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Delaware | 7389 | 76-0681190 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
3110 Hayes Road, Suite 300 Houston, Texas 77082 (281) 596-9988 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices) | J. Chris Brewster Chief Financial Officer 3110 Hayes Road, Suite 300 Houston, Texas 77082 (281) 596-9988 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) |
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* | Includes certain subsidiaries of Cardtronics, Inc. identified below. |
Delaware | 75-3003720 | |||
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) |
Delaware | 51-0412519 | |||
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) |
Delaware | 76-0419117 | |||
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) |
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• | We are offering to exchange up to $200,000,000 of our outstanding 9.250% Senior Notes due 2013 for new notes with substantially identical terms that have been registered under the Securities Act and are freely tradable. | |
• | We will exchange all outstanding notes that you validly tender and do not validly withdraw before the exchange offer expires for an equal principal amount of new notes. | |
• | The exchange offer expires at 5:00 p.m., New York City time, on , 2006, unless extended. We do not currently intend to extend the exchange offer. | |
• | Tenders of outstanding notes may be withdrawn at any time prior to the expiration of the exchange offer. | |
• | The exchange of outstanding notes for new notes will not be a taxable event for U.S. federal income tax purposes. |
• | The new notes will mature on August 15, 2013. |
• | Interest on the new notes is payable on February 15 and August 15 of each year. | |
• | Interest will accrue from August 12, 2005 or the most recent date to which interest has been paid. |
• | We may redeem some or all of the new notes at any time on or after August 15, 2009 at redemption prices listed in “Description of the New Notes — Optional Redemption,” and we may redeem some or all of the notes before that date by the payment of a make-whole premium. | |
• | Subject to certain limitations, we may also redeem up to 35% of the new notes using the proceeds of certain equity offerings completed before August 15, 2008. |
• | If we experience a change of control, subject to certain conditions, we must offer to purchase the new notes. |
• | The new notes are unsecured senior subordinated obligations. The new notes rank junior in right of payment with all of our other existing and future senior debt including borrowings under our bank credit facilities. As of June 30, 2006, approximately $45.6 million of indebtedness would have ranked senior in right of payment to the new notes. |
• | All payments on the new notes, including principal and interest, will be jointly and severally guaranteed on a senior subordinated basis by all of our existing domestic subsidiaries and certain of our future subsidiaries. |
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ATM Cash Services Agreement | ||||||||
Amendment No.1 to ATM Cash Services Agreement | ||||||||
Amendment No.2 to ATM Cash Services Agreement | ||||||||
Computation of Ratio of Earnings to Fixed Charges | ||||||||
Consent of KPMG LLP | ||||||||
Consent of Deloitte and Touche, LLP |
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Exchange Offer | We are offering to exchange new notes for outstanding notes. | |
Expiration Date | The exchange offer will expire at 5:00 p.m. New York City time, on , 2006, unless we decide to extend it. | |
Condition to the Exchange Offer | The registration rights agreement does not require us to accept outstanding notes for exchange if the exchange offer or the making of any exchange by a holder of the outstanding notes would violate any applicable law or interpretation of the staff of the SEC. A minimum aggregate principal amount of outstanding notes being tendered is not a condition to the exchange offer. In addition, we will not be obligated to accept for exchange the outstanding notes of any holder that has not complied with the procedures for tendering outstanding notes. Please read “Exchange Offer — Conditions to the Exchange Offer.” | |
Procedures for Tendering Outstanding Notes | To participate in the exchange offer, you must follow the procedures established by The Depository Trust Company, which we call “DTC,” for tendering notes held in book-entry form. These procedures, which we call “ATOP,” require that the exchange agent receive, prior to the expiration date of the exchange offer, a computer generated message known as an “agent’s message” that is transmitted through DTC’s automated tender offer program and that DTC confirm that: | |
• DTC has received your instructions to exchange your notes; and | ||
• you agree to be bound by the terms of the letter of transmittal. | ||
For more details, please refer to the sections of this prospectus entitled “Exchange Offer — Terms of the Exchange Offer” and “— Procedures for Tendering.” | ||
Guaranteed Delivery Procedures | None. | |
Withdrawal of Tenders | You may withdraw your tender of outstanding notes at any time prior to the expiration date. To withdraw, you must submit a notice of withdrawal to exchange agent using ATOP procedures before 5:00 p.m. New York City time on the expiration date of the exchange offer. Please read “Exchange Offer — Withdrawal of Tenders.” | |
Acceptance of Outstanding Notes and Delivery of New Notes | If you fulfill all conditions required for proper acceptance of outstanding notes, we will accept any and all outstanding notes |
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that you properly tender in the exchange offer on or before 5:00 p.m. New York City time on the expiration date. We will return any outstanding note that we do not accept for exchange to you without expense promptly following the expiration or termination of the exchange offer. We will deliver the new notes promptly after the expiration date and acceptance of the outstanding notes for exchange. Please refer to the section in this prospectus entitled “Exchange Offer — Terms of the Exchange Offer.” | ||
Fees and Expenses | We will bear all expenses related to the exchange offer. Please refer to the section in this prospectus entitled “Exchange Offer — Fees and Expenses.” | |
Use of Proceeds | The issuance of the new notes will not provide us with any new proceeds. We are making this exchange offer solely to satisfy our obligations under our registration rights agreement. | |
Consequences of Failure to Exchange Outstanding Notes | If you do not exchange your outstanding notes in this exchange offer, you will no longer be able to require us to register the outstanding notes under the Securities Act except in the limited circumstances provided under our registration rights agreement. In addition, you will not be able to resell, offer to resell or otherwise transfer the outstanding notes unless we have registered the outstanding notes under the Securities Act, or unless you resell, offer to resell or otherwise transfer them under an exemption from the registration requirements of, or in a transaction not subject to, the Securities Act. | |
U.S. Federal Income Tax Considerations | The exchange of new notes for outstanding notes in the exchange offer should not be a taxable event for U.S. federal income tax purposes. Please read “Federal Income Tax Considerations.” | |
Exchange Agent | We have appointed Wells Fargo Bank, National Association as exchange agent for the exchange offer. You should direct questions and requests for assistance and requests for additional copies of this prospectus (including the letter of transmittal) to the exchange agent addressed as follows: Wells Fargo Bank, National Association, Attention: Corporate Trust Operations, Sixth and Marquette, MAC N9303-121, Minneapolis, MN 55479. Eligible institutions may make requests by facsimile at (612)667-4927. |
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Issuer | Cardtronics, Inc. | |
Notes Offered | $200.0 million aggregate principal amount of 91/4% Senior Subordinated Notes due 2013 (the “notes”). | |
Maturity | The notes will mature on August 15, 2013. | |
Interest | Interest on the notes will accrue at the rate of 91/4% per annum. Interest on the notes will be payable semi-annually, in cash, in arrears on February 15 and August 15 of each year, commencing on February 15, 2006. | |
Guarantees | All payments on the notes, including principal and interest, will be jointly and severally guaranteed on a senior subordinated basis by all of our existing domestic subsidiaries and certain of our future subsidiaries. See “Description of the New Notes — Guarantees.” | |
Ranking | The notes and the guarantees will be unsecured senior subordinated obligations and will rank: | |
• junior in right of payment to all of our and our subsidiary guarantors’ existing and future senior indebtedness, including borrowings under our bank credit facilities and guarantees of those borrowings; | ||
• equally in right of payment with any of our and our subsidiary guarantors’ future senior subordinated indebtedness; and | ||
• senior in right of payment to any of our and our subsidiary guarantors’ future indebtedness that is expressly subordinated in right of payment to the notes. | ||
As of the date of this prospectus, our subsidiary guarantors had no debt outstanding other than the guarantees of the notes and guarantees of borrowings under our bank credit facilities, which totaled approximately $45.6 million as of June 30, 2006. | ||
Optional Redemption | We may redeem some or all of the notes on or after August 15, 2009 at the redemption prices set forth in this prospectus. At any time prior to August 15, 2009, we may redeem the notes, in whole or in part, at a price equal to 100% of their outstanding principal amount plus the make-whole premium described under “Description of the New Notes — Optional Redemption.” |
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In addition, we may redeem up to 35% of the aggregate principal amount of the notes at a redemption price of 109.250% using the proceeds of certain equity offerings completed on or before August 15, 2008. We may make this redemption only if, after the redemption, at least 65% of the aggregate principal amount of the notes originally issued remains outstanding. | ||
Change of Control | If we sell substantially all of our assets or experience specific kinds of changes of control, we must offer to repurchase the notes at a price in cash equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. | |
Certain Covenants | The indenture governing the notes contains covenants that, among other things, limit our ability and the ability of our subsidiaries to: | |
• incur or guarantee additional indebtedness; | ||
• incur senior subordinated debt; | ||
• make certain restricted payments; | ||
• consolidate or merge with or into other companies; | ||
• conduct asset sales; | ||
• restrict dividends or other payments to us; | ||
• engage in transactions with affiliates or related persons; | ||
• create liens; | ||
• redeem or repurchase capital stock; and | ||
• issue and sell preferred stock in restricted subsidiaries. | ||
These limitations will be subject to a number of important qualifications and exceptions. See “Description of the New Notes — Certain Covenants.” | ||
Absence of a Public Market | The new notes generally will be freely transferable; however, there can be no assurance as to the development or liquidity of any market for the new notes. |
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Six Months | ||||||||||||||
Ended | ||||||||||||||
June 30, | Years Ended December 31, | |||||||||||||
2006 | 2005 | 2005 | 2004 | 2003 | 2002 | 2001 | ||||||||
Ratio of earnings to fixed charges(1)(2) | — | 1.1x | — | 1.5x | 1.3x | — | — |
(1) | For purposes of determining the ratio of earnings to fixed charges, earnings are defined as our income from operations before income taxes and fixed charges (excluding the effects of any preferred stock dividends and related accretion expense). Fixed charges consist of interest expense on all indebtedness, amortization of debt issuance costs, the interest portion of lease payments, and preferred stock dividends and accretion expense. Earnings were insufficient to cover fixed charges by approximately $3.6 million for the six months ended June 30, 2006, $5.7 million for the year ended December 31, 2005, $2.7 million for the year ended December 31, 2002, and $4.1 million for the year ended December 31, 2001. The pro forma effect of the refinancing of our existing term loans with the senior subordinated notes did not change our historical ratio of earnings to fixed charges for the year ended December 31, 2005 by more than 10 percent. Accordingly, no pro forma ratio has been presented herein. |
(2) | The ratio of earnings to fixed charges calculations exclude costs incurred with respect to our vault cash rental obligations as such costs are not considered to be fixed charges for purposes of computing such ratios. Such costs totaled approximately $10.2 million and $6.3 million for the six months ended June 30, 2006 and 2005, respectively, and approximately $15.7 million, $10.2 million, $5.5 million, $2.7 million and $1.2 million for the years ended December 31, 2005, 2004, 2003, 2002 and 2001, respectively. |
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We operate in a changing and unpredictable regulatory environment. If we are subject to new legislation regarding the operation of our ATMs, we could be required to make substantial expenditures to comply with such legislation, which may reduce our net income and our profit margins. |
The passing of legislation banning or limiting surcharge fees would severely impact our revenue. |
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We depend on ATM transaction fees for substantially all of our revenues and our revenues would be reduced by a decline in usage of or surcharge fees at our ATMs. |
We derive a substantial portion of our revenue from ATMs placed with a small number of merchants. If one or more of our top merchants were to cease doing business with us, or to substantially reduce its dealings with us, our revenues could decline. |
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The ATM industry is highly competitive and such competition may increase, which may adversely affect our profit margins. |
We may be unable to integrate our recent and future acquisitions in an efficient manner and inefficiencies would increase our cost of operations and reduce our profitability. |
• | the operations, technology and personnel of any acquired companies may be difficult to integrate; | |
• | the allocation of management resources to consummate these transactions may disrupt ourday-to-day business; and | |
• | acquired networks may not achieve anticipated revenues, earnings or cash flow. Such a shortfall could require us to write down the carrying value of the intangible assets associated with any acquired company, which would adversely affect our reported earnings. |
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The full impact of our recent acquisitions on our operating results is not fully reflected in our historical financial results, which as a result we believe are not necessarily indicative of our future results of operations. |
Changes in interest rates could increase our operating costs by increasing interest expense under our credit facilities and our cash management costs. |
Our earnings may be reduced due to the risk of fluctuations in foreign currencies, specifically the British Pound and Mexican Peso. |
Our international operations may not be successful, which would result in a reduction of our gross profits. |
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• | exposure to currency fluctuations; | |
• | difficulties in complying with foreign laws and regulations; | |
• | unexpected changes in regulatory requirements; | |
• | difficulties in staffing and managing foreign operations; and | |
• | potentially adverse tax consequences. |
If we, our transaction processors, our electric funds transfer networks or other service providers experience system failures, the ATM products and services we provide could be delayed or interrupted, which would harm our business. |
We rely on third parties to provide us with the cash we require to operate many of our ATMs. If these third parties were unable or unwilling to provide us with the necessary cash to operate our ATMs, we would need to locate alternative sources of cash to operate our ATMs or we would not be able to operate our business. |
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Criminal activity by third parties, whether through tampering with our ATM machines or otherwise, could result in decreased consumer confidence in ATM usage and thereby reduce our profit. |
We rely on electronic funds transfer network providers, transaction processors and maintenance providers; if they fail or no longer agree to provide their services, we could suffer a temporary loss of transaction revenues or the permanent loss of any merchant contract affected by such disruption. |
We have a substantial amount of indebtedness, which may adversely affect our cash flow and our ability to operate our business, remain in compliance with debt covenants and make payments on our indebtedness, including the notes. |
• | make it more difficult for us to satisfy our obligations with respect to our indebtedness, including the notes, and any failure to comply with the obligations of any of our debt instruments, including financial and other restrictive covenants, could result in an event of default under the indenture governing the notes and the agreements governing such other indebtedness; | |
• | require us to dedicate a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes; | |
• | limit our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; | |
• | make us more vulnerable to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; |
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• | limit our ability to borrow additional amounts for working capital, capital expenditures, acquisitions, debt service requirements, execution of our growth strategy, research and development costs or other purposes; and | |
• | place us at a disadvantage compared to our competitors who have less debt. |
Repayment of our debt, including the notes, is dependent on cash flow generated by our subsidiaries. |
Your right to receive payments on the notes is junior to our existing and future senior debt, and the guarantees of the notes are junior to all of the guarantors’ existing and future senior debt. |
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Your right to receive payments on the notes is effectively subordinated to the rights of existing and future creditors of our subsidiaries that are not guarantors on the notes. |
The terms of our credit agreement and the indenture governing the notes may restrict our current and future operations, particularly our ability to respond to changes in our business or to take certain actions. |
• | sell or transfer property or assets; | |
• | pay dividends on or redeem or repurchase stock; | |
• | merge into or consolidate with any third party; | |
• | create, incur, assume or guarantee additional indebtedness; | |
• | create certain liens; | |
• | make investments; | |
• | make certain restricted payments, including the payment of dividends; | |
• | engage in transactions with affiliates; | |
• | redeem or repurchase capital stock; | |
• | issue or sell preferred stock of restricted subsidiaries; and | |
• | enter into sale and leaseback transactions. |
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The notes and the guarantees are not secured by our assets nor those of the guarantors, and the lenders under our credit agreement are entitled to remedies available to a secured lender, which gives them priority over you to collect amounts due to them. |
• | we enter into bankruptcy, liquidation, reorganization, or otherwinding-up proceedings; | |
• | there is a default in payment under our credit agreement; or | |
• | there is an acceleration of any indebtedness under our credit agreement. |
We may not be able to repurchase the notes upon a change of control. |
The guarantees may not be enforceable because of fraudulent conveyance laws. |
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• | were insolvent or rendered insolvent by reason of such incurrence; or | |
• | were engaged in a business or transaction for which one of our or such guarantor’s remaining assets constituted unreasonably small capital; or | |
• | intended to incur, or believed that we or such guarantor would incur, debts beyond our or such guarantor’s ability to pay such debts as they mature. |
• | the sum of our or such guarantor’s debts, including contingent liabilities, was greater than the fair saleable value of our or such guarantor’s assets; or | |
• | if the present fair saleable value of our or such guarantor’s assets were less than the amount than would be required to pay our or such guarantor’s probable liability on our or such guarantor’s existing debts, including contingent liabilities, as they become absolute and mature; or | |
• | we or such guarantor could not pay our or such guarantor’s debts as they become due. |
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If you do not properly tender your outstanding notes, you will continue to hold unregistered outstanding notes and your ability to transfer outstanding notes will be adversely affected. |
