##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission
file no 001 - 32622
 GLOBAL CASH ACCESS HOLDINGS, INC.
  DELAWARE
    
    20-0723270(State or Other Jurisdiction of
Incorporation or Organization)
    
    (I.R.S. Employer I.D. No.)
 3525 EAST POST ROAD, SUITE 120
LAS VEGAS, NEVADA
    
    89120(Address of Principal Executive Offices)
    
    (Zip Code)
 (800) 833-7110
  Yes þ No o
  Large accelerated filer o Accelerated filer o Non-accelerated filer þ
  Yes o No þ




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TABLE OF CONTENTS
 PagePart I: Financial Information
    
    
    3Item 1: Unaudited Condensed Consolidated Financial Statements
    
    
    3Unaudited Condensed Consolidated Balance Sheets as of June
30, 2006 and December 31, 2005
    
    
    3Unaudited Condensed Consolidated Statements of Income and
Comprehensive Income for the three and six months ended June
30, 2006 and 2005
    
    
    4Unaudited Condensed Consolidated Statements of Cash Flows for
the six months ended June 30, 2006 and 2005
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    7Item 2: Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    29Item 3: Quantitative and Qualitative Disclosures About Market Risk
    
    
    40Item 4: Controls and Procedures
    
    
    41Part II: Other Information
    
    
    42Item 1: Legal Proceedings
    
    
    42Item 1A: Risk Factors
    
    
    43Item 6: Exhibits
    
    
    65Signatures
    
    
    66Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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PART I: FINANCIAL INFORMATION
 
  GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (amounts in thousands, except par value)
 (unaudited)
 June 30,
    
    
    December 31,2006
    
    
    2005ASSETSCash and cash equivalents
    
    $
    58,635
    
    
    $
    35,123Settlement receivables
    
    
    24,943
    
    
    
    60,164Receivables, other
    
    
    7,307
    
    
    
    7,355Prepaid and other assets
    
    
    9,830
    
    
    
    10,959Property, equipment and leasehold improvements, net
    
    
    17,940
    
    
    
    10,579Goodwill, net
    
    
    156,785
    
    
    
    156,756Other intangibles, net
    
    
    20,119
    
    
    
    22,006Deferred income taxes, net
    
    
    199,441
    
    
    
    207,476Total assets
    
    $
    495,000
    
    
    $
    510,418LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIES:Settlement liabilities
    
    $
    26,832
    
    
    $
    59,782Accounts payable
    
    
    22,844
    
    
    
    20,413Accrued expenses
    
    
    14,563
    
    
    
    14,178Borrowings
    
    
    316,791
    
    
    
    321,412Total liabilities
    
    
    381,030
    
    
    
    415,785COMMITMENTS AND CONTINGENCIESMINORITY INTEREST
    
    
    273
    
    
    
    149STOCKHOLDERS EQUITYCommon stock, $0.001 par value, 500,000 shares authorized and
81,688 and 81,554 shares outstanding at June 30, 2006 and December
31, 2005, respectively
    
    
    82
    
    
    
    82Preferred stock, $0.001 par value, 50,000 shares authorized and 0
shares shares outstanding at June 30, 2006 and December 31, 2005,
respectively
    
    
    
    
    
    
    Additional paid in capital
    
    
    134,484
    
    
    
    128,886Accumulated deficit
    
    
    (22,967
    )
    
    
    (36,210
    )Accumulated other comprehensive income
    
    
    2,098
    
    
    
    1,726Total stockholders equity
    
    
    113,697
    
    
    
    94,484Total liabilities and stockholders equity
    
    $
    495,000
    
    
    $
    510,418
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GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME 
(amounts in thousands, except per share) 
(unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005REVENUES:Cash advance
    
    $
    69,143
    
    
    $
    57,933
    
    
    $
    136,198
    
    
    $
    114,710ATM
    
    
    54,586
    
    
    
    45,217
    
    
    
    107,746
    
    
    
    88,989Check services
    
    
    7,459
    
    
    
    6,734
    
    
    
    14,703
    
    
    
    13,043Central Credit and other revenues
    
    
    2,388
    
    
    
    2,576
    
    
    
    4,764
    
    
    
    5,383Total revenues
    
    
    133,576
    
    
    
    112,460
    
    
    
    263,411
    
    
    
    222,125Cost of revenues (exclusive of
depreciation and amortization)
    
    
    (94,292
    )
    
    
    (75,987
    )
    
    
    (185,643
    )
    
    
    (148,452
    )Operating expenses
    
    
    (16,636
    )
    
    
    (12,288
    )
    
    
    (31,926
    )
    
    
    (24,301
    )Amortization
    
    
    (1,384
    )
    
    
    (1,295
    )
    
    
    (2,886
    )
    
    
    (2,659
    )Depreciation
    
    
    (1,050
    )
    
    
    (1,932
    )
    
    
    (2,115
    )
    
    
    (3,884
    )OPERATING INCOME
    
    
    20,214
    
    
    
    20,958
    
    
    
    40,841
    
    
    
    42,829INTEREST INCOME (EXPENSE), NETInterest income
    
    
    868
    
    
    
    181
    
    
    
    1,424
    
    
    
    633Interest expense
    
    
    (10,701
    )
    
    
    (10,828
    )
    
    
    (20,949
    )
    
    
    (21,760
    )Total interest income
(expense), net
    
    
    (9,833
    )
    
    
    (10,647
    )
    
    
    (19,525
    )
    
    
    (21,127
    )INCOME BEFORE INCOME TAX PROVISION AND
MINORITY OWNERSHIP LOSS
    
    
    10,381
    
    
    
    10,311
    
    
    
    21,316
    
    
    
    21,702INCOME TAX PROVISION
    
    
    (4,140
    )
    
    
    (3,712
    )
    
    
    (8,147
    )
    
    
    (7,813
    )INCOME BEFORE MINORITY OWNERSHIP LOSS
    
    
    6,241
    
    
    
    6,599
    
    
    
    13,169
    
    
    
    13,889MINORITY OWNERSHIP LOSS, NET OF TAX
    
    
    38
    
    
    
    44
    
    
    
    74
    
    
    
    94NET INCOME
    
    
    6,279
    
    
    
    6,643
    
    
    
    13,243
    
    
    
    13,983Foreign currency translation, net of tax
    
    
    319
    
    
    
    (55
    )
    
    
    372
    
    
    
    (169
    )COMPREHENSIVE INCOME
    
    $
    6,598
    
    
    $
    6,588
    
    
    $
    13,615
    
    
    $
    13,814Earnings per shareBasic
    
    $
    0.08
    
    
    $
    0.21
    
    
    $
    0.16
    
    
    $
    0.43Diluted
    
    $
    0.08
    
    
    $
    0.09
    
    
    $
    0.16
    
    
    $
    0.20Weighted average number of common shares
outstandingBasic
    
    
    81,619
    
    
    
    32,175
    
    
    
    81,588
    
    
    
    32,175Diluted
    
    
    82,230
    
    
    
    71,699
    
    
    
    81,965
    
    
    
    71,699
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GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(amounts in thousands)
(unaudited)
 Six Months EndedJune 30,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    13,243
    
    
    $
    13,983Adjustments to reconcile net income to cash provided
by operating activities:Amortization of financing costs
    
    
    853
    
    
    
    990Amortization of intangibles
    
    
    2,886
    
    
    
    2,659Depreciation
    
    
    2,115
    
    
    
    3,884Gain on sale or disposal of assets
    
    
    (5
    )
    
    
    Provision for bad debts
    
    
    3,011
    
    
    
    Deferred income taxes
    
    
    8,035
    
    
    
    6,780Minority ownership loss
    
    
    (116
    )
    
    
    (94
    )Stock-based compensation
    
    
    4,323
    
    
    
    Changes in operating assets and liabilities:Settlement receivables
    
    
    35,413
    
    
    
    10,375Receivables, other
    
    
    (2,288
    )
    
    
    (312
    )Prepaid and other assets
    
    
    447
    
    
    
    (1,969
    )Settlement liabilities
    
    
    (33,133
    )
    
    
    (17,800
    )Accounts payable
    
    
    2,425
    
    
    
    (3,349
    )Accrued expenses
    
    
    173
    
    
    
    1,369Net cash provided by operating activities
    
    
    37,382
    
    
    
    16,516CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property, equipment and leasehold improvements
    
    
    (9,453
    )
    
    
    (2,671
    )Purchase of other intangibles
    
    
    (999
    )
    
    
    (433
    )Net cash used in investing activities
    
    
    (10,452
    )
    
    
    (3,104
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repayments under credit facility
    
    
    (4,621
    )
    
    
    (34,286
    )Debt issuance costs
    
    
    (139
    )
    
    
    (90
    )Proceeds from exercise of stock options
    
    
    1,287
    
    
    
    Minority capital contributions
    
    
    240
    
    
    
    280Net cash used in financing activities
    
    
    (3,233
    )
    
    
    (34,096
    )
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GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
 Six Months EndedJune 30,2006
    
    
    2005NET EFFECT OF EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS
    
    $
    (185
    )
    
    $
    75NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    23,512
    
    
    
    (20,609
    )CASH AND CASH EQUIVALENTSBeginning of period
    
    
    35,123
    
    
    
    49,577CASH AND CASH EQUIVALENTSEnd of period
    
    $
    58,635
    
    
    $
    28,968SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for interest
    
    $
    19,809
    
    
    $
    20,585Cash paid for income taxes, net of refunds
    
    $
    537
    
    
    $
    1,934
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GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
 
 NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 1.
    
    BUSINESS AND BASIS OF PRESENTATIONBusinessGlobal Cash Access Holdings, Inc. is a holding company, the principal asset of which
is the capital stock of Global Cash Access, Inc. (GCA). Unless otherwise indicated, the
terms the Company, Holdings, we, us and our refer to Global Cash Access
Holdings, Inc. together with its consolidated subsidiaries. Holdings was formed on February 4,
2004, to hold all of the outstanding capital stock of GCA and to guarantee the obligations
under GCAs senior secured credit facilities. The accompanying condensed consolidated
financial statements present the operations of the Company as-if Holdings had been in
existence for all periods presented.GCA is a financial services company that provides cash access products and services to the
gaming industry. The Companys cash access products and services allow gaming patrons to
access funds through a variety of methods, including credit card cash advances, point-of-sale
debit card cash advances, automated teller machine (ATM) withdrawals, check cashing
transactions and money transfers. These services are provided to patrons at gaming
establishments directly by the Company or through one of its consolidated subsidiaries. GCAs
subsidiaries are: CashCall Systems Inc. (CashCall), GCA Canada Inc. (GCA Canada), Global
Cash Access (BVI), Inc. (BVI), Arriva Card, Inc. (Arriva), Global Cash Access Switzerland
A.G. (Swiss Co) Innovative Funds Transfer, LLC, formerly known as QuikPlay, LLC (IFT),
Global Cash Access (HK) Ltd. (GCA HK) and GCA (Macau), S.A. (GCA Macau).The Company also owns and operates one of the leading credit reporting agencies in the gaming
industry, Central Credit, LLC (Central), and provides credit-information services and
credit-reporting history on gaming patrons to various gaming establishments. Central operates
in both international and domestic gaming markets.The accompanying unaudited condensed consolidated financial statements include the accounts of
Holdings and its consolidated subsidiaries: GCA, CashCall, Central, BVI, Arriva, Swiss Co, GCA
Canada, IFT, GCA HK and GCA Macau.Basis of PresentationThe condensed consolidated financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Some of the information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted accounting
principles in the United States have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of management, all adjustments (which
include normal recurring adjustments) necessary for a fair presentation of results for the
interim periods have been made. The results for the three and six months ended June 30, 2006
are not necessarily indicative of results to be expected for the full fiscal year. Certain
amounts in the prior period financial statements and related notes have been reclassified to
conform to the 2006 presentation.These unaudited condensed consolidated financial statements should be read in conjunction with
the annual consolidated financial statements and notes thereto included within the Companys
Annual Report on Form 10-K for the year ended December 31, 2005.
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2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESPrinciples of Consolidation The unaudited condensed consolidated financial statements
presented for the three and six months ended June 30, 2006 and 2005 and as of December 31,
2005 include the accounts of
Global Cash Access Holdings, Inc., and its subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.Earnings Applicable to Common StockIn accordance with the provisions of Statement of
Financial Accounting Standards (SFAS) No. 128, Earnings per Share, basic earnings per
share is calculated by dividing net income by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share reflect the effect of potential common
stock, which consists of convertible preferred stock, non-vested shares and assumed stock
option exercises. The weighted-average number of common shares outstanding used in the
computation of basic and diluted earnings per share is as follows (in thousands):
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Weighted average common shares outstanding -
basic
    
