##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    September 30, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number
    333-113470
      CARDTRONICS, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

76-0681190(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer Identification
    No.)3110 Hayes Road, Suite 300
    Houston, TX(Address of principal
    executive offices)

77082(Zip Code)   Registrants telephone number, including area code:
 (281) 596-9988
  þ o
  Rule 12b-2
 o o þ
  Rule 12b-2 o þ
  Common Stock, par value: $0.0001 per share


Shares outstanding on November 8, 2007: 1,764,735




---



##### 



CARDTRONICS,
    INC.
  TABLE OF CONTENTS
  PAGEPART I.


Financial InformationItem 1.


Financial Statements (unaudited)


2Condensed Consolidated Balance Sheets as of
    September 30, 2007 and December 31, 2006


2Condensed Consolidated Statements of Operations
    for the Three and Nine Months Ended September 30, 2007 and
    2006


3Condensed Consolidated Statements of Cash Flows
    for the Nine Months Ended September 30, 2007 and 2006


4Notes to Condensed Consolidated Financial
    Statements


5Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


32Item 3.


Quantitative and Qualitative Disclosures about
    Market Risk


50Item 4.


Controls and Procedures


52PART II.


Other InformationItem 1.


Legal Proceedings


53Item 1A.


Risk Factors


55Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


59Item 3.


Defaults Upon Senior Securities


59Item 4.


Submission of Matters to a Vote of Security
    Holders


59Item 5.


Other Information


59Item 6.


Exhibits


59Signatures


60Vault Cash AgreementPlacement Agreement2007 Stock Incentive PlanCertification of CEO Pursuant to Rule 13a-14(a)Certification of CFO Pursuant to Rule 13a-14(a)Certification of CEO Pursuant to Section 1350Certification of CFO Pursuant to Section 1350    and/or
 1




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##### Table of Contents



PART I.
    FINANCIAL INFORMATION
  Item 1.
    Financial
    Statements  CARDTRONICS,
    INC.
  CONDENSED CONSOLIDATED BALANCE SHEETS
 (In
    thousands, except share amounts)
  September 30,


December 31,2007


2006(unaudited)ASSETSCurrent assets:Cash and cash equivalents

$
6,118


$
2,718Accounts and notes receivable, net of allowance of $400 and $409
    as of September 30, 2007 and December 31, 2006,
    respectively


24,076



14,891Inventory


5,294



4,444Prepaid expenses, deferred costs, and other current assets


11,955



16,334Total current assets


47,443



38,387Property and equipment, net


138,324



86,668Intangible assets, net


134,690



67,763Goodwill


236,488



169,563Prepaid expenses and other assets


5,256



5,375Total assets

$
562,201


$
367,756LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Current portion of long-term debt

$
529


$
194Current portion of capital lease obligations


1,098



Current portion of other long-term liabilities


12,552



2,501Accounts payable and accrued liabilities


79,018



51,256Total current liabilities


93,197



53,951Long-term liabilities:Long-term debt, net of related discounts


406,100



252,701Capital lease obligations


1,183



Deferred tax liability, net


9,943



7,625Asset retirement obligations


16,392



9,989Other long-term liabilities and minority interest in subsidiaries


17,921



4,064Total liabilities


544,736



328,330Redeemable convertible preferred stock


76,794



76,594Stockholders deficit:Common stock, $0.0001 par value; 5,000,000 shares
    authorized; 2,394,509 shares issued at September 30,
    2007 and December 31, 2006, respectively; 1,764,735 and
    1,760,798 outstanding at September 30, 2007 and
    December 31, 2006, respectively






Subscriptions receivable (at face value)


(324
)


(324
)Additional paid-in capital


3,625



2,857Accumulated other comprehensive income, net


8,577



11,658Accumulated deficit


(22,986
)


(3,092
)Treasury stock; 629,774 and 633,711 shares at cost at
    September 30, 2007 and December 31, 2006, respectively


(48,221
)


(48,267
)Total stockholders deficit


(59,329
)


(37,168
)Total liabilities and stockholders deficit

$
562,201


$
367,756   See accompanying notes to condensed consolidated financial
    statements.
 2




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##### Table of Contents



CARDTRONICS,
    INC.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (In thousands)
    (Unaudited)
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2007


2006


2007


2006Revenues:ATM operating revenues

$
106,234


$
72,887


$
251,854


$
209,542Vcom operating revenues


685







685



ATM product sales and other revenues


3,668



3,478



9,805



9,218Total revenues


110,587



76,365



262,344



218,760Cost of revenues:Cost of ATM operating revenues (includes stock-based
    compensation of $16 and $15 for the three months ended
    September 30, 2007 and 2006, respectively, and $47 and $35
    for the nine months ended September 30, 2007 and 2006,
    respectively. Excludes depreciation, accretion, and
    amortization, shown separately below.)


79,966



54,280



191,046



157,225Cost of Vcom operating revenues


2,644







2,644



Cost of ATM product sales and other revenues


3,111



3,105



9,196



8,142Total cost of revenues


85,721



57,385



202,886



165,367Gross profit


24,866



18,980



59,458



53,393Operating expenses:Selling, general, and administrative expenses (includes
    stock-based compensation of $297 and $240 for the three months
    ended September 30, 2007 and 2006, respectively, and $721
    and $600 for the nine months ended September 30, 2007 and
    2006, respectively)


7,621



5,811



20,985



15,709Depreciation and accretion expense


6,961



5,214



18,541



14,072Amortization expense


9,204



2,263



14,062



9,610Total operating expenses


23,786



13,288



53,588



39,391Income from operations


1,080



5,692



5,870



14,002Other expense (income):Interest expense, net


8,545



5,871



20,437



17,193Amortization and write-off of financing costs and bond discounts


439



362



1,155



1,576Minority interest in subsidiary


(174
)


(71
)


(286
)


(128
)Other


678



(83
)


1,037



(740
)Total other expense


9,488



6,079



22,343



17,901Loss before income taxes


(8,408
)


(387
)


(16,473
)


(3,899
)Income tax provision (benefit)


2,275



(60
)


3,212



(1,217
)Net loss


(10,683
)


(327
)


(19,685
)


(2,682
)Preferred stock accretion expense


67



67



200



199Net loss available to common stockholders

$
(10,750
)

$
(394
)

$
(19,885
)

$
(2,881
)   See accompanying notes to condensed consolidated financial
    statements.
 3




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##### Table of Contents



CARDTRONICS,
    INC.
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands)
    (Unaudited)
  Nine Months EndedSeptember 30,2007


2006Cash flows from operating activities:Net loss

$
(19,685
)

