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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission File Number 333-113470
 CARDTRONICS, INC.
  Delaware
    
    76-0681190(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)3110 Hayes Road, Suite 300
    
    77082Houston, TX(Address of principal executive offices)
    
    (Zip code)
 (281) 596-9988
 None
 None
 o þ
 o þ
 þ o
 þ
  o o þ
 o þ
 The common stock of the registrant is not traded on any exchange, and therefore, its aggregate market value and the value of shares held by
non-affiliates cannot be reasonably determined.
 Common Stock, par value $0.0001 per share. Shares outstanding on March 30, 2007: 1,760,798
 None




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##### 



CARDTRONICS, INC.
 TABLE OF CONTENTS
 PAGEPART IItem 1.
    

    Business
    
    1Item 1A.
    
    Risk Factors
    
    10Item 1B.
    
    Unresolved Staff Comments
    
    18Item 2.
    
    Properties
    
    18Item 3.
    
    Legal Proceedings
    
    19Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    20PART IIItem 5.
    
    Market for Registrants Common Equity,
Related Stockholder Matters, and Issuer Purchases of Equity Securities
    
    21Item 6.
    
    Selected Financial Data
    
    22Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    24Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    43Item 8.
    
    Financial Statements and Supplementary Data
    
    45Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    84Item 9A.
    
    Controls and Procedures
    
    84Item 9B.
    
    Other Information
    
    84PART IIIItem 10.
    
    Directors, Executive Officers, and Corporate Governance
    
    85Item 11.
    
    Executive Compensation
    
    88Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    98Item 13.
    
    Certain
Relationships and Related Transactions, and Director Independence
    
    99Item 14.
    
    Principal Accountant Fees and Services
    
    100PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    102Signatures
    
    105Exhibit Index
    
    1062006 Bonus PlanAmendment No.4 to Credit AgreementComputation of Ratio of Earnings to Fixed ChargesCode of Business and EthicsList of SubsidiariesCertification of CEO Pursuant to Section 13a-14(a)Certification of CFO Pursuant to Section 13a-14(a)Certification of CEO Pursuant to Section 1350Certification of CFO Pursuant to Section 1350




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PART I
 
 ITEM 1. BUSINESS
 Overview
    Organizational History
    1




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Additional Company Information
 http://www.cardtronics.com
 Our Strategy
  Increase penetration and ATM count with leading merchants.
 Capitalize on existing opportunities to become a significant retail marketing and distribution
partner to financial institutions.
 Capitalize on surcharge-free network opportunities.
 Pursue selected domestic and international acquisition opportunities.
 Our Products and Services
  2




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Company-Owned

    
    Merchant-Owned

    
    TotalNumber of ATMs
    
    
    12,796
    
    
    
    12,463
    
    
    
    25,259Percent of total ATMs
    
    
    50.7
    %
    
    
    49.3
    %
    
    
    100.0
    %Average monthly withdrawal transactions per ATM
    
    
    531
    
    
    
    289
    
    
    
    404
    Segment Information
  Part II,
Item 7. Managements
Discussion and Analysis of Financial Condition and Results of Operations Part II, Item 8. Financial Statements and
Supplementary Data, Note 18.
 3




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Sales and Marketing
   Technology
  ATM equipment.
  Transaction processing.
  Internal systems. .
  4




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Cash management.
  Customer service.
   Primary Vendor Relationships
  Transaction processing.
 EFT network services.
 ATM equipment.
 5




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ATM maintenance.
 Cash management.
   Cash replenishment.
 Merchant Customers
   6




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
    
    an initial term of five to seven years;
    
    ATM exclusivity at locations where we install an ATM;
    
    protection for us against underperforming locations by permitting us to increase the
surcharge fee or remove ATMs;
    
    in the United States, provisions permitting us to terminate or remove ATMs or renegotiate
the fees paid to the merchant if surcharge fees are generally reduced or eliminated by law;
and
    
    provisions making the merchants fee dependent on the number of ATM transactions.
  
    
    in the United States, provisions prohibiting in-store check cashing by the merchant and,
in the United States and United Kingdom, the operation of any other cash-back devices;
    
    provisions imposing an obligation on the merchant to operate the ATM at any time his or
her store is open to the public; and
    
    provisions, when possible, that require a merchant to have a purchaser of the merchants
store assume our contract.
 Seasonality
   Competition
  7




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Government and Industry Regulation
 United States
  Americans with Disabilities Act (ADA).
 Item 3, Legal Proceedings.
 Rehabilitation Act.
 Encrypting Pin Pad (EPP) and Triple Data Encryption Standard (Triple DES).
 Surcharge regulation.
 8




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EFT network regulations.
 United Kingdom
  Mexico
  Employees
  9




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ITEM 1A. RISK FACTORS
 CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
   We depend on ATM transaction fees for substantially all of our revenues, and our revenues would be
reduced by a decline in the usage of our ATMs or a decline in the number of ATMs that we operate.
   The proliferation of payment options other than cash in the United States, including credit cards,
debit cards, and stored-value cards, could result in a reduced need for cash in the marketplace and
a resulting decline in the usage of our ATMs.
  10




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Study of Consumer Payment
Preferences
 Interchange fees, which comprise a substantial portion of our ATM transaction revenues, may be
lowered at the discretion of the various EFT networks through which our ATM transactions are
routed, thus reducing our future revenues.
  We derive a substantial portion of our revenue from ATMs placed with a small number of merchants.
If one or more of our top merchants were to cease doing business with us, or to substantially
reduce its dealings with us, our revenues could decline.
  We rely on EFT network providers, transaction processors, and maintenance providers; if they fail
or no longer agree to provide their services, we could suffer a temporary loss of transaction
revenues or the permanent loss of any merchant contract affected by such disruption.
  If we, our transaction processors, our EFT networks or other service providers experience system
failures, the ATM products and services we provide could be delayed or interrupted, which would
harm our business.
  11




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If not done properly, the transitioning of processing transactions conducted on our ATMs from
third-party processors to our own in-house processing switch could lead to service interruptions
and/or the inaccurate settlement of funds between the various parties to our ATM transactions,
which would harm our business and our relationships with our merchants.
  Security breaches could harm our business by compromising customer information and disrupting our
ATM transaction processing services, thus damaging our relationships with our merchant customers
and exposing us to liability.
  Computer viruses could harm our business by disrupting our ATM transaction processing services,
thus causing non-compliance of network rules and damaging our relationships with our merchant
customers.
  Operational failures in our ATM transaction processing facilities could harm our business and our
relationships with our merchant customers.
  Errors or omissions in the settlement of merchant funds could damage our relationships with our
merchant customers and expose us to liability.
  12




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We rely on third parties to provide us with the cash we require to operate many of our ATMs. If
these third parties were unable or unwilling to provide us with the necessary cash to operate our
ATMs, we would need to locate alternative sources of cash to operate our ATMs or we would not be
able to operate our business.
    The ATM industry is highly competitive and such competition may increase, which may adversely
affect our profit margins.
   The election of our merchant customers to not participate in our surcharge-free network offerings
could impact the networks effectiveness, which would negatively impact our financial results.
  13




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We may be unable to integrate our recent and future acquisitions in an efficient manner and
inefficiencies would increase our cost of operations and reduce our profitability.
  
    
    the operations, technology, and personnel of any acquired companies may be difficult to
integrate;
    
    the allocation of management resources to consummate these transactions may disrupt our
day-to-day business; and
    
    acquired networks may not achieve anticipated revenues, earnings or cash flow. Such a
shortfall could require us to write down the carrying value of the intangible assets
associated with any acquired company, which would adversely affect our reported earnings.
     Our international operations involve special risks and may not be successful, which would result in
a reduction of our gross profits.
   
    
    exposure to currency fluctuations;
    
    difficulties in complying with foreign laws and regulations;
    
    unexpected changes in laws, regulations and policies of foreign governments or other regulatory bodies;
    
    difficulties in staffing and managing foreign operations; and
    
    potentially adverse tax consequences.
  14




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We have a substantial amount of indebtedness, which may adversely affect our cash flow as well as
our ability to operate our business and remain in compliance with debt covenants.
  
    
    make it more difficult for us to satisfy our obligations with respect to our indebtedness
and any failure to comply with the obligations of any of our debt instruments, including
financial and other restrictive covenants, could result in an event of default under the
agreements governing such indebtedness;
    
    require us to dedicate a substantial portion of our cash flow to pay principal and
interest on our debt, which will reduce the funds available for working capital, capital
expenditures, acquisitions, and other general corporate purposes;
    
    limit our flexibility in planning for and reacting to changes in our business and in the
industry in which we operate;
    
    make us more vulnerable to adverse changes in general economic, industry and competitive
conditions, and adverse changes in government regulation;
    
    limit our ability to borrow additional amounts for working capital, capital expenditures,
acquisitions, debt service requirements, execution of our growth strategy, research and
development costs or other purposes; and
    
    place us at a disadvantage compared to our competitors who have less debt.
   The terms of our credit agreement and the indenture governing our senior subordinated notes (the
Notes) may restrict our current and future operations, particularly our ability to respond to
changes in our business or to take certain actions.
  
    
    sell or transfer property or assets;
    
    pay dividends on or redeem or repurchase stock;
    
    merge into or consolidate with any third party;
    
    create, incur, assume or guarantee additional indebtedness;
    
    create certain liens;
    
    make investments;
    
    make certain restricted payments, including the payment of dividends;
    
    engage in transactions with affiliates;
 15




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
    
    redeem or repurchase capital stock;
    
    issue or sell preferred stock of restricted subsidiaries; and
    
    enter into sale and leaseback transactions.
   Repayment of our indebtedness is dependent on cash flow generated by our subsidiaries.
  Changes in interest rates could increase our operating costs by increasing interest expense under
our credit facilities and our cash management costs.
 Part II, Item 7A, Quantitative and Qualitative
Disclosures about Market Risk
 16




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We operate in a changing and unpredictable regulatory environment. If we are subject to new
legislation regarding the operation of our ATMs, we could be required to make substantial
expenditures to comply with such legislation, which may reduce our net income and our profit
margins.
  The passing of legislation banning or limiting surcharge fees would severely impact our revenue.
    The passing of legislation requiring modifications to be made to ATMs could severely impact our
cash flows.
  17




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The passing of anti-money laundering legislation could cause us to lose certain merchant accounts,
thus reducing our revenues.
  Material weaknesses identified in our internal control over financial reporting could result in a
material misstatement to our financial statements as well as result in our inability to file
periodic reports within the time periods required by federal securities laws.
   
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  18




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ITEM 3. LEGAL PROCEEDINGS
 National Federation of the Blind (NFB).
    Other matters.
  19




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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  20




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Common Stock
 Item 12, Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters,
  Recent Issuances / Repurchases of Unregistered Securities
 Preferred stock private placement.
   Common stock issuance.
 21




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ITEM 6. SELECTED FINANCIAL DATA
 Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations, Item 8, Financial Statements and Supplementary Data,
 As of or for the Years Ended December 31,2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(in thousands, except numbers of ATMs)Consolidated Statements of Operations Data:Revenues:ATM operating revenues
    
    $
    280,985
    
    
    $
    258,979
    
    
    $
    182,711
    
    
    $
    101,950
    
    
    $
    59,183ATM product sales and other revenues (1)
    
    
    12,620
    
    
    
    9,986
    
    
    
    10,204
    
    
    
    8,493
    
    
    
    9,603Total revenues
    
    
    293,605
    
    
    
    268,965
    
    
    
    192,915
    
    
    
    110,443
    
    
    
    68,786Cost of revenues:Cost of ATM operating revenues(2)
    
    
    209,850
    
    
    
    199,767
    
    
    
    143,504
    
    
    
    80,286
    
    
    
    49,134Cost of ATM product sales and other revenues
    
    
    11,443
    
    
    
    9,681
    
    
    
    8,703
    
    
    
    7,903
    
    
    
    8,984Total cost of revenues (excluding depreciation and amortization)
    
    
    221,293
    
    
    
    209,448
    
    
    
    152,207
    
    
    
    88,189
    
    
    
    58,118Gross profit
    
    
    72,312
    
    
    
    59,517
    
    
    
    40,708
    
    
    
    22,254
    
    
    
    10,668Operating expenses:Selling, general, and administrative expenses (3) (4) (5)
    
    
    21,667
    
    
    
    17,865
    
    
    
    13,571
    
    
    
    7,229
    
    
    
    6,142Depreciation and accretion expense
    
    
    18,595
    
    
    
    12,951
    
    
    
    6,785
    
    
    
    3,632
    
    
    
    1,650Amortization expense (6)
    
    
    11,983
    
    
    
    8,980
    
    
    
    5,508
    
    
    
    3,842
    
    
    
    1,641Total operating expenses
    
    
    52,245
    
    
    
    39,796
    
    
    
    25,864
    
    
    
    14,703
    
    
    
    9,433Income from operations
    
    
    20,067
    
    
    
    19,721
    
    
    
    14,844
    
    
    
    7,551
    
    
    
    1,235Other expense (7) (8)(9)
    
    
    20,086
    
    
    
    23,409
    
    
    
    5,463
    
    
    
    2,263
    
    
    
    1,097(Loss) income before income taxes
    
    
    (19
    )
    
    
    (3,688
    )
    
    
    9,381
    
    
    
    5,288
    
    
    
    138Income tax provision (benefit)
    
    
    512
    
    
    
    (1,270
    )
    
    
    3,576
    
    
    
    1,955
    
    
    
    111(Loss) income before cumulative effect of a change in accounting
principle
    
    $
    (531
    )
    
    $
    (2,418
    )
    
    $
    5,805
    
    
    $
    3,333
    
    
    $
    27Cumulative effect of change in accounting principle for asset
retirement obligations, net of related income tax benefit of $80
(10)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134
    
    
    
    Net (loss) income
    
    $
    (531
    )
    
    $
    (2,418
    )
    
    $
    5,805
    
    
    $
    3,199
    
    
    $
    27Net (loss) income available to common stockholders (11)
    
    $
    (796
    )
    
    $
    (3,813
    )
    
    $
    3,493
    
    
    $
    1,110
    
    
    $
    (1,853
    )Consolidated Balance Sheets Data:Total cash
    
    $
    2,718
    
    
    $
    1,699
    
    
    $
    1,412
    
    
    $
    5,554
    
    
    $
    3,184Total assets
    
    
    367,756
    
    
    
    343,751
    
    
    
    197,667
    
    
    
    65,295
    
    
    
    34,843Total long-term debt, including current portion
    
    
    252,895
    
    
    
    247,624
    
    
    
    128,541
    
    
    
    31,371
    
    
    
    18,475Preferred stock (12)
    
    
    76,594
    
    
    
    76,329
    
    
    
    23,634
    
    
    
    21,322
    
    
    
    19,233Total stockholders equity (deficit)
    
    
    (37,168
    )
    
    
    (49,084
    )
    
    
    (340
    )
    
    
    (6,329
    )
    
    
    (9,024
    )Consolidated Statements of Cash Flows Data:Cash flows from operating activities
    
    $
    25,446
    
    
    $
    33,227
    
    
    $
    20,466
    
    
    $
    21,629
    
    
    $
    4,491Cash flows from investing activities
    
    
    (35,973
    )
    
    
    (139,960
    )
    
    
    (118,926
    )
    
    
    (29,663
    )
    
    
    (15,023
    )Cash flows from financing activities
    
    
    11,192
    
    
    
    107,214
    
    
    
    94,318
    
    
    
    10,404
    
    
    
    10,741Operating Data:Total number of ATMs
    
    
    25,259
    
    
    
    26,208
    
    
    
    24,581
    
    
    
    12,021
    
    
    
    8,298Total transactions
    
    
    172,808
    
    
    
    156,851
    
    
    
    111,577
    
    
    
    64,605
    
    
    
    36,212Total withdrawal transactions
    
    
    125,078
    
    
    
    118,960
    
    
    
    86,821
    
    
    
    49,859
    
    
    
    28,955
 
 (1)
    
    Consists primarily of revenues from the sale of equipment to our merchant-owned customer base
and our associated value added resellers as well as other miscellaneous non-transaction based
revenues.(2)
    
    Includes stock-based compensation totaling $51,000 and $172,000 for the years ended December
31, 2006 and 2005. No stock-based compensation expense was recorded as a cost of ATM
operating revenues for the years ended December 31, 2004, 2003 and 2002. Additionally, the
amounts recorded in 2006 reflects our adoption of Statement of Financial Accounting Standards
(SFAS) No. 123 (revised 2004), Share-Based Payments (SFAS No. 123R). See Item 8.
Financial Statements and Supplementary Data, Note 1(o) and Note 3for additional details of
our adoption.(3)
    
    Reflects a one-time bonus of $1.8 million made to our Chief Executive Officer in 2004 related
to the tax liability associated with a related restricted stock grant. See Item 8.
Financial Statements and Supplementary Data, Note 3to our
consolidated financial statements. 22




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(4)
    
    Reflects the write-off of approximately $1.8 million in 2004 of costs associated with our
terminated initial public offering and related costs.(5)
    
    Includes stock-based compensation totaling $0.8 million, $2.2 million, $1.0 million, $1.6
million, and $0 for the years ended December 31, 2006, 2005, 2004, 2003, and 2002,
respectively. Additionally, the amount recorded in 2006 reflects our adoption of SFAS No.
123R. See Item 8. Financial Statements and Supplementary Data, Note 1(o)and Note 3to our
consolidated financial statements for additional details of our adoption.(6)
    
    Includes impairment charges of $2.8 million and $1.2 million for the years ended December 31,
2006 and 2005, respectively.(7)
    
    Consists primarily of interest expense and losses on the sale or disposal of assets.(8)
    
    Reflects the write-off of $0.5 million and $5.0 million of deferred financing costs in 2006
and 2005, respectively, as a result of modifications made to the Companys existing revolving
credit facilities in 2006 and amendments to its existing bank credit facility and the
repayment of its existing term loans in 2005.(9)
    
    Reflects the recognition of approximately $4.8 million in other income primarily related to
settlement proceeds received from Winn-Dixie Stores, Inc. (Winn-Dixie), one of our merchant
customers as part of that companys successful emergence from bankruptcy, a $1.1
million contract termination payment received from one of our
customers, and a $0.5 million
payment received in August 2006 from one of our customers related to the sale of a number of
its stores to another party. See Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations  Recent Eventsfor additional details of the Winn-Dixie
settlement and the contract cancellation and store closure payments.(10)
    
    Reflects the adoption of SFAS No. 143, Accounting for Asset Retirement Obligations. See Item
8. Financial Statements and Supplementary Data, Note 1(m)to our consolidated financial
statements.(11)
    
    Net (loss) income available to common stockholders reflects non-cash dividends on our Series
A Preferred Stock, which was redeemed in February 2005. Subsequent to the redemption of the
Series A Preferred Stock, the amount reflects the accretion of the Series B Preferred Stock
issuance costs.(12)
    
    The amount of preferred stock reflected in our balance sheet is shown net of unaccreted
issuance costs of $1.4 million and $1.7 million as of December 31, 2006 and 2005,
respectively. The aggregate redemption price of the preferred stock was approximately $78.0
million as of December 31, 2006 and 2005. 23




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Managements Discussion and Analysis of Financial Condition and Results of Operations contains
forward-looking statements that are based on managements current expectations, estimates, and
projections about our business and operations. Our actual results may differ materially from those
currently anticipated and expressed in such forward-looking statements as a result of numerous
factors, including those we discuss under Part I, Item 1A, Risk Factors. Additionally, you should
read the following discussion together with the financial statements and the related notes included
in Item 8, Financial Statements and Supplementary Data.
  