    
    81,619
    
    
    
    32,175
    
    
    
    81,588
    
    
    
    32,175Potential dilution from conversion of
preferred shares
    
    
    
    
    
    
    39,325
    
    
    
    
    
    
    
    39,325Potential dilution from equity grants (1)
    
    
    611
    
    
    
    199
    
    
    
    377
    
    
    
    199Weighted average common shares
outstanding - diluted
    
    
    82,230
    
    
    
    71,699
    
    
    
    81,965
    
    
    
    71,699
 
 (1)
    
    - The potential dilution excludes stock options to acquire 3,406,221 and
3,046,930 shares of common stock at June 30, 2006 and June 30, 2005, respectively, as the
application of the treasury stock method, as required by SFAS No. 128, makes them
anti-dilutive. Stock-Based Compensation Share-Based
Payment Accounting for Stock Issued to Employees
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, Accounting for Stock-Based Compensation,
 Three MonthsEnded
    
    
    Six Months EndedJune 30, 2005
    
    
    June 30, 2005Net income, as reported
    
    $
    6,643
    
    
    $
    13,983Less: total stock-based compensation
determined under fair-value based
method for all awards, net of tax
    
    
    (947
    )
    
    
    (1,823
    )Pro forma net income
    
    $
    5,696
    
    
    $
    12,160Pro forma earnings per shareBasic
    
    $
    0.18
    
    
    $
    0.38Diluted
    
    $
    0.08
    
    
    $
    0.17Pro forma weighted average number
of common shares outstandingBasic
    
    
    32,175
    
    
    
    32,175Diluted
    
    
    71,699
    
    
    
    71,699
 Recently Issued Accounting PronouncementsIn February 2006, the Financial Accounting
Standards Board (FASB) issued SFAS No. 155, Accounting for Certain Hybrid Financial
Instruments, an amendment of FASB Statements No. 133 and 140. The provisions of SFAS No. 155
are effective for all financial instruments acquired or issued after the beginning of the
first fiscal year after September 15, 2006. SFAS No. 155 will be effective for the Company
beginning in the first quarter of 2007. This pronouncement primarily resolves certain issues
addressed in the implementation of SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, concerning beneficial interests in securitized financial assets. The
Statement is effective for all financial instruments acquired, issued, or subject to a
remeasurement event occurring after the beginning of the 2007 fiscal year. The Company is
evaluating any future effect of this pronouncement.In July 2006, the FASB issued Interpretation No. 48 (FIN 48), Accounting for Uncertainty in
Income Taxes, which clarifies the accounting for uncertainty in income taxes recognized in the
financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48
provides guidance on the financial statement recognition and measurement of a tax position
taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods, disclosures, and
transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The
Company is currently evaluating the impact of this standard on the Condensed Consolidated
Financial Statements.3.
    
    ATM FUNDING AGREEMENTSBank of America Amended Treasury Services AgreementOn March 8, 2004, the Company entered
into an Amendment of the Treasury Services Agreement with Bank of America, N.A. that allowed
for the Company to utilize up to $300 million in funds owned by Bank of America to provide the
currency needed for normal operating requirements for all the Companys ATMs. For use of
these funds, GCA pays Bank of America a cash usage fee equal to the average daily balance of
funds utilized multiplied by the one-month LIBOR rate plus 25 basis points. At June 30, 2006,
the outstanding balance of ATM cash utilized by GCA was $356.8 million and the cash usage
interest rate in effect was 5.6%.Site Funded ATMsGCA operates some ATMs at customer locations where the customer provides the
cash required for ATM operational needs. GCA is required to reimburse the customer for the
amount of cash dispensed from these site-funded ATMs. The site-funded ATM liability is
included within settlement liabilities in the accompanying balance sheets and was $12.6
million and $15.6 million as of June 30, 2006 and December 31, 2005, respectively. As of June
30, 2006 and December 31, 2005, GCA operated 299 and 203 devices (ATMs and redemption kiosks),
respectively, that were site funded.
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4.
    
    COMMITMENTS AND CONTINGENCIESLitigation Claims and AssessmentsCanadian Goods and Services Tax (GST)In April 2004, CashCall was notified through one of
its customers that the Canadian Revenue Agency (CRA) Appeals Division had taken a
position, on audit of the customers two locations, that the customer was liable for GST on
commissions it received in connection with the cash advance services provided by CashCall. The
CRAs position is disputed by both CashCall and the customer based upon their interpretation
of the Canadian Excise Tax Act (ETA).In December 2004, the Company paid the amount assessed related to the customer, and the
customer remitted such amount to the CRA. In February 2005, the Company filed a refund claim
for taxes paid in error with CRA. This claim was denied as expected, and the Company is
currently defending the rebate claim.The Company believes the transactions performed in Canada are financial services transactions
specifically exempted by the ETA and therefore not subject to GST. As the Company has paid
these obligations and as there is uncertainty related to the ability to recover these amounts
through the refund claim and appeals process, the Company has deemed it appropriate to expense
this payment and accrue for a liability related to future payments for this customer. In the
three and six months ended June 30, 2006 and 2005, the Company has recorded minimal amounts in
operating expenses related to this potential tax exposure in the accompanying consolidated
income statements.Patent Infringement Litigation On October 22, 2004, we and USA Payments, as co-plaintiffs,
filed a complaint in United States District Court, District of Nevada against U.S. Bancorp
d/b/a U.S. Bank, Certegy Inc., Certegy Check Services, Inc., Game Financial Corporation and
GameCash, Inc. alleging the infringement of the patented 3-in-1 rollover functionality. In
this litigation, we are seeking an injunction against future infringement of the patent and
recovery of damages as a result of past infringement of the patent. In its response, the
defendants have denied infringement and have asserted patent invalidity. In addition, the
defendants have asserted various antitrust and unfair competition counterclaims.Compliance Letters from MasterCard International, Inc. and Visa USAIn the normal course of
business, the Company routinely receives letters from MasterCard International, Inc. and Visa
USA (the Associations) regarding non-compliance with various aspects of the respective
Associations bylaws and regulations as they relate to transaction processing. The Company is
periodically involved in discussions with its sponsoring bank and the Associations to resolve
these issues. It is the opinion of management that all of the issues raised by the
Associations will be resolved in the normal course of business and related changes to the
bankcard transaction processing, if any, will not result in material adverse impact to the
financial results of the Company.Customer Commission LitigationIn March 2006 and thereafter, we were named as a defendant in
actions commenced by the subsidiaries of a former customer alleging commissions were owed
following the expiration of our agreements with such subsidiaries. In July 2006, we settled
all of the claims with an aggregate payment of $200,000 to the subsidiaries and these actions
were dismissed with prejudice. The expense associated with this settlement was recorded in
operating expenses in the second quarter of 2006.The Company is threatened with or named as a defendant in various lawsuits in the ordinary
course of business. It is not possible to determine the ultimate disposition of these matters;
however, management is of the opinion that the final resolution of any threatened or pending
litigation is not likely to have a material adverse effect on the financial position, results
of operations or cash flows of the Company.Registration AgreementThe Company and some of its stockholders are party to a Registration Agreement. The
Registration Agreement provides the stockholders with rights to cause the Company to register
their shares of Common Stock on a registration statement filed with the Securities and
Exchange Commission. Under the terms of this agreement, some holders of registration rights
may require the Company to file a registration statement under
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the Securities Act at the Companys expense with respect to their shares of Common Stock.
Under this agreement, the Company has agreed to bear all registration and offering expenses
(other than underwriting discounts and commissions and fees), and specific fees and
disbursements of counsel of the holders of registration rights. The Company has agreed to
indemnify the holders of registration rights against specific liabilities under the Securities
Act.Arriva Origination CommitmentsArriva entered into separate agreements with CIT Bank and with Fiserv Solutions, Inc., all of
which are effective as of March 2006, related to the issuance, underwriting and processing of
our private label credit card. Under the terms of the agreements with CIT Bank, Arriva is
committed to pay CIT Bank a minimum of $0.2 million in consumer origination fees and $0.1
million in other operating expenses during the first 18 months of the term. After meeting
these commitments, Arriva may cancel these agreements during the first 18 months of the term
without any additional penalty. Under the terms of the agreement with Fiserv Solutions, Inc.,
Arriva is also committed to pay $0.5 million in termination fees to Fiserv Solutions, Inc. if
the arrangement is terminated during the first 18 months of the term.Innovative Funds Transfer, LLC Required Capital InvestmentPursuant to the terms of our agreement with International Game Technology (IGT), we are
obligated to invest up to our pro rata share of $10.0 million in capital to IFT. Our
obligation to invest additional capital in IFT is conditioned upon capital calls, which are in
our sole discretion. As of June 30, 2006, we had invested a total of $4.0 million in IFT, and
are committed to invest up to $2.0 million in additional capital investments if required.5.
    
    BORROWINGSSenior Secured Credit FacilityIn April 2005, GCA and Holdings entered into an Amended and
Restated Credit Facility (the Amended Credit Facility). Borrowings under the Amended Credit
Facility bear interest, at the Companys option, at either i) a base rate plus an applicable
margin or ii) LIBOR plus an applicable margin. In January 2006, the Company received a credit
rating upgrade and had reduced the overall leverage ratio to qualify for a decrease of the
applicable margin applied to the borrowings under the term loan portion and the revolving
portion of the Amended Credit Facility. Beginning April 2006, the applicable margin for LIBOR
loans was reduced from 2.25% to 1.75% while the applicable margin for base rate loans was
reduced from 1.25% to 0.75%.At June 30, 2006 and December 31, 2005, borrowings under the term loan portion of the Amended
Credit Facility were $164.0 million and $168.6 million, respectively. In the three and six
months ended June 30, 2006, the Company made repayments on the term loan of $2.3 million and
$4.6 million, respectively. The interest rate in effect at June 30, 2006 was 7.1%. In
addition to scheduled quarterly principal repayments and based upon the Companys leverage
ratio at December 31, 2005, GCA is required to make an annual repayment of 50% of the excess
cash flow as defined in the Amended Credit Facility. As our additional voluntary prepayments
in 2005 exceeded our required excess cash flow payment for 2005, no excess cash flow payment
was required in 2006.Under the terms of our Amended Credit Facility we are required to comply with financial
covenants related to our leverage ratio, senior leverage ratio and fixed charge cover ratio.
Additionally, we have a covenant related to our allowable capital expenditures. The Company
believes it was in compliance with all of its debt covenants that were applicable as of June
30, 2006. We expect that our capital expenditures for 2006 will exceed the maximum allowed by
our covenants. Under terms of the Amended Credit Facility, this would result in an event of
default. If we are unable to obtain from the lenders a written waiver or modification of such
covenant related to this event of default the lenders have several remedies available to them,
up to and including, acceleration of repayment of all outstanding amounts under the senior
secured credit facilities. The Company intends to seek a waiver or modification of this
covenant or to refinance the senior secured credit facility in its entirety prior to December
31, 2006.
 11




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##### Table of Contents



As of June 30, 2006, the Company had $3.1 million in letters of credit issued and outstanding,
which reduced amounts available under the revolving portion of the Amended Credit Facility.6.
    