$
(2,682
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation, amortization, and accretion expense


32,603



23,682Amortization and write-off of financing costs and bond discounts


1,155



1,576Stock-based compensation expense


768



635Deferred income taxes


3,065



(1,316
)Minority interest


(286
)


(128
)Loss on sale or disposal of assets


1,672



731Gain on sale of Winn-Dixie equity securities


(569
)


Other reserves and non-cash items


829



Changes in assets and liabilities, net of acquisitions:Increase in accounts and notes receivable, net


(1,607
)


(938
)Decrease (increase) in prepaid, deferred costs, and other
    current assets


2,855



(3,598
)Decrease (increase) in inventory


3,231



(1,184
)Increase in other assets


(5,193
)


(907
)Increase in accounts payable and accrued liabilities


19,031



3,972Decrease in other liabilities


(2,680
)


(2,976
)Net cash provided by operating activities


35,189



16,867Cash flows from investing activities:Additions to property and equipment


(43,957
)


(24,179
)Proceeds from disposals of property and equipment


3



100Payments for exclusive license agreements and site acquisition
    costs


(1,381
)


(1,842
)Additions to equipment to be leased to customers


(412
)


Principal payments received under direct financing leases


22



Acquisition of 7-Eleven Financial Services Business, net of cash
    acquired


(138,570
)


Other acquisitions, net of cash acquired






(12
)Proceeds from sale of Winn-Dixie equity securities


3,950



Proceeds received out of escrow related to BASC acquisition


876



Net cash used in investing activities


(179,469
)


(25,933
)Cash flows from financing activities:Proceeds from issuance of long-term debt


170,258



30,300Repayments of long-term debt


(22,363
)


(22,000
)Proceeds from borrowings under bank overdraft facility, net


54



Issuance of capital stock


46



Minority interest shareholder capital contribution


174



Purchase of treasury stock






(50
)Deferred equity offering costs


(150
)


Debt issuance and modification costs


(326
)


(477
)Net cash provided by financing activities


147,693



7,773Effect of exchange rate changes on cash


(13
)


69Net increase (decrease) in cash and cash equivalents


3,400



(1,224
)Cash and cash equivalents at beginning of period


2,718



1,699Cash and cash equivalents at end of period

$
6,118


$
475Supplemental disclosure of cash flow information:Cash paid for interest

$
22,872


$
21,554Cash paid for income taxes

$
27


$
49Fixed assets financed by direct debt

$
3,125


$
   See accompanying notes to condensed consolidated financial
    statements.
 4




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  1. General
    and Basis of Presentation
  General
  and/or
  7-Eleven ®
  Basis of
    Presentation
    Form 10-Q Form 10-Q Form 10-K,
  Form 10-K.
   5




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Cost of
    ATM Operating Revenues and Gross Profit Presentation
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2007


2006


2007


2006(In thousands)Depreciation and accretion related to ATMs and ATM-related assets

$
6,479


$
4,855


$
17,257


$
13,033Amortization


9,204



2,263



14,062



9,610Total depreciation, accretion, and amortization excluded from
    cost of ATM operating revenues and gross profit

$
15,683


$
7,118


$
31,319


$
22,643     2. Acquisitions
  Acquisition
    of 7-Eleven Financial Services Business
  TM
  Business Combinations.
 6




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Cash

$
1,427Trade accounts receivable, net


3,388Surcharge and interchange receivable


3,769Inventory


1,953Other current assets


3,012Property and equipment


18,315Software


4,113Intangible assets subject to amortization


78,000Goodwill


62,367Total assets acquired


176,344Current portion of capital lease obligations


(1,119
)Accounts payable


(688
)Accrued liabilities and deferred income


(9,583
)Current portion of other long-term liabilities


(7,777
)Non-current portion of capital lease obligations


(1,388
)Other long-term liabilities


(17,809
)Total liabilities assumed


(38,364
)Net assets acquired

$
137,980   true-up
  Pro Forma
    Results of Operations
  7-Eleven
 7




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Nine Months EndedSeptember 30,2007


2006(In thousands)Revenues

$
349,854


$
343,261Income from operations


15,315



34,178Net (loss) income


(17,820
)


3,233   Acquisition
    of CCS Mexico
        3.
    Stock-based
    Compensation  Share-Based
    Payment
  Three Months Ended


Nine Months EndedSeptember 30,


September 30,2007


2006


2007


2006(In thousands)Cost of ATM operating revenues

$
16


$
15


$
47


$
35Selling, general, and administrative expenses


297



240



721



600Total stock-based compensation expense

$
313


$
255


$
768


$
635  8




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedNumber


Averageof Shares


Exercise PriceBalance as of January 1, 2007


509,461


$
52.76Granted


76,000


$
90.05Exercised


(3,937
)

$
11.73Forfeited


(25,000
)

$
83.84Balance as of September 30, 2007


556,524


$
56.74Options vested and exercisable as of September 30, 2007


333,399


$
38.58   4.
    Comprehensive
    Income (Loss)  Reporting Comprehensive Income
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2007


2006


2007


2006(In thousands)Net loss

$
(10,683
)

$
(327
)

$
(19,685
)

$
(2,682
)Foreign currency translation adjustments


1,878



1,706



4,378



7,015Changes in unrealized gains on interest rate hedges, net of taxes


(7,155
)


(3,919
)


(6,961
)


(439
)Reclassifications of unrealized gains on available-for-sale
    securities, net of taxes










(498
)


Total comprehensive (loss) income

$
(15,960
)

$
(2,540
)

$
(22,766
)

$
3,894  9




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    September 30, 2007


December 31, 2006(In thousands)Foreign currency translation adjustments

$
11,089


$
6,711Unrealized (losses) gains on interest rate hedges, net of taxes
    as of December 31, 2006


(2,512
)


4,449Unrealized gains on available-for-sale securities, net of taxes






498Total accumulated other comprehensive income

$
8,577


$
11,658     5.
    Intangible
    Assets  Intangible
    Assets with Indefinite Lives
    Goodwill


Trade NameU.S.


U.K.


Mexico


U.S.


U.K.