    
    Overview of Business
    
    Developing Trends in the ATM Industry
    
    Recent Events
    
    Results of Operations
    
    Liquidity and Capital Resources
    
    Critical Accounting Policies and Estimates
 Overview of Business
  Company-owned.
  Merchant-owned.
 24




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In-house processing.
 Components of Revenues, Cost of Revenues, and Expenses
 Revenues
  ATM Operating Revenues.
 
    
    Surcharge revenue.A surcharge fee represents a convenience fee paid by the cardholder
for making a cash withdrawal from an ATM. Surcharge fees often vary by the type of
arrangement under which we place our ATMs and can vary widely based on the location of the
ATM and the nature of the contracts negotiated with our merchants. In the future, we expect
that surcharge fees per surcharge-bearing transaction will vary depending upon negotiated
surcharge fees at newly deployed ATMs, the roll-out of additional branding arrangements,
and future negotiations with existing merchant partners, as well as our ongoing efforts to
improve profitability through improved pricing. For those ATMs that we own or operate on
surcharge-free networks, we do not receive surcharge fees related to withdrawal
transactions from cardholders who are participants of such networks, but rather we receive
interchange and branding revenues (as discussed below.) Surcharge fees in the United
Kingdom are typically higher than the surcharge fees charged in the United States. In
Mexico, surcharge fees are generally less than those charged in the United States.
    
    Interchange revenue.An interchange fee is a fee paid by the cardholders financial
institution for the use of the applicable EFT network that transmits data between the ATM
and the cardholders financial institution. We receive a portion of the interchange fee
paid to the EFT network. In the United States and Mexico, interchange fees are earned not
only on cash withdrawal transactions but on any ATM transaction, including balance
inquiries, transfers, and surcharge-free transactions. In the United Kingdom, interchange
fees are earned on all ATM transactions other than surcharge-bearing cash withdrawals.
Interchange fees are set by the ETF networks and vary according to EFT network arrangements
with financial institutions, as well as the type of transaction. Such fees are typically
lower for balance inquiries and fund transfers and higher for withdrawals.
    
    Branding revenue.We generate branding revenue in a variety of ways. Under a bank
branding agreement, ATMs
 25




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that are owned and operated by us are branded with the signage of and operated as if they
were owned by the branding financial institution. Customers of the branding institution can
use those machines without paying a surcharge, and, in exchange, the financial institution
pays us a monthly per-machine fee for such branding. We think that this type of branding
arrangement will typically result in an increase in transaction levels at the branded ATMs,
as existing customers continue to use the ATMs and new customers of the branding financial
institution are attracted by the surcharge-free service. Additionally, although we forego
the surcharge fee on ATM transactions by the branding institutions customers, we continue
to earn interchange fees on those transactions along with the monthly branding fee, and
typically enjoy an increase in surcharge-bearing transactions from users who are not
customers of the branding institution as a result of having a bank brand on our ATMs.
Overall, based on the above, we believe a branding arrangement can substantially increase
the profitability of an ATM versus operating the same machine in an unbranded mode. Fees
paid for branding an ATM vary widely within our industry, as well as within our own
operations. We expect that this variance in branding fees will continue in the future.
However, because our strategy is to set branding fees at levels sufficient to offset lost
surcharge revenue, we do not expect any such variance to cause a decrease in our total
revenues.We also generate branding revenue from the ATMs we include in our nationwide surcharge-free
Allpoint network, of which we are the largest member and owner, as well as our recently
instituted MasterCard surcharge-free network. Network branding is an arrangement where a
financial institutions customers are allowed to use most of our nationwide ATM network on a
surcharge-free basis. In the case of the Allpoint surcharge-free network, each participating
financial institution pays us a fixed fee per cardholder to participate in the network.
Under the MasterCard surcharge-free network, we receive a fee from MasterCard for each
surcharge-free withdrawal transaction conducted on our network. Although we forego
surcharge revenues on those transactions, we do earn interchange revenues in addition to
network branding revenues, and believe that many of these transactions are incremental.
Consequently, we believe that network branding arrangements can enable us to profitably
operate in the significant portion of the ATM transaction market that does not involve a
surcharge.
  2006
    
    2005
    
    2004Per withdrawal transaction:Surcharge revenue
    
    $
    1.52
    
    
    $
    1.52
    
    
    $
    1.45Interchange revenue
    
    
    0.55
    
    
    
    0.56
    
    
    
    0.60Branding revenue
    
    
    0.13
    
    
    
    0.06
    
    
    
    0.03
  2006
    
    
    2005
    
    
    2004Surcharge revenues
    
    
    67.5
    %
    
    
    69.9
    %
    
    
    68.9
    %Interchange revenues
    
    
    24.5
    
    
    
    25.7
    
    
    
    28.3Branding revenues
    
    
    6.0
    
    
    
    2.6
    
    
    
    1.3Other revenues
    
    
    2.0
    
    
    
    1.8
    
    
    
    1.5Total ATM operating revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 ATM Product Sales and Other Revenues.
 26




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##### Table of Contents



Cost of Revenues
  
    
    Merchant fees.We pay our merchants a fee that depends on a variety of factors,
including the type of arrangement under which the ATM is placed and the number of
transactions at that ATM.
    
    Processing fees.We pay fees to third-party vendors for processing transactions
originated at our ATMs. These vendors, which include Star Systems, Fiserv, Lynk, and Elan
Financial Services, communicate with the cardholders financial institution through EFT
networks to gain transaction authorization and to settle transactions. As previously
noted, we are in the process of converting most of our ATMs over to our own in-house
processing switch, which should result in a slight reduction in our overall processing
costs in the future.
    
    Cost of cash.Cost of cash includes all costs associated with the provision of cash by
us for our ATMs, including fees for the use of cash, armored courier services, insurance,
cash reconciliation, and associated wire fees. Changes in interest rates could affect our
cost of cash. However, we have entered into a number of interest rate swap transactions to
hedge our exposure through 2010 on varying amounts of our current and anticipated
outstanding domestic ATM cash balances.
    
    Communications.Under our company-owned arrangements, we are responsible for expenses
associated with providing telecommunications capabilities to the ATMs, allowing the ATMs to
connect with the applicable EFT network.
    
    Repairs and maintenance.Depending on the type of arrangement with the merchant, we may
be responsible for first and/or second line maintenance for the ATM. We typically manage
the provision of these services by third parties with national operations. Our primary
maintenance vendors are Diebold, NCR, and Pendum.
    
    Direct operations.These expenses consist of costs associated with managing our ATM
network, including expenses for monitoring the ATMs, program managers, technicians, and
customer service representatives.
    
    Cost of equipment revenue.In connection with the sale of equipment to merchants and
value added resellers, we incur costs associated with purchasing equipment from
manufacturers, as well as delivery and installation expenses.
   Indirect Operating Expenses
 Liquidity and Capital Resources
 27




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##### Table of Contents



Developing Trends in the ATM Industry
 International opportunities.
   Bank and network branding opportunities.
 Bank and other financial institution outsourcing opportunities.
 Transaction revenue declines.
 28




---



##### Table of Contents



Recent Events
 Acquisitions
  Financing transactions.
 Winn-Dixie bankruptcy.
   29




---



##### Table of Contents



Accounting for Certain Investments in Debt and Equity Securities
 Liquidity and Capital Resources
 Customer contract cancellations.
 Merchant-owned account attrition.
 30




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##### Table of Contents



Results of Operations
  Years EndedDecember 31,2006
    
    
    2005
    
    
    2004Revenues:ATM operating revenues
    
    
    95.7
    %
    
    
    96.3
    %
    
    
    94.7
    %ATM product sales and other revenues
    
    
    4.3
    
    
    
    3.7
    
    
    
    5.3Total revenues
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Cost of revenues:Cost of ATM operating revenues
    
    
    71.5
    
    
    
    74.3
    
    
    
    74.4Cost of ATM product sales and other revenues
    
    
    3.9
    
    
    
    3.6
    
    
    
    4.5Total cost of revenues
    
    
    75.4
    
    
    
    77.9
    
    
    
    78.9Gross profit (exclusive of depreciation and amortization shown separately below)
    
    
    24.6
    
    
    
    22.1
    
    
    
    21.1Operating expenses:Selling, general and administrative expenses
    
    
    7.4
    
    
    
    6.6
    
    
    
    7.0Depreciation and accretion expense
    
    
    6.3
    
    
    
    4.8
    
    
    
    3.5Amortization expense
    
    
    4.1
    
    
    
    3.3
    
    
    
    2.9Total operating expenses
    
    
    17.8
    
    
    
    14.7
    
    
    
    13.4Income from operations
    
    
    6.8
    
    
    
    7.4
    
    
    
    7.7Other (income) expense:Interest expense, net
    
    
    8.5
    
    
    
    8.4
    
    
    
    2.7Minority interest in subsidiary
    
    
    (0.1
    )
    
    
    0.0
    
    
    
    0.0Other
    
    
    (1.6
    )
    
    
    0.4
    
    
    
    0.1Total other expense
    
    
    6.8
    
    
    
    8.8
    
    
    
    2.8(Loss) income before income taxes
    
    
    
    
    
    
    (1.4
    )
    
    
    4.9Income tax provision (benefit)
    
    
    (0.2
    )
    
    
    (0.5
    )
    
    
    1.9Net (loss) income
    
    
    (0.2
    )%
    
    
    (0.9
    )%
    
    
    3.0
    %
 Key Operating Metrics
  Years Ended December 31,2006
    
    
    2005
    
    
    2004Average number of transacting ATMs
    
    
    25,778
    
    
    
    26,164
    
    
    
    17,936Total transactions (in thousands)
    
    
    172,808
    
    
    
    156,851
    
    
    
    111,577Monthly total transactions per ATM
    
    
    559
    
    
    
    500
    
    
    
    518Total withdrawal transactions (in thousands)
    
    
    125,078
    
    
    
    118,960
    
    
    
    86,821Monthly withdrawal transactions per ATM
    
    
    404
    
    
    
    379
    
    
    
    403Per withdrawal transaction:Total transaction revenues
    
    $
    2.25
    
    
    $
    2.18
    
    
    $
    2.10Cost of transaction revenues
    
    
    1.68
    
    
    
    1.68
    
    
    
    1.65Transaction gross profit (1)
    
    $
    0.57
    
    
    $
    0.50
    
    
    $
    0.45Transaction gross profit margin (2)
    
    
    25.3
    %
    
    
    22.9
    %
    
    
    21.4
    %
 
 (1)
    
    Transaction gross profit is a measure of profitability that uses only the revenues
and expenses that are transaction-based. The revenues and expenses from ATM equipment sales
and other ATM-related services are not included.(2)
    
    The increase in transaction gross profit margins in 2006 when compared to 2005 is due
to the increases in revenues associated with the Companys bank and network branding
initiatives, increased surcharge rates in selected merchant retail locations, and higher gross
profit margins associated with our United Kingdom portfolio of ATMs (which was acquired in May
2005). 31




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##### Table of Contents



Revenues
 For the Years Ended December 31,% Change
    
    
    
    
    
    
    % Change(In thousands, excluding percentages)
    
    2006
    
    
    2005
    
    
    2005 to 2006
    
    
    2004
    
    
    2004 to 2005ATM operating revenues
    
    $
    280,985
    
    
    $
    258,979
    
    
    
    8.5
    %
    
    $
    182,711
    
    
    
    41.7
    %ATM product sales and other revenues
    
    
    12,620
    
    
    
    9,986
    
    
    
    26.4
    %
    
    
    10,204
    
    
    
    (2.1
    )%Total revenues
    
    $
    293,605
    
    
    $
    268,965
    
    
    
    9.2
    %
    
    $
    192,915
    
    
    
    39.4
    %
 ATM operating revenues.
  ATM product sales and other revenues.
  Cost of Revenues and Gross Margins
 For the Years Ended December 31,% Change
    
    
    
    
    
    
    % Change(In thousands, excluding percentages)
    
    2006
    
    
    2005
    
    
    2005 to 2006
    
    
    2004
    
    
    2004 to 2005Cost of ATM operating revenues
    
    $
    209,850
    
    
    $
    199,767
    
    
    
    5.0
    %
    
    $
    143,504
    
    
    
    39.2
    %Cost of ATM product sales and other
revenues
    
    
    11,443
    
    
    
    9,681
    
    
    
    18.2
    %
    
    
    8,703
    
    
    
    11.2
    %Total cost of revenues
    
    $
    221,293
    
    
    $
    209,448
    
    
    
    5.7
    %
    
    $
    152,207
    
    
    
    37.6
    %ATM operating revenues gross margin
    
    
    25.3
    %
    
    
    22.9
    %
    
    
    
    
    
    
    21.4
    %ATM product sales and other revenues
gross margin
    
    
    9.3
    %
    
    
    3.1
    %
    
    
    
    
    
    
    14.7
    %Total gross margin
    
    
    24.6
    %
    
    
    22.1
    %
    
    
    
    
    
    
    21.1
    %
 Cost of ATM operating revenues.
 32




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##### Table of Contents



Gross margin.
  Selling, General, and Administrative Expense
 For the Years Ended December 31,% Change
    
    
    
    
    
    
    % Change(In thousands, excluding percentages)
    
    2006
    
    
    2005
    
    
    2005 to 2006
    
    
    2004
    
    
    2004 to 2005Stock-based compensation
    
    $
    828
    
    
    $
    2,201
    
    
    
    (62.4
    )%
    
    $
    956
    
    
    
    130.2
    %Other selling, general, and
administrative expenses
    
    
    20,839
    
    
    
    15,664
    
    
    
    33.0
    %
    
    
    12,615
    
    
    
    24.2
    %Total selling, general, and
administrative expenses
    
    $
    21,667
    
    
    $
    17,865
    
    
    
    21.3
    %
    
    $
    13,571
    
    
    
    31.6
    %Percentage of revenues:Stock-based compensation
    
    
    0.3
    %
    
    
    0.8
    %
    
    
    
    
    
    
    0.5
    %Other selling, general, and
administrative expenses
    
    
    7.1
    %
    
    
    5.8
    %
    
    
    
    
    
    
    6.5
    %Total selling, general, and
administrative expenses
    
    
    7.4
    %
    
    
    6.6
    %
    
    
    
    
    
    
    7.0
    %
 Other selling, general, and administrative expenses.
 33




---



##### Table of Contents



Stock-based compensation.
 Item 8. Financial
Statements and Supplementary Data, Note 3,
 Depreciation and Accretion Expense
 For the Years Ended December 31,% Change
    
    
    
    
    
    % Change(In thousands, excluding percentages)
    
    2006
    
    2005
    
    2005 to 2006
    
    2004
    
    2004 to 2005Depreciation and accretion
    
    $
    18,595
    
    
    $
    12,951
    
    
    
    43.6
    %
    
    $
    6,785
    
    
    
    90.9
    %Percentage of revenues
    
    
    6.3
    %
    
    
    4.8
    %
    
    
    
    
    
    
    3.5
    %
    34




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##### Table of Contents



Materiality Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in
Current Year Financial Statements.
 Liquidity and Capital Resources
 Amortization Expense
 For the Years Ended December 31,% Change
    
    
    
    
    
    % Change(In thousands, excluding percentages)
    
    2006
    
    2005
    
    2005 to 2006
    
    2004
    
    2004 to 2005Amortization
    
    $
    11,983
    
    
    $
    8,980
    
    
    
    33.4
    %
    
    $
    5,508
    
    
    
    63.0
    %Percentage of revenues
    
    
    4.1
    %
    
    
    3.3
    %
    
    
    
    
    
    
    2.9
    %
   Interest Expense, net
 For the Years Ended December 31,% Change
    
    
    
    
    
    
    % Change(In thousands, excluding percentages)
    
    2006
    
    
    2005
    
    
    2005 to 2006
    
    
    2004
    
    
    2004 to 2005Interest expense, net
    
    $
    23,143
    
    
    $
    15,485
    
    
    
    49.5
    %
    
    $
    4,155
    
    
    
    272.6
    %Amortization and write-off of financing
costs and bond discount
    
    
    1,929
    
    
    
    6,941
    
    
    
    (72.2
    )%
    
    
    1,080
    
    
    
    542.7
    %Total interest expense, net
    
    $
    25,072
    
    
    $
    22,426
    
    
    
    11.8
    %
    
    $
    5,235
    
    
    
    328.4
    %Percentage of revenues
    
    
    8.5
    %
    
    
    8.4
    %
    
    
    
    
    
    
    2.7
    %
 Interest expense, net.
 35




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##### Table of Contents



Liquidity and Capital Resources
 Amortization and write-off of financing costs and bond discount.
 Other (Income) Expense
 For the Years Ended December 31,% Change
    
    
    
    
    
    
    % Change(In thousands, excluding percentages)
    
    2006
    
    
    2005
    
    
    2005 to 2006
    
    
    2004
    
    
    2004 to 2005Minority interest
    
    $
    (225
    )
    
    $
    15
    
    
    
    (1,600.0
    )%
    
    $
    19
    
    
    
    (21.1
    )%Other (income) expense
    
    
    (4,761
    )
    
    
    968
    
    
    
    (591.8
    )%
    
    
    209
    
    
    
    363.2
    %Total other (income) expense
    
    $
    (4,986
    )
    
    $
    983
    
    
    
    (607.2
    )%
    
    $
    228
    
    
    
    331.1
    %Percentage of revenues
    
    
    (1.7
    )%
    
    
    0.4
    %
    
    
    
    
    
    
    0.1
    %
 Recent Events Item 8. Financial Statements and Supplementary Data, Note 5,
 Income Tax Provision (Benefit)
 For the Years Ended December 31,% Change
    
    
    
    
    
    % Change(In thousands, excluding percentages)
    
    2006
    
    2005
    
    2005 to 2006
    
    2004
    
    2004 to 2005Income tax provision (benefit)
    
    $
    512
    
    
    $
    (1,270
    )
    
    
    140.3
    %
    
    $
    3,576
    
    
    
    (135.5
    )%Effective tax rate
    
    
    (2,694.7
    )%
    
    
    34.4
    %
    
    
    
    
    
    
    38.1
    %
  36




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##### Table of Contents



Liquidity and Capital Resources
 Overview
   Operating Activities
   37




---



##### Table of Contents



Investing Activities
      Financing Activities
  38




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##### Table of Contents



Financing Facilities
  Revolving credit facility.
 Other borrowing facilities.
  Effects of Inflation
  39




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##### Table of Contents



Contractual Obligations
  Payments Due by Period2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    Total(in thousands)Long-term financings:Principal (1)
    
    $
    39
    
    
    $
    145
    
    
    $
    207
    
    
    $
    53,331
    
    
    $
    235
    
    
    $
    200,000
    
    
    $
    253,957Interest(2)
    
    
    23,189
    
    
    
    23,196
    
    
    
    23,168
    
    
    
    20,291
    
    
    