    BENEFIT PLANSStock OptionsThe Company has issued stock options to directors, officers and key employees
under the 2005 Stock Incentive Plan (the 2005 Plan). Generally, options under the 2005 Plan
(other than those granted to non-employee directors) will vest at a rate of 25% of the shares
underlying the option after one year and the remaining shares vest in equal portions over the
following 36 months, such that all shares are vested after four years. Stock options are
issued at the current market price on the date of grant, with a contractual term of 10 years.
The shares to be issued pursuant to option exercises may be authorized, but unissued, or
reacquired common stock. The grant date fair value is calculated using the Black-Scholes
option valuation model. In addition to the 2005 Plan, the Company has granted our Chief
Financial Officer options to acquire 722,215 shares of common stock as part of his employment
agreement in 2004. The terms of these options are similar to those found in the 2005 Plan.The fair value of the options granted during the three and six months ended June 30, 2006 and
2005 were estimated using the following weighted average assumptions:
 Three Months Ended June 30,
    
    Six Months Ended June 30,2006
    
    2005
    
    2006
    
    2005Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected volatility
    
    
    36.9
    %
    
    
    50.0
    %
    
    
    42.9
    %
    
    
    50.0
    %Risk-free interest rate
    
    
    5.0
    %
    
    
    4.0
    %
    
    
    4.8
    %
    
    
    3.7
    %Expected life of stock options (in years)
    
    
    6.3
    
    
    
    6.0
    
    
    
    6.3
    
    
    
    6.0
  The expected volatility was based on an estimate of the volatility for similar companies
within our industry that have recently completed an initial public offering of common stock.
The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant.
 12




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##### Table of Contents



A summary of award activity under the Companys stock option plans as of June 30, 2006 and
changes during the three and six month periods then ended is as follows:
 WeightedAverage
    
    WeightedExercise
    
    Average Life
    
    AggregateOptions
    
    Prices
    
    Remaining
    
    Intrinsic Value(In thousands)Outstanding  December 31, 2005
    
    
    4,079,145
    
    
    $
    12.94
    
    
    9.0 years
    
    $
    27,502Granted
    
    
    55,000
    
    
    
    15.79Exercised
    
    
    (11,650
    )
    
    
    13.99Forfeited
    
    
    (2,500
    )
    
    
    13.99Outstanding  March 31, 2006
    
    
    4,119,995
    
    
    $
    12.97
    
    
    8.8 years
    
    $
    27,871Granted
    
    
    65,000
    
    
    
    18.94Exercised
    
    
    (122,807
    )
    
    
    9.15Forfeited
    
    
    (33,752
    )
    
    
    13.99Outstanding  June 30, 2006
    
    
    4,028,436
    
    
    $
    13.17
    
    
    8.6 years
    
    $
    27,593Exercisable  June 30, 2006
    
    
    1,309,319
    
    
    $
    12.87
    
    
    8.5 years
    
    $
    8,778
 The weighted-average grant-date fair value per share of the options granted during the three
months ended June 30, 2006 and 2005 was $8.64 and $7.33, respectively. The weighted-average
grant-date fair value per share of the options granted during the six months ended June 30,
2006 and 2005 was $8.60 and $7.27, respectively.During the three and six months ended June 30, 2006 we received $1.1 million and $1.3 million
in cash from the exercise of stock options, respectively. The total intrinsic value of options
exercised during the three and six months ended June 30, 2006 was $0.6 million and $0.7
million, respectively. There were no stock option exercises in 2005. As of June 30, 2006,
there was $17.4 million in unrecognized compensation expense related to options expected to
vest. That cost is expected to be recognized on a straight-line basis over a weighted average
period of 2.5 years.Restricted StockIn March 2006, the Company awarded 619,747 shares of time-based restricted
common stock to employees. These shares will vest over a period of four years. A summary of
non-vested share awards for the Companys time-based restricted shares as of June 30, 2006 and
changes during the three month period is as follows:
 SharesOutstandingBalance  December 31, 2005
    
    
    Granted
    
    
    619,747Vested
    
    
    Forfeited
    
    
    Balance  March 31, 2006
    
    
    619,747Granted
    
    
    Vested
    
    
    Forfeited
    
    
    (7,500
    )Balance  June 30, 2006
    
    
    612,247
 There were no time-based restricted shares vested during the three and six months ended June
30, 2006 or 2005. As of June 30, 2006, there was $9.0 million in unrecognized compensation
expense related to time-based restricted shares expected to vest. That cost is expected to be
recognized on a straight-line basis over a weighted average period of 3.6 years.
 13




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##### Table of Contents



7.
    
    RELATED PARTY TRANSACTIONSM&C International (M&C) is the owner of approximately 24.7% of the outstanding equity
interests of Holdings. An affiliate of Bank of America Corporation owns approximately 3.8% of
the equity interests of Holdings.The Company made payments for software development costs and system maintenance to Infonox on
the Web (Infonox) pursuant to agreements with Infonox. At the time we entered into these
agreements and during the periods presented, Infonox was controlled by the principals of M&C
and family members of one of our directors. These family members now own approximately 60% of
the ownership interests, and hold two of the three director seats, of Infonox. The software
development costs are capitalized and reflected in intangible assets in the unaudited
condensed consolidated balance sheets and the system maintenance is classified in operating
expenses in the unaudited condensed consolidated statements of income.The Company obtains transaction processing services from USA Payments, a company controlled by
the principals of M&C, pursuant to the Amended and Restated Agreement for Electronic Payment
Processing. Under terms of this agreement, GCA pays a fee to USA Payments for transaction
processing services, which is reflected in cost of revenues (exclusive of depreciation and
amortization), and pays other directly identifiable operating expenses that are included
within operating expenses in the unaudited condensed consolidated statements of income.
Pursuant to this agreement, GCA is obligated to pay USA Payments a monthly fixed processing
fee and transaction fees that total $2.3 million annually through the termination of this
agreement in March 2014. Additionally, we reimburse USA Payments for invoices related mainly
to gateway fees and other processing charges incurred on behalf of the Company from
unrelatedthird parties these expenses are also classified as part of cost of
revenues (exclusive of depreciation and amortization).The Company uses Bank of America, N.A., an affiliate of Bank of America Corporation, for
general corporate banking purposes and is charged monthly servicing fees for these services,
which are included in operating expenses. In connection with the Amendment of the Treasury
Services Agreement, GCA obtains cash for our ATMs from Bank of America, N.A. The fees paid to
Bank of America, N.A. for the preparation of the cash used in our ATMs is included within
operating expenses, while the cash usage fee is included as part of interest expense.
 14




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##### Table of Contents



Name of
    
    
    
    June 30,
    
    
    June 30,Related Party
    
    Description of Transaction
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005M&C Affiliates:Infonox on the Web
    
    Software development costs and maintenance
expense included in operating expenses and
other intangibles, net
    
    $
    872
    
    
    $
    382
    
    
    $
    1,284
    
    
    $
    822USA Payments
    
    Transaction processing charges included in
cost of revenues
    
    
    823
    
    
    
    809
    
    
    
    1,676
    
    
    
    1,523USA Payments
    
    Pass through billing related to gateway fees,
telecom and other items included in cost of
revenues and operating expenses
    
    
    358
    
    
    
    309
    
    
    
    633
    
    
    
    603Bank of America, N.A.:Bank of America, N.A.
    
    Bank fees and cash preparation fees for cash
accounts maintained included within operating
expenses
    
    
    419
    
    
    
    431
    
    
    
    820
    
    
    
    866Bank of America, N.A.
    
    Cash usage fee included within interest expense
    
    $
    3,991
    
    
    $
    2,238
    
    
    $
    7,518
    
    
    $
    4,220
 15




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##### Table of Contents



The following table details the amounts due from (to) these related parties that are recorded
as part of receivables, other, accounts payable and accrued expenses in the unaudited
condensed consolidated balance sheets (amounts in thousands):
 June 30,
    
    
    December 31,2006
    
    
    2005M&C and related companies
    
    $
    31
    
    
    $
    11Bank of America, N.A.
    
    
    141
    
    
    
    3Total included within receivables, other
    
    $
    172
    
    
    $
    14USA Payments
    
    $
    (388
    )
    
    $
    (345
    )Infonox on the Web
    
    
    (157
    )
    
    
    (171
    )Bank of America, N.A.
    
    
    (195
    )
    
    
    (150
    )Total included within accounts payable and
accrued expenses
    
    $
    (740
    )
    
    $
    (666
    )
 8.
    
    SEGMENT INFORMATIONOperating segments as defined by SFAS No. 131, Disclosures About Segments of an Enterprise and
Related Information, are components of an enterprise about which separate financial
information is available that is
evaluated regularly by the chief operating decision maker, or decision-making group, in
deciding how to allocate resources and in assessing performance. The Companys chief operating
decision-making group consists of the Chief Executive Officer and Chief Financial Officer. The
operating segments are reviewed separately because each represents products that can be, and
often are, marketed and sold separately to our customers.The Company operates in four distinct business segments: cash advance, ATM, check services and
credit reporting services. These segments are monitored separately by management for
performance against its internal forecast and are consistent with the Companys internal
management reporting.Other lines of business, none of which exceed the established materiality for segment
reporting, include Western Union, direct marketing and IFT, among others.The Companys business is predominantly domestic, with no specific regional concentrations.Major customers On June 13, 2005, our largest customer, Harrahs Entertainment, Inc.
(Harrahs) completed its acquisition of Caesars Entertainment, Inc. (Caesars), another
customer of ours. For the three and six months ended June 30, 2006 and 2005, the combined
revenues from all segments for this customer, assuming it had been combined for all periods
presented, would have been approximately $23.4 million and $46.3 million and $20.5 million and
$41.0 million, respectively representing 17.5% and 17.6% and 18.2% and 18.5% of the Companys
total consolidated revenues, respectively. On a historical basis, the combined revenues from
all segments for Harrahs for the three and six months ended June 30, 2005 was $12.3 million
and $24.9 million representing 10.9% and 11.2% of the Companys total consolidated revenues,
respectively.On April 25, 2005, MGM MIRAGE (MGM) acquired Mandalay Resort Group (Mandalay). Prior to
December 2005, the Company did not have any cash advance revenue or ATM revenue from MGM, but
did provide our full offering of services to Mandalay. For the three and six months ended June
30, 2006 and 2005, the combined revenues from all segments for MGM, assuming it had been
combined for all periods presented, would have been approximately $13.8 million and $26.6
million, and $7.4 million and $14.9 million, respectively representing 10.4% and 10.1%, and
6.6% and 6.7% of the Companys total consolidated revenues, respectively. On a historical
basis, the combined revenues from all segments for MGM for the three and six months ended June
30, 2005 was $0.1 million and $0.2 million, respectively.
 16




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##### Table of Contents



Cash
    
    
    
    
    
    Check
    
    CreditAdvance
    
    ATM
    
    Services
    
    Reporting
    
    Other
    
    TotalThree Months Ended June 30,
2006Revenues
    
    $
    69,143
    
    
    $
    54,586
    
    
    $
    7,459
    
    
    $
    2,005
    
    
    $
    383
    
    
    $
    133,576Depreciation and amortization
    
    
    (968
    )
    
    
    (1,321
    )
    
    
    (8
    )
    
    
    (20
    )
    
    
    (117
    )
    
    
    (2,434
    )Operating income (loss)
    
    
    10,343
    
    
    
