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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 March 31, 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) 297-4255Former 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 May 10, 2004Common Stock, $0.01 par value
    
    
    36,397,359




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INDEX CENTRAL PARKING CORPORATION AND SUBSIDIARIES  
 PAGEPART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Consolidated Balance Sheets as of March 31, 2004 and September 30, 2003
    
    
    3Consolidated Statements of Operations for the three and six months ended March 31, 2004 and 2003
    
    
    4Consolidated Statements of Cash Flows for the six months ended March 31, 2004 and 2003
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2.
    

Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3.
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    21Item 4.
    
    Controls and Procedures
    
    
    22PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    22Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    23Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    23SIGNATURES
    
    
    
    
    
    
    26EX-31.1  SECTION 302 CEO CERTIFICATIONEX-31.2  SECTION 302 CFO CERTIFICATIONEX-32.1  SECTION 906 CEO CERTIFICATIONEX-32.2  SECTION 906 CFO CERTIFICATION




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Part 1. Financial Information 
  CENTRAL PARKING CORPORATION AND SUBSIDIARIES 
 CONSOLIDATED BALANCE SHEETS
UNAUDITED
 Amounts in thousands, except share data March 31,
    
    September 30,2004
    
    2003ASSETSCurrent assets:Cash and cash equivalents
    
    $
    34,807
    
    
    $
    31,572Management accounts receivable, net of allowance for doubtful accounts of $3,291
and $3,720 at
March 31, 2004 and September 30, 2003, respectively
    
    
    35,261
    
    
    
    34,174Accounts
receivable - other
    
    
    7,041
    
    
    
    15,440Current portion of notes receivable (including amounts due from related parties of
$2,297 at March 31, 2004 and $3,370 at September 30, 2003)
    
    
    5,532
    
    
    
    8,220Prepaid expenses
    
    
    16,311
    
    
    
    11,424Assets held for sale
    
    
    37,533
    
    
    
    39,417Refundable income taxes
    
    
    3,826
    
    
    
    5,483Total current assets
    
    
    140,311
    
    
    
    145,730Notes receivable, less current portion
    
    
    40,529
    
    
    
    40,879Property, equipment, and leasehold improvements, net
    
    
    373,069
    
    
    
    414,265Contracts and lease rights, net
    
    
    92,996
    
    
    
    102,315Goodwill, net
    
    
    230,312
    
    
    
    230,312Investment in and advances to partnerships and joint ventures
    
    
    10,518
    
    
    
    13,649Other assets
    
    
    45,420
    
    
    
    42,297Total assets
    
    $
    933,155
    
    
    $
    989,447LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current portion of long-term debt and capital lease obligations
    
    $
    15,503
    
    
    $
    3,623Trade accounts payable
    
    
    73,486
    
    
    
    80,128Accrued expenses
    
    
    44,761
    
    
    
    43,661Management accounts payable
    
    
    23,144
    
    
    
    22,392Total current liabilities
    
    
    156,894
    
    
    
    149,804Long-term debt and capital lease obligations, less current portion
    
    
    193,200
    
    
    
    266,961Subordinated convertible debentures
    
    
    78,085
    
    
    
    78,085Deferred rent
    
    
    26,033
    
    
    
    27,569Deferred income taxes
    
    
    3,733
    
    
    
    3,010Other liabilities
    
    
    16,459
    
    
    
    16,303Total liabilities
    
    
    474,404
    
    
    
    541,732Minority interest
    
    
    29,646
    
    
    
    31,189Shareholders equity:Common stock, $0.01 par value; 50,000,000 shares authorized, 36,390,909
and 36,170,274 shares issued and outstanding at March 31, 2004 and
September 30, 2003, respectively
    
    
    364
    
    
    
    362Additional paid-in capital
    
    
    248,515
    
    
    
    246,559Accumulated other comprehensive (loss) income, net
    
    
    (140
    )
    
    
    78Retained earnings
    
    
    181,071
    
    
    
    170,232Other
    
    
    (705
    )
    
    
    (705
    )Total shareholders equity
    
    
    429,105
    
    
    
    416,526Total liabilities and shareholders equity
    
    $
    933,155
    
    
    $
    989,447
 See accompanying notes to consolidated financial statements. Page 3 of 26




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CENTRAL PARKING CORPORATION AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
 Amounts in thousands, except per share data Three months ended March 31,
    
    Six months ended March 31,2004
    
    2003
    
    2004
    
    2003Revenues:Parking
    
    $
    146,054
    
    
    $
    145,001
    
    
    $
    297,608
    
    
    $
    294,065Management contracts
    
    
    30,941
    
    
    
    29,275
    
    
    
    63,903
    
    
    
    59,570176,995
    
    
    
    174,276
    
    
    
    361,511
    
    
    
    353,635Reimbursement of management contract expenses
    
    
    113,835
    
    
    
    102,722
    
    
    
    226,559
    
    
    
    204,703Total revenues
    
    
    290,830
    
    
    
    276,998
    
    
    
    588,070
    
    
    
    558,338Costs and expenses:Cost of parking
    
    
    134,205
    
    
    
    139,380
    
    
    
    267,171
    
    
    
    272,106Cost of management contracts
    
    
    14,594
    
    
    
    17,486
    
    
    
    28,968
    
    
    
    32,096General and administrative
    
    
    18,290
    
    
    
    20,835
    
    
    
    37,131
    
    
    
    41,586167,089
    
    
    
    177,701
    
    
    
    333,270
    
    
    
    345,788Reimbursed management contract expenses
    
    
    113,835
    
    
    
    102,722
    
    
    
    226,559
    
    
    
    204,703Total costs and expenses
    
    
    280,924
    
    
    
    280,423
    
    
    
    559,829
    
    
    
    550,491Property-related gains (losses), net
    
    
    3,294
    
    
    
    (3,300
    )
    
    
    4,536
    
    
    
    (3,179
    )Operating earnings (loss)
    
    
    13,200
    
    
    
    (6,725
    )
    
    
    32,777
    
    
    
    4,668Other income (expenses):Interest income
    
    
    1,178
    
    
    