    18,513
    
    
    
    37,000
    
    
    
    145,357Notes payable(3)
    
    
    155
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155Operating leases
    
    
    1,015
    
    
    
    895
    
    
    
    752
    
    
    
    414
    
    
    
    282
    
    
    
    321
    
    
    
    3,679Merchant space leases
    
    
    4,571
    
    
    
    4,517
    
    
    
    2,309
    
    
    
    1,309
    
    
    
    1,251
    
    
    
    2,439
    
    
    
    16,396Total contractual
obligations
    
    $
    28,969
    
    
    $
    28,753
    
    
    $
    26,436
    
    
    $
    75,345
    
    
    $
    20,281
    
    
    $
    239,760
    
    
    $
    419,544
 
 (1)
    
    Represents the face value of our senior subordinated notes of $200.0 million, which has
been reflected net of unamortized discount of approximately $1.2 million in our consolidated
financial statements, as well as the $53.1 million outstanding under our revolving credit
facility and $0.8 million outstanding under our Mexico equipment financing facility.(2)
    
    Represents the estimated interest payments associated with our long-term debt outstanding
as of December 31, 2006.(3)
    
    Represents a fully-funded note issued in conjunction with the Bank Machine acquisition in
2005. Critical Accounting Policies and Estimates
 Item 8. Financial Statements and Supplementary Data, Note 1
 Goodwill and intangible assets. Business
Combinations
  Goodwill and Other Intangible Assets
 40




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##### Table of Contents



Valuation of long-lived assets. Accounting for Impairment or Disposal of Long-Lived Assets
 Income taxes.
  41




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##### Table of Contents



Asset Retirement Obligations. Accounting for Asset Retirement Obligations.
  Share-based compensation. Item 8, Financial Statements and
Supplementary Data, Note 3.
 New Accounting Pronouncements Issued but Not Yet Adopted
 Item 8, Financial Statement and Supplementary Data, Note 1(x) New Accounting
Pronouncements Issued but Not Yet Adopted
 Commitments and Contingencies
 Item 8. Financial Statement
and Supplementary Data, Note 14,
 42




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Disclosure about Market Risk
 Interest Rate Risk
   Weighted AverageNotional Amount
    
    Fixed Rate
    
    Period$300,000
    
    3.86%
    
    January 1, 2007  December 31, 2007$300,000
    
    4.35%
    
    January 1, 2008  December 31, 2008$200,000
    
    4.36%
    
    January 1, 2009  December 31, 2009$100,000
    
    4.34%
    
    January 1, 2010  December 31, 2010
  Accounting for
Derivative Instruments and Hedging Activities,
   43




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##### Table of Contents



Foreign Currency Exchange Risk
    44




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 INDEX
 Part II, Item 8, Financial Statements and Supplementary Data
 PageReport of Independent Registered Public Accounting Firm
    
    
    46Consolidated Balance Sheets as of December 31, 2006 and 2005
    
    
    47Consolidated Statements of Operations for the Years Ended December 31, 2006, 2005, and 2004
    
    
    48Consolidated Statements of Stockholders Deficit for the Years Ended December 31, 2006, 2005, and 2004
    
    
    49Consolidated Statements of
Comprehensive Income (Loss) for the Years Ended December 31, 2006, 2005, and 2004
    
    
    50Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, 2005, and 2004
    
    
    51Notes to Consolidated Financial Statements
    
    
    521. Business and Summary of Significant Accounting Policies
    
    
    522. Acquisitions
    
    
    603. Stock-based Compensation
    
    
    644. Related Party Transactions
    
    
    675. Prepaid Expenses, Deferred Costs, and Other Current Assets
    
    
    686. Property and Equipment, net
    
    
    697. Intangible Assets
    
    
    698. Prepaid Expenses and Other Non-current Assets
    
    
    709. Preferred Stock
    
    
    7010. Accrued Liabilities
    
    
    7111. Other Long-Term Liabilities and Minority Interest in Subsidiary
    
    
    7112. Long-term Debt
    
    
    7213. Employee Benefits
    
    
    7314. Commitments and Contingencies
    
    
    7415. Derivative Financial Instruments
    
    
    7516. Income Taxes
    
    
    7617. Significant Suppliers
    
    
    7818. Segment Information
    
    
    7819. Supplemental Guarantor Financial Information
    
    
    80
 45




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Share-based Payment
  
 46




---



##### Table of Contents



CARDTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
 (In thousands, except share amounts)
 December 31,2006
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    2,718
    
    
    $
    1,699Accounts and notes receivable, net of allowance of $373 and $686 as of December 31, 2006 and
2005, respectively
    
    
    14,891
    
    
    
    9,746Inventory
    
    
    4,444
    
    
    
    2,747Restricted cash, short-term
    
    
    883
    
    
    
    4,232Deferred tax asset, net
    
    
    273
    
    
    
    1,105Prepaid expenses, deferred costs, and other current assets
    
    
    15,178
    
    
    
    6,756Total current assets
    
    
    38,387
    
    
    
    26,285Restricted cash
    
    
    34
    
    
    
    33Property and equipment, net
    
    
    86,668
    
    
    
    74,151Intangible assets, net
    
    
    67,763
    
    
    
    75,965Goodwill
    
    
    169,563
    
    
    
    161,557Prepaid expenses and other assets
    
    
    5,341
    
    
    
    5,760Total assets
    
    $
    367,756
    
    
    $
    343,751LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Current portion of long-term debt and notes payable
    
    $
    194
    
    
    $
    3,168Current portion of other long-term liabilities
    
    
    2,501
    
    
    
    2,251Accounts payable
    
    
    16,915
    
    
    
    7,285Accounts payable to affiliates
    
    
    
    
    
    
    310Accrued liabilities
    
    
    34,341
    
    
    
    34,843Total current liabilities
    
    
    53,951
    
    
    
    47,857Long-term liabilities:Long-term debt, net of related discount
    
    
    252,701
    
    
    
    244,456Deferred tax liability, net
    
    
    7,625
    
    
    
    9,800Other long-term liabilities and minority interest in subsidiaries
    
    
    14,053
    
    
    
    14,393Total liabilities
    
    
    328,330
    
    
    
    316,506Series B redeemable preferred stock, $0.0001 par value; 1,500,000 shares authorized; 929,789
shares issued and outstanding as of December 31, 2006 and 2005; liquidation value of $78,000 as
of December 31, 2006 and 2005
    
    
    76,594
    
    
    
    76,329Stockholders deficit:Common stock, $0.0001 par value; 5,000,000 shares authorized; 2,394,509 shares issued as of
December 31, 2006 and 2005; 1,760,798 and 1,771,349 outstanding at December 31, 2006 and
2005, respectively
    
    
    
    
    
    
    Subscriptions receivable (at face value)
    
    
    (324
    )
    
    
    (1,476
    )Additional paid-in capital
    
    
    2,857
    
    
    
    2,033Accumulated other comprehensive income (loss), net
    
    
    11,658
    
    
    
    (346
    )Accumulated deficit
    
    
    (3,092
    )
    
    
    (2,252
    )Treasury stock; 633,711 and 623,160 shares at cost at December 31, 2006 and 2005, respectively
    
    
    (48,267
    )
    
    
    (47,043
    )Total stockholders deficit
    
    
    (37,168
    )
    
    
    (49,084
    )Total liabilities and stockholders deficit
    
    $
    367,756
    
    
    $
    343,751
  47




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##### Table of Contents



CARDTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands)
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Revenues:ATM operating revenues
    
    $
    280,985
    
    
    $
    258,979
    
    
    $
    182,711ATM product sales and other revenues
    
    
    12,620
    
    
    
    9,986
    
    
    
    10,204Total revenues
    
    
    293,605
    
    
    
    268,965
    
    
    
    192,915Cost of revenues:Cost of ATM operating revenues (includes stock-based
compensation of $51 and $172 in 2006 and 2005, respectively)
    
    
    209,850
    
    
    
    199,767
    
    
    
    143,504Cost of ATM product sales and other revenues
    
    
    11,443
    
    
    
    9,681
    
    
    
    8,703Total cost of revenues
    
    
    221,293
    
    
    
    209,448
    
    
    
    152,207Gross profit (exclusive of depreciation and
amortization shown separately below)
    
    
    72,312
    
    
    
    59,517
    
    
    
    40,708Operating expenses:Selling, general and administrative expenses (includes
stock-based compensation of $828, $2,201, and $956 in 2006,
2005, and 2004, respectively)
    
    
    21,667
    
    
    
    17,865
    
    
    
    13,571Depreciation and accretion expense
    
    
    18,595
    
    
    
    12,951
    
    
    
    6,785Amortization expense
    
    
    11,983
    
    
    
    8,980
    
    
    
    5,508Total operating expenses
    
    
    52,245
    
    
    
    39,796
    
    
    
    25,864Income from operations
    
    
    20,067
    
    
    
    19,721
    
    
    
    14,844Other (income) expense:Interest expense, net
    
    
    23,143
    
    
    
    15,485
    
    
    
    4,155Amortization and write-off of financing costs and bond discount
    
    
    1,929
    
    
    
    6,941
    
    
    
    1,080Minority interest in subsidiary
    
    
    (225
    )
    
    
    15
    
    
    
    19Other
    
    
    (4,761
    )
    
    
    968
    
    
    
    209Total other expenses
    
    
    20,086
    
    
    
    23,409
    
    
    
    5,463(Loss) income before income taxes
    
    
    (19
    )
    
    
    (3,688
    )
    
    
    9,381Income tax provision (benefit)
    
    
    512
    
    
    
    (1,270
    )
    
    
    3,576Net (loss) income
    
    
    (531
    )
    
    
    (2,418
    )
    
    
    5,805Preferred stock dividends and accretion expense
    
    
    265
    
    
    
    1,395
    
    
    
    2,312Net (loss) income available to common stockholders
    
    $
    (796
    )
    
    $
    (3,813
    )
    
    $
    3,493
  48




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##### Table of Contents



CARDTRONICS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT
 (In thousands)
 Year ended December 31,2006
    
    
    2005
    
    
    2004Common Stock, par value $0.0001 per share:Balance at beginning of year
    
    $
    
    
    
    $
    
    
    
    $
    Equity offering
    
    
    
    
    
    
    
    
    
    
    Balance at end of year
    
    $
    
    
    
    $
    
    
    
    $
    Subscriptions Receivable:Balance at beginning of year
    
    $
    (1,476
    )
    
    $
    (1,862
    )
    
    $
    (2,305
    )Settlement of subscriptions receivable through repurchases of capital stock
    
    
    1,152
    
    
    
    
    
    
    
    Repayment of subscriptions
    
    
    
    
    
    
    386
    
    
    
    443Balance at end of year
    
    $
    (324
    )
    
    $
    (1,476
    )
    
    $
    (1,862
    )Additional Paid in Capital:Balance at beginning of year
    
    $
    2,033
    
    
    $
    
    
    
    $
    1,039Issuance of capital stock
    
    
    (55
    )
    
    
    1,590
    
    
    
    27Dividends on preferred stock
    
    
    
    
    
    
    (98
    )
    
    
    (2,153
    )Tax benefit from stock option exercise
    
    
    
    
    
    
    
    
    
    
    184Stock-based compensation charges
    
    
    879
    
    
    
    541
    
    
    
    903Balance at end of year
    
    $
    2,857
    
    
    $
    2,033
    
    
    $
    Accumulated Other Comprehensive Income (Loss):Balance at beginning of year
    
    $
    (346
    )
    
    $
    886
    
    
    $
    Other comprehensive income (loss)
    
    
    12,004
    
    
    
    (1,232
    )
    
    
    886Balance at end of year
    
    $
    11,658
    
    
    $
    (346
    )
    
    $
    886Retained Earnings (Accumulated Deficit):Balance at beginning of year
    
    $
    (2,252
    )
    
    $
    1,495
    
    
    $
    (4,168
    )Dividends on preferred stock
    
    
    
    
    
    
    (1,063
    )
    
    
    (159
    )Non-cash compensation charges
    
    
    
    
    
    
    
    
    
    
    53Preferred stock issuance cost accretion
    
    
    (265
    )
    
    
    (234
    )
    
    
    Distributions
    
    
    (44
    )
    
    
    (32
    )
    
    
    (36
    )Net (loss) income
    
    
    (531
    )
    
    
    (2,418
    )
    
    
    5,805Balance at end of year
    
    $
    (3,092
    )
    
    $
    (2,252
    )
    
    $
    1,495Treasury Stock:Balance at beginning of year
    
    $
    (47,043
    )
    
    $
    (859
    )
    
    $
    (896
    )Issuance of capital stock
    
    
    55
    
    
    
    269
    
    
    
    37Purchase of treasury stock
    
    
    (1,279
    )
    
    
    (46,453
    )
    
    
    Balance at end of year
    
    $
    (48,267
    )
    
    $
    (47,043
    )
    
    $
    (859
    )Total stockholders deficit
    
    $
    (37,168
    )
    
    $
    (49,084
    )
    
    $
    (340
    )
  49




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##### Table of Contents



CARDTRONICS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 (In thousands)
 Year ended December 31,2006
    
    
    2005
    
    
    2004Net (loss) income
    
    $
    (531
    )
    
    $
    (2,418
    )
    
    $
    5,805Foreign currency translation adjustments
    
    
    12,202
    
    
    
    (5,491
    )
    
    
    Unrealized
(losses) gains on interest rate cash flow hedges, net of taxes of $258 in
2006, $(2,469) in 2005, and $(566) in 2004
    
    
    (696
    )
    
    
    4,259
    
    
    
    886Unrealized gains on available-for-sale securities, net of taxes of $293 in 2006
    
    
    498
    
    
    
    
    
    
    
    Other comprehensive income (loss)
    
    
    12,004
    
    
    
    (1,232
    )
    
    
    886Total comprehensive income (loss)
    
    $
    11,473
    
    
    $
    (3,650
    )
    
    $
    6,691
  50




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##### Table of Contents



CARDTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 Year Ended December 31,2006
    
    
    2005
    
    
    2004Cash flows from operating activities:Net (loss) income
    
    $
    (531
    )
    
    $
    (2,418
    )
    
    $
    5,805Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation, amortization and accretion expense
    
    
    30,578
    
    
    
    21,931
    
    
    
    12,293Amortization and write-off of financing costs and bond discount
    
    
    1,929
    
    
    
    6,941
    
    
    
    1,080Stock-based compensation expense
    
    
    879
    
    
    
    541
    
    
    
    956Deferred income taxes
    
    
    454
    
    
    
    (1,270
    )
    
    
    3,490Non-cash receipt of Winn-Dixie equity securities
    
    
    (3,394
    )
    
    
    
    
    
    
    Minority interest
    
    
    (225
    )
    
    
    15
    
    
    
    19Loss on disposal of assets
    
    
    1,603
    
    
    
    1,036
    
    
    
    209Other reserves and non-cash items
    
    
    1,219
    
    
    
    363
    
    
    
    Changes in assets and liabilities, net of acquisitions:(Increase) decrease in accounts receivable, net
    
    
    (4,105
    )
    
    
    2,176
    
    
    
    (4,344
    )(Increase) decrease in prepaid, deferred costs, and other current assets
    
    
    (3,783
    )
    
    
    378
    
    
    
    (407
    )(Increase) decrease in inventory
    
    
    (694
    )
    
    
    1,060
    
    
    
    487Decrease in notes receivable, net
    
    
    155
    
    
    
    439
    
    
    
    758(Increase) decrease in other assets
    
    
    (1,718
    )
    
    
    (600
    )
    
    
    79Increase (decrease) in accounts payable
    
    
    5,436
    
    
    
    (1,085
    )
    
    
    (4,349
    )Increase in accrued liabilities
    
    
    813
    
    
    
    7,190
    
    
    
    2,107(Decrease) increase in other liabilities
    
    
    (3,170
    )
    
    
    (3,470
    )
    
    
    2,283Net cash provided by operating activities
    
    
    25,446
    
    
    
    33,227
    
    
    
    20,466Cash flows from investing activities:Additions to property and equipment
    
    
    (32,537
    )
    
    
    (27,261
    )
    
    
    (18,622
    )Payments for exclusive license agreements and site acquisition costs
    
    
    (3,357
    )
    
    
    (4,665
    )
    
    
    (1,125
    )Additions to equipment to be leased to customers
    
    
    (197
    )
    
    
    
    
    
    
    Proceeds from sale of property and equipment
    
    
    130
    
    
    
    78
    
    
    
    446Acquisitions, net of cash acquired
    
    
    (12
    )
    
    
    (108,112
    )
    
    
    (99,625
    )Net cash used in investing activities
    
    
    (35,973
    )
    
    
    (139,960
    )
    
    
    (118,926
    )Cash flows from financing activities:Proceeds from issuance of long-term debt
    
    
    45,661
    
    
    
    478,009
    
    
    
    136,041Repayments of long-term debt and capital leases
    
    
    (37,503
    )
    
    
    (362,141
    )
    
    
    (38,925
    )Utilization of bank overdraft facility, net
    
    
    3,818
    
    
    
    
    
    
    
    Redemption of Series A preferred stock
    
    
    
    
    
    
    (24,795
    )
    
    
    Purchase of treasury stock
    
    
    (50
    )
    
    
    (46,453
    )
    
    
    Issuance of Series B preferred stock
    
    
    
    
    
    
    73,297
    
    
    
    Issuance of capital stock
    
    
    
    
    
    
    89
    
    
    
    64Repayment of subscriptions receivable
    
    
    
    
    
    
    386
    
    
    
    443Distributions
    
    
    (18
    )
    
    
    (51
    )
    
    
    (36
    )Debt issuance costs
    
    
    (716
    )
    
    
    (11,127
    )
    
    
    (3,269
    )Net cash provided by financing activities
    
    
    11,192
    
    
    
    107,214
    
    
    
    94,318Effect of exchange rate changes
    
    
    354
    
    
    
    (194
    )
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    1,019
    
    
    
    287
    
    
    
    (4,142
    )Cash and cash equivalents at beginning of period
    
    
    1,699
    
    
    
    1,412
    
    
    
    5,554Cash and cash equivalents at end of period
    
    $
    2,718
    
    
    $
    1,699
    
    
    $
    1,412Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    22,939
    
    
    $
    8,359
    
    
    $
    4,517Cash paid for income taxes
    
    $
    67
    
    
    $
    92
    
    
    $
    327
  51




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##### Table of Contents



CARDTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 (1) Business and Summary of Significant Accounting Policies
 (a) Description of Business
  (b) Basis of Presentation
  Note 1(m)
 (c) Use of Estimates in the Preparation of Financial Statements
  (d) Cash and Cash Equivalents
  Note 2
 (e) ATM Cash Management Program
  52




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##### Table of Contents



(f) Accounts Receivable
  (g) Notes Receivable
  (h) Inventory
  December 31,2006
    
    
    2005ATMs
    
    $
    1,612
    
    
    $
    1,447ATM parts and supplies
    
    
    2,832
    
    
    
    1,300Total
    
    $
    4,444
    
    
    $
    2,747
 (i) Property and Equipment, net
  53




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##### Table of Contents



Note 1(m)
  (j) Goodwill and Other Intangible Assets
 i.e. i.e. Note 12
  Note 1(k)
 (k) Impairment of Long-Lived Assets and Goodwill
 Accounting for Impairment or Disposal of Long-Lived Assets
 54