    7,094
    
    
    
    1,983
    
    
    
    1,050
    
    
    
    (256
    )
    
    
    20,214Interest income
    
    
    868
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    868Interest expense
    
    
    (3,474
    )
    
    
    (6,733
    )
    
    
    (375
    )
    
    
    (101
    )
    
    
    (18
    )
    
    
    (10,701
    )Income taxes
    
    
    (3,085
    )
    
    
    (188
    )
    
    
    (626
    )
    
    
    (369
    )
    
    
    128
    
    
    
    (4,140
    )Minority ownership loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38
    
    
    
    38Net income (loss)
    
    $
    4,652
    
    
    $
    173
    
    
    $
    982
    
    
    $
    580
    
    
    $
    (108
    )
    
    $
    6,279Three Months Ended June 30,
2005Revenues
    
    $
    57,933
    
    
    $
    45,217
    
    
    $
    6,734
    
    
    $
    2,245
    
    
    $
    331
    
    
    $
    112,460Depreciation and amortization
    
    
    (1,083
    )
    
    
    (1,993
    )
    
    
    (9
    )
    
    
    (20
    )
    
    
    (122
    )
    
    
    (3,227
    )Operating income
    
    
    11,243
    
    
    
    6,775
    
    
    
    2,077
    
    
    
    864
    
    
    
    (1
    )
    
    
    20,958Interest income
    
    
    181
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    181Interest expense
    
    
    (4,426
    )
    
    
    (5,692
    )
    
    
    (514
    )
    
    
    (171
    )
    
    
    (25
    )
    
    
    (10,828
    )Income taxes
    
    
    (2,519
    )
    
    
    (390
    )
    
    
    (563
    )
    
    
    (249
    )
    
    
    9
    
    
    
    (3,712
    )Minority ownership loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44
    
    
    
    44Net income
    
    $
    4,479
    
    
    $
    693
    
    
    $
    1,000
    
    
    $
    444
    
    
    $
    27
    
    
    $
    6,643Six Months Ended June 30,
2006Revenues
    
    $
    136,198
    
    
    $
    107,746
    
    
    $
    14,703
    
    
    $
    4,080
    
    
    $
    684
    
    
    $
    263,411Depreciation and amortization
    
    
    (1,940
    )
    
    
    (2,777
    )
    
    
    (17
    )
    
    
    (39
    )
    
    
    (228
    )
    
    
    (5,001
    )Operating income (loss)
    
    
    20,478
    
    
    
    14,276
    
    
    
    4,514
    
    
    
    2,125
    
    
    
    (552
    )
    
    
    40,841Interest income
    
    
    1,424
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,424Interest expense
    
    
    (6,945
    )
    
    
    (13,012
    )
    
    
    (750
    )
    
    
    (208
    )
    
    
    (34
    )
    
    
    (20,949
    )Income taxes
    
    
    (5,737
    )
    
    
    (521
    )
    
    
    (1,427
    )
    
    
    (727
    )
    
    
    265
    
    
    
    (8,147
    )Minority ownership loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    74Net income (loss)
    
    $
    9,220
    
    
    $
    743
    
    
    $
    2,337
    
    
    $
    1,190
    
    
    $
    (247
    )
    
    $
    13,243Six Months Ended June 30,
2005Revenues
    
    $
    114,710
    
    
    $
    88,989
    
    
    $
    13,043
    
    
    $
    4,599
    
    
    $
    784
    
    
    $
    222,125Depreciation and amortization
    
    
    (2,226
    )
    
    
    (3,993
    )
    
    
    (18
    )
    
    
    (63
    )
    
    
    (243
    )
    
    
    (6,543
    )Operating income
    
    
    22,591
    
    
    
    13,579
    
    
    
    4,428
    
    
    
    2,117
    
    
    
    114
    
    
    
    42,829Interest income
    
    
    633
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    633Interest expense
    
    
    (9,058
    )
    
    
    (11,247
    )
    
    
    (1,030
    )
    
    
    (363
    )
    
    
    (62
    )
    
    
    (21,760
    )Income taxes
    
    
    (5,100
    )
    
    
    (840
    )
    
    
    (1,223
    )
    
    
    (631
    )
    
    
    (19
    )
    
    
    (7,813
    )Minority ownership loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    94
    
    
    
    94Net income
    
    $
    9,066
    
    
    $
    1,492
    
    
    $
    2,175
    
    
    $
    1,123
    
    
    $
    127
    
    
    $
    13,983
 June 30,
    
    
    December 31,2006
    
    
    2005Total AssetsCash advance
    
    $
    307,004
    
    
    $
    320,688ATM
    
    
    141,437
    
    
    
    142,626Check services
    
    
    2,484
    
    
    
    3,886Credit reporting
    
    
    44,053
    
    
    
    43,162Other
    
    
    22
    
    
    
    56Total assets
    
    $
    495,000
    
    
    $
    510,418
 17




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##### Table of Contents



9.
    
    SUBSEQUENT EVENTSOn July 27, 2006, QuikPlay, LLC changed its name to Innovative Funds Transfer, LLC.10.
    
    GUARANTOR INFORMATIONIn March 2004, GCA issued $235 million in aggregate principal amount of 8 3/4% senior subordinated
notes due 2012 (the Notes). At June 30, 2006 and December 31, 2005 there were $152.8 million in
Notes that were outstanding. The Notes are guaranteed by all of GCAs existing domestic 100% owned
subsidiaries. In addition, effective upon the closing of the Companys initial public offering of
common stock, Holdings guaranteed, on a subordinated basis, GCAs obligations under the Notes.
These guarantees are full, unconditional, joint and several. CashCall, GCA Canada, BVI , Swiss Co,
GCA HK and GCA Macau, which are 100% owned non-domestic subsidiaries, and IFT, which is a
consolidated joint venture, do not guaranty the Notes. The following consolidating schedules
present separate unaudited condensed financial statement information on a combined basis for the
parent only, the issuer, as well as the Companys guarantor subsidiaries and non-guarantor
subsidiaries and affiliate, as of June 30, 2006 and December 31, 2005, and for the three and six
months ended June 30, 2006 and 2005.
 18




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##### Table of Contents



GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING SCHEDULE  BALANCE SHEET INFORMATION
JUNE 30, 2006
(amounts in thousands)
(unaudited)
 Combined
    
    
    Combined Non-
    
    
    EliminationParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Entries *
    
    
    ConsolidatedASSETSCash and cash equivalents
    
    $
    
    
    
    $
    54,217
    
    
    $
    114
    
    
    $
    4,304
    
    
    $
    
    
    
    $
    58,635Settlement receivables
    
    
    
    
    
    
    24,478
    
    
    
    
    
    
    
    465
    
    
    
    
    
    
    
    24,943Receivables, other
    
    
    11
    
    
    
    10,423
    
    
    
    26,717
    
    
    
    28
    
    
    
    (29,872
    )
    
    
    7,307Prepaid and other assets
    
    
    
    
    
    
    9,828
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    9,830Investment in subsidiaries
    
    
    108,097
    
    
    
    71,034
    
    
    
    
    
    
    
    
    
    
    
    (179,131
    )
    
    
    Property, equipment and
leasehold improvements, net
    
    
    
    
    
    
    17,830
    
    
    
    21
    
    
    
    89
    
    
    
    
    
    
    
    17,940Goodwill, net
    
    
    
    
    
    
    116,574
    
    
    
    39,470
    
    
    
    741
    
    
    
    
    
    
    
    156,785Other intangibles, net
    
    
    
    
    
    
    19,403
    
    
    
    481
    
    
    
    235
    
    
    
    
    
    
    
    20,119Deferred income taxes, net
    
    
    
    
    
    
    199,441
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    199,441TOTAL
    
    $
    108,108
    
    
    $
    523,228
    
    
    $
    66,805
    
    
    $
    5,862
    
    
    $
    (209,003
    )
    
    $
    495,000LIABILITIES AND STOCKHOLDERS
(DEFICIT) EQUITYLIABILITIES:Settlement liabilities
    
    $
    
    
    
    $
    26,430
    
    
    $
    
    
    
    $
    402
    
    
    $
    
    
    
    $
    26,832Accounts payable
    
    
    
    
    
    
    22,680
    
    
    
    15
    
    
    
    149
    
    
    
    
    
    
    
    22,844Accrued expenses
    
    
    
    
    
    
    48,957
    
    
    
    850
    
    
    
    216
    
    
    
    (35,460
    )
    
    
    14,563Borrowings
    
    
    
    
    
    
    316,791
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    316,791Total liabilities
    
    
    
    
    
    
    414,858
    
    
    
    865
    
    
    
    767
    
    
    
    (35,460
    )
    
    
    381,030COMMITMENTS AND CONTINGENCIESMINORITY INTEREST
    
    
    
    
    
    
    273
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    273STOCKHOLDERS EQUITY
    
    
    108,108
    
    
    
    108,097
    
    
    
    65,940
    
    
    
    5,095
    
    
    
    (173,543
    )
    
    
    113,697TOTAL
    
    $
    108,108
    
    
    $
    523,228
    
    
    $
    66,805
    
    
    $
    5,862
    
    
    $
    (209,003
    )
    
    $
    495,000
 
 * Eliminations include intercompany investments and management fees 19




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##### Table of Contents



GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING SCHEDULE  BALANCE SHEET INFORMATION
DECEMBER 31, 2005
(amounts in thousands)
(unaudited)
 Combined
    
    
    Combined Non-
    
    
    EliminationParent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Entries *
    
    
    ConsolidatedASSETSCash and cash equivalents
    
    $
    
    
    
    $
    32,237
    
    
    $
    276
    
    
    $
    2,610
    
    
    $
    
    
    
    $
    35,123Settlement receivables
    
    
    
    
    
    
    59,236
    
    
    
    
    
    
    
    928
    
    
    
    
    
    
    
    60,164Receivables, other
    
    
    
    
    
    
    136,213
    
    
    
    22,737
    
    
    
    37
    
    
    
    (151,632
    )
    
    
    7,355Prepaid and other assets
    
    
    
    
    
    
    10,946
    
    
    
    1
    
    
    
    12
    
    
    
    
    
    
    
    10,959Investment in subsidiaries
    
    
    223,378
    
    
    
    66,707
    
    
    
    
    
    
    
    
    
    
    
    (290,085
    )
    
    
    Property, equipment and
leasehold improvements, net
    
    
    
    
    
    
    10,485
    
    
    
    3
    
    
    
    91
    
    
    
    
    
    
    
    10,579Goodwill, net
    
    
    
    
    
    
    116,574
    
    
    
    39,471
    
    
    
    711
    
    
    
    
    
    
    
    156,756Other intangibles, net
    
    
    
    
    
    
    21,714
    
    
    
    128
    
    
    
    164
    
    
    
    
    
    
    
    22,006Deferred income taxes, net
    
    
    
    
    
    
    207,476
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    207,476TOTAL
    
    $
    223,378
    
    
    $
    661,588
    
    
    $
    62,616
    
    
    $
    4,553
    
    
    $
    (441,717
    )
    
    $
    510,418LIABILITIES AND
STOCKHOLDERS EQUITYLIABILITIES:Settlement liabilities
    
    $
    
    
    
    $
    59,017
    
    
    $
    
    
    
    $
    765
    
    
    $
    
    
    
    $
    59,782Accounts payable
    
    
    
    
    
    
    20,103
    
    
    
    70
    
    
    
    240
    
    
    
    
    
    
    
    20,413Accrued expenses
    
    
    
    
    
    
    37,529
    
    
    
    58
    
    
    
    (671
    )
    
    
    (22,738
    )
    
    
    14,178Borrowings
    
    
    
    
    
    
    321,412
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    321,412Total liabilities
    
    
    
    
    