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• | within 240 days after the original issuance of the outstanding notes on August 12, 2005, file a registration statement with the SEC with respect to a registered offer to exchange each outstanding note for a new note having terms substantially identical in all material respects to such note, except that the new note will not contain terms with respect to transfer restrictions; | |
• | use our reasonable best efforts to cause the registration statement to be declared effective under the Securities Act within 300 days after the original issuance of the outstanding notes; | |
• | promptly following the effectiveness of the registration statement, offer the new notes in exchange for surrender of the outstanding notes; and | |
• | keep the exchange offer open for not less than 30 days (or longer if required by applicable law) after the date notice of the exchange offer is mailed to the holders of the outstanding notes. |
• | a change in law or in applicable interpretations thereof of the staff of the SEC does not permit us to effect the exchange offer; or | |
• | for any other reason the exchange offer is not consummated within 330 days from August 12, 2005, the date of the original issuance of the outstanding notes; or | |
• | any of the initial purchasers notify us following consummation of the exchange offer that outstanding notes held by it are not eligible to be exchanged for new notes in the exchange offer; or | |
• | certain holders are not eligible to participate in the exchange offer, or such holders do not receive freely tradeable securities on the date of the exchange. |
• | if either this registration statement or, if we are obligated to file one, a shelf registration statement is not declared effective by the Commission by the date required, | |
• | if we fail to consummate the exchange offer prior to the date that is 330 days after August 12, 2005, or | |
• | after this registration statement or a shelf registration statement, as the case may be, is declared effective, such registration statement thereafter ceases to be effective or usable (subject to certain exceptions) (each such event referred to in the preceding clauses being a “registration default”); |
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• | any new notes will be acquired in the ordinary course of your business; | |
• | you have no arrangement or understanding with any person or entity to participate in the distribution of the new notes; | |
• | you are not engaged in and do not intend to engage in the distribution of the new notes; | |
• | if you are a broker-dealer that will receive new notes for your own account in exchange for outstanding notes, you acquired those notes as a result of market-making activities or other trading activities and you will deliver a prospectus, as required by law, in connection with any resale of such new notes; and | |
• | you are not our “affiliate,” as defined in Rule 405 of the Securities Act. |
• | you are not our “affiliate” within the meaning of Rule 405 under the Securities Act; | |
• | such new notes are acquired in the ordinary course of your business; and | |
• | you do not intend to participate in a distribution of the new notes. |
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• | cannot rely on such interpretations by the SEC staff; and | |
• | must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. |
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• | to extend the exchange offer and delay accepting for exchange any outstanding notes or | |
• | to terminate the exchange offer, |
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Determinations Under the Exchange Offer |
When We Will Issue New Notes |
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• | a book-entry confirmation of such outstanding notes into the exchange agent’s account at DTC; and | |
• | a properly transmitted agent’s message. |
Return of Outstanding Notes Not Accepted or Exchanged |
Your Representations to Us |
• | any new notes that you receive will be acquired in the ordinary course of your business; | |
• | you have no arrangement or understanding with any person or entity to participate in the distribution of the new notes; | |
• | you are not engaged in and do not intend to engage in the distribution of the new notes; | |
• | if you are a broker-dealer that will receive new notes for your own account in exchange for outstanding notes, you acquired those notes as a result of market-making activities or other trading activities and you will deliver a prospectus, as required by law, in connection with any resale of such new notes; and | |
• | you are not our “affiliate,” as defined in Rule 405 of the Securities Act. |
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• | SEC registration fees; | |
• | fees and expenses of the exchange agent and trustee; | |
• | accounting and legal fees and printing costs; and | |
• | related fees and expenses. |
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Six Months Ended | ||||||||||||||||||||||||||||||
June 30, | Years Ended December 31, | |||||||||||||||||||||||||||||
2006 | 2005 | 2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||
Consolidated Statements of Operations: | ||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||
ATM operating revenues | $ | 136,655 | $ | 122,128 | $ | 258,992 | $ | 182,711 | $ | 101,950 | $ | 59,183 | $ | 33,868 | ||||||||||||||||
ATM product sales and other revenues(1) | 5,740 | 5,326 | 9,973 | 10,204 | 8,493 | 9,603 | 11,220 | |||||||||||||||||||||||
Total revenues | 142,395 | 127,454 | 268,965 | 192,915 | 110,443 | 68,786 | 45,088 | |||||||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||||||||
Cost of ATM operating revenues | 102,945 | 95,087 | 199,763 | 143,504 | 80,286 | 49,134 | 29,121 | |||||||||||||||||||||||
Cost of ATM product sales and other revenues(1) | 5,037 | 4,803 | 9,685 | 8,703 | 7,903 | 8,984 | 12,089 | |||||||||||||||||||||||
Total cost of revenues (exclusive of depreciation and amortization shown separately below) | 107,982 | 99,890 | 209,448 | 152,207 | 88,189 | 58,118 | 41,210 | |||||||||||||||||||||||
Gross profit | 34,413 | 27,564 | 59,517 | 40,708 | 22,254 | 10,668 | 3,878 | |||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||
Selling, general and administrative expenses(2)(3)(4) | 9,898 | 8,700 | 17,865 | 13,571 | 7,229 | 6,142 | 4,925 | |||||||||||||||||||||||
Depreciation and accretion expense | 8,858 | 5,142 | 12,951 | 6,785 | 3,632 | 1,650 | 957 | |||||||||||||||||||||||
Amortization expense(5) | 7,347 | 3,709 | 8,980 | 5,508 | 3,842 | 1,641 | 554 | |||||||||||||||||||||||
Total operating expenses | 26,103 | 17,551 | 39,796 | 25,864 | 14,703 | 9,433 | 6,436 | |||||||||||||||||||||||
Income (loss) from operations | 8,310 | 10,013 | 19,721 | 14,844 | 7,551 | 1,235 | (2,558 | ) | ||||||||||||||||||||||
Other (income) expense: | ||||||||||||||||||||||||||||||
Interest expense | 11,322 | 5,269 | 13,101 | 4,156 | 1,629 | 729 | 444 | |||||||||||||||||||||||
Amortization and write-off of financing costs and bond discount(6) | 1,214 | 1,131 | 9,325 | 1,079 | 528 | 310 | 34 | |||||||||||||||||||||||
Minority interest in subsidiary | (57 | ) | 15 | 15 | 19 | — | — | — | ||||||||||||||||||||||
Other(7) | (657 | ) | 432 | 968 | 209 | 106 | 58 | — | ||||||||||||||||||||||
Total other expenses | 11,822 | 6,847 | 23,409 | 5,463 | 2,263 | 1,097 | 478 | |||||||||||||||||||||||
Income (loss) before income taxes | (3,512 | ) | 3,166 | (3,688 | ) | 9,381 | 5,288 | 138 | (3,036 | ) | ||||||||||||||||||||
Income tax provision (benefit) | (1,157 | ) | 1,151 | (1,270 | ) | 3,576 | 1,955 | 111 | (997 | ) | ||||||||||||||||||||
Income (loss) before cumulative effect of a change in accounting principle | (2,355 | ) | 2,015 | (2,418 | ) | 5,805 | 3,333 | 27 | (2,039 | ) | ||||||||||||||||||||
Cumulative effect of change in accounting principle for asset retirement obligations, net of related income tax benefit of $80(8) | — | — | — | — | 134 | — | — | |||||||||||||||||||||||
Net income (loss) | (2,355 | ) | 2,015 | (2,418 | ) | 5,805 | 3,199 | 27 | (2,039 | ) | ||||||||||||||||||||
Preferred stock dividends and accretion expense(9) | 132 | 1,262 | 1,395 | 2,312 | 2,089 | 1,880 | 741 | |||||||||||||||||||||||
Net income (loss) available to common stockholders | $ | (2,487 | ) | $ | 753 | $ | (3,813 | ) | $ | 3,493 | $ | 1,110 | $ | (1,853 | ) | $ | (2,780 | ) | ||||||||||||
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Six Months Ended | ||||||||||||||||||||||||||||
June 30, | Years Ended December 31, | |||||||||||||||||||||||||||
2006 | 2005 | 2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
(in thousands, except ratios and numbers of ATMs) | ||||||||||||||||||||||||||||
Other Financial Data: | ||||||||||||||||||||||||||||
Ratio of earnings to fixed charges(10) | — | 1.1 | x | — | 1.5 | x | 1.3 | x | — | — | ||||||||||||||||||
Cash flows from operating activities | $ | 13,890 | $ | 18,833 | $ | 33,207 | $ | 20,466 | $ | 21,629 | $ | 4,491 | $ | (1,929 | ) | |||||||||||||
Cash flows from investing activities | (11,288 | ) | (116,412 | ) | (139,960 | ) | (118,926 | ) | (29,663 | ) | (15,023 | ) | (7,496 | ) | ||||||||||||||
Cash flows from financing activities | (367 | ) | 101,924 | 107,234 | 94,318 | 10,404 | 10,741 | 12,066 | ||||||||||||||||||||
Operating Data: | ||||||||||||||||||||||||||||
Total number of ATMs (at period end) | 25,676 | 26,279 | 26,208 | 24,581 | 12,021 | 8,298 | 6,707 | |||||||||||||||||||||
Total transactions | 83,482 | 72,950 | 156,851 | 111,577 | 64,605 | 36,212 | 19,865 | |||||||||||||||||||||
Total surcharge transactions | 53,408 | 51,991 | 106,613 | 82,087 | 48,778 | 28,978 | 16,027 |
As of December 31, | ||||||||||||||||||||||||
June 30, | ||||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 3,936 | $ | 1,699 | $ | 1,412 | $ | 5,554 | $ | 3,184 | $ | 2,975 | ||||||||||||
Total assets | 349,616 | 343,751 | 197,667 | 65,295 | 34,843 | 25,373 | ||||||||||||||||||
Total long-term debt, including current portion | 244,465 | 247,582 | 128,541 | 31,371 | 18,475 | 8,620 | ||||||||||||||||||
Preferred stock(11) | 76,462 | 76,329 | 23,634 | 21,322 | 19,233 | 15,453 | ||||||||||||||||||
Total stockholders’ equity (deficit) | (42,411 | ) | (49,084 | ) | (340 | ) | (6,329 | ) | (9,024 | ) | (7,065 | ) |
(1) | ATM product sales and other revenues consist primarily of revenues from the sale of equipment to our merchant-owned customer base and our associate value added resellers as well as other miscellaneous non-transaction based revenues. |
(2) | Reflects a one-time bonus of $1.8 million made to our chief executive officer in 2004 related to the tax liability associated with a related restricted stock grant. See note 5 to our consolidated financial statements. |
(3) | Reflects the write-off in 2004 of approximately $1.8 million in costs associated with our terminated initial public offering and related costs. |
(4) | Includes stock-based compensation totaling $0.4 million and $1.9 million for the six months ended June 30, 2006 and 2005, respectively, and $2.2 million, $1.0 million, $1.6 million, $0 and $2.2 million for the years ended December 31, 2005, 2004, 2003, 2002 and 2001, respectively. |
(5) | Includes impairment charges of $2.8 million and $1.2 million for the six months ended June 30, 2006 and the year ended December 31, 2005, respectively. |
(6) | Reflects the write-off of $4.9 million in financing costs in 2005 associated with the repayment of our term loans resulting from the issuance of our senior subordinated notes. |
(7) | Other expenses primarily consists of losses on the sale or disposal of assets. |
(8) | Reflects the effect of our adoption of SFAS No. 143. See note 1(n) to our consolidated financial statements. |
(9) | Reflects non-cash dividends on our Series A Preferred Stock, which was redeemed in February 2005. Subsequent to the redemption of the Series A Preferred Stock, the amount reflects the accretion of the Series B Preferred Stock issuance costs. |
(10) | For purposes of determining the ratio of earnings to fixed charges, earnings are defined as our income from operations before income taxes and fixed charges (excluding the effects of any preferred stock dividends and related accretion expense). Fixed charges consist of interest expense on all indebtedness, amortization of debt issuance costs, the interest portion of lease payments, and preferred stock dividends and accretion expense. Earnings were insufficient to cover fixed charges by approximately $3.6 million for the six months ended June 30, 2006, $5.7 million for the year ended December 31, 2005, $2.7 million for the year ended December 31, 2002, and $4.1 million for the year ended December 31, 2001. The pro forma effect of the refinancing of our existing term loans with the senior subordinated notes did not change our historical ratio of earnings to fixed charges for the year ended December 31, 2005 by more than 10 percent. Accordingly, no pro forma ratio has been presented herein. |
The ratio of earnings to fixed charges calculations exclude costs incurred with respect to our vault cash rental obligations as such costs are not considered to be fixed charges for purposes of computing such ratios. Such costs totaled approximately $10.2 million and $6.3 million for the six months ended June 30, 2006 and 2005, respectively, and $15.7 million, $10.2 million, $5.5 million, $2.7 million and $1.2 million for the years ended December 31, 2005, 2004, 2003, 2002 and 2001, respectively. |
(11) | The amount reflected on our balance sheet is shown net of issuance costs of $1.5 million and $1.7 million as of June 30, 2006 and December 31, 2005, respectively. The aggregate redemption price for the preferred stock was approximately $78.0 million as of June 30, 2006 and December 31, 2005. |
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Year ended December 31, 2002 | $ | (157 | ) | ||
Year ended December 31, 2003 | 1,189 | ||||
Year ended December 31, 2004 | 1,815 | ||||
Nine months ended September 30, 2005 | (2,369 | ) | |||
Total | $ | 478 | |||
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• | Company-owned. Under a company-owned arrangement, we own or lease the ATM and are responsible for controlling substantially all aspects of its operation. These responsibilities include what we refer to as first line maintenance, such as replacing paper, clearing paper or bill jams, resetting the ATM and any telecommunications and power issues or other maintenance activities that do not require a trained service technician. We are also responsible for what we refer to as second line maintenance, or more complex maintenance procedures that require trained service technicians and often involve replacing component parts. In addition to first and second line maintenance, we are responsible for arranging for cash, cash loading, supplies, telecommunications service and all other services required for the operation of the ATM, other than electricity. We typically pay a fee, either periodically, on a per-transaction basis or a combination of both, to the merchant on whose premises the ATM is physically located. We operate a limited number of our company-owned ATMs on a merchant-assisted basis. In these arrangements, we own or lease the ATM and provide all transaction processing services, but the merchant generally is responsible for providing and loading cash for the ATM and first line maintenance. Typically, we deploy ATMs under company-owned arrangements for our national and regional merchant customers, such as Amerada Hess, BP Amoco, Chevron, Costco, CVS Pharmacy, Duane Reade, ExxonMobil, Mills Malls, Sunoco, Target and Walgreens in the United States, and Alfred Jones, Co-Op, Mitchells & Butlers, the U.K. Post Office, Tates, Tesco and TM Retail in the United Kingdom. Because company-owned locations are controlled by us, are usually located in major national chains, and are thus more likely candidates for additional sources of revenue such as bank branding, company-owned locations generally offer higher transaction volumes and greater profitability, which we consider necessary to justify the upfront capital cost of installing such machines. As of June 30, 2006, we operated approximately 12,000 ATMs under company-owned arrangements. | |
• | Merchant-owned. Under a merchant-owned arrangement, the merchant owns the ATM and is responsible for its maintenance and most of the operating costs. We typically provide all transaction processing services and, in some cases, retain responsibility for providing and loading cash. We typically operate ATMs with our independent merchant customers under merchant-owned arrangements. A merchant who purchases an ATM from us is typically responsible for providing cash for the ATM and all maintenance. The merchant is also responsible for cash loading, supplies, telecommunication and electrical services. Under these arrangements, we sometimes retain responsibility for second line maintenance for an additional fee, and we provide all transaction processing services. Because the merchant bears more of the costs associated with operating ATMs under this arrangement, the merchant typically receives a higher fee on a per-transaction basis than is the case under a company-owned arrangement. In a limited number of our merchant-owned arrangements, we have assumed responsibility for providing and loading cash. Accordingly, under these arrangements, the merchant receives a smaller fee on a per-transaction basis than in the typical merchant-owned arrangement. As of June 30, 2006, we operated approximately 13,700 ATMs under merchant-owned arrangements. | |
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For the Six | |||||||||||||||||||||
Months Ended | Years Ended | ||||||||||||||||||||
June 30, | December 31, | ||||||||||||||||||||
2006 | 2005 | 2005 | 2004 | 2003 | |||||||||||||||||
Company-owned: | |||||||||||||||||||||
Revenues | 59% | 51% | 54% | 55% | 61% | ||||||||||||||||
Gross profit | 70% | 60% | 67% | 68% | 73% | ||||||||||||||||
Merchant-owned: | |||||||||||||||||||||
Revenues | 41% | 49% | 46% | 45% | 39% | ||||||||||||||||
Gross profit | 30% | 40% | 33% | 32% | 27% |
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Pro Forma | |||||||||||||||||||||||||
Six Months | Years Ended | Year Ended | |||||||||||||||||||||||
Ended June 30, | December 31, | December 31, | |||||||||||||||||||||||
2006 | 2005 | 2005 | 2004 | 2003 | 2005 | ||||||||||||||||||||
Per surcharge-bearing transaction: | |||||||||||||||||||||||||
Surcharge revenue | $ | 1.75 | $ | 1.65 | $ | 1.70 | $ | 1.53 | $ | 1.43 | $ | 1.72 | |||||||||||||
Interchange revenue | 0.63 | 0.62 | 0.62 | 0.63 | 0.60 | 0.62 | |||||||||||||||||||
Branding revenue | 0.12 | 0.05 | 0.06 | 0.03 | 0.02 | 0.06 | |||||||||||||||||||
Per transaction: | |||||||||||||||||||||||||
Interchange revenue | $ | 0.40 | $ | 0.44 | $ | 0.42 | $ | 0.46 | $ | 0.45 | $ | 0.42 |
• | Surcharge revenue. A surcharge fee represents a convenience fee paid by the cardholder for making a cash withdrawal from an ATM. Surcharge fees are most typically associated with cash withdrawal transactions and generally are not generated by balance inquiries, fund transfers and, in some cases, cash withdrawals from ATMs from which we earn branding revenues. Surcharge fees often vary by the type of arrangement under which we place our ATMs. Our transaction surcharges averaged approximately $1.75 per surcharge-bearing transaction for the six months ended June 30, 2006, $1.70 per surcharge-bearing transaction for the year ended December 31, 2005 ($1.72 on a pro forma basis for the Bank Machine acquisition), and approximately $1.53 per surcharge-bearing transaction for the year ended December 31, 2004. Surcharge fees can vary widely based on the location of the ATM and the nature of the contracts negotiated with our merchants. Furthermore, surcharge fees in the United Kingdom are typically higher than the surcharge fees received in the United States, thus explaining the increases reflected in the table above for 2006 and 2005. In the future, we expect that surcharge fees per surcharge-bearing transaction will vary depending upon negotiated surcharge fees at newly deployed ATMs and future negotiations with existing merchant partners, and our ongoing efforts to improve profitability through improved pricing. For those ATMs that we own or operate on surcharge-free networks, we generally receive interchange revenue as described in the following paragraph. |