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##### Table of Contents



Goodwill and Other Intangible Assets
 (l) Income Taxes
 Accounting
for Income Taxes. Note 1(x), New Accounting Pronouncements Issued but Not Yet Adopted  Accounting for Uncertainty in
Income Taxes.
 (m) Asset Retirement Obligations
 Accounting for
Asset Retirement Obligations.
 55




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##### Table of Contents



2006
    
    
    2005Asset retirement obligation as of beginning of period
    
    $
    8,339
    
    
    $
    5,305Additional ATMs
    
    
    2,291
    
    
    
    3,038Accretion expense
    
    
    279
    
    
    
    1,024Payments
    
    
    (1,079
    )
    
    
    (958
    )Foreign currency translation adjustments
    
    
    159
    
    
    
    (70
    )Asset retirement obligation as of end of period
    
    $
    9,989
    
    
    $
    8,339
 Materiality Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year
Financial Statements.
 (n) Revenue Recognition
 Revenue Recognition, Revenue Arrangements with
Multiple Deliverables, Revenue Recognition,
  56




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##### Table of Contents



Accounting
for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendors Products)
 Reporting Revenue Gross as a Principal versus Net as
an Agent
  (o) Stock-Based Compensation
 Share-Based
Payment (SFAS No. 123R Accounting for Stock-based Compensation,
 57




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##### Table of Contents



Year EndedDecember 31,2005
    
    
    2004Net (loss) income, as reported
    
    $
    (2,418
    )
    
    $
    5,805Add: Stock-based employee compensation expense included in
reported net income, net of tax
    
    
    1,492
    
    
    
    589Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of tax
    
    
    (1,694
    )
    
    
    (637
    )Net (loss) income, as adjusted
    
    
    (2,620
    )
    
    
    5,757Preferred stock dividends and accretion expense
    
    
    1,395
    
    
    
    2,312Net (loss) income available to common stockholders, as adjusted
    
    $
    (4,015
    )
    
    $
    3,445
 Note 3
 (p) Derivative Instruments
  Accounting for Derivative Instruments and Hedging Activities. Note
15
 (q) Fair Value of Financial Instruments
 Disclosures About Fair Value of Financial Instruments
 Note 15 Note 12
 (r) Foreign Currency Translation
  58




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##### Table of Contents



(s) Comprehensive Income (Loss)
 Reporting Comprehensive Income
  2006
    
    
    2005Foreign currency translation adjustments
    
    $
    6,711
    
    
    $
    (5,491
    )Unrealized gains on interest rate hedges
    
    
    4,449
    
    
    
    5,145Unrealized gains on available-for-sale securities
    
    
    498
    
    
    
    Total accumulated other comprehensive income (loss)
    
    $
    11,658
    
    
    $
    (346
    )
 (t) Treasury Stock
  (u) Advertising Costs
  (v) Working Capital Deficit
  (w) Accounting Changes and Errors Corrections
 Accounting Changes and Error Corrections, a
replacement of APB Opinion No. 20 and FASB Statement No. 3
 Considering the Effects of
Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements
 59




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##### Table of Contents



(x) New Accounting Pronouncements Issued but Not Yet Adopted
 Accounting for Uncertainty in Income Taxes. Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement No. 109 Accounting for Income Taxes
 Fair Value Measurements. Fair Value
Measurements
 Fair Value Option. The Fair Value Option for
Financial Assets and Financial Liabilities
 
 (2) Acquisitions
 Acquisition of CCS Mexico
    Acquisition of Bank Machine (Acquisitions) Limited
  60




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##### Table of Contents



Business Combinations
 Cash
    
    $
    3,400Trade accounts receivable, net
    
    
    407Inventory
    
    
    82Other current assets
    
    
    4,936Property and equipment
    
    
    12,590Intangible assets subject to amortization (7 year
weighted-average life)
    
    
    6,812Intangible assets not subject to amortization
    
    
    3,682Goodwill
    
    
    77,269Total assets acquired
    
    
    109,178Accounts payable
    
    
    (2,467
    )Accrued liabilities
    
    
    (5,307
    )Current portion of notes payable
    
    
    (3,232
    )Deferred income taxes, non-current
    
    
    (1,926
    )Other long-term liabilities
    
    
    (1,225
    )Total liabilities assumed
    
    
    (14,157
    )Net assets acquired
    
    $
    95,021
 Above amounts were converted from Pound Sterling to U.S. Dollars at $1.8410, which
represents the exchange rate in effect as of the date of the acquisition.
  61




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##### Table of Contents



Acquisition of the E*TRADE Access, Inc. ATM Portfolio
     Cash
    
    $
    8,137Trade accounts receivable, net
    
    
    574Surcharge and interchange receivable
    
    
    1,240Inventory
    
    
    395Other current assets
    
    
    319Property and equipment
    
    
    8,496Intangible assets subject to amortization (10 year
weighted-average life)
    
    
    23,954Deferred income taxes
    
    
    2,219Goodwill
    
    
    82,758Total assets acquired
    
    
    128,092Accounts payable
    
    
    (5,762
    )Accrued liabilities
    
    
    (9,204
    )Other long-term liabilities
    
    
    (6,258
    )Total liabilities assumed
    
    
    (21,224
    )Net assets acquired
    
    $
    106,868
   62




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##### Table of Contents



Pro Forma Results of Operations
 Note 12
 Years EndedDecember 31,2005
    
    2004Revenues
    
    $
    279,149
    
    
    $
    278,416Income from continuing operations
    
    
    21,083
    
    
    
    23,470Net (loss) income
    
    
    (1,162
    )
    
    
    1,263
 Other Acquisitions
   63




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##### Table of Contents



Cash
    
    $
    142Trade accounts receivable, net
    
    
    546Other current assets
    
    
    6Property and equipment
    
    
    14Intangible assets subject to amortization (8 year
weighted-average life)
    
    
    3,000Intangible assets not subject to amortization
    
    
    200Other assets
    
    
    11Goodwill
    
    
    3,684Total assets acquired
    
    
    7,603Accounts payable and accrued liabilities
    
    
    (1,710
    )Deferred income taxes
    
    
    (1,113
    )Total liabilities assumed
    
    
    (2,823
    )Net assets acquired
    
    $
    4,780
  
 (3) Stock-based Compensation
 Note 1
  2006
    
    
    2005
    
    
    2004Cost of ATM operating revenues
    
    $
    51
    
    
    $
    172
    
    
    $
    Selling, general and administrative expenses
    
    
    828
    
    
    
    2,201
    
    
    
    956Total stock-based compensation expense
    
    $
    879
    
    
    $
    2,373
    
    
    $
    956
 64




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##### Table of Contents



Stock-Based Compensation Plan
  Stock Option Grants
   Number of
    
    
    Weighted AverageShares
    
    
    Exercise PriceBalance as of January 1, 2006
    
    
    464,164
    
    
    $
    48.70Granted
    
    
    97,500
    
    
    $
    83.84Exercised
    
    
    (4,703
    )
    
    $
    0.04Forfeited
    
    
    (47,500
    )
    
    $
    82.16Balance as of December 31, 2006
    
    
    509,461
    
    
    $
    52.76Options vested and exercisable as of December 31, 2006
    
    
    279,211
    
    
    $
    32.01
   Fair Value Assumptions
  Weighted average estimated fair value per stock option granted
    
    
    $33.68Valuation assumptions:Expected option term (years)
    
    
    6.25Expected volatility
    
    
    34.50% - 35.90%Expected dividend yield
    
    
    0.00%Risk-free interest rate
    
    
    4.74% - 4.85%
 65




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##### Table of Contents



Non-vested Stock Options
  Number of
    
    WeightedShares Under
    
    AverageOutstanding
    
    Grant DateOptions
    
    Fair ValueNon-vested options as of January 1, 2006
    
    
    270,562
    
    
    $
    6.69Granted
    
    
    97,500
    
    
    $
    33.68Vested
    
    
    (92,812
    )
    
    $
    6.13Forfeited
    
    
    (45,000
    )
    
    $
    8.16Non-vested options as of December 31, 2006
    
    
    230,250
    
    
    $
    18.06
  Restricted Stock
  66




---



##### Table of Contents



Other Stock-Based Compensation
  
 (4) Related Party Transactions
 Subscriptions Receivable
 Note 9
 Other Related Parties
   67




---



##### Table of Contents



Note 9 Part III, Item 11. Executive Compensation,
   
 (5) Prepaid Expenses, Deferred Costs, and Other Current Assets
  December 31,2006
    
    
    2005Prepaid expenses
    
    $
    6,469
    
    
    $
    3,258Available for sale securities, at market value
    
    
    4,184
    
    
    
    Current portion of interest rate swaps
    
    
    4,079
    
    
    
    3,270Deferred costs and other current assets
    
    
    446
    
    
    
    228Total
    
    $
    15,178
    
    
    $
    6,756
   68




---



##### Table of Contents



(6) Property and Equipment, net
  December 31,2006
    
    
    2005ATM equipment and related costs
    
    $
    114,803
    
    
    $
    89,136Office furniture, fixtures, and other
    
    
    9,299
    
    
    
    7,157Total
    
    
    124,102
    
    
    
    96,293Less accumulated depreciation
    
    
    (37,434
    )
    
    
    (22,142
    )Net property and equipment
    
    $
    86,668
    
    
    $
    74,151
 Note 1(i)
 
 (7) Intangible Assets
 Intangible Assets with Indefinite Lives
  Goodwill
    
    
    Trade NameU.S.
    
    
    U.K.
    
    
    Mexico
    
    
    U.S.
    
    
    U.K.
    
    
    TotalBalance at December 31, 2005
    
    $
    88,806
    
    
    $
    72,751
    
    
    $
    
    
    
    $
    200
    
    
    $
    3,471
    
    
    $
    165,228Acquisitions
    
    
    115
    
    
    
    
    
    
    
    1,030
    
    
    
    
    
    
    
    
    
    
    
    1,145Purchase price adjustments
    
    
    (2,219
    )
    
    
    241
    
    
    
    (334
    )
    
    
    
    
    
    
    
    
    
    
    (2,312
    )Foreign currency translation adjustments
    
    
    
    
    
    
    9,180
    
    
    
    (7
    )
    
    
    
    
    
    
    452
    
    
    
    9,625Balance as of December 31, 2006
    
    $
    86,702
    
    
    $
    82,172
    
    
    $
    689
    
    
    $
    200
    
    
    $
    3,923
    
    
    $
    173,686
 Note 2
 Intangible Assets with Definite Lives
  WeightedAverageRemaining
    
    
    Gross
    
    
    
    
    
    
    NetAmortization
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingPeriod
    
    
    Amount
    
    
    Amortization
    
    
    AmountCustomer contracts and relationships
    
    6.0 years
    
    $
    83,670
    
    
    $
    (31,378
    )
    
    $
    52,292Exclusive license agreements
    
    5.4 years
    
    
    4,261
    
    
    
    (1,066
    )
    
    
    3,195Non-compete agreements
    
    3.1 years
    
    
    99
    
    
    
    (23
    )
    
    
    76Deferred financing costs
    
    5.4 years
    
    
    11,001
    
    
    
    (2,924
    )
    
    
    8,077Total
    
    5.9 years
    
    $
    99,031
    
    
    $
    (35,391
    )
    
    $
    63,640
 69




---



##### Table of Contents



Customer
    
    
    ExclusiveContracts
    
    
    License
    
    
    Non-compete
    
    
    Deferredand Relationships
    
    
    Agreements
    
    
    Agreements
    
    
    Financing Costs
    
    
    Total2007
    
    $
    9,105
    
    
    $
    636
    
    
    $
    25
    
    
    $
    1,313
    
    
    $
    11,0792008
    
    
    9,112
    
    
    
    576
    
    
    
    25
    
    
    
    1,382
    
    
    
    11,0952009
    
    
    8,796
    
    
    
    571
    
    
    
    25
    
    
    
    1,459
    
    
    
    10,8512010
    
    
    7,813
    
    
    
    475
    
    
    
    1
    
    
    
    1,134
    
    
    
    9,4232011
    
    
    5,839
    
    
    
    361
    
    
    
    
    
    
    
    977
    
    
    
    7,177Thereafter
    
    
    11,627
    
    
    
    576
    
    
    
    
    
    
    
    1,812
    
    
    
    14,015Total
    
    $
    52,292
    
    
    $
    3,195
    
    
    $
    76
    
    
    $
    8,077
    
    
    $
    63,640
 
 (8) Prepaid Expenses and Other Non-current Assets
  December 31,2006
    
    
    2005Interest rate swaps, non-current
    
    $
    2,994
    
    
    $
    4,910Prepaid expenses
    
    
    627
    
    
    
    376Other
    
    
    1,720
    
    
    
    474Total
    
    $
    5,341
    
    
    $
    5,760
 
 (9) Preferred Stock
   70




---



##### Table of Contents



(10) Accrued Liabilities
  December 31,2006
    
    
    2005Accrued interest
    
    $
    7,954
    
    
    $
    7,328Accrued merchant fees
    
    
    7,915
    
    
    
    7,613Accrued purchases
    
    
    4,467
    
    
    
    2,292Accrued compensation
    
    
    3,499
    
    
    
    1,722Accrued armored
    
    
    3,242
    
    
    
    2,662Accrued cash management fees
    
    
    2,740
    
    
    
    3,430Accrued maintenance
    
    
    2,090
    
    
    
    1,431Other accrued expenses
    
    
    2,434
    
    
    
    8,365Total
    
    $
    34,341
    
    
    $
    34,843
 
 (11) Other Long-Term Liabilities and Minority Interest in Subsidiary
  December 31,2006
    
    
    2005Asset retirement obligations
    
    $
    9,989
    
    
    $
    8,339Deferred revenue
    
    
    642
    
    
    
    1,075Minority interest in subsidiary
    
    
    111
    
    
    
    25Other long-term liabilities
    
    
    3,311
    
    
    
    4,954Total
    
    $
    14,053
    
    
    $
    14,393
 71




---



##### Table of Contents



(12) Long-term Debt
  2006
    
    
    2005Revolving credit loan facility
bearing interest at LIBOR + 3.25% as of
December 31, 2006 and 2005 and PRIME +
2.50% for swing-line borrowings as of
December 31, 2006 and 2005
(weighted-average combined rate of 8.67%
and 7.05% at December 31, 2006 and 2005,
respectively)
    
    $
    53,100
    
    
    $
    45,800Senior subordinated notes due August 2013,
net of unamortized discount of $1.2
million and $1.3 million as of December
31, 2006 and 2005, respectively (9.25%
stated rate, 9.375% effective yield)
    
    
    198,783
    
    
    
    198,656Other
    
    
    1,012
    
    
    
    3,168Total
    
    
    252,895
    
    
    
    247,624Less current portion
    
    
    194
    
    
    
    3,168Total excluding current portion
    
    $
    252,701
    
    
    $
    244,456
 Credit Facility
    Senior Subordinated Notes
 th th
 72




---



##### Table of Contents



Other Facilities
   Debt Maturities
  Amount2007
    
    $
    1942008
    
    
    1452009
    
    
    2072010
    
    
    53,3312011
    
    
    2352012
    
    
    2013
    
    
    200,000Total
    
    $
    254,112
  
 (13) Employee Benefits
  73




---



##### Table of Contents



(14) Commitments and Contingencies
 Legal and Other Regulatory Matters
 National Federation of the Blind (NFB).
    Other matters.
  74




---



##### Table of Contents



Purchase Commitments
   Operating and Capital Lease Obligations
   2007
    
    $
    5,5862008
    
    
    5,4122009
    
    
    3,0612010
    
    
    1,7232011
    
    
    1,533Thereafter
    
    
    2,760Total minimum lease payments
    
    $
    20,075
 
 (15) Derivative Financial Instruments
   Notional Amount
    
    Weighted Average Fixed Rate
    
    Period$
    300,000
    
    
    
    3.86
    %
    
    January 1, 2007-December 31, 2007$
    300,000
    
    
    
    4.35
    %
    
    January 1, 2008-December 31, 2008$
    200,000
    
    
    
    4.36
    %
    
    January 1, 2009-December 31, 2009$
    100,000
    
    
    
    4.34
    %
    
    January 1, 2010-December 31, 2010
  75




---



##### Table of Contents



(16) Income Taxes
  2006
    
    
    2005
    
    
    2004Current:U.S. federal
    
    $
    
    
    
    $
    
    
    
    $
    22State and local
    
    
    28
    
    
    
    
    
    
    
    64Foreign
    
    
    30
    
    
    
    
    
    
    
    Total current
    
    $
    58
    
    
    $
    
    
    
    $
    86Deferred:U.S. federal
    
    $
    (584
    )
    
    $
    (1,831
    )
    
    $
    3,117State and local
    
    
    251
    
    
    
    332
    
    
    
    373Foreign
    
    
    787
    
    
    
    229
    
    
    
    Total deferred
    
    
    454
    
    
    
    (1,270
    )
    
    
    3,490Total
    
    $
    512
    
    
    $
    (1,270
    )
    
    $
    3,576
  2006
    
    
    2005
    
    
    2004Income tax (benefit) expense at the statutory rate of 34.0%
    
    $
    (6
    )
    
    $
    (1,254
    )
    
    $
    3,190State tax, net of federal benefit
    
    
    195
    
    
    
    131
    
    
    
    316Non-deductible expenses
    
    
    52
    
    
    
    22
    
    
    
    11Potential non-deductible interest of foreign subsidiary
    
    
    205
    
    
    
    
    
    
    
    Impact of foreign rate differential
    
    
    (55
    )
    
    
    (31
    )
    
    
    Change in effective state tax rate
    
    
    
    
    
    
    (72
    )
    
    
    66Other
    
    
    16
    
    
    
    (66
    )
    
    
    (7
    )Subtotal
    
    $
    407
    
    
    $
    (1,270
    )
    
    $
    3,576Change in valuation allowance
    
    
    105
    
    
    
    
    
    
    
    Total tax provision (benefit)
    
    $
    512
    
    
    $
    (1,270
    )
    
    $
    3,576
  United States
    
    
    United Kingdom
    
    
    Mexico
    
    
    Consolidated2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Current deferred tax asset
    
    $
    440
    
    
    $
    1,143
    
    
    $
    149
    
    
    $
    
    
    
    $
    47
    
    
    $
    
    
    
    $
    636
    
    
    $
    1,143Valuation allowance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47
    )
    
    
    
    
    
    
    (47
    )
    
    
    Current deferred tax liability
    
    
    (316
    )
    
    
    (38
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (316
    )
    
    
    (38
    )Net current deferred tax asset
    
    $
    124
    
    
    $
    1,105
    
    
    $
    149
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    273
    
    
    $
    1,105Non-current deferred tax asset
    
    $
    11,740
    
    
    $
    8,080
    
    
    $
    248
    
    
    $
    466
    
    
    $
    187
    
    
    $
    
    
    
    $
    12,175
    
    
    $
    8,546Valuation allowance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (101
    )
    
    
    
    
    
    
    (101
    )
    
    
    Non-current deferred tax liability
    
    
    (16,120
    )
    
    
    (16,054
    )
    