    
    438,061
    
    
    
    128
    
    
    
    334
    
    
    
    (22,738
    )
    
    
    415,785COMMITMENTS AND CONTINGENCIESMINORITY INTEREST
    
    
    
    
    
    
    149
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    149STOCKHOLDERS EQUITY
    
    
    223,378
    
    
    
    223,378
    
    
    
    62,488
    
    
    
    4,219
    
    
    
    (418,979
    )
    
    
    94,484TOTAL
    
    $
    223,378
    
    
    $
    661,588
    
    
    $
    62,616
    
    
    $
    4,553
    
    
    $
    (441,717
    )
    
    $
    510,418
 
 *
    
    Eliminations include intercompany investments and management fees 20




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##### Table of Contents



GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING SCHEDULE  STATEMENT OF INCOME INFORMATION
THREE MONTHS ENDED JUNE 30, 2006
(amounts in thousands)
(unaudited)
 CombinedCombined
    
    
    Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations *
    
    
    ConsolidatedREVENUES:Cash advance
    
    $
    
    
    
    $
    67,762
    
    
    $
    
    
    
    $
    1,381
    
    
    $
    
    
    
    $
    69,143ATM
    
    
    
    
    
    
    54,586
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,586Check services
    
    
    
    
    
    
    4,676
    
    
    
    2,783
    
    
    
    
    
    
    
    
    
    
    
    7,459Central Credit and other revenues
    
    
    6,279
    
    
    
    2,259
    
    
    
    2,007
    
    
    
    26
    
    
    
    (8,183
    )
    
    
    2,388Total revenues
    
    
    6,279
    
    
    
    129,283
    
    
    
    4,790
    
    
    
    1,407
    
    
    
    (8,183
    )
    
    
    133,576Cost of revenues (exclusive of depreciation and amortization)
    
    
    
    
    
    
    (91,369
    )
    
    
    (2,146
    )
    
    
    (777
    )
    
    
    
    
    
    
    (94,292
    )Operating expenses
    
    
    
    
    
    
    (15,366
    )
    
    
    (957
    )
    
    
    (471
    )
    
    
    158
    
    
    
    (16,636
    )Amortization
    
    
    
    
    
    
    (1,338
    )
    
    
    (28
    )
    
    
    (18
    )
    
    
    
    
    
    
    (1,384
    )Depreciation
    
    
    
    
    
    
    (1,037
    )
    
    
    (2
    )
    
    
    (11
    )
    
    
    
    
    
    
    (1,050
    )OPERATING INCOME
    
    
    6,279
    
    
    
    20,173
    
    
    
    1,657
    
    
    
    130
    
    
    
    (8,025
    )
    
    
    20,214INTEREST INCOME (EXPENSE), NETInterest income
    
    
    
    
    
    
    832
    
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    868Interest expense
    
    
    
    
    
    
    (10,701
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,701
    )Total interest income (expense) , net
    
    
    
    
    
    
    (9,869
    )
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    (9,833
    )INCOME BEFORE INCOME TAX PROVISION
AND MINORITY OWNERSHIP LOSS
    
    
    6,279
    
    
    
    10,304
    
    
    
    1,657
    
    
    
    166
    
    
    
    (8,025
    )
    
    
    10,381INCOME TAX PROVISION
    
    
    
    
    
    
    (4,063
    )
    
    
    
    
    
    
    (77
    )
    
    
    
    
    
    
    (4,140
    )INCOME BEFORE MINORITY OWNERSHIP LOSS
    
    
    6,279
    
    
    
    6,241
    
    
    
    1,657
    
    
    
    89
    
    
    
    (8,025
    )
    
    
    6,241MINORITY OWNERSHIP LOSS, NET OF TAX
    
    
    
    
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38NET INCOME
    
    $
    6,279
    
    
    $
    6,279
    
    
    $
    1,657
    
    
    $
    89
    
    
    $
    (8,025
    )
    
    $
    6,279
 
 *
    
    Eliminations include earnings on subsidiaries and management fees 21




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##### Table of Contents



GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING SCHEDULE  STATEMENT OF INCOME INFORMATION
SIX MONTHS ENDED JUNE 30, 2006
(amounts in thousands)
(unaudited)
 Combined
    
    
    Combined Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations *
    
    
    ConsolidatedREVENUES:Cash advance
    
    $
    
    
    
    $
    133,535
    
    
    $
    
    
    
    $
    2,663
    
    
    $
    
    
    
    $
    136,198ATM
    
    
    
    
    
    
    107,746
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    107,746Check services
    
    
    
    
    
    
    9,589
    
    
    
    5,114
    
    
    
    
    
    
    
    
    
    
    
    14,703Central Credit and other revenues
    
    
    13,243
    
    
    
    4,505
    
    
    
    4,082
    
    
    
    48
    
    
    
    (17,114
    )
    
    
    4,764Total revenues
    
    
    13,243
    
    
    
    255,375
    
    
    
    9,196
    
    
    
    2,711
    
    
    
    (17,114
    )
    
    
    263,411Cost of revenues (exclusive of depreciation and amortization)
    
    
    
    
    
    
    (180,368
    )
    
    
    (3,712
    )
    
    
    (1,563
    )
    
    
    
    
    
    
    (185,643
    )Operating expenses
    
    
    
    
    
    
    (29,339
    )
    
    
    (1,986
    )
    
    
    (910
    )
    
    
    309
    
    
    
    (31,926
    )Amortization
    
    
    
    
    
    
    (2,806
    )
    
    
    (45
    )
    
    
    (35
    )
    
    
    
    
    
    
    (2,886
    )Depreciation
    
    
    
    
    
    
    (2,091
    )
    
    
    (2
    )
    
    
    (22
    )
    
    
    
    
    
    
    (2,115
    )OPERATING INCOME
    
    
    13,243
    
    
    
    40,771
    
    
    
    3,451
    
    
    
    181
    
    
    
    (16,805
    )
    
    
    40,841INTEREST INCOME (EXPENSE), NETInterest income
    
    
    
    
    
    
    1,359
    
    
    
    
    
    
    
    65
    
    
    
    
    
    
    
    1,424Interest expense
    
    
    
    
    
    
    (20,949
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,949
    )Total interest income (expense) , net
    
    
    
    
    
    
    (19,590
    )
    
    
    
    
    
    
    65
    
    
    
    
    
    
    
    (19,525
    )INCOME BEFORE INCOME TAX PROVISION
AND MINORITY OWNERSHIP LOSS
    
    
    13,243
    
    
    
    21,181
    
    
    
    3,451
    
    
    
    246
    
    
    
    (16,805
    )
    
    
    21,316INCOME TAX PROVISION
    
    
    
    
    
    
    (8,012
    )
    
    
    
    
    
    
    (135
    )
    
    
    
    
    
    
    (8,147
    )INCOME BEFORE MINORITY OWNERSHIP LOSS
    
    
    13,243
    
    
    
    13,169
    
    
    
    3,451
    
    
    
    111
    
    
    
    (16,805
    )
    
    
    13,169MINORITY OWNERSHIP LOSS, NET OF TAX
    
    
    
    
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74NET INCOME
    
    $
    13,243
    
    
    $
    13,243
    
    
    $
    3,451
    
    
    $
    111
    
    
    $
    (16,805
    )
    
    $
    13,243
 
 *
    
    Eliminations include earnings on subsidiaries and management fees 22




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##### Table of Contents



GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING SCHEDULE  STATEMENT OF INCOME INFORMATION
THREE MONTHS ENDED JUNE 30, 2005
(amounts in thousands)
(unaudited)
 CombinedCombined
    
    
    Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations *
    
    
    ConsolidatedREVENUES:Cash advance
    
    $
    
    
    
    $
    56,706
    
    
    $
    
    
    
    $
    1,227
    
    
    $
    
    
    
    $
    57,933ATM
    
    
    
    
    
    
    45,217
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,217Check services
    
    
    
    
    
    
    6,381
    
    
    
    353
    
    
    
    
    
    
    
    
    
    
    
    6,734Central Credit and other revenues
    
    
    6,643
    
    
    
    1,360
    
    
    
    2,245
    
    
    
    24
    
    
    
    (7,696
    )
    
    
    2,576Total revenues
    
    
    6,643
    
    
    
    109,664
    
    
    
    2,598
    
    
    
    1,251
    
    
    
    (7,696
    )
    
    
    112,460Cost of revenues (exclusive of depreciation and amortization)
    
    
    
    
    
    
    (74,750
    )
    
    
    (489
    )
    
    
    (748
    )
    
    
    
    
    
    
    (75,987
    )Operating expenses
    
    
    
    
    
    
    (10,840
    )
    
    
    (1,229
    )
    
    
    (386
    )
    
    
    167
    
    
    
    (12,288
    )Amortization
    
    
    
    
    
    
    (1,272
    )
    
    
    (17
    )
    
    
    (6
    )
    
    
    
    
    
    
    (1,295
    )Depreciation
    
    
    
    
    
    
    (1,927
    )
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    (1,932
    )OPERATING INCOME
    
    
    6,643
    
    
    
    20,875
    
    
    
    863
    
    
    
    106
    
    
    
    (7,529
    )
    
    
    20,958INTEREST INCOME (EXPENSE), NETInterest income
    
    
    
    
    
    
    163
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    181Interest expense
    
    
    
    
    
    
    (10,828
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,828
    )Total interest income (expense) , net
    
    
    
    
    
    
    (10,665
    )
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    (10,647
    )INCOME BEFORE INCOME TAX PROVISION
AND MINORITY OWNERSHIP LOSS
    
    
    6,643
    
    
    
    10,210
    
    
    
    863
    
    
    
    124
    
    
    
    (7,529
    )
    
    
    10,311INCOME TAX PROVISION
    
    
    
    
    
    
    (3,611
    )
    
    
    
    
    
    
    (101
    )
    
    
    
    
    
    
    (3,712
    )INCOME BEFORE MINORITY OWNERSHIP
LOSS, NET OF TAX
    
    
    6,643
    
    
    
    6,599
    
    
    
    863
    
    
    
    23
    
    
    
    (7,529
    )
    
    
    6,599MINORITY OWNERSHIP LOSS, NET OF TAX
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44NET INCOME
    
    $
    6,643
    
    
    $
    6,643
    
    
    $
    863
    
    
    $
    23
    
    
    $
    (7,529
    )
    
    $
    6,643
 
 *
    
    Eliminations include earnings on subsidiaries and management fees 23




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##### Table of Contents



GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING SCHEDULE  STATEMENT OF INCOME INFORMATION
SIX MONTHS ENDED JUNE 30, 2005
(amounts in thousands)
(unaudited)
 CombinedCombined
    
    
    Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations *
    
    
    ConsolidatedREVENUES:Cash advance
    
    $
    
    
    
    $
    112,290
    
    
    $
    
    
    
    $
    2,420
    
    
    $
    
    
    
    $
    114,710ATM
    
    
    
    
    
    
    88,989
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88,989Check services
    
    
    
    
    
    
    12,598
    
    
    
    445
    
    
    
    
    
    
    
    
    
    
    
    13,043Central Credit and other revenues
    
    
    13,983
    
    
    
    3,284
    
    
    
    4,599
    
    
    
    46
    
    
    
    (16,529
    )
    
    
    5,383Total revenues
    
    
    13,983
    
    
    
    217,161
    
    
    
    5,044
    
    
    
    2,466
    
    
    
    (16,529
    )
    
    
    222,125Cost of revenues (exclusive of depreciation and amortization)
    
    
    
    
    
    
    (146,399
    )
    
    
    (539
    )
    
    
    (1,514
    )
    
    
    
    
    
    
    (148,452
    )Operating expenses
    
    
    
    
    
    
    (21,625
    )
    
    
    (2,269
    )
    