Total(In thousands)Balance as of December 31, 2006

$
86,702


$
82,172


$
689


$
200


$
3,923


$
173,686Acquisition of 7-Eleven Financial Services Business


62,367



















62,367Purchase price adjustment


1,558



















1,558Foreign currency translation adjustments






2,999



1







147



3,147Balance as of September 30, 2007

$
150,627


$
85,171


$
690


$
200


$
4,070


$
240,758  10




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Intangible
    Assets with Definite Lives
    Gross





NetCarrying


Accumulated


CarryingAmount


Amortization


Amount(In thousands)Customer contracts and relationships

$
162,426


$
(45,010
)

$
117,416Deferred financing costs


13,864



(3,903
)


9,961Exclusive license agreements


4,568



(1,583
)


2,985Non-compete agreements


100



(42
)


58Total

$
180,958


$
(50,538
)

$
130,420        11




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Deferred


ExclusiveCustomer Contracts


Financing


License


Non-competeand Relationships


Costs


Agreements


Agreements


Total(In thousands)2007

$
4,171


$
357


$
173


$
6


$
4,7072008


16,698



1,516



633



25



18,8722009


16,384



1,628



628



25



18,6652010


14,941



1,752



531



2



17,2262011


13,120



1,891



417







15,4282012


11,909



1,751



349







14,009Thereafter


40,193



1,066



254







41,513Total

$
117,416


$
9,961


$
2,985


$
58


$
130,420   6.
    Accounts
    Payable and Accrued Liabilities    September 30, 2007


December 31, 2006(In thousands)Accounts payable

$
28,478


$
16,915Accrued merchant fees


11,741



7,915Accrued interest


5,759



7,954Accrued cash management fees


6,632



2,740Accrued armored fees


5,097



3,242Accrued maintenance fees


3,000



2,090Accrued compensation


2,806



3,499Accrued purchases


2,581



343Accrued ATM telecommunications fees


1,665



650Other accrued expenses


11,259



5,908Total

$
79,018


$
51,256  12




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    Long-term
    Debt    September 30, 2007


December 31, 2006(In thousands)Revolving credit facility

$
105,600


$
53,100Senior subordinated notes issued in 2005 and due
    August 2013 (net of unamortized discount of
    $1.1 million as of September 30, 2007 and
    $1.2 million as of December 31, 2006)


198,886



198,783Senior subordinated notes issued in 2007 and due August 2013
    (net of unamortized discount of $2.9 million as
    September 30, 2007)


97,073



Other


5,070



1,012Total


406,629



252,895Less current portion


529



194Total excluding current portion

$
406,100


$
252,701   Revolving
    Credit Facility
    12-month 12-month 12-month
  12-month
 13




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Senior
    Subordinated Notes
      Other
    Facilities
   14




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      8.
    Asset
    Retirement Obligations  Asset Retirement
    Obligations.
    Asset retirement obligation as of January 1, 2007

$
9,989Additional obligations


8,357Accretion expense


831Payments


(902
)Change in estimates


(1,974
)Foreign currency translation adjustments


91Asset retirement obligation as of September 30, 2007

$
16,392    15




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  9.
    Other
    Long-term Liabilities    September 30, 2007


December 31, 2006(In thousands)Deferred revenue

$
1,760


$
481Other deferred liabilities


10,347



161Interest rate swaps


3,417



Minority interest in subsidiary






112Other long-term liabilities


2,397



3,310Total

$
17,921


$
4,064       10.
    Preferred
    Stock     16




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Form S-1
    11.
    Income
    Taxes    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2007


2006


2007


2006(In thousands)Income tax provision (benefit)

$
2,275


$
(60
)

$
3,212


$
(1,217
)Effective tax rate


(27.1
)%


15.5
%


(19.5
)%


31.2
%      17




---



##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      12.
    Commitments
    and Contingencies  Legal
    and Other Regulatory Matters
  National Federation of the Blind
    (NFB).
      Other matters.
 18




---



##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Capital
    and Operating Lease Obligations
     19




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  13.
    Derivative
    Financial Instruments    (in
    thousands)
  Weighted AverageNotional Amount

Fixed Rate


Period$300,000


4.00
%


October 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,
     20




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14.
    Segment
    Information  and/or
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2007


2006


2007


2006(In thousands)EBITDA

$
16,741


$
13,323


$
37,722


$
38,552Depreciation and accretion expense


6,961



5,214



18,541



14,072Amortization expense


9,204



2,263



14,062



9,610Interest expense, net, including the amortization and write-off
    of financing costs and bond discounts


8,984



6,233



21,592



18,769Income tax provision (benefit)


2,275



(60
)


3,212



(1,217
)Net loss

$
(10,683
)

$
(327
)

$
(19,685
)

$
(2,682
)    21




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##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Three Months Ended September 30, 2007United





AdvancedUnited States


Kingdom


Mexico


Functionality


Eliminations


Total(In thousands)Revenue from external customers

$
91,259


$
17,192


$
1,451


$
685


$



$
110,587Cost of revenues


69,586



12,339



1,152



2,644







85,721Selling, general, and administrative expense


6,091



1,116



344



121



(51
)


7,621EBITDA

$
15,036


$
3,611


$
(50
)

$
(2,080
)

$
224


$
16,741Depreciation and accretion expense

$
4,862


$
1,997


$
93


$



$
9


$
6,961Amortization expense


8,743



449



12











9,204Interest expense, net


7,778



1,124



82











8,984Capital
    expenditures(1)(2)

$
9,685


$
9,833


$
865


$
226


$



$
20,609Additions to equipment to be leased to customers










(10
)










(10
)   For the Three Months Ended September 30, 2006United





AdvancedUnited States


Kingdom


Mexico


Functionality


Eliminations


Total(In thousands)Revenue from external customers

$
64,346


$
11,747


$
272


$



$



$
76,365Intersegment revenues


46















(46
)


Cost of revenues


49,550



7,719



144







(28
)


57,385Selling, general, and administrative expense


4,814



803



194











5,811EBITDA

$
10,259


$
3,210


$
(128
)

$



$
(18
)

$
13,323Depreciation and accretion expense

$
4,096


$
1,106


$
12


$



$



$
5,214Amortization expense


1,888



342



33











2,263Interest expense, net


5,416



831



(14
)










6,233Capital
    expenditures(1)(2)

$
8,592


$
5,744


$
91


$



$



$
14,427   For the Nine Months Ended September 30, 2007United





AdvancedUnited States


Kingdom


Mexico


Functionality


Eliminations


Total(In thousands)Revenue from external customers

$
213,186


$
45,533


$
2,940


$
685


$



$
262,344Intersegment revenues


(82
)














82



Cost of revenues


165,188



32,650



2,454



2,644



(50
)


202,886Selling, general, and administrative expense


16,735



3,152



961



121



16



20,985EBITDA

$
30,773


$
9,394


$
(491
)

$
(2,080
)

$
126


$
37,722Depreciation and accretion expense

$
13,392


$
5,007


$
162


$



$
(20
)

$
18,541Amortization expense


12,747



1,278



37











14,062Interest expense, net


18,262



3,156



174











21,592Capital
    expenditures(1)(2)