    1,151
    
    
    
    2,425
    
    
    
    2,350Interest expense
    
    
    (4,071
    )
    
    
    (5,594
    )
    
    
    (8,341
    )
    
    
    (8,548
    )Interest expense  subordinated debentures
    
    
    (1,045
    )
    
    
    (1,045
    )
    
    
    (2,089
    )
    
    
    (2,089
    )Gain on sale of non-operating assets
    
    
    
    
    
    
    3,241
    
    
    
    
    
    
    
    3,241Equity in partnership and joint venture (losses) earnings
    
    
    (2,535
    )
    
    
    878
    
    
    
    (1,988
    )
    
    
    1,546Earnings (loss) from continuing operations before minority
interest and income taxes
    
    
    6,727
    
    
    
    (8,094
    )
    
    
    22,784
    
    
    
    1,168Minority interest, net of tax
    
    
    (644
    )
    
    
    (1,075
    )
    
    
    (1,657
    )
    
    
    (2,360
    )Earnings (loss) from continuing operations before income taxes
    
    
    6,083
    
    
    
    (9,169
    )
    
    
    21,127
    
    
    
    (1,192
    )Income tax (expense) benefit
    
    
    (2,601
    )
    
    
    2,256
    
    
    
    (8,206
    )
    
    
    (643
    )Earnings (loss) from continuing operations
    
    
    3,482
    
    
    
    (6,913
    )
    
    
    12,921
    
    
    
    (1,835
    )Discontinued operations, net of tax
    
    
    53
    
    
    
    (2,237
    )
    
    
    (992
    )
    
    
    (449
    )Net earnings (loss)
    
    $
    3,535
    
    
    $
    (9,150
    )
    
    $
    11,929
    
    
    $
    (2,284
    )Basic earnings (loss) per share:Earnings (loss) from continuing operations
    
    $
    0.10
    
    
    $
    (0.19
    )
    
    $
    0.36
    
    
    $
    (0.05
    )Discontinued operations, net of tax
    
    
    0.00
    
    
    
    (0.06
    )
    
    
    (0.03
    )
    
    
    (0.01
    )Net earnings (loss)
    
    $
    0.10
    
    
    $
    (0.25
    )
    
    $
    0.33
    
    
    $
    (0.06
    )Diluted earnings (loss) per share:Earnings (loss) from continuing operations
    
    $
    0.10
    
    
    $
    (0.19
    )
    
    $
    0.36
    
    
    
    (0.05
    )Discontinued operations, net of tax
    
    
    0.00
    
    
    
    (0.06
    )
    
    
    (0.03
    )
    
    
    (0.01
    )Net earnings (loss)
    
    $
    0.10
    
    
    $
    (0.25
    )
    
    $
    0.33
    
    
    $
    (0.06
    )Weighted average shares used for basic per share data
    
    
    36,238
    
    
    
    35,980
    
    
    
    36,198
    
    
    
    35,974Effect of dilutive common stock options
    
    
    285
    
    
    
    
    
    
    
    166
    
    
    
    Weighted average shares used for dilutive per share data
    
    
    36,523
    
    
    
    35,980
    
    
    
    36,364
    
    
    
    35,974
 See accompanying notes to consolidated financial statements. Page 4 of 26




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CENTRAL PARKING CORPORATION AND SUBSIDIARIES 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
 Amounts in thousands Six months ended March 31,2004
    
    2003Cash flows from operating activities:Net earnings (loss)
    
    $
    11,929
    
    
    $
    (2,284
    )Loss from discontinued operations
    
    
    992
    
    
    
    449Earnings (loss) from continuing operations
    
    
    12,921
    
    
    
    (1,835
    )Adjustments to reconcile earnings (loss) from continuing operations to net cash provided by operating activities:Depreciation and amortization
    
    
    16,604
    
    
    
    17,139Equity in
partnership and joint venture losses (earnings)
    
    
    1,974
    
    
    
    (1,261
    )Distributions from partnerships and joint ventures
    
    
    943
    
    
    
    591Gain on sale of non-operating assets
    
    
    
    
    
    
    (3,241
    )Property-related (gains) losses, net
    
    
    (4,536
    )
    
    
    3,179Loss on derivatives related to refinancing
    
    
    
    
    
    
    918Decrease in fair value of derivatives
    
    
    
    
    
    
    12Deferred income tax expense (benefit)
    
    
    701
    
    
    
    (3,968
    )Minority interest, net of tax
    
    
    1,657
    
    
    
    2,360Changes in operating assets and liabilities:Management accounts receivable
    
    
    (1,087
    )
    
    
    801Accounts receivable  other
    
    
    8,399
    
    
    
    4,373Prepaid expenses
    
    
    (4,887
    )
    
    
    (2,857
    )Other assets
    
    
    (5,592
    )
    
    

    (1,237
    )Trade accounts payable, accrued expenses and other liabilities
    
    
    (9,392
    )
    
    
    4,436Management accounts payable
    
    
    752
    
    
    
    3,175Deferred rent
    
    
    (1,536
    )
    
    
    (771
    )Refundable income taxes
    
    
    1,657
    
    
    
    Income taxes payable
    
    
    
    
    
    
    (8,698
    )Net cash provided by operating activities  continuing operations
    
    
    18,578
    
    
    
    13,116Net cash provided (used) by operating activities  discontinued operations
    
    
    526
    
    
    
    (2,600
    )Net cash provided by operating activities
    
    
    19,104
    
    
    
    10,516Cash flows from investing activities:Proceeds from disposition of property and equipment
    
    
    50,916
    
    
    
    17,200Purchases of property, equipment and leasehold improvements
    
    
    (5,591
    )
    
    
    (34,573
    )Purchases of contract and lease rights
    
    
    
    
    
    
    (7,857
    )Other investing activities
    
    
    3,139
    
    
    
    8,452Net cash provided (used) by investing activities
    
    
    48,464
    
    
    
    (16,778
    )Cash flows from financing activities:Dividends paid
    
    
    (1,090
    )
    