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• | Interchange revenue. An interchange fee is a fee paid by the cardholder’s financial institution for the use of the applicable electronic funds transfer network that transmits data between the ATM and the cardholder’s financial institution in connection with any ATM transaction, including balance inquiries, transfers and surcharge-free transactions, including those under branding arrangements. We receive a portion of the interchange fee paid to the electronic funds transfer network. In the United States, interchange fees are earned not only on cash withdrawal transactions, but also on other ATM transactions such as balance inquiries and fund transfers. In the United Kingdom, interchange fees are earned on all ATM transactions other than surcharge-bearing cash withdrawals. Interchange fees are set by the electronic funds transfer networks and vary according to electronic funds transfer network arrangements with financial institutions, as well as the type of transaction. Interchange fees are typically lower for balance inquiries and fund transfers and higher for withdrawals. For the six months ended June 30, 2006, we received approximately $0.63 in interchange fees per surcharge-bearing transaction. For the year ended December 31, 2005, we received approximately $0.62 in interchange fees per surcharge-bearing transaction on both a historical and pro forma basis (for the Bank Machine acquisition). For the year ended December 31, 2004, we received $0.63 in interchange fees per surcharge-bearing transaction compared to $0.60 for the year ended December 31, 2003. Interchange fees per surcharge-bearing transaction increased in 2004 due to the increase in the number of transactions on ATMs included in surcharge-free networks and branded ATMs, which generate interchange fees, but do not generate surcharge fees and, as a result, are not included in the number of surcharge-bearing transactions. We believe that our future interchange fees per surcharge-bearing transaction will be consistent with the pro forma amount reflected above. | |
• | Branding revenue. We generate branding revenue in a variety of ways. We allow financial institutions to place signage on, or brand, our ATMs. Under this arrangement, we allow the branding financial institution’s customers to use branded ATMs without paying a surcharge fee. In exchange, the branding financial institution pays us a fixed monthly fee per branded ATM. We believe that this type of branding arrangement will typically result in an increase in transaction levels at the branded ATMs as existing customers continue to use the ATMs and new customers of the branding financial institution are attracted by the surcharge-free service. We also believe that having a major bank brand on an ATM leads to increased surchargable transactions from customers other than those of the branding bank. Fees paid for branding an ATM vary widely within our industry, as well as within our own operations. We expect that this variance in branding fees will continue in the future. However, because our strategy is to set branding fees at levels sufficient to offset lost surcharge revenue, we do not expect any such variance to cause a decrease in our total revenues. |
We also generate branding revenue from the ATMs we include in a nationwide surcharge-free ATM network of which we are the largest member and owner (effective December 21, 2005). Substantially all of our domestic ATMs participate in this network. Under this arrangement, cardholders of the institutions that participate in the network use our ATMs included in the network free of surcharge fees in exchange for a payment to us of a fixed monthly fee per cardholder, which is paid by such cardholder’s financial institution. |
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For the Six | ||||||||||||||||||||
Months Ended | ||||||||||||||||||||
June 30, | Years Ended December 31, | |||||||||||||||||||
2006 | 2005 | 2005 | 2004 | 2003 | ||||||||||||||||
Surcharge revenues | 68.5% | 70.3% | 69.9% | 68.9% | 68.6% | |||||||||||||||
Interchange revenues | 24.7% | 26.2% | 25.7% | 28.3% | 28.5% | |||||||||||||||
Branding revenues | 4.7% | 2.1% | 2.6% | 1.3% | 1.0% | |||||||||||||||
Other revenues | 2.1% | 1.4% | 1.8% | 1.5% | 1.9% | |||||||||||||||
Total ATM operating revenues | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | |||||||||||||||
• | Merchant fees. We pay our merchants a fee that depends on a variety of factors, including the type of arrangement under which the ATM is placed and the number of transactions at that ATM. | |
• | Processing fees. We pay fees to third-party vendors for processing transactions originated at our ATMs. These vendors, which include Star Systems, Fiserv, Inc. and Genpass, communicate with the cardholder’s financial institution through electronic funds transfer networks to gain transaction authorization and to settle transactions. | |
• | Cost of cash. Cost of cash includes all costs associated with the provision of cash by us for our ATMs, including fees for the use of cash, armored courier services, insurance, cash reconciliation and associated wire fees. Changes in interest rates could affect our cost of cash, although we have entered into a number of interest rate swap transactions to hedge our exposure through 2010 on varying amounts of our current and anticipated outstanding domestic ATM cash balances. | |
�� | • | Communications. Under our company-owned arrangements, we are responsible for expenses associated with providing telecommunications capabilities to the ATMs, allowing the ATMs to connect with the applicable electronic funds transfer network. |
• | Repairs and maintenance. Depending on the type of arrangement with the merchant, we may be responsible for first and/or second line maintenance for the ATM. We typically manage the provision of these services by third parties with national operations. Our primary maintenance vendors are Diebold, NCR and EFMARK. | |
• | Direct operations. These expenses consist of costs associated with managing our ATM network, including expenses for monitoring the ATMs, program managers, technicians and customer service representatives. | |
• | Cost of equipment revenue. In connection with the sale of equipment to merchants and value added resellers, we incur costs associated with purchasing equipment from manufacturers, as well as delivery and installation expenses. |
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• | The transfer of cash management and vault cash services for approximately 2,500 ATMs to our preferred cash management and vault cash providers; | |
• | The transfer of maintenance services for approximately 10,000 E*TRADE Access ATMs from the existing provider to our preferred maintenance service provider; | |
• | The transfer of processing services for approximately 1,600 ATMs to our preferred service provider; and | |
• | The transfer of armored car service used in the transportation of cash for approximately 1,000 ATMs to our preferred service provider. |
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Number of ATMs | |||||||||||||
As of | |||||||||||||
June 30, | Net | ||||||||||||
At Closing | 2006 | Increase | |||||||||||
2001 Acquisitions | 878 | 1,422 | 544 | ||||||||||
2002 Acquisitions | 1,195 | 1,211 | 16 | ||||||||||
2003 Acquisitions | 3,689 | 4,655 | 966 | ||||||||||
Total | 5,762 | 7,288 | 1,526 | ||||||||||
Number of ATMs | ||||||||||||
As of | ||||||||||||
June 30, | Net | |||||||||||
At Closing | 2006 | Decrease | ||||||||||
Total | 13,155 | 11,238 | (1,917 | ) | ||||||||
Acquisition Valuation |
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Financing Transactions |
Winn-Dixie Bankruptcy |
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Customer Contract Cancellations |
United Kingdom Transaction Declines |
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Six Months | Years Ended | |||||||||||||||||||||
Ended June 30, | December 31, | |||||||||||||||||||||
2006 | 2005 | 2005 | 2004 | 2003 | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||
ATM operating revenues | 96.0 | % | 95.8 | % | 96.3 | % | 94.7 | % | 92.3 | % | ||||||||||||
ATM product sales and other revenues | 4.0 | 4.2 | 3.7 | 5.3 | 7.7 | |||||||||||||||||
Total revenues | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||
Cost of ATM operating revenues | 72.3 | 74.6 | 74.3 | 74.4 | 72.7 | |||||||||||||||||
Cost of ATM product sales and other revenues | 3.5 | 3.8 | 3.6 | 4.5 | 7.2 | |||||||||||||||||
Total cost of revenues | 75.8 | 78.4 | 77.9 | 78.9 | 79.9 | |||||||||||||||||
Gross profit (exclusive of depreciation shown separately below) | 24.2 | 21.6 | 22.1 | 21.1 | 20.1 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Selling, general and administrative expenses | 7.0 | 6.8 | 6.6 | 7.0 | 6.5 | |||||||||||||||||
Depreciation and accretion expense | 6.2 | 4.0 | 4.8 | 3.5 | 3.3 | |||||||||||||||||
Amortization expense | 5.2 | 2.9 | 3.3 | 2.9 | 3.5 | |||||||||||||||||
Total operating expenses | 18.4 | 13.7 | 14.7 | 13.4 | 13.3 | |||||||||||||||||
Income from operations | 5.8 | 7.9 | 7.4 | 7.7 | 6.8 | |||||||||||||||||
Other (income) expense: | ||||||||||||||||||||||
Interest expense, net | 8.8 | 5.0 | 8.4 | 2.7 | 1.9 | |||||||||||||||||
Minority interest in subsidiary | — | — | 0.0 | 0.0 | 0.0 | |||||||||||||||||
Other | (0.5) | 0.4 | 0.4 | 0.1 | 0.1 | |||||||||||||||||
Total other expenses | 8.3 | 5.4 | 8.8 | 2.8 | 2.0 | |||||||||||||||||
Income (loss) before income taxes and cumulative effect of change in accounting principle | (2.5) | 2.5 | (1.4) | 4.9 | 4.8 | |||||||||||||||||
Income tax provision (benefit) | (0.8) | 0.9 | 0.5 | 1.9 | 1.8 | |||||||||||||||||
Income (loss) before cumulative effect of change in accounting principle | (1.7) | 1.6 | (0.9) | 3.0 | 3.0 | |||||||||||||||||
Cumulative effect of change in accounting principle for asset retirement obligations, net of related income tax benefit | — | — | — | — | 0.1 | |||||||||||||||||
Net income (loss) before preferred dividends and accretion expense | (1.7) | % | 1.6 | % | (0.9) | % | 3.0 | % | 2.9 | % | ||||||||||||
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Key Operating Metrics |
Six Months | |||||||||||||||||||||
Ended | |||||||||||||||||||||
June 30, | Years Ended December 31, | ||||||||||||||||||||
2006 | 2005 | 2005 | 2004 | 2003 | |||||||||||||||||
Average number of ATMs | 25,983 | 25,935 | 26,175 | 17,936 | 10,480 | ||||||||||||||||
Total transactions (in thousands) | 83,482 | 72,950 | 156,851 | 111,577 | 64,605 | ||||||||||||||||
Monthly total transactions per ATM | 535 | 469 | 499 | 518 | 514 | ||||||||||||||||
Total surcharge-bearing transactions (in thousands) | 53,408 | 51,991 | 106,613 | 82,087 | 48,778 | ||||||||||||||||
Monthly surcharge-bearing transactions per ATM(1) | 343 | 334 | 339 | 381 | 388 | ||||||||||||||||
Per surcharge-bearing transaction: | |||||||||||||||||||||
Surcharge revenues | $ | 1.75 | $ | 1.65 | $ | 1.70 | $ | 1.53 | $ | 1.43 | |||||||||||
Interchange revenues | 0.63 | 0.62 | 0.62 | 0.63 | 0.60 | ||||||||||||||||
Other transaction revenues(2) | 0.18 | 0.08 | 0.11 | 0.07 | 0.06 | ||||||||||||||||
Total transaction revenues | $ | 2.56 | $ | 2.35 | $ | 2.43 | $ | 2.23 | $ | 2.09 | |||||||||||
Cost of transaction revenues | 1.92 | 1.83 | 1.87 | 1.75 | 1.65 | ||||||||||||||||
Transaction gross profit(3) | $ | 0.64 | $ | 0.52 | $ | 0.56 | $ | 0.48 | $ | 0.44 | |||||||||||
Transaction gross profit margin(4) | 24.7 | % | 22.1 | % | 22.9 | % | 21.5 | % | 21.2 | % |
(1) | Monthly surcharge-bearing transactions per ATM for the year ended December 31, 2005 were lower than in the year ended December 31, 2004 largely because the ATMs acquired from E*TRADE Access, Inc. on June 30, 2004 were primarily merchant-owned machines with lower average transactions per ATM. |
(2) | Other transaction revenues consist primarily of bank and network branding fees and other ATM operating fees. |
(3) | Transaction gross profit is a measure of profitability that uses revenue and expenses that are transaction based. The revenue and expenses from ATM equipment sales and other ATM-related services are not included. |
(4) | The increase in transaction gross profit margins in 2006 when compared to 2005 is due to the increases in revenues associated with the Company’s bank and network branding initiatives, increased surcharge rates in selected merchant retail locations, and higher gross profit margins associated with our U.K. portfolio of ATMs (which was acquired in May 2005). |
Revenues |
Six Months | |||||||||||||
Ended June 30, | |||||||||||||
2006 | 2005 | % Change | |||||||||||
(in thousands) | |||||||||||||
ATM operating revenues | $ | 136,655 | $ | 122,128 | 11.9 | % | |||||||
ATM product sales and other revenues | 5,740 | 5,326 | 7.8 | % | |||||||||
Total revenues | $ | 142,395 | $ | 127,454 | 11.7 | % | |||||||
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Cost of Revenues and Gross Margins |
Six Months | |||||||||||||
Ended June 30, | |||||||||||||
2006 | 2005 | % Change | |||||||||||
(in thousands) | |||||||||||||
Cost of ATM operating revenues | $ | 102,945 | $ | 95,087 | 8.3 | % | |||||||
Cost of ATM product sales and other revenues | 5,037 | 4,803 | 4.9 | % | |||||||||
Total cost of revenues | $ | 107,982 | $ | 99,890 | 8.1 | % | |||||||
ATM operating revenues gross margin | 24.7 | % | 22.1 | % | |||||||||
ATM product sales and other revenues gross margin | 12.2 | % | 9.8 | % | |||||||||
Total gross margin | 24.2 | % | 21.6 | % |
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Selling, General and Administrative Expense |
Six Months | ||||||||||||
Ended June 30, | ||||||||||||
2006 | 2005 | % Change | ||||||||||
(in thousands) | ||||||||||||
Stock-based compensation | $ | 360 | $ | 1,939 | (81.4 | )% | ||||||
Other selling, general and administrative expenses | 9,538 | 6,761 | 41.1 | % | ||||||||
Total selling, general and administrative expense | $ | 9,898 | $ | 8,700 | 13.8 | % | ||||||
Percentage of revenues: | ||||||||||||
Stock-based compensation | 0.3 | % | 1.5 | % | ||||||||
Other selling, general and administrative expenses | 6.7 | % | 5.3 | % | ||||||||
Total selling, general and administrative expense | 7.0 | % | 6.8 | % | ||||||||
Depreciation and Accretion Expense |
Six Months | ||||||||||||
Ended June 30, | ||||||||||||
2006 | 2005 | % Change | ||||||||||
(in thousands) | ||||||||||||
Depreciation and accretion expense | $ | 8,858 | $ | 5,142 | 72.3 | % | ||||||
Percentage of revenues | 6.2 | % | 4.0 | % |
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Amortization Expense |
Six Months | ||||||||||||
Ended June 30, | ||||||||||||
2006 | 2005 | % Change | ||||||||||
(in thousands) | ||||||||||||
Amortization expense | $ | 7,347 | $ | 3,709 | 98.1 | % | ||||||
Percentage of revenues | 5.2 | % | 2.9 | % |
Interest Expense, net |
Six Months | ||||||||||||
Ended June 30, | ||||||||||||
2006 | 2005 | % Change | ||||||||||
(in thousands) | ||||||||||||
Interest expense, net | $ | 11,322 | $ | 5,269 | 114.9 | % | ||||||
Amortization and write-off of financing costs and bond discount | 1,214 | 1,131 | 7.3 | % | ||||||||
Total interest expense, net | $ | 12,536 | $ | 6,400 | 95.9 | % | ||||||
Percentage of revenues | 8.8 | % | 5.0 | % |
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Other Expense (Income) |
Six Months | ||||||||||||
Ended June 30, | ||||||||||||
2006 | 2005 | % Change | ||||||||||
(in thousands) | ||||||||||||
Other expense (income) | $ | (657 | ) | $ | 432 | (252.1 | )% | |||||
Percentage of revenues | (0.5 | )% | 0.4 | % |
Income Tax Provision (Benefit) |
Six Months | ||||||||||||
Ended June 30, | ||||||||||||
2006 | 2005 | % Change | ||||||||||
(in thousands) | ||||||||||||
Income tax provision (benefit) | $ | (1,157 | ) | $ | 1,151 | (200.5 | )% | |||||
Effective tax rate | 32.9 | % | 36.4 | % |
Years Ended December 31, 2005 (2005) and December 31, 2004 (2004) |
Years Ended | ||||||||||||
December 31, | ||||||||||||
2005 | 2004 | % Change | ||||||||||
(in thousands) | ||||||||||||
ATM operating revenues | $ | 258,992 | $ | 182,711 | 41.7 | % | ||||||
ATM product sales and other revenues | 9,973 | 10,204 | (2.3 | )% | ||||||||
Total revenues | $ | 268,965 | $ | 192,915 | 39.4 | % | ||||||
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Cost of Revenues and Gross Margins |
Years Ended | |||||||||||||
December 31, | |||||||||||||
2005 | 2004 | % Change | |||||||||||
(in thousands) | |||||||||||||
Cost of ATM operating revenues | $ | 199,763 | $ | 143,504 | 39.2 | % | |||||||
Cost of ATM product sales and other revenues | 9,685 | 8,703 | 11.3 | % | |||||||||
Total cost of revenues | $ | 209,448 | $ | 152,207 | 37.6 | % | |||||||
ATM operating revenues gross margin | 22.9 | % | 21.5 | % | |||||||||
ATM product sales and other revenues gross margin | 2.9 | % | 14.7 | % | |||||||||
Total gross margin | 22.1 | % | 21.1 | % |
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Selling, General and Administrative Expense |
Years Ended | ||||||||||||
December 31, | ||||||||||||
2005 | 2004 | % Change | ||||||||||
(in thousands) | ||||||||||||
Selling, general and administrative expense | $ | 17,865 | $ | 13,571 | 31.6 | % | ||||||
Percentage of revenues | 6.6 | % | 7.0 | % |
Depreciation and Accretion Expense |
Years Ended | ||||||||||||
December 31, | ||||||||||||
2005 | 2004 | % Change | ||||||||||
(in thousands) | ||||||||||||
Depreciation and accretion expense | $ | 12,951 | $ | 6,785 | 90.9 | % | ||||||
Percentage of revenues | 4.8 | % | 3.5 | % |
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Amortization Expense |
Years Ended | ||||||||||||
December 31, | ||||||||||||
2005 | 2004 | % Change | ||||||||||
(in thousands) | ||||||||||||
Amortization expense | $ | 8,980 | $ | 5,508 | 63.0 | % | ||||||
Percentage of revenues | 3.3 | % | 2.9 | % |
Interest Expense, net |
Years Ended | ||||||||||||
December 31, | ||||||||||||
2005 | 2004 | % Change | ||||||||||
(in thousands) | ||||||||||||
Interest expense, net | $ | 22,426 | $ | 5,235 | 328.4 | % | ||||||
Percentage of revenues | 8.4 | % | 2.7 | % |
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Income Tax Provision |
Years Ended | ||||||||||||
December 31, | ||||||||||||
2005 | 2004 | % Change | ||||||||||
(in thousands) | ||||||||||||
Income tax provision (benefit) | $ | (1,270 | ) | $ | 3,576 | (135.5 | )% | |||||
Effective tax rate | 34.4 | % | 38.1 | % |
Years Ended | |||||||||||||
December 31, | |||||||||||||
2004 | 2003 | % Change | |||||||||||
(in thousands) | |||||||||||||
ATM operating revenues | $ | 182,711 | $ | 101,950 | 79.2 | % | |||||||
ATM product sales and other revenues | 10,204 | 8,493 | 20.1 | % | |||||||||
Total revenues | $ | 192,915 | $ | 110,443 | 74.7 | % | |||||||
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Cost of Revenues and Gross Margins |
Year Ended | |||||||||||||
December 31, | |||||||||||||
2004 | 2003 | % Change | |||||||||||
(in thousands) | |||||||||||||
Cost of ATM operating revenues | $ | 143,504 | $ | 80,286 | 78.7 | % | |||||||
Cost of ATM product sales and other revenues | 8,703 | 7,903 | 10.1 | % | |||||||||
Total cost of revenues | $ | 152,207 | $ | 88,189 | 72.6 | % | |||||||
ATM operating revenues gross margin | 21.5 | % | 21.2 | % | |||||||||
ATM product sales and other revenues gross margin | 14.7 | % | 6.9 | % | |||||||||
Total gross margin | 21.1 | % | 20.1 | % |
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Selling, General and Administrative Expense |
Years Ended | ||||||||||||
December 31, | ||||||||||||
2004 | 2003 | % Change | ||||||||||
(in thousands) | ||||||||||||
Selling, general and administrative expense | $ | 13,571 | $ | 7,229 | 87.7 | % | ||||||
Percentage of revenues | 7.0 | % | 6.5 | % |
Depreciation and Accretion Expense |
Years Ended | ||||||||||||
December 31, | ||||||||||||
2004 | 2003 | % Change | ||||||||||
(in thousands) | ||||||||||||
Depreciation and accretion expense | $ | 6,785 | $ | 3,632 | 86.8 | % | ||||||
Percentage of revenues | 3.5 | % | 3.3 | % |
Amortization Expense |
Years Ended | ||||||||||||
December 31, | ||||||||||||
2004 | 2003 | % Change | ||||||||||
(in thousands) | ||||||||||||
Amortization expense | $ | 5,508 | $ | 3,842 | 43.4 | % | ||||||
Percentage of revenues | 2.9 | % | 3.5 | % |
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Interest Expense, net |
Years Ended | ||||||||||||
December 31, | ||||||||||||
2004 | 2003 | % Change | ||||||||||
(in thousands) | ||||||||||||
Interest expense, net | $ | 5,235 | $ | 2,157 | 142.7 | % | ||||||
Percentage of revenues | 2.7 | % | 1.9 | % |
Income Tax Provision |
Years Ended | ||||||||||||
December 31, | ||||||||||||
2004 | 2003 | % Change | ||||||||||
(in thousands) | ||||||||||||
Income tax provision | $ | 3,576 | $ | 1,955 | 82.9 | % | ||||||
Effective tax rate | 38.1 | % | 37.0 | % |
Cumulative Effect of Change in Accounting Principle (Net) |
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Our Bank Credit Facilities and Senior Subordinated Notes |
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Six Months | ||||||||||||||||||||||||||||||||
Ending | ||||||||||||||||||||||||||||||||
December 31, | For the Year Ending December 31, | |||||||||||||||||||||||||||||||
Contractual Obligations | Total | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | Thereafter | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
Long-term debt(a)(b) | $ | 399,211 | $ | 11,285 | $ | 22,294 | $ | 22,294 | $ | 22,294 | $ | 65,544 | $ | 18,500 | $ | 237,000 | ||||||||||||||||
Notes payable(c) | 142 | 142 | — | — | — | — | — | — | ||||||||||||||||||||||||
Capital lease obligations | 6 | 6 | — | — | — | — | — | — | ||||||||||||||||||||||||
Operating lease obligations | 4,864 | 1,361 | 1,302 | 779 | 637 | 316 | 188 | 281 | ||||||||||||||||||||||||
Merchant space lease obligations | 9,760 | 1,829 | 3,309 | 3,267 | 1,082 | 104 | 75 | 94 | ||||||||||||||||||||||||
Total contractual obligations | $ | 413,983 | $ | 14,623 | $ | 26,905 | $ | 26,340 | $ | 24,013 | $ | 65,964 | $ | 18,763 | $ | 237,375 | ||||||||||||||||
(a) | Includes the face value of our senior subordinated notes of $200.0 million, which have been reflected net of unamortized discount of approximately $1.3 million in our consolidated financial statements, and the $45.6 million outstanding under our revolving credit facility. |
(b) | Amount includes the estimated interest payments associated with such borrowings. |
(c) | Amount represents fully-funded notes issued in connection with the Bank Machine acquisition. |
