foreign currency translation
    
    
    651
    
    
    
    822Net (decrease) increase in cash and cash equivalents
    
    
    (1,584
    )
    
    
    12Cash and cash equivalents at beginning of period
    
    
    31,572
    
    
    
    33,498Cash and cash equivalents at end of period
    
    $
    29,988
    
    
    $
    33,510Non-cash transactions:Unrealized gain on fair value of derivatives, net of tax
    
    $
    1,608
    
    
    $
    857Reclassification of assets held for sale
    
    $
    16,613
    
    
    $
    Issuance of shares related to the deferred stock unit plan
    
    $
    476
    
    
    $
    Cash payments for:Interest
    
    $
    14,642
    
    
    $
    7,364Income taxes
    
    $
    5,888
    
    
    $
    13,453
 See accompanying notes to consolidated financial statements. 5




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CENTRAL PARKING CORPORATION AND SUBSIDIARIES 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 UNAUDITED
 (1) Basis of Presentation A.The accompanying unaudited consolidated financial statements of Central
Parking Corporation and subsidiaries (Central Parking or the Company) have
been prepared in accordance with U.S. generally accepted accounting principles
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by U.S. generally accepted accounting principles for complete financial
statements. In the opinion of management, the unaudited consolidated financial
statements reflect all adjustments considered necessary for a fair
presentation, consisting only of normal and recurring adjustments. All
significant inter-company transactions have been eliminated in consolidation.
Operating results for the three and nine months ended June 30, 2004 are not
necessarily indicative of the results that may be expected for the fiscal year
ending September 30, 2004. For further information, refer to the consolidated
financial statements and footnotes thereto for the year ended September 30,
2003 (included in the Companys Annual Report on Form 10-K). Certain prior
period amounts have been reclassified to conform to the current year
presentation. B.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 including Financial Accounting
Standards Board (FASB) Interpretation No. 44, Accounting for Certain
Transactions involving Stock Compensation, an interpretation of APB Opinion No.
25,to account for its fixed-plan stock options. Under this method,
compensation expense is recorded on the date of grant only if the current
market price of the underlying stock exceeded the exercise price. Statement of
Financial Accounting Statements (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 No. 123 and SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, an amendment of FASB Statement No.
123, the Company has elected to continue to apply the intrinsic-value-based
method of accounting described above, and has adopted only the disclosure
requirements of these statements. The following table illustrates the effect on
net earnings (loss) if the fair-value-based method had been applied to all
outstanding and unvested awards in each period (in thousands except per share
data). Three Months ended June 30,
    
    Nine Months ended June 30,2004
    
    2003
    
    2004
    
    2003Net earnings (loss), as reported
    
    $
    5,968
    
    
    $
    (5,128
    )
    
    $
    17,898
    
    
    $
    (7,413
    )Add stock-based employee
compensation expense included
in reported net earnings
(loss), net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deduct total stock-based
employee compensation expense
determined under
fair-value-based method for all
awards, net of tax
    
    
    (819
    )
    
    
    (1,213
    )
    
    
    (2,081
    )
    
    
    (3,816
    )Pro forma net earnings (loss)
    
    $
    5,149
    
    
    $
    (6,341
    )
    
    $
    15,817
    
    
    $
    (11,229
    )Earnings (loss) per share:Basic-as reported
    
    $
    0.16
    
    
    $
    (0.14
    )
    
    $
    0.49
    
    
    $
    (0.21
    )Basic-pro forma
    
    $
    0.14
    
    
    $
    (0.18
    )
    
    $
    0.44
    
    
    $
    (0.31
    )Diluted-as reported
    
    $
    0.16
    
    
    $
    (0.14
    )
    
    $
    0.49
    
    
    $
    (0.21
    )Diluted-pro forma
    
    $
    0.14
    
    
    $
    (0.18
    )
    
    $
    0.43
    
    
    $
    (0.31
    )
 Deductions for stock-based employee compensation expense in the table
above were calculated using the Black-Scholes option pricing model. The
Company utilizes both the single option and multiple option valuation
approaches. Allocations of compensation expense were made using historical
option terms for option grants made to the Companys employees and historical
Central Parking Corporation stock price volatility. The Company applies a 38%
tax rate to arrive at the after tax deduction. 6




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The estimated weighted average fair value of the options granted was $6.60
for 2003 option grants and $11.35 for 2002 option grants using the
Black-Scholes option pricing model with the following assumptions: weighted
average dividend yield based on historic dividend rates at the date of grant,
weighted average volatility of 50% for fiscal year 2003, and 41% for fiscal
year 2002, weighted average risk free interest based on the treasury bill rate
of 10-year instruments at the date of grant, and a weighted average expected
term of 4.9 years for 2003 and 4.3 years for 2002. There have been no options
granted during 2004. (2) Acquisitions Sterling Parking LTD Effective May 1, 2003, the Company purchased 100% of the common stock of
Sterling Parking Limited in Calgary, Alberta for $1,996,567. The purchase
included 18 management and 9 leased locations. The fair value of assets and
liabilities acquired as of the acquisition date was as follows (in thousands): Tangible assets
    
    $
    632Contract rights
    
    
    2,333Liabilities assumed
    
    
    (968
    )Net assets acquired
    
    $
    1,997
 The tangible assets primarily consisted of accounts receivable, equipment
and leasehold improvements, and prepaid lease payments. The purchase price was
paid in cash at closing of which $319,030 went directly to the seller. The
remainder of the purchase price is being held in escrow with the closing
attorney pending the disposition of a business tax proceeding in Calgary as
well as an estoppel holdback. Lease rights In 1992 the Company entered into an agreement to lease and operate certain
locations in New York City. The 1992 agreement, which terminates in August
2004, initially covered approximately 80 locations; however, all but seven of
these locations had been renegotiated with extended terms or terminated as of
September 30, 2002. The Company is entitled to receive a termination fee, as
defined in the agreement, as the landlord disposes of certain properties or
renegotiates the lease agreements. The termination fee is based on the
earnings of the location over the remaining duration of the agreement. The
termination amounts have been recorded as deferred rent and are being amortized
through August 2004 to offset the rent payments due under the 1992 agreement.
Amortization for the quarter ended June 30, 2004, was $1.0 million. The
Company has reached tentative agreement to continue to operate six of the seven
locations when the existing agreement expires at the end of August 2004. These
locations will be converted from leased to managed. The seventh location has
been sold and the Company is operating the location for the new owner under a
lease. In October 2002, the Company executed an agreement with Connex South
Eastern Limited, a private rail company headquartered in the United Kingdom, to
lease 82 parking facilities throughout the United Kingdom. Connex was
responsible for operating certain rail lines for the Strategic Rail Authority,
a United Kingdom government agency. Under the terms of the lease agreement, the
Company paid an upfront payment of $6.4 million for the right to lease these
facilities and agreed to invest approximately $5 million in property
improvements at these locations. The $6.4 million of upfront payments and $5
million in property improvements were to be amortized over the nine-year term
of the lease. During the third quarter of 2003, the Company was informed that
Connex would be removed as the private operator by the Strategic Rail
Authority. Under the lease agreement Connex was required to reimburse the
Company for the unamortized upfront payments. In November 2003, the Company
entered into a management agreement with the Strategic Rail Authority to
operate the same 82 parking facilities covered by the Connex lease, for a five
year term. In accordance with the management agreement, the Strategic Rail
Authority agreed to acquire the Companys property improvements under the
former Connex agreement. In November 2003, Connex made a settlement payment
to the Company to reimburse the Company for the upfront and property
improvement payments of $11.4 million and for $19.2 million for other capital
expenditures. The Company realized a gain of $0.4 million related to the
settlement of the agreement. (3) Earnings (Loss) Per Share Basic earnings (loss) per share excludes dilution and is computed by dividing income (loss) available to common shareholders
by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential
dilution that could occur if securities or other contracts to issue common stock were 7




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exercised or converted into common stock, or if restricted shares of common
stock were to become fully vested. For the three and nine months ended June 30, 2003, the reported net loss
resulted in all options to purchase common shares being excluded from the
calculation of diluted common shares since they were anti-dilutive. For the
three months ended June 30, 2004, options to purchase 1,611,687 shares are
excluded from the diluted common shares since they are anti-dilutive. For the
nine months ended June 30, 2004, options to purchase 2,938,869 shares are
excluded from the calculation of diluted common shares since they are
anti-dilutive. The subordinated convertible debentures have not been included
in the diluted earnings (loss) per share calculation since such securities are
anti-dilutive. Such securities were convertible into 1,419,588 shares of common
stock on both June 30, 2004 and 2003. (4) Property-Related Gains (Losses), Net The Company routinely disposes of or impairs owned properties, leasehold
improvements, contract rights, lease rights and other long-term deferred
expenses due to various factors, including economic considerations, unsolicited
offers from third parties, loss of contracts and condemnation proceedings
initiated by local government authorities. Leased and managed properties are
also periodically evaluated and determinations may be made to sell or exit a
lease obligation. Gains and losses on the sale or condemnation of property,
equipment, leasehold improvements, contract rights and lease rights are
included as a component of discontinued operations as are gains and losses on
the termination, prior to the end of the contractual term, of lease or
management obligations. Impairments associated with parking facilities that are
classified as assets held-for-sale are also included as a component of
discontinued operations unless the Company intends to sell the property and
subsequently manage it. Impairment charges for property, equipment, leasehold
improvements, and contract and lease rights for locations that are not being
discontinued are included as a component of property-related gains or losses.
Gains or losses on the sale of properties include partial property
sales and properties for which the company has the intent and ability
to manage. A
summary of property-related gains and losses for the three and nine months
ended June 30, 2004 and June 30, 2003 is as follows (in thousands): Three months ended
    