    
    (3,493
    )
    
    
    (2,292
    )
    
    
    (86
    )
    
    
    
    
    
    
    (19,699
    )
    
    
    (18,346
    )Net non-current deferred tax
liability
    
    $
    (4,380
    )
    
    $
    (7,974
    )
    
    $
    (3,245
    )
    
    $
    (1,826
    )
    
    $
    
    
    
    $
    
    
    
    $
    (7,625
    )
    
    $
    (9,800
    )Net deferred tax liability
    
    $
    (4,256
    )
    
    $
    (6,869
    )
    
    $
    (3,096
    )
    
    $
    (1,826
    )
    
    $
    
    
    
    $
    
    
    
    $
    (7,352
    )
    
    $
    (8,695
    )
 76




---



##### Table of Contents



2006
    
    
    2005Current deferred tax assets:Reserve for receivables
    
    $
    98
    
    
    $
    59Accrued liabilities and reserves
    
    
    438
    
    
    
    1,032Other
    
    
    100
    
    
    
    52Subtotal
    
    
    636
    
    
    
    1,143Valuation allowance
    
    
    (47
    )
    
    
    Current deferred tax assets
    
    
    589
    
    
    
    1,143Non-current deferred tax assets:Net operating loss carryforward
    
    
    8,827
    
    
    
    6,998Share-based compensation
    
    
    353
    
    
    
    87SFAS No. 143 deinstallation costs
    
    
    367
    
    
    
    634Deferred revenue and reserves
    
    
    1,679
    
    
    
    758Other
    
    
    949
    
    
    
    69Subtotal
    
    
    12,175
    
    
    
    8,546Valuation allowance
    
    
    (101
    )
    
    
    Non-current deferred tax assets
    
    
    12,074
    
    
    
    8,546Current deferred tax liabilities:Deferred stock compensation
    
    
    
    
    
    
    (67
    )Unrealized gain on marketable securities
    
    
    (293
    )
    
    
    Other
    
    
    (23
    )
    
    
    29Current deferred tax liabilities
    
    
    (316
    )
    
    
    (38
    )Non-current deferred tax liabilities:Tangible and intangible assets
    
    
    (13,506
    )
    
    
    (12,960
    )Deployment costs
    
    
    (3,569
    )
    
    
    (2,352
    )Unrealized gain on derivative instruments
    
    
    (2,624
    )
    
    
    (3,034
    )Non-current deferred tax liabilities
    
    
    (19,699
    )
    
    
    (18,346
    )Net deferred tax liability
    
    $
    (7,352
    )
    
    $
    (8,695
    )
    77




---



##### Table of Contents



(17) Significant Suppliers
  
 (18) Segment Information
  78




---



##### Table of Contents



As of or for the Year Ended December 31, 2006UnitedUnited States
    
    Kingdom
    
    Mexico
    
    Eliminations
    
    TotalRevenue from external customers
    
    $
    250,425
    
    
    $
    42,157
    
    
    $
    1,023
    
    
    $
    
    
    
    $
    293,605Intersegment revenue
    
    
    340
    
    
    
    
    
    
    
    
    
    
    
    (340
    )
    
    
    Depreciation, depletion, and
amortization expense
    
    
    24,819
    
    
    
    5,675
    
    
    
    84
    
    
    
    
    
    
    
    30,578Interest income
    
    
    (3,676
    )
    
    
    (164
    )
    
    
    (5
    )
    
    
    3,464
    
    
    
    (381
    )Interest expense
    
    
    25,443
    
    
    
    3,464
    
    
    
    10
    
    
    
    (3,464
    )
    
    
    25,453(Loss) income before income taxes
    
    
    (1,503
    )
    
    
    1,957
    
    
    
    (388
    )
    
    
    (85
    )
    
    
    (19
    )Identifiable Assets
    
    $
    238,127
    
    
    $
    126,070
    
    
    $
    3,559
    
    
    $
    
    
    
    $
    367,756Capital expenditures(1)
    
    $
    19,384
    
    
    $
    14,912
    
    
    $
    1,795
    
    
    $
    
    
    
    $
    36,091
 As of or for the Year Ended December 31, 2005UnitedUnited States
    
    Kingdom
    
    Mexico(2)
    
    Eliminations
    
    TotalRevenue from external customers
    
    $
    247,143
    
    
    $
    21,822
    
    
    
    
    
    
    $
    
    
    
    $
    268,965Intersegment revenue
    
    
    358
    
    
    
    
    
    
    
    
    
    
    
    (358
    )
    
    
    Depreciation, depletion, and
amortization expense
    
    
    19,211
    
    
    
    2,720
    
    
    
    
    
    
    
    
    
    
    
    21,931Interest income
    
    
    (3,238
    )
    
    
    (988
    )
    
    
    
    
    
    
    2,637
    
    
    
    (1,589
    )Interest expense
    
    
    24,015
    
    
    
    2,637
    
    
    
    
    
    
    
    (2,637
    )
    
    
    24,015(Loss) income before income taxes
    
    
    (4,335
    )
    
    
    766
    
    
    
    
    
    
    
    (119
    )
    
    
    (3,688
    )Identifiable Assets
    
    $
    238,377
    
    
    $
    105,374
    
    
    
    
    
    
    $
    
    
    
    $
    343,751Capital expenditures
    
    $
    23,344
    
    
    $
    8,582
    
    
    
    
    
    
    $
    
    
    
    $
    31,926
 As of or for the Year Ended December 31, 2004UnitedUnited States
    
    Kingdom(3)
    
    Mexico(2)
    
    Eliminations
    
    TotalRevenue from external customers
    
    $
    192,915
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    192,915Intersegment revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Depreciation, depletion, and
amortization expense
    
    
    12,293
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,293Interest income
    
    
    (283
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (283
    )Interest expense
    
    
    5,518
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,518(Loss) income before income taxes
    
    
    9,381
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,381Identifiable Assets
    
    $
    197,667
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    197,667Capital expenditures
    
    $
    19,747
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    19,747
 
 (1)
    
    Capital expenditure amounts in 2006 exclude the Companys initial
investment in Mexico but include the purchase of assets to be leased.(2)
    
    No information is shown in 2005 or 2004 for the Companys Mexico operations,
as they were not acquired until 2006.(3)
    
    No information is shown in 2004 for the Companys United Kingdom operations,
as they were not acquired until 2005.  79




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##### Table of Contents



(19) Supplemental Guarantor Financial Information
  Consolidating Statements of Operations
 Year Ended December 31, 2006Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalRevenues
    
    $
    
    
    
    $
    250,765
    
    
    $
    43,180
    
    
    $
    (340
    )
    
    $
    293,605Operating costs and expenses
    
    
    865
    
    
    
    235,450
    
    
    
    37,480
    
    
    
    (257
    )
    
    
    273,538Operating income (loss)
    
    
    (865
    )
    
    
    15,315
    
    
    
    5,700
    
    
    
    (83
    )
    
    
    20,067Interest expense, net
    
    
    8,491
    
    
    
    13,276
    
    
    
    3,305
    
    
    
    
    
    
    
    25,072Equity in (earnings) losses of subsidiaries
    
    
    (8,151
    )
    
    
    
    
    
    
    
    
    
    
    8,151
    
    
    
    Other (income) expense, net
    
    
    (175
    )
    
    
    (5,639
    )
    
    
    826
    
    
    
    2
    
    
    
    (4,986
    )(Loss) income before income taxes
    
    
    (1,030
    )
    
    
    7,678
    
    
    
    1,569
    
    
    
    (8,236
    )
    
    
    (19
    )Income tax provision (benefit)
    
    
    (584
    )
    
    
    278
    
    
    
    818
    
    
    
    
    
    
    
    512Net (loss) income
    
    
    (446
    )
    
    
    7,400
    
    
    
    751
    
    
    
    (8,236
    )
    
    
    (531
    )Preferred stock dividends and accretion
expense
    
    
    265
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    265Net (loss) income available to common
stockholders
    
    $
    (711
    )
    
    $
    7,400
    
    
    $
    751
    
    
    $
    (8,236
    )
    
    $
    (796
    )
 Year Ended December 31, 2005Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalRevenues
    
    $
    
    
    
    $
    247,501
    
    
    $
    21,822
    
    
    $
    (358
    )
    
    $
    268,965Operating costs and expenses
    
    
    2,547
    
    
    
    227,682
    
    
    
    19,254
    
    
    
    (239
    )
    
    
    249,244Operating income (loss)
    
    
    (2,547
    )
    
    
    19,819
    
    
    
    2,568
    
    
    
    (119
    )
    
    
    19,721Interest expense, net
    
    
    8,062
    
    
    
    12,715
    
    
    
    1,649
    
    
    
    
    
    
    
    22,426Equity in (earnings) losses of subsidiaries
    
    
    (6,399
    )
    
    
    
    
    
    
    
    
    
    
    6,399
    
    
    
    Other expense, net
    
    
    
    
    
    
    830
    
    
    
    153
    
    
    
    
    
    
    
    983(Loss) income before income taxes
    
    
    (4,210
    )
    
    
    6,274
    
    
    
    766
    
    
    
    (6,518
    )
    
    
    (3,688
    )Income tax provision (benefit)
    
    
    (1,911
    )
    
    
    412
    
    
    
    229
    
    
    
    
    
    
    
    (1,270
    )Net (loss) income
    
    
    (2,299
    )
    
    
    5,862
    
    
    
    537
    
    
    
    (6,518
    )
    
    
    (2,418
    )Preferred stock dividends and accretion
expense
    
    
    1,395
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,395Net (loss) income available to common
stockholders
    
    $
    (3,694
    )
    
    $
    5,862
    
    
    $
    537
    
    
    $
    (6,518
    )
    
    $
    (3,813
    )
 Year Ended December 31, 2004Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalRevenues
    
    $
    
    
    
    $
    192,915
    
    
    $
    
    
    
    $
    
    
    
    $
    192,915Operating costs and expenses
    
    
    2,542
    
    
    
    175,529
    
    
    
    
    
    
    
    
    
    
    
    178,071Operating income (loss)
    
    
    (2,542
    )
    
    
    17,386
    
    
    
    
    
    
    
    
    
    
    
    14,844Interest expense (income), net
    
    
    (155
    )
    
    
    5,390
    
    
    
    
    
    
    
    
    
    
    
    5,235Equity in (earnings) losses of subsidiaries
    
    
    (7,354
    )
    
    
    
    
    
    
    
    
    
    
    7,354
    
    
    
    Other expense, net
    
    
    
    
    
    
    228
    
    
    
    
    
    
    
    
    
    
    
    228(Loss) income before income taxes
    
    
    4,967
    
    
    
    11,768
    
    
    
    
    
    
    
    (7,354
    )
    
    
    9,381Income tax provision (benefit)
    
    
    (838
    )
    
    
    4,414
    
    
    
    
    
    
    
    
    
    
    
    3,576Net (loss) income
    
    
    5,805
    
    
    
    7,354
    
    
    
    
    
    
    
    (7,354
    )
    
    
    5,805Preferred stock dividends and accretion
expense
    
    
    2,312
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,312Net (loss) income available to common
stockholders
    
    $
    3,493
    
    
    $
    7,354
    
    
    $
    
    
    
    $
    (7,354
    )
    
    $
    3,493
 80




---



##### Table of Contents



Consolidating Balance Sheets
 As of December 31, 2006Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalAssets:Cash and cash equivalents
    
    $
    97
    
    
    $
    1,818
    
    
    $
    803
    
    
    $
    
    
    
    $
    2,718Accounts and notes receivable, net
    
    
    3,463
    
    
    
    13,068
    
    
    
    1,966
    
    
    
    (3,606
    )
    
    
    14,891Other current assets
    
    
    544
    
    
    
    14,069
    
    
    
    6,204
    
    
    
    (39
    )
    
    
    20,778Total current assets
    
    
    4,104
    
    
    
    28,955
    
    
    
    8,973
    
    
    
    (3,645
    )
    
    
    38,387Property and equipment, net
    
    
    
    
    
    
    59,512
    
    
    
    27,326
    
    
    
    (170
    )
    
    
    86,668Intangible assets, net
    
    
    6,982
    
    
    
    45,757
    
    
    
    15,024
    
    
    
    
    
    
    
    67,763Goodwill
    
    
    1,228
    
    
    
    85,474
    
    
    
    82,861
    
    
    
    
    
    
    
    169,563Investments and advances to subsidiaries
    
    
    79,848
    
    
    
    
    
    
    
    
    
    
    
    (79,848
    )
    
    
    Intercompany receivable
    
    
    (122
    )
    
    
    5,046
    
    
    
    (4,924
    )
    
    
    
    
    
    
    Prepaid expenses and other assets
    
    
    211,175
    
    
    
    5,006
    
    
    
    369
    
    
    
    (211,175
    )
    
    
    5,375Total assets
    
    $
    303,215
    
    
    $
    229,750
    
    
    $
    129,629
    
    
    $
    (294,838
    )
    
    $
    367,756Liabilities and Stockholders Deficit:Current portion of long-term debt and notes payable
    
    $
    
    
    
    $
    
    
    
    $
    194
    
    
    $
    
    
    
    $
    194Current portion of other long-term liabilities
    
    
    
    
    
    
    2,458
    
    
    
    43
    
    
    
    
    
    
    
    2,501Accounts payable and accrued liabilities
    
    
    8,458
    
    
    
    32,202
    
    
    
    14,218
    
    
    
    (3,622
    )
    
    
    51,256Total current liabilities
    
    
    8,458
    
    
    
    34,660
    
    
    
    14,455
    
    
    
    (3,622
    )
    
    
    53,951Long-term debt, less current portion
    
    
    251,883
    
    
    
    132,351
    
    
    
    79,641
    
    
    
    (211,174
    )
    
    
    252,701Other non-current liabilities and minority interest
    
    
    3,448
    
    
    
    12,519
    
    
    
    5,711
    
    
    
    
    
    
    
    21,678Total liabilities
    
    
    263,789
    
    
    
    179,530
    
    
    
    99,807
    
    
    
    (214,796
    )
    
    
    328,330Preferred stock
    
    
    76,594
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,594Stockholders (deficit) equity
    
    
    (37,168
    )
    
    
    50,220
    
    
    
    29,822
    
    
    
    (80,042
    )
    
    
    (37,168
    )Total liabilities and stockholders deficit
    
    $
    303,215
    
    
    $
    229,750
    
    
    $
    129,629
    
    
    $
    (294,838
    )
    
    $
    367,756
 As of December 31, 2005Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalAssets:Cash and cash equivalents
    
    $
    118
    
    
    $
    1,544
    
    
    $
    37
    
    
    $
    
    
    
    $
    1,699Accounts and notes receivable, net
    
    
    2,047
    
    
    
    10,706
    
    
    
    836
    
    
    
    (3,843
    )
    
    
    9,746Other current assets
    
    
    1,669
    
    
    
    7,480
    
    
    
    5,691
    
    
    
    
    
    
    
    14,840Total current assets
    
    
    3,834
    
    
    
    19,730
    
    
    
    6,564
    
    
    
    (3,843
    )
    
    
    26,285Property and equipment, net
    
    
    
    
    
    
    58,283
    
    
    
    15,991
    
    
    
    (123
    )
    
    
    74,151Intangible assets, net
    
    
    10,906
    
    
    
    52,243
    
    
    
    12,816
    
    
    
    
    
    
    
    75,965Goodwill
    
    
    3,684
    
    
    
    85,122
    
    
    
    72,751
    
    
    
    
    
    
    
    161,557Investments and advances to subsidiaries
    
    
    62,562
    
    
    
    
    
    
    
    
    
    
    
    (62,562
    )
    
    
    Intercompany receivable
    
    
    487
    
    
    
    2,288
    
    
    
    (2,775
    )
    
    
    
    
    
    
    Prepaid expenses and other assets
    
    
    205,389
    
    
    
    6,476
    
    
    
    27
    
    
    
    (206,099
    )
    
    
    5,793Total assets
    
    $
    286,862
    
    
    $
    224,142
    
    
    $
    105,374
    
    
    $
    (272,627
    )
    
    $
    343,751Liabilities and Stockholders Deficit:Current portion of long-term debt and notes payable
    
    $
    
    
    
    $
    42
    
    
    $
    3,126
    
    
    $
    
    
    
    $
    3,168Current portion of other long-term liabilities
    
    
    
    
    
    
    2,251
    
    
    
    
    
    
    
    
    
    
    
    2,251Accounts payable and accrued liabilities
    
    
    8,650
    
    
    
    29,444
    
    
    
    8,203
    
    
    
    (3,859
    )
    
    
    42,438Total current liabilities
    
    
    8,650
    
    
    
    31,737
    
    
    
    11,329
    
    
    
    (3,859
    )
    
    
    47,857Long-term debt, less current portion
    
    
    244,456
    
    
    
    139,551
    
    
    
    66,548
    
    
    
    (206,099
    )
    
    
    244,456Other non-current liabilities and minority interest
    
    
    6,511
    
    
    
    14,629
    
    
    
    3,053
    
    
    
    
    
    
    
    24,193Total liabilities
    
    
    259,617
    
    
    
    185,917
    
    
    
    80,930
    
    
    
    (209,958
    )
    
    
    316,506Preferred stock
    
    
    76,329
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,329Stockholders (deficit) equity
    
    
    (49,084
    )
    
    
    38,225
    
    
    
    24,444
    
    
    
    (62,669
    )
    
    
    (49,084
    )Total liabilities and stockholders deficit
    
    $
    286,862
    
    
    $
    224,142
    
    
    $
    105,374
    
    
    $
    (272,627
    )
    
    $
    343,751
 81




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##### Table of Contents



Consolidating Statements of Cash Flows
 Year Ended December 31, 2006Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalCash flows provided by (used in)
operating activities
    
    $
    (12,940
    )
    
    $
    27,065
    
    
    $
    11,321
    
    
    $
    
    
    
    $
    25,446Capital expenditures, net of sales
    
    
    
    
    
    
    (17,534
    )
    
    
    (15,070
    )
    
    
    
    
    
    
    (32,604
    )Payments for exclusive license agreements
and site acquisition costs
    
    
    
    
    
    
    (1,842
    )
    
    
    (1,515
    )
    
    
    
    
    
    
    (3,357
    )Acquisitions, net of cash acquired
    
    
    (1,039
    )
    
    
    27
    
    
    
    
    
    
    
    1,000
    
    
    
    (12
    )Cash flows (used in) provided by investing
activities
    
    
    (1,039
    )
    
    
    (19,349
    )
    
    
    (16,585
    )
    
    
    1,000
    
    
    
    (35,973
    )Proceeds from issuance of long-term debt
    
    
    44,800
    
    
    
    23,200
    
    
    
    861
    
    
    
    (23,200
    )
    
    
    45,661Repayments of long-term debt
    
    
    (37,500
    )
    
    
    (30,400
    )
    
    
    (3
    )
    
    
    30,400
    
    
    
    (37,503
    )Issuance of long-term notes receivable
    
    
    (4,300
    )
    
    
    
    
    
    
    
    
    
    
    4,300
    
    
    
    Payments received on long-term notes
receivable
    
    
    11,500
    
    
    
    
    
    
    
    
    
    
    
    (11,500
    )
    
    
    Utilization of bank overdraft facility, net
    
    
    