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Weighted Average Fixed | ||||||||
Notional Amount | Rate | Period | ||||||
$300,000 | 3.70 | % | July 1, 2006 — December 31, 2006 | |||||
$300,000 | 3.86 | % | January 1, 2007 — December 31, 2007 | |||||
$300,000 | 4.35 | % | January 1, 2008 — December 31, 2008 | |||||
$200,000 | 4.36 | % | January 1, 2009 — December 31, 2009 | |||||
$100,000 | 4.34 | % | January 1, 2010 — December 31, 2010 |
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• | Bank branding is a scenario in which ATMs owned and operated by us are branded, signed, and operated as if they were owned by the branding bank, and customers of the branding bank can use those machines without paying a surcharge. The bank pays us a monthly per-machine fee for such branding. Although we forego the surcharge fee on ATM transactions by the branding banks’ customers, we continue to earn interchange fees on those transactions and the monthly branding fee, and typically enjoy an increase in surchargable transactions from users who are not customers of the branding bank. We believe that a branding arrangement can substantially increase the profitability of an ATM versus operating the same machine in an unbranded mode. | |
• | Network branding is an arrangement where a bank’s customers are allowed to use our nationwide ATM network on a surcharge-free basis. Each bank pays us a fixed fee per cardholder to participate in the network. Although we forego surcharge revenue on those transactions, we do earn interchange revenues in addition to network branding revenues, and believe that many of these transactions are incremental. Consequently, we believe that branding arrangements can enable us to profitably operate in the significant portion of the ATM transaction market that does not involve a surcharge. |
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Rank | U.S. ATM Network | ATMs | % of Total | |||||||||
1 | Cardtronics | 25,116 | 6.3% | |||||||||
2 | Bank of America | 16,714 | 4.2% | |||||||||
3 | TRM | 16,329 | 4.1% | |||||||||
4 | NetBank | 9,649 | 2.4% | |||||||||
5 | JPMorgan Chase | 6,900 | 1.7% | |||||||||
6 | Wells Fargo | 6,363 | 1.6% | |||||||||
7 | International Merchant Services | 5,900 | 1.5% | |||||||||
8 | 7-Eleven Stores | 5,341 | 1.3% | |||||||||
9 | Wachovia | 5,119 | 1.3% | |||||||||
10 | U.S. Bancorp | 5,003 | 1.3% | |||||||||
(Top 10) | 102,434 | 25.9% | ||||||||||
U.S. Market | 396,000 | 100.0% |
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Company-Owned | Merchant-Owned | |||||||||||
ATMs | ATMs | Total | ||||||||||
Number of ATMs | 12,000 | 13,700 | 25,700 | |||||||||
Percent of total ATMs | 47 | % | 53 | % | 100 | % | ||||||
Average monthly surcharge transactions per ATM | 428 | 270 | 342 |
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• | an initial term of five to seven years; | |
• | ATM exclusivity at locations where we install an ATM; | |
• | protection for us against underperforming locations by permitting us to increase the surcharge fee or remove ATMs; | |
• | in the United States, provisions permitting us to terminate or remove ATMs or renegotiate the fees paid to the merchant if surcharge fees are generally reduced or eliminated by law; and | |
• | provisions making the merchant’s fee dependent on the number of ATM transactions. |
• | in the United States, provisions prohibiting in-store check cashing by the merchant and, in the United States and United Kingdom, the operation of any other cash-back devices; | |
• | provisions imposing an obligation on the merchant to operate the ATM at any time his or her store is open to the public; and | |
• | provisions, when possible, that require a merchant to have a purchaser of the merchant’s store assume our contract. |
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Name | Age | Position | ||||
Jack Antonini | 53 | Chief Executive Officer, President and Director | ||||
J. Chris Brewster | 57 | Chief Financial Officer | ||||
Michael H. Clinard | 39 | Chief Operating Officer | ||||
Thomas E. Upton | 50 | Chief Administrative Officer | ||||
Drew Soinski | 47 | Chief Marketing Officer | ||||
Fred R. Lummis | 53 | Director and Chairman of the Board of Directors | ||||
Robert P. Barone | 69 | Director | ||||
Frederick W. Brazelton | 35 | Director | ||||
Ralph H. Clinard | 72 | Director | ||||
Ron Coben | 48 | Director | ||||
Jorge M. Diaz | 41 | Director | ||||
Roger B. Kafker | 44 | Director | ||||
Michael A. R. Wilson | 38 | Director | ||||
Ronald Delnevo | 51 | Director and Chief Executive of Bank Machine Limited |
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Annual Compensation | |||||||||
Name and Principal Position | Salary | Bonus | |||||||
Jack Antonini | $ | 330,750 | $ | 125,000 | (1) | ||||
Chief Executive Officer, President and Director | |||||||||
J. Chris Brewster | 236,250 | 100,000 | (1) | ||||||
Chief Financial Officer | |||||||||
Michael H. Clinard | 220,500 | 100,000 | (1) | ||||||
Chief Operating Officer | |||||||||
Thomas E. Upton | 210,000 | 50,000 | (1) | ||||||
Chief Administrative Officer | |||||||||
Drew Soinski(2) | 128,869 | 175,000 | (1)(3) | ||||||
Chief Marketing Officer |
(1) | Reflects bonuses earned for the year ended December 31, 2005 and paid in 2006. |
(2) | Mr. Soinski joined us in August 2005. |
(3) | Includes a relocation bonus of $50,000. |
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Number of | % of Total | |||||||||||||||||||
Securities | Options | |||||||||||||||||||
Underlying | Granted to | Exercise or | Grant Date | |||||||||||||||||
Options | Employees in | Base Price | Expiration | Present | ||||||||||||||||
Granted(1) | Fiscal Year | ($/Share) | Date | Value $(2) | ||||||||||||||||
Drew Soinski | 50,000 | 23.8% | $ | 83.84 | 8/1/2015 | $ | 422,783 |
(1) | The ten-year options granted in 2005 vest ratably over four years beginning one year following the date of grant. |
(2) | The Black-Scholes option pricing model was utilized to determine the grant date present value of the stock options granted in 2005. Under the Black-Scholes option pricing model, the grant date present value of the stock options referred to in the table above was calculated to be $8.46 per share. The following facts and assumptions were utilized in making such calculation: (a) an unadjusted exercise price $83.84 per share; (b) a fair market value of $83.84 per share on the date of grant; (c) no dividend yield; (d) a term of five years; (e) no volatility; and (f) an assumed risk-free interest rate of 4.16%, which approximated the yield on the five year treasury note on the date of grant. No other discounts or restrictions related to the vesting or the likelihood of vesting of the stock options were applied. The resulting grant date present value per share amount was multiplied by the total number of stock options granted to determine the total grant date present value figure above. |
Number of Shares | Value of Unexercised | |||||||||||||||||||||||
Underlying Unexercised | In-the-Money | |||||||||||||||||||||||
Shares | Options at Year-End | Options at Year-End(1) | ||||||||||||||||||||||
Acquired | Value | |||||||||||||||||||||||
on Exercise | Realized | Exercisable | Unexercisable | Exercisable | Unexercisable | |||||||||||||||||||
Jack Antonini(2) | — | — | — | — | $ | — | $ | — | ||||||||||||||||
J. Chris Brewster | — | — | 15,000 | 30,000 | $ | 477,591 | $ | 955,182 | ||||||||||||||||
Michael H. Clinard | — | — | 18,683 | — | $ | 1,419,859 | $ | — | ||||||||||||||||
Thomas E. Upton | — | — | 22,354 | 1,250 | $ | 1,728,278 | $ | 90,137 | ||||||||||||||||
Drew Soinski | — | — | — | 50,000 | $ | — | $ | — |
(1) | There was no public market for our common stock on December 31, 2005. Accordingly, we calculated these values based on an estimated price per share of $83.84, as determined by management, less the applicable exercise prices. |
(2) | Mr. Antonini only owns restricted shares in the Company and has not been granted any options to purchase the Company’s common stock. |
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• | Each employment agreement requires the employee to protect the confidentiality of our proprietary and confidential information. | |
• | Each employment agreement requires that the employee not compete with us or solicit our employees or customers for a period of 24 months following the term of his employment. | |
• | Each employment agreement provides that the employee may be paid an annual bonus based on certain factors and objectives set by our compensation committee, with the ultimate amount of any bonus paid determined at the direction of our compensation committee. |
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• | each person known to us to beneficially own more than 5% of the outstanding shares of our common stock; | |
• | each of the executive officers identified in the summary compensation table; | |
• | each of our directors; and | |
• | all directors and named executive officers as a group. |
Number of Shares | Percent of | |||||||
of Common Stock | Common Stock | |||||||
Name of Beneficial Owner(1) | Beneficially Owned | Beneficially Owned | ||||||
5% Stockholders: | ||||||||
CapStreet II, L.P. | 1,017,958 | 34.5 | % | |||||
CapStreet Parallel II, L.P. | 119,501 | 4.0 | % | |||||
TA Associates, Inc.(2) | 894,568 | 30.3 | % | |||||
Ralph H. Clinard(3) | 420,225 | 14.2 | % | |||||
Directors and Executive Officers: | ||||||||
Fred R. Lummis(4) | 1,137,459 | 38.5 | % | |||||
Michael Wilson(5) | 894,568 | 30.3 | % | |||||
Roger Kafker(6) | 894,568 | 30.3 | % | |||||
Jack Antonini | 70,508 | 2.4 | % | |||||
Michael H. Clinard(7) | 75,382 | 2.6 | % | |||||
Thomas E. Upton(8) | 36,752 | 1.2 | % | |||||
J. Chris Brewster(9) | 30,000 | 1.0 | % | |||||
Ronald Delnevo(10) | 23,209 | * | ||||||
Robert P. Barone(11) | 4,316 | * | ||||||
Frederick W. Brazelton | — | — | ||||||
Ron Coben(12) | 4,316 | * | ||||||
Jorge M. Diaz(13) | 2,500 | * | ||||||
All executive officers and directors as a group (13 persons) | 2,699,235 | 90.8 | % |
* | Less than 1% of the outstanding common stock. |
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(1) | “Beneficial ownership” is a term broadly defined by the SEC in Rule 13d-3 under the Exchange Act, and includes more than the typical forms of stock ownership, that is, stock held in the person’s name. The term also includes what is referred to as “indirect ownership,” meaning ownership of shares as to which a person has or shares investment or voting power. For the purpose of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares as of July 31, 2006 that such person or group has the right to acquire within 60 days after such date. | |
(2) | The shares owned by TA Associates, Inc. through certain of its affiliated funds, including TA IX L.P., TA/ Atlantic and Pacific IV L.P., TA/ Atlantic and Pacific V L.P., TA Strategic Partners Fund A L.P., TA Strategic Partners Fund B L.P., TA Investors II, L.P., which we collectively refer to as the TA Funds, are Series B Preferred shares which are convertible into our common stock on a share for share basis. | |
(3) | Mr. Clinard is a member of our board of directors. | |
(4) | The shares indicated as being beneficially owned by Mr. Lummis are owned directly by CapStreet II, L.P. and CapStreet Parallel II, L.P. Mr. Lummis serves as a Managing Director of The CapStreet Group, the ultimate general partner of both CapStreet II, L.P. and CapStreet Parallel II, L.P. As such, Mr. Lummis may be deemed to have a beneficial ownership of the shares owned by CapStreet II, L.P. and CapStreet Parallel II, L.P. Mr. Lummis disclaims beneficial ownership of such shares. | |
(5) | Mr. Wilson serves as a Managing Director of TA Associates, Inc., the ultimate general partner of the TA Funds. As such, Mr. Wilson may be deemed to have a beneficial ownership of the shares owned by the TA Funds. Mr. Wilson disclaims beneficial ownership of such shares. | |
(6) | Mr. Kafker serves as a Managing Director of TA Associates, Inc., the ultimate general partner of the TA Funds. As such, Mr. Kafker may be deemed to have a beneficial ownership of the shares owned by the TA Funds. Mr. Kafker disclaims beneficial ownership of such shares. | |
(7) | Includes options to purchase 18,683 shares of common stock exercisable by Michael H. Clinard. | |
(8) | Includes options to purchase 23,604 shares of common stock exercisable by Thomas E. Upton. | |
(9) | Represents options to purchase 30,000 shares of common stock exercisable by J. Chris Brewster. | |
(10) | Represents 13,209 shares of our Series B Preferred stock which are convertible into our common stock on a share for share basis and options to purchase 10,000 shares of common stock exercisable by Ronald Delnevo. | |
(11) | Represents options to purchase 4,316 shares of common stock exercisable by Robert P. Barone. | |
(12) | Represents options to purchase 3,937 shares of common stock exercisable by Ron Coben. | |
(13) | Represents options to purchase 2,500 shares of common stock exercisable by Jorge Diaz. | |
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• | are general unsecured obligations of the Company; | |
• | are subordinated in right of payment to all existing and future Senior Debt of the Company, including the Indebtedness of the Company under the Credit Agreement; | |
• | arepari passuin right of payment with all existing and any future senior subordinated Indebtedness of the Company; | |
• | are senior in right of payment to all existing and any future subordinated Indebtedness of the Company; | |
• | are guaranteed by the Guarantors as described under “— Note Guarantees”; and | |
• | are effectively subordinated to all existing and any future Indebtedness and other liabilities of the Company’s Subsidiaries that are not Guarantors. |
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• | is a general unsecured obligation of that Guarantor; | |
• | is subordinated in right of payment to all existing and future Senior Debt of that Guarantor, including the Guarantee by that Guarantor of Indebtedness under the Credit Agreement; | |
• | ispari passuin right of payment with all existing and any future senior subordinated Indebtedness of that Guarantor; and | |
• | is senior in right of payment to all existing and any future subordinated Indebtedness of that Guarantor. |
(1) any liquidation or dissolution of the Company; | |
(2) any bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property; | |
(3) any assignment for the benefit of creditors; or | |
(4) any marshaling of the Company’s assets and liabilities. |
(1) a default (a “payment default”) in the payment of principal, premium or interest on Designated Senior Debt of the Company occurs and is continuing; or | |
(2) any other default (a “nonpayment default”) occurs and is continuing on any series of Designated Senior Debt of the Company that permits holders of that series of Designated Senior Debt of |
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the Company to accelerate its maturity, and the Trustee receives a notice of such default (a “Payment Blockage Notice”) from a representative of the holders of such Designated Senior Debt. |
(1) in the case of a payment default on Designated Senior Debt of the Company, upon the date on which such default is cured or waived; and | |
(2) in case of a nonpayment default on Designated Senior Debt of the Company, the earlier of (x) the date on which such default is cured or waived, (y) 179 days after the date on which the applicable Payment Blockage Notice is received and (z) the date the Trustee receives notice from the representative for such Designated Senior Debt rescinding the Payment Blockage Notice, unless, in each case, the maturity of such Designated Senior Debt of the Company has been accelerated. |
(1) 360 days have elapsed since the delivery of the immediately prior Payment Blockage Notice; and | |
(2) all scheduled payments of principal, interest and premium and Additional Interest, if any, on the Notes that have come due have been paid in full in cash or Cash Equivalents. |
(1) the payment is prohibited by these subordination provisions; and | |
(2) the Trustee or the Holder has actual knowledge that the payment is prohibited (providedthat such actual knowledge will not be required in the case of any payment default on Designated Senior Debt), |
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(1) any Indebtedness outstanding under the Credit Agreement; and | |
(2) to the extent permitted under the Credit Agreement, any other Senior Debt permitted under the Indenture the amount of which is $25.0 million or more and that has been designated by the Company as “Designated Senior Debt.” |
(1) Equity Interests in the Company or any Guarantor or any other business entity provided for by a plan or reorganization; and | |
(2) debt securities of the Company or any Guarantor or any other business entity provided for by a plan of reorganization that are subordinated to all Senior Debt and any debt securities issued in exchange for Senior Debt to the same extent as, or to a greater extent than, the Notes and the Note Guarantees are subordinated to Senior Debt under the Indenture. |
(1) all Indebtedness of such Person outstanding under the Credit Agreement and all Hedging Obligations with respect thereto, whether outstanding on the Issue Date or Incurred thereafter; | |
(2) any other Indebtedness of such Person permitted to be Incurred under the terms of the Indenture, unless the instrument under which such Indebtedness is Incurred expressly provides that it is on a parity with or is subordinated in right of payment to the Notes or any Note Guarantee; and | |
(3) all Obligations with respect to the items listed in the preceding clauses (1) and (2) (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law). |
(1) any liability for federal, state, local or other taxes owed or owing by the Company or any Guarantor; | |
(2) any Indebtedness of the Company or any Guarantor to any of their Subsidiaries or other Affiliates; | |
(3) any trade payables; | |
(4) the portion of any Indebtedness that is Incurred in violation of the Indenture, provided that a good faith determination by the Board of Directors of the Company evidenced by a Board Resolution, or a good faith determination by the Chief Financial Officer of the Company evidenced by an officer’s certificate, that any Indebtedness being incurred under the Credit Agreement is permitted by the Indenture will be conclusive; | |
(5) any Indebtedness of the Company or any Guarantor that, when Incurred, was without recourse to the Company or such Guarantor; | |
(6) any repurchase, redemption or other obligation in respect of Disqualified Stock or Preferred Stock; or | |
(7) any Indebtedness owed to any employee of the Company or any of its Subsidiaries. |
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(1) at least 65% of the aggregate principal amount of Notes issued under the Indenture (including any Additional Notes) remains outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company or its Affiliates); and | |
(2) the redemption must occur within 45 days of the date of the closing of such Equity Offering. |
Year | Percentage | |||
2009 | 104.625 | % | ||
2010 | 102.313 | % | ||
2011 and thereafter | 100.000 | % |
(1) if the Notes are listed on any national securities exchange, in compliance with the requirements of such principal national securities exchange; or | |
(2) if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee will deem fair and appropriate. |
Change of Control |
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(1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer; | |
(2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered; and | |
(3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. |
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Asset Sales |
(1) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and | |
(2) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash, Cash Equivalents or Replacement Assets or a combination of both. For purposes of this provision, each of the following will be deemed to be cash: |
(a) any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet) of the Company or any Restricted Subsidiary (other than contingent liabilities, Indebtedness that is by its terms subordinated to the Notes or any Note Guarantee and liabilities to the extent owed to the Company or any Affiliate of the Company) that are assumed by the transferee of any such assets or Equity Interests pursuant to a written novation agreement that releases the Company or such Restricted Subsidiary from further liability therefor; | |
(b) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are contemporaneously (subject to ordinary settlement periods) converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received in that conversion); and | |
(c) any Designated Non-Cash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Sale having an aggregated Fair Market Value, taken together with all other Designated Non-Cash consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed the greater of (x) 5.0% of the Company’s Consolidated Net Assets as of the date or receipt of such Designated Non-Cash Consideration and (y) $15.0 million (with the Fair Market Value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value). |
(1) to repay Senior Debt and, if the Senior Debt repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; or | |