    
    (1,081
    )Net repayments under revolving credit agreement
    
    
    (49,000
    )
    
    
    (83,000
    )Proceeds from issuance of notes payable, net of issuance costs
    
    
    1,851
    
    
    
    175,000Principal repayments on long-term debt and capital lease obligations
    
    
    (14,732
    )
    
    
    (76,761
    )Payment to minority interest partners
    
    
    (2,845
    )
    
    
    (3,597
    )Proceeds from issuance of common stock and exercise of stock options
    
    
    1,606
    
    
    
    528Net cash (used) provided by financing activities
    
    
    (64,210
    )
    
    
    11,089Foreign currency translation
    
    
    (123
    )
    
    
    1Net increase in cash and cash equivalents
    
    
    3,235
    
    
    
    4,828Cash and cash equivalents at beginning of period
    
    
    31,572
    
    
    
    33,498Cash and cash equivalents at end of period
    
    $
    34,807
    
    
    $
    38,326Non-cash transactions:Unrealized gain on fair value of derivatives, net of tax
    
    $
    95
    
    
    $
    994Issuance of
shares related to the deferred stock unit plan
    
    $
    352
    
    
    $
    Cash payments for:Interest
    
    $
    8,377
    
    
    $
    7,364Income taxes
    
    $
    5,034
    
    
    $
    13,008
 See accompanying notes to consolidated financial statements. Page 5 of 26




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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 accounting principles generally accepted in the United States
of America 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 accounting principles generally accepted in the United States of
America 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 six months ended March 31,
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.     In December 2002, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure, an amendment of FASB
Statement No. 123. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based
Compensation,to provide alternative methods of transition for a voluntary
change to the fair value method of accounting for stock-based employee
compensation. In addition, this statement amended the disclosure requirements
of SFAS No. 123 to require prominent disclosures in both annual and interim
financial statements. Certain of the disclosure modifications are included
below. 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 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. SFAS No. 123, 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, 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 income (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 March 31,
    
    Six Months ended March 31,2004
    
    2003
    
    2004
    
    2003Net earnings (loss), as reported
    
    $
    3,535
    
    
    $
    (9,150
    )
    
    $
    11,929
    
    
    $
    (2,284
    )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
    
    
    (679
    )
    
    
    (1,363
    )
    
    
    (1,416
    )
    
    
    (2,864
    )Pro forma net earnings (loss)
    
    $
    2,856
    
    
    $
    (10,513
    )
    
    $
    10,513
    
    
    $
    (5,148
    )Earnings (loss) per share:Basic-as reported
    
    $
    0.10
    
    
    $
    (0.25
    )
    
    $
    0.33
    
    
    $
    (0.06
    )Basic-pro forma
    
    $
    0.08
    
    
    $
    (0.29
    )
    
    $
    0.29
    
    
    $
    (0.14
    )Diluted-as reported
    
    $
    0.10
    
    
    $
    (0.25
    )
    
    $
    0.33
    
    
    $
    (0.06
    )Diluted-pro forma
    
    $
    0.08
    
    
    $
    (0.29
    )
    
    $
    0.29
    
    
    $
    (0.14
    )
 Page 6 of 26




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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 40%
tax rate to arrive at the after tax deduction. 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 6.2 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 January 2002, the Company purchased the lease rights for three
locations in New York City for $16.4 million in cash. The lease rights are
being amortized over the remaining terms of the individual lease agreements,
which range from 10 to 30 years. Previously, the Company had operated each of
these locations under an agreement entered into in September 1992. 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 has reached tentative agreement to continue to operate six of
the seven facilities 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. The Company is entitled to receive a termination fee, as defined in the
agreement, as the third party disposes of certain properties or renegotiates
the lease agreements. The termination fee is based on the earnings of the
location and the remaining duration of the agreement. During the year ended
September 30, 2002, the Company received $8.4 million in termination fees
related to the three locations described above and two additional locations
which were disposed of during the period. These amounts have been recorded as
deferred rent and will be amortized through August 2004 to offset the
guaranteed rent payments due under the original agreement. Amortization for
the quarter ended March 31, 2004, was $0.9 million 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 Page 7 of 26




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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 payments of $11.4 million
and other capital expenditures for $19.2 million as reimbursement for the payments made by the Company
in 2002. The Company realized again 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 exercised or converted into common stock,
or if restricted shares of common stock were to become fully vested. For the three and six months ended March 31, 2003, the reported net loss
resulted in all options to purchase common shares being excluded from the
calculation of diluted common shares. For the three months ended March 31,
2004, options to purchase 3,066,213 shares are excluded from the diluted common
shares since they are anti-dilutive. For the six months ended March 31, 2004,
options to purchase 3,148,934 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 March 31, 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. 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 that the Company has
continuing involvement are included as a component of property
related gains or losses. A summary of property-related gains and losses for the three and six months
ended March 31, 2004 and March 31, 2003 is as follows (in thousands): Three months ended
    
    Six months endedMarch 31,
    
    March 31,2004
    
    2003
    
    2004
    
    2003Net gains on sales of property
    
    $
    4,243
    
    
    $
    2,122
    
    
    $
    6,260
    
    
    $
    2,243Impairment charges for property,
equipment and leasehold improvements held
for use
    
    
    (609
    )
    
    
    (427
    )
    
    
    (1,365
    )
    
    
    (427
    )Impairment charges for contract rights,
lease rights and other intangible assets
    
    
    (340
    )
    
    
    (4,995
    )
    
    
    (359
    )
    
    
    (4,995
    )Total property-related gains (losses), net
    
    $
    3,294
    
    
    $
    (3,300
    )
    
    $
    4,536
    
    
    $
    (3,179
    )
 (5) Amortizable Intangible Assets As of March 31, 2004, the Company had the following amortizable
intangible assets (in thousands): GrossCarrying
    
    AccumulatedAmount
    
    Amortization
    
    NetContract and lease rights
    
    $
    144,883
    
    
    $
    (51,887
    )
    
    $
    92,996Noncompete agreements
    
    
    2,575
    
    
    