    
    (698
    )
    
    
    291
    
    
    
    (24,301
    )Amortization
    
    
    
    
    
    
    (2,596
    )
    
    
    (57
    )
    
    
    (6
    )
    
    
    
    
    
    
    (2,659
    )Depreciation
    
    
    
    
    
    
    (3,875
    )
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    (3,884
    )OPERATING INCOME
    
    
    13,983
    
    
    
    42,666
    
    
    
    2,179
    
    
    
    239
    
    
    
    (16,238
    )
    
    
    42,829INTEREST INCOME (EXPENSE), NETInterest income
    
    
    
    
    
    
    590
    
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    633Interest expense
    
    
    
    
    
    
    (21,760
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,760
    )Total interest income (expense) , net
    
    
    
    
    
    
    (21,170
    )
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    (21,127
    )INCOME BEFORE INCOME TAX PROVISION
AND MINORITY OWNERSHIP LOSS
    
    
    13,983
    
    
    
    21,496
    
    
    
    2,179
    
    
    
    282
    
    
    
    (16,238
    )
    
    
    21,702INCOME TAX PROVISION
    
    
    
    
    
    
    (7,607
    )
    
    
    
    
    
    
    (206
    )
    
    
    
    
    
    
    (7,813
    )INCOME BEFORE MINORITY OWNERSHIP
LOSS, NET OF TAX
    
    
    13,983
    
    
    
    13,889
    
    
    
    2,179
    
    
    
    76
    
    
    
    (16,238
    )
    
    
    13,889MINORITY OWNERSHIP LOSS, NET OF TAX
    
    
    
    
    
    
    94
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    94NET INCOME
    
    $
    13,983
    
    
    $
    13,983
    
    
    $
    2,179
    
    
    $
    76
    
    
    $
    (16,238
    )
    
    $
    13,983
 
 *
    
    Eliminations include earnings on subsidiaries and management fees 24




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##### Table of Contents



GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING SCHEDULE  STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2006
(amounts in thousands)
(unaudited)
 CombinedCombined
    
    
    Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations *
    
    
    ConsolidatedCASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    13,243
    
    
    $
    13,243
    
    
    $
    3,451
    
    
    $
    111
    
    
    $
    (16,805
    )
    
    $
    13,243Adjustments to reconcile net income to
cash provided by operating activities:Amortization of financing costs
    
    
    
    
    
    
    853
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    853Amortization of intangibles
    
    
    
    
    
    
    2,806
    
    
    
    45
    
    
    
    35
    
    
    
    
    
    
    
    2,886Depreciation
    
    
    
    
    
    
    2,091
    
    
    
    2
    
    
    
    22
    
    
    
    
    
    
    
    2,115Gain on disposal of assets
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5
    )Write-off of bad debt
    
    
    
    
    
    
    
    
    
    
    3,011
    
    
    
    
    
    
    
    
    
    
    
    3,011Deferred income taxes
    
    
    
    
    
    
    8,035
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,035Equity income in subsidiaries
    
    
    (13,243
    )
    
    
    (3,562
    )
    
    
    
    
    
    
    
    
    
    
    16,805
    
    
    
    Minority ownership loss
    
    
    
    
    
    
    (116
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (116
    )Stock-based compensation
    
    
    
    
    
    
    4,323
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,323Changes in operating assets and liabilities:Settlement receivables
    
    
    
    
    
    
    34,893
    
    
    
    
    
    
    
    520
    
    
    
    
    
    
    
    35,413Receivables, other
    
    
    
    
    
    
    (8,103
    )
    
    
    (6,989
    )
    
    
    81
    
    
    
    12,723
    
    
    
    (2,288
    )Prepaid and other assets
    
    
    
    
    
    
    436
    
    
    
    (1
    )
    
    
    12
    
    
    
    
    
    
    
    447Settlement liabilities
    
    
    
    
    
    
    (32,703
    )
    
    
    
    
    
    
    (430
    )
    
    
    
    
    
    
    (33,133
    )Accounts payable
    
    
    
    
    
    
    2,576
    
    
    
    (54
    )
    
    
    (97
    )
    
    
    
    
    
    
    2,425Accrued expenses
    
    
    
    
    
    
    11,279
    
    
    
    792
    
    
    
    825
    
    
    
    (12,723
    )
    
    
    173Net cash provided by operating activities
    
    
    
    
    
    
    36,046
    
    
    
    257
    
    
    
    1,079
    
    
    
    
    
    
    
    37,382
 
 *
    
    Eliminations include intercompany investments and management fees  25




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##### Table of Contents



GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE  STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2006
(amounts in thousands)
(unaudited)
 CombinedCombined
    
    
    Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations *
    
    
    ConsolidatedCASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property, equipment and leasehold improvements
    
    $
    
    
    
    $
    (9,415
    )
    
    $
    (20
    )
    
    $
    (18
    )
    
    $
    
    
    
    $
    (9,453
    )Purchase of other intangibles
    
    
    
    
    
    
    (495
    )
    
    
    (399
    )
    
    
    (105
    )
    
    
    
    
    
    
    (999
    )Investments in subsidiaries
    
    
    (1,287
    )
    
    
    (360
    )
    
    
    
    
    
    
    
    
    
    
    1,647
    
    
    
    Net cash used in investing activities
    
    
    (1,287
    )
    
    
    (10,270
    )
    
    
    (419
    )
    
    
    (123
    )
    
    
    1,647
    
    
    
    (10,452
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repayments under credit facility
    
    
    
    
    
    
    (4,621
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,621
    )Debt issuance costs
    
    
    
    
    
    
    (139
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (139
    )Proceeds from equity offering
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options
    
    
    1,287
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,287Minority capital contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    240
    
    
    
    240Capital contributions
    
    
    
    
    
    
    1,287
    
    
    
    
    
    
    
    600
    
    
    
    (1,887
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    1,287
    
    
    
    (3,473
    )
    
    
    
    
    
    
    600
    
    
    
    (1,647
    )
    
    
    (3,233
    )NET EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS
    
    
    
    
    
    
    (323
    )
    
    
    
    
    
    
    138
    
    
    
    
    
    
    
    (185
    )NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
    
    
    
    
    
    
    21,980
    
    
    
    (162
    )
    
    
    1,694
    
    
    
    
    
    
    
    23,512CASH AND CASH EQUIVALENTSBeginning of period
    
    
    
    
    
    
    32,237
    
    
    
    276
    
    
    
    2,610
    
    
    
    
    
    
    
    35,123CASH AND CASH EQUIVALENTSEnd of period
    
    $
    
    
    
    $
    54,217
    
    
    $
    114
    
    
    $
    4,304
    
    
    $
    
    
    
    $
    58,635
 26




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GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING SCHEDULE  STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2005
(amounts in thousands)
(unaudited)
 CombinedCombined
    
    
    Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations *
    
    
    ConsolidatedCASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    13,983
    
    
    $
    13,983
    
    
    $
    2,179
    
    
    $
    76
    
    
    $
    (16,238
    )
    
    $
    13,983Adjustments to reconcile net income to
cash provided by (used in) operating activities:Amortization of financing costs
    
    
    
    
    
    
    990
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    990Amortization of intangibles
    
    
    
    
    
    
    2,596
    
    
    
    57
    
    
    
    6
    
    
    
    
    
    
    
    2,659Depreciation
    
    
    
    
    
    
    3,875
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    3,884Deferred income taxes
    
    
    
    
    
    
    6,780
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,780Equity income in subsidiaries
    
    
    (13,983
    )
    
    
    (2,255
    )
    
    
    
    
    
    
    
    
    
    
    16,238
    
    
    
    Minority ownership loss
    
    
    
    
    
    
    (94
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (94
    )Changes in operating assets and liabilities:Settlement receivables
    
    
    
    
    
    
    10,290
    
    
    
    
    
    
    
    85
    
    
    
    
    
    
    
    10,375Receivables, other
    
    
    
    
    
    
    (2,110
    )
    
    
    (1,975
    )
    
    
    
    
    
    
    3,773
    
    
    
    (312
    )Prepaid and other assets
    
    
    
    
    
    
    (1,978
    )
    
    
    (3
    )
    
    
    12
    
    
    
    
    
    
    
    (1,969
    )Settlement liabilities
    
    
    
    
    
    
    (17,560
    )
    
    
    
    
    
    
    (240
    )
    
    
    
    
    
    
    (17,800
    )Accounts payable
    
    
    
    
    
    
    (2,867
    )
    
    
    (371
    )
    
    
    (111
    )
    
    
    
    
    
    
    (3,349
    )Accrued expenses
    
    
    
    
    
    
    4,549
    
    
    
    72
    
    
    
    521
    
    
    
    (3,773
    )
    
    
    1,369Net cash provided by (used in)
operating activities
    
    
    
    
    
    
    16,199
    
    
    
    (41
    )
    
    
    358
    
    
    
    
    
    
    
    16,516CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property, equipment and leasehold
improvements
    
    
    
    
    
    
    (2,519
    )
    
    
    (4
    )
    
    
    (148
    )
    
    
    
    
    
    
    (2,671
    )Purchase of other intangibles
    
    
    
    
    
    
    (170
    )
    
    
    (183
    )
    
    
    (80
    )
    
    
    
    
    
    
    (433
    )Investments in subsidiaries
    
    
    (700
    )
    
    
    (700
    )
    
    
    
    
    
    
    
    
    
    
    1,400
    
    
    
    Net cash used in investing activities
    
    
    (700
    )
    
    
    (3,389
    )
    
    
    (187
    )
    
    
    (228
    )
    
    
    1,400
    
    
    
    (3,104
    )
 
 *
    
    Eliminations include intercompany investments and management fees  27




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##### Table of Contents



GLOBAL CASH ACCESS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE  STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2005
(amounts in thousands)
(unaudited)
 CombinedCombined
    
    
    Non-Parent
    
    
    Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations *
    
    
    ConsolidatedCASH FLOWS FROM FINANCING ACTIVITIES:Repayments under credit facility
    
    $
    
    
    
    $
    (34,286
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (34,286
    )Debt issuance costs
    
    
    
    
    
    
    (90
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (90
    )Minority capital contributions
    
    
    
    
    
    
    280
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    280Capital contributions
    
    
    
    
    
    
    700
    
    
    
    
    
    
    
    700
    
    
    
    (1,400
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    
    
    
    
    (33,396
    )
    
    
    
    
    
    
    700
    
    
    
    (1,400
    )
    
    
    (34,096
    )NET EFFECT OF EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS
    
    
    
    
    
    
    129
    
    
    
    
    
    
    
    (54
    )
    
    
    
    
    
    
    75NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS
    
    
    (700
    )
    
    
    (20,457
    )
    
    
    (228
    )
    
    
    776
    
    
    
    
    
    
    
    (20,609
    )CASH AND CASH EQUIVALENTSBeginning
of period
    
    
    700
    
    
    
    45,037
    
    
    
    662
    
    
    
    3,178
    
    
    
    
    
    
    
    49,577CASH AND CASH EQUIVALENTSEnd
of period
    
    $
    
    
    
    $
    24,580
    
    
    $
    434
    
    
    $
    3,954
    
    
    $
    
    
    
    $
    28,968
 28




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   29




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##### Table of Contents



Overview
  3 4
  30




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##### Table of Contents



Three months ended June 30, 2006 compared to three months ended June 30, 2005
  Three Months EndedJune 30, 2006
    
    
    June 30, 2005$
    
    
    %
    
    
    $
    
    
    %REVENUES:Cash advance
    
    $
    69,143
    
    
    
    51.8
    %
    
    $
    57,933
    
    
    
    51.5
    %ATM
    
    
    54,586
    
    
    
    40.9
    %
    
    
    45,217
    
    
    