    
    
    
    
    
    
    
    3,818
    
    
    
    
    
    
    
    3,818Issuance of capital stock
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    (1,000
    )
    
    
    Purchase of treasury stock
    
    
    (50
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50
    )Other financing activities
    
    
    (492
    )
    
    
    (242
    )
    
    
    
    
    
    
    
    
    
    
    (734
    )Cash flows (used in) provided by
financing activities
    
    
    13,958
    
    
    
    (7,442
    )
    
    
    5,676
    
    
    
    (1,000
    )
    
    
    11,192Effect of exchange rate changes
    
    
    
    
    
    
    
    
    
    
    354
    
    
    
    
    
    
    
    354(Decrease) increase in cash and cash
equivalents
    
    
    (21
    )
    
    
    274
    
    
    
    766
    
    
    
    
    
    
    
    1,019Cash and cash equivalents at beginning of
period
    
    
    118
    
    
    
    1,544
    
    
    
    37
    
    
    
    
    
    
    
    1,699Cash and cash equivalents at end of period
    
    $
    97
    
    
    $
    1,818
    
    
    $
    803
    
    
    $
    
    
    
    $
    2,718
 Year Ended December 31, 2005Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalCash flows provided by (used in)
operating activities
    
    $
    (4,607
    )
    
    $
    32,563
    
    
    $
    5,271
    
    
    $
    
    
    
    $
    33,227Capital expenditures, net of sales
    
    
    
    
    
    
    (22,300
    )
    
    
    (4,883
    )
    
    
    
    
    
    
    (27,183
    )Payments for exclusive license agreements
and site acquisition costs
    
    
    
    
    
    
    (988
    )
    
    
    (3,677
    )
    
    
    
    
    
    
    (4,665
    )Acquisitions, net of cash acquired
    
    
    (25,369
    )
    
    
    (17,108
    )
    
    
    (88,669
    )
    
    
    23,034
    
    
    
    (108,112
    )Cash flows (used in) provided by
investing activities
    
    
    (25,369
    )
    
    
    (40,396
    )
    
    
    (97,229
    )
    
    
    23,034
    
    
    
    (139,960
    )Proceeds from issuance of long-term debt
    
    
    451,056
    
    
    
    173,037
    
    
    
    66,235
    
    
    
    (212,319
    )
    
    
    478,009Repayments of long-term debt
    
    
    (206,600
    )
    
    
    (162,141
    )
    
    
    
    
    
    
    6,600
    
    
    
    (362,141
    )Issuance of long-term notes receivable
    
    
    (215,083
    )
    
    
    
    
    
    
    
    
    
    
    215,083
    
    
    
    Payments received on long-term notes
receivable
    
    
    6,600
    
    
    
    
    
    
    
    
    
    
    
    (6,600
    )
    
    
    Issuance of preferred stock
    
    
    73,142
    
    
    
    
    
    
    
    
    
    
    
    155
    
    
    
    73,297Redemption of preferred stock
    
    
    (24,795
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,795
    )Purchase of treasury stock
    
    
    (46,453
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (46,453
    )Issuance of capital stock
    
    
    88
    
    
    
    
    
    
    
    25,954
    
    
    
    (25,953
    )
    
    
    89Other financing activities
    
    
    (7,861
    )
    
    
    (2,931
    )
    
    
    
    
    
    
    
    
    
    
    (10,792
    )Cash flows (used in) provided by
financing activities
    
    
    30,094
    
    
    
    7,965
    
    
    
    92,189
    
    
    
    (23,034
    )
    
    
    107,214Effect of exchange rate changes
    
    
    
    
    
    
    
    
    
    
    (194
    )
    
    
    
    
    
    
    (194
    )Increase in cash and cash equivalents
    
    
    118
    
    
    
    132
    
    
    
    37
    
    
    
    
    
    
    
    287Cash and cash equivalents at beginning of
period
    
    
    
    
    
    
    1,412
    
    
    
    
    
    
    
    
    
    
    
    1,412Cash and cash equivalents at end of period
    
    $
    118
    
    
    $
    1,544
    
    
    $
    37
    
    
    $
    
    
    
    $
    1,699
 82




---



##### Table of Contents



Year Ended December 31, 2004Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalCash flows provided by operating activities
    
    $
    
    
    
    $
    20,466
    
    
    $
    
    
    
    $
    
    
    
    $
    20,466Capital expenditures, net
    
    
    
    
    
    
    (18,176
    )
    
    
    
    
    
    
    
    
    
    
    (18,176
    )Payments for exclusive license agreements and
site acquisition costs
    
    
    
    
    
    
    (1,125
    )
    
    
    
    
    
    
    
    
    
    
    (1,125
    )Acquisitions, net of cash acquired
    
    
    
    
    
    
    (99,625
    )
    
    
    
    
    
    
    
    
    
    
    (99,625
    )Cash flows (used in) investing activities
    
    
    
    
    
    
    (118,926
    )
    
    
    
    
    
    
    
    
    
    
    (118,926
    )Proceeds from issuance of long-term debt
    
    
    
    
    
    
    136,041
    
    
    
    
    
    
    
    
    
    
    
    136,041Repayments of long-term debt
    
    
    
    
    
    
    (38,925
    )
    
    
    
    
    
    
    
    
    
    
    (38,925
    )Issuance of capital stock
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    64Other financing activities
    
    
    
    
    
    
    (2,862
    )
    
    
    
    
    
    
    
    
    
    
    (2,862
    )Cash flows provided by financing activities
    
    
    
    
    
    
    94,318
    
    
    
    
    
    
    
    
    
    
    
    94,318Decrease in cash and cash equivalents
    
    
    
    
    
    
    (4,142
    )
    
    
    
    
    
    
    
    
    
    
    (4,142
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    5,554
    
    
    
    
    
    
    
    
    
    
    
    5,554Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    1,412
    
    
    $
    
    
    
    $
    
    
    
    $
    1,412
 83




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION
  84




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
 Board of Directors
 Board composition.
 Name
    
    AgeFred R. Lummis
    
    
    53Robert P. Barone
    
    
    69Frederick W. Brazelton
    
    
    36Ralph H. Clinard
    
    
    73Jorge M. Diaz
    
    
    42Roger B. Kafker
    
    
    45Michael A.R. Wilson
    
    
    39Jack Antonini
    
    
    53Ronald Delnevo
    
    
    52
   Fred R. Lummis
 Robert P. Barone
 Frederick W. Brazelton
 85




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##### Table of Contents



Ralph H. Clinard
 Jorge M. Diaz
 Roger B. Kafker
 Michael A.R. Wilson
 Executive Officers
 Committees of the Board of Directors
  Audit committee.
 86




---



##### Table of Contents



Compensation committee.
 Nominating committee.
 Additional information.
 Executive Officers
  Name
    
    Age
    
    PositionJack Antonini
    
    53
    
    Chief Executive Officer, President, and DirectorJ. Chris Brewster
    
    57
    
    Chief Financial OfficerMichael H. Clinard
    
    40
    
    Chief Operating OfficerThomas E. Upton
    
    50
    
    Chief Administrative OfficerRonald Delnevo
    
    52
    
    Chief Executive of Bank Machine and Director
  Jack Antonini
 J. Chris Brewster
 87




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##### Table of Contents



Michael H. Clinard
 Thomas E. Upton
 Ronald Delnevo
 Corporate Governance
 Code of Ethics. www.cardtronics.com
 Audit committee financial expert. Committees of the Board of Directors
 
 ITEM 11. EXECUTIVE COMPENSATION
  88




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##### Table of Contents



Compensation Discussion and Analysis
 Objectives of Executive Compensation Program
    Compensation Components
 Base salary. Employment-related Agreements of Named Executive Officers
 Annual bonus.
 89




---



##### Table of Contents



Long-term incentive program  stock options.
  Long-term incentive bonus program  U.K. operations.
 Severance and change of control arrangements. Employment-related Agreements of Named Executive Officers
 90




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##### Table of Contents



2006 Summary Compensation Table
  Non-EquityStock
    
    Option
    
    Incentive Plan
    
    All OtherName & Principal Position
    
    Year
    
    Salary
    
    Awards(1)
    
    Awards(2)
    
    Compensation
    
    Compensation
    
    TotalJack Antonini 
Director, Chief Executive Officer, and President
    
    
    2006
    
    
    $
    347,287
    
    
    $
    215,894
    
    
    $
    
    
    
    $
    223,653
    
    
    $
    
    
    
    $
    786,834J. Chris Brewster 
Chief Financial Officer
    
    
    2006
    
    
    $
    248,063
    
    
    
    
    
    
    $
    103,929
    (3)
    
    $
    209,753
    
    
    $
    
    
    
    $
    561,745Michael H. Clinard Chief Operating Officer
    
    
    2006
    
    
    $
    231,525
    
    
    
    
    
    
    $
    69,286
    (3)
    
    $
    149,102
    
    
    $
    9,000
    (4)
    
    $
    458,913Thomas E. Upton 
Chief Administrative Officer
    
    
    2006
    
    
    $
    220,500
    
    
    
    
    
    
    $
    69,286
    (3)
    
    $
    234,902
    
    
    $
    
    
    
    $
    524,688Ronald Delnevo (5)
Director and Chief Executive of Bank Machine
    
    
    2006
    
    
    $
    281,937
    
    
    
    
    
    
    $
    
    
    
    $
    153,868
    
    
    $
    49,180
    (6)
    
    $
    484,985Drew Soinski (7)
Chief Marketing Officer
    
    
    2006
    
    
    $
    164,384
    
    
    
    
    
    
    $
    
    
    
    $
    83,333
    
    
    $
    253,499
    (8)
    
    $
    501,216
 
 (1)
    
    Amount represents the compensation expense recognized by the Company in
2006 related to restricted stock granted to Mr. Antonini in 2004.(2)
    
    During 2006, the compensation committee granted no option awards to Messrs.
Antonini, Delnevo, and Soinski. Such decision was based on the sizeable restricted stock
grant awarded to Mr. Antonini in conjunction with his initial employment in 2003, the option
award granted to Mr. Delnevo in conjunction with his retained employment subsequent to our
purchase of Bank Machine in May 2005, and the option award granted to Mr. Soinski in
conjunction with his initial employment in August 2005.(3)
    
    Amounts were calculated utilizing the provisions of SFAS No. 123R. For a
description of the assumptions underlying the valuation of these option awards, see Item 8,
Financial Statements and Supplemental Data, Note 3. For purposes of this disclosure,
estimates of forfeitures related to service-based vesting conditions have been omitted.(4)
    
    Amount represents the car allowance provided to Mr. Clinard in accordance with
the terms of his employment agreement.(5)
    
    Amounts shown for Mr. Delnevo were converted from Pounds Sterling to U.S.
Dollars at $1.9613, which represents the exchange rate in effect as of December 31,
2006.(6)
    
    Amount represents a car allowance of £12,000 and monthly contributions made on
behalf of Mr. Delnevo to a personal retirement account selected by Mr. Delnevo in accordance
with the terms of his employment agreement.(7)
    
    Mr. Soinski served as our Chief Marketing Officer from August 2005 until August
2006.(8)
    
    Amount equals Mr. Soinskis base salary for 12 months plus a partial
subsidization of his health and life insurance premiums. This additional compensation is
related to Mr. Soinskis departure from the Company and is being made pursuant to the terms of
Mr. Soinskis employment agreement with the Company.  Employment-related Agreements of Named Executive Officers
 Employment Agreement with Jack Antonini. Annual Bonus
 91




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##### Table of Contents



Employment Agreement with J. Chris Brewster. Annual Bonus
 Employment Agreement with Michael H. Clinard. Annual Bonus
 Employment Agreement with Thomas E. Upton. Annual Bonus
 Employment Agreement with Ronald Delnevo. Annual Bonus
 Common Provisions of Employment-Related Agreements of Named Executive Officers.
 (1)
    
    Each employment agreement requires the employee to protect the confidentiality of
our proprietary and confidential information.
 92




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##### Table of Contents



(2)
    
    Each employment agreement (with the exception of Mr. Delnevos agreement) requires that
the employee not compete with us or solicit our employees or customers for a period of 24
months following the term of his employment. Mr. Delnevos agreement contains a non-compete
period of 12 months following the term of his employment.(3)
    
    Each employment agreement provides that the employee may be paid an annual bonus based on
certain factors and objectives set by our compensation committee, with the ultimate amount
of any bonus paid determined at the direction of our compensation committee.
 Grants of Plan-based Awards in Fiscal 2006
  Grant DateAll Other
    
    
    
    
    
    Fair ValueEstimated Possible/Future
    
    Option Awards:
    
    Exercise or Base
    
    of StockPayouts Under Non-Equity
    
    Number of Securities
    
    Price of Option
    
    and OptionIncentive Plan Awards(1)
    
    Underlying Options
    
    Awards(2)
    
    AwardsApprovalName
    
    Grant Date
    
    Date(3)
    
    Threshold
    
    Target
    
    MaximumJack Antonini
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    173,644
    
    
    
    
    (4)
    
    
    
    
    
    
    
    
    
    
    J. Chris Brewster
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    124,032
    
    
    
    
    (4)
    
    
    
    
    
    
    
    
    
    
    03-06-2006
    
    
    
    03-03-2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    $
    83.84
    
    
    $
    505,601Michael H. Clinard
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    115,763
    
    
    
    
    (4)
    
    
    
    
    
    
    
    
    
    
    03-06-2006
    
    
    
    03-03-2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    $
    83.84
    
    
    $
    337,067Thomas E. Upton
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    110,250
    
    
    
    
    (4)
    
    
    
    
    
    
    
    
    
    
    03-06-2006
    
    
    
    03-03-2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    $
    83.84
    
    
    $
    337,067Ronald
Delnevo(5)(6)
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    133,368
    
    
    
    
    (4)
    
    
    
    
    
    
    
    
    
    
    Drew Soinski
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    125,000
    
    
    
    
    (4)
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Represents the dollar value of the applicable range (threshold, target and
maximum amounts) of bonuses awarded to each named executive officer for 2006. The actual
bonus amounts paid to the named executive officers are reflected in the Non-Equity Incentive
Plan Compensation column of the 2006 Summary Compensation Table reflected above.(2)
    
    There was no public market for the Companys common stock throughout 2006.
The exercise
price of $83.84 per share was based on an
independent third-party appraisal of the Company as of December 31, 2005, which the Company believes reflected the per share value of its common stock at the grant date.(3)
    
    Represents the date our compensation committee formally approved the option
grants.(4)
    
    Under the 2006 Executive Bonus Plan, there is no formal cap on the amount of
bonus an executive may receive. Rather, the annual bonuses for our executives are determined
at the sole discretion of our compensation committee. As a result, the actual amounts awarded
may exceed or fall short of the targeted level. As we are unable to predict the committees
ultimate actions regarding the bonus awards, we are unable to estimate the maximum possible
grants that could potentially be made and paid out under the bonus plan.(5)
    
    Amounts shows for Mr. Delnevo were converted from Pounds Sterling to U.S.
Dollars at $1.9613, which represents the exchange rate in effect as of December 31,
2006.(6)
    
    The non-equity incentive plan awards information presented for Mr. Delnevo
excludes amounts that may become payable under our U.K. long-term incentive bonus program.
Future payouts under such program, which was established to provide an incentive for Mr.
Delnevo and his direct reports to achieve certain cumulative earnings objectives over a
four-year period, are contingent upon the actual results exceeding the cumulative earnings
benchmark, less an investment charge on the capital employed to achieve such results. Under
the terms of the incentive plan, such payouts would not occur until 2009. As a result, we are
unable to estimate at this time what the ultimate payout will be, if any. 93




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##### Table of Contents



Outstanding Equity Awards at Fiscal 2006 Year-end
  Option Awards
    
    Stock AwardsNumber of Securities
    
    Option
    
    Option
    
    
    
    
    
    Market Value ofUnderlying Unexercised Options
    
    Exercise
    
    Expiration
    
    # of Shares that
    
    Shares thatName
    
    Exercisable
    
    Unexercisable
    
    Price
    
    Date
    
    Have Not Vested
    
    Have Not VestedJack Antonini (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,000
    (2)
    
    
    $1,822,400(3)J. Chris Brewster
    
    
    30,000
    
    
    
    15,000
    (4)
    
    $
    52.00
    
    
    
    03-31-2014
    
    
    
    
    
    
    
    
    
    
    
    15,000
    (5)
    
    $
    83.84
    
    
    
    03-06-2016
    
    
    
    
    
    
    
    Michael H. Clinard
    
    
    12,417
    
    
    
    
    
    
    $
    5.88
    
    
    
    06-04-2011
    
    
    
    
    
    
    
    6,266
    
    
    
    
    
    
    $
    11.73
    
    
    
    03-03-2012
    
    
    
    
    
    
    
    
    
    
    
    10,000
    (5)
    
    $
    83.84
    
    
    
    03-06-2016
    
    
    
    
    
    
    
    Thomas E. Upton
    
    
    19,854
    
    
    
    
    
    
    $
    5.87
    
    
    
    06-04-2011
    
    
    
    
    
    
    
    3,750
    
    
    
    
    
    
    $
    11.73
    
    
    
    03-03-2012
    
    
    
    
    
    
    
    
    
    
    
    10,000
    (5)
    
    $
    83.84
    
    
    
    03-06-2016
    
    
    
    
    
    
    
    Ronald Delnevo
    
    
    10,000
    
    
    
    30,000
    (5)
    
    $
    83.84
    
    
    
    05-17-2015
    
    
    
    
    
    
    
    Drew Soinski(6)
    
    
    25,000
    
    
    
    
    
    
    $
    83.84
    
    
    
    08-28-2007
    
    
    
    
    
    
    
    
 
 (1)
    
    Mr. Antonini only owns restricted shares in the Company and has not been
granted any options to purchase the Companys common stock.(2)
    
    These shares fully vested on January 20, 2007.(3)
    
    There was no public market for our common stock on December 31, 2006.
Accordingly, we calculated this value based on an estimated price per share of $91.12, as
determined by an independent third-party appraisal of the Company.(4)
    
    These options fully vested on March 31, 2007.(5)
    
    These options will vest in four equal annual installments, the first of which
occurred on March 6, 2007 and the last of which will occur on March 6, 2010.(6)
    
    The vesting and expiration schedules of Mr. Soinskis options, which were
granted in August 2005, were accelerated as a result of his departure from the Company in
August 2006. Option Exercises and Stock Vested during Fiscal Year 2006
  Pension Benefits
  Nonqualified Deferred Compensation
  94




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##### Table of Contents



Potential Payments upon Termination or Change in Control
  Termination in
    
    Termination byInvoluntary, Not-
    
    Good Reason
    
    
    
    
    
    Connection with a
    
    Executive upon aVoluntary
    
    For-Cause
    
    for-Cause
    
    Termination
    
    Change in
    
    
    Change in
    
    Change in
    
    Death orExecutive
    
    Benefits
    
    Termination
    
    Termination
    
    Termination
    
    by Executive
    

Control
    
    
    Control
    
    Control
    
    Disability(1)
    
    (1)
    
    (1)(2)
    
    (1)
    
    
    
    (1)
    
    
    
    (1)Jack Antonini
    
    Base salary(3)
    
