The tangible assets primarily consisted of accounts receivable, equipment and leasehold improvements, and prepaid lease payments. The purchase price included $1,996,567 paid in cash at closing of which $319,030 went directly to the seller. The balance of $1,677,537 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.

      Property acquisitions

      In April 2002, the Company acquired four properties in Atlanta for $16.5 million, including acquisition costs. The purchase was funded through two notes payable secured by the acquired properties. The notes require the Company to make monthly interest payments at a weighted average rate of one-month LIBOR plus 157.5 basis points, with the principal balance due in April 2007. The properties are currently being leased to another parking operator.

      On October 7, 2002, the Company purchased a parking location in Baltimore, Maryland for approximately $16 million in cash. Previously, the company had operated the location under a lease agreement.

      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 intends to enter into negotiations to extend the terms of these remaining locations prior to the termination of the existing agreement. There can be no assurance that these locations will be renewed or, if renewed, that the new agreements will not have substantially different terms.

      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. The amount has been recorded as deferred rent and will be amortized through August 2004 to offset the guaranteed rent payments due under the original agreement.

      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 is 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 will be amortized over the nine-year term of the lease. Yearly base lease payments under the lease range from $7.1 million in year one to $7.4 million in years two through nine, which are being recognized by the Company on a straight-line method during the term of the lease. Additionally, lease payments may increase during the final six years of the lease based upon increases in the aggregate pricing charged to customers at these locations. During the third quarter of 2003, the Company was informed that Connex will be removed as the private operator by the Strategic Rail Authority effective December 31, 2003. The Strategic Rail authority is in the process of identifying a new private operator to assume Connex’s responsibilities. The Company anticipates that its contract with Connex will be assumed by the new operator. However, there can be no assurance that this will happen.

(3) Earnings Per Share

      Basic earnings per share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that 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.

      The company-obligated mandatorily redeemable securities of a subsidiary trust have not been included in the

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diluted earnings per share calculation since such securities are anti-dilutive. Such securities were convertible into 1,419,588 shares of common stock on both June 30, 2003 and 2002. For the three and nine months ended June 30, 2003, options to purchase 5,288,704 shares and 4,495,983 shares are excluded from the calculation of diluted common shares since they are anti-dilutive due to the reported net losses.

(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. The Company adopted SFAS No. 144, Accounting for the Impairment or Disposal of Long Lived Assets, effective October 1, 2002. In accordance with SFAS No. 144, 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 meet the assets held-for-sale criteria as defined in SFAS No. 144 are also included as a component of discontinued operations. A summary of property-related gains and losses for the three and nine months ended June 30, 2003 and June 30, 2002 is as follows (in thousands):

(5) Goodwill and Intangible Assets

      As of June 30, 2003, the Company had the following amortizable intangible assets (in thousands):

      Amortization expense related to the contract and lease rights was $2.8 million and $7.7 million, respectively, for the three and nine months ended June 30, 2003, and $2.7 million and $7.7 million for the three and nine months ended June 30, 2002. Amortization expense related to noncompete agreements was $54,000 and $0.2 million, respectively, for the three and nine months ended June 30, 2003, and $94,000 and $0.3 million for the three and nine months ended June 30, 2002, respectively.

      In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually. The transition provisions of SFAS No. 142 required that the Company assess goodwill for impairment as of the date of adoption and recognize identified impairments as a cumulative effect of an accounting change in the accounting period in which the standard was adopted. The Company adopted SFAS No. 142 as of October 1, 2001. The Company completed the transition process as required under the provisions of SFAS No. 142 and recorded as a cumulative effect of an accounting change a charge of $9.3 million (net of an income tax benefit of $28 thousand) related to business units in Chicago and New Jersey as of October 1, 2001.

      During the three months ended June 30, 2003, the Company eliminated deferred tax valuation allowances on

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acquired operating loss carryforwards totaling $11,949,000, because Management determined that the deferred tax assets from these operating loss carryforwards would be realized. Since these deferred tax assets were obtained from previous acquisitions for which goodwill was recorded, the Company reduced such goodwill by the amount of the elimination of the deferred tax valuation allowances.

(6) Gain on Sale of Non-Operating Assets

      During the three months ended March 31, 2003, the Company consummated the sale of an airplane owned by the Company for $3.9 million. At the time of the consummation of the sale, the airplane had a net book value of $0.1 million, resulting in the recognition of a gain of $3.3 million, net of selling costs.

(7) 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 credit facility including a sub-limit of $60 million for standby letters of credit, and a $175 million seven-year term loan. Proceeds from the credit facility were used to refinance the 1999 credit facility. The facility is secured by the stock of certain subsidiaries of the Company, 106 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 credit facility and term loan. The weighted average margin as of June 30, 2003 was 3.35%. The amount outstanding under the Company’s Credit Facility was $246.6 million with a weighted average interest rate of 4.99% as of June 30, 2003. The term loan is required to be repaid in quarterly payments of $0.44 million through March 2008 and quarterly payments of $20.8 million from June 2008 through March 2010. The aggregate availability under the Credit Facility was $32.3 million at June 30, 2003, which is net of $35.7 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. As of March 31, 2003, the Company was in default due to non-compliance with both the leverage and senior leverage ratios. A temporary waiver was obtained from the lenders for the quarter ended March 31, 2003, subject to certain conditions. Pursuant to the provisions of the Emerging Issues Task Force (“EITF”) Issue No. 86-30, Classification of Obligations When a Violation Is Waived by the Creditor, the Company projected future compliance with the existing covenants and concluded that non-compliance with the same covenants at the next quarterly measurement date was probable. As a result, the Credit Facility was classified as a current liability at March 31, 2003. The temporary waiver required the Company to complete an amendment to the Credit Facility.