    Nine months endedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Net gains on sales of property
    
    $
    5,762
    
    
    $
    272
    
    
    $
    12,022
    
    
    $
    264Impairment charges for property,
equipment and leasehold improvements held
for use
    
    
    
    
    
    
    (3,436
    )
    
    
    (1,365
    )
    
    
    (1,612
    )Impairment charges for contract rights,
lease rights and other intangible assets
    
    
    (4,592
    )
    
    
    (944
    )
    
    
    (4,952
    )
    
    
    (5,939
    )Total property-related gains (losses), net
    
    $
    1,170
    
    
    $
    (4,108
    )
    
    $
    5,705
    
    
    $
    (7,287
    )
 (5) Amortizable Intangible Assets As of June 30, 2004, the Company had the following amortizable intangible
assets (in thousands): GrossCarrying
    
    AccumulatedAmount
    
    Amortization
    
    NetContracts and lease rights
    
    $
    143,399
    
    
    $
    (53,683
    )
    
    $
    89,716Noncompete agreements
    
    
    2,575
    
    
    
    (2,381
    )
    
    
    194Total
    
    $
    145,974
    
    
    $
    (56,064
    )
    
    $
    89,910
 Amortization
expense related to the contracts and lease rights was $2.3
million and $2.8 million respectively, for the three months ended June 30, 2004
and 2003 and $7.1 million and $7.7 million, respectively, for the nine months
ended June 30, 2004 and 2003. (6) Long-Term Debt On February 28, 2003, the Company entered into a credit facility (the
Credit Facility) initially providing for an aggregate availability of up to
$350 million consisting of a five-year $175 million revolving loan, including a
sub-limit of $60 million for standby letters of credit, and a $175 million
seven-year term loan. The facility is secured by the stock of certain
subsidiaries of the Company, certain real estate assets, and domestic personal
property assets of the Company and certain subsidiaries. The Company has
reduced the maximum loan commitment from $350.0 8




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million to $322.2 million as of
June 30, 2004. This permanent reduction is as a result of $2.2 million of
scheduled amortization and $25.6 million of prepayments related to property
dispositions. The Company amended the Credit Facility in June 2004. The amendment
reduced the margin applied to the term loan by 75 basis points, which was
included in the weighted average margin at June 30, 2004, and increased the
standby letters of credit sub-limit by $30.0 million to $90.0 million. The
Company uses its revolving loan to collateralize outstanding letters of credit.
All other terms and conditions remained the same. The Credit Facility bears interest at LIBOR plus a tier-based margin
dependent upon certain financial ratios. There are separate tiers for the
revolving loan and term loan. The weighted average margin as of June 30, 2004
was 275 basis points. The amount outstanding under the Companys Credit
Facility was $158.1 million with a weighted average interest rate of 4.8% as of
June 30, 2004. The term loan is required to be repaid in quarterly payments of
$437,500 through March 2008 and quarterly payments of $20.8 million from June
2008 through March 2010. The aggregate availability under the Credit Facility
was $110.2 million at June 30, 2004, which is net of $54.0 million of stand-by
letters of credit. The Company had deferred financing costs related to the
Credit Facility of $7.1 million as of June 30, 2004 and $6.4 million as of June
30, 2003. The Company amortizes these costs over the term of the loan. The Credit Facility contains covenants including those that require the
Company to maintain certain financial ratios, restrict further indebtedness and
certain acquisition activity and limit the amount of dividends paid. The
primary ratios are a leverage ratio, senior leverage ratio and a fixed charge
coverage ratio. Quarterly compliance is calculated using a four quarter rolling
methodology and is measured against certain targets. The Company was in
compliance with the covenants at June 30, 2004. (7) Subordinated Convertible Debentures On March 18, 1998, the Company created Central Parking Finance Trust
(Trust) which completed a private placement of 4,400,000 shares at $25.00 per
share of 5.25% convertible trust issued preferred securities (Preferred
Securities) pursuant to an exemption from registration under the Securities
Act of 1933, as amended. The net proceeds to the Company from the Preferred
Securities private placement were $106.5 million. The Preferred Securities
represent preferred undivided beneficial interests in the assets of Central
Parking Finance Trust, a statutory business trust formed under the laws of the
State of Delaware. The Company owns all of the common securities of the Trust.
The Trust exists for the sole purpose of issuing the Preferred Securities and
investing the proceeds thereof in an equivalent amount of 5.25% Convertible
Subordinated Debentures (Convertible Debentures) of the Company due 2028.
Each Preferred Security is entitled to receive cumulative cash distributions at
an annual rate of 5.25% (or $1.312 per share) and will be convertible at the
option of the holder thereof into shares of Company common stock at a
conversion rate of 0.4545 shares of Company common stock for each Preferred
Security (equivalent to $55.00 per share of Company common stock), subject to
adjustment in certain circumstances. The Preferred Securities prohibit the
payment of dividends on Companys common stock if the quarterly distributions
on the Preferred Securities are not made for any reason. The Preferred
Securities do not have a stated maturity date but are subject to mandatory
redemption upon the repayment of the Convertible Debentures at their stated
maturity (April 1, 2028) or upon acceleration or earlier repayment of the
Convertible Debentures. The Preferred Securities are owned by a few large
investors. In December 2003, the FASB issued FASB Interpretation No. 46 (revised
December 2003) (FIN 46R), Consolidation of Variable Interest Entities,which
addresses how a business enterprise should evaluate whether it has a
controlling financial interest in an entity through means other than voting
rights and accordingly should consolidate the entity. FIN 46R replaces FASB
Interpretation No. 46, Consolidation of Variable Interest Entities,which was
issued in January 2003. FIN 46Rs transition guidance required the application of either FIN 46 or
FIN 46R to all Special Purpose Entities (SPEs) in which the Company holds a
variable interest no later than the end of the first reporting period ending
after December 15, 2003. Under the provisions of both FIN 46 and FIN 46R, the
Trust is considered an SPE in which the Company holds a variable interest
because the Trusts activities are generally so restricted and predetermined
that the holders of the Preferred Securities lack the direct or indirect
ability to make decisions about the Trusts activities through voting rights or
similar rights. During the quarter ended December 31, 2003, the Company
adopted the provisions of FIN 46R to account for its variable interest in the
Trust. Since a majority of the Preferred Securities issued by the Trust are owned
by a few investors, the Company is not deemed to be the primary beneficiary
under FIN 46R. Additionally, the Trusts common stock equity held by the
Company would not be considered at risk and therefore, the common stock equity
would not absorb any expected losses of the Trust. Accordingly, under the
provisions of FIN 46R, the Company does not have a significant variable 9




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interest in the Trust. Therefore, the Company deconsolidated the Trust upon
adoption of FIN 46R by removing, on the consolidated balance sheets, the amount
previously recorded as Company-obligated mandatorily redeemable securities of a
subsidiary trust and recorded, as a component of long-term liabilities,
subordinated convertible
debentures. Additionally, the amounts previously reported as dividends on
Company-obligated mandatorily redeemable securities of a subsidiary trust, were
renamed as interest expense-subordinated convertible debentures on the
consolidated statements of operations. As permitted by FIN 46R, the Company
elected to restate the prior period amounts to conform to the current year
presentation. (8) Derivative Financial Instruments The Company uses variable rate debt to finance its operations. These debt
obligations expose the Company to variability in interest payments due to
changes in interest rates. If interest rates increase, interest expense
increases. Conversely, if interest rates decrease, interest expense also
decreases. Management believes it is prudent to limit the variability of its
interest payments. To meet this objective, the Company may enter into various types of
derivative instruments to manage fluctuations in cash flows resulting from
interest rate risk. These instruments include interest rate swaps and caps.
Under the interest rate swaps, the Company receives variable interest rate
payments and makes fixed interest rate payments, thereby creating fixed-rate
debt. The purchased interest rate cap agreements also protect the Company from
increases in interest rates that would result in increased cash interest
payments made under its Credit Facility. Under the interest rate cap
agreements, the Company has the right to receive cash if interest rates
increase above a specified level. The Company does not enter into derivative instruments for any purpose
other than cash flow hedging purposes. That is, the Company does not speculate
using derivative instruments. The Company assesses interest rate cash flow
risk by continually identifying and monitoring changes in interest rate
exposures that may adversely impact expected future cash flows and by
evaluating hedging opportunities. The Company maintains risk management
control systems to monitor interest rate cash flow risk attributable to the
Companys outstanding or forecasted debt obligations as well as the Companys
offsetting hedge positions. The risk management control systems involve the
use of analytical techniques, including cash flow sensitivity analysis, to
estimate the expected impact of changes in interest rates on the Companys
future cash flows. At June 30, 2004, the Companys derivative financial instruments consisted
of three interest rate swaps with a combined notional amount of $100.3 million.
The derivative financial instruments are reported at their fair values and are
included as other assets or other liabilities on the face of the consolidated
balance sheets. The following table lists the fair value of these derivative
financial instruments (amounts in thousands): June 30,
    
    September 30,2004
    
    2003Derivative instrument assets:Interest rate swaps
    
    $
    2,273
    
    
    $
    Derivative instrument liabilities:Interest rate swaps
    
    $
    
    
    