$
21,795


$
21,058


$
2,259


$
226


$



$
45,338Additions to equipment to be leased to customers










412











412  22




---



##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For the Nine Months Ended September 30, 2006United





AdvancedUnited States


Kingdom


Mexico


Functionality


Eliminations


Total(In thousands)Revenue from external customers

$
188,903


$
29,383


$
474


$



$



$
218,760Intersegment revenues


(216
)














216



Cost of revenues


145,767



19,456



295







(151
)


165,367Selling, general, and administrative expense


12,979



2,372



361







(3
)


15,709EBITDA

$
31,378


$
7,394


$
(155
)

$



$
(65
)

$
38,552Depreciation and accretion expense

$
10,979


$
3,067


$
26


$



$



$
14,072Amortization expense


8,698



879



33











9,610Interest expense, net


16,353



2,415



1











18,769Capital
    expenditures(1)(2)

$
16,749


$
9,052


$
220


$



$



$
26,021     (1)
    
    Capital expenditure amounts presented above include payments
    made for exclusive license agreements and site acquisition costs.(2)
    
    Capital expenditure amounts for Cardtronics Mexico are reflected
    gross of any minority interest amounts. Additionally, the 2006
    capital expenditure amount excludes the Companys initial
    $1.0 million investment in Cardtronics Mexico.  Identifiable
    Assets:
  September 30, 2007


December 31, 2006(In thousands)United States

$
396,339


$
238,127United Kingdom


148,467



126,070Mexico


9,730



3,559Advanced Functionality


7,665



Total

$
562,201


$
367,756   15.
    New
    Accounting Pronouncements  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
 23




---



##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair Value Option. The Fair Value Option for
    Financial Assets and Financial Liabilities
  Registration Payment Arrangements. No. 00-19-2, Accounting for Registration Payment Arrangements EITF 00-19-2), EITF 00-19-2 Accounting for Contingencies Accounting for Derivative Instruments
    and Hedging Activities Accounting for Certain Financial
    Instruments with Characteristics of both Liabilities and
    Equity Guarantors
    Accounting and Disclosure Requirements for Guarantees, Including
    Indirect Guarantees of Indebtedness of Others EITF 00-19-2 EITF 00-19-2
  16.
    Related
    Party Transactions  Series B Convertible Preferred Stock
    Amendment.
  Cardtronics Mexico Capital Contribution.
 24




---



##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Common Stock Repurchase.
  17.
    Supplemental
    Guarantor Financial Information   25




---



##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Statements of Operations
  Three Months Ended September 30, 2007Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)Revenues

$



$
91,944


$
18,643


$



$
110,587Operating costs and expenses


320



91,727



17,502



(42
)


109,507Operating (loss) income


(320
)


217



1,141



42



1,080Interest expense, net


2,142



5,636



1,206







8,984Equity in (earnings) losses of subsidiaries


6,005











(6,005
)


Other (income) expense, net






547



131



(174
)


504(Loss) income before income taxes


(8,467
)


(5,966
)


(196
)


6,221



(8,408
)Income tax provision (benefit)


2,432



53



(210
)






2,275Net (loss) income


(10,899
)


(6,019
)


14



6,221



(10,683
)Preferred stock accretion expense


67















67Net (loss) income available to common stockholders

$
(10,966
)

$
(6,019
)

$
14


$
6,221


$
(10,750
)   Three Months Ended September 30, 2006Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)Revenues

$



$
64,392


$
12,019


$
(46
)

$
76,365Operating costs and expenses


311



60,037



10,353



(28
)


70,673Operating (loss) income


(311
)


4,355



1,666



(18
)


5,692Interest expense, net


2,229



3,187



817







6,233Equity in (earnings) losses of subsidiaries


(1,778
)










1,778



Other (income) expense, net






(184
)


78



(48
)


(154
)(Loss) income before income taxes


(762
)


1,352



771



(1,748
)


(387
)Income tax (benefit) provision


(405
)


63



282







(60
)Net (loss) income


(357
)


1,289



489



(1,748
)


(327
)Preferred stock accretion expense


67















67Net (loss) income available to common stockholders

$
(424
)

$
1,289


$
489


$
(1,748
)

$
(394
)   26




---



##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Nine Months Ended September 30, 2007Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)Revenues

$



$
213,953


$
48,473


$
(82
)

$
262,344Operating costs and expenses


909



209,918



45,701



(54
)


256,474Operating (loss) income


(909
)


4,035



2,772



(28
)


5,870Interest expense, net


6,502



11,760



3,330







21,592Equity in (earnings) losses of subsidiaries


9,240











(9,240
)


Other (income) expense, net


(112
)


684



353



(174
)


751(Loss) income before income taxes


(16,539
)


(8,409
)


(911
)


9,386



(16,473
)Income tax provision (benefit)


3,292



158



(238
)






3,212Net (loss) income


(19,831
)


(8,567
)


(673
)


9,386



(19,685
)Preferred stock accretion expense


200















200Net (loss) income available to common stockholders

$
(20,031
)

$
(8,567
)

$
(673
)

$
9,386


$
(19,885
)   Nine Months Ended September 30, 2006Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)Revenues

$



$
189,119


$
29,857


$
(216
)

$
218,760Operating costs and expenses


796



177,627



26,489



(154
)


204,758Operating (loss) income


(796
)


11,492



3,368



(62
)


14,002Interest expense, net


6,335



10,018



2,416







18,769Equity in (earnings) losses of subsidiaries


(2,898
)










2,898



Other (income) expense, net






(956
)


133



(45
)


(868
)(Loss) income before income taxes


(4,233
)


2,430



819



(2,915
)


(3,899
)Income tax (benefit) provision


(1,568
)


37



314







(1,217
)Net (loss) income


(2,665
)


2,393



505



(2,915
)


(2,682
)Preferred stock accretion expense


199















199Net (loss) income available to common stockholders

$
(2,864
)

$
2,393


$
505


$
(2,915
)

$
(2,881
)  27




---



##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Balance Sheets
  As of September 30, 2007Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)Assets:Cash and cash equivalents

$
14


$
5,527


$
577


$



$
6,118Receivables, net


(4,104
)


21,067



3,322



3,791



24,076Other current assets


1,051



7,879



8,647



(328
)


17,249Total current assets


(3,039
)


34,473



12,546



3,463



47,443Property and equipment, net






90,203



48,336



(215
)


138,324Intangible assets, net


9,074



110,305



15,311







134,690Goodwill






150,627



85,861







236,488Investments and advances to subsidiaries


65,906











(65,906
)