(2) to purchase Replacement Assets (or enter into a binding agreement to purchase such Replacement Assets; provided that (x) such purchase is consummated within 90 days after the date of such binding agreement and (y) if such purchase is not consummated, within the period set forth in subclause (x), the Net Proceeds not so applied will be deemed to be Excess Proceeds (as defined below)). |
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Restricted Payments |
(1) declare or pay (without duplication) any dividend or make any other payment or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of |
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its Restricted Subsidiaries) or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends, payments or distributions (x) payable in Equity Interests (other than Disqualified Stock) of the Company or (y) to the Company or a Restricted Subsidiary of the Company); | |
(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) any Equity Interests of the Company, or any Restricted Subsidiary thereof held by Persons other than the Company or any of its Restricted Subsidiaries; | |
(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes or any Note Guarantees, except (a) a payment of interest or principal at the Stated Maturity thereof or (b) the purchase, repurchase or other acquisition of any such Indebtedness in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such purchase, repurchase or other acquisition; or | |
(4) make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”), |
(1) no Default or Event of Default will have occurred and be continuing or would occur as a consequence thereof; and | |
(2) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness”; and | |
(3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issue Date (excluding Restricted Payments permitted by clauses (3), (4), (5), (6) and (10) of the next succeeding paragraph (B)), is less than the sum, without duplication, of: |
(a) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the Issue Date to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit),plus | |
(b) 100% of the aggregate net cash proceeds and the Fair Market Value of assets other than cash received by the Company since the Issue Date as a contribution to its common equity capital or from the issue or sale of Equity Interests (other than Disqualified Stock) of the Company or from the Incurrence of Indebtedness of the Company that has been converted into or exchanged for such Equity Interests (other than Equity Interests sold to, or Indebtedness held by, a Subsidiary of the Company),plus | |
(c) with respect to Restricted Investments made by the Company and its Restricted Subsidiaries after the Issue Date, an amount equal to the net reduction in such Restricted Investments in any Person resulting from repayments of loans or advances, or other transfers of assets, in each case to the Company or any Restricted Subsidiary or from the net cash proceeds from the sale of any such Restricted Investment (except, in each case, to the extent any such payment or proceeds are included in the calculation of Consolidated Net Income), from the release of any Guarantee (except to the extent any amounts are paid under such Guarantee) or from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries, not to exceed, in each case, the amount of Restricted |
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Investments previously made by the Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary after the Issue Date;plus | |
(d) the amount by which Indebtedness of the Company is reduced on the Company’s most recent quarterly balance sheet upon the conversion or exchange subsequent to the Issue Date of any Indebtedness of the Company convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash or the Fair Market Value of any other property distributed by the Company upon such conversion or exchange) plus the amount of any cash received by the Company upon such conversion or exchange;provided, however,that such amount may not exceed the net proceeds received by the Company or any of its Restricted Subsidiaries from the conversion or exchange of such Indebtedness (excluding net proceeds from conversion or exchange by a Subsidiary of the Company or by an employee ownership plan or by a trust established by the Company or any of its Subsidiaries for the benefit of their employees). |
(1) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture; | |
(2) the payment of any dividend by a Restricted Subsidiary of the Company to the holders of its Common Stock on a pro rata basis; | |
(3) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Disqualified Stock of the Company or any Guarantor or of any Equity Interests of the Company or any Restricted Subsidiary in exchange for, or out of the net cash proceeds of a contribution to the Equity Interests (other than Disqualified Stock) of the Company or a substantially concurrent sale (other than to a Subsidiary of the Company) of, Equity Interests (other than Disqualified Stock) of the Company;providedthat the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition will be excluded from clause (3) (b) of the preceding paragraph (A); | |
(4) the defeasance, redemption, repurchase or other acquisition of Indebtedness subordinated to the Notes or the Note Guarantees with the net cash proceeds from an Incurrence of Permitted Refinancing Indebtedness; | |
(5) Investments acquired as a capital contribution to, or in exchange for, or out of the net cash proceeds of a substantially concurrent offering of, Equity Interests (other than Disqualified Stock) of the Company;provided that the amount of any such net cash proceeds that are utilized for any such acquisition or exchange will be excluded from clause (3) (b) of the preceding paragraph (A); | |
(6) the repurchase of Capital Stock deemed to occur upon the exercise of options or warrants to the extent that such Capital Stock represents all or a portion of the exercise price thereof; | |
(7) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company held by any current or former employee or director of the Company (or any of its Restricted Subsidiaries) pursuant to the terms of any employee equity subscription agreement, stock option agreement or similar agreement entered into in the ordinary course of business; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests in a calendar year does not exceed $2.0 million (with unused amounts in any calendar year being carried over to succeeding calendar years (without giving effect to the following proviso)) and does not exceed $6.0 million in aggregate;provided further that such amount in any calendar year may be increased by an amount not to exceed (A) the net cash proceeds received by the Company from the sale of Equity Interests (other than Disqualified Stock) of the Company to members of management or directors of the Company and its Restricted Subsidiaries that occurs after the Issue Date (to the extent such cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments) plus (B) the net cash proceeds of key man life insurance policies received by the |
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Company and its Restricted Subsidiaries after the Issue Date, less (C) the amount of any Restricted Payments made pursuant to clauses (A) and (B) of this clause (7); | |
(8) payments in respect of management fees to any of the Principals pursuant to agreements in effect on the Issue Date as described in this prospectus in an amount not to exceed an aggregate amount of $500,000 in any calendar year; | |
(9) payments of dividends on Disqualified Stock otherwise permitted under Indenture; | |
(10) cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock of the Company; | |
(11) payments of dividends on the Company’s common stock following the first bona fide underwritten public offering of common stock of the Company after the Closing Date, of up to 6% per annum of the net cash proceeds received by the Company from such public offering;provided however,that (A) at the time of payment of any such dividend, no Default will have occurred and be continuing (or result therefrom), and (B) the aggregate amount of all dividends paid under this clause (11) will not exceed the aggregate amount of net proceeds received by the Company from such public offering; and | |
(12) other Restricted Payments in an aggregate amount not to exceed $10.0 million. |
Incurrence of Indebtedness |
(1) the Incurrence by the Company or any Guarantor of Indebtedness under Credit Facilities (including, without limitation, the Incurrence by the Company and the Guarantors of Guarantees thereof) in an aggregate amount at any one time outstanding pursuant to this clause (1) not to exceed $200.0 million,lessthe aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any Restricted Subsidiary thereof to permanently repay any such Indebtedness pursuant to the covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales”; provided that a Restricted Subsidiary that is not a Domestic Subsidiary or a Guarantor of Indebtedness under the Credit Facilities may incur Indebtedness pursuant to this clause (1), together with Indebtedness Incurred pursuant to clause (9) of this “Incurrence of Indebtedness” covenant, in an aggregate amount, after giving effect to such Incurrence, at any time outstanding not to exceed the greater of (a) $25.0 million or (b) 40% of the aggregate Consolidated Net Assets of such Restricted Subsidiaries; | |
(2) the Incurrence of Existing Indebtedness; | |
(3) the Incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the Issue Date; |
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(4) the Incurrence by the Company or any Guarantor of Indebtedness represented by Capital Lease Obligations, mortgage financings, construction loans or purchase money obligations for property acquired in the ordinary course of business, in each case Incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used by the Company or any such Guarantor, in an aggregate amount, including all Permitted Refinancing Indebtedness Incurred to refund, refinance or replace any Indebtedness Incurred pursuant to this clause (4), not to exceed 7.5% of the Company’s Consolidated Net Assets at any time outstanding; | |
(5) the Incurrence by the Company or any Restricted Subsidiary of the Company of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be Incurred under the first paragraph of this covenant or clause (2), (3), (4), (5), or (10) of this paragraph; | |
(6) the Incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness owing to and held by the Company or any of its Restricted Subsidiaries;provided, however,that: |
(a) if the Company or any Guarantor is the obligor on such Indebtedness, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; | |
(b) Indebtedness owed to the Company or any Guarantor must be evidenced by an unsubordinated promissory note, unless the obligor under such Indebtedness is the Company or a Guarantor; and | |
(c) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof, will be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6); |
(7) the Guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be Incurred by another provision of this covenant; or | |
(8) the Incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are Incurred for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; | |
(9) the Incurrence by any Restricted Subsidiary other than a Domestic Subsidiary of Indebtedness in an aggregate amount at any time outstanding, after giving effect to such Incurrence and together with any Indebtedness Incurred under the proviso in clause (1) of this “Incurrence of Indebtedness” covenant, not to exceed the greater of (a) $25 million or (b) 40% of the Consolidated Net Assets of any such Restricted Subsidiaries; or | |
(10) the Incurrence by the Company or any Guarantor of additional Indebtedness in an aggregate amount at any time outstanding, including all Permitted Refinancing Indebtedness Incurred to refund, refinance or replace any Indebtedness Incurred pursuant to this clause (10), not to exceed the greater of (a) $15.0 million or (b) 5% of the Consolidated Net Assets of the Company. |
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Limitation on Senior Subordinated Debt |
Liens |
Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries |
(1) pay dividends or make any other distributions on its Capital Stock (or with respect to any other interest or participation in, or measured by, its profits) to the Company or any of its Restricted Subsidiaries or pay any liabilities owed to the Company or any of its Restricted Subsidiaries; | |
(2) make loans or advances to the Company or any of its Restricted Subsidiaries; or | |
(3) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. |
(1) existing under, by reason of or with respect to the Credit Agreement, Existing Indebtedness or any other agreements in effect on the Issue Date and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof,providedthat the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, than those contained in the Credit Agreement, Existing Indebtedness or such other agreements, as the case may be, as in effect on the Issue Date; |
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(2) set forth in the Indenture, the Notes and the Note Guarantees; | |
(3) existing under, by reason of or with respect to applicable law; | |
(4) with respect to any Person or the property or assets of a Person acquired by the Company or any of its Restricted Subsidiaries existing at the time of such acquisition and not incurred in connection with or in contemplation of such acquisition, which encumbrance or restriction is not applicable to any Person or the properties or assets of any Person, other than the Person, or the property or assets of the Person so acquired and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof;providedthat the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, than those in effect on the date of the acquisition; | |
(5) in the case of clause (3) of the first paragraph of this covenant: |
(A) that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is a lease, license, conveyance or contract or similar property or asset, | |
(B) existing by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Restricted Subsidiary thereof not otherwise prohibited by the Indenture; | |
(C) any encumbrance or restriction arising or existing by reason of construction loans or purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations, in each case to the extent permitted under the Indenture; | |
(D) customary restrictions imposed on the transfer of intellectual property in connection with licenses of such intellectual property in the ordinary course of business; | |
(E) encumbrances or restrictions existing under or by reason of provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements, in each case to the extent permitted under the Indenture, so long as any such encumbrances or restrictions are not applicable to any Person (to its property or assets) other than such joint venture or a Subsidiary thereof; or | |
(F) arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of the Company or any Restricted Subsidiary thereof in any manner material to the Company or any Restricted Subsidiary thereof; |
(6) existing under, by reason of or with respect to any agreement for the sale or other disposition of all or substantially all of the Capital Stock of, or property and assets of, a Restricted Subsidiary that restrict distributions by that Restricted Subsidiary pending such sale or other disposition; and | |
(7) on cash or other deposits or net worth imposed by customers or required by insurance, surety or bonding companies, in each case, under contracts entered into in the ordinary course of business. |
Merger, Consolidation or Sale of Assets |
(1) either: (a) the Company is the surviving Person; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition will have been made (i) is a Person organized or existing under the laws of the United States, any state thereof or the District of Columbia and (ii) assumes all the obligations of |
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the Company under the Notes, the Indenture and, to the extent applicable, the Registration Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee; | |
(2) immediately after giving effect to such transaction no Default or Event of Default exists; | |
(3) immediately after giving effect to such transaction on a pro forma basis, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition will have been made, will be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “— Incurrence of Indebtedness.” | |
(4) each Guarantor, unless such Guarantor is the Person with which the Company has entered into a transaction under this covenant, will have by amendment to its Note Guarantee confirmed that its Note Guarantee will apply to the obligations of the Company or the surviving Person in accordance with the Notes and the Indenture. | |
(5) the Company delivers to the Trustee an Officers’ Certificate (attaching the arithmetic computation to demonstrate compliance with clause (3) above) and Opinion of Counsel, in each case stating that such transaction and such agreement complies with this covenant and that all conditions precedent provided for in this covenant relating to such transaction have been complied with. |
Transactions with Affiliates |
(1) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable arm’s-length transaction by the Company or such Restricted Subsidiary with a Person that is not an Affiliate of the Company or any of its Restricted Subsidiaries; and | |
(2) the Company delivers to the Trustee: |
(a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a Board Resolution set forth in an Officers’ Certificate certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with this covenant, and that such Affiliate Transaction or series of related Affiliate Transactions has been approved by a majority of the disinterested members of the Board of Directors of the Company; and |
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(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25.0 million, an opinion as to the fairness to the Company or such Restricted Subsidiary of such Affiliate Transaction or series of related Affiliate Transactions from a financial point of view issued by an independent accounting, appraisal or investment banking firm of national standing. |
(1) transactions between or among the Company and/or its Restricted Subsidiaries; | |
(2) payment of reasonable and customary fees to, and reasonable and customary indemnification and similar payments on behalf of, directors of the Company; | |
(3) Restricted Payments that are permitted by the provisions of the Indenture described above under the covenants described under the caption “— Restricted Payments” including, without limitation, payments included in the definition of “Permitted Investments”; and | |
(4) any sale of Equity Interests (other than Disqualified Stock) of the Company; | |
(5) the receipt by the Company of any capital contribution from its shareholders; | |
(6) transactions pursuant to agreements or arrangements in effect on the Issue Date and described in this prospectus, or any amendment, modification, or supplement thereto or replacement thereof, as long as such agreement or arrangement, as so amended, modified or supplemented or replaced, taken as a whole, is not more disadvantageous to the Company and its Restricted Subsidiaries than the original agreements or arrangements in existence on the Issue Date; | |
(7) payment by the Company of management or other similar fees to any of the Principals pursuant to any agreement or arrangement in an aggregate amount not to exceed $500,000 in any calendar year; and | |
(8) any employment, consulting, service or termination agreement, or reasonable and customary indemnification arrangements, entered into by the Company or any of its Restricted Subsidiaries with officers and employees of the Company or any of its Restricted Subsidiaries and the payment of compensation to officers and employees of the Company or any of its Restricted Subsidiaries (including amounts paid pursuant to employee benefit plans, employee stock option or similar plans), so long as such agreement or payment has been approved by the Board of Directors of the Company. |
Designation of Restricted and Unrestricted Subsidiaries |
(1) any Guarantee by the Company or any Restricted Subsidiary thereof of any Indebtedness of the Subsidiary being so designated will be deemed to be an Incurrence of Indebtedness by the Company or such Restricted Subsidiary (or both, if applicable) at the time of such designation, and such Incurrence of Indebtedness would be permitted under the covenant described above under the caption “— Incurrence of Indebtedness,” and any lien on the property of the Restricted Subsidiary will be permitted to exist under the covenant described above under the caption “— Liens;” | |
(2) the aggregate Fair Market Value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary being so designated (including any Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of such Subsidiary) will be deemed to be a Restricted Investment made as of the time of such designation and that such Investment would be permitted under the covenant described above under the caption “— Restricted Payments”; |
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(3) the Subsidiary being so designated: |
(a) except as permitted by the covenant described above under the caption “— Transaction with Affiliates,” is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; | |