    $
    776
 The underlying terms of these interest rate swaps, including the notional
amount, interest rate index, duration, and reset dates, are identical to those
of the associated debt instruments and therefore the hedging relationship
results in no ineffectiveness. Accordingly, such derivative instruments are
classified as cash flow hedges. As such, any changes in the fair market value
of these derivative instruments are included in accumulated other comprehensive
income (AOCI) on the face of the consolidated balance sheets. The Company had a $25.0 million swap that matured on October 29, 2003.
This swap hedged a credit facility that was paid in full in February 2003.
Under the terms of that agreement, the Company continued to pay the fixed
interest through maturity. Because this swap was no longer associated with any
existing debt, it was considered ineffective. Therefore, any change in fair
value subsequent to February 2003 was reflected in the consolidated statements
of operations. Additionally the Company had three interest rate cap
agreements, which matured on March 19, 2004, and previously hedged the credit
facility paid in full in February 2003. Because the cap agreements were no
longer associated with any existing debt, they were also considered
ineffective. Therefore any change in fair value subsequent to February 2003,
was reflected in the consolidated statements of operations. 10




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(9) Discontinued Operations As
of and for the nine months ended June 30, 2004, the Company had
certain locations designated as discontinued operations which were either held-for-sale
or disposed during the current year. For the nine months ended June 30,
2004, the locations had revenues of $2.9 million, pretax loss of $2.5 million,
and $1.0 million of income tax benefit, resulting in a loss from discontinued
operations of $1.5 million, net of $2.5 million in property related losses.
The facts and circumstances leading to discontinued operations classification
and the expected disposals include expected property sales, condemnations, or
early lease and management agreement terminations. Included in the three and
nine months ended June 30, 2004 is the year-to-date results of operations for
all locations discontinued during the first quarter, second quarter and third
quarter of 2004 as well as the locations designated as held-for-sale during
fiscal year 2003 but not yet sold. The Companys prior period results were
reclassified to reflect the operations of the locations discontinued in the
first quarter, second quarter and third quarter of fiscal 2004 as well as the
locations designated as held-for-sale during fiscal year 2003 but not yet sold,
as discontinued operations net of related income taxes. (10) Recently Adopted Accounting Pronouncements Effective January 1, 2004, the Company adopted FIN 46R for VIEs except
for the Companys Trust for which the Company adopted FIN 46R on October 1,
2003. The adoption of FIN 46R resulted in a deconsolidation of the Companys
Trust (see Note 7). Under FIN 46R, the Company
holds a variable interest in 17 variable interest entities, for which it is
not the primary beneficiary as follows: Number ofCommencement
    
    Nature of
    
    %
    
    
    
    ParkingEntity
    
    of Operations
    
    Activities
    
    Ownership
    
    Location
    
    SpacesCentral Parking
    
    Aug-94
    
    Leases and
    
    
    50.00
    %
    
    Mexico
    
    
    64,062System of Mexico,
    
    
    
    manages parkingSA De CV
    
    
    
    lotsOther investments
    
    Oct 80-July 99
    
    Ownership,
    
    3.32%- 50%
    
    Mexico and
    
    
    11,608in 16 VIEs
    
    
    
    management, and
    
    
    
    
    
    Various statesleases of parkinglots
 Except for the deconsolidation of the Companys Trust, the adoption of FIN
46R had no impact on the Companys consolidated financial statements. (11) Commitments and Contingencies In June and July 2003, four stockholders filed separate lawsuits against
the Company, its former CEO, its former CFO and its current CEO in the U. S.
District Court for the Middle District of Tennessee. The plaintiff in each
case sought to represent a plaintiff class of purchasers of Central Parkings
Common Stock. The plaintiff in each case claimed that the defendants made
material misrepresentations and/or omissions in connection with the Companys
financial statements for the quarter and the fiscal year ended September 30,
2002 and about the Companys internal controls in violation of the Securities
Exchange Act of 1934, which allegedly caused the plaintiffs to buy Company
stock at inflated prices. The cases have been consolidated by the Court. By
order dated December 10, 2003, the Court has consolidated the cases now
identified as In re: Central Parking Corporation Securities Litigation, civil
action No. 03-CV-0546, appointed two individuals as co-lead plaintiffs and
approved their selection of counsel. The plaintiffs filed an amended complaint
on February 13, 2004 in which plaintiffs added the Companys Registered Public
Accountant as a defendant and in which the plaintiffs added a number of
allegations. The amended complaint also seeks to extend the putative class
period during which investors purchased the Companys Common Stock by
approximately nine months (the new class period is February 5, 2002 to February
13, 2003). On April 23, 2004, the Company filed motions to dismiss the lawsuit
and the plaintiffs have responded to the motions to dismiss. On
August 11, 2004, the court denied the Central defendants motions to
dismiss. The litigation is
in its preliminary stages and the amount of potential loss, if any, cannot
reasonably be estimated. The Company, Pepsi Cola Company, and several related Pepsi companies and
individuals are co-defendants in a lawsuit filed in the 270th Judicial District
Court in Harris County, Texas, by an individual, David Loftus, and three
companies affiliated with Mr. Loftus known as PepsiPark USA, Inc. The
plaintiffs in the suit allege, among other things, that the Company and Pepsi
conspired to misappropriate a concept developed by the plaintiffs for selling
Pepsi products and other vending machine products to parking customers.
Plaintiffs allege substantial damages relating to the 11




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concept based on several
causes of action, including breach of contract, misrepresentation, breach of
fiduciary duties, fraud, conversion and unfair competition. The suit, which
was initially filed on June 24, 2002, was amended on April 24, 2003, to add
allegations against the Company for underpayment of percentage rent with
respect to three parking lots
leased to the Company by Mr. Loftus and related companies. The plaintiffs
allege, among other things, breach of contract and fraud with respect to these
parking lots, and are currently seeking damages for allegedly unpaid percentage
rent of $1.3 million plus interest and attorneys fees and expenses, which is in
addition to the damages being sought in connection with the alleged
misappropriation of plaintiffs concept. The plaintiffs also are seeking
unspecified exemplary damages. On May 9, 2003, the suit was again amended to
add an allegation that the Company refused to implement the plaintiffs concept
for selling vending machine products to parking lot customers to avoid
liability for past underreporting of revenues. During mediation in June 2004,
the Company and Pepsi Cola Company tentatively agreed with the plaintiff to
settle the case for an undisclosed amount. The settlement is subject to the
negotiation and execution of a definitive settlement agreement. The Company
accrued the amount of the tentative settlement during the
3rd quarter of 2004. The
Company is currently arbitrating a rent dispute relating to a five-year real estate lease
extension that has a base rent equal to the greater of $4.75 million annually
or fair market value with an annual rent increase of 1.5% for each of the next
succeeding four years. The landlord demanded an increase in rent of
more than 50%, which the Company believes is substantially in excess
of fair market value. The arbitration to determine fair market value is in
its preliminary stages and the amount of the potential rent increase cannot
currently be reasonably estimated. In addition to the matters described above the Company is subject to
various legal proceedings and claims, which arise in the ordinary course of its
business. In the opinion of management, the ultimate liability with respect to
those proceedings and claims will not have a material adverse effect on the
financial position, operations, or liquidity of the Company. The Company
maintains property casualty insurance coverage for individual claims in excess
of various dollar amounts, subject to annual aggregate limits. The primary
amount of such coverage is $1 million per occurrence and $2 million in the
aggregate per facility. In addition, the Company purchases umbrella/excess
liability coverage. The Companys various property casualty insurance policies
have deductibles of up to $250,000 that must be met before the insurance
companies are required to reimburse the Company for costs and liabilities
relating to covered claims. As a result, the Company is, in effect,
self-insured for all of these types of claims up to the deductible levels. (12) Comprehensive Income (Loss) Comprehensive income (loss) for the three and nine months ended June 30,
2004 and 2003 was as follows (in thousands): Three months ended
    
    Nine months endedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Net earnings (loss)
    
    $
    5,968
    
    
    $
    (5,128
    )
    
    $
    17,898
    
    
    $
    (7,413
    )Change in fair value of derivatives, net of tax
    
    
    1,838
    
    
    
    (138
    )
    
    
    1,686
    
    
    
    857Change in fair value of investment securities,
net of tax
    
    
    (136
    )
    
    
    
    
    
    
    (78
    )
    
    
    Foreign currency cumulative translation adjustment
    
    
    774
    
    
    
    821
    
    
    
    650
    
    
    
    822Comprehensive income (loss)
    
    $
    8,444
    
    
    $
    (4,445
    )
    
    $
    20,156
    
    
    $
    (5,734
    )
 (13) Business Segments The Company is managed based on segments administered by senior vice
presidents. These segments are generally organized geographically, with
exceptions depending on the needs of specific regions. The following are
summaries of revenues and operating earnings (loss) of each segment for the
three and nine months ended June 30, 2004 and 2003, as well as identifiable
assets for each segment as of June 30, 2004 and September 30, 2003. During
fiscal year 2004, the Company realigned certain locations among segments. All
prior year segment data has been reclassified to conform to the new segment
alignment. 12




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Three months ended
    
    Nine months endedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Revenues:(1)Segment One
    
    $
    18,775
    
    
    $
    19,006
    
    
    $
    58,373
    
    
    $
    57,054Segment Two
    
    
    79,744
    
    
    
    77,785
    
    
    
    234,315
    
    
    
    224,748Segment Three
    
    
    4,534
    
    
    
    3,521
    
    
    
    13,977
    
    
    
    11,434Segment Four
    
    
    8,937
    
    
    
    9,374
    
    
    
    27,820
    
    
    
    28,722Segment Five
    
    
    2,607
    
    
    
    2,515
    
    
    
    8,034
    
    
    
    7,721Segment Six
    
    
    24,109
    
    
    
    24,605
    
    
    
    73,328
    
    
    
    71,803Segment Seven
    
    
    17,643
    
    
    
    20,143
    
    
    
    50,109
    
    
    
    59,195Segment Eight
    
    
    22,366
    
    
    
    23,228
    
    
    
    66,540
    
    
    
    69,297Other
    
    
    2,932
    
    
    