    40.2
    %Check services
    
    
    7,459
    
    
    
    5.6
    %
    
    
    6,734
    
    
    
    6.0
    %Central Credit and other revenues
    
    
    2,388
    
    
    
    1.8
    %
    
    
    2,576
    
    
    
    2.3
    %Total revenues
    
    
    133,576
    
    
    
    100.0
    %
    
    
    112,460
    
    
    
    100.0
    %Cost of revenues (exclusive of depreciation and
amortization)
    
    
    (94,292
    )
    
    
    (70.6
    )%
    
    
    (75,987
    )
    
    
    (67.6
    )%Operating expenses
    
    
    (16,636
    )
    
    
    (12.5
    )%
    
    
    (12,288
    )
    
    
    (10.9
    )%Amortization
    
    
    (1,384
    )
    
    
    (1.0
    )%
    
    
    (1,295
    )
    
    
    (1.2
    )%Depreciation
    
    
    (1,050
    )
    
    
    (0.8
    )%
    
    
    (1,932
    )
    
    
    (1.7
    )%OPERATING INCOME
    
    
    20,214
    
    
    
    15.1
    %
    
    
    20,958
    
    
    
    18.6
    %INTEREST INCOME (EXPENSE), NETInterest income
    
    
    868
    
    
    
    0.6
    %
    
    
    181
    
    
    
    0.2
    %Interest expense
    
    
    (10,701
    )
    
    
    (8.0
    )%
    
    
    (10,828
    )
    
    
    (9.6
    )%Total interest income (expense), net
    
    
    (9,833
    )
    
    
    (7.4
    )%
    
    
    (10,647
    )
    
    
    (9.5
    )%INCOME BEFORE INCOME TAX PROVISION AND MINORITY
OWNERSHIP LOSS
    
    
    10,381
    
    
    
    7.8
    %
    
    
    10,311
    
    
    
    9.2
    %INCOME TAX PROVISION
    
    
    (4,140
    )
    
    
    (3.1
    )%
    
    
    (3,712
    )
    
    
    (3.3
    )%INCOME BEFORE MINORITY OWNERSHIP LOSS
    
    
    6,241
    
    
    
    4.7
    %
    
    
    6,599
    
    
    
    5.9
    %MINORITY OWNERSHIP LOSS, net of tax
    
    
    38
    
    
    
    0.0
    %
    
    
    44
    
    
    
    0.0
    %NET INCOME
    
    $
    6,279
    
    
    
    4.7
    %
    
    $
    6,643
    
    
    
    5.9
    %OTHER DATA:Aggregate dollar amount processed (in billions):Cash advance
    
    $
    1.4
    
    
    
    
    
    
    $
    1.1ATM
    
    
    3.0
    
    
    
    
    
    
    
    2.5Check warranty
    
    $
    0.3
    
    
    
    
    
    
    $
    0.3Number of transactions completed (in millions):Cash advance
    
    
    2.5
    
    
    
    
    
    
    
    2.3ATM
    
    
    17.0
    
    
    
    
    
    
    
    14.7Check warranty
    
    
    1.3
    
    
    
    
    
    
    
    1.2
 31




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##### Table of Contents



Total Revenues
   Cash Advance.
 ATM.
 Check Services.
 Central Credit and Other.
 Costs and Expenses
 Cost of Revenues (Exclusive of Depreciation and Amortization).
 Operating Expenses. Share-Based Payment,
 Depreciation and Amortization.
 32




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##### Table of Contents



Interest Income (Expense), Net.
   Income Tax.
  Minority Ownership Loss, Net of Tax.
  33




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##### Table of Contents



Six months ended June 30, 2006 compared to six months ended June 30, 2005
  Six Months EndedJune 30, 2006
    
    
    June 30, 2005$
    
    
    %
    
    
    $
    
    
    %REVENUES:Cash advance
    
    $
    136,198
    
    
    
    51.7
    %
    
    $
    114,710
    
    
    
    51.6
    %ATM
    
    
    107,746
    
    
    
    40.9
    %
    
    
    88,989
    
    
    
    40.1
    %Check services
    
    
    14,703
    
    
    
    5.6
    %
    
    
    13,043
    
    
    
    5.9
    %Central Credit and other revenues
    
    
    4,764
    
    
    
    1.8
    %
    
    
    5,383
    
    
    
    2.4
    %Total revenues
    
    
    263,411
    
    
    
    100.0
    %
    
    
    222,125
    
    
    
    100.0
    %Cost of revenues (exclusive of depreciation and
amortization)
    
    
    (185,643
    )
    
    
    (70.5
    )%
    
    
    (148,452
    )
    
    
    (66.8
    )%Operating expenses
    
    
    (31,926
    )
    
    
    (12.1
    )%
    
    
    (24,301
    )
    
    
    (10.9
    )%Amortization
    
    
    (2,886
    )
    
    
    (1.1
    )%
    
    
    (2,659
    )
    
    
    (1.2
    )%Depreciation
    
    
    (2,115
    )
    
    
    (0.8
    )%
    
    
    (3,884
    )
    
    
    (1.7
    )%OPERATING INCOME
    
    
    40,841
    
    
    
    15.5
    %
    
    
    42,829
    
    
    
    19.3
    %INTEREST INCOME (EXPENSE), NETInterest income
    
    
    1,424
    
    
    
    0.5
    %
    
    
    633
    
    
    
    0.3
    %Interest expense
    
    
    (20,949
    )
    
    
    (8.0
    )%
    
    
    (21,760
    )
    
    
    (9.8
    )%Total interest income (expense), net
    
    
    (19,525
    )
    
    
    (7.4
    )%
    
    
    (21,127
    )
    
    
    (9.5
    )%INCOME BEFORE INCOME TAX PROVISION
AND MINORITY OWNERSHIP LOSS
    
    
    21,316
    
    
    
    8.1
    %
    
    
    21,702
    
    
    
    9.8
    %INCOME TAX PROVISION
    
    
    (8,147
    )
    
    
    (3.1
    )%
    
    
    (7,813
    )
    
    
    (3.5
    )%INCOME BEFORE MINORITY
OWNERSHIP LOSS
    
    
    13,169
    
    
    
    5.0
    %
    
    
    13,889
    
    
    
    6.3
    %MINORITY OWNERSHIP LOSS, net of tax
    
    
    74
    
    
    
    0.0
    %
    
    
    94
    
    
    
    0.0
    %NET INCOME
    
    $
    13,243
    
    
    
    5.0
    %
    
    $
    13,983
    
    
    
    6.3
    %OTHER DATA:Aggregate dollar amount processed (in billions):Cash advance
    
    $
    2.7
    
    
    
    
    
    
    $
    2.3ATM
    
    
    5.9
    
    
    
    
    
    
    
    4.8Check warranty
    
    $
    0.7
    
    
    
    
    
    
    $
    0.5Number of transactions completed (in millions):Cash advance
    
    
    5.1
    
    
    
    
    
    
    
    4.6ATM
    
    
    33.6
    
    
    
    
    
    
    
    29.1Check warranty
    
    
    2.5
    
    
    
    
    
    
    
    2.3
 34




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Total Revenues
   Cash Advance.
 ATM.
 Check Services.
 Central Credit and Other.
 Costs and Expenses
 Cost of Revenues (Exclusive of Depreciation and Amortization).
 Operating Expenses. Share-Based
Payment,
 Depreciation and Amortization.
 35




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Interest Income (Expense), Net.
   Income Tax.
  Minority Ownership Loss, Net of Tax.
  36




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LIQUIDITY AND CAPITAL RESOURCES
 Cash Flows
  Six Months EndedJune 30,
    
    
    June 30,2006
    
    
    2005Net cash provided by operating activities
    
    $
    37,382
    
    
    $
    16,516Net cash used in investing activities
    
    
    (10,452
    )
    
    
    (3,104
    )Net cash used in financing activities
    
    
    (3,233
    )
    
    
    (34,096
    )Net effect of exchange rate changes on cash
and cash equivalents
    
    
    (185
    )
    
    
    75Net increase (decrease) in cash and cash
equivalents
    
    
    23,512
    
    
    
    (20,609
    )Cash and cash equivalents, beginning of period
    
    
    35,123
    
    
    
    49,577Cash and cash equivalents, end of period
    
    $
    58,635
    
    
    $
    28,968
 Our principal source of liquidity is cash flows from operating activities, which were $37.4
million and $16.5 million, for the six months ended June 30, 2006 and 2005, respectively. Our
cash from operating activities was greater than in the first six months of 2006 when compared
to 2005. Changes in settlement receivables and settlement payables account for $9.7 million
of the change, while $4.3 million is the result of stock based compensation. Additionally,
accrual of warranty expense reserves related to our Central Credit check cashing product
accounted for $3.0 million and $1.3 million is the result of changes in the deferred income
tax asset included in the six months of 2006 that were not present in the comparable period of
2005.Net cash used in investing activities totaled $10.5 million and $3.1 million for the six
months ended June 30, 2006 and 2005, respectively. Included in net cash used in investing
activities were funds spent on purchased software and software development in the amounts of
$0.9 million and $0.4 million, funds spent on the procurement of cash access equipment,
computer and other hardware in the amounts of $9.4 million and $2.7 million for the six months
ended June 30, 2006 and 2005, respectively. We have met our capital requirements to date
through cash flows from operating activities. We currently expect that capital expenditures in
2006 will exceed the annual limit allowed under our senior secured credit facilities. We will
seek to obtain a waiver or modification of this restriction or to refinance our senior secured
debt, but if we are unsuccessful in doing so, we could be in breach of this provision at the
end of 2006.Net cash used in financing activities was $3.2 million and $34.1 million for the six months
ended June 30, 2006 and 2005, respectively. In the six months ended June 30, 2006 and 2005, we
repaid $4.6 million and $34.3 million of principal on our credit facilities. In the six
months ended June 30, 2006 and 2005, the net cash used also includes payments for debt
issuance costs of $0.1 million and $0.1 million, respectively. Cash provided by financing
activities includes $0.2 million and $0.3 million in capital contributions IFT from our
minority investor in the six months ended June 30, 2006 and 2005, respectively. Additionally,
in the first six months of 2006 we obtained proceeds from the exercising of employee options
under our equity compensation programs totaling $1.3 million.
 37




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Indebtedness
    th th
 Other Liquidity Needs and Resources
     38




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Off-Balance Sheet Arrangements
   Effects of Inflation
  Critical Accounting Policies
  39




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES  ABOUT MARKET RISK
    40




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ITEM 4. CONTROLS AND PROCEDURES
   41




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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
    42




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ITEM 1A. RISK FACTORS
  Risks related to our business
 If we are unable to maintain our current customers on terms that are favorable to us, our
business, financial condition and operating results may suffer a material adverse effect.
  Because of significant concentration among our top customers, the loss of a top customer could
have a material adverse effect on our revenues and profitability.
   Competition in the market for cash access services is intense which could result in higher
commissions or loss of customers to our competitors
  43




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If we are unable to protect our intellectual property adequately, we may lose a valuable
competitive advantage or be forced to incur costly litigation to protect our rights.
    44




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We are subject to extensive rules and regulations of card associations, including MasterCard
International, Visa International and Visa U.S.A., that are always subject to change, which
may harm our business.
    45