(b) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (i) to subscribe for additional Equity Interests or (ii) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and | |
(c) has not Guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries, except to the extent such Guarantee or credit support would be released upon such designation; and |
(4) no Default or Event of Default would be in existence following such designation. |
(1) such designation will be deemed to be an Incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if such Indebtedness is permitted under the covenant described under the caption “— Incurrence of Indebtedness;” | |
(2) all outstanding Investments owned by such Unrestricted Subsidiary will be deemed to be made as of the time of such designation and such designation will only be permitted if such Investments would be permitted under the covenant described above under the caption “— Restricted Payments”; | |
(3) all Liens upon property or assets of such Unrestricted Subsidiary existing at the time of such designation would be permitted under the covenant described under the caption “— Liens”; and | |
(4) no Default or Event of Default would be in existence following such designation. |
Limitation on Issuances and Sales of Preferred Stock in Restricted Subsidiaries |
(1) such transfer, conveyance, sale, lease or other disposition is of all the Equity Interest in such Restricted Subsidiary owned by the Company and its Restricted Subsidiaries; and | |
(2) the cash Net Proceeds from such transfer, conveyance, sale, lease or other disposition are applied in accordance with the covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales.” |
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Guarantees |
(1) immediately after giving effect to that transaction, no Default or Event of Default exists; and | |
(2) either: |
(a) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (if other than the Guarantor) is organized or existing under the laws of the United States, any state thereof or the District of Columbia and assumes all the obligations of that Guarantor under the Indenture, its Note Guarantee and the Registration Rights Agreement pursuant to a supplemental indenture satisfactory to the Trustee; or | |
(b) such sale or other disposition or consolidation or merger complies with the covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales.” |
(1) in connection with any sale or other disposition of all of the Capital Stock of a Guarantor to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of the Company, if the sale of all such Capital Stock of that Guarantor complies with the covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales”; | |
(2) if the Company properly designates any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary under the Indenture; or | |
(3) solely in the case of a Note Guarantee created pursuant to the second paragraph of this covenant, upon the release or discharge of the Guarantee which resulted in the creation of such Note Guarantee pursuant to this covenant, except a discharge or release by or as a result of payment under such Guarantee. |
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Business Activities |
Payments for Consent |
Reports |
(1) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by the Company’s certified independent accountants; and | |
(2) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports. |
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(1) default for 30 days in the payment when due of interest on, or Additional Interest with respect to, the Notes whether or not prohibited by the subordination provisions of the Indenture; | |
(2) default in payment when due (whether at maturity, upon acceleration, redemption or otherwise) of the principal of, or premium, if any, on the Notes, whether or not prohibited by the subordination provisions of the Indenture; | |
(3) failure by the Company or any of its Restricted Subsidiaries to consummate a purchase of the Notes when required by the provisions described under the captions “— Repurchase at the Option of Holders — Change of Control,” or “— Repurchase at the Option of Holders — Asset Sales” or failure to comply with “— Certain Covenants — Merger, Consolidation or Sale of Assets”; | |
(4) failure by the Company or any of its Restricted Subsidiaries for 60 days after written notice by the Trustee or Holders representing 25% or more of the aggregate principal amount of Notes outstanding to comply with any of the other agreements in the Indenture; | |
(5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary (or any Restricted Subsidiaries that together would constitute a Significant Subsidiary) (or the payment of which is Guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, if that default: |
(a) is caused by a failure to make any payment when due at the final maturity of such Indebtedness (a “Payment Default”); or | |
(b) results in the acceleration of such Indebtedness prior to its express maturity, |
and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $10.0 million or more; |
(6) failure by the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary (or any Restricted Subsidiaries that together would constitute a Significant Subsidiary) to pay final judgments (to the extent such judgments are not paid or covered by insurance provided by a reputable carrier that has the ability to perform and has acknowledged coverage in writing) aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; | |
(7) except as permitted by the Indenture, any Note Guarantee will be held in any judicial proceeding to be unenforceable or invalid or will cease for any reason to be in full force and effect or any Guarantor, or any Person acting on behalf of any Guarantor, will deny or disaffirm its obligations under its Note Guarantee; and | |
(8) certain events of bankruptcy or insolvency with respect to the Company, any Guarantor or any Restricted Subsidiary that is a Significant Subsidiary of the Company (or any Restricted Subsidiaries that together would constitute a Significant Subsidiary). |
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(1) the Holder gives the Trustee written notice of a continuing Event of Default; | |
(2) the Holders of at least 25% in aggregate principal amount of outstanding Notes make a written request to the Trustee to pursue the remedy; | |
(3) such Holder or Holders offer the Trustee indemnity satisfactory to the Trustee against any costs, liability or expense; | |
(4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and | |
(5) during such60-day period, the Holders of a majority in aggregate principal amount of the outstanding Notes do not give the Trustee a direction that is inconsistent with the request. |
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(1) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, or interest or premium and Additional Interest, if any, on such Notes when such payments are due from the trust referred to below; | |
(2) the Company’s obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust; | |
(3) the rights, powers, trusts, duties and immunities of the Trustee, and the Company’s and the Guarantors’ obligations in connection therewith; and | |
(4) the Legal Defeasance provisions of the Indenture. |
(1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, or interest and premium and Additional Interest, if any, on the outstanding Notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date; | |
(2) in the case of Legal Defeasance, the Company will have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based |
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thereon such Opinion of Counsel will confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; | |
(3) in the case of Covenant Defeasance, the Company will have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; | |
(4) no Default or Event of Default will have occurred and be continuing either: (a) on the date of such deposit; or (b) insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 123rd day after the date of deposit (other than a Default resulting from the borrowing of funds to be applied to such deposit); | |
(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; | |
(6) the Company must have delivered to the Trustee an Opinion of Counsel to the effect that, (1) assuming no intervening bankruptcy of the Company or any Guarantor between the date of deposit and the 123rd day following the deposit and assuming that no Holder or the Trustee is deemed to be an “insider” of the Company under the United States Bankruptcy Code and the New York Debtor and Creditor Law, and assuming that the deposit is not otherwise deemed to be to or for the benefit of an “insider” of the Company under the United States Bankruptcy Code and the New York Debtor and Creditor Law, and assuming that no Holder or the Trustee is deemed to be an “initial transferee” or “mediate transferee” of a “transfer” within the meaning of Section 550 of the United States Bankruptcy Code, after the 123rd day following the deposit, the transfer of the trust funds pursuant to such deposit will not be subject to avoidance pursuant to Section 547 of the United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law and (2) the creation of the defeasance trust does not violate the Investment Company Act of 1940; | |
(7) the Company must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and | |
(8) the Company must deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with. |
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(1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; | |
(2) reduce the principal of or change the fixed maturity of any Note or alter the provisions, or waive any payment, with respect to the redemption of the Notes (other than any provision with respect to the covenant described under the caption “Repurchase at the Options of Holders — Asset Sales” or “Repurchase at the Option of Holders — Change of Control” or “Merger, Consolidation and Sale of Assets”); | |
(3) reduce the rate of, or change the time for payment of, interest on any Note; | |
(4) waive a Default or Event of Default in the payment of principal of, or interest, or premium or Additional Interest, if any, on, the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration); | |
(5) make any Note payable in money other than U.S. dollars; | |
(6) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of, or interest or premium or Additional Interest, if any, on, the Notes; | |
(7) release any Guarantor from any of its obligations under its Note Guarantee or the Indenture, except in accordance with the terms of the Indenture; | |
(8) impair the right to institute suit for the enforcement of any payment on or with respect to the Notes or the Note Guarantees; | |
(9) except as otherwise permitted under the covenants described under the captions “— Certain Covenants — Guarantees,” consent to the assignment or transfer by the Company or any Guarantor of any of their rights or obligations under the Indenture; or | |
(10) make any change in the preceding amendment and waiver provisions. |
(1) to cure any ambiguity, defect or inconsistency; | |
(2) to provide for uncertificated Notes in addition to or in place of certificated Notes; | |
(3) to provide for the assumption of the Company’s or any Guarantor’s obligations to Holders of Notes in the case of a merger or consolidation or sale of all or substantially all of the Company’s or such Guarantor’s assets; | |
(4) to make any change that would provide any additional rights or benefits to the Holders of Notes or that does not materially adversely affect the legal rights under the Indenture of any such Holder, including the addition of any new Note Guarantee; | |
(5) to comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act; | |
(6) to comply with the provisions described under “— Certain Covenants — Guarantees,” including to reflect the release of a Guarantee of the Notes in accordance with the Indenture; |
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(7) to secure the Notes and/or Guarantees of the Notes; | |
(8) to evidence and provide for the acceptance of appointment by a successor Trustee; or | |
(9) to provide for the issuance of Additional Notes in accordance with the Indenture. |
(1) either: |
(a) all Notes that have been authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company) have been delivered to the Trustee for cancellation; or | |
(b) all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the mailing of a notice of redemption or otherwise or will become due and payable within one year and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium and Additional Interest, if any, and accrued interest to the date of maturity or redemption; |
(2) no Default or Event of Default will have occurred and be continuing on the date of such deposit or will occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound; | |
(3) the Company or any Guarantor has paid or caused to be paid all sums payable by it under the Indenture; and | |
(4) the Company has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be. |
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(1) the sale, lease, conveyance or other disposition of any assets, other than a transaction governed by the provisions of the Indenture described above under the caption “— Repurchase at the Option of Holders — Change of Control” and/or the provisions described above under the caption “— Certain Covenants — Merger, Consolidation or Sale of Assets;” and | |
(2) the issuance of Equity Interests by any of the Company’s Restricted Subsidiaries or the sale by the Company or any Restricted Subsidiary thereof of Equity Interests in any of its Subsidiaries (other than directors’ qualifying shares and shares issued to foreign nationals to the extent required by applicable law). |
(1) any single transaction or series of related transactions that involves assets or Equity Interests having a Fair Market Value of less than $1.0 million; | |
(2) a transfer of assets or Equity Interests between or among the Company and its Restricted Subsidiaries; | |
(3) an issuance or sale of Equity Interests by a Restricted Subsidiary of the Company to the Company or to another Restricted Subsidiary; | |
(4) the sale or lease of equipment, inventory, accounts receivable or other assets in the ordinary course of business; | |
(5) the sale or other disposition of Cash Equivalents; | |
(6) dispositions of accounts receivable in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings; | |
(7) a Restricted Payment that is permitted by the covenant described above under the caption “— Certain Covenants — Restricted Payments” and any Permitted Investments; | |
(8) any sale or disposition of any property or equipment that has become damaged, worn out, or obsolete; and |
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(9) the creation of a Lien not prohibited by the Indenture. |
(1) with respect to a corporation, the board of directors of the corporation or, except in the context of the definitions of “Change of Control” and “Continuing Directors,” a duly authorized committee thereof; | |
(2) with respect to a partnership, the Board of Directors of the general partner of the partnership; and | |
(3) with respect to any other Person, the board or committee of such Person serving a similar function. |
(1) in the case of a corporation, any corporate stock; | |
(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; | |
(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and | |
(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. |
(1) United States dollars, or in the case of a Subsidiary other than a Domestic Subsidiary, such local currencies held by it in the ordinary course of business; | |
(2) securities issued or directly and fully guaranteed or insured by the United States government, or any member state of the European Union in which the Company or any Subsidiary operates or anticipates operating within the 12 months, or any agency or instrumentality thereof (providedthat the full faith and credit of the United States is pledged in support thereof) maturing, unless such securities are deposited to defease any Indebtedness, not more than one year from the date of acquisition; | |
(3) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a rating at the time of acquisition thereof of P-1 or better from Moody’s Investors Service, Inc. or A-1 or better from Standard & Poor’s Rating Services; |
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(4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; | |
(5) commercial paper having the highest rating obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Rating Services and in each case maturing within one year after the date of acquisition; | |
(6) securities issued and fully guaranteed by any state, commonwealth or territory of the United States of America , or any member state of the European Union in which the Company or any Subsidiary operates or anticipates operating within the next 12 months, or by any political subdivision or taxing authority thereof, rated at least “A” by Moody’s Investors Service, Inc. or Standard &Poor’s Rating Services and having maturities of not more than six months from the date of acquisition; | |
(7) in the case of any Restricted subsidiary located in a country that is outside the United States and the European Union (in which the Company or its Restricted Subsidiary is operating or anticipates operating within the next 12 months), any substantially similar investment to the kinds described in clauses (1) through (6) of this definition obtained in the ordinary course of business and rated the lower of (i) at least P-1 by Moody’s or A-1 by S&P or the equivalent thereof and (ii) the highest ranking obtainable in the applicable jurisdiction; and | |
(8) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (6) of this definition. |
(1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries, taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act), other than to any of the Principals or Related Parties; | |
(2) the adoption of a plan relating to the liquidation or dissolution of the Company; | |
(3) prior to the first public offering of Common Stock of the Company, the Principals or the Related Parties cease to be the ultimate Beneficial Owners, directly or indirectly, of a majority in the aggregate of the total voting power of the Voting Stock of the Company, on a fully diluted basis, whether as a result of issuance of securities of the Company, any merger, consolidation, liquidation or dissolution of the Company or a Parent, or any direct of indirect transfer of securities by the Company, or otherwise (for the avoidance of doubt, pro rata distributions in kind of Equity Interests of the Company by any Principal to its general and/or limited partners will be disregarded for this clause (3)); | |
(4) on and following the first public offering of Common Stock of the Company, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than any of the Principals or Related Parties, becomes the ultimate Beneficial Owner, directly or indirectly, of 50% or more of the voting power of the Voting Stock of the Company; | |
(5) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors; or | |
(6) the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance), and any transaction where immediately after such transaction, no “person” or |
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“group” (as such terms are used in Section 13(d) and 14(d) of the Exchange Act), becomes, directly or indirectly, the ultimate Beneficial Owner of 50% or more of the voting power of the Voting Stock of the surviving or transferee Person. |
(1) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income;plus | |
(2) Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that any such Fixed Charges were deducted in computing such Consolidated Net Income;plus | |
(3) depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income;minus | |
(4) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue consistent with past practice; |
(1) the Net Income (or loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or |
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distributions or other payments that are actually paid in cash (or to the extent converted into cash) to the specified Person or a Restricted Subsidiary thereof; | |
(2) Solely for the purpose of determining the amount available for Restricted Payments under “— Certain Covenants — Restricted Payments,” the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its equity holders, unless such restriction has been waived: provided that Consolidated Net Income for such Restricted Subsidiary will be increased by the amount of dividends or distributions or other payments that are actually paid in cash (or to the extent converted into cash) to such Restricted Subsidiary in respect to such period, to the extent not already included therein; | |
(3) the Net Income of any Person acquired during the specified period for any period prior to the date of such acquisition will be excluded; | |
(4) the cumulative effect of a change in accounting principles will be excluded; | |
(5) the amortization or write off of fees and expenses incurred in connection with the acquisition or integration of a Permitted Business or assets used in a Permitted Business will be excluded; | |