Intercompany receivable


(636
)


6,226



(5,590
)






Prepaid and other assets


359,675



3,523



1,733



(359,675
)


5,256Total assets

$
430,980


$
395,357


$
158,197


$
(422,333
)

$
562,201Liabilities and Stockholders Deficit:Current portion of long-term debt and notes payable

$



$



$
529


$



$
529Current portion of capital leases






1,098











1,098Current portion of other long-term liabilities






12,399



153







12,552Accounts payable and accrued liabilities


6,369



47,727



21,453



3,469



79,018Total current liabilities


6,369



61,224



22,135



3,469



93,197Long-term debt, less current portion


401,559



266,925



97,291



(359,675
)


406,100Capital leases






1,183











1,183Deferred tax liability


5,587



1,230



3,126







9,943Asset retirement obligations






11,946



4,446







16,392Other non-current liabilities and minority interest






17,425



496







17,921Total liabilities


413,515



359,933



127,494



(356,206
)


544,736Preferred stock


76,794















76,794Stockholders equity (deficit)


(59,329
)


35,424



30,703



(66,127
)


(59,329
)Total liabilities and stockholders deficit

$
430,980


$
395,357


$
158,197


$
(422,333
)

$
562,201   28




---



##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  As of December 31, 2006Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)Assets:Cash and cash equivalents

$
97


$
1,818


$
803


$



$
2,718Receivables, 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






86,702



82,861







169,563Investments and advances to subsidiaries


81,076











(81,076
)


Intercompany receivable


(122
)


5,046



(4,924
)






Prepaid and other assets


211,175



5,006



369



(211,175
)


5,375Total assets

$
303,215


$
230,978


$
129,629


$
(296,066
)

$
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
)


252,701Deferred tax liability


3,340



1,040



3,245







7,625Asset retirement obligations






7,673



2,316







9,989Other non-current liabilities and minority interest


108



3,806



150







4,064Total liabilities


263,789



179,530



99,807



(214,796
)


328,330Preferred stock


76,594















76,594Stockholders equity (deficit)


(37,168
)


51,448



29,822



(81,270
)


(37,168
)Total liabilities and stockholders deficit

$
303,215


$
230,978


$
129,629


$
(296,066
)

$
367,756  29




---



##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Statements of Cash Flows
  Nine Months Ended September 30, 2007Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)Net cash (used in) provided by operating activities

$
(4,328
)

$
25,198


$
14,319


$



$
35,189Capital expenditures, net






(21,711
)


(22,243
)






(43,954
)Payments for exclusive license agreements and site acquisition
    costs






(307
)


(1,074
)






(1,381
)Additions to equipment to be leased to customers, net of
    principal payments received










(390
)






(390
)Acquisition of 7-Eleven Financial Services Business, net of cash
    acquired






(138,570
)










(138,570
)Proceeds from sale of Winn-Dixie equity securities






3,950











3,950Proceeds received out of escrow related to BASC acquisition






876











876Net cash used in investing activities






(155,762
)


(23,707
)






(179,469
)Proceeds from issuance of long-term debt


169,434



155,934



8,872



(163,982
)


170,258Repayments of long-term debt


(22,000
)


(21,609
)


(114
)


21,360



(22,363
)Issuance of long-term notes receivable


(163,982
)










163,982



Payments received on long-term notes receivable


21,360











(21,360
)


Proceeds from borrowings under bank overdraft facility, net










54







54Issuance of capital stock


46



(363
)


363







46Minority interest shareholder capital contribution






174











174Other financing activities


(613
)


137











(476
)Net cash provided by financing activities


4,245



134,273



9,175







147,693Effect of exchange rate changes on cash










(13
)






(13
)Net increase (decrease) in cash and cash equivalents


(83
)


3,709



(226
)






3,400Cash and cash equivalents at beginning of period


97



1,818



803







2,718Cash and cash equivalents at end of period

$
14


$
5,527


$
577


$



$
6,118   30




---



##### Table of Contents



CARDTRONICS,
    INC.
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Nine Months Ended September 30, 2006Non-Parent


Guarantors


Guarantors


Eliminations


Total(In thousands)Net cash (used in) provided by operating activities

$
(11,866
)

$
20,876


$
7,857


$



$
16,867Capital expenditures, net






(15,196
)


(8,883
)






(24,079
)Payments for exclusive license agreements and site acquisition
    costs






(1,544
)


(298
)






(1,842
)Acquisitions, net of cash acquired


(1,039
)


27







1,000



(12
)Net cash (used in) provided by investing activities


(1,039
)


(16,713
)


(9,181
)


1,000



(25,933
)Proceeds from issuance of long-term debt


30,300



9,900







(9,900
)


30,300Repayments of long-term debt


(22,000
)


(14,900
)






14,900



(22,000
)Issuance of long-term notes receivable


(9,900
)










9,900



Payments received on long-term notes receivable


14,900











(14,900
)


Issuance of capital stock










1,000



(1,000
)


Purchase of treasury stock


(50
)














(50
)Other financing activities


(447
)


(30
)










(477
)Net cash provided by (used in) financing activities


12,803



(5,030
)


1,000



(1,000
)


7,773Effect of exchange rate changes on cash










69







69Net decrease in cash and cash equivalents


(102
)


(867
)


(255
)






(1,224
)Cash and cash equivalents at beginning of period


118



1,544



37







1,699Cash and cash equivalents at end of period

$
16


$
677


$
(218
)

$



$
475  31




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  This Quarterly Report on
    Form 10-Q
    contains certain forward-looking statements within the meaning
    of Section 21E of the Securities Exchange Act of 1934, as
    amended. Such statements are identified by the use of the words
    believe, expect, anticipate,
    will, contemplate, would,
    and similar expressions that contemplate future events. Numerous
    important factors, risks, and uncertainties may affect our
    operating results, including, without limitation, risks and
    uncertainties relating to trends in ATM usage and alternative
    payment options; changes in the ATM transaction fees the Company
    receives; decreases in the number of ATMs that can be placed
    with the Companys top merchants; the Companys
    reliance on third parties for cash management and other key
    outsourced services; changes in interest rates; declines in, or
    system failures that interrupt or delay, ATM transactions; the
    Companys ability to continue to execute its growth
    strategies; risks associated with the acquisition of other ATM
    networks; increased industry competition; increased regulation
    and regulatory uncertainty; changes in ATM technology; changes
    in foreign currency rates; and general and economic conditions.
    As a result, our future results may differ materially from the
    results implied by these or any other forward-looking statements
    made by us or on our behalf, and there can be no assurance that
    future results will meet expectations. All of our
    forward-looking statements, whether written or oral, are
    expressly qualified by these cautionary statements and any other
    cautionary statements that may accompany such forward-looking
    statements. In addition, we disclaim any obligation to update
    any forward-looking statements to reflect events or
    circumstances after the date of this report.
  With this in mind, you should consider the risks discussed
    elsewhere in this report and other documents we file with the
    SEC from time to time and the following important factors that
    could cause actual results to differ materially from those
    expressed in any forward-looking statement made by us or on our
    behalf.
  Overview
    Company-owned.
   32