    $
    
    
    
    $
    
    
    
    $
    347,287
    
    
    $
    
    
    
$



    $
    347,287
    
    
    $
347,287


    $
    Bonus
    
    
    
    
    
    
    
    
    
    
    223,653
    
    
    
    
    
    




    
    223,653
    
    
    



    
    223,653Restricted stock(4)
    
    
    
    
    
    
    
    
    
    
    1,587,200
    
    
    
    1,587,200
    
    

1,587,200


    
    1,587,200
    
    
    
1,587,200


    
    1,587,200J. Chris Brewster
    
    Base salary(5)
    
    $
    
    
    
    $
    
    
    
    $
    248,063
    
    
    $
    248,063
    
    
$



    $
    248,063
    
    
    $
248,063


    $
    Bonus
    
    
    
    
    
    
    
    
    
    
    209,753
    
    
    
    209,753
    
    




    
    209,753
    
    
    
209,753


    
    209,753Stock Options(6)
    
    
    
    
    
    
    
    
    
    
    586,800
    
    
    
    586,800
    
    

586,800


    
    586,800
    
    
    
586,800


    
    Post-employment healthcare(7)
    
    
    
    
    
    
    
    
    
    
    8,134
    
    
    
    8,134
    
    




    
    8,134
    
    
    
8,134


    
    Michael H. Clinard
    
    Base salary
    
    $
    
    
    
    $
    
    
    
    $
    231,525
    
    
    $
    231,525
    
    
$



    $
    
    
    
    $



    $
    179,525
    (8)Bonus
    
    
    
    
    
    
    
    
    
    
    149,102
    
    
    
    
    
    




    
    
    
    
    



    
    149,102Thomas E. Upton
    
    Base salary
    
    $
    
    
    
    $
    
    
    
    $
    220,500
    
    
    $
    
    
    
$



    $
    
    
    
    $



    $
    220,500Bonus
    
    
    
    
    
    
    
    
    
    
    234,902
    
    
    
    
    
    




    
    
    
    
    



    
    234,902Ronald Delnevo(9)
    
    Base salary
    
    $
    
    
    
    $
    
    
    
    $
    333,739
    
    
    $
    333,739
    
    
$



    $
    
    
    
    $



    $
    102,591

(10)Bonus
    
    
    
    
    
    
    
    
    
    
    153,868
    
    
    
    
    
    




    
    
    
    
    



    
    Accrued vacation
    
    
    6,412
    
    
    
    
    
    
    
    6,412
    
    
    
    6,412
    
    




    
    6,412
    
    
    



    
    6,412
 
 (1)
    
    Upon the occurrence of any of the termination events listed, the terminated
executive would receive any base salary amount that had been earned but had not been paid at
the time of termination. The total amounts shown above do not include such amounts.(2)
    
    In the event of a not-for-cause termination, the terminated executive would
receive severance pay equal to his current base salary for the lesser
of a period of 12 months or the number of months remaining under
the executives employment agreement. (The employment
agreements of Messrs. Antonini, Brewster, Clinard, and Upton expire
on January 31, 2008. The employment agreement of Mr. Delnevo
expires on May 17, 2009). For each
executive, such amount would be payable in bi-weekly installments with the exception of Mr.
Delnevo, whose employment agreement calls for such amount to be paid within 14 days of
receiving a notice of termination. Additionally, each executive would receive a pro-rata
bonus for services provided during the year. Amounts shown above
represent the full bonus earned by the executive in 2006.(3)
    
    In the event of a termination upon a change in control,
Mr. Antonini would receive severance pay equal to his current base salary for a period of 12
months. There is no specified time period following a change in
control in which Mr. Antonini must notify the Company of his
intention to terminate his employment with the Company.(4)
    
    Pursuant to the terms of Mr. Antoninis restricted
stock agreement, his unvested
restricted shares would automatically
vest upon death or disability, a change in control, a not-for-cause
termination, or a good reason termination. Amount shown does not
represent a liability of the Company, but rather represents the
benefit to the executive as a result of the accelerated vesting. Such
amount represents the product of (a) the
20,000 unvested shares that would vest as of December 31, 2006
upon the aforementioned events, and (b) the difference between
(A) $91.12 (the fair market value of our common stock as of December 31, 2006, the value of which was
determined by an independent third-party appraisal company engaged by
management), and (B) the
price at which Mr. Antonini purchased the restricted shares in 2004. These 20,000 restricted
shares became fully vested on January 20, 2007, upon the expiration of the Companys right to
repurchase such restricted shares.(5)
    
    In the event of a not-for-cause termination, a good reason termination, or
termination upon a change in control, Mr. Brewster would receive payment in the amount of his
base salary for a period of twelve months. To be eligible to receive
such payments in the event of a good reason termination or a
termination by the executive upon a change in control, Mr. Brewster
must notify the Company within one year of the occurrence that he
intends to terminate his employment with the Company. However, in the event he accepts another full-time
employment position (defined as 20 hours per week) within one year after termination,
remaining payments to be made by the Company would be reduced by the gross amount being earned
under his new employment arrangement.(6)
    
    Pursuant to the terms of Mr. Brewsters stock option agreement, 15,000
of his unvested options would automatically vest upon the event of a not-for-cause termination, a good reason
termination, or a change in control. Amount shown does not
represent a liability of the Company, but rather represents the
benefit to the executive as a result of the accelerated vesting. Such
amount represents the product of (a) the 15,000
shares underlying the outstanding options that would have vested as
of December 31, 2006 upon the aforementioned events, and (b) the
difference between (A) $91.12 (the fair market value of our common stock as of December 31, 2006, the
value of which was determined by an independent third-party appraisal company engaged by
management), and (B) the exercise price of the options. Mr. Brewster, or his designated
beneficiaries, would have three years from the date of his termination to exercise all vested
options. These 15,000 options fully vested on March 31, 2007.(7)
    
    If Mr. Brewster, in the event of a not-for-cause termination, a good reason
termination, or a termination in connection with a change in control, elected to continue benefits coverage through the
Companys group health plan under the Consolidated Omnibus Budget Reconciliation Act of 1986
(COBRA), the Company would partially subsidize Mr. Brewsters incremental healthcare premiums.
Amount shown represents the difference in Mr. Brewsters current insurance premiums and
current COBRA rates for a similar plan.(8)
    
    In the event Mr. Clinards employment is terminated as a result of death or
disability, Mr. Clinard would be entitled to receive payments equal to the difference between
his base salary and any disability benefits received by him under the Companys disability
benefits plans (calculated as the lesser of 60% of base salary or $52,000) for twelve months.(9)
    
    Amounts shown for Mr. Delnevo were converted from Pounds Sterling to U.S.
Dollars at $1.9613, which represents the exchange rate in effect as of December 31,
2006.(10)
    
    In the event Mr. Delnevo becomes disabled, Mr. Delveno would
be entitled to receive payments equal to his base salary for a
maximum of 16 weeks (i.e., 80 work days.)  95




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##### Table of Contents



Change in control.
 a)
    
    prior to the date of an IPO, (i) any transaction or event pursuant to which the
CapStreet Investors and TA Associates, Inc. (or their respective affiliates) cease
collectively to own 50% or more of the Companys common stock equivalents or (ii) all or
substantially all of the assets of Cardtronics, Inc. are transferred to an entity that is
not owned (in substantially the same proportions) by the holders of equity securities of
Cardtronics, Inc. immediately prior to such transaction; andb)
    
    from and after the date of an IPO, (i) a merger of Cardtronics, Inc. with another
entity, a consolidation involving Cardtronics, Inc., or the sale of all or substantially
all of the assets of Cardtronics, Inc. to another entity if, in any such case, (A) the
holders of equity securities of Cardtronics, Inc. immediately prior to such transaction or
event do not beneficially own immediately after such transaction or event equity securities
of the resulting entity entitled to 60% or more of the votes then eligible to be cast in
the election of directors generally (or comparable governing body) of the resulting entity
in substantially the same proportions that they owned the equity securities of Cardtronics,
Inc. immediately prior to such transaction or event or (B) the persons who were members of
the Board immediately prior to such transaction or event shall not constitute at least a
majority of the board of directors of the resulting entity immediately after such
transaction or event; (ii) the dissolution or liquidation of Cardtronics, Inc.; (iii) when
any person or entity, including a group as contemplated by Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (other than the CapStreet Investors) acquires
or gains ownership or control (including, without limitation, power to vote) of more than
50% of the combined voting power of the outstanding securities of, (A) if Cardtronics, Inc.
has not engaged in a merger or consolidation, Cardtronics, Inc. or (B) if Cardtronics, Inc.
has engaged in a merger or consolidation, the resulting entity; or (iv) as a result of or
in connection with a contested election of directors, the persons who were members of the
Board immediately before such election shall cease to constitute a majority of the Board.
   Director Compensation
  Fees Earned orName
    
    Paid in CashFred R. Lummis
    
    
    Robert P. Barone
    
    $
    5,000Frederick W. Brazelton
    
    
    Ralph H. Clinard
    
    
    Jorge M. Diaz
    
    $
    2,000Roger B. Kafker
    
    
    Michael A.R. Wilson
    
    
    Jack Antonini
    
    
    Ronald Delnevo
    
    
    Ronald Coben
    
    $
    3,000
 96




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Compensation Committee Interlocks and Insider Participation
  Compensation Committee Report
  Compensation Committee
 97




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##### Table of Contents



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 Ownership of Equity Securities in the Company
   Number of Shares of Common
    
    Percent of Common StockName of Beneficial Owner(1)
    
    Stock Beneficially Owned
    
    Beneficially Owned5.0% Stockholders:CapStreet II, L.P.
    
    
    1,017,958
    
    
    
    33.4
    %CapStreet Parallel II, L.P.
    
    
    119,501
    
    
    
    3.9
    %TA Associates, Inc.(2)
    
    
    894,568
    
    
    
    29.3
    %Ralph H. Clinard (3)
    
    
    420,225
    
    
    
    13.8
    %Directors and Executive Officers:Fred R. Lummis (4)
    
    
    1,137,459
    
    
    
    37.3
    %Michael Wilson (5)
    
    
    894,568
    
    
    
    29.3
    %Roger Kafker (6)
    
    
    894,568
    
    
    
    29.3
    %Jack Antonini
    
    
    59,816
    
    
    
    2.0
    %Michael H. Clinard (7)
    
    
    74,733
    
    
    
    2.5
    %Thomas E. Upton (8)
    
    
    37,838
    
    
    
    1.2
    %J. Chris Brewster (9)
    
    
    48,750
    
    
    
    1.6
    %Ronald Delnevo (10)
    
    
    33,209
    
    
    
    1.1
    %Robert P. Barone (11)
    
    
    4,316
    
    
    
    *Frederick W. Brazelton
    
    
    
    
    
    
    Jorge M. Diaz (12)
    
    
    2,500
    
    
    
    *All
Directors and executive officers as a group
    
    
    2,713,414
    
    
    
    89.0
    %
 
 *
    
    Less than 1.0% of the outstanding common stock.(1)
    
    Beneficial ownership is a term broadly defined by the SEC in Rule 13d-3 under the
Exchange Act, and includes more than the typical forms of stock ownership, that is, stock held in
the persons name. The term also includes what is referred to as indirect ownership, meaning
ownership of shares as to which a person has or shares investment or voting power. For the purpose
of this table, a person or group of persons is deemed to have beneficial ownership of any shares
as of March 30, 2007, that such person or group has the right to acquire within 60 days after such
date.(2)
    
    The shares owned by TA Associates, Inc. through certain of its affiliated funds, including
TA IX L.P., TA/Atlantic and Pacific IV L.P., TA/Atlantic and Pacific V L.P., TA Strategic Partners
Fund A L.P., TA Strategic Partners Fund B L.P., TA Investors II, L.P., which we collectively refer
to as the TA Funds, are Series B Preferred shares which are convertible into our common stock on a
share for share basis.(3)
    
    Mr. Clinard is a member of our Board of Directors.(4)
    
    The shares indicated as being beneficially owned by Mr. Lummis are owned directly by
CapStreet II, L.P. and CapStreet Parallel II, L.P. Mr. Lummis serves as a senior advisor of The
CapStreet Group, the ultimate general partner of both CapStreet II, L.P. and CapStreet Parallel II,
L.P. As such, Mr. Lummis may be deemed to have a beneficial ownership of the shares owned by
CapStreet II, L.P. and CapStreet Parallel II, L.P. Mr. Lummis disclaims beneficial ownership of
such shares.(5)
    
    Mr. Wilson serves as a Managing Director of TA Associates, Inc., the ultimate general
partner of the TA Funds. As such, Mr. Wilson may be deemed to have a beneficial ownership of the
shares owned by the TA Funds. Mr. Wilson disclaims beneficial ownership of such shares.(6)
    
    Mr. Kafker serves as a Managing Director of TA Associates, Inc., the ultimate general
partner of the TA Funds. As such, Mr. Kafker may be deemed to have a beneficial ownership of the
shares owned by the TA Funds. Mr. Kafker disclaims beneficial ownership of such shares. 98




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##### Table of Contents



(7)
    
    Includes options to purchase 21,183 shares of common stock exercisable by Michael H.
Clinard.(8)
    
    Includes options to purchase 26,104 shares of common stock exercisable by Thomas E.
Upton.(9)
    
    Represents options to purchase 48,750 shares of common stock exercisable by J. Chris
Brewster.(10)
    
    Represents 13,209 shares of our Series B Preferred stock which are convertible into our
common stock on a share for share basis and options to purchase 20,000 shares of common stock
exercisable by Ronald Delnevo.(11)
    
    Represents options to purchase 4,316 shares of common stock exercisable by Robert P.
Barone.(12)
    
    Represents options to purchase 2,500 shares of common stock exercisable by Jorge
Diaz. Equity Compensation Plan Information
  Number of Securities RemainingNumber of Securities to
    
    Weighted-average
    
    Available for Future Issuance underbe Issued upon Exercise
    
    Exercise Price
    
    Equity Compensation Plans (excludingPlan Category
    
    Of Outstanding Options
    
    of Outstanding Options
    
    Securities Reflected in Column (a))(a)
    
    (b)
    
    (c)Equity
compensation plans
approved by
security
holders(1)
    
    
    22,651
    
    
    $
    0.11
    
    
    
    Equity
compensation plans
not approved by
security
holders(2)
    
    
    486,810
    
    
    $
    55.21
    
    
    
    68,875Total
    
    
    509,461
    
    
    $
    52.76
    
    
    
    68,875
 
 (1)
    
    Represents shares issued under our predecessors option plan in 2001,
prior to the adoption of our 2001 Stock Incentive Plan. These options are fully vested and
have a weighted-average remaining life of 4.4 years.(2)
    
    Represents shares issued under the 2001 Stock Incentive Plan, approved by our
Board of Directors. 
 ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 Related Party Transactions
     99




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Approval of Related Person Transactions
  
    
    any person who is, or at any time during the applicable period was, a Director of the Company;
    
    any person who is known to the Company to be the beneficial
owner of more than 5.0% of the Common Stock;
    
    any immediate family member of any of the foregoing persons, which means any child,
stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law of the Director or
a more than 5.0%
beneficial owner of the Common Stock, and any person (other than a tenant or employee)
sharing the household of such Director or a more than 5.0% beneficial owner of the Common
Stock; and
    
    any firm, corporation or other entity in which any of the foregoing persons is a partner
or principal or in a similar position or in which such person has a
10.0% or greater
beneficial ownership interest.
   Director Independence
 Item 10. Directors, Executive
Officers, and Corporate Governance
 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
   2006
    
    
    2005Audit fees
    
    $
    884,000
    
    
    $
    828,000Audit-related fees
    
    
    
    
    
    
    Tax fees
    
    
    
    
    
    
    All other fees
    
    
    
    
    
    
    Total
    
    $
    884,000
    
    
    $
    828,000
 100




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##### Table of Contents



Audit Fees.
  Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Auditor
  101




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PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 1.
    
    Financial Statements
 PageReport of Independent Registered Public Accounting Firm
    
    46Consolidated Balance Sheets as of December 31, 2006 and 2005
    
    47Consolidated Statements of Operations for the Years Ended December 31, 2006, 2005, and 2004
    
    48Consolidated Statements of Stockholders Deficit for the Years Ended December 31, 2006, 2005, and 2004
    
    49Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2006, 2005,
and 2004
    
    50Consolidated Statements of Cash Flows for the Years Ended December 31, 2006, 2005, and 2004
    
    51Notes to Consolidated Financial Statements
    
    52
 2.
    
    Financial Statement SchedulesAll schedules are omitted because they are either not applicable or required information is
shown in the financial statements or notes thereto.
 3.
    