(6) any net after tax gain (or loss) realized upon the sale or other disposition of any assets of the Company, its Consolidated Subsidiaries or any other Person (including pursuant to any sale-and- leaseback arrangement) which is not sold or otherwise disposed of in the ordinary course of business and any net after tax gain (or loss) realized upon the sale or other disposition of any Capital Stock of any Person will be excluded; | |
(7) extraordinary gains or losses will be excluded; | |
(8) any non-cash compensation charge or expense realized from grants of stock, stock appreciation or similar rights, stock option or other rights to officers, directors and employees or the Company or any of its Restricted Subsidiaries will be excluded; and | |
(9) any unusual, nonoperating or nonrecurring gain, loss, charge or write-down of assets will be excluded. |
(1) was a member of such Board of Directors on the Issue Date; or | |
(2) was nominated for election or elected to such Board of Directors (i) with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election or (ii) the nominating committee of the Board of Directors so long as it consists of Continuing Directors appointed to serve on the nominating committee in accordance with the First Amended and Restated Investors Agreement dated February 10, 2005. |
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(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, excluding amortization of debt issuance costs and the expensing of any financing fees, but including original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, and net of the effect of all payments made or received pursuant to Hedging Obligations;plus | |
(2) the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period;plus | |
(3) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon;plus | |
(4) all dividends, whether paid or accrued and whether or not in cash, on any series of Disqualified Stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) of the Company or to the Company or a Restricted Subsidiary of the Company, in each case, on a consolidated basis and in accordance with GAAP. |
(1) acquisitions and dispositions of business entities or property and assets constituting a division or line of business of any Person that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date will be given pro forma effect as if they had occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period will be calculated on a pro forma basis, but without giving effect to clause (3) of the proviso set forth in the definition of Consolidated Net Income; | |
(2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, will be excluded; | |
(3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will |
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not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date; and | |
(4) consolidated interest expense attributable to interest on any Indebtedness (whether existing or being Incurred) computed on apro forma basis and bearing a floating interest rate will be computed as if the average rate in effect from the beginning of the applicable period to the Calculation Date (taking into account any interest rate option, swap, cap or similar agreement applicable to such Indebtedness if such agreement has a remaining term in excess of 12 months or,if shorter, at least equal to the remaining term of such Indebtedness) had been the applicable rate for the entire period; and | |
(5) if any Indebtedness is incurred under a revolving credit facility and is being given pro forma effect in such calculation, the interest on such Indebtedness shall be calculated based on the average daily balance of such Indebtedness for the four fiscal quarters subject to the pro forma calculation to the extent that such Indebtedness was incurred solely for working capital purposes. |
(1) the Initial Guarantors; and | |
(2) any other subsidiary that executes a Note Guarantee in accordance with the provisions of the Indenture; |
(1) interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and other agreements or arrangements with respect to interest rates; | |
(2) commodity swap agreements, commodity option agreements, forward contracts and other agreements or arrangements with respect to commodity prices; and | |
(3) foreign exchange contracts, currency swap agreements and other agreements or arrangements with respect to foreign currency exchange rates. |
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(1) in respect of borrowed money; | |
(2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); | |
(3) in respect of banker’s acceptances; | |
(4) in respect of Capital Lease Obligations; | |
(5) in respect of the balance deferred and unpaid of the purchase price of any property or services, except any such balance that constitutes an accrued expense or trade payable; | |
(6) representing Hedging Obligations; | |
(7) representing Disqualified Stock valued at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued dividends; | |
(8) in the case of a Subsidiary of such Person, representing Preferred Stock valued at greater of its voluntary or involuntary maximum fixed repurchase price plus accrued dividends. |
(1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and | |
(2) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. |
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(1) the Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, provided, however, that such Indebtedness is extinguished within five Business Days of its Incurrence; | |
(2) the Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness constituting reimbursement obligations with respect to letters of credit in respect of workers’ compensation claims or self-insurance obligations or bid, performance or surety bonds (in each case, other than for an obligation for borrowed money); | |
(3) the Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business; provided that, upon the drawing of such letters of credit or in the Incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or Incurrence; | |
(4) the Incurrence by the Company of Indebtedness to the extent that the net proceeds thereof are promptly deposited to defease or to satisfy and discharge the Notes; | |
(5) any Indebtedness which has been defeased in accordance with GAAP; and | |
(6) the Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or Guarantees or letters of credit, surety bonds or performance bonds securing any obligations of the Company or any of its Restricted Subsidiaries pursuant to such agreements, in any case Incurred in connection with the disposition of any business, assets or Restricted Subsidiary of the Company (other than Guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition), so long as the amount so indemnified or otherwise Incurred does not exceed the gross proceeds actually received by the Company or any Restricted Subsidiary thereof in connection with such disposition. |
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(1) any gain (or loss), together with any related provision for taxes on such gain (or loss), realized in connection with: (a) any sale of assets outside the ordinary course of business of such Person; or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and | |
(2) any extraordinary gain (or loss), together with any related provision for taxes on such extraordinary gain (or loss). |
(1) the direct costs relating to such Asset Sale, including, without limitation, legal, accounting, investment banking and brokerage fees, and sales commissions, and any relocation expenses incurred as a result thereof, | |
(2) taxes paid or payable as a result thereof, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, | |
(3) amounts required to be applied to the repayment of Indebtedness or other liabilities, secured by a Lien on the asset or assets that were the subject of such Asset Sale, or is required to be paid as a result of such sale, | |
(4) any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP, | |
(5) in the case of any Asset Sale by a Restricted Subsidiary of the Company, payments to holders of Equity Interests in such Restricted Subsidiary in such capacity (other than such Equity Interests held by the Company or any Restricted Subsidiary thereof) to the extent that such payment is required to permit the distribution of such proceeds in respect of the Equity Interests in such Restricted Subsidiary held by the Company or any Restricted Subsidiary thereof; and | |
(6) appropriate amounts to be provided by the Company or its Restricted Subsidiaries as a reserve against liabilities associated with such Asset Sale, including, without limitation, pension and other post- employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as determined in accordance with GAAP; |
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(1) any Investment in the Company or in a Restricted Subsidiary of the Company; | |
(2) any Investment in Cash Equivalents; | |
(3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment: |
(a) such Person becomes a Restricted Subsidiary of the Company; or | |
(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; |
(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales”; | |
(5) Hedging Obligations that are Incurred for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnifies and compensation payable thereunder; | |
(6) stock, obligations or securities received in satisfaction of judgments; | |
(7) advances to customers or suppliers in the ordinary course of business that are, in conformity with GAAP, recorded as accounts receivable, prepaid expenses or deposits on the balance sheet of the Company or its Restricted Subsidiaries and endorsements for collection or deposit arising in the ordinary course of business; | |
(8) commission, payroll, travel and similar advances to officers and employees of the Company or any of its Restricted Subsidiaries that are expected at the time of such advance ultimately to be recorded as an expense in conformity with GAAP; | |
(9) Investments in any Person received in settlement of debts created in the ordinary course of business and owing to the Company or any of its Subsidiaries or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any debtor; | |
(10) Investments existing on the Issue Date; | |
(11) endorsements of negotiable instruments and documents in the ordinary course of business; | |
(12) acquisitions of assets, Equity Interests or other securities by the Company for consideration consisting of Equity Interests (other than Disqualified Stock) of the Company; |
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(13) Investments in the Notes; | |
(14) Investments in a joint venture engaged in a Permitted Business in an amount, together with any other amount under this clause (14), not to exceed 7.5% of the Company’s Consolidated Net Assets; and | |
(15) other Investments in any Person (provided that any such Person is not an Affiliate of the Company or is an Affiliate of the Company solely because the Company, directly or indirectly, owns Equity Interests in, or controls, such Person) having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (15) since the Issue Date, not to exceed $10.0 million. |
(1) Liens on the assets of the Company, any Guarantor and any Restricted Subsidiary that is not a Domestic Subsidiary securing Senior Debt that was permitted by the terms of the Indenture to be Incurred; | |
(2) Liens in favor of the Company or any Restricted Subsidiary that is a Guarantor; | |
(3) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Restricted Subsidiary of the Company;providedthat such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company or the Restricted Subsidiary; | |
(4) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company,providedthat such Liens were in existence prior to the contemplation of such acquisition and do not extend to any property other than the property so acquired by the Company or the Restricted Subsidiary; | |
(5) Liens securing the Notes and the Note Guarantees; | |
(6) Liens existing on the Issue Date; | |
(7) Liens securing Permitted Refinancing Indebtedness;providedthat such Liens do not extend to any property or assets other than the property or assets that secure the Indebtedness being refinanced; | |
(8) Liens on property or assets used to defease or to satisfy and discharge Indebtedness;providedthat (a) the Incurrence of such Indebtedness was not prohibited by the Indenture and (b) such defeasance or satisfaction and discharge is not prohibited by the Indenture; | |
(9) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance or other kinds of social security, or to secure the payment or performance of tenders, bids, contracts (other than contracts for the payment of Indebtedness) or leases to which such Person is a party, statutory or regulatory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business (including lessee or operator obligations under statutes, governmental regulations or instruments related to the ownership, exploration and production of oil, gas and minerals on state or federal lands or waters); | |
(10) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; | |
(11) statutory liens of landlords, mechanics, suppliers, vendors, warehousemen, carriers or other like Liens arising in the ordinary course of business; |
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(12) prejudgment liens and judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceeding that may have been duly initiated for the review of such judgment has not been finally terminated or the period within which such proceeding may be initiated has not expired; | |
(13) Liens constituting survey exceptions, encumbrances, easements, and reservations of, and rights to others for,rights-of-way, zoning and other restrictions as to the use of real properties, and minor defects of title which, in the case of any of the foregoing, do not secure the payment of borrowed money, and in the aggregate do not materially adversely affect the value of the assets of the Company and its Restricted Subsidiaries, taken as a whole, or materially impair the use of such properties for the purposes of which such properties are held by the Company or such Subsidiaries; | |
(14) Liens securing Indebtedness incurred to finance the construction, purchase or lease of, or repairs, improvements or additions to, property, plant or equipment of such Person;provided, however,that the Lien may not extend to any other property owned by such Person or any of its Restricted Subsidiaries at the time the Lien is incurred or created (other than assets and property affixed or appurtenant thereto), and the Indebtedness (other than any interest thereon) secured by the Lien may not be incurred or created more than 180 days after the later of the date of acquisition, completion of construction, repair, improvement, addition or commencement of full operation of the property subject to the Lien; and | |
(15) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $5.0 million at any one time outstanding. |
(1) the principal amount (or accreted value or liquidation preference, if applicable) of such Permitted Refinancing Indebtedness does not exceed the amount (or accreted value or liquidation preference,if applicable) the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued and unpaid interest thereon and the amount of any reasonably determined premium necessary to accomplish such refinancing and such reasonable expenses incurred in connection therewith); | |
(2) such Permitted Refinancing Indebtedness has a final maturity date (or redemption date, if applicable) later than the final maturity date (or redemption date, if applicable) of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; | |
(3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes or the Note Guarantees, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of the Notes, and is subordinated in right of payment to, the Notes on terms at least as favorable, taken as a whole, to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; | |
(4) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded ispari passuin right of payment with the Notes or any Note Guarantees, such Permitted Refinancing Indebtedness ispari passuwith, or subordinated in right of payment to, the Notes or such Note Guarantees; and | |
(5) such Indebtedness is Incurred by either (a) the Restricted Subsidiary that is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded or (b) the Company;provided, however,that a Restricted Subsidiary that is also a Guarantor may guarantee Permitted Refinancing Indebtedness incurred by the Company, whether or not such Restricted Subsidiary was an |
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obligor or guarantor of the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. |
(1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and | |
(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof). |
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(1) each direct or indirect Domestic Subsidiary of the Company on the date of the Indenture; and | |
(2) any other subsidiary that executes a Note Guarantee in accordance with the provisions of the Indenture; |
(1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by | |
(2) the then outstanding principal amount of such Indebtedness. |
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• | you acquire the new notes in the ordinary course of your business; and | |
• | you are not engaged in, and do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of such new notes. |
• | our “affiliate” within the meaning of Rule 405 under the Securities Act; or | |
• | a broker-dealer that acquired outstanding notes directly from us. |
• | in negotiated transactions; | |
• | through the writing of options on the new notes or a combination of such methods of resale; | |
• | at market prices prevailing at the time of resale; and | |
• | at prices related to such prevailing market prices or negotiated prices. |
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CARDTRONICS, INC. AND SUBSIDIARIES | ||||||
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Bank Machine | ||||||||||||||||||||||
Cardtronics | US GAAP ($) | Pro Forma | ||||||||||||||||||||
Historical(a) | (See Note 1)(b) | Adjustments | Notes | Pro Forma | ||||||||||||||||||
Revenues | $ | 268,965 | $ | 10,184 | $ | — | $ | 279,149 | ||||||||||||||
Cost of revenues | 209,448 | 6,035 | — | 215,483 | ||||||||||||||||||
Gross profit | 59,517 | 4,149 | — | 63,666 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Selling, general and administrative expenses | 17,865 | 1,621 | — | 19,486 | ||||||||||||||||||
Depreciation and accretion expense | 12,951 | 1,080 | (247 | ) | 3 | 13,784 | ||||||||||||||||
Amortization expense | 8,980 | 730 | (397 | ) | 3 | 9,313 | ||||||||||||||||
Total operating expenses | 39,796 | 3,431 | (644 | ) | 42,583 | |||||||||||||||||
Income from operations | 19,721 | 718 | 644 | 21,083 | ||||||||||||||||||
Interest expense | 22,426 | 1,010 | (1,448 | ) | 2 | 21,988 | ||||||||||||||||
Other (income) expense | 983 | — | — | 983 | ||||||||||||||||||
Income (loss) before income taxes | (3,688 | ) | (292 | ) | 2,092 | (1,888 | ) | |||||||||||||||
Income tax provision | (1,270 | ) | (53 | ) | 597 | 4 | (726 | ) | ||||||||||||||
Net income (loss) | $ | (2,418 | ) | $ | (239 | ) | $ | 1,495 | $ | (1,162 | ) | |||||||||||
Preferred stock dividends and accretion expense | 1,395 | — | — | 1,395 | ||||||||||||||||||
Net income (loss) available to common stockholders | $ | (3,813 | ) | $ | (239 | ) | $ | 1,495 | $ | (2,557 | ) | |||||||||||
(a) | For the year ended December 31, 2005. Includes the results of the acquired Bank Machine business for the period May 1, 2005 through December 31, 2005. |
(b) | For the four months ended April 30, 2005. |
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(1) | The unaudited pro forma condensed consolidated financial statements combine the historical results of Cardtronics and Bank Machine and assume, for purposes of the pro forma statements of operations, that the Bank Machine acquisition and the issuance and sale of the notes described in this prospectus occurred on January 1, 2005. The Company acquired Bank Machine on May 17, 2005, and utilized May 1, 2005 as the acquisition date for accounting purposes. Accordingly, amounts associated with this acquisition are included in Cardtronics’ historical consolidated financial statements subsequent to May 1, 2005. |
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Bank Machine | US GAAP | Bank Machine | Bank Machine | |||||||||||||||
UK GAAP (£) | Adjustments (£) | US GAAP (£) | US GAAP ($)* | |||||||||||||||
Revenues | £ | 5,385 | £ | — | £ | 5,385 | $ | 10,184 | ||||||||||
Cost of revenues | 3,191 | — | 3,191 | 6,035 | ||||||||||||||
Gross profit | 2,194 | — | 2,194 | 4,149 | ||||||||||||||
Operating expenses: | ||||||||||||||||||
Selling, general and administrative expenses | 842 | 15 | (b) | 857 | 1,621 | |||||||||||||
Depreciation and accretion expense | 571 | — | 571 | 1,080 | ||||||||||||||
Amortization expense | 269 | 117 | (a) | 386 | 730 | |||||||||||||
Total operating expenses | 1,682 | 132 | 1,814 | 3,431 | ||||||||||||||
Income (loss) from operations | 512 | (132 | ) | 380 | 718 | |||||||||||||
Interest expense | 509 | 25 | (c) | 534 | 1,010 | |||||||||||||
Other (income) expense | — | — | — | — | ||||||||||||||
Income (loss) before income taxes | 3 | (157 | ) | (154 | ) | (292 | ) | |||||||||||
Income tax provision/(benefit) | 100 | (128 | )(d) | (28 | ) | (53 | ) | |||||||||||
Net loss | £ | (97 | ) | £ | (29 | ) | £ | (126 | ) | $ | (239 | ) | ||||||
* | Converted to US $ at a rate of $1.8912 to £1.00 UK. |