    708
    
    
    
    9,874
    
    
    
    3,684Total revenues
    
    $
    181,647
    
    
    $
    180,885
    
    
    $
    542,370
    
    
    $
    533,658
  (1)
    
    Revenues exclude reimbursement of management contract expenses.
Such amounts were $113.6 million and $104.6 million for the three
months ended June 30, 2004 and 2003, respectively, and $340.1 million
and $309.3 million for the nine months ended June 30, 2004 and 2003,
respectively. Three months ended
    
    Nine months endedJune 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Operating earnings (loss):Segment One
    
    $
    (426
    )
    
    $
    (527
    )
    
    $
    4
    
    
    $
    (1,976
    )Segment Two
    
    
    2,056
    
    
    
    2,713
    
    
    
    10,988
    
    
    
    8,068Segment Three
    
    
    937
    
    
    
    (1,124
    )
    
    
    2,809
    
    
    
    (730
    )Segment Four
    
    
    1,098
    
    
    
    240
    
    
    
    5,116
    
    
    
    1,868Segment Five
    
    
    559
    
    
    
    307
    
    
    
    1,521
    
    
    
    1,196Segment Six
    
    
    1,557
    
    
    
    2,355
    
    
    
    5,975
    
    
    
    5,750Segment Seven
    
    
    1,144
    
    
    
    355
    
    
    
    (162
    )
    
    
    424Segment Eight
    
    
    2,895
    
    
    
    1,963
    
    
    
    9,476
    
    
    
    6,392Other
    
    
    6,585
    
    
    
    (11,147
    )
    
    
    13,373
    
    
    
    (21,267
    )Total operating earnings (loss)
    
    $
    16,405
    
    
    $
    (4,865
    )
    
    $
    49,100
    
    
    $
    (275
    )
 June 30,
    
    September 30,2004
    
    2003Identifiable assets:Segment One
    
    $
    13,168
    
    
    $
    18,248Segment Two
    
    
    318,701
    
    
    
    330,420Segment Three
    
    
    13,799
    
    
    
    12,953Segment Four
    
    
    45,969
    
    
    
    41,645Segment Five
    
    
    1,340
    
    
    
    1,082Segment Six
    
    
    20,073
    
    
    
    23,347Segment Seven
    
    
    35,816
    
    
    
    36,618Segment Eight
    
    
    33,246
    
    
    
    37,267Other
    
    
    446,211
    
    
    
    487,867Total assets
    
    $
    928,323
    
    
    $
    989,447
 Segment One encompasses the Western region of the United States, the Lexis
acquisition and Vancouver, BC. Segment Two encompasses the Northeastern United States, including New York
City, New Jersey, Boston and Philadelphia. Segment Three encompasses USA Parking. Segment Four encompasses Europe, Puerto Rico, Central and South America. Segment Five encompasses Nashville, TN. 13




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Segment Six encompasses Nebraska, Oklahoma, Missouri, and the Midwestern region
of the United States. It also includes Canada, excluding Vancouver. Segment Seven encompasses the Mid-Atlantic region of the United States to
include Virginia, Washington DC and Baltimore. It also includes Pennsylvania
and Western New York. Segment Eight encompasses Florida, Alabama, parts of Tennessee and the
southeastern region of the United States to include the Gulf Coast region and
Texas. Other encompasses the home office, eliminations, certain owned real estate,
certain partnerships and discontinued operations. (14) Subsequent Event Effective July 1, 2004, a wholly owned subsidiary had its general
partnership interest in Edison Parking Management L.P. (Edison) redeemed by
Edison. Pursuant to the redemption, Edison distributed cash in the amount of
$570,251, a note receivable from another Company subsidiary in the amount of
$3,000,000 and certain active parking management agreements with an agreed upon
value of $16,189,375 to the Companys subsidiary that withdrew. In
connection with the withdrawal, Edison and its affiliates have agreed not to
enter into any parking management agreements in the United States which would
be in competition with the Company for one year from the date of withdrawal. 
 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 Risk Factors in
the Managements Discussion and Analysis of Financial Condition and Results of
Operations section of the Companys annual report on Form 10-K for the year
ended September 30, 2003. 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, results of
operations and impact of new accounting pronouncements. Such statements
include, but are not limited to, statements preceded by, followed by or that
otherwise include the words believes, expects, anticipates, intends,
estimates, projects, objectives, strategy, outlook, assumptions,
guidance, forecasts, goal, intends, pursue, will likely result,
will continue or similar expressions. For those statements, the Company
claims the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995. The following important factors, in addition to those discussed elsewhere
in this document, and the documents which are incorporated herein by reference,
could affect the future financial results of the Company and could cause actual
results to differ materially from those expressed in forward-looking statements
contained or incorporated by reference in this document:  
    
    the Companys ability to achieve the goals described in this report
and other reports filed with the Securities and Exchange Commission,
including but not limited to, the Companys ability to  
    
    increase cash flow by reducing operating costs, accounts receivable
and indebtedness;
    
    cover the fixed cost of its leased and owned
facilities and maintain adequate liquidity through its cash
resources and credit facility;
    
    integrate possible future acquisitions, in light of
challenges in retaining key employees, synchronizing business
processes and efficiently integrating facilities, marketing,
and operations;
    
    comply with the terms of its credit facility or obtain waivers of
noncompliance;
    
    form and maintain strategic relationships with certain large real
estate owners and operators; and
    
    renew and obtain performance and surety bonds on favorable terms;  
    
    successful implementation of the Companys operating and growth strategy;
    
    interest rate fluctuations;
    
    the loss, or renewal on less favorable terms, of existing
management contracts and leases and the failure to add new locations on
favorable terms; 14




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
    
    the timing of property-related gains and losses;
    
    the timing of pre-opening, start-up and break-in costs of parking
facilities, particularly at leased locations;
    
    player strikes or other events affecting major league sports;
    
    changes in economic and business conditions at the local, regional, national or international levels;
    
    changes in patterns of air travel or automobile usage, including
effects of terrorist alerts and attacks, special events and weather on
travel and transportation patterns;
    
    the impact of litigation, including but not limited to, the
securities class action lawsuits and other lawsuits pending against
the Company;
    
    higher premium and claims costs relating to medical, liability,
workers compensation and other insurance programs and changes in
actuarial assumptions and valuations of such claims costs;
    
    compliance with, or changes in, local, state, national and
international laws and regulations, including, without limitation,
local regulations, restrictions and taxation on parking facilities,
parking and automobile usage, security measures, environmental,
anti-trust and consumer protection laws;
    
    changes in current parking rates and pricing of services to
clients;
    
    extraordinary events affecting parking facilities that the Company
operates, including labor strikes, emergency safety measures, military
actions or terrorist attacks and natural disasters; and
    
    the loss of key employees. Overview The Company is a leading provider of parking and related services.
Central Parking operates parking facilities in 39 states, the District of
Columbia, Canada, Puerto Rico, Mexico, Chile, Colombia, Peru, Venezuela, the
United Kingdom, the Republic of Ireland, Spain, Germany, Poland, Greece and
Switzerland. The Company also provides ancillary products and services,
including parking consulting, shuttle, valet, on-street and parking meter
enforcement, and billing and collection services.
        . Central Parking operates parking facilities under three general types of
arrangements: management contracts, leases and fee ownership. Parking revenues
consist of revenues from leased and owned facilities. Cost of parking relates
to both leased and owned facilities and includes rent, payroll and related
benefits, depreciation (if applicable), maintenance, insurance, and general
operating expenses. Management contract revenues consist of management fees
(both fixed and performance based) and fees for ancillary services such as
insurance, accounting, equipment leasing, and consulting. The cost of
management contracts includes insurance premiums, claims and other direct
overhead. As of June 30, 2004, Central Parking operated 1,691 parking
facilities through management contracts, leased 1,704 parking facilities, and
owned 195 parking facilities, either independently or in joint ventures with
third parties. The Company believes that most commercial real estate developers and
property owners view services such as parking as potential profit centers
rather than cost centers. Many of these parties outsource parking operations
to parking management companies in an effort to maximize profits or leverage
the original rental value to a third-party lender. Parking management
companies can increase profits by using managerial skills and experience,
operating systems, and operating controls unique to the parking industry. The Companys strategy is to increase the number of profitable parking
facilities it operates by focusing its marketing efforts on adding facilities
at the local level, targeting real estate managers and developers with a
national presence, pursuing strategic acquisitions of other parking service
operators on a selective basis, and expanding its international operations. The Company continues to view privatization of certain governmental
operations and facilities as an opportunity for the parking industry. For
example, privatization of on-street parking fee collection and enforcement in
the United Kingdom has provided significant opportunities for private parking
companies. In the United States, several cities have awarded on-street parking
fee collection and enforcement and parking meter service contracts to
for-profit parking 15