      The Company completed an amendment of the Credit Facility on August 12, 2003. The Company paid a fee of $1.5 million in connection with obtaining the amendment. The amendment included changes to the permitted covenant ratios; limitation of capital expenditures, acquisitions and loans; adjusted pricing with additional tiers; and new provisions for asset dispositions. The amended facility includes a new pricing tier that adds 25 basis points when the Company’s leverage ratio exceeds certain levels. Pursuant to EITF Issue No. 86-30, the Company projected future compliance with the amended covenants and believes that compliance with the amended covenants during the next four quarterly measurement dates was probable. Accordingly, the Credit Facility has been classified as a long-term liability at June 30, 2003.

(8) Convertible Trust Issued Preferred Securities

      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 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. The net proceeds to the Company from the Preferred Securities private placement were $106.5 million. 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

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the repayment of the Convertible Debentures at their stated maturity (April 1, 2028) or upon acceleration or earlier repayment of the Convertible Debentures.

      The Company’s consolidated balance sheets reflect the Preferred Securities of the Trust as company-obligated mandatorily redeemable convertible securities of a subsidiary trust holding solely parent debentures.

      On June 28, 2002, the Company repurchased 138,800 shares of its Preferred Securities for $2.5 million. On March 30, 2002, the Company repurchased 500,000 shares of its Preferred Securities for $9.3 million. On December 28, 2001, the Company repurchased 637,795 shares of the Preferred Securities for $10.0 million. For the year ended September 30, 2002, these transactions resulted in a reduction of $31.9 million of the outstanding balance of the Preferred Securities and pre-tax gains of $9.2 million, net of write downs of a proportionate share of the related deferred finance costs of $0.9 million.

(9) 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, management 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 swaps variable interest rate payments for fixed-rate payments. 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 agreements, the Company has the right to receive cash if interest rates increase above a specified level.

      The Company recognizes all derivative instruments as either assets or liabilities, measured at fair value, in the consolidated balance sheets.

      At June 30, 2003, the Company’s derivative financial instruments consist of three interest rate cap agreements with a combined notional amount of $75.0 million and four interest rate swaps with a combined notional amount of $125.8 million. The interest rate caps and an interest rate swap with a notional amount of $25.0 million were obtained to manage fluctuations in cash flows associated with the Company’s 1999 Credit Facility. The refinancing of the credit facility during the second quarter of 2003 resulted in these derivatives being deemed to be ineffective based on the guidance provided in SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities and related interpretations. Accordingly, the Company recorded an increase to interest expense of approximately $0.9 million during the quarter ended March 31, 2003, which represented the balance recorded in accumulated other comprehensive income associated with these derivative financial instruments.

      As of June 30, 2003, the Company has not redesignated these derivative financial instruments. As a result, the three interest rate caps and the interest rate swap are being accounted for as speculative derivative financial instruments with changes in fair values being reflected as a component of interest expense. For the three months ended June 30, 2003, approximately $301,000 was recorded as decrease within other income (expense) to reflect the increase in fair value of these derivatives from the date of the refinancing to June 30, 2003.

      The following table lists the fair value of each type of derivative financial instrument (amounts in thousands):

(10) Discontinued Operations

      The Company adopted the provisions of SFAS No. 144 on October 1, 2002. In addition to providing enhanced guidance on identifying and measuring impairments of long-lived assets, SFAS No. 144 requires that the operating

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results from certain disposals of a parking facility be reflected as discontinued operations. SFAS No. 144 also requires that gains, losses and impairments resulting from the designation of a parking facility disposed of or held-for-sale as discontinued operations. For the nine months ended June 30, 2003, the Company designated as held-for-sale or disposed of 26 locations, resulting in a loss from discontinued operations of $1.3 million, including $2.9 million in impairments and $2.9 million in property related gains. Included in the nine months ended June 30, 2003 is the year-to-date results of operations for all locations discontinued during the first quarter as well as the locations disposed of during the second and third fiscal quarters of 2003. The Company’s 2002 results were reclassified to reflect the operations of these locations discontinued in 2003 as discontinued operations net of related income taxes.

(11) Recent Accounting Pronouncements

      In November 2002, the FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34. This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. The Interpretation also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The disclosure requirements are effective for financial statements of interim and annual periods ending after December 15, 2002, and have been included in the notes to the consolidated financial statements included herein. The impact on the Company’s financial statements from the application of the recognition and measurement provisions of the Interpretation is dependent on the level of guarantees issued or modified in 2003. No guaranties were issued or modified during the nine months ended June 30, 2003 which were impacted by the provisions of FASB Interpretation No. 45.

      In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of ARB No. 51. The primary objectives of Interpretation No. 46 are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights (“variable interest entities” or “VIEs”) and how to determine when and which business enterprise should consolidate the VIE (the “primary beneficiary”). This new model for consolidation applies to an entity in which either (1) the equity investors (if any) do not have a controlling financial interest or (2) the equity investment at risk is insufficient to finance that entity’s activities without receiving additional subordinated financial support from other parties. In addition, Interpretation No. 46 requires that both the primary beneficiary and all other enterprises with a significant variable interest in a VIE make additional disclosures. The Company has 19 variable interest entities with which it holds a significant variable interest, but is not the primary beneficiary: