##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 001-33864
 
 CARDTRONICS, INC.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    76-0681190
(I.R.S. Employer Identification No.)3250 Briarpark Drive, Suite 400
Houston, TX
(Address of principal executive offices)
    
    77042
(Zip Code)
 (832) 308-4000
 Yes þ No o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ




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##### 



CARDTRONICS, INC.
 TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)
    
    
    1Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008
    
    
    1Condensed Consolidated Statements of Operations for the Three Months Ended
March 31, 2009 and 2008
    
    
    2Condensed Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2009 and 2008
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Cautionary Statement Regarding Forward-Looking Statements
    
    
    20Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 4. Controls and Procedures
    
    
    34PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    35Item 1A. Risk Factors
    
    
    35Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    35Item 6. Exhibits
    
    
    35Signatures
    
    
    36Exhibit 31.1Exhibit 31.2Exhibit 32.1
    i




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 CARDTRONICS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, excluding share and per share amounts)
 March 31, 2009
    
    
    December 31, 2008(Unaudited)
    
    
    (Audited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    9,451
    
    
    $
    3,424Accounts and notes receivable, net of allowance of $482
and $504 as of March 31, 2009 and December 31, 2008,
respectively
    
    
    22,844
    
    
    
    25,317Inventory
    
    
    3,050
    
    
    
    3,011Restricted cash, short-term
    
    
    2,938
    
    
    
    2,423Prepaid expenses, deferred costs, and other current assets
    
    
    12,750
    
    
    
    17,273Total current assets
    
    
    51,033
    
    
    
    51,448Property and equipment, net
    
    
    147,267
    
    
    
    154,829Intangible assets, net
    
    
    103,582
    
    
    
    108,327Goodwill
    
    
    163,518
    
    
    
    163,784Prepaid expenses, deferred costs, and other assets
    
    
    3,512
    
    
    
    3,839Total assets
    
    $
    468,912
    
    
    $
    482,227LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Current portion of long-term debt and notes payable
    
    $
    1,466
    
    
    $
    1,373Current portion of capital lease obligations
    
    
    697
    
    
    
    757Current portion of other long-term liabilities
    
    
    21,525
    
    
    
    24,302Accounts payable
    
    
    14,639
    
    
    
    17,212Accrued liabilities
    
    
    46,125
    
    
    
    55,174Total current liabilities
    
    
    84,452
    
    
    
    98,818Long-term liabilities:Long-term debt, net of related discounts
    
    
    349,372
    
    
    
    344,816Capital lease obligations
    
    
    96
    
    
    
    235Deferred tax liability, net
    
    
    12,619
    
    
    
    11,673Asset retirement obligations
    
    
    21,461
    
    
    
    21,069Other long-term liabilities
    
    
    23,571
    
    
    
    23,967Total liabilities
    
    
    491,571
    
    
    
    500,578Commitments and contingenciesStockholders deficit:Common stock, $0.0001 par value; 125,000,000 shares
authorized; 45,645,282 and 45,642,282 shares issued as of
March 31, 2009 and December 31, 2008, respectively;
40,518,607 and 40,636,533 shares outstanding as of March
31, 2009 and December 31, 2008, respectively
    
    
    4
    
    
    
    4Subscriptions receivable (at face value)
    
    
    
    
    
    
    (34
    )Additional paid-in capital
    
    
    195,159
    
    
    
    194,101Accumulated other comprehensive loss, net
    
    
    (64,608
    )
    
    
    (64,355
    )Accumulated deficit
    
    
    (105,538
    )
    
    
    (100,470
    )Treasury stock; 5,126,675 and 5,005,749 shares at cost as
of March 31, 2009 and December 31, 2008, respectively
    
    
    (48,222
    )
    
    
    (48,221
    )Total parent stockholders deficit
    
    
    (23,205
    )
    
    
    (18,975
    )Noncontrolling interests
    
    
    546
    
    
    
    624Total stockholders deficit
    
    
    (22,659
    )
    
    
    (18,351
    )Total liabilities and stockholders deficit
    
    $
    468,912
    
    
    $
    482,227
 See accompanying notes to consolidated financial statements.
  1




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CARDTRONICS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, excluding share and per share amounts)
 (Unaudited)
 Three Months Ended March 31,2009
    
    
    2008Revenues:ATM operating revenues
    
    $
    113,580
    
    
    $
    116,297ATM product sales and other revenues
    
    
    1,765
    
    
    
    4,278Total revenues
    
    
    115,345
    
    
    
    120,575Cost of revenues:Cost of ATM operating revenues (excludes depreciation,
accretion, and amortization shown separately below. See
Note 1)
    
    
    82,229
    
    
    
    89,101Cost of ATM product sales and other revenues
    
    
    1,814
    
    
    
    4,164Total cost of revenues
    
    
    84,043
    
    
    
    93,265Gross profit
    
    
    31,302
    
    
    
    27,310Operating expenses:Selling, general, and administrative expenses
    
    
    10,855
    
    
    
    8,551Depreciation and accretion expense
    
    
    9,639
    
    
    
    9,082Amortization expense
    
    
    4,527
    
    
    
    4,503Loss on disposal of assets
    
    
    2,108
    
    
    
    1,193Total operating expenses
    
    
    27,129
    
    
    
    23,329Income from operations
    
    
    4,173
    
    
    
    3,981Other expense (income):Interest expense, net
    
    
    7,711
    
    
    
    7,632Amortization of deferred financing costs and bond discounts
    
    
    568
    
    
    
    508Other income
    
    
    (86
    )
    
    
    (132
    )Total other expense
    
    
    8,193
    
    
    
    8,008Loss before income taxes
    
    
    (4,020
    )
    
    
    (4,027
    )Income tax expense
    
    
    1,017
    
    
    
    565Net loss
    
    
    (5,037
    )
    
    
    (4,592
    )Net income attributable to noncontrolling interests
    
    
    31
    
    
    
    Net loss attributable to controlling interests and
available to common stockholders
    
    $
    (5,068
    )
    
    $
    (4,592
    )Net loss per common share  basic and diluted
    
    $
    (0.13
    )
    
    $
    (0.12
    )Weighted average shares outstanding  basic and diluted
    
    
    38,960,083
    
    
    
    38,589,878
 See accompanying notes to consolidated financial statements.
  2




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CARDTRONICS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Three Months Ended March 31,2009
    
    
    2008Cash flows from operating activities:Net loss attributable to controlling interests
    
    $
    (5,068
    )
    
    $
    (4,592
    )Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:Depreciation, accretion, and amortization expense
    
    
    14,166
    
    
    
    13,585Amortization of deferred financing costs and bond discounts
    
    
    568
    
    
    
    508Stock-based compensation expense
    
    
    1,058
    
    
    
    266Deferred income taxes
    
    
    946
    
    
    
    430Noncontrolling interests
    
    
    31
    
    
    
    Loss on disposal of assets
    
    
    2,225
    
    
    
    1,150Other reserves and non-cash items
    
    
    (573
    )
    
    
    (1,975
    )Changes in assets and liabilities, net of acquisitions:Decrease (increase) in accounts and notes receivable, net
    
    
    2,240
    
    
    
    (2,964
    )Decrease (increase) in prepaid, deferred costs, and other current assets
    
    
    4,631
    
    
    
    (2,595
    )Increase in inventory
    
    
    (724
    )
    
    
    (932
    )Decrease in other assets
    
    
    561
    
    
    
    217Decrease in accounts payable and accrued liabilities
    
    
    (12,384
    )
    
    
    (12,006
    )Decrease in other liabilities
    
    
    (1,273
    )
    
    
    (1,417
    )Net cash provided by (used in) operating activities
    
    
    6,404
    
    
    
    (10,325
    )Cash flows from investing activities:Additions to property and equipment
    
    
    (4,374
    )
    
    
    (25,799
    )Payments for exclusive license agreements and site acquisition costs
    
    
    (59
    )
    
    
    (298
    )Principal payments received under direct financing leases
    
    
    
    
    
    
    13Net cash used in investing activities
    
    
    (4,433
    )
    
    
    (26,084
    )Cash flows from financing activities:Proceeds from issuance of long-term debt
    
    
    23,500
    
    
    
    49,836Repayments of long-term debt and capital leases
    
    
    (18,936
    )
    
    
    (14,995
    )Repayments of borrowings under bank overdraft facility, net
    
    
    (142
    )
    
    
    (1,866
    )Payments received on subscriptions receivable
    
    
    34
    
    
    
    11Proceeds from exercises of stock options
    
    
    
    
    
    
    123Equity offering costs
    
    
    
    
    
    
    (1,250
    )Debt issuance and modification costs
    
    
    (438
    )
    
    
    (4
    )Repurchase of capital stock
    
    
    (1
    )
    
    
    Net cash provided by financing activities
    
    
    4,017
    
    
    
    31,855Effect of exchange rate changes on cash
    
    
    39
    
    
    
    23Net increase (decrease) in cash and cash equivalents
    
    
    6,027
    
    
    
    (4,531
    )Cash and cash equivalents as of beginning of period
    
    
    3,424
    
    
    
    13,439Cash and cash equivalents as of end of period
    
    $
    9,451
    
    
    $
    8,908Supplemental disclosure of cash flow information:Cash paid for interest, including interest on capital leases
    
    $
    14,634
    
    
    $
    15,116
 See accompanying notes to consolidated financial statements.
  3




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CARDTRONICS, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 (1) General and Basis of Presentation
 General
  Basis of Presentation
   Note 15 Noncontrolling Interests in Consolidated Financial Statements  an amendment of ARB No. 5
   4




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Cost of ATM Operating Revenues and Gross Profit Presentation
  2009
    
    
    2008(In thousands)Depreciation and accretion expense related to ATMs and ATM-related assets
    
    $
    8,037
    
    
    $
    7,962Amortization expense
    
    
    4,527
    
    
    
    4,503Total depreciation, accretion, and amortization expense excluded from
Cost of ATM operating revenues and Gross profit
    
    $
    12,564
    
    
    $
    12,465
 (2) Stock-Based Compensation
 Share-Based Payment,
 2009
    
    
    2008(In thousands)Cost of ATM operating revenues
    
    $
    191
    
    
    $
    65Selling, general, and administrative expenses
    
    
    867
    
    
    
    201Total stock-based compensation expense
    
    $
    1,058
    
    
    $
    266
  Options.
 WeightedNumber
    
    
    Averageof Shares
    
    
    Exercise PriceOptions outstanding as of January 1, 2009
    
    
    4,288,942
    
    
    $
    7.96Granted
    
    
    20,000
    
    
    $
    1.16Exercised
    
    
    (3,000
    )
    
    $
    0.03Options outstanding as of March 31, 2009
    
    
    4,305,942
    
    
    $
    7.94Options vested and exercisable as of March 31, 2009
    
    
    3,276,054
    
    
    $
    7.04
  Restricted Stock.
 Numberof SharesRestricted shares outstanding as of January 1, 2009
    
    
    1,679,250Forfeited
    
    
    (120,000
    )Vested
    
    
    (20,000
    )Restricted shares outstanding as of March 31, 2009
    
    
    1,539,250
  5




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(3) Earnings per Share
 Earnings per
Share Determining Whether Instruments Granted in Share-Based
Payment Transactions are Participating Securities
 (4) Comprehensive Income (Loss)
 Reporting Comprehensive Income
 2009
    
    
    2008(In thousands)Net loss
    
    $
    (5,037
    )
    
    $
    (4,592
    )Unrealized gains (losses) on interest rate hedges
    
    
    1,193
    
    
    
    (13,465
    )Foreign currency translation adjustments
    
    
    (1,446
    )
    
    
    (1,408
    )Total comprehensive loss
    
    
    (5,290
    )
    
    
    (19,465
    )Less: comprehensive income (loss) attributable to noncontrolling interests
    
    
    10
    
    
    
    (4
    )Comprehensive loss attributable to controlling interests
    
    $
    (5,300
    )
    
    $
    (19,461
    )
   March 31, 2009
    
    
    December 31, 2008(In thousands)Unrealized losses on interest rate hedges
    
    $
    (30,959
    )
    
    $
    (32,152
    )Foreign currency translation adjustments
    
    
    (33,649
    )
    
    
    (32,203
    )Total accumulated other comprehensive loss
    
    $
    (64,608
    )
    
    $
    (64,355
    )
   6




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(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 January 1, 2009
    
    $
    150,461
    
    
    $
    12,603
    
    
    $
    720
    
    
    $
    200
    
    
    $
    2,922
    
    
    $
    166,906Foreign currency translation adjustments
    
    
    
    
    
    
    (271
    )
    
    
    5
    
    
    
    
    
    
    
    (63
    )
    
    
    (329
    )Balance as of March 31, 2009
    
    $
    150,461
    
    
    $
    12,332
    
    
    $
    725
    
    
    $
    200
    
    
    $
    2,859
    
    
    $
    166,577
 Intangible Assets with Definite Lives
  Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    Amount(In thousands)Customer and branding contracts/relationships
    
    $
    159,168
    
    
    $
    (70,007
    )
    
    $
    89,161Deferred financing costs
    
    
    14,499
    
    
    
    (6,240
    )
    
    
    8,259Exclusive license agreements
    
    
    5,475
    
    
    
    (2,697
    )
    
    
    2,778Non-Compete agreements
    
    
    425
    
    
    
    (100
    )
    
    
    325Total
    
    $
    179,567
    
    
    $
    (79,044
    )
    
    $
    100,523
 (6) Accrued Liabilities
  March 31, 2009
    
    
    December 31, 2008(In thousands)Accrued merchant fees
    
    $
    11,558
    
    
    $
    10,291Accrued armored fees
    
    
    5,683
    
    
    
    5,372Accrued maintenance fees
    
    
    5,394
    
    
    
    4,273Accrued interest expense
    
    
    3,759
    
    
    
    10,643Accrued merchant settlement amounts
    
    
    3,507
    
    
    
    3,111Accrued compensation
    
    
    3,114
    
    
    
    3,396Accrued cash rental and management fees
    
    
    2,681
    
    
    
    3,693Accrued processing costs
    
    
    2,011
    
    
    
    1,804Accrued interest rate swap payments
    
    
    1,847
    
    
    
    1,836Accrued ATM telecommunications costs
    
    
    1,444
    
    
    
    1,916Accrued purchases
    
    
    626
    
    
    
    1,085Other accrued expenses
    
    
    4,501
    
    
    
    7,754Total
    
    $
    46,125
    
    
    $
    55,174
   7




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(7) Long-Term Debt
  March 31, 2009
    
    
    December 31, 2008(In thousands)Revolving credit facility
    
    $
    48,500
    
    
    $
    43,500Senior subordinated notes due August 2013 (net
of unamortized discounts of $3.2 million and
$3.4 million as of March 31, 2009 and December
31, 2008)
    
    
    296,782
    
    
    
    296,637Other
    
    
    5,556
    
    
    
    6,052Total
    
    
    350,838
    
    
    
    346,189Less: current portion
    
    
    1,466
    
    
    
    1,373Total long-term debt, excluding current portion
    
    $
    349,372
    
    
    $
    344,816
 Revolving Credit Facility
   Other Facilities
 Cardtronics Mexico equipment financial agreements.
 Bank Machine overdraft facility.
 (8) Asset Retirement Obligations
 Asset Retirement Obligations,
  8




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(in thousands)
 Asset retirement obligation as of January 1, 2009
    
    $
    21,069Additional obligations
    
    
    776Accretion expense
    
    
    465Payments
    
    
    (661
    )Foreign currency translation adjustments
    
    
    (188
    )Asset retirement obligation as of March 31, 2009
    
    $
    21,461
 Note 11 Fair Value Measurements
 (9) Other Liabilities
  March 31, 2009
    
    
    December 31, 2008(In thousands)Current Portion of Other Long-Term Liabilities:Interest rate swaps
    
    $
    13,324
    
    
    $
    13,788Obligations associated with acquired unfavorable contracts
    
    
    5,925
    
    
    
    8,203Deferred revenue
    
    
    1,870
    
    
    
    1,879Other
    
    
    406
    
    
    
    432Total
    
    $
    21,525
    
    
    $
    24,302Other Long-Term Liabilities:Interest rate swaps
    
    $
    17,635
    
    
    $
    18,364Deferred revenue
    
    
    3,121
    
    
    
    3,604Other long-term liabilities
    
    
    2,815
    
    
    
    1,999Total
    
    $
    23,571
    
    
    $
    23,967
  (10) Derivative Financial Instruments
 Accounting Policy
 Accounting for Derivative Instruments and Hedging Activities, as amended Disclosures about Derivative
Instruments and Hedging Activities
   9




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Weighted AverageNotional Amount
    
    
    Fixed Rate
    
    
    Term(In thousands)$
    550,000
    
    
    
    4.30
    %
    
    April 1, 2009  December 31, 2009$
    550,000
    
    
    
    4.11
    %
    
    January 1, 2010  December 31, 2010$
    400,000
    
    
    
    3.72
    %
    
    January 1, 2011  December 31, 2011$
    200,000
    
    
    
    3.96
    %
    
    January 1, 2012  December 31, 2012
  Cash Flow Hedging Strategy
    10




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Tabular Disclosures
  Balance Sheet Data
 Liability Derivative InstrumentsMarch 31, 2009
    
    
    December 31, 2008Balance Sheet
    
    
    
    
    
    Balance SheetLocation
    
    Fair Value
    
    
    Location
    
    Fair Value(In thousands)Derivatives Designated as
Hedging Instruments Under
SFAS No. 133Interest rate swap contracts
    
    Current portion of
    
    
    
    
    
    Current portion ofother long-term
    
    
    
    
    
    other long-termliabilities
    
    $
    13,324
    
    
    liabilities
    
    $
    13,788Interest rate swap contracts
    
    Other long-term
    
    
    
    
    
    Other long-termliabilities
    
    
    17,635
    
    
    liabilities
    
    
    18,364Total
    
    
    
    $
    30,959
    
    
    
    
    $
    32,152
  Statements of Operations Data
 Amount of Gain (Loss)
    
    
    
    
    Amount of Loss Reclassified fromRecognized in OCI on Derivative
    
    
    Location of Gain (Loss)
    
    Accumulated OCI into IncomeInstruments (Effective Portion)
    
    
    Reclassified from
    
    (Effective Portion)Three Months Ended March 31,
    
    
    Accumulated OCI into
    
    Three Months Ended March 31,2009
    
    
    2008
    
    
    Income (Effective Portion)
    
    2009
    
    
    2008(In thousands)
    
    
    
    
    (In thousands)Derivatives in SFAS No. 133
Cash Flow Hedging
RelationshipsInterest rate swap contracts
    
    $
    6,640
    
    
    $
    (11,578
    )
    
    Cost of ATM
operating revenues
    
    $
    (5,447
    )
    
    $
    (1,887
    )
   Note 11 Fair Value Measurements
 (11) Fair Value Measurements
 Fair Value Measurements Effective Date of Financial Accounting Standards Board
(FASB) Statement No. 157
  11




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Fair Value MeasurementsTotal CarryingValue
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3(In thousands)Liabilities associated with interest rate swaps
    
    $
    30,959
    
    
    $
    
    
    
    $
    30,959
    
    
    $
    
  Fair Value MeasurementsTotal CarryingValue
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3(In thousands)Asset retirement
obligations 
liabilities added
during the three
months ended March
31, 2009
    
    $
    776
    
    
    $
    
    
    
    $
    
    
    
    $
    776
  ash and cash equivalents, accounts and notes receivable, net of the allowance for doubtful
accounts, other current assets, accounts payable, accrued expenses, and other current liabilities.
 Interest rate swaps.
 Additions to asset retirement obligation liability.
  (12) Commitments and Contingencies
 Legal and Other Regulatory Matters
   12




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Other Commitments
 Asset Retirement Obligations. Note 8
 (13) Income Taxes
  2009
    
    
    2008(In thousands)Income tax expense
    
    $
    1,017
    
    
    $
    565Effective tax rate
    
    
    (25.3
    )%
    
    
    (14.0
    )%
   13




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##### Table of Contents



(14) Segment Information
    2009
    
    
    2008(In thousands)EBITDA
    
    $
    18,394
    
    
    $
    17,698Depreciation and accretion expense
    
    
    9,639
    
    
    
    9,082Amortization expense
    
    
    4,527
    
    
    
    4,503Interest expense, net, including amortization of deferred financing costs and bond discounts
    
    
    8,279
    
    
    
    8,140Income tax expense
    
    
    1,017
    
    
    
    565Net loss attributable to controlling interests
    
    $
    (5,068
    )
    
    $
    (4,592
    )
  14




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##### Table of Contents



For the Three Month Period Ended March 31, 2009United States
    
    
    United Kingdom
    
    
    Mexico
    
    
    Eliminations
    
    
    Total(In thousands)Revenue from external customers
    
    $
    96,767
    
    
    $
    14,777
    
    
    $
    3,801
    
    
    $
    
    
    
    $
    115,345Intersegment revenues
    
    
    374
    
    
    
    
    
    
    
    
    
    
    
    (374
    )
    
    
    Cost of revenues
    
    
    70,782
    
    
    
    10,707
    
    
    
    2,928
    
    
    
    (374
    )
    
    
    84,043Selling, general, and
administrative expenses
(1)
    
    
    9,636
    
    
    
    1,017
    
    
    
    202
    
    
    
    
    
    
    
    10,855EBITDA
    
    
    16,508
    
    
    
    1,291
    
    
    
    617
    
    
    
    (22
    )
    
    
    18,394Depreciation and accretion expense
    
    
    6,805
    
    
    
    2,436
    
    
    
    403
    
    
    
    (5
    )
    
    
    9,639Amortization expense
    
    
    4,119
    
    
    
    399
    
    
    
    9
    
    
    
    
    
    
    
    4,527Loss on disposal of assets
    
    
    395
    
    
    
    1,713
    
    
    
    
    
    
    
    
    
    
    
    2,108Interest expense, net
    
    
    6,922
    
    
    
    1,216
    
    
    
    141
    
    
    
    
    
    
    
    8,279Capital expenditures, excluding
acquisitions (2)
    
    $
    2,512
    
    
    $
    1,767
    
    
    $
    154
    
    
    $
    
    
    
    $
    4,433
 For the Three Month Period Ended March 31, 2008United States
    
    
    United Kingdom
    
    
    Mexico
    
    
    Eliminations
    
    
    Total(In thousands)Revenue from external customers
    
    $
    100,353
    
    
    $
    17,640
    
    
    $
    2,582
    
    
    $
    
    
    
    $
    120,575Cost of revenues
    
    
    76,686
    
    
    
    14,392
    
    
    
    2,187
    
    
    
    
    
    
    
    93,265Selling, general, and administrative expenses
    
    
    7,325
    
    
    
    928
    
    
    
    298
    
    
    
    
    
    
    
    8,551EBITDA
    
    
    15,627
    
    
    
    1,944
    
    
    
    127
    
    
    
    
    
    
    
    17,698Depreciation and accretion expense
    
    
    6,113
    
    
    
    2,682
    
    
    
    309
    
    
    
    (22
    )
    
    
    9,082Amortization expense
    
    
    3,953
    
    
    
    538
    
    
    
    12
    
    
    
    
    
    
    
    4,503Loss on disposal of assets
    
    
    872
    
    
    
    321
    
    
    
    
    
    
    
    
    
    
    
    1,193Interest expense, net
    
    
    6,503
    
    
    
    1,456
    
    
    
    181
    
    
    
    
    
    
    
    8,140Capital expenditures, excluding acquisitions
(2)
    
    $
    15,843
    
    
    $
    10,187
    
    
    $
    67
    
    
    $
    
    
    
    $
    26,097
 
 (1)
    
    Selling, general, and administrative expenses for the
three months ended March 31, 2009 includes $1.2 million in
severance costs associated with the departure of the
Companys former Chief Executive Officer in March 2009.(2)
    
    Capital expenditure amounts include payments made for
exclusive license agreements and site acquisition costs.
Additionally, capital expenditure amounts for Mexico are
reflected gross of any noncontrolling interest amounts. Identifiable Assets:
 March 31, 2009
    
    
    December 31, 2008(In thousands)United States
    
    $
    385,009
    
    
    $
    394,216United Kingdom
    
    
    72,891
    
    
    
    76,275Mexico
    
    
    11,012
    
    
    
    11,736Total
    
    $
    468,912
    
    
    $
    482,227
  15




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##### Table of Contents



(15) New Accounting Pronouncements
 Adopted
 Disclosures about Derivative Instruments and
Hedging Activities, Note 10 Fair Value Measurements Note 11
 Noncontrolling Interests Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51
 Business Combinations. Business Combinations
 Useful Life of Intangible Assets. Determination of the Useful Life of
Intangible Assets, Goodwill and Other Intangible Assets
 Unvested Participating Securities. Determining Whether Instruments Granted
in Share-Based Payment Transactions are Participating Securities,
 Issued but Not Yet Adopted
 Interim Disclosures about Fair Value. Interim Disclosures about Fair Value of Financial Instruments. Disclosures about Fair Value of Financial Instruments Interim Financial Reporting
  16




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##### Table of Contents



(16) Supplemental Guarantor Financial Information
  Condensed Consolidating Statements of Operations
 Three Months Ended March 31, 2009Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Total(In thousands)Revenues
    
    $
    
    
    
    $
    97,141
    
    
    $
    18,578
    
    
    $
    (374
    )
    
    $
    115,345Operating costs and expenses
    
    
    1,133
    
    
    
    90,604
    
    
    
    19,814
    
    
    
    (379
    )
    
    
    111,172Operating income (loss)
    
    
    (1,133
    )
    
    
    6,537
    
    
    
    (1,236
    )
    
    
    5
    
    
    
    4,173Interest expense, net, including
amortization of deferred
financing costs and bond
discounts
    
    
    496
    
    
    
    6,426
    
    
    
    1,357
    
    
    
    
    
    
    
    8,279Equity in losses of subsidiaries
    
    
    2,634
    
    
    
    
    
    
    
    
    
    
    
    (2,634
    )
    
    
    Other (income) expense, net
    
    
    (167
    )
    
    
    (22
    )
    
    
    103
    
    
    
    
    
    
    
    (86
    )Loss (income) before income taxes
    
    
    (4,096
    )
    
    
    133
    
    
    
    (2,696
    )
    
    
    2,639
    
    
    
    (4,020
    )Income tax expense
    
    
    946
    
    
    
    71
    
    
    
    
    
    
    
    
    
    
    
    1,017Net (loss) income
    
    
    (5,042
    )
    
    
    62
    
    
    
    (2,696
    )
    
    
    2,639
    
    
    
    (5,037
    )Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31
    
    
    
    31Net (loss) income attributable
to controlling interests and
available to common stockholders
    
    $
    (5,042
    )
    
    $
    62
    
    
    $
    (2,696
    )
    
    $
    2,608
    
    
    $
    (5,068
    )
 Three Months Ended March 31, 2008Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Total(In thousands)Revenues
    
    $
    
    
    
    $
    100,353
    
    
    $
    20,222
    
    
    $
    
    
    
    $
    120,575Operating costs and expenses
    
    
    17
    
    
    
    94,932
    
    
    
    21,667
    
    
    
    (22
    )
    
    
    116,594Operating income (loss)
    
    
    (17
    )
    
    
    5,421
    
    
    
    (1,445
    )
    
    
    22
    
    
    
    3,981Interest expense, net,
including amortization of
deferred financing costs and
bond discounts
    
    
    49
    
    
    
    6,454
    
    
    
    1,637
    
    
    
    
    
    
    
    8,140Equity in losses of subsidiaries
    
    
    3,422
    
    
    
    
    
    
    
    
    
    
    
    (3,422
    )
    
    
    Other (income) expense, net
    
    
    (56
    )
    
    
    (101
    )
    
    
    25
    
    
    
    
    
    
    
    (132
    )Loss before income taxes
    
    
    (3,432
    )
    
    
    (932
    )
    
    
    (3,107
    )
    
    
    3,444
    
    
    
    (4,027
    )Income tax expense (benefit)
    
    
    1,182
    
    
    
    136
    
    
    
    (753
    )
    
    
    
    
    
    
    565Net loss
    
    
    (4,614
    )
    
    
    (1,068
    )
    
    
    (2,354
    )
    
    
    3,444
    
    
    
    (4,592
    )Net income attributable to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss attributable to
controlling interests and
available to common
stockholders
    
    $
    (4,614
    )
    
    $
    (1,068
    )
    
    $
    (2,354
    )
    
    $
    3,444
    
    
    $
    (4,592
    )
  17




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##### Table of Contents



Condensed Consolidating Balance Sheets
 As of March 31, 2009Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Total(In thousands)Assets:Cash and cash equivalents
    
    $
    22
    
    
    $
    7,041
    
    
    $
    2,388
    
    
    $
    
    
    
    $
    9,451Receivables, net
    
    
    6,668
    
    
    
    20,213
    
    
    
    3,188
    
    
    
    (7,225
    )
    
    
    22,844Other current assets
    
    
    3,011
    
    
    
    9,781
    
    
    
    8,936
    
    
    
    (2,990
    )
    
    
    18,738Total current assets
    
    
    9,701
    
    
    
    37,035
    
    
    
    14,512
    
    
    
    (10,215
    )
    
    
    51,033Property and equipment, net
    
    
    
    
    
    
    93,009
    
    
    
    54,427
    
    
    
    (169
    )
    
    
    147,267Intangible assets, net
    
    
    7,657
    
    
    
    86,733
    
    
    
    9,192
    
    
    
    
    
    
    
    103,582Goodwill
    
    
    
    
    
    
    150,461
    
    
    
    13,057
    
    
    
    
    
    
    
    163,518Investments in and advances to subsidiaries
    
    
    (52,104
    )
    
    
    
    
    
    
    
    
    
    
    52,104
    
    
    
    Intercompany receivable (payable)
    
    
    (4,293
    )
    
    
    12,720
    
    
    
    (8,109
    )
    
    
    (318
    )
    
    
    Prepaid expenses, deferred costs, and other assets
    
    
    377,360
    
    
    
    2,688
    
    
    
    824
    
    
    
    (377,360
    )
    
    
    3,512Total assets
    
    $
    338,321
    
    
    $
    382,646
    
    
    $
    83,903
    
    
    $
    (335,958
    )
    
    $
    468,912Liabilities and Stockholders (Deficit) Equity:Current portion of long-term debt
    
    $
    
    
    
    $
    
    
    
    $
    1,466
    
    
    $
    
    
    
    $
    1,466Current portion of capital lease obligations
    
    
    
    
    
    
    697
    
    
    
    
    
    
    
    
    
    
    
    697Current portion of other long-term liabilities
    
    
    
    
    
    
    21,525
    
    
    
    
    
    
    
    
    
    
    
    21,525Accounts payable and accrued liabilities
    
    
    4,047
    
    
    
    52,627
    
    
    
    14,299
    
    
    
    (10,209
    )
    
    
    60,764Total current liabilities
    
    
    4,047
    
    
    
    74,849
    
    
    
    15,765
    
    
    
    (10,209
    )
    
    
    84,452Long-term debt, net of related discounts
    
    
    345,282
    
    
    
    264,346
    
    
    
    113,983
    
    
    
    (374,239
    )
    
    
    349,372Capital lease obligations
    
    
    
    
    
    
    96
    
    
    
    
    
    
    
    
    
    
    
    96Deferred tax liability, net
    
    
    11,651
    
    
    
    968
    
    
    
    
    
    
    
    
    
    
    
    12,619Asset retirement obligations
    
    
    
    
    
    
    13,610
    
    
    
    7,851
    
    
    
    
    
    
    
    21,461Other non-current liabilities
    
    
    
    
    
    
    23,540
    
    
    
    31
    
    
    
    
    
    
    
    23,571Total liabilities
    
    
    360,980
    
    
    
    377,409
    
    
    
    137,630
    
    
    
    (384,448
    )
    
    
    491,571Stockholders (deficit) equity
    
    
    (22,659
    )
    
    
    5,237
    
    
    
    (53,727
    )
    
    
    48,490
    
    
    
    (22,659
    )Total liabilities and stockholders (deficit)
equity
    
    $
    338,321
    
    
    $
    382,646
    
    
    $
    83,903
    
    
    $
    (335,958
    )
    
    $
    468,912
 As of December 31, 2008Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Total(In thousands)Assets:Cash and cash equivalents
    
    $
    20
    
    
    $
    3,165
    
    
    $
    239
    
    
    $
    
    
    
    $
    3,424Receivables, net
    
    
    2,329
    
    
    
    22,872
    
    
    
    2,965
    
    
    
    (2,849
    )
    
    
    25,317Other current assets
    
    
    2,547
    
    
    
    12,245
    
    
    
    10,406
    
    
    
    (2,491
    )
    
    
    22,707Total current assets
    
    
    4,896
    
    
    
    38,282
    
    
    
    13,610
    
    
    
    (5,340
    )
    
    
    51,448Property and equipment, net
    
    
    
    
    
    
    96,965
    
    
    
    58,039
    
    
    
    (175
    )
    
    
    154,829Intangible assets, net
    
    
    7,612
    
    
    
    90,844
    
    
    
    9,871
    
    
    
    
    
    
    
    108,327Goodwill
    
    
    
    
    
    
    150,462
    
    
    
    13,322
    
    
    
    
    
    
    
    163,784Investments in and advances to subsidiaries
    
    
    (47,301
    )
    
    
    
    
    
    
    
    
    
    
    47,301
    
    
    
    Intercompany receivable (payable)
    
    
    (4,571
    )
    
    
    12,342
    
    
    
    (7,771
    )
    
    
    
    
    
    
    Prepaid expenses, deferred costs, and other assets
    
    
    382,890
    
    
    
    2,899
    
    
    
    940
    
    
    
    (382,890
    )
    
    
    3,839Total assets
    
    $
    343,526
    
    
    $
    391,794
    
    
    $
    88,011
    
    
    $
    (341,104
    )
    
    $
    482,227Liabilities and Stockholders (Deficit) Equity:Current portion of long-term debt
    
    $
    
    
    
    $
    
    
    
    $
    1,373
    
    
    $
    
    
    
    $
    1,373Current portion of capital lease obligations
    
    
    
    
    
    
    757
    
    
    
    
    
    
    
    
    
    
    
    757Current portion of other long-term liabilities
    
    
    
    
    
    
    24,302
    
    
    
    
    
    
    
    
    
    
    
    24,302Accounts payable and accrued liabilities
    
    
    11,035
    
    
    
    51,016
    
    
    
    15,669
    
    
    
    (5,334
    )
    
    
    72,386Total current liabilities
    
    
    11,035
    
    
    
    76,075
    
    
    
    17,042
    
    
    
    (5,334
    )
    
    
    98,818Long-term debt, net of related discounts
    
    
    340,137
    
    
    
    273,346
    
    
    
    114,223
    
    
    
    (382,890
    )
    
    
    344,816Capital lease obligations
    
    
    
    
    
    
    235
    
    
    
    
    
    
    
    
    
    
    
    235Deferred tax liability, net
    
    
    10,705
    
    
    
    968
    
    
    
    
    
    
    
    
    
    
    
    11,673Asset retirement obligations
    
    
    
    
    
    
    13,247
    
    
    
    7,822
    
    
    
    
    
    
    
    21,069Other non-current liabilities
    
    
    
    
    
    
    23,944
    
    
    
    23
    
    
    
    
    
    
    
    23,967Total liabilities
    
    
    361,877
    
    
    
    387,815
    
    
    
    139,110
    
    
    
    (388,224
    )
    
    
    500,578Stockholders (deficit) equity
    
    
    (18,351
    )
    
    
    3,979
    
    
    
    (51,099
    )
    
    
    47,120
    
    
    
    (18,351
    )Total liabilities and stockholders (deficit)
equity
    
    $
    343,526
    
    
    $
    391,794
    
    
    $
    88,011
    
    
    $
    (341,104
    )
    
    $
    482,227
  18




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##### Table of Contents



Condensed Consolidating Statements of Cash Flows
 Three Months Ended March 31, 2009Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Total(In thousands)Net cash provided by (used in) operating activities
    
    $
    (12,593
    )
    
    $
    15,587
    
    
    $
    3,410
    
    
    $
    
    
    
    $
    6,404Additions to property and equipment
    
    
    
    
    
    
    (2,456
    )
    
    
    (1,918
    )
    
    
    
    
    
    
    (4,374
    )Payments for exclusive license agreements and site
acquisition costs
    
    
    
    
    
    
    (55
    )
    
    
    (4
    )
    
    
    
    
    
    
    (59
    )Net cash used in investing activities
    
    
    
    
    
    
    (2,511
    )
    
    
    (1,922
    )
    
    
    
    
    
    
    (4,433
    )Proceeds from issuance of long-term debt
    
    
    23,500
    
    
    
    9,500
    
    
    
    1,000
    
    
    
    (10,500
    )
    
    
    23,500Repayments of long-term debt and capital leases
    
    
    (18,500
    )
    
    
    (18,700
    )
    
    
    (236
    )
    
    
    18,500
    
    
    
    (18,936
    )Issuance of long-term notes receivable
    
    
    (10,500
    )
    
    
    
    
    
    
    
    
    
    
    10,500
    
    
    
    Payments received on long-term notes receivable
    
    
    18,500
    
    
    
    
    
    
    
    
    
    
    
    (18,500
    )
    
    
    Repayments of borrowings under bank overdraft
facility, net
    
    
    
    
    
    
    
    
    
    
    (142
    )
    
    
    
    
    
    
    (142
    )Other financing activities
    
    
    (405
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (405
    )Net cash provided by (used in) financing activities
    
    
    12,595
    
    
    
    (9,200
    )
    
    
    622
    
    
    
    
    
    
    
    4,017Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    39
    
    
    
    
    
    
    
    39Net increase in cash and cash equivalents
    
    
    2
    
    
    
    3,876
    
    
    
    2,149
    
    
    
    
    
    
    
    6,027Cash and cash equivalents as of beginning of period
    
    
    20
    
    
    
    3,165
    
    
    
    239
    
    
    
    
    
    
    
    3,424Cash and cash equivalents as of end of period
    
    $
    22
    
    
    $
    7,041
    
    
    $
    2,388
    
    
    $
    
    
    
    $
    9,451
 Three Months Ended March 31, 2008Non-Parent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    Total(In thousands)Net cash provided by (used in) operating activities
    
    $
    (7,307
    )
    
    $
    (5,417
    )
    
    $
    2,399
    
    
    $
    
    
    
    $
    (10,325
    )Additions to property and equipment
    
    
    
    
    
    
    (15,792
    )
    
    
    (10,007
    )
    
    
    
    
    
    
    (25,799
    )Payments for exclusive license agreements and site
acquisition costs
    
    
    
    
    
    
    (51
    )
    
    
    (247
    )
    
    
    
    
    
    
    (298
    )Principal payments received under direct financing
leases
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    13Net cash used in investing activities
    
    
    
    
    
    
    (15,843
    )
    
    
    (10,241
    )
    
    
    
    
    
    
    (26,084
    )Proceeds from issuance of long-term debt
    
    
    50,000
    
    
    
    22,640
    
    
    
    9,836
    
    
    
    (32,640
    )
    
    
    49,836Repayments of long-term debt and capital leases
    
    
    (14,500
    )
    
    
    (6,079
    )
    
    
    (73
    )
    
    
    5,657
    
    
    
    (14,995
    )Issuance of long-term notes receivable
    
    
    (32,640
    )
    
    
    
    
    
    
    
    
    
    
    32,640
    
    
    
    Payments received on long-term notes receivable
    
    
    5,657
    
    
    
    
    
    
    
    
    
    
    
    (5,657
    )
    
    
    Repayments of borrowings under bank overdraft
facility, net
    
    
    
    
    
    
    
    
    
    
    (1,866
    )
    
    
    
    
    
    
    (1,866
    )Proceeds from exercises of stock options
    
    
    123
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123Other financing activities
    
    
    (1,243
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,243
    )Net cash provided by financing activities
    
    
    7,397
    
    
    
    16,561
    
    
    
    7,897
    
    
    
    
    
    
    
    31,855Effect of exchange rate changes on cash
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    23Net increase (decrease) in cash and cash equivalents
    
    
    90
    
    
    
    (4,699
    )
    
    
    78
    
    
    
    
    
    
    
    (4,531
    )Cash and cash equivalents as of beginning of period
    
    
    76
    
    
    
    11,576
    
    
    
    1,787
    
    
    
    
    
    
    
    13,439Cash and cash equivalents as of end of period
    
    $
    166
    
    
    $
    6,877
    
    
    $
    1,865
    
    
    $
    
    
    
    $
    8,908
  19




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##### Table of Contents



Cautionary Statement Regarding Forward-Looking Statements
 Certain statements and information in this Quarterly Report on Form 10-Q (this Form 10-Q)
may constitute forward-looking statements within the meaning of the Private Securities Litigation
Act of 1995. The words believe, expect, anticipate, plan, intend, foresee, should,
would, could or other similar expressions are intended to identify forward-looking statements,
which are generally not historical in nature. These forward-looking statements are based on our
current expectations and beliefs concerning future developments and their potential effect on us.
While management believes that these forward-looking statements are reasonable as and when made,
there can be no assurance that future developments affecting us will be those that we currently
anticipate. All comments concerning our expectations for future revenues and operating results are
based on our forecasts for our existing operations and do not include the potential impact of any
future acquisitions. Our forward-looking statements involve significant risks and uncertainties
(some of which are beyond our control) and assumptions that could cause actual results to differ
materially from our historical experience and our present expectations or projections. Important
factors that could cause actual results to differ materially from those in the forward-looking
statements include, but are not limited to, those summarized below:
 
    
    our financial outlook and the financial outlook of the ATM industry;
 
    
    our ability to cope with and develop business strategies dealing with the deterioration
experienced in global credit markets;
 
    
    the consolidation of several of our existing branding customers;
 
    
    our ability to expand our bank branding and surcharge-free service offerings;
 
    
    our ability to provide new ATM solutions to financial institutions;
 
    
    our ATM vault cash rental needs, including liquidity issues with our vault cash
providers;
 
    
    the implementation of our corporate strategy;
 
    
    our ability to compete successfully with our competitors;
 
    
    our financial performance;
 
    
    our ability to strengthen existing customer relationships and reach new customers;
 
    
    our ability to meet the service levels required by our service level agreements with our
customers;
 
    
    our ability to pursue and successfully integrate acquisitions;
 
    
    our ability to expand internationally;
 
    
    our ability prevent security breaches; and
 
    
    the additional risks we are exposed to in our armored transport business.
 Other factors that could cause our actual results to differ from our projected results are
described in (1) our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (2008
Form 10-K), (2) our reports and registration statements filed from time to time with the
Securities and Exchange Commission (SEC) and (3) other announcements we make from time to time.
 Readers are cautioned not to place undue reliance on forward-looking statements, which speak
only as of the date hereof. We undertake no obligation to publicly update or revise any
forward-looking statements after the date they are made, whether as a result of new information,
future events or otherwise.
  20




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
 Form 10-K.
 Economic and Strategic Update
  Stable and recurring nature of our business model.
 Strong liquidity position
 Product diversification.
  21




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##### Table of Contents



Recent Events
 Foreign Currency Exchange Rates.
 Revolving Credit Facility Modification.
 Stock Repurchase Program.
 Departure of Chief Executive Officer.
  22




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##### Table of Contents



Results of Operations
  Three Months Ended March 31,2009
    
    
    2008Revenues:ATM operating revenues
    
    
    98.5
    %
    
    
    96.5
    %ATM product sales and other revenues
    
    
    1.5
    
    
    
    3.5Total revenues
    
    
    100.0
    
    
    
    100.0Cost of revenues:Cost of ATM operating revenues (exclusive of depreciation,
accretion, and amortization, shown separately below)
(1)
    
    
    71.3
    
    
    
    73.9Cost of ATM product sales and other revenues
    
    
    1.6
    
    
    
    3.5Total cost of revenues
    
    
    72.9
    
    
    
    77.4Gross profit
    
    
    27.1
    
    
    
    22.6Operating expenses:Selling, general, and administrative expenses (2)
    
    
    9.4
    
    
    
    7.1Depreciation and accretion expense
    
    
    8.4
    
    
    
    7.5Amortization expense
    
    
    3.9
    
    
    
    3.7Loss on disposal of assets
    
    
    1.8
    
    
    
    1.0Total operating expenses
    
    
    23.5
    
    
    
    19.3Income from operations
    
    
    3.6
    
    
    
    3.3Other expense (income):Interest expense, net
    
    
    7.2
    
    
    
    6.8Other income
    
    
    (0.1
    )
    
    
    (0.1
    )Total other expense
    
    
    7.1
    
    
    
    6.6Loss before income taxes
    
    
    (3.5
    )
    
    
    (3.3
    )Income tax expense
    
    
    0.9
    
    
    
    0.5Net loss
    
    
    (4.4
    )
    
    
    (3.8
    )Net income attributable to noncontrolling interests
    
    
    (0.0
    )
    
    
    Net loss attributable to controlling interests
    
    
    (4.4
    )%
    
    
    (3.8
    )%
 
 (1)
    
    Excludes effects of depreciation, accretion, and amortization expense of $12.6 million and $12.5 million for the
three month periods ended March 31, 2009 and 2008, respectively. The inclusion of this depreciation, accretion, and
amortization expense in Cost of ATM operating revenues would have increased our Cost of ATM operating revenues as a
percentage of total revenues by 10.9% and 10.3% for the three month periods ended March 31, 2009 and 2008,
respectively.(2)
    
    Includes effects of $1.2 million in severance costs associated with the departure of our former CEO during March 2009.  23




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##### Table of Contents



Key Operating Metrics
  2009
    
    
    2008Average number of transacting ATMs:United States: Company-owned
    
    
    18,257
    
    
    