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companies such as Central Parking. Critical Accounting Policies Managements Discussion and Analysis of Financial Condition and Results of
Operations discusses the Companys consolidated financial statements, which
have been prepared in accordance with U.S. generally accepted
accounting principles. Accounting estimates are an integral part of the
preparation of the financial statements and the financial reporting process and
are based upon current judgments. The preparation of financial statements in
conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reported period. Certain accounting estimates are
particularly sensitive because of their complexity and the possibility that
future events affecting them may differ materially from the Companys current
judgments and estimates. This listing of critical accounting policies is not intended to be a
comprehensive list of all of the Companys accounting policies. In many cases,
the accounting treatment of a particular transaction is specifically dictated
by U.S. generally accepted accounting principles, with no need for managements
judgment regarding accounting policy. The Company believes that of its
significant accounting policies, as discussed in Note 1 of the consolidated
financial statements included in the Companys Annual Report on Form 10-K for
the year ended September 30, 2003, the following involve a higher degree of
judgment and complexity: Impairment of Long-Lived Assets and Goodwill As of June 30, 2004, the Companys long-lived assets were comprised
primarily of $392.9 million of property, equipment and leasehold improvements,
$232.6 million of goodwill, $89.7 million of contracts and lease rights and
$14.0 million of deferred expenses. In accounting for the Companys long-lived
assets, other than goodwill, the Company applies the provisions of Statement of
Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. The Company accounts for goodwill and other
non-amortizing intangible assets under the provisions of SFAS No. 142, Goodwill
and Other Intangible Assets. The determination and measurement of an impairment loss under these
accounting standards require the continuous use of significant judgment and
estimates. The determination of fair value of these assets includes cash flow
projections that assume certain future revenue and cost levels, assumed
discount rates based upon current market conditions and other valuation
factors, all of which involve the use of significant judgment and estimation.
The Company recorded impairment losses of approximately $4.8 million ($4.6
million in continuing operations and $0.2 million in discontinued operations)
during the three months ended June 30, 2004 and approximately $7.3 million
($6.3 million in continuing operations and $1.0 million in discontinued
operations) during the nine months ended June 30, 2004, respectively, as a
result of underperforming locations, upon termination or disposal and premature
closures. Future events may indicate differences from managements judgments
and estimates, which could, in turn, result in increased impairment charges in
the future. Future events that may result in increased impairment charges
include increases in interest rates, which would impact discount rates,
unfavorable economic conditions or other factors, which could decrease revenues
and profitability of existing locations, and changes in the cost structure of
existing facilities. Contracts and Lease Rights As of June 30, 2004, the Company had $89.7 million of contracts and lease
rights. The Company capitalizes payments made to third parties, which provide
the Company the right to manage or lease facilities. Lease rights and
management contract rights, which are purchased individually, are amortized on
a straight-line basis over the terms of the related agreements, which range
from 5 to 30 years. Management contract rights acquired through acquisition of
an entity are amortized as a group over the estimated term of the contracts,
including anticipated renewals and terminations based on the Companys
historical experience (typically 15 years). If the renewal rate of contracts
within an acquired group is less than initially estimated, accelerated
amortization or impairment may be necessary. Allowance for Doubtful Accounts As of June 30, 2004, the Company had $54.4 million of gross trade
receivables, including management locations accounts receivable and accounts
receivable  other. Additionally, the Company had a recorded allowance for
doubtful accounts of $3.0 million. The Company reports management locations
accounts receivable, net of an allowance for doubtful accounts, to represent
its estimate of the amount that ultimately will be realized in cash. The
Company reviews the adequacy of its allowance for doubtful accounts on an
ongoing basis, using historical collection trends, analyses of receivable
portfolios by region and by source, aging of receivables, as well as review of
specific accounts, and makes adjustments in the allowance as necessary.
Changes in economic conditions, specifically in the 16




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Northeast United States,
could have an impact on the collection of existing receivable balances or
future allowance considerations. Insurance The Company purchases comprehensive property casualty insurance covering
certain claims that occur at parking facilities it owns, leases or manages. The
primary amount of such coverage is $1 million per occurrence and $2 million in
the aggregate per facility. In addition, the Company purchases umbrella/excess
liability coverage. The Companys various property casualty insurance policies
have deductibles of up to $250,000 that must be met before the insurance
companies are required to reimburse the Company for costs incurred relating to
covered claims. As a result, the Company is, in effect, self-insured for all
claims up to the deductible levels. The Company applies the provisions of SFAS
No. 5, Accounting for Contingencies, in determining the timing and amount of
expense recognition associated with claims against the Company. The expense
recognition is based upon managements determination of an unfavorable outcome
of a claim being deemed as probable and reasonably estimated, as defined in
SFAS No. 5. This determination requires the use of judgment in both the
estimation of probability and the amount to be recognized as an expense.
Management utilizes historical experience with similar claims and actuaries, to
estimate the amount of claims to accrue. The Company seeks input from legal
counsel in determining the likelihood and amount of an unfavorable outcome for
certain general litigation. Future events may indicate differences from these
judgments and estimates and result in increased expense recognition in the
future. Income Taxes The Company uses the asset and liability method of SFAS No. 109,
Accounting for Income Taxes, to account for income taxes. Under this method,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The Company has certain
net operating loss carry forwards which expire between 2004 and 2018. The
ability of the Company to fully utilize these net operating losses to offset
taxable income is limited due to changes in ownership of the companies which
generated these losses. These limitations have been considered in determining
the Companys deferred tax asset valuation allowance. The valuation allowance
provides for net operating loss carry forwards for which recoverability is
deemed to be uncertain. The carrying value of the Companys net deferred tax
assets assumes that the Company will be able to generate sufficient future
taxable income in certain tax jurisdictions, based on estimates and
assumptions. If these estimates and related assumptions change in the future,
the Company will be required to adjust its deferred tax valuation allowances. Results of Operations Three Months Ended June 30, 2004 Compared to Three Months Ended June 30, 2003 Parking revenues in the third quarter of fiscal year 2004 decreased to
$148.5 million from $150.6 million in the third quarter of fiscal year 2003, a
decrease of $2.1 million, or 1.4%. The primary factors affecting parking
revenues were an increase of $4.1 million in same-store revenues and an
increase of $10.2 million from locations added in fiscal years 2004 and 2003,
offset by a decrease of $14.3 million due to closed locations and a decrease of
$2.1 million for locations converted from lease arrangements to management
agreements. Same-store revenues in the New York market increased 6.7% over
last years third quarter compared with a decrease of 0.7% in same-store sales
outside of New York. Management contract revenues for the third quarter of fiscal 2004
increased to $33.1 million from $30.3 million in the third quarter of fiscal
year 2003, an improvement of $2.8 million or 9.2%. The increase resulted
primarily from $1.0 million due to new locations and partnerships and $1.5
million due to improved insurance program revenue and an increase in equipment
income of $0.3 million. Cost of parking in the third quarter of 2004 decreased to $134.6 million
from $140.3 million in the third quarter of 2003, a decrease of $5.7 million or
4.1%. During the third quarter of fiscal 2004, the Company had a $1.1 million
decline in payroll due in large part to reduced overtime; a $2.3 million
decrease in rent expense due to closed locations, locations converted from
lease arrangements to management agreements and renegotiated lease agreements;
a $0.1 million decrease in professional services due to a reduction in
consulting services; and a $2.2 million decrease in other miscellaneous
expenses. Rent expense as a percentage of parking revenues decreased to 51.5%
during the quarter ended June 30, 2004, from 52.3% in the quarter ended June
30, 2003. Payroll and benefit expenses were 18.8% of parking revenues during
the third quarter of fiscal 2004 as compared to 19.2% in the comparable prior
year period. Cost of parking as a percentage of parking revenues decreased to
90.6% in the third 17




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quarter of fiscal 2004 from 93.2% in the third quarter of
fiscal 2003. Cost of management contracts in the third quarter of fiscal 2004 decreased
to $13.8 million from $16.5 million in the comparable period in 2003, a
decrease of $2.7 million or 16.4%. The decrease was primarily due to a
decrease of $1.5 million in bad debt expense and a decrease of $1.2 million in
insurance claims expense. Cost of management contracts as a percentage of
management contract revenue decreased to 41.7% for the third quarter of 2004
from 54.6% for the same period in 2003. General and administrative expenses decreased to $18.0 million for the
third quarter of fiscal 2004 from $24.8 million in the third quarter of fiscal
2003. This decrease is due to reduced payroll due to severance costs in the
prior year of $5.7 million and reduced legal and professional expenses of $0.6
million. Miscellaneous other expenses of $0.5 million comprise the remainder of
the quarterly decrease. General and administrative expenses as a percentage of
total revenues (excluding reimbursement of management contract expenses)
decreased to 9.9% for the third quarter of fiscal 2004 compared to 13.7% for
the third quarter of fiscal 2003. Net property-related gains for the three months ended June 30, 2004 was
$1.2 million. The $1.2 million gain was comprised of a gain on sale of
property of $5.8 million partially offset by a $4.5 million lease buy out and $0.09 million of impairments of
contract rights, leasehold improvements and deferred expenses primarily related
to two locations in New York, which management plans to continue to operate.
Based on current operating results, the Companys recent forecast for the next
fiscal year, required capital improvements, and certain lease term
uncertainties, management determined that the projected cash flows for these
locations would not be enough to recover the remaining value of the assets. Operating results from certain disposals of parking facilities are
reflected as discontinued operations. Gains, losses and impairments resulting
from the designation of a parking facility as held-for-sale are reflected as
discontinued operations unless the Company intends to sell the property with
the right to manage it. For the three months ended June 30, 2004, the Company
either disposed of or designated as held-for-sale or disposal certain
locations, resulting in loss from discontinued operations of $577 thousand, net
of tax. The Companys prior period results were reclassified to reflect the
operations of these locations, discontinued in fiscal 2004, as discontinued
operations, net of related income taxes. For the three months ended June 30,
2003, the Company had a loss from discontinued operations of $0.2 million. Interest expense and interest on subordinated convertible debentures
decreased to $4.8 million for the third quarter of fiscal 2004 from $5.9
million in the third quarter of fiscal 2003, a decrease of $1.1 million or
18.6%. The decrease was attributed to reduction in the average principal
balance. The weighted average balance outstanding for the Companys debt
obligations and subordinated convertible debentures was $288.5 million during
the three months ended June 30, 2004, at a weighted average interest rate of
6.02% compared to a weighted average balance outstanding of $367.3 million at a
weighted average rate of 6.04% during the three months ended June 30, 2003.
Amortization of deferred finance costs was included in the calculation of the
weighted average interest rate. Equity in partnership and joint venture (losses) earnings decreased to
$(0.4) million for the third quarter of fiscal 2004 from $0.3 million in the
third quarter of fiscal 2003, a decrease of $0.7 million. The decrease is
primarily related to operating results for the Companys 50% owned,
non-consolidated affiliate in Mexico. The Company recorded an income tax expense on earnings from continuing
operations of $5.1 million for the third quarter of fiscal 2004 as compared to
income tax benefit of $5.2 million in the third quarter of fiscal 2003, a
change of $10.3 million. The effective tax rate on earnings from continuing
operations before income taxes for the third quarter of fiscal 2004 was 43.6%
compared to 51.4% for the third quarter of fiscal 2003. The change in the
effective tax rate is due primarily to the change in the relationship of the
amount of earnings from the minority interest, net of tax and the non-consolidated affiliates which are recorded net
of tax. The tax rate on operating earnings, excluding
non-consolidated affiliates and minority interest, was 38% for the
third quarter ended June 30, 2004 and 2003. Results of Operations Nine Months Ended June 30, 2004 Compared to Nine Months Ended June 30, 2003 Parking revenues in the first nine months of fiscal year 2004 increased to
$445.5 million from $444.1 million in the first nine months of fiscal year
2003, an increase of $1.4 million, or 0.3%. This increase was composed of
$17.3 million increase in same-store revenues and an increase of $28.0 million
from locations added in fiscal year 2004 and 2003. This increase was offset by
a decrease of $44.1 million due to closed locations. Same-store revenues were
particularly 18