---



##### Table of Contents



Merchant-owned.
    In-house transaction processing.
  Recent
    Events
  7-Eleven ATM Transaction. tm
 33




---



##### Table of Contents



12-18 months
  Financing Transactions. Form S-1 Form 10-Q
  1 4
 34




---



##### Table of Contents



12-month
    Merchant-owned account attrition.
  Intangible asset impairments.
 35




---



##### Table of Contents



Valuation allowance.
  Results
    of Operations
    Three Months


Nine MonthsEnded September 30,


Ended September 30,2007


2006


2007


2006Revenues:ATM operating revenues


96.1
%


95.4
%


96.0
%


95.8
%Vcom operating revenues


0.6







0.3



ATM product sales and other revenues


3.3



4.6



3.7



4.2Total revenues


100.0



100.0



100.0



100.0Cost of revenues:Cost of ATM operating revenues (exclusive of depreciation,
    accretion, and amortization, shown separately
    below)(1)


72.3



71.1



72.8



71.9Cost of Vcom operating revenues


2.4







1.0



Cost of ATM product sales and other revenues


2.8



4.1



3.5



3.7Total cost of revenues


77.5



75.1



77.3



75.6Gross profit


22.5



24.9



22.7



24.4Operating expenses:Selling, general, and administrative expenses


6.9



7.6



8.0



7.2Depreciation and accretion expense


6.3



6.8



7.1



6.4Amortization
    expense(2)


8.3



3.0



5.4



4.4Total operating expenses


21.5



17.4



20.4



18.0Income from operations


1.0



7.5



2.2



6.4Other expense (income):Interest expense, net


8.1



8.2



8.2



8.6Minority interest in subsidiary


(0.2
)


(0.1
)


(0.1
)


(0.1
)Other


0.6



(0.1
)


0.4



(0.3
)Total other expense


8.6



8.0



8.5



8.2Loss before income taxes


(7.6
)


(0.5
)


(6.3
)


(1.8
)Income tax provision (benefit)


2.1



(0.1
)


1.2



(0.6
)Net loss


(9.7
)%


(0.4
)%


(7.5
)%


(1.2
)%  36




---



##### Table of Contents



(1)
    
    Excludes effects of depreciation, accretion, and amortization
    expense of $15.7 million and $7.1 million for the
    three month periods ended September 30, 2007 and 2006,
    respectively, and $31.3 million and $22.6 million for
    the nine month periods ended September 30, 2007 and 2006,
    respectively.(2)
    
    Includes pre-tax impairment charges of $5.1 million for the
    three month period ended September 30, 2007 and
    $5.3 million and $2.8 million for the nine month
    periods ended September 30, 2007 and 2006, respectively.  Key
    Operating Metrics
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2007


2006


2007


2006Average number of transacting machines:United States: Company-owned


11,347



11,186



11,424



11,023United States: Merchant-owned


11,691



13,023



11,811



13,451United States: 7-Eleven Financial Services
    Business(1)


4,170







1,668



United Kingdom


1,794



1,212



1,602



1,147Mexico(2)


878



305



644



292Total average number of transaction machines


29,880



25,726



27,149



25,913Total transactions (in thousands)


73,007



44,736



166,183



128,539Monthly total transactions per ATM


814



580



680



551Total withdrawal transactions (in thousands)


49,710



32,241



113,934



93,756Monthly withdrawal transactions per ATM


555



418



466



402Per ATM per month:ATM operating revenues

$
1,185


$
944


$
1,031


$
898Cost of ATM operating revenues (exclusive of depreciation,
    accretion, and
    amortization)(3)


892



703



782



674ATM operating gross
    profit(3)(4)

$
293


$
241


$
249


$
224ATM operating gross profit margin (exclusive of depreciation,
    accretion, and
    amortization)(3)(5)


24.7
%


25.5
%


24.1
%


25.0
%     (1)
    
    The 2007 average numbers of transacting ATMs for the 7-Eleven
    Financial Services Business represent the average number of ATM
    and Vcom units beginning from the acquisition date
    (July 20, 2007) and continuing through
    September 30, 2007.(2)
    
    The
    2006 year-to-date
    average number of transacting ATMs for our Mexico operations
    represents the average number of ATM beginning from the
    acquisition date (February 8, 2006) and continuing
    through September 30, 2006.(3)
    
    Excludes effects of depreciation, accretion, and amortization
    expense of $15.7 million and $7.1 million for the
    three month periods ended September 30, 2007 and 2006,
    respectively, and $31.3 million and $22.6 million for
    the nine month periods ended September 30, 2007 and 2006,
    respectively.(4)
    
    ATM operating gross profit is a measure of profitability that
    uses only the revenue and expenses that related to operating the
    ATMs. The revenue and expenses from ATM equipment sales, Vcom
    Services, and other ATM-related services are not included.(5)
    
    The decrease in ATM operating gross profit margins in 2007 is
    primarily due to higher vault cash costs and costs incurred in
    connection with our Triple-DES and in-house processing
    conversion costs. 37




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##### Table of Contents



Revenues
  Three Months Ended September 30,


Nine Months Ended September 30,2007


2006


% Change


2007


2006


% Change(In thousands)





(In thousands)ATM operating revenues

$
106,234


$
72,887



45.8
%

$
251,854


$
209,542



20.2
%Vcom operating revenues


685







100.0
%


685







100.0
%ATM product sales and other revenues


3,668



3,478



5.5
%


9,805



9,218



6.4
%Total revenues

$
110,587


$
76,365



44.8
%

$
262,344


$
218,760



19.9
%   ATM operating revenues.
       38




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##### Table of Contents



Vcom operating revenues.
  ATM product sales and other revenues.
 39




---



##### Table of Contents



Cost
    of Revenues and Gross Margin (exclusive of Depreciation,
    Accretion, and Amortization)
  Three Months Ended September 30,


Nine Months Ended September 30,2007


2006


% Change


2007


2006


% Change(In thousands)





(In thousands)Cost of ATM operating revenues (exclusive of depreciation,
    accretion, and amortization, shown separately
    below)(1)