    (2,371
    )
    
    
    204Total
    
    $
    147,458
    
    
    $
    (54,258
    )
    
    $
    93,200
 Amortization expense related to the contract and lease rights was $2.4 and
$2.5 million respectively, for the three months ended March 31, 2004 and 2003
and $4.8 million and $4.9 million, respectively, for the six months ended March 31,
2004 and 2003. Page 8 of 26




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(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 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 March 31, 2004
was 347 basis points. The amount outstanding under the Companys Credit
Facility was $174.6 million with a weighted average interest rate of 5.23% as
of March 31, 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 $103.8 million at March 31, 2004, which is net of $52.5 million of
stand-by letters of credit. 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 March 31, 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 Central Parking 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 requires 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 would be considered an SPE under 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 elected to adopt 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
interest in the Trust. Therefore, the Company deconsolidated the Trust upon
adoption of FIN 46R by removing, on Page 9 of 26




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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 income. 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 enters 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 March 31, 2004, the Companys derivative financial instruments
consisted of three interest rate swaps with a combined notional amount of
$100.4 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): March 31,
    
    September 30,2004
    
    2003Derivative instrument liabilities:Interest rate swaps
    
    $
    790
    
    
    $
    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. (9) Discontinued Operations As
of March 31, 2004, the Company had 63 locations designated as discontinued operations
which are either held-for-sale or already disposed, with revenues of $1.4
million, pretax loss of $1.7 million and $0.7 million of income
tax benefit, resulting in a loss from discontinued
operations of $1.0 million, net of $1.5 million in property related gains. The
facts and circumstances leading to discontinued operations classification and
the expected disposals include expected property sales, condemnations, or Page 10 of 26




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early lease and management agreement terminations. Included in the three and
six months ended March 31, 2004 is the year-to-date results of operations for
all locations discontinued during the first quarter and second 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 and second
quarter of fiscal 2004 as discontinued operations net of related income taxes. (10) Recently Adopted Accounting Pronouncements Effective
January 1, 2004, the Company adopted FIN 46R for all 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 which is now classified
as subordinated debentures on the Balance Sheets (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 of any of the variable interest
entities as follows: Number ofCommencement
    
    Nature of
    
    %
    
    
    
    ParkingEntity
    
    of Operations
    
    Activities
    
    Ownership
    
    Location
    
    SpacesCentral Parking
System of Mexico,
SA De CV
    
    Aug-94
    
    Leases and manages
parking lots
    
    
    50.00
    %
    
    Mexico
    
    
    64,062Other investments
in 16 VIEs
    
    Oct 80-July 99
    
    Ownership,
management, and
leases of parking lots
    
    
    3.32%-50
    %
    
    Mexico and Various
states
    
    
    11,608
 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) Recently Issued Accounting Pronouncements In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity.
SFAS No. 150 requires issuers to classify as liabilities (or assets in some
circumstance) three classes of freestanding financial instruments that embody
obligations for the issuer. Generally, SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003. The Company adopted
the provisions of SFAS No. 150 on July 1, 2003. The Company has not entered
into any financial instruments within the scope of SFAS No. 150 after May 31,
2003. (12) 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 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. The plaintiffs have until June 11,
2004, to file a response to the motions to dismiss. The litigation is in its
preliminary stages and the amount of potential loss, if any, cannot reasonably
be estimated. The Company was a defendant in a lawsuit filed in July 2002 in Chancery
Court in Davidson County, Tennessee, by Wardrop Parking Holdings, LLC relating
to the Companys management of McKendree Parking Center in Nashville. The suit
was settled in early January 2004. 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 Page 11 of 26




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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 attorneys 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. Trial in the case is scheduled for June 2004. The Company is
vigorously defending the case and believes it is more likely than not
that it will prevail. 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. (13) Comprehensive Income (Loss) Comprehensive income (loss) for the three and six months ended March 31,
2004 and 2003 was as follows (in thousands): Three months ended
    
    Six months endedMarch 31,
    
    March 31,2004
    
    2003
    
    2004
    
    2003Net earnings (loss)
    
    $
    3,535
    
    
    $
    (9,150
    )
    
    $
    11,929
    
    
    $
    (2,284
    )Change in fair value of derivatives, net of tax
    
    
    (771
    )
    
    
    793
    
    
    
    (153
    )
    
    
    994Change in fair value of investment securities,
net of tax
    
    
    (14
    )
    
    
    
    
    
    
    58
    
    
    
    Foreign currency cumulative translation adjustment
    
    
    597
    
    
    
    207
    
    
    
    (123
    )
    
    
    1Comprehensive income (loss)
    
    $
    3,347
    
    
    $
    (8,150
    )
    
    $
    11,711
    
    
    $
    (1,289
    )
 (14) 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 six months ended March 31, 2004 and 2003, as well as identifiable
assets for each segment as of March 31, 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. Three months ended
    
    Six months endedMarch 31,
    
    March 31,2004
    
    2003
    
    2004
    
    2003Revenues:(1)Segment One
    
    $
    19,322
    
    
    $
    18,293
    
    
    $
    39,598
    
    
    $
    38,047Segment Two
    
    
    75,286
    
    
    
    71,834
    
    
    
    154,572
    
    
    
    146,963Segment Three
    
    
    5,048
    
    
    
    4,064
    
    
    
    9,443
    
    
    
    7,914Segment Four
    
    
    8,812
    
    
    
    9,536
    
    
    
    18,884
    
    
    
    19,348Segment Five
    
    
    2,769
    
    
    
    2,624
    
    
    
    5,427
    
    
    
    5,205Segment Six
    
    
    25,188
    
    
    
    24,852
    
    
    
    50,900
    
    
    
    49,134Segment Seven
    
    
    15,043
    
    
    
    19,489
    
    
    
    32,467
    
    
    
    39,052Segment Eight
    
    
    21,489
    
    
    
    22,337
    
    
    
    43,233
    
    
    
    44,957Other
    
    
    4,038
    
    
    
    1,247
    
    
    
    6,987
    
    
    