    17,854United States: Merchant-owned
    
    
    10,145
    
    
    
    10,947United Kingdom
    
    
    2,544
    
    
    
    2,252Mexico
    
    
    2,094
    
    
    
    1,422Total average number of transacting ATMs
    
    
    33,040
    
    
    
    32,475Total transactions (in thousands)
    
    
    89,371
    
    
    
    83,457Total cash withdrawal transactions (in thousands)
    
    
    57,564
    
    
    
    53,890Average monthly cash withdrawal transactions per average transacting ATM
    
    
    581
    
    
    
    553Per ATM per month:ATM operating revenues (1)
    
    $
    1,146
    
    
    $
    1,194Cost of ATM operating revenues (exclusive of depreciation,
accretion, and amortization) (2)
    
    
    830
    
    
    
    915ATM operating gross profit (2) (3)
    
    $
    316
    
    
    $
    279ATM operating gross profit margin (exclusive of depreciation,
accretion, and amortization)
    
    
    27.6
    %
    
    
    23.4
    %ATM operating gross profit margin (inclusive of depreciation,
accretion, and amortization)
    
    
    16.5
    %
    
    
    12.7
    %
 
 (1)
    
    The decline in ATM operating
revenues per ATM per month was due
to foreign currency exchange rate
movements between the first quarter
of 2008 and the first quarter of
2009.(2)
    
    Excludes effects of depreciation,
accretion, and amortization expense
of $12.6 million and $12.5 million
for the three month periods ended
March 31, 2009 and 2008,
respectively. The inclusion of this
depreciation, accretion, and
amortization expense in Cost of ATM
operating revenues would have
increased our cost of ATM operating
revenues per ATM per month and
decreased our ATM operating gross
profit per ATM per month by $127 and
$128 for the three month periods
ended March 31, 2009 and 2008,
respectively.(3)
    
    ATM operating gross profit is a
measure of profitability that uses
only the revenue and expenses that
related to operating the ATMs in our
portfolio. Revenues and expenses
from advanced ATM equipment sales
and other ATM-related services are
not included. Revenues
 Three Months Ended March 31,2009
    
    
    2008
    
    
    % Change(In thousands)ATM operating revenues
    
    $
    113,580
    
    
    $
    116,297
    
    
    
    (2.3
    )%ATM product sales and other revenues
    
    
    1,765
    
    
    
    4,278
    
    
    
    (58.7
    )%Total revenues
    
    $
    115,345
    
    
    $
    120,575
    
    
    
    (4.3
    )%
 ATM operating revenues.
 2008 to 2009 VarianceU.S.
    
    
    U.K.
    
    
    Mexico
    
    
    TotalIncrease (decrease)(In thousands)Surcharge revenue
    
    $
    (3,315
    )
    
    $
    (2,537
    )
    
    $
    984
    
    
    $
    (4,868
    )Interchange revenue
    
    
    529
    
    
    
    (317
    )
    
    
    300
    
    
    
    512Branding and surcharge-free network revenue
    
    
    1,732
    
    
    
    
    
    
    
    (2
    )
    
    
    1,730Other
    
    
    (89
    )
    
    
    (2
    )
    
    
    
    
    
    
    (91
    )Total increase (decrease) in ATM operating revenues
    
    $
    (1,143
    )
    
    $
    (2,856
    )
    
    $
    1,282
    
    
    $
    (2,717
    )
  24




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##### Table of Contents



United States
 United Kingdom
 Mexico
 ATM product sales and other revenues.
 Cost of Revenues
 Three Months Ended March 31,2009
    
    
    2008
    
    
    % Change(In thousands)Cost of ATM operating revenues (exclusive
of depreciation, accretion, and
amortization)
    
    $
    82,229
    
    
    $
    89,101
    
    
    
    (7.7
    )%Cost of ATM product sales and other revenues
    
    
    1,814
    
    
    
    4,164
    
    
    
    (56.4
    )%Total cost of revenues (exclusive of
depreciation, accretion, and amortization)
    
    $
    84,043
    
    
    $
    93,265
    
    
    
    (9.9
    )%
  25




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##### Table of Contents



Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization).
 2008 to 2009 VarianceU.S.
    
    
    U.K.
    
    
    Mexico
    
    
    TotalIncrease (decrease)(In thousands)Merchant commissions
    
    $
    (1,901
    )
    
    $
    (411
    )
    
    $
    309
    
    
    $
    (2,003
    )Cost of cash
    
    
    (1,422
    )
    
    
    (2,415
    )
    
    
    283
    
    
    
    (3,554
    )Repairs and maintenance
    
    
    225
    
    
    
    108
    
    
    
    163
    
    
    
    496Communications
    
    
    (236
    )
    
    
    (506
    )
    
    
    54
    
    
    
    (688
    )Transaction processing
    
    
    (704
    )
    
    
    (484
    )
    
    
    92
    
    
    
    (1,096
    )Other expenses
    
    
    (99
    )
    
    
    46
    
    
    
    26
    
    
    
    (27
    )Total increase (decrease) in cost of ATM operating revenues
    
    $
    (4,137
    )
    
    $
    (3,662
    )
    
    $
    927
    
    
    $
    (6,872
    )
 United States
  United Kingdom
 Mexico
 Cost of ATM product sales and other revenues.
  26




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##### Table of Contents



Gross Profit Margin
 2009
    
    
    2008ATM operating gross profit margin:Exclusive of depreciation, accretion, and amortization
    
    
    27.6
    %
    
    
    23.4
    %Inclusive of depreciation, accretion, and amortization
    
    
    16.5
    %
    
    
    12.7
    %ATM product sales and other revenues gross profit margin
    
    
    (2.8
    )%
    
    
    2.7
    %Total gross profit margin:Exclusive of depreciation, accretion, and amortization
    
    
    27.1
    %
    
    
    22.6
    %Inclusive of depreciation, accretion, and amortization
    
    
    16.2
    %
    
    
    12.3
    %
 ATM operating gross profit margin
 ATM product sales and other revenues gross profit margin.
 Selling, General, and Administrative Expenses
 Three Months Ended March 31,2009
    
    
    2008
    
    
    % Change(In thousands)Selling, general, and administrative expenses
    
    $
    9,988
    
    
    $
    8,350
    
    
    
    19.6
    %Stock-based compensation
    
    
    867
    
    
    
    201
    
    
    
    331.3
    %Total selling, general, and administrative expenses
    
    $
    10,855
    
    
    $
    8,551
    
    
    
    26.9
    %Percentage of total revenues:Selling, general, and administrative expenses
    
    
    8.7
    %
    
    
    6.9
    %Stock-based compensation
    
    
    0.8
    %
    
    
    0.2
    %Total selling, general, and administrative expenses
    
    
    9.4
    %
    
    
    7.1
    %
 Selling, general, and administrative expenses (SG&A expenses), excluding stock-based
compensation.
  Stock-based compensation. Item 1,
Notes to Condensed Consolidated Financial Statements, Note 2, Stock-Based Compensation
  27




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##### Table of Contents



Depreciation and Accretion Expense
 Three Months Ended March 31,2009
    
    
    2008
    
    
    % Change(In thousands)Depreciation expense
    
    $
    9,174
    
    
    $
    8,687
    
    
    
    5.6
    %Accretion expense
    
    
    465
    
    
    
    395
    
    
    
    17.7
    %Depreciation and accretion expense
    
    $
    9,639
    
    
    $
    9,082
    
    
    
    6.1
    %Percentage of total revenues:Depreciation expense
    
    
    8.0
    %
    
    
    7.2
    %Accretion expense
    
    
    0.4
    %
    
    
    0.3
    %Total depreciation and accretion expense
    
    
    8.4
    %
    
    
    7.5
    %
 Depreciation expense.
 Accretion expense. Accounting for Asset Retirement
Obligations
 Amortization Expense
 Three Months Ended March 31,2009
    