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strong in the New York market as the same-store percentage
increased 6.8% over the first nine months of last year compared with an
increase of 0.5% in same-store sales outside of New York. Management contract revenues for the first nine months of fiscal 2004
increased to $96.8 million from $89.6 million in the first nine months of fiscal year 2003, an improvement of $7.2
million or 8.0%. The increase resulted primarily from an increase of $3.4
million due to new locations and partnerships and an increase of $3.8 million
due to improved insurance program revenue. Cost of parking in the first nine months of 2004 decreased to $401.2
million from $411.9 million in the first nine months of 2003, a decrease of
$10.7 million or 2.6%. During the first nine months of fiscal 2004, the
Company had a $4.5 million decrease in payroll due in large part to reduced
overtime, a decrease of $1.4 million for rent expense, a decrease of $0.6
million for supplies, a decrease of $0.6 million for snow removal, a decrease
of $0.3 million for professional services and a reduction of other expenses of
$3.3 million. Rent expense as a percentage of parking revenues decreased to
51.0% during the nine months ended June 30, 2004, from 51.5% in the first nine
months ended June 30, 2003. Payroll and benefit expenses were 18.4% of parking
revenues during the first nine months of fiscal 2004 as compared to 19.5% in
the comparable prior year period. Cost of parking as a percentage of parking
revenues decreased to 90.1% in the first nine months of fiscal 2004 from 92.8%
in the first nine months of fiscal 2003. Cost of management contracts in the first nine months of fiscal 2004
decreased to $42.8 million from $48.5 million in the comparable period in 2003,
a decrease of $5.7 million or 11.8%. The decrease was primarily due to a
decrease of $3.7 million in bad debt expense, a decrease of $1.8 million in
insurance claims expense and a decrease of $0.2 million in equipment lease
expense. Cost of management contracts as a percentage of management contract
revenue decreased to 44.2% for the first nine months of 2004 from 54.2% for the
same period in 2003. General and administrative expenses decreased to $55.0 million for the
first nine months of fiscal 2004 from $66.2 million in the first nine months of
fiscal 2003. This decrease is due to reduced payroll of $9.1 million and
reduced legal and professional services of $1.3 million. Miscellaneous other
expenses of $0.8 million comprise the remainder of the year to date decrease.
General and administrative expenses as a percentage of total revenues
(excluding reimbursement of management contract expenses) decreased to 10.1%
for the first nine months of fiscal 2004 compared to 12.4% for first nine
months of fiscal 2003. Net property-related gains for the nine months ended June 30, 2004 was
$5.7 million. The $5.7 million gain was comprised of a gain on sale of
property of $12.0 million partially offset by, a $4.5 million lease buy out and
$1.8 million of impairments of contract rights, leasehold improvements and
deferred expenses related to locations which management plans to continue to
operate. Based on current operating results, the Companys recent forecast for
the next fiscal year, required capital improvements, and certain lease term
uncertainties management determined that the projected cash flows for these
locations would not be enough to recover the remaining value of the assets.
The Companys property-related losses for the nine months ended June 30, 2003,
were comprised primarily of the impairment of contract rights and deferred
expenses related to six locations in New York. Operating results from certain disposals of parking facilities are
reflected as discontinued operations. Gains, losses and impairments resulting
from the designation of a parking facility as held-for-sale are reflected as
discontinued operations unless the Company intends to sell the property with
the right to manage it. For the nine months ended June 30, 2004, the Company
either disposed of or designated as held-for-sale or disposal certain
locations, resulting in a loss from discontinued operations of $1.5 million,
net of tax. The Companys prior period results were reclassified to reflect
the operations of these locations discontinued in fiscal 2004 as discontinued
operations net of related income taxes. For the nine months ended June 30,
2003, the Company had a loss from discontinued operations of $0.6 million. Interest expense and interest on subordinated convertible debentures
decreased to $15.3 million for the first nine months of fiscal 2004 from $16.5
million in the first nine months of fiscal 2003, a decrease of $1.2 million or
7.3%. The decrease was attributed to a decrease in the amount of debt
outstanding for the first nine months of fiscal 2004. A decrease in
amortization of deferred finance costs on the Companys Credit Facility during
2004 was offset by an increase in letter of credit costs. The weighted average balance outstanding for the Companys debt
obligations and subordinated convertible debentures was $315.6 million during
the nine months ended June 30, 2004, at a weighted average interest rate of
5.85% compared to a weighted average balance outstanding of $361.4 million at a
weighted average rate of 5.70% during the 19




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nine months ended June 30, 2003.
Amortization of deferred finance costs was included in the calculation of the
weighted average interest rate. Equity in partnership and joint venture (losses) earnings decreased to
$(2.4) million for the first nine months of fiscal 2004 from $1.8 million in
the first nine months of fiscal 2003, a decrease of $4.2 million. The decrease
is related to operating results for the Companys 50% owned, non-consolidated
affiliate in Mexico. During the second quarter of fiscal 2004, the Companys
Mexican affiliate reported to the Company that the affiliate would be taking
certain impairments and losses as part of the year-end audit performed by
independent auditors. As the entity is a 50% owned, non-consolidated
investment, results are recorded on the equity method. The losses reported to
us were mostly non-cash, and totaled $2.6 million. Of this amount, $1.5
million was related to the second quarter of 2004 and $1.1 million related to
prior periods. The $1.5 million second quarter impact is the result of
non-cash impairments, primarily related to notes receivable and other assets.
The prior-period impact is due to corrections in the recording of equipment
leases, and interest-expense accruals. Due to the immateriality of the effect
on any one prior period, the total adjustment was made in the second quarter of
2004. The Company recorded an income tax expense on earnings from continuing
operations of $13.3 million for the first nine months of fiscal 2004 as
compared to income tax benefit of $4.6 million in the first nine months of
fiscal 2003, a change of $17.9 million. The effective tax rate on earnings
(loss) from continuing operations before income taxes for the first nine months
of fiscal 2004 was 40.6% compared to 40.3% for the first nine months of fiscal
2003. The change in the effective tax rate is due primarily to the change in
the relationship of the amount of earnings from minority interest,
net of tax and the non-consolidated affiliates
which are recorded net of tax. The tax rate on operating earnings,
excluding non-consolidated affiliates and minority interest, was 38%
for the third quarter ended June 30, 2004 and 2003. Liquidity and Capital Resources Operating activities for the nine months ended June 30, 2004 provided net
cash of $28.7 million, compared to $16.5 million of cash provided by operating
activities for the nine months ended June 30, 2003. Net earnings from
continuing operations of $19.4 million, depreciation and amortization of $24.8
million, deferred income taxes of $4.3 million, equity in partnership and joint
venture losses of $2.4 million, minority interest, net of tax of $2.4 million
offset by property related gains of $5.7 million, offset by net increases in
operating assets and net decreases in operating liabilities aggregating $21.2
million, and $1.0 million in discontinued operations, account for the majority
of the cash provided by operating activities during the first nine months of
fiscal 2004. Investing activities for the nine months ended June 30, 2004 provided net
cash of $49.6 million, compared to $38.3 million of net cash used in investing
activities for the same period in the prior year. Purchases of property,
equipment and leasehold improvements of $12.2 million and the purchase of
contract and lease rights of $4.5 million offset by proceeds from disposition
of property and equipment of $62.0 million and other investing activities of
$4.2 million, accounted for the majority of the cash provided by investing
activities in the first nine months of fiscal 2004. The $62.0 million of
proceeds from disposition consists primarily of $42.8 million received from the
sale of eleven properties and $19.2 million received from Connex as part of the
conversion of the United Kingdom rail contract from a leased arrangement to a
management agreement. The proceeds received from Connex represent
reimbursement of up-front monies, capital expenditures, value-added taxes and
other accrued liabilities. Purchases of property, equipment and leasehold
improvements of $52.0 million and purchases of contract and lease rights of
$7.2 million, offset by proceeds from disposition of property and equipment of
$17.9 million and other investing activities of $3.0 million, accounted for the
majority of the cash used by investing activities in the first nine months of
fiscal 2003. Financing activities for the nine months ended June 30, 2004 used net cash
of $80.5 million, compared to $21.0 million provided in the same period in the
prior year. Principal repayments on revolving credit of $59.0 million,
principal repayments on notes payable and capital lease obligations of $21.4
million, payment to minority interest partners of $3.2 million, and dividends
paid of $1.6 million offset by proceeds from issuance of notes payable of $1.9
million, and issuance of common stock of $2.9 million comprised a majority of
the cash used by financing activities for the nine months ended June 30, 2004.
Principal repayments on revolving credit of $74.5 million, principal repayments
on notes payable and capital leases of $78.3 million, payment to minority
interest partners of $3.9 million and dividends paid of $1.6 million, offset by
proceeds from issuance of notes payable of $176.3 million comprised a majority
of the cash provided by financing activities for the nine months ended June 30,
2003. On February 28, 2003, the Company entered into a credit facility (the
Credit Facility) initially providing for an aggregate availability of up to
$350 million consisting of a five-year $175 million revolving loan, including a
sub-limit of $60 million for standby letters of credit, and a $175 million
seven-year term loan. The facility is secured 20