    3,015Total revenues
    
    $
    176,995
    
    
    $
    174,276
    
    
    $
    361,511
    
    
    $
    353,635
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(1)
    
    Revenues exclude reimbursement of management contract expenses.
Such amounts were $113.8 million and $102.7 million for the three
months ended March 31, 2004 and 2003, respectively, and $226.6 million
and $204.7 million for the six months ended March 31, 2004 and 2003,
respectively. Three months endedMarch 31,
    
    Six months
endedMarch 31,2004
    
    2003
    
    2004
    
    2003Operating earnings (loss):Segment One
    
    $
    22
    
    
    $
    (2,004
    )
    
    $
    430
    
    
    $
    (1,450
    )Segment Two
    
    
    1,416
    
    
    
    (1,977
    )
    
    
    8,932
    
    
    
    5,355Segment Three
    
    
    937
    
    
    
    59
    
    
    
    1,872
    
    
    
    395Segment Four
    
    
    2,223
    
    
    
    502
    
    
    
    4,018
    
    
    
    1,628Segment Five
    
    
    557
    
    
    
    361
    
    
    
    963
    
    
    
    889Segment Six
    
    
    1,728
    
    
    
    1,400
    
    
    
    4,587
    
    
    
    3,632Segment Seven
    
    
    (1,983
    )
    
    
    (1,136
    )
    
    
    (1,306
    )
    
    
    69Segment Eight
    
    
    2,818
    
    
    
    1,551
    
    
    
    6,524
    
    
    
    4,323Other
    
    
    5,482
    
    
    
    (5,481
    )
    
    
    6,757
    
    
    
    (10,173
    )Total operating earnings (loss)
    
    $
    13,200
    
    
    $
    (6,725
    )
    
    $
    32,777
    
    
    $
    4,668
 March 31,
    
    September 30,2004
    
    2003Identifiable assets:Segment One
    
    $
    13,415
    
    
    $
    18,248Segment Two
    
    
    320,411
    
    
    
    330,420Segment Three
    
    
    13,400
    
    
    
    12,953Segment Four
    
    
    43,006
    
    
    
    41,664Segment Five
    
    
    1,427
    
    
    
    1,082Segment Six
    
    
    22,366
    
    
    
    24,471Segment Seven
    
    
    35,350
    
    
    
    36,618Segment Eight
    
    
    32,762
    
    
    
    37,111Other
    
    
    451,018
    
    
    
    486,880Total assets
    
    $
    933,155
    
    
    $
    989,447
 Segment One encompasses the western region of the United States 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 and the Lexis acquisition. 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. 
 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 Page 13 of 26




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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;-
    
    the timing of property-related gains and losses;-
    
    the timing of pre-opening, start-up and break-in costs of parking facilities;-
    
    player strikes or other events affecting major league sports;-
    
    changes in economic and business conditions at the local, regional, national or international levels;-
    
    changes in patterns of air travel or automobile usage, including
effects of 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;-
    
    compliance with, or changes in, local, state, national and
international laws and regulations, including, without limitation,
local regulations, restrictions and taxation on 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
or terrorist attacks and natural disasters; and-
    
    the loss of key employees. Page 14 of 26




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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. As of March 31, 2004,
Central Parking operated 1,707 parking facilities through management contracts,
leased 1,742 parking facilities, and owned 198 parking facilities, either
independently or in joint ventures with third parties. 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. 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 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 accounting principles generally accepted
in the United States of America. 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 accounting principles generally accepted in the United
States of America 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 accounting principles generally accepted in the United States of America,
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 March 31, 2004, the Companys long-lived assets were comprised
primarily of $373.1 million of property, equipment and leasehold improvements,
$230.3 million of goodwill, $93.0 million of contracts and lease rights and
$14.7 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. Page 15 of 26




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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 $1.3 million ($0.9
million in continuing operations and $0.4 million in discontinued operations)
during the three months ended March 31, 2004 and approximately $2.5 million
($1.7 million in continuing operations and $0.08 million in discontinued
operations) during the six months ended March 31, 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. Contract and Lease Rights As of March 31, 2004, the Company had $93.0 million of contract and lease
rights. The Company capitalizes payments made to third parties, which provide
the Company the right to manage or lease facilities. Lease rights and
management contract rights, which are purchased individually, are amortized on
a straight-line basis over the terms of the related agreements, which range
from 5 to 30 years. Management contract rights acquired through acquisition of
an entity are amortized as a group over the estimated term of the contracts,
including anticipated renewals and terminations based on the Companys
historical experience (typically 15 years). If the renewal rate of contracts
within an acquired group is less than initially estimated, accelerated
amortization or impairment may be necessary. Allowance for Doubtful Accounts As of March 31, 2004, the Company had $45.6 million of gross trade
receivables, including management accounts receivable and accounts receivable 
other. Additionally, the Company had a recorded allowance for doubtful
accounts of $3.3 million. The Company reports management accounts receivable,
net of an allowance for doubtful accounts, to represent its estimate of the
amount that ultimately will be realized in cash. The Company reviews the
adequacy of its allowance for doubtful accounts on an ongoing basis, using
historical collection trends, analyses of receivable portfolios by region and
by source, aging of receivables, as well as review of specific accounts, and
makes adjustments in the allowance as necessary. Changes in economic
conditions, specifically in the Northeast United States, could have an impact
on the collection of existing receivable balances or future allowance
considerations. 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 Page 16 of 26