    Exhibits
 ExhibitNumber
    
    Description2.1
    
    Share Sale and Purchase Agreement between Bank Machine (Holdings) Limited and Cardtronics
Limited, dated effective as of May 17, 2005 (incorporated herein by reference to Exhibit 2.1 of
the Amendment No. 1 to Registration Statement on Form S-4/A, filed by Cardtronics, Inc. on July
10, 2006, Registration No. 333-131199).2.2
    
    Purchase and Sale Agreement Between E*TRADE Access, Inc., E*TRADE Bank, Cardtronics, LP and
Cardtronics, Inc., dated effective as of June 2, 2004 (incorporated herein by reference to
Exhibit 2.2 of the Amendment No. 1 to Registration Statement on Form S-4/A, filed by
Cardtronics, Inc. on July 10, 2006, Registration No. 333-131199).3.1
    
    First Amended and Restated Certificate of Incorporation of Cardtronics, Inc., dated as of March
10, 2005 (incorporated herein by reference to Exhibit 3.1 of the Registration Statement on Form
S-4, filed by Cardtronics, Inc. on January 20, 2006, Registration No. 333-131199).3.2
    
    Certificate of Amendment of the First Amended and Restated Certificate of Incorporation of
Cardtronics, Inc. dated as of May 12, 2005 (incorporated herein by reference to Exhibit 3.2 of
the Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).3.3
    
    Certificate of Amendment of the First Amended and Restated Certificate of Incorporation of
Cardtronics, Inc. dated as of August 9, 2005 (incorporated herein by reference to Exhibit 3.3
of the Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).3.4
    
    First Amended and Restated Bylaws of Cardtronics, Inc. (incorporated herein by reference to
Exhibit 3.4 of the Registration Statement on Form S-4, filed by Cardtronics, Inc. on January
20, 2006, Registration No. 333-131199).4.1
    
    Indenture dated as of August 12, 2005 by and among Cardtronics, Inc., the Subsidiary Guarantors
party thereto and Wells Fargo Bank, NA as Trustee (incorporated herein by reference to Exhibit
4.1 of the Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).4.2
    
    Form of Senior Subordinated Note (incorporated by reference to Exhibit A to Exhibit 4.1 hereto).4.3
    
    Registration Rights Agreement dated as of August 12, 2005 by and among Cardtronics, Inc., the
Subsidiary Guarantors party thereto and the Initial Purchasers party thereto (incorporated
herein by reference to Exhibit 4.3 of the Registration Statement on Form S-4, filed by
Cardtronics, Inc. on January 20, 2006, Registration No. 333-131199).
 102




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ExhibitNumber
    
    Description10.1
    
    ATM Cash Services Agreement between Bank of America and Cardtronics, LP, dated effective as of
August 2, 2004 (incorporated herein by reference to Exhibit 10.1 of the Amendment No. 2 to
Registration Statement on Form S-4/A filed by Cardtronics, Inc. on August 25, 2006,
Registration No. 333-131199).10.2
    
    Third Amended and Restated First Lien Credit Agreement, dated as of May 17, 2005, by and among
Cardtronics, Inc., the Subsidiary Guarantors party thereto, Bank of America, N.A., BNP Paribas,
and the other Lenders parties thereto (incorporated herein by reference to Exhibit 10.2 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.3
    
    Amendment No. 1 to Credit Agreement, dated as of July 6, 2005 (incorporated herein by reference
to Exhibit 10.3 of the Registration Statement on Form S-4, filed by Cardtronics, Inc. on
January 20, 2006, Registration No. 333-131199).10.4
    
    Amendment No. 2 to Credit Agreement, dated as of August 5, 2005 (incorporated herein by
reference to Exhibit 10.4 of the Registration Statement on Form S-4, filed by Cardtronics, Inc.
on January 20, 2006, Registration No. 333-131199).10.5
    
    Amendment No. 3 to Credit Agreement, dated as of November 17, 2005 (incorporated herein by
reference to Exhibit 10.5 of the Registration Statement on Form S-4, filed by Cardtronics, Inc.
on January 20, 2006, Registration No. 333-131199).10.6
    
    Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated effective as of
January 30, 2003 (incorporated by reference to Exhibit 10.10 of the Registration Statement on
Form S-1 filed by Cardtronics, Inc. on March 10, 2004, Registration No. 333-113470).10.7
    
    First Amendment to Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated
effective as of February 4, 2004 (incorporated by reference to Exhibit 10.11 of the
Registration Statement on Form S-1 filed by Cardtronics, Inc. on March 10, 2004, Registration
No. 333-113470).10.8
    
    Second Amendment to Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated
effective as of January 1, 2005 (incorporated herein by reference to Exhibit 10.8 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.9
    
    Restricted Stock Agreement, dated as of February 4, 2004 between Cardtronics, Inc. and Jack M.
Antonini (incorporated herein by reference to Exhibit 10.9 of the Registration Statement on
Form S-4, filed by Cardtronics, Inc. on January 20, 2006, Registration No. 333-131199).10.10
    
    First Amendment to Restricted Stock Agreement, dated as of March 1, 2004, between Cardtronics,
Inc. and Jack M. Antonini (incorporated herein by reference to Exhibit 10.10 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.11
    
    Second Amendment to Restricted Stock Agreement, dated as of February 10, 2005, between
Cardtronics, Inc. and Jack M. Antonini (incorporated herein by reference to Exhibit 10.11 of
the Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.12
    
    Employment Agreement between Cardtronics, LP and Michael H. Clinard, dated effective as of June
4, 2001 (incorporated by reference to Exhibit 10.12 of the Registration Statement on Form S-1
filed by Cardtronics, Inc. on March 10, 2004) (incorporated by reference to Exhibit 10.12 of
the Registration Statement on Form S-1 filed by Cardtronics, Inc. on March 10, 2004,
Registration No. 333-113470).10.13
    
    First Amendment to Employment Agreement between Cardtronics, LP and Michael H. Clinard, dated
effective as of January 1, 2005 (incorporated herein by reference to Exhibit 10.13 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.14
    
    Employment Agreement between Cardtronics, LP and Thomas E. Upton, dated effective as of June 1,
2001 (incorporated by reference to Exhibit 10.13 of the Registration Statement on Form S-1
filed by Cardtronics, Inc. on March 10, 2004, Registration No. 333-113470).10.15
    
    First Amendment to Employment Agreement between Cardtronics, LP and Thomas E. Upton, dated
effective as of January 1, 2005(incorporated herein by reference to Exhibit 10.15 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.16
    
    Employment Agreement between Cardtronics, LP and J. Chris Brewster, dated effective as of March
31, 2004 (incorporated by reference to Exhibit 10.14 of the Registration Statement on Form
S-1/A filed by Cardtronics, Inc. on May 14, 2004).10.17
    
    First Amendment to Employment Agreement between Cardtronics, LP and J. Chris Brewster, dated
effective as of January 1, 2005 (incorporated herein by reference to Exhibit 10.17 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.18
    
    Employment Agreement between Cardtronics, LP, Cardtronics, Inc. and Drew Soinski, dated
effective
 103




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##### Table of Contents



ExhibitNumber
    
    Descriptionas of July 12, 2005 (incorporated herein by reference to Exhibit 10.18 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.19
    
    Amended and Restated Service Agreement between Bank Machine Limited and Ron Delnevo, dated
effective as of May 17, 2005 (incorporated herein by reference to Exhibit 10.19 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.20
    
    Bonus Agreement between Bank Machine Limited and Ron Delnevo, dated effective as of May 17,
2005 (incorporated herein by reference to Exhibit 10.20 of the Registration Statement on Form
S-4, filed by Cardtronics, Inc. on January 20, 2006, Registration No. 333-131199).10.21
    
    2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as of June 4, 2001
(incorporated herein by reference to Exhibit 10.21 of the Registration Statement on Form S-4,
filed by Cardtronics, Inc. on January 20, 2006, Registration No. 333-131199).10.22
    
    Amendment No. 1 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as
of January 30, 2004 (incorporated herein by reference to Exhibit 10.22 of the Registration
Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006, Registration No.
333-131199).10.23
    
    Amendment No. 2 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as
of June 23, 2004 (incorporated herein by reference to Exhibit 10.23 of the Registration
Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006, Registration No.
333-131199).10.24
    
    Form of Director Indemnification Agreement entered into by and between Cardtronics, Inc. and
each of its directors, dated as of February 10, 2005 (incorporated herein by reference to
Exhibit 10.24 of the Registration Statement on Form S-4, filed by Cardtronics, Inc. on January
20, 2006, Registration No. 333-131199).10.25
    
    Amendment No. 1 to ATM Cash Services Agreement, dated August 2, 2004 (incorporated herein by
reference to Exhibit 10.25 of the Amendment No. 2 to Registration Statement on Form S-4/A filed
by Cardtronics, Inc. on August 25, 2006, Registration No. 333-131199).10.26
    
    Amendment No. 2 to ATM Cash Services Agreement, dated February 9, 2006 (incorporated herein by
reference to Exhibit 10.26 of the Amendment No. 2 to Registration Statement on Form S-4/A filed
by Cardtronics, Inc. on August 25, 2006, Registration No. 333-131199).10.27
    
    2006 Bonus Plan of Cardtronics, Inc., effective as of January 1, 2006.* 10.28
    
    Amendment No. 4 to Credit Agreement, dated as of February 14, 2006. *12.1
    
    Computation of Ratio of Earnings to Fixed Charges.*14.1
    
    Code of Business Conduct and Ethics of Cardtronics, Inc., adopted effective January 1, 2007.*21.1
    
    List of Subsidiaries.31.1
    
    Certification of the Chief Executive Officer of Cardtronics, Inc. pursuant to Section 13a-14(a)
of the Securities Exchange Act of 1934.*31.2
    
    Certification of the Chief Financial Officer of Cardtronics, Inc. pursuant to Section 13a-14(a)
of the Securities Exchange Act of 1934.*32.1
    
    Certification of the Chief Executive Officer of Cardtronics, Inc. pursuant to Section 13a-14(b)
of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.*32.2
    
    Certification of the Chief Financial Officer of Cardtronics, Inc. pursuant to Section 13a-14(b)
of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.*
 
 *
    
    Filed herewith**
    
    Furnished herewith
    
    Management contract or compensatory plan or arrangement 104




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SIGNATURES
  CARDTRONICS, INC.April 2, 2007
    
    /s/ JACK ANTONINIJack AntoniniPresident, Chief Executive Officer, and Director(Principal Executive Officer)April 2, 2007
    
    /s/ J. CHRIS BREWSTERJ. Chris BrewsterChief Financial Officer(Principal Financial and Accounting Officer)
  Signature
    
    Title/s/ JACK ANTONINI
    
    Chief Executive Officer, President, and DirectorJack Antonini
    
    (Principal Executive Officer)/s/ J. CHRIS BREWSTER
    
    Chief Financial OfficerJ. Chris Brewster
    
    (Principal Financial and Accounting Officer)/s/ FRED R. LUMMIS
Fred R. Lummis
    
    Director and Chairman of the Board of Directors/s/ ROBERT P. BARONE
Robert P. Barone
    
    Director/s/ FREDERICK W. BRAZELTON
Frederick W. Brazelton
    
    Director/s/ RALPH H. CLINARD
Ralph H. Clinard
    
    Director/s/ JORGE M. DIAZ
Jorge M. Diaz
    
    Director/s/ ROGER B. KAFKER
Roger B. Kafker
    
    Director/s/ MICHAEL A.R. WILSON
Michael A.R. Wilson
    
    Director/s/ RONALD DELNEVO
Ronald Delnevo
    
    Director and Chief Executive of Bank Machine Limited
 105




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description2.1
    
    Share Sale and Purchase Agreement between Bank Machine (Holdings) Limited and Cardtronics
Limited, dated effective as of May 17, 2005 (incorporated herein by reference to Exhibit 2.1 of
the Amendment No. 1 to Registration Statement on Form S-4/A, filed by Cardtronics, Inc. on July
10, 2006, Registration No. 333-131199).2.2
    
    Purchase and Sale Agreement Between E*TRADE Access, Inc., E*TRADE Bank, Cardtronics, LP and
Cardtronics, Inc., dated effective as of June 2, 2004 (incorporated herein by reference to
Exhibit 2.2 of the Amendment No. 1 to Registration Statement on Form S-4/A, filed by
Cardtronics, Inc. on July 10, 2006, Registration No. 333-131199).3.1
    
    First Amended and Restated Certificate of Incorporation of Cardtronics, Inc., dated as of March
10, 2005 (incorporated herein by reference to Exhibit 3.1 of the Registration Statement on Form
S-4, filed by Cardtronics, Inc. on January 20, 2006, Registration No. 333-131199).3.2
    
    Certificate of Amendment of the First Amended and Restated Certificate of Incorporation of
Cardtronics, Inc. dated as of May 12, 2005 (incorporated herein by reference to Exhibit 3.2 of
the Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).3.3
    
    Certificate of Amendment of the First Amended and Restated Certificate of Incorporation of
Cardtronics, Inc. dated as of August 9, 2005 (incorporated herein by reference to Exhibit 3.3
of the Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).3.4
    
    First Amended and Restated Bylaws of Cardtronics, Inc. (incorporated herein by reference to
Exhibit 3.4 of the Registration Statement on Form S-4, filed by Cardtronics, Inc. on January
20, 2006, Registration No. 333-131199).4.1
    
    Indenture dated as of August 12, 2005 by and among Cardtronics, Inc., the Subsidiary Guarantors
party thereto and Wells Fargo Bank, NA as Trustee (incorporated herein by reference to Exhibit
4.1 of the Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).4.2
    
    Form of Senior Subordinated Note (incorporated by reference to Exhibit A to Exhibit 4.1 hereto).4.3
    
    Registration Rights Agreement dated as of August 12, 2005 by and among Cardtronics, Inc., the
Subsidiary Guarantors party thereto and the Initial Purchasers party thereto (incorporated
herein by reference to Exhibit 4.3 of the Registration Statement on Form S-4, filed by
Cardtronics, Inc. on January 20, 2006, Registration No. 333-131199).
 106




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##### Table of Contents



ExhibitNumber
    
    Description10.1
    
    ATM Cash Services Agreement between Bank of America and Cardtronics, LP, dated effective as of
August 2, 2004 (incorporated herein by reference to Exhibit 10.1 of the Amendment No. 2 to
Registration Statement on Form S-4/A filed by Cardtronics, Inc. on August 25, 2006,
Registration No. 333-131199).10.2
    
    Third Amended and Restated First Lien Credit Agreement, dated as of May 17, 2005, by and among
Cardtronics, Inc., the Subsidiary Guarantors party thereto, Bank of America, N.A., BNP Paribas,
and the other Lenders parties thereto (incorporated herein by reference to Exhibit 10.2 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.3
    
    Amendment No. 1 to Credit Agreement, dated as of July 6, 2005 (incorporated herein by reference
to Exhibit 10.3 of the Registration Statement on Form S-4, filed by Cardtronics, Inc. on
January 20, 2006, Registration No. 333-131199).10.4
    
    Amendment No. 2 to Credit Agreement, dated as of August 5, 2005 (incorporated herein by
reference to Exhibit 10.4 of the Registration Statement on Form S-4, filed by Cardtronics, Inc.
on January 20, 2006, Registration No. 333-131199).10.5
    
    Amendment No. 3 to Credit Agreement, dated as of November 17, 2005 (incorporated herein by
reference to Exhibit 10.5 of the Registration Statement on Form S-4, filed by Cardtronics, Inc.
on January 20, 2006, Registration No. 333-131199).10.6
    
    Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated effective as of
January 30, 2003 (incorporated by reference to Exhibit 10.10 of the Registration Statement on
Form S-1 filed by Cardtronics, Inc. on March 10, 2004, Registration No. 333-113470).10.7
    
    First Amendment to Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated
effective as of February 4, 2004 (incorporated by reference to Exhibit 10.11 of the
Registration Statement on Form S-1 filed by Cardtronics, Inc. on March 10, 2004, Registration
No. 333-113470).10.8
    
    Second Amendment to Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated
effective as of January 1, 2005 (incorporated herein by reference to Exhibit 10.8 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.9
    
    Restricted Stock Agreement, dated as of February 4, 2004 between Cardtronics, Inc. and Jack M.
Antonini (incorporated herein by reference to Exhibit 10.9 of the Registration Statement on
Form S-4, filed by Cardtronics, Inc. on January 20, 2006, Registration No. 333-131199).10.10
    
    First Amendment to Restricted Stock Agreement, dated as of March 1, 2004, between Cardtronics,
Inc. and Jack M. Antonini (incorporated herein by reference to Exhibit 10.10 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.11
    
    Second Amendment to Restricted Stock Agreement, dated as of February 10, 2005, between
Cardtronics, Inc. and Jack M. Antonini (incorporated herein by reference to Exhibit 10.11 of
the Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.12
    
    Employment Agreement between Cardtronics, LP and Michael H. Clinard, dated effective as of June
4, 2001 (incorporated by reference to Exhibit 10.12 of the Registration Statement on Form S-1
filed by Cardtronics, Inc. on March 10, 2004) (incorporated by reference to Exhibit 10.12 of
the Registration Statement on Form S-1 filed by Cardtronics, Inc. on March 10, 2004,
Registration No. 333-113470).10.13
    
    First Amendment to Employment Agreement between Cardtronics, LP and Michael H. Clinard, dated
effective as of January 1, 2005 (incorporated herein by reference to Exhibit 10.13 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.14
    
    Employment Agreement between Cardtronics, LP and Thomas E. Upton, dated effective as of June 1,
2001 (incorporated by reference to Exhibit 10.13 of the Registration Statement on Form S-1
filed by Cardtronics, Inc. on March 10, 2004, Registration No. 333-113470).10.15
    
    First Amendment to Employment Agreement between Cardtronics, LP and Thomas E. Upton, dated
effective as of January 1, 2005(incorporated herein by reference to Exhibit 10.15 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.16
    
    Employment Agreement between Cardtronics, LP and J. Chris Brewster, dated effective as of March
31, 2004 (incorporated by reference to Exhibit 10.14 of the Registration Statement on Form
S-1/A filed by Cardtronics, Inc. on May 14, 2004).10.17
    
    First Amendment to Employment Agreement between Cardtronics, LP and J. Chris Brewster, dated
effective as of January 1, 2005 (incorporated herein by reference to Exhibit 10.17 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).
 107




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##### Table of Contents



ExhibitNumber
    
    Description10.18
    
    Employment Agreement between Cardtronics, LP, Cardtronics, Inc. and Drew Soinski, dated
effective
as of July 12, 2005 (incorporated herein by reference to Exhibit 10.18 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.19
    
    Amended and Restated Service Agreement between Bank Machine Limited and Ron Delnevo, dated
effective as of May 17, 2005 (incorporated herein by reference to Exhibit 10.19 of the
Registration Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006,
Registration No. 333-131199).10.20
    
    Bonus Agreement between Bank Machine Limited and Ron Delnevo, dated effective as of May 17,
2005 (incorporated herein by reference to Exhibit 10.20 of the Registration Statement on Form
S-4, filed by Cardtronics, Inc. on January 20, 2006, Registration No. 333-131199).10.21
    
    2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as of June 4, 2001
(incorporated herein by reference to Exhibit 10.21 of the Registration Statement on Form S-4,
filed by Cardtronics, Inc. on January 20, 2006, Registration No. 333-131199).10.22
    
    Amendment No. 1 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as
of January 30, 2004 (incorporated herein by reference to Exhibit 10.22 of the Registration
Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006, Registration No.
333-131199).10.23
    
    Amendment No. 2 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as
of June 23, 2004 (incorporated herein by reference to Exhibit 10.23 of the Registration
Statement on Form S-4, filed by Cardtronics, Inc. on January 20, 2006, Registration No.
333-131199).10.24
    
    Form of Director Indemnification Agreement entered into by and between Cardtronics, Inc. and
each of its directors, dated as of February 10, 2005 (incorporated herein by reference to
Exhibit 10.24 of the Registration Statement on Form S-4, filed by Cardtronics, Inc. on January
20, 2006, Registration No. 333-131199).10.25
    
    Amendment No. 1 to ATM Cash Services Agreement, dated August 2, 2004 (incorporated herein by
reference to Exhibit 10.25 of the Amendment No. 2 to Registration Statement on Form S-4/A filed
by Cardtronics, Inc. on August 25, 2006, Registration No. 333-131199).10.26
    
    Amendment No. 2 to ATM Cash Services Agreement, dated February 9, 2006 (incorporated herein by
reference to Exhibit 10.26 of the Amendment No. 2 to Registration Statement on Form S-4/A filed
by Cardtronics, Inc. on August 25, 2006, Registration No. 333-131199).10.27
    
    2006 Bonus Plan of Cardtronics, Inc., effective as of January 1, 2006.* 10.28
    
    Amendment No. 4 to Credit Agreement, dated as of February 14, 2006. *12.1
    
    Computation of Ratio of Earnings to Fixed Charges.*14.1
    
    Code of Business Conduct and Ethics of Cardtronics, Inc., adopted effective January 1, 2007.*21.1
    
    List of Subsidiaries.31.1
    
    Certification of the Chief Executive Officer of Cardtronics, Inc. pursuant to Section 13a-14(a)
of the Securities Exchange Act of 1934.*31.2
    
    Certification of the Chief Financial Officer of Cardtronics, Inc. pursuant to Section 13a-14(a)
of the Securities Exchange Act of 1934.*32.1
    
    Certification of the Chief Executive Officer of Cardtronics, Inc. pursuant to Section 13a-14(b)
of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.*32.2
    
    Certification of the Chief Financial Officer of Cardtronics, Inc. pursuant to Section 13a-14(b)
of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.*
 
 *
    
    Filed herewith**
    
    Furnished herewith
    
    Management contract or compensatory plan or arrangement 108