    
    2008
    
    
    % Change(In thousands)Amortization expense
    
    $
    4,527
    
    
    $
    4,503
    
    
    
    0.5
    %Percentage of total revenues
    
    
    3.9
    %
    
    
    3.7
    %
  Loss on Disposal of Assets
 Three Months Ended March 31,2009
    
    
    2008
    
    
    % Change(In thousands)Loss on disposal of assets
    
    $
    2,108
    
    
    $
    1,193
    
    
    
    76.7
    %Percentage of total revenues
    
    
    1.8
    %
    
    
    1.0
    %
   28




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##### Table of Contents



Interest Expense, Net
 Three Months Ended March 31,2009
    
    
    2008
    
    
    % Change(In thousands)Interest expense, net
    
    $
    7,711
    
    
    $
    7,632
    
    
    
    1.0
    %Amortization of deferred financing costs and bond discounts
    
    
    568
    
    
    
    508
    
    
    
    11.8
    %Total interest expense, net
    
    $
    8,279
    
    
    $
    8,140
    
    
    
    1.7
    %Percentage of revenues
    
    
    7.2
    %
    
    
    6.8
    %
 Interest expense, net.
 Amortization of deferred financing costs and bond discounts.
 Income Tax Expense
 Three Months Ended March 31,2009
    
    
    2008
    
    
    % Change(In thousands)Income tax expense
    
    $
    1,017
    
    
    $
    565
    
    
    
    80.0
    %Effective tax rate
    
    
    (25.3
    )%
    
    
    (14.0
    )%
   29




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##### Table of Contents



Liquidity and Capital Resources
 Overview
   Financing Facilities
 Operating Activities
  Investing Activities
  Anticipated Future Capital Expenditures.
 Financing Activities
 Investing Activities
  30




---



##### Table of Contents



Financing Facilities
  Revolving credit facility.
  Bank Machine overdraft facility.
 Cardtronics Mexico equipment financing agreements.
 Capital lease agreements.
 New Accounting Standards
 Item 1,
Notes to Condensed Consolidated Financial Statements, Note 15, New Accounting Pronouncements
  31




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
 Vault cash rental expense.
  Weighted AverageNotional Amount
    
    
    Fixed Rate
    
    
    Period(In thousands)$
    550,000
    
    
    
    4.30
    %
    
    April 1, 2009  December 31, 2009$
    550,000
    
    
    
    4.11
    %
    
    January 1, 2010  December 31, 2010$
    400,000
    
    
    
    3.72
    %
    
    January 1, 2011  December 31, 2011$
    200,000
    
    
    
    3.96
    %
    
    January 1, 2012  December 31, 2012
  Additional Interest Incurred
    
    
    Additional Interest Incurred onon 100 Basis Point Increase
    
    
    100 Basis Point IncreaseVault Cash Balance as of
    
    
    (Excluding Impact of
    
    
    (Including Impact ofMarch 31, 2009
    
    
    Interest Rate Swaps)
    
    
    Interest Rate Swaps)(Functional
    
    
    
    
    
    
    (Functional
    
    
    
    
    
    
    (Functionalcurrency)
    
    
    (U.S. dollars)
    
    
    currency)
    
    
    (U.S. dollars)
    
    
    currency)
    
    
    (U.S. dollars)(In millions)
    
    
    (In millions)
    
    
    (In millions)United States
    
    $
    783.9
    
    
    $
    783.9
    
    
    $
    7.8
    
    
    $
    7.8
    
    
    $
    2.3
    
    
    $
    2.3United Kingdom
    
    £
    102.3
    
    
    
    146.2
    
    
    £
    1.0
    
    
    
    1.5
    
    
    £
    1.0
    
    
    
    1.5Mexico
    
    p $
    256.7
    
    
    
    17.8
    
    
    p $
    2.6
    
    
    
    0.2
    
    
    p $
    2.6
    
    
    
    0.2Total
    
    
    
    
    
    $
    947.9
    
    
    
    
    
    
    $
    9.5
    
    
    
    
    
    
    $
    4.0
 Item 1, Notes to Condensed Consolidated Financial Statements, Note 10, Derivative
Financial Instruments Note 11, Fair Value Measurements
  Interest expense.
 Outlook.
  32




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##### Table of Contents



Foreign Currency Exchange Risk
  Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations  Results of Operations
   33




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
 Managements Quarterly Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
   34




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##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
 Part I., Item I., Financial
Information, Notes to Condensed Consolidated Financial Statements, Note 12, Commitments and
Contingencies.
 
 ITEM 1A. RISK FACTORS
 Part I, Item 1A, Risk
Factors
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
 Total Number of
    
    
    Approximate DollarTotal Number
    
    
    
    
    
    
    Shares Purchased as
    
    
    Value that May Yetof Shares
    
    
    Average Price
    
    
    Part of a Publicly
    
    
    be Purchased UnderPeriod
    
    Purchased
    
    
    Paid Per Share
    
    
    Announced Program
    
    
    the Program(1)January 1  31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    February 1  28, 2009
    
    
    926
    (2)
    
    $
    8.06
    
    
    
    
    
    
    
    March 1  31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    926
    
    
    $
    8.06
    
    
    
    
 
 (1)
    
    In connection with the lapsing of restrictions on
restricted shares granted by our Company under our 2007
Stock Incentive Plan, which was adopted in December 2007
and expires in December 2017, we adopted a policy that
enables employees to surrender shares to cover their tax
liability associated with the vesting of such shares. We
are unable to determine at this time the total amount of
securities or the approximate dollar value of those
securities that could potentially be surrendered to us
pursuant to this provision of our 2007 Stock Incentive
Plan.(2)
    
    These shares represent shares surrendered to us by a
participant in our 2007 Stock Incentive Plan to settle the
participants personal tax liability that resulted from the
lapsing of restrictions on shares awarded to the
participant under the plan. The price paid per share was based on the
average of the high and low trading price of our Companys
common stock on September 1, 2008, which represents the date the
restrictions lapsed on such shares.  Total Number of
    
    
    Approximate DollarTotal Number
    
    
    
    
    
    
    Shares Purchased as
    
    
    Value that May Yetof Shares
    
    
    Average Price
    
    
    Part of a Publicly
    
    
    be Purchased UnderPeriod
    
    Purchased
    
    
    Paid Per Share
    
    
    Announced Program
    
    
    the ProgramJanuary 1  31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    February 1  28, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    10,000,000March 1  31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    10,000,000Total
    
    
    
    
    
    
    
    
    
    
    
 
 ITEM 6. EXHIBITS
   35




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##### Table of Contents



SIGNATURES
  CARDTRONICS, INC.May 6, 2009
    /s/ J. Chris BrewsterChief Financial Officer(Duly Authorized Officer and
Principal Financial Officer)May 6, 2009
    /s/ Tres ThompsonTres ThompsonChief Accounting Officer
(Duly Authorized Officer and
Principal Accounting Officer)  36




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber
    
    Description3.1
    
    
    Third Amended and Restated Certificate of Incorporation of Cardtronics, Inc. (incorporated herein by
reference to Exhibit 3.1 of the Current Report on Form 8-K filed by Cardtronics, Inc. on December 14,
2007, Registration No. 001-33864).3.2
    
    
    Second Amended and Restated Bylaws of Cardtronics, Inc. (incorporated herein by reference to Exhibit
3.2 of the Current Report on Form 8-K filed by Cardtronics, Inc. on December 14, 2007, Registration
No. 001-33864).10.1
    
    
    Amendment No. 9 to Credit Agreement, dated as of February 23, 2009 (incorporated herein by reference to
Exhibit 10.1 of the Current Report on Form 8-K filed by Cardtronics, Inc. on February 24, 2009,
Registration No. 001-33864).*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 and 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.
  37