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Changes in interchange rates and other fees may affect our cost of revenues (exclusive of
depreciation and amortization) and net income.
   Our substantial indebtedness could materially adversely affect our operations and financial
results and prevent us from obtaining additional financing, if necessary
  
    
    makes it more difficult for us to satisfy our obligations with respect to either
our senior secured debt or our senior subordinated notes, which, if we fail to do,
could result in the acceleration of all of our debt;
 
    
    increases our vulnerability to general adverse economic and industry conditions;
 
    
    requires us to dedicate a substantial portion (in the case of our senior secured
debt, up to 75% of our excess cash flow, depending upon our total leverage ratio) of
our cash flow from operations to
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payments on our indebtedness, which would reduce the availability of our cash flow to
fund working capital, capital expenditures, expansion efforts and other general
corporate purposes;
 
    
    limits our flexibility in planning for, or reacting to, changes in our business and
the industry in which we operate;
 
    
    restricts our ability to pay dividends or repurchase our common stock;
 
    
    places us at a competitive disadvantage compared to our competitors that have less debt;
 
    
    prohibits us from acquiring businesses or technologies that would benefit our business;
 
    
    restricts our ability to engage in transactions with affiliates or create liens or guarantees; and
 
    
    limits, along with the financial and other restrictive covenants in our other
indebtedness, among other things, our ability to borrow additional funds.
   To service our indebtedness we will require a significant amount of cash, and our ability to
generate cash flow depends on many factors beyond our control.
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Because of our dependence on a few providers, or in some cases one provider, for some of the
financial services we offer to patrons, the loss of a provider could have a material adverse
effect on our business or our financial performance.
  Money order instruments
 Check warranty services
 Authorizations and Settlement
 Card association sponsorship
 ATM cash supply
 Software development and system support
 Product Development
 48




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##### Table of Contents



Money transfers
  Certain providers upon whom we are dependent are under common control with M&C International,
the loss of which could have a material adverse effect on our business.
  Our business depends on our ability to introduce new, commercially viable products and
services in a timely manner.
    49




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We may not be successful in our entry into the consumer credit business through the issuance
of a private label credit card.
       50




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##### Table of Contents



Conflicts of interest may arise in connection with the issuance of credit cards by Arriva to
our officers and directors.
  Our products and services are complex, depend on a myriad of complex networks and technologies
and may be subject to software or hardware errors or failures that could lead to an increase
in our costs, reduce our revenues or damage our reputation.
  We may not successfully enter new markets and therefore not achieve all of our strategic
growth objectives.
  51




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We may encounter difficulties managing our growth, which could adversely affect our operating
results.
  We depend on key personnel and they would be difficult to replace.
  52




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##### Table of Contents



The loss of our sponsorship into the Visa U.S.A., Visa International and MasterCard card
associations could have a material adverse effect on our business.
    53




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##### Table of Contents



An unexpectedly high level of chargebacks, as the result of fraud or otherwise, could
adversely affect our cash advance business.
   A material increase in market interest rates or changing regulations could adversely affect
our ATM business.
   An unexpected increase in check warranty expenses could adversely affect our check warranty
business.
  54




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We operate our business in regions subject to natural disasters, including hurricanes. We may
suffer casualty losses as a result of a natural disaster, and any interruption to our business
resulting from a natural disaster will adversely affect our revenues and results of
operations.
   We will be required to comply with Section 404 of the Sarbanes-Oxley Act of 2002 and furnish a
report on our internal control over financial reporting as of the end of 2006.
   To execute our growth strategy, we may make acquisitions or strategic investments, which
involve numerous risks that we may not be able to address without substantial expense, delay
or other operational or financial problems.
  55




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##### Table of Contents




    
    difficulty integrating the technologies, operations and personnel from the acquired business;
    
    overestimation of potential synergies or a delay in realizing those synergies;
    
    disruption to our ongoing business, including the diversion of managements
attention and of resources from our principal business;
    
    inability to obtain the desired financial and strategic benefits from the acquisition or investment;
    
    loss of customers of an acquired business;
    
    assumption of unanticipated liabilities;
    
    loss of key employees of an acquired business; and
    
    entering into new markets in which we have limited prior experience.
  We may incur penalties in connection with the administration of our benefit plans.
  Risks related to the industry
 Economic downturns, a decline in the popularity of gaming or changes in the demographic
profile of gaming patrons could reduce the number of patrons that use our services or the
amounts of cash that they access using our services.
   56




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Changes in consumer willingness to pay a fee to access their funds could reduce the demand for
our cash access products and services.
  The cash access industry is subject to change, and we must keep pace with the changes to
successfully compete.
   Growth of the gaming industry in any market is subject to political and regulatory
developments that are difficult to anticipate.
  57




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We are subject to extensive governmental gaming regulation, which may harm our business.
     58




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##### Table of Contents



A governmental shutdown of a gaming regulatory body in a jurisdiction where we operate may
cause a disruption in our business and harm our operating results.
  Many of the financial services that we provide are subject to extensive rules and regulations,
which may harm our business.
  59




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##### Table of Contents



If consumer privacy laws change, or if we are required to change our business practices, the
value of our patron marketing services may be hampered.
  60




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##### Table of Contents



Responsible gaming pressures could result in a material adverse effect on our business and
operating results.
   Risk related to our capital structure
 Our common stock has only been publicly traded since September 22, 2005 and we expect that the
price of our common stock will fluctuate substantially.
  
    
    our failure to maintain our current customers, including because of consolidation
in the gaming industry;
    
    increases in commissions paid to gaming establishments as a result of competition;
    
    increases in interchange rates or processing or other fees paid by us or decreases
in reverse interchange rates;
    
    actual or anticipated fluctuations in our or our competitors revenue, operating
results or growth rate;
    
    our inability to adequately protect or enforce our intellectual property rights;
 61




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##### Table of Contents




    
    any adverse results in litigation initiated by us or by others against us;
    
    our inability to make payments on our outstanding indebtedness as they become due
or our inability to undertake actions that might otherwise benefit us based on the
financial and other restrictive covenants contained in our senior secured credit
facilities and the indenture for our senior subordinated notes;
    
    the loss of a significant supplier or strategic partner, or the failure of a
significant supplier or strategic partner to provide the goods or services that we
rely on them for;
    
    our inability to introduce successful, new products and services in a timely manner
or the introduction of new products or services by our competitors that reduce the
demand for our products and services;
    
    our failure to successfully enter new markets or the failure of new markets to
develop in the time and manner that we anticipate;
    
    announcements by our competitors of significant new contracts or contract renewals
or of new products or services;
    
    changes in general economic conditions, financial markets, the gaming industry or
the payments processing industry;
    
    the trading volume of our common stock;
    
    sales of common stock or other actions by our current officers, directors and stockholders;
    
    acquisitions, strategic alliances or joint ventures involving us or our competitors;
    
    future sales of our common stock or other securities;
    
    the failure of securities analysts to cover our common stock after this offering or
changes in financial estimates or recommendations by analysts;
    
    our failure to meet the revenue, net income or earnings per share estimates of
securities analysts or investors;
    
    additions or departures of key personnel;
    
    terrorist acts, theft, vandalism, fires, floods or other natural disasters; and
    
    rumors or speculation as to any of the above which we may be unable to confirm or
deny due to disclosure restrictions imposed on us by law or which we otherwise deem
imprudent to comment upon.
   Future sales of our common stock may cause the market price of our common stock to drop
significantly, even if our business is doing well.
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##### Table of Contents



M&C International and entities affiliated with Summit Partners possess significant voting
power and may take actions that are not in the best interests of our other stockholders.
  Conflicts of interest may arise because some of our directors are also principals or partners
of our controlling stockholders.
  Some provisions of our certificate of incorporation and bylaws may delay or prevent
transactions that many stockholders may favor.
  
    
    divide our Board of Directors into three separate classes serving staggered
three-year terms, which will have the effect of requiring at least two annual
stockholder meetings instead of one, to replace a majority of our directors, which
could have the effect of delaying of preventing a change in our control or management;
    
    provide that special meetings of stockholders can only be called by our Board of
Directors, Chairman of the Board or Chief Executive Officer. In addition, the business
permitted to be conducted at any special meeting of stockholders is limited to the
business specified in the notice of such meeting to the stockholders;
 63




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
    
    provide for an advance notice procedure with regard to business to be brought
before a meeting of stockholders which may delay or preclude stockholders from
bringing matters before a meeting of stockholders or from making nominations for
directors at a meeting of stockholders, which could delay or deter takeover attempts
or changes in management;
    
    eliminate the right of stockholders to act by written consent so that all
stockholder actions must be effected at a duly called meeting;
    
    provide that directors may only be removed for cause with the approval of
stockholders holding a majority of our outstanding voting stock;
    
    provide that vacancies on our Board of Directors may be filled by a majority,
although less than a quorum, of directors in office and that our Board of Directors
may fix the number of directors by resolution;
    
    allow our Board of Directors to issue shares of preferred stock with rights senior
to those of the common stock and that otherwise could adversely affect the rights and
powers, including voting rights and the right to approve or not to approve an
acquisition or other change in control, of the holders of common stock, without any
further vote or action by the stockholders; and
    
    do not provide for cumulative voting for our directors, which may make it more
difficult for stockholders owning less than a majority of our stock to elect any
directors to our Board of Directors. In addition, we are also subject to Section 203
of the Delaware General Corporation Law, which provides, subject to enumerated
exceptions, that if a person acquires 15% or more of our voting stock, the person is
an interested stockholder and may not engage in business combinations with us
for a period of three years from the time the person acquired 15% or more of our
voting stock.
  If we fail to attract or retain independent directors, we may face unfavorable public
disclosure, a halt in the trading of our common stock and delisting from the New York Stock
Exchange.
  We do not intend to pay dividends in the future.
  64




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ITEM 6. EXHIBITS
 Exhibit No.
    
    Description.10.1(1)
    
    Amendment No. 1 to Registration Agreement, dated as of May 17,
2006, by and among Global Cash Access Holdings, Inc. and the other
parties thereto.31.1*
    
    Certification of Kirk E. Sanford, Chief Executive Officer of
Global Cash Access Holdings, Inc. dated August 14, 2006 in
accordance with 18 U.S.C. 1350, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Harry C. Hagerty, Chief Financial Officer of
Global Cash Access Holdings, Inc. dated August 14, 2006 in
accordance with 18 U.S.C. 1350, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.32.1*
    
    Certification of Kirk E. Sanford, Chief Executive Officer of
Global Cash Access Holdings, Inc. dated August 14, 2006 in
accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2*
    
    Certification of Harry C. Hagerty, Chief Financial Officer of
Global Cash Access Holdings, Inc. dated August 14, 2006 in
accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 
 (1)
    
    Incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K (File
No. 001-32622) filed May 17, 2006.*
    
    Filed herewith. 65




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##### Table of Contents



SIGNATURES
  August 14, 2006
    
    GLOBAL CASH ACCESS HOLDINGS, INC.(Date)
    

(Registrant)/s/ Harry C. HagertyHarry C. HagertyChief Financial Officer
(For the Registrant and as
Principal Financial Officer
and as Chief Accounting Officer) 66




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EXHIBIT INDEX
 Exhibit No.
    
    Description.10.1(1)
    
    Amendment No. 1 to Registration Agreement, dated as of May 17,
2006, by and among Global Cash Access Holdings, Inc. and the other
parties thereto.31.1*
    
    Certification of Kirk E. Sanford, Chief Executive Officer of
Global Cash Access Holdings, Inc. dated August 14, 2006 in
accordance with 18 U.S.C. 1350, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Harry C. Hagerty, Chief Financial Officer of
Global Cash Access Holdings, Inc. dated August 14, 2006 in
accordance with 18 U.S.C. 1350, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.32.1*
    
    Certification of Kirk E. Sanford, Chief Executive Officer of
Global Cash Access Holdings, Inc. dated August 14, 2006 in
accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.32.2*
    
    Certification of Harry C. Hagerty, Chief Financial Officer of
Global Cash Access Holdings, Inc. dated August 14, 2006 in
accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 
 (1)
    
    Incorporated by reference to Exhibit 10.1 of the Companys Current Report on Form 8-K (File
No. 001-32622) filed May 17, 2006*
    
    Filed herewith 67