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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 the determination of 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 March 31, 2004 Compared to Three Months Ended March 31, 2003 Parking revenues in the second quarter of fiscal year 2004 increased to
$146.1 million from $145.0 million in the second quarter of fiscal year 2003,
an increase of $1.1 million, or 0.8%. The increase was comprised of $5.3
million resulting from a 2.7% increase in same-store revenues, offset by a
decrease of $1.9 million due to closed locations and a decrease of $2.3 million
for locations converted from lease arrangements to management agreements.
Same-store revenues were particularly strong in the New York market as the
same-store percentage increased 7.6% over last years first quarter compared
with an increase of 0.3% in same-store sales outside of New York. Management contract revenues for the second quarter of fiscal 2004
increased to $30.9 million from $29.3 million in the second quarter of fiscal
year 2003, an improvement of $1.6 million or 5.5%. The increase resulted
primarily from $0.7 million due to new locations and partnerships and
$0.8 million due to improved insurance program revenue. Cost of parking in the second quarter of 2004 decreased to $134.2 million
from $139.4 million in the second quarter of 2003, a decrease of $5.2 million
or 3.7%. During the second quarter of fiscal 2004, the Company had a $1.7
million decline in payroll due in large part to reduced overtime, a $1.2
million decrease in rent expense due to fewer operating locations and
renegotiated lease agreements, a $0.4 million decrease in professional services
due to a reduction in consulting services, and a $1.9 million decrease in other
expenses. Rent expense as a percentage of parking revenues decreased to 51.8%
during the quarter ended March 31, 2004, from 52.9% in the quarter ended March
31, 2003. Payroll and benefit expenses were 18.6% of parking revenues during
the second quarter of fiscal 2004 as compared to 19.8% in the comparable prior
year period. Cost of parking as a percentage of parking revenues decreased to
91.9% in the second quarter of fiscal 2004 from 96.1% in the second quarter of
fiscal 2003. Cost of management contracts in the second quarter of fiscal 2004
decreased to $14.6 million from $17.5 million in the comparable period in 2003,
a decrease of $2.9 million or 16.6%. The decrease was primarily due to a
decrease of $1.8 million in bad debt expense, a decrease of $0.5 million in
insurance claims expense and a decrease in equipment lease expense of $0.4
million. Cost of management contracts as a percentage of management contract
revenue decreased to 47.2% for the second quarter of 2004 from 59.7% for the
same period in 2003. General and administrative expenses decreased to $18.3 million for the
second quarter of fiscal 2004 from $20.8 million in the second quarter of
fiscal 2003. This decrease is due to reduced payroll of $1.4 million and
reduced legal and professional expenses of $0.5 million. Miscellaneous other
expenses of $0.6 million comprise the remainder of the quarterly decrease.
Much of the decline in year-over-year general and administrative expenses is
due to cost-cutting measures implemented in the latter half of 2003. General
and administrative expenses as a percentage of total revenues (excluding
reimbursement of management contract expenses) decreased to 10.3% for the
second quarter of fiscal 2004 compared to 11.9% for the second quarter of
fiscal 2003. Net property-related gains for the three months ended March 31, 2004 was
$3.3 million. The $3.3 million gain was comprised of a gain on sale of
property of $4.2 million partially offset by $0.9 million of impairments of
contract rights, leasehold improvements and deferred expenses primarily related
to one location in New York and one location in Atlanta, 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 Page 17 of 26




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discontinued operations. For the three months ended March 31, 2004, the
Company either disposed of or designated as held-for-sale or disposal 63
locations, resulting in earnings from discontinued operations of $53 thousand,
net of tax. The Companys prior period results were reclassified to reflect
the operations of these locations discontinued in the first and second quarter
of fiscal 2004 as discontinued operations net of related income taxes. Interest expense and interest on subordinated convertible debentures
decreased to $5.1 million for the second quarter of fiscal 2004 from $6.6
million in the second quarter of fiscal 2003, a decrease of $1.5 million or
22.7%. The decrease was attributed to the write off of $2.0 million in
deferred finance costs, as a result of the new credit facility. The weighted average balance outstanding for the Companys debt
obligations and subordinated convertible debentures was $311.5 million during
the three months ended March 31, 2004, at a weighted average interest rate of
6.14% compared to a weighted average balance outstanding of $362.1 million at a
weighted average rate of 6.91% during the three months ended March 31, 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
$(2.5) million for the second quarter of fiscal 2004 from $0.9 million in the
second quarter of fiscal 2003, a decrease of $3.4 million. The decrease is
primarily related to 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. $1.5 million was related to the current quarter and
$1.1 million related to prior periods. The $1.5 million current-quarter impact is the result
of non-cash impairments, primarily related to notes receivable and other
assets. The recent 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 to the
current quarter. The Company recorded an income tax expense on earnings from continuing
operations of $2.6 million for the second quarter of fiscal 2004 as compared to
income tax benefit of $(2.3) million in the second quarter of fiscal 2003, a
change of $4.9 million. The effective tax rate on earnings from continuing
operations before income taxes for the second quarter of fiscal 2004 was 42.8%
compared to 24.6% for the second quarter of fiscal 2003. The change in the
effective tax rate is due to the change in relationship of the amount of
certain permanent items to the pretax income mainly related to the
Mexican affiliate. Results of Operations Six Months Ended March 31, 2004 Compared to Six Months Ended March 31, 2003 Parking revenues in the first half of fiscal year 2004 increased to $297.6
million from $294.1 million in the first half of fiscal year 2003, an increase
of $3.5 million, or 1.2%. This increase was composed of $8.7 million resulting
from a 3.6% increase in same-store revenues, offset by a decrease of $5.2
million due to closed locations. Same-store revenues were particularly strong
in the New York market as the same-store percentage increased 7.0% over the
first half of last year compared with an increase of 1.8% in same-store sales
outside of New York. Management contract revenues for the first half of fiscal 2004 increased
to $63.9 million from $59.6 million in the first half of fiscal year 2003, an
improvement of $4.3 million or 7.2%. The increase resulted primarily from
an increase of $2.3 million due to new locations and partnerships and an
increase of $2.0 million due to improved insurance program revenue. Cost of parking in the first half of 2004 decreased to $267.2 million from
$272.1 million in the first half of 2003, a decrease of $4.9 million or 1.8%.
During the first half of fiscal 2004, the Company had a $3.2 million decrease
in payroll due in large part to reduced overtime, a decrease of $0.5 million
for supplies, a decrease of $0.5 million for snow removal and a reduction of
other expenses of $0.7 million. Rent expense as a percentage of parking
revenues decreased to 50.8% during the six months ended March 31, 2004, from
51.1% in the first six months ended March 31, 2003. Payroll and benefit
expenses were 18.4% of parking revenues during the first half of fiscal 2004 as
compared to 19.7% in the comparable prior year period. Cost of parking as a
percentage of parking revenues decreased to 89.8% in the first half of fiscal
2004 from 92.5% in the first half of fiscal 2003. Cost of management contracts in the first half of fiscal 2004 decreased to
$29.0 million from $32.1 million in the Page 18 of 26