$
79,966


$
54,280



47.3
%

$
191,046


$
157,225



21.5
%Cost of Vcom operating revenues


2,644







100.0
%


2,644







100.0
%Cost of ATM product sales and other revenues


3,111



3,105



0.2
%


9,196



8,142



12.9
%Total cost of revenues

$
85,721


$
57,385



49.4
%

$
202,886


$
165,367



22.7
%ATM operating revenues gross margin (exclusive of depreciation,
    accretion, and amortization, shown separately
    below)(1)


24.7
%


25.5
%






24.1
%


25.0
%Vcom operating revenues gross margin


(286.0
)%










(286.0
)%


ATM product sales and other revenues gross margin


15.2
%


10.7
%






6.2
%


11.7
%Total gross margin (exclusive of depreciation, accretion, and
    amortization, shown separately
    below)(1)


22.5
%


24.9
%






22.7
%


24.4
%     (1)
    
    Excludes depreciation, accretion, and amortization expense of
    $15.7 million and $7.1 million for the three month
    periods ended September 30, 2007 and 2006, respectively,
    and $31.3 million and $22.6 million for the nine month
    periods ended September 30, 2007 and 2006, respectively.  Cost of ATM operating revenues (exclusive of depreciation,
    accretion, and amortization).
     40




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##### Table of Contents



ATM operating revenues gross margin (exclusive of
    depreciation, accretion, and amortization.)
 41




---



##### Table of Contents



Cost of Vcom operating revenues.
  Cost of ATM product sales and other
    revenues.
  ATM product sales and other revenues gross
    margin.
  Selling,
    General, and Administrative Expenses
    (SG&A)
  Three Months Ended September 30,


Nine Months Ended September 30,2007


2006


% Change


2007


2006


% Change(In thousands)





(In thousands)Selling, general and administrative expenses, excluding
    stock-based compensation

$
7,324


$
5,571



31.5
%

$
20,264


$
15,109



34.1
%Stock-based compensation


297



240



23.8
%


721



600



20.2
%Total selling, general, and administrative expenses

$
7,621


$
5,811



31.1
%

$
20,985


$
15,709



33.6
%Percentage of revenues:Selling, general, and administrative expenses


6.6
%


7.3
%






7.7
%


6.9
%Stock-based compensation


0.3
%


0.3
%






0.3
%


0.3
%Total selling, general, and administrative expenses


6.9
%


7.6
%






8.0
%


7.2
%   Selling, general, and administrative expenses, excluding
    stock-based compensation.
 42




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##### Table of Contents



7-Eleven
  Depreciation
    and Accretion Expense
  Three Months Ended September 30,


Nine Months Ended September 30,2007


2006


% Change


2007


2006


% Change(In thousands)





(In thousands)Depreciation expense

$
6,600


$
4,583



44.0
%

$
17,710


$
12,888



37.4
%Accretion expense


361



631



(42.8
)%


831



1,184



(29.8
)%Depreciation and accretion expense

$
6,961


$
5,214



33.5
%

$
18,541


$
14,072



31.8
%Percentage of revenues:Depreciation expense


6.0
%


6.0
%






6.8
%


5.9
%Accretion expense


0.3
%


0.8
%






0.3
%


0.5
%Total depreciation and accretion


6.3
%


6.8
%






7.1
%


6.4
%   Depreciation expense. 7-Eleven
  Accretion expense. Accounting for Asset Retirement
    Obligations
 43




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##### Table of Contents



7-Eleven
  Amortization
    Expense
  Three Months Ended September 30,


Nine Months Ended September 30,2007


2006


% Change


2007


2006


% Change(In thousands)





(In thousands)Amortization expense

$
9,204


$
2,263



306.7
%

$
14,062


$
9,610



46.3
%Percentage of revenues


8.3
%


3.0
%






5.4
%


4.4
%     7-Eleven 7-Eleven
  7-Eleven
  7-Eleven
 44




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##### Table of Contents



Interest
    Expense, Net
  Three Months Ended September 30,


Nine Months Ended September 30,2007


2006


% Change


2007


2006


% Change(In thousands)





(In thousands)Interest expense, net

$
8,545


$
5,871



45.5
%

$
20,437


$
17,193



18.9
%Amortization and write-off of financing costs and bond discount


439



362



21.3
%


1,155



1,576



(26.7
)%Total interest expense, net

$
8,984


$
6,233



44.1
%

$
21,592


$
18,769



15.0
%Percentage of revenues


8.1
%


8.2
%






8.2
%


8.6
%   Interest expense, net.
  Liquidity and
    Capital Resources
  Amortization and write-off of financing costs and bond
    discounts.
 45




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##### Table of Contents



Other
    Expense (Income)
  Three Months Ended September 30,


Nine Months Ended September 30,2007


2006


% Change


2007


2006


% Change(In thousands)





(In thousands)Minority interest

$
(174
)

$
(71
)


145.1
%

$
(286
)

$
(128
)


123.4
%Other expense (income)


678



(83
)


(916.9
)%


1,037



(740
)


(240.1
)%Total other expense (income)

$
504


$
(154
)


(427.3
)%

$
751


$
(868
)


(186.5
)%Percentage of revenues


0.5
%


(0.2
)%






0.3
%


(0.4
)%     Income
    Tax Provision (Benefit)
  Three Months Ended September 30,

Nine Months Ended September 30,2007

2006

% Change

2007

2006

% Change(In thousands)



(In thousands)Income tax provision (benefit)

$
2,275


$
(60
)


(3,891.7
)%

$
3,212


$
(1,217
)


(363.9
)%Effective tax rate


(27.1
)%


15.5
%






(19.5
)%


31.2
%      46




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##### Table of Contents



Liquidity
    and Capital Resources
  Overview
    internallygenerated
  Operating
    Activities
    Investing
    Activities
    12-month
   47




---



##### Table of Contents



Financing
    Activities
    Financing
    Facilities
         48




---



##### Table of Contents



New
    Accounting Standards
  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
  Registration Payment Arrangements. No. 00-19-2, Accounting for Registration Payment Arrangements EITF 00-19-2), EITF 00-19-2 Accounting for Contingencies Accounting for Derivative Instruments
    and Hedging Activities Accounting for Certain Financial
    Instruments with Characteristics of both Liabilities and
    Equity Guarantors
    Accounting and Disclosure Requirements for Guarantees, Including
    Indirect Guarantees of Indebtedness of Others EITF 00-19-2 EITF 00-19-2
 49




---



##### Table of Contents



Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk  Disclosure
    about Market Risk
  Interest
    Rate Risk
    (in thousands)
  Weighted AverageNotional Amount