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by the stock of certain subsidiaries of the Company, certain real estate assets, and domestic personal
property assets of the Company and certain subsidiaries. The Company amended the Credit Facility in June 2004. The amendment
reduced the margin applied to the term loan by 75 basis points, which was
included in the weighted average margin at June 30, 2004, and increased the
standby letter of credit sub-limit by $30.0 million to $90.0 million. The
Company uses its revolving loan to collateralize outstanding letters of credit.
All other terms and conditions remained the same. The Credit Facility bears interest at LIBOR plus a tier-based margin
dependent upon certain financial ratios. There are separate tiers for the
revolving loan and term loan. The weighted average margin as of June 30, 2004
was 275 basis points. The amount outstanding under the Companys Credit
Facility was $158.1 million with a weighted average interest rate of 4.81% as
of June 30, 2004. The term loan is required to be repaid in quarterly payments
of $437,500 through March 2008 and quarterly payments of $20.8 million from
June 2008 through March 2010. The aggregate availability under the reduced
Credit Facility ($322.2 million as of June 30, 2004) was $110.2 million at June
30, 2004, which is net of $53.9 million of stand-by letters of credit. The
Company had deferred financing costs related to the Credit Facility of $7.1
million as of June 30, 2004 and $6.4 million as of June 30, 2003. The Company
amortizes these costs over the term of the loan. The Credit Facility contains covenants including those that require the
Company to maintain certain financial ratios, restrict further indebtedness and
certain acquisition activity and limit the amount of dividends paid. The
primary ratios are a leverage ratio, senior leverage ratio and a fixed charge
coverage ratio. Quarterly compliance is calculated using a four quarter rolling
methodology and measured against certain targets. The Company was in
compliance with the covenants at June 30, 2004. If Central Parking identifies investment opportunities requiring cash in
excess of Central Parkings cash flows and the Credit Facility, Central Parking
may seek additional sources of capital, including seeking to further amend the
existing credit facility to obtain additional indebtedness. Future Cash Commitments The Company routinely makes capital expenditures to maintain or enhance
parking facilities under its control. The Company expects capital expenditures
for fiscal 2004 to be approximately $17 to $20 million, of which the Company
has spent $10.4 million during the first nine months of fiscal 2004. The following tables summarize the Companys total contracted obligations and
commercial commitments as of June 30, 2004 (amounts in thousands). Payments due by periodLess than
    
    1-2
    
    3-4
    
    After 5Total
    
    1 Year
    
    Years
    
    Years
    
    YearsLong-term debt and capital lease
obligations
    
    $
    192,066
    
    
    $
    15,461
    
    
    $
    22,254
    
    
    $
    105,873
    
    
    $
    48,478Subordinated convertible debentures
    
    
    78,085
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,085Operating leases
    
    
    1,364,921
    
    
    
    227,052
    
    
    
    366,229
    
    
    
    232,724
    
    
    
    538,916Total contractual cash obligations
    
    $
    1,635,072
    
    
    $
    242,513
    
    
    $
    388,483
    
    
    $
    338,597
    
    
    $
    665,479
 Amount of commitment expiration per periodLess than
    
    1-3
    
    4-5
    
    After 5Total
    
    1 Year
    
    Years
    
    Years
    
    YearsUnused lines of credit
    
    $
    110,249
    
    
    $
    
    
    
    $
    110,249
    
    
    $
    
    
    
    $
    Guarantees
    
    
    1,000
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    Other commercial commitments
    
    
    2,640
    
    
    
    2,640
    
    
    
    
    
    
    
    
    
    
    
    Total commercial commitments
    
    $
    113,889
    
    
    $
    3,640
    
    
    $
    110,249
    
    
    $
    
    
    
    $
    
 The Company has as part of the unused line of credit the ability to
collateralize up to $90 million in stand-by letters of credit. As of June 30,
2004, the Company had $53.9 million of stand-by letters of credit outstanding. Other commercial commitments include guaranteed minimum payments to
minority partners of certain partnerships. 21




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##### Table of Contents



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 variable rate borrowings. As of June 30, 2004, the Company
had $158.1 million of variable rate debt outstanding under the Credit Facility
priced at LIBOR plus a weighted average margin of 275 basis points. The term
loan balance of the Credit Facility of $158.1 million is payable in quarterly
installments of $437,500 through March 2008 and quarterly payments of $20.8
million from June 2008 through March 2010. There was no outstanding balance
under the revolving credit loans as of June 30, 2004. The Company anticipates
paying the scheduled quarterly payments from operating cash flows. The Company is required under the Credit Facility to enter into and
maintain interest rate protection agreements designed to limit the Companys
exposure to increases in interest rates. On May 30, 2003, the Company entered
into two interest rate swap transactions for a total of $87.5 million. Both
transactions swapped the Companys floating LIBOR interest rates for fixed
interest rate of 2.45% until June 30, 2007. Both of these derivative
instruments have terms consistent with the terms of the Credit Facility and
qualify as cash flow hedges. The weighted average interest rate on the Companys Credit Facility at
June 30, 2004 was 4.81%. An increase (decrease) in LIBOR of 1% would result in
an increase (decrease) of annual interest expense of $1.6 million based on the
Companys outstanding Credit Facility balance of $158.1 million at June 30,
2004. In March 2000, a limited liability company, of which the Company is the
sole shareholder, purchased a parking structure for $19.6 million and financed
$13.3 million of the purchase price with a five-year note bearing interest at
one-month floating LIBOR plus 162.5 basis points. The Company entered into a
five-year LIBOR swap for this interest rate, yielding an effective interest
cost of 8.91% for the five-year period. The notional amount of the swap is
reduced in conjunction with the principal payments on the related variable rate
debt. The terms of this derivative instrument are consistent with the terms of
the note and this derivative instrument qualifies as a cash flow hedge. Foreign Currency Risk The Companys exposure to foreign exchange risk is minimal. As of June
30, 2004, the Company had approximately GBP 0.4 million (USD $0.7 million) of
cash and cash equivalents denominated in British pounds, EUR 1.0 million (USD
$1.2 million) denominated in euros, CAD 1.9 million (USD $1.5 million)
denominated in Canadian dollars, and USD $1.0 million denominated in various
other foreign currencies. The Company also had EUR $0.9 million (USD $1.1
million) of notes payable denominated in euros at June 30, 2004. These notes
bear interest at a floating rate EURIBOR plus 200 basis points or 4.08% as of
June 30, 2004, and require monthly principal and interest payments through
2012. On June 25, 2004, the Company entered into a foreign exchange agreement
to purchase GBP at a rate of 1.824 USD per GBP on June 29, 2004. The
transaction was completed on July 1, 2004. The Company monitors foreign
currency positions and may enter into certain hedging instruments in the future
should it determine that exposure to foreign exchange risk has increased.
Based on the Companys overall currency rate exposure as of June 30, 2004,
management does not believe a near-term change in currency rates, based on
historical currency movements, would materially affect the Companys financial
statements. 
 Item 4. Controls and Procedures  (a)
    
    Evaluation of disclosure controls and procedures: Under the supervision
and with participation of the Companys management, including the
Companys Chief Executive Officer and Chief Financial Officer, the Company
conducted an evaluation of its disclosure controls and procedures, as such
term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the
Securities Exchange Act of 1934, as amended. Based on this evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that the
Companys disclosure controls and procedures as of June 30, 2004 are
effective in timely alerting them to material information required to be
included in the Companys periodic reports and that such information is
(i) accumulated and communicated to the Companys management in a timely
manner, and (ii) recorded, processed, summarized and reported within the
time periods specified in the SECs rules and forms.(b)
    
    Changes in internal control over financial reporting: There has been no
change (including corrective actions with regard to significant
deficiencies or material weaknesses) in the Companys internal control
over financial reporting that has occurred during the Companys fiscal
quarter ended June 30, 2004 that has 22