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comparable period in 2003, a decrease
of $3.1 million or 9.7%. The decrease was primarily due to a decrease of $2.2
million in bad debt expense, a decrease of $0.5 million in commercial and
employment claims and a decrease of $0.3 million in equipment lease expense.
Cost of management contracts as a percentage of management contract revenue
decreased to 45.4% for the first half of 2004 from 53.9% for the same period in
2003. General and administrative expenses decreased to $37.1 million for the
first half of fiscal 2004 from $41.6 million in the first half of fiscal 2003.
This decrease is due to reduced payroll of $2.5 million and reduced legal and
professional services of $1.0 million. Miscellaneous other expenses of $0.8
million comprise the remainder of the year to date decrease. Much of the
decline in year-over-year general and administrative expenses is due to
cost-cutting measures implemented in the latter half of 2003. General and
administrative expenses as a percentage of total revenues (excluding
reimbursement of management contract expenses) decreased to 10.3% for the first
half of fiscal 2004 compared to 11.7% for first half of fiscal 2003. Net property-related gains for the six months ended March 31, 2004 was
$4.5 million. The $4.5 million gain was comprised of a gain on sale of
property of $6.3 million partially offset by $1.7 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 six months ended March 31, 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. For the six months ended March 31, 2004, the Company
either disposed of or designated as held-for-sale or disposal 63 locations,
resulting in a loss from discontinued operations of $1.0 million, net of tax.
The Companys prior period results were reclassified to reflect the operations
of these locations discontinued in the first and second quarter of fiscal 2004
as discontinued operations net of related income taxes. Interest expense and interest on subordinated convertible debentures
decreased to $10.4 million for the first half of fiscal 2004 from $10.6 million
in the first half of fiscal 2003, a decrease of $0.2 million or 1.9%. The
decrease was attributed to a decrease in the amount of debt outstanding for the first
half of fiscal 2004, offset by an increase in interest rates on the Companys
Credit Facility due to the refinancing in February 2003, and an increase in
letter of credit costs. The weighted average balance outstanding for the Companys debt
obligations and subordinated convertible debentures was $329.1 million during
the six months ended March 31, 2004, at a weighted average interest rate of
5.79% compared to a weighted average balance outstanding of $358.4 million at a
weighted average rate of 5.52% during the six months ended March 31, 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
$(2.0) million for the first half of fiscal 2004 from $1.5 million in the first
half of fiscal 2003, a decrease of $3.5 million. The decrease is related to
the Companys 50% owned, non-consolidated affiliate in Mexico. During the
quarter, 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. $1.5 million was related to the current quarter and $1.1 million related to prior periods. The
$1.5 million current-quarter impact is the result of non-cash impairments, primarily
related to notes receivable and other assets. The recent 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 to the current quarter. The Company recorded an income tax expense on earnings from continuing
operations of $8.2 million for the first half of fiscal 2004 as compared to
income tax expense of $0.6 million in the first half of fiscal 2003, a change
of $7.6 million. The effective tax rate on earnings from continuing operations
before income taxes for the first half of fiscal 2004 was 38.8% compared to
53.9% for the first half of fiscal 2003. The change in the effective tax rate
is due to the change in relationship of the amount of certain permanent items
to the pretax income in 2003 mainly related to the Mexican affiliate. Page 19 of 26




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Liquidity and Capital Resources Operating activities for the six months ended March 31, 2004 provided net
cash of $19.1 million, compared to $10.5 million of cash provided by operating
activities for the six months ended March 31, 2003. Net earnings from
continuing operations of $12.9 million, depreciation and amortization of $16.6
million, deferred income taxes of $0.7 million, equity in partnership and joint
venture losses of $2.0 million, minority interest, net of tax of $1.7 million
and property related gains of $4.5 million, offset by net increases in
operating assets and net decreases in operating liabilities
aggregating $11.7
million, and $0.5 million in discontinued operations, account for the majority
of the cash provided by operating activities during the first six months of
fiscal 2004. Investing
activities for the six months ended March 31, 2004 provided
net cash of $48.5 million, compared to $16.8 million of net cash used in
investing activities for the same period in the prior year. Purchases of
property, equipment and leasehold improvements of $5.6 million offset by
proceeds from disposition of property and equipment of $50.9 million and other
investing activities of $3.1 million, accounted for the majority of the cash
provided by investing activities in the first six months of fiscal 2004. The
$50.9 million of proceeds from disposition consists primarily of $31.7 million
received from the sale of six 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 $34.6 million and purchases of contract and lease
rights of $7.9 million, offset by proceeds from disposition of property and
equipment of $17.2 million and other investing activities of $8.5 million,
accounted for the majority of the cash used by investing activities in the
first six months of fiscal 2003. Financing activities for the six months ended March 31, 2004 used net cash
of $64.2 million, compared to $11.1 million provided in the same period in the
prior year. Principal repayments on revolving credit of $49.0 million,
principal repayments on notes payable and capital lease obligations of $14.7
million, payment to minority interest partners of $2.8 million, and dividends
paid of $1.1 million offset by proceeds from issuance of notes payable of $1.9
million, and issuance of common stock of $1.6 million comprised a majority of
the cash used by financing activities for the six months ended March 31, 2004.
Principal repayments on revolving credit of $83.0 million, principal repayments
on notes payable and capital leases of $76.8 million, payment to minority
interest partners of $3.6 million and dividends paid of $1.1 million, offset by
proceeds from issuance of notes payable of $175.0 million and issuance of
common stock of $0.5 million comprised a majority of the cash provided by
financing activities for the six months ended March 31, 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 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 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 March 31, 2004
was 347 basis points. The amount outstanding under the Companys Credit
Facility was $174.6 million with a weighted average interest rate of 5.23% as
of March 31, 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 $103.6 million at March 31, 2004, which is net of $52.5 million of
stand-by letters of credit. 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 March 31, 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. Page 20 of 26