Fixed Rate


Period$300,000



4.00%



October 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,
   50




---



##### Table of Contents



Foreign
    Currency Exchange Risk
       51




---



##### Table of Contents



Item 4.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rule 13a-15(e)
  Changes
    in Internal Control over Financial Reporting
  Rules 13a-15(f)
 52




---



##### Table of Contents



PART II.
    OTHER INFORMATION
  Item 1.
    Legal
    Proceedings  National Federation of the Blind
    (NFB).
      Other matters.
   53




---



##### Table of Contents



54




---



##### Table of Contents



Item 1A.
    Risk
    Factors  Form S-1 Form 10-K Form 10-K
  The
    7-Eleven ATM Transaction represents our second largest
    acquisition to date, based on the number of ATMs that we
    acquired. We may be unable to integrate the acquired business in
    an efficient manner, thus increasing our cost of operations and
    reducing the expected profits to be generated from such
    acquisition.
    7-Eleven 7-Eleven
  A
    substantial portion of our future revenues and operating profits
    will be generated by the new
    7-Eleven
    merchant relationship. Accordingly, if
    7-Elevens
    financial condition deteriorates in the future and it is
    required to close some or all of its store locations, or if our
    ATM placement agreement with
    7-Eleven
    expires or is terminated, our future financial results would be
    significantly impaired.
  7-Eleven. 7-Elevens 7-Eleven 7-Eleven 7-Eleven 7-Eleven
 55




---



##### Table of Contents



In
    connection with the 7-Eleven ATM Transaction, we acquired
    advanced-functionality Vcom machines with significant potential
    for providing new services. Failure to achieve market acceptance
    among users could lead to continued losses from the Vcom
    Services, which could adversely affect our operating
    results.
    12-18 months 7-Eleven
  We
    maintain a significant amount of cash within our Company-owned
    ATMs, which is subject to potential loss due to theft or other
    events, including natural disasters.
  and/or
 56




---



##### Table of Contents



We
    have incurred substantial losses in the past and may continue to
    incur losses in the future.
    Our
    operating results have fluctuated historically and could
    continue to fluctuate in the future, which could affect our
    ability to maintain our current market position or
    expand.
    
    changes in general economic conditions and specific market
    conditions in the ATM and financial services industries;
    changes in payment trends and offerings in the markets in which
    we operate;
    competition from other companies providing the same or similar
    services that we offer;
    the timing and magnitude of operating expenses, capital
    expenditures, and expenses related to the expansion of sales,
    marketing, and operations, including as a result of
    acquisitions, if any;
    the timing and magnitude of any impairment charges that may
    materialize over time relating to our goodwill, intangible
    assets or long-lived assets;
    changes in the general level of interest rates in the markets in
    which we operate;
    changes in regulatory requirements associated with the ATM and
    financial services industries;
    changes in the mix of our current services; and
    changes in the financial condition and credit risk of our
    customers.    If our
    goodwill or other intangible assets become impaired, we may be
    required to record a significant charge to
    earnings.
   57




---



##### Table of Contents



Material
    weaknesses previously identified in our internal control over
    financial reporting by our independent registered public
    accounting firm 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, which could have a material adverse effect on
    our business and stock price.
    Form 10-K, Form 10-K,
    Our
    international operations involve special risks and may not be
    successful, which would result in a reduction of our gross
    profits.
   58




---



##### Table of Contents




    exposure to currency fluctuations, including the risk that our
    future reported operating results could be negatively impacted
    by unfavorable movements in the functional currencies of our
    international operations relative to the United States dollar,
    which represents our consolidated reporting currency;
    difficulties in complying with the different laws and
    regulations in each country and jurisdiction in which we
    operate, including unique labor and reporting laws;
    unexpected changes in laws, regulations, and policies of foreign
    governments or other regulatory bodies, including changes that
    could potentially disallow surcharging or that could result in a
    reduction in the amount of interchange fees received per
    transaction;
    difficulties in staffing and managing foreign operations,
    including hiring and retaining skilled workers in those
    countries in which we operate; and
    potentially adverse tax consequences, including restrictions on
    the repatriation of foreign earnings.    Our
    proposed expansion efforts into new international markets
    involve unique risks and may not be successful.
    Form 10-K
  Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds    Item 3.
    Defaults
    upon Senior Securities    Item 4.
    Submission
    of Matters to a Vote of Security Holders    Item 5.
    Other
    Information   59




---



##### Table of Contents



ITEM 6.
    EXHIBITS    ExhibitNumber

Description2
.1

Purchase and Sale Agreement, dated as of July 20, 2007, by
    and between Cardtronics, L.P. and 7-Eleven, Inc. (incorporated
    herein by reference to Exhibit 10.1 of the Report on
    Form 8-K
    filed by Cardtronics, Inc. on July 26, 2007).+*10
.1

Vault Cash Agreement, dated as of July 20, 2007, by and
    between Cardtronics, Inc. and Wells Fargo, N.A.+*10
.2

Placement Agreement, dated as of July 20, 2007, by and
    between Cardtronics, Inc. and 7-Eleven, Inc.*10
.3

Cardtronics, Inc. 2007 Stock Incentive Plan.*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.     +
    
    Application has been made to the Securities and Exchange
    Commission for the confidential treatment of certain provisions
    of this exhibit. The omitted material for which confidential
    treatment has been requested has been filed separately with the
    Securities and Exchange Commission. 60




---



##### Table of Contents



SIGNATURES
      
   President and Chief Executive Officer
 (Principal Executive Officer)
    
   Chief Financial Officer
 (Principal Financial and Accounting Officer)
   61




---



##### Table of Contents



EXHIBIT INDEX
    ExhibitNumber

Description2
.1

Purchase and Sale Agreement, dated as of July 20, 2007, by
    and between Cardtronics, L.P. and
    7-Eleven,
    Inc. (incorporated herein by reference to Exhibit 10.1 of
    the Report on
    Form 8-K
    filed by Cardtronics, Inc. on July 26, 2007).+*10
.1

Vault Cash Agreement, dated as of July 20, 2007, by and
    between Cardtronics, Inc. and Wells Fargo, N.A.+*10
.2

Placement Agreement, dated as of July 20, 2007, by and
    between Cardtronics, Inc. and
    7-Eleven,
    Inc.*10
.3

Cardtronics, Inc. 2007 Stock Incentive Plan.*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.     +
    
    Application has been made to the Securities and Exchange
    Commission for the confidential treatment of certain provisions
    of this exhibit. The omitted material for which confidential
    treatment has been requested has been filed separately with the
    Securities and Exchange Commission. 62