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##### Table of Contents



materially affected, or is reasonably
likely to materially affect the Companys internal control over financial
reporting. 
 PART II. OTHER INFORMATION 
 Item 1. Legal Proceedings In June and July 2003, four stockholders filed separate lawsuits against
the Company, its former CEO, its former CFO and its current CEO in the U. S.
District Court for the Middle District of Tennessee. The plaintiff in each
case sought to represent a plaintiff class of purchasers of Central Parkings
Common Stock. The plaintiff in each case claimed that the defendants made
material misrepresentations and/or omissions in connection with the Companys
financial statements for the quarter and the fiscal year ended September 30,
2002 and about the Companys internal controls in violation of the Securities
Exchange Act of 1934, which allegedly caused the plaintiffs to buy Company
stock at inflated prices. The cases have been consolidated by the Court. By
order dated December 10, 2003, the Court has consolidated the cases now
identified as In re: Central Parking Corporation Securities Litigation, civil
action No. 03-CV-0546, appointed two individuals as co-lead plaintiffs and
approved their selection of counsel. The plaintiffs filed an amended complaint
on February 13, 2004 in which plaintiffs added the Companys independent
auditor as a defendant and in which the plaintiffs added a number of
allegations. The amended complaint also seeks to extend the putative class
period during which investors purchased the Companys Common Stock by
approximately nine months (the new class period is February 5, 2002 to February
13, 2003). On April 23, 2004, the Company filed motions to dismiss the lawsuit
and the plaintiffs have responded to the motions to dismiss. On
August 11, 2004, the court denied the Central defendants motions to
dismiss. The litigation is
in its preliminary stages and the amount of potential loss, if any, cannot
reasonably be estimated. The Company, Pepsi Cola Company, and several related Pepsi companies and
individuals are co-defendants in a lawsuit filed in the 270th Judicial District
Court in Harris County, Texas, by an individual, David Loftus, and three
companies affiliated with Mr. Loftus known as PepsiPark USA, Inc. The
plaintiffs in the suit allege, among other things, that the Company and Pepsi
conspired to misappropriate a concept developed by the plaintiffs for selling
Pepsi products and other vending machine products to parking customers.
Plaintiffs allege substantial damages relating to the concept based on several
causes of action, including breach of contract, misrepresentation, breach of
fiduciary duties, fraud, conversion and unfair competition. The suit, which
was initially filed on June 24, 2002, was amended on April 24, 2003, to add
allegations against the Company for underpayment of percentage rent with
respect to three parking lots leased to the Company by Mr. Loftus and related
companies. The plaintiffs allege, among other things, breach of contract and
fraud with respect to these parking lots, and are currently seeking damages for
allegedly unpaid percentage rent of $1.3 million plus interest and attorneys
fees and expenses which is in addition to the damages being sought in
connection with the alleged misappropriation of plaintiffs concept. The
plaintiffs also are seeking unspecified exemplary damages. On May 9, 2003, the
suit was again amended to add an allegation that the Company refused to
implement the plaintiffs concept for selling vending machine products to
parking lot customers to avoid liability for past underreporting of revenues.
During mediation in June 2004, the Company and Pepsi Cola Company tentatively
agreed with the plaintiff to settle the case for an undisclosed amount. The
settlement is subject to the negotiation and execution of a definitive
settlement agreement. The
Company is currently arbitrating a rent dispute relating to a five-year real estate lease
extension that has a base rent equal to the greater of $4.75 million annually
or fair market value with an annual rent increase of 1.5% for each of the next
succeeding four years. The landlord demanded an increase in rent of
more than 50%, which the Company believes is substantially in excess
of fair market value. The arbitration to determine fair market value is in
its preliminary stages and the amount of the potential rent increase cannot
currently be reasonably estimated. In addition to the matters described above the Company is subject to
various legal proceedings and claims, which arise in the ordinary course of its
business. In the opinion of management, the ultimate liability with respect to
those proceedings and claims will not have a material adverse effect on the
financial position, operations, or liquidity of the Company. The Company
maintains property casualty insurance coverage for individual claims in excess
of various dollar amounts, subject to annual aggregate limits. The primary
amount of such coverage is $1 million per occurrence and $2 million in the
aggregate per facility. In addition, the Company purchases umbrella/excess
liability coverage. The Companys various property casualty insurance policies
have deductibles of up to $250,000 that must be met before the insurance
companies are required to reimburse the Company for costs and liabilities
relating to covered claims. As a result, the Company is, in effect,
self-insured for all of these types of claims up to the deductible levels. 23




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Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 2.1
    
    
    
    Plan of Recapitalization, effective October 9, 1997 (Incorporated
by reference to Exhibit 2 to the Companys Registration Statement
No. 33-95640 on Form S-1).2.2
    
    
    
    Agreement and Plan of Merger dated September 21, 1998, by and
among the Registrant, Central Merger Sub, Inc., Allright Holdings,
Inc., Apollo Real Estate Investment Fund II, L.P. and AEW Partners,
L.P. (Incorporated by reference to Exhibit 2.1 to the Companys
Registration Statement No. 333-66081 on Form S-4 filed on October
21, 1998).2.3
    
    
    
    Amendment dated as of January 5, 1999, to the Agreement and Plan
of Merger dated September 21, 1998 by and among the Registrant,
Central Merger Sub, Inc., Allright Holdings, Inc., Apollo Real
Estate Investment Fund II, L.P. and AEW Partners, L.P.
(Incorporated by reference to Exhibit 2.1 to the Companys
Registration Statement No. 333-66081 on Form S-4 filed on October
21, 1998, as amended).2.4
    
    
    
    Acquisition Agreement and Plan of Merger dated as of November 7,
1997, by and between the Registrant and Kinney System Holding Corp
and a subsidiary of the Registrant (Incorporated by reference to
the Companys Current Report on Form 8-K filed on February 17,
1998).3.1
    
    (a)
    
    Amended and Restated Charter of the Registrant (Incorporated
by reference to Exhibit 4.1 to the Companys Registration Statement
No. 333-23869 on Form S-3).(b)
    
    Articles of Amendment to the Charter of
Central Parking Corporation increasing the authorized
number of shares of common stock, par value $0.01 per
share, to one hundred million (Incorporated by
reference to Exhibit 2 to the Companys 10-Q for the
quarter ended March 31, 1999).3.2
    
    
    
    Amended and Restated Bylaws of the Registrant (Incorporated by
reference to Exhibit 4.1 to the Companys Registration Statement
No. 333-23869 on Form S-3).4.1
    
    
    
    Form of Common Stock Certificate (Incorporated by reference to
Exhibit 4.1 to the Companys Registration Statement No. 33-95640 on
Form S-1).4.2
    
    (a)
    
    Registration Rights Agreement (the Allright Registration Rights Agreement) dated as of September 21, 1998 by and
between the Registrant, Apollo Real Estate Investment Fund II, L.P., AEW Partners, L.P. and Monroe J. Carell, Jr.,
The Monroe Carell Jr. Foundation, Monroe Carell Jr. 1995 Grantor Retained Annuity Trust, Monroe Carell Jr. 1994
Grantor Retained Annuity Trust, The Carell Childrens Trust, The 1996 Carell Grandchildrens Trust, The Carell
Family Grandchildren 1990 Trust, The Kathryn Carell Brown Foundation, The Edith Carell Johnson Foundation, The
Julie Carell Stadler Foundation, 1997 Carell Elizabeth Brown Trust, 1997 Ann Scott Johnson Trust, 1997 Julia
Claire Stadler Trust, 1997 William Carell Johnson Trust, 1997 David Nicholas Brown Trust and 1997 George Monroe
Stadler Trust (Incorporated by reference to Exhibit 4.4 to the Companys Registration Statement No. 333-66081
filed on October 21, 1998).4.2
    
    (b)
    
    Amendment dated January 5, 1999 to the Allright Registration Rights Agreement (Incorporated by reference to
Exhibit 4.4.1 to the Companys Registration Statement No. 333-66081 filed on October 21, 1998, as amended).4.2
    
    (c)
    
    Second Amendment dated February 1, 2001 to the Allright Registration Rights Agreement. (Incorporated by reference
to Exhibit 4.6 to the Companys Registration Statement No. 333-54914 on Form S-3 filed on February 2, 2001)
 24




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4.3
    
    
    
    Indenture dated March 18, 1998 between the registrant and Chase Bank of Texas, National Association, as
Trustee regarding up to $113,402,050 of 5-1/4 % Convertible
Subordinated Debentures due 2028. (Incorporated by reference to
Exhibit 4.5 to the Registrants Registration Statement No.
333-52497 on Form S-3).4.4
    
    
    
    Amended and Restated Declaration of Trust of Central Parking
Finance Trust dated as of March 18, 1998. (Incorporated by
reference to Exhibit 4.5 to the Registrants Registration Statement
No. 333-52497 on Form S-3).4.5
    
    
    
    Preferred Securities Guarantee Agreement dated as of March 18,
1998 by and between the Registrant and Chase Bank of Texas,
national Association as Trustee (Incorporated by reference to
Exhibit 4.7 to the Registrants Registration Statement No.
333-52497 on Form S-3).4.6
    
    
    
    Common Securities Guarantee Agreement dated March 18, 1998 by the
Registrant. (Incorporated by reference to Exhibit 4.9 to 333-52497
on Form S-3).10.1
    
    
    
    Second Amendment to the Credit Facility dated June 4, 2004 by Bank
of America, N.A. and Central Parking Corporation (filed herewith).31.1
    
    
    
    Certification of Monroe J. Carell, Jr. pursuant to Rule 13a-14(a)31.2
    
    
    
    Certification of Mark Shapiro pursuant to Rule 13a-14(a)32.1
    
    
    
    Certification of Monroe J. Carell, Jr. pursuant to Section 135032.2
    
    
    
    Certification of Mark Shapiro pursuant to Section 1350
 (b) Reports on Form 8-K On May 5, 2004, the Company filed a current report on Form 8-K announcing
its operating results for the second quarter ended March 31, 2004 25




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned party duly authorized. CENTRAL PARKING CORPORATIONDate: August 13, 2004
    
    By:   /s/ MONROE J. CARELL, JR.Monroe J. Carell, Jr.Chairman and Chief Executive OfficerCENTRAL PARKING CORPORATIONDate: August 13, 2004
    
    By:   /s/ MARK SHAPIROMark ShapiroSenior Vice President andChief Financial Officer
 26