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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 $5.6 million during the first six months of fiscal 2004 The following tables summarize the Companys total contracted obligations
and commercial commitments as of March 31, 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
    
    $
    208,703
    
    
    $
    15,503
    
    
    $
    5,721
    
    
    $
    103,365
    
    
    $
    84,114Subordinated convertible debentures
    
    
    78,085
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,085Operating leases
    
    
    1,338,579
    
    
    
    119,299
    
    
    
    401,178
    
    
    
    278,935
    
    
    
    539,167Total contractual cash obligations
    
    $
    1,625,367
    
    
    $
    134,802
    
    
    $
    406,899
    
    
    $
    382,300
    
    
    $
    701,366
 Amount of commitment expiration per periodLess than
    
    1-3
    
    4-5
    
    After 5Total
    
    1 Year
    
    Years
    
    Years
    
    YearsUnused lines of credit
    
    $
    96,300
    
    
    $
    
    
    
    $
    
    
    
    $
    96,300
    
    
    $
    Stand-by letters of credit
    
    
    7,509
    
    
    
    
    
    
    
    
    
    
    
    7,509
    
    
    
    Guarantees
    
    
    1,000
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    Other commercial commitments
    
    
    2,640
    
    
    
    2,640
    
    
    
    
    
    
    
    
    
    
    
    Total commercial commitments
    
    $
    107,449
    
    
    $
    3,640
    
    
    $
    
    
    
    $
    103,809
    
    
    $
    
 Other commercial commitments include guaranteed minimum payments to
minority partners of certain partnerships. 
 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 March 31, 2004, the Company
had $174.5 million of variable rate debt outstanding under the Credit Facility
priced at LIBOR plus a weighted average margin of 347 basis points. Of this
amount, $164.5 million of the Credit Facility is payable in quarterly
installments of $437,500 through March 2008 and quarterly payments of $20.8
million from June 2008 through March 2010. Approximately $10.0 million in
revolving credit loans are due in February 2008. 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
March 31, 2004 was 5.23%. An increase (decrease) in LIBOR of 1% would result
in an increase (decrease) of annual interest expense of $1.7 million based on
the Companys outstanding Credit Facility balance of $174.5 million at March
31, 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 Page 21 of 26




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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 March
31, 2004, the Company had approximately GBP 3.7 million (USD $6.9 million) of
cash and cash equivalents denominated in British pounds, EUR 2.9 million (USD
$3.5 million) denominated in euros, CAD 2.1 million (USD $1.6 million)
denominated in Canadian dollars, and USD $0.7 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 March 31, 2004. These notes
bear interest at a floating rate of 5.34% as of March 31, 2004, and require
monthly principal and interest payments through 2012. On March 26, 2004, the
Company entered into a foreign exchange agreement to purchase GBP at a rate of
1.817 USD per GBP. The transaction was completed on April 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 March 31, 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 Accounting 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 Accounting Officer
concluded that the Companys disclosure controls and procedures as of
March 31, 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 March 31, 2004 that has materially affected, or is
reasonably likely to materially affect the Companys internal control over
financial reporting except that the Company has implemented a new
process for recording trade accounts payable. 
 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. The plaintiffs have until June 11,
2004, to file a response to the motions to dismiss. The litigation is in its
preliminary stages and the amount of potential loss, if any, cannot reasonably
be estimated. The Company was a defendant in a lawsuit filed in July 2002 in Chancery
Court in Davidson County, Tennessee, Page 22 of 26




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by Wardrop Parking Holdings, LLC relating
to the Companys management of McKendree Parking Center in Nashville. The suit
was settled in early January 2004. 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 attorneys
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. Trial in the
case is scheduled for June 2004. The Company is vigorously
defending the case and believes it is more likely than not that it
will prevail. 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. 
 Item 4. Submission of Matters to a Vote of Security Holders An annual meeting of shareholders was held on February 10, 2004. At the
meeting, the Companys shareholders were asked to elect nine directors to the
Companys board of directors. Each of the nominated directors was elected. No
other matters were voted upon at the annual meeting. The following table sets forth the voting tabulation for each of the
directors nominated to serve on the Companys board of directors: Votes
    
    Votes
    
    Votes
    
    
    
    BrokerFor
    
    Against
    
    Withheld
    
    Abstentions
    
    Non-VotesMonroe J. Carell, Jr.
    
    34,360,987
    
    
    
    267,093
    
    
    
    N/ARaymond T. Baker
    
    34,491,339
    
    
    
    136,691
    
    
    
    N/AKathryn Carell Brown
    
    34,356,379
    
    
    
    271,701
    
    
    
    N/ACecil Conlee
    
    33,930,473
    
    
    
    697,607
    
    
    
    N/ALewis Katz
    
    28,163,517
    
    
    
    6,464,563
    
    
    
    N/AEdward G. Nelson
    
    33,977,908
    
    
    
    650,171
    
    
    
    N/AOwen G. Shell, Jr.
    
    34,489,614
    
    
    
    138,466
    
    
    
    N/ARichard H. Sinkfield
    
    33,982,698
    
    
    
    645,382
    
    
    
    N/AWilliam B. Smith
    
    33,250,822
    
    
    
    1,377,258
    
    
    
    N/A
 
 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).
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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)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).
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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).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 February 2, 2004, the Company filed a current report on Form 8-K
announcing its operating results for the first quarter ended December 31, 2003 Page 25 of 26




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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: May 13, 2004
    
    By:
    
    /s/ MONROE J. CARELL, JR.Monroe J. Carell, Jr.Chairman and Chief Executive OfficerCENTRAL PARKING CORPORATIONDate: May 13, 2004
    
    By:
    
    /s/ MARK SHAPIROMark ShapiroSenior Vice President and Chief Financial Officer
 Page 26 of 26