(a) | UK GAAP requires intangible assets to be separately recognized in a business combination only if (i) they can be disposed of separately without disposing of the business of the entity, and (ii) if their value can be measured reliably on initial measurement. | |
Under US GAAP, Statement of Financial Accounting Standards (“SFAS”) No. 141,Business Combinations(“SFAS 141”), mandates the recognition of intangible assets in a business combination if (i) they arise from contractual rights or other legal rights or (ii) they are capable of being separated or divided from the acquired entity and sold, transferred, licensed, rented or otherwise exchanged. Under SFAS 141, the Company established an additional £8,100,000 in intangible assets as part of the purchase price allocation process, with such amount being comprised of £7,800,000 in acquired merchant contract relationships and £300,000 for a covenant not to compete. | ||
Under US GAAP, SFAS No. 142,Goodwill and Other Intangible Assets(“SFAS 142”), requires that intangible assets with finite lives be amortized over their estimated useful lives in a manner that reflects the pattern in which the economic benefits of such intangible assets are expected to be consumed or otherwise used up. Accordingly, under US GAAP, the Company is amortizing the above merchant contract relationship intangible on an accelerated basis over an estimated useful life of approximately 12 years, and the non-compete covenant on a straight-line basis over a period of three years. Such amortization expense totaled £386,000 for the four months ended April 30, 2005. | ||
Under FRS 10, UK GAAP requires that goodwill should be amortized over its useful economic life, which is generally presumed not to exceed 20 years. Accordingly, under UK GAAP goodwill is being amortized on a straight-line basis over an estimated useful life of 20 years. |
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Under US GAAP, SFAS 142 requires that goodwill and intangibles with an indefinite life no longer be amortized but instead subject to an impairment test at least annually, and more frequently if conditions warrant. Accordingly, under US GAAP, no goodwill amortization was recorded during 2005. | ||
(b) | Under UK GAAP, there is no comprehensive requirement to accrue for vacation pay or other compensated absences during the same accounting period, although accrual in certain industries where it is common for all staff to take holiday at the same time is not prohibited. | |
Under US GAAP, in accordance with SFAS No. 43,Accounting for Compensated Absences(“SFAS 43”), an employer should accrue a liability for employees’ compensation for future absences if all of the following conditions are met: (i) the employer’s obligation relating to employees’ rights to receive compensation for future absences is attributable to employees’ services already rendered; (ii) the obligation relates to rights that vest or accumulate; (iii) payment of the compensation is probable; and (iv) the amount can be reasonably estimated. Under US GAAP, the vacation accrual relating to compensated absences was £26,000 as of April 30, 2005. | ||
(c) | Under UK GAAP, payments made or received under the Company’s interest rate swap agreement are reflected as an increase or decrease to interest expense when incurred, and the fair market value of the swap is not reflected in the Company’s consolidated balance sheet. | |
Under US GAAP, the Company accounts for derivative financial instruments in accordance with SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities(“SFAS 133”). SFAS 133 requires that all derivative instruments be recognized as assets or liabilities in the consolidated balance sheet and measured at fair value, regardless of the purpose or intent in holding them. Changes in the fair value of derivative instruments are recognized periodically either in earnings or equity (as a component of other comprehensive income or loss), depending on whether the derivative is designated as a hedge of changes in fair value or cash flows. For derivatives designated as a fair value hedges, changes in fair value of the hedged item and the derivative are recognized currently in earnings. For derivatives designated as cash flow hedges, fair value changes of the effective portion of the hedging instrument are recognized in accumulated other comprehensive income or loss in the consolidated balance sheet until the hedged item is recognized in earnings. The ineffective portion of the fair value changes is recognized in earnings immediately. Changes in the fair value of the underlying debt instrument are not recognized in net income or equity. | ||
The Company has not designated its interest rate swap transaction as a hedge under SFAS 133. As a result, under US GAAP, such transaction is reflected in the consolidated balance sheet at its fair market value, with any resulting changes in that value being recorded in earnings in the applicable period. As of April 30, 2005 a derivative asset of £38,000 was reflected in the Company’s consolidated balance sheet. During the four months ended April 30, 2005, a £29,000 loss was included in the Company’s earnings reflecting the change in the fair value of such swap during that period. | ||
(d) | Reflects the deferred tax effects of the above adjustments. |
(2) | Reflects the incremental interest expense associated with the issuance and sale of the notes described in this prospectus, and the subsequent repayment of a portion of our existing bank debt, including the borrowings used to finance the Bank Machine acquisition in May 2005. The unaudited pro forma condensed consolidated statements of operations assume the simultaneous issuance and repayment occurred on January 1, 2005. The debt capitalization structure assumed to be outstanding reflects the pro forma borrowings under the revolving credit facility as of the period preceding the Bank Machine acquisition, and does not reflect subsequent fluctuations in such facility attributable to working capital requirements or insignificant acquisitions (see further discussion and adjustment below). The pro forma long-term debt is as follows (in thousands): |
Long-term fixed rate notes reflected in this prospectus (net of discount) | $ | 198,610 | ||
Revolving credit facility | 34,925 | |||
Total pro forma long-term debt | $ | 233,535 | ||
For purposes of computing the interest expense amounts associated with the above debt structure, a weighted-average rate of 8.92% has been utilized. Assuming an increase of 25 basis points in the floating borrowing rate under our bank credit facilities, pro forma interest expense would have increased by $87 for the year ended December 31, 2005. |
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In addition to the above, the pro forma interest expense amount includes the interest costs associated with the $9.0 million that was borrowed under the Company’s revolving credit facility in April 2005 to fund the Neo Concepts, Inc. acquisition. Such interest costs have been reflected in the accompanying pro forma condensed consolidated statement of operations for the period from the acquisition date (April 2005) through December 31, 2005. | |
The following reconciliation provides additional details behind the pro forma interest expense adjustment reflected in the accompanying unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2005 (in thousands): | |
Annual interest expense associated with senior subordinated notes ($198.6 million at an effective interest rate of 9.375%) | $ | 18,620 | ||
Annual interest expense associated with pro forma revolving credit facility balance ($34.9 million at an annual interest rate of 6.34%) | 2,214 | |||
Annual amortization of deferred financing costs related to the senior subordinated notes ($6.0 million in estimated fees amortized on a straight-line basis over 8 years) | 750 | |||
Incremental interest expense associated with the Neo Concepts, Inc. acquisition for the remaining eight months of 2005 ($9.0 million at an annual interest rate of 6.75%) | 404 | |||
Pro forma interest expense | 21,988 | |||
Elimination of historical interest expense of Cardtronics, Inc. and the acquired Bank Machine operations | (23,436 | ) | ||
Pro forma interest expense adjustment | $ | (1,448 | ) | |
Future maturities of our pro forma long-term debt, including the incremental $9.0 million in borrowings associated with the Neo Concepts, Inc. acquisition, are as follows (in thousands): |
Total | 2006 | 2007 | 2008 | 2009 | 2010 | Thereafter | ||||||||||||||||||||||
Long-term debt (net of discount) | $ | 242,535 | $ | — | $ | — | $ | — | $ | — | $ | 43,925 | $ | 198,610 |
The pro forma interest expense figures also reflect the amortization of approximately $6.0 million in deferred financing costs associated with the sale of the notes described in this prospectus. Such amount is reflected as being amortized over the8-year estimated life of the notes. The historical condensed consolidated financial statements also reflect the subsequent pre-tax write-off of approximately $0.1 million in deferred financing costs which were incurred when we refinanced our existing bank credit facilities in May 2005, and the pre-tax write-off of approximately $4.9 million in deferred financing costs upon the successful completion of the notes offering in August 2005 and the simultaneous pay-off and retirement of the Company’s outstanding term loans. However, such write-offs have been excluded from the accompanying unaudited pro forma condensed consolidated financial statements as such costs were incurred directly as a result of the refinancings of our existing bank credit facility as part of our Bank Machine acquisition and as a result of the sale of the notes described in this prospectus. |
(3) | Reflects the adjustments to the historical depreciation, accretion and amortization expense resulting from the effects of the purchase price allocation associated with the Bank Machine acquisition. We acquired Bank Machine as of May 1, 2005, therefore the pro forma adjustments relate to the results for the four months ended April 30, 2005. The acquired tangible assets have a weighted-average remaining useful life of approximately 3.7 years and are being depreciated on a straight-line basis over such period of time. The acquired intangible customer contracts and relationships are estimated to have a7-year life, |
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after taking into consideration expected renewals, and are being amortized over such period on a straight-line basis, consistent with our past practice. Reference is made to the historical consolidated financial statements of Cardtronics, Inc. as of December 31, 2005, included elsewhere in this prospectus for additional information on the Bank Machine purchase price allocation. | |
(4) | Reflects the adjustments to income taxes at the statutory rates of 37.1% for our US operations (34.0% federal and 3.1% state) and 30.0% for our UK operations. |
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June 30, | December 31, | ||||||||
2006 | 2005 | ||||||||
(unaudited) | |||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 3,936 | $ | 1,699 | |||||
Accounts and notes receivable, net of allowance of $277 and $559 as of June 30, 2006 and December 31, 2005, respectively | 9,660 | 9,746 | |||||||
Inventory | 4,948 | 2,747 | |||||||
Prepaid expenses, deferred costs, and other current assets | 5,043 | 4,244 | |||||||
Restricted cash, short-term | 814 | 4,232 | |||||||
Deferred tax asset, net | 1,125 | 1,105 | |||||||
Total current assets | 25,526 | 23,773 | |||||||
Restricted cash | 34 | 33 | |||||||
Property and equipment, net | 73,313 | 74,151 | |||||||
Intangible assets, net | 70,189 | 75,965 | |||||||
Goodwill | 166,688 | 161,557 | |||||||
Prepaid expenses and other assets | 13,866 | 8,272 | |||||||
Total assets | $ | 349,616 | $ | 343,751 | |||||
Liabilities and Stockholders’ Deficit | |||||||||
Current liabilities: | |||||||||
Notes payable and capital leases | $ | 147 | $ | 3,168 | |||||
Current portion of other long-term liabilities | 2,281 | 2,251 | |||||||
Accounts payable and accrued liabilities | 44,355 | 42,438 | |||||||
Total current liabilities | 46,783 | 47,857 | |||||||
Long-term liabilities: | |||||||||
Long-term debt, net of related discount | 244,318 | 244,456 | |||||||
Deferred tax liability, net | 10,914 | 9,800 | |||||||
Other long-term liabilities and minority interest in subsidiaries | 13,550 | 14,393 | |||||||
Total liabilities | 315,565 | 316,506 | |||||||
Redeemable preferred stock | 76,462 | 76,329 | |||||||
Stockholders’ deficit: | |||||||||
Common stock, $0.0001 par value; 2,500,000 shares authorized; 2,394,508 shares issued at June 30, 2006 and December 31, 2005; 1,776,052 and 1,771,349 outstanding at June 30, 2006 and December 31, 2005, respectively | — | — | |||||||
Subscriptions receivable (at face value) | (1,476 | ) | (1,476 | ) | |||||
Additional paid-in capital | 2,358 | 2,033 | |||||||
Accumulated other comprehensive income (loss), net | 8,443 | (346 | ) | ||||||
Accumulated deficit | (4,748 | ) | (2,252 | ) | |||||
Treasury stock; 618,456 and 623,160 shares at cost at June 30, 2006 and December 31, 2005, respectively | (46,988 | ) | (47,043 | ) | |||||
Total stockholders’ deficit | (42,411 | ) | (49,084 | ) | |||||
Total liabilities and stockholders’ deficit | $ | 349,616 | $ | 343,751 | |||||
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Six Months Ended | ||||||||||
June 30, | ||||||||||
2006 | 2005 | |||||||||
(unaudited) | ||||||||||
Revenues: | ||||||||||
ATM operating revenues | $ | 136,655 | $ | 122,128 | ||||||
ATM product sales and other revenues | 5,740 | 5,326 | ||||||||
Total revenues | 142,395 | 127,454 | ||||||||
Cost of revenues: | ||||||||||
Cost of ATM operating revenues (includes stock-based compensation of $20 and $172 for the six months ended June 30, 2006 and 2005, respectively) | 102,945 | 95,087 | ||||||||
Cost of ATM product sales and other revenues | 5,037 | 4,803 | ||||||||
Total cost of revenues | 107,982 | 99,890 | ||||||||
Gross profit | 34,413 | 27,564 | ||||||||
Operating expenses: | ||||||||||
Selling, general and administrative expenses (includes stock-based compensation of $360 and $1,939 for the six months ended June 30, 2006 and 2005, respectively) | 9,898 | 8,700 | ||||||||
Depreciation and accretion expense | 8,858 | 5,142 | ||||||||
Amortization expense | 7,347 | 3,709 | ||||||||
Total operating expenses | 26,103 | 17,551 | ||||||||
Income from operations | 8,310 | 10,013 | ||||||||
Other (income) expense: | ||||||||||
Interest expense, net | 11,322 | 5,269 | ||||||||
Amortization and write-off of financing costs and bond discount | 1,214 | 1,131 | ||||||||
Minority interest in subsidiary | (57 | ) | 15 | |||||||
Other | (657 | ) | 432 | |||||||
Total other expenses | 11,822 | 6,847 | ||||||||
Income (loss) before income taxes | (3,512 | ) | 3,166 | |||||||
Income tax provision (benefit) | (1,157 | ) | 1,151 | |||||||
Net income (loss) | (2,355 | ) | 2,015 | |||||||
Preferred stock dividends and accretion expense | 132 | 1,262 | ||||||||
Net income (loss) available to common stockholders | $ | (2,487 | ) | $ | 753 | |||||
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Six Months Ended | ||||||||||||
June 30, | ||||||||||||
2006 | 2005 | |||||||||||
(unaudited) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | (2,355 | ) | $ | 2,015 | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation, amortization and accretion expense | 16,205 | 8,851 | ||||||||||
Amortization and write-off of deferred financing costs and bond discount | 1,214 | 1,131 | ||||||||||
Non-cash compensation expense | 380 | 279 | ||||||||||
Deferred income taxes | (1,168 | ) | 1,075 | |||||||||
Minority interest | (57 | ) | 15 | |||||||||
Loss on disposal of assets | 447 | 432 | ||||||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||||||
Decrease in receivables, net | 1,846 | 2,277 | ||||||||||
Increase in prepaid, deferred costs and other current assets | (1,846 | ) | (104 | ) | ||||||||
(Increase) decrease in inventory | (1,038 | ) | 894 | |||||||||
Increase in other assets | (310 | ) | (120 | ) | ||||||||
Decrease in accounts payable and accrued liabilities | 3,300 | 2,648 | ||||||||||
Decrease in other liabilities | (2,728 | ) | (560 | ) | ||||||||
Net cash provided by operating activities | 13,890 | 18,833 | ||||||||||
Cash flows from investing activities: | ||||||||||||
Additions to property and equipment | (9,454 | ) | (10,704 | ) | ||||||||
Payments for exclusive license agreements | (1,842 | ) | — | |||||||||
Disposals of property and equipment | 8 | 60 | ||||||||||
Acquisitions, net of cash acquired | — | (105,768 | ) | |||||||||
Net cash used in investing activities | (11,288 | ) | (116,412 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from issuance of long-term debt | 14,300 | 260,284 | ||||||||||
Repayments of long-term debt | (14,500 | ) | (155,541 | ) | ||||||||
Issuance of Series B preferred stock | — | 73,297 | ||||||||||
Redemption of Series A preferred stock | — | (24,795 | ) | |||||||||
Issuance of capital stock | — | 84 | ||||||||||
Purchase of treasury stock | — | (46,453 | ) | |||||||||
Debt issuance and modification costs | (167 | ) | (5,315 | ) | ||||||||
Distributions | — | (23 | ) | |||||||||
Repayment of subscriptions receivable | — | 386 | ||||||||||
Net cash (used in) provided by financing activities | (367 | ) | 101,924 | |||||||||
Effect of exchange rate changes on cash | 2 | (105 | ) | |||||||||
Net increase in cash and cash equivalents | 2,237 | 4,240 | ||||||||||
Cash and cash equivalents at beginning of period | 1,699 | 1,412 | ||||||||||
Cash and cash equivalents at end of period | $ | 3,936 | $ | 5,652 | ||||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid for interest | $ | 11,001 | $ | 4,662 | ||||||||
Cash paid for income taxes | — | 32 |
F-14
Table of Contents
NOTE 1 — | General and Basis of Financial Statements — |
NOTE 2 — | Business Combinations |
Acquisition of Bank Machine (Acquisitions) Limited — |
F-15
Table of Contents
Six Months Ended | ||||
June 30, 2005 | ||||
Revenues | $ | 137,638 | ||
Income from operations | 11,375 | |||
Net income | 50 |
Acquisition of ATM National, Inc. — |
Acquisition of CCS Mexico — |
F-16
Table of Contents
Other 2005 Acquisitions — |
Six Months | |||||||||
Ended | |||||||||
June 30, | |||||||||
2006 | 2005 | ||||||||
Cost of ATM operating revenues | $ | 20 | $ | 172 | |||||
Selling, general and administrative expense | 360 | 1,939 | |||||||
Total stock-based compensation expense | $ | 380 | $ | 2,111 | |||||
F-17
Table of Contents
Stock Based Compensation Plan |
Stock Option Grants |
Weighted | |||||||||
Average | |||||||||
Exercise | |||||||||
Shares | Price | ||||||||
Balance January 1, 2006 | 464,164 | $ | 48.70 | ||||||
Granted | 97,500 | 83.84 | |||||||
Exercised | (4,703 | ) | 0.04 | ||||||
Forfeited | (22,500 | ) | 80.30 | ||||||
Balance June 30, 2006 | 534,461 | $ | 54.21 | ||||||
Options vested and exercisable at June 30, 2006 | 250,836 | $ | 26.69 | ||||||
F-18
Table of Contents
Weighted average fair value per stock option granted | $ | 33.71 | |||
Valuation assumptions: | |||||
Expected option term (years) | 6.25 | ||||
Expected volatility | 34.50 | % | |||
Expected dividend yield | 0.00 | % | |||
Risk-free interest rate | 4.85 | % |
F-19
Table of Contents
Number of | Weighted | ||||||||
Shares Under | Average | ||||||||
Outstanding | Grant Date | ||||||||
Options | Fair Value | ||||||||
Non-vested options at January 1, 2006 | 270,562 | $ | 6.69 | ||||||
Granted | 97,500 | 33.71 | |||||||
Vested | (64,437 | ) | 5.14 | ||||||
Forfeited | (20,000 | ) | 7.78 | ||||||
Non-vested options at June 30, 2006 | 283,625 | $ | 16.25 | ||||||
Restricted Stock |
F-20
Table of Contents
Other Stock-Based Compensation |
Six Months Ended | ||||||||
June 30, | ||||||||
2006 | 2005 | |||||||
Net income (loss) | $ | (2,355 | ) | $ | 2,015 | |||
Foreign currency translation adjustments | 5,309 | (2,430 | ) | |||||
Unrealized gain on interest rate hedges, net of tax | 3,480 | 921 | ||||||
Total comprehensive income | $ | 6,434 | $ | 506 | ||||
Foreign | Unrealized | Accumulated | ||||||||||
Currency | Gains on | Other | ||||||||||
Translation | Interest Rate | Comprehensive | ||||||||||
Adjustments | Hedges | Income (Loss) | ||||||||||
Balance as of December 31, 2005 | $ | (5,491 | ) | $ | 5,145 | $ | (346 | ) | ||||
Current period changes | 5,309 | 3,480 | 8,789 | |||||||||
Balance as of June 30, 2006 | $ | (182 | ) | $ | 8,625 | $ | 8,443 | |||||
F-21
Table of Contents
Intangible Assets with Indefinite Lives — |
Goodwill | Tradename | Total | ||||||||||
Balance at December 31, 2005 | $ | 161,557 | $ | 3,671 | $ | 165,228 | ||||||
Acquisitions | 1,021 | — | 1,021 | |||||||||
Foreign currency translation adjustments | 4,110 | 203 | 4,313 | |||||||||
Balance at June 30, 2006 | $ | 166,688 | $ | 3,874 | $ | 170,562 | ||||||
Intangible Assets with Definite Lives |
Gross Carrying | Accumulated | Net Carrying | |||||||||||
Amount | Amortization | Amount | |||||||||||
Customer contracts and relationships | $ | 81,264 | $ | (27,005 | ) | $ | 54,259 | ||||||
Exclusive license agreements | 4,262 | (742 | ) | 3,520 | |||||||||
Deferred financing costs | 10,809 | (2,273 | ) | 8,536 | |||||||||
Total | $ | 96,335 | $ | (30,020 | ) | $ | 66,315 | ||||||
F-22
Table of Contents
Customer Contracts | Exclusive License | Deferred | ||||||||||||||
and Relationships | Agreements | Financing Costs | Total | |||||||||||||
2006 | $ | 4,379 | $ | 324 | $ | 620 | $ | 5,323 | ||||||||
2007 | 8,675 | 636 | 1,288 | 10,599 | ||||||||||||
2008 | 8,680 | 576 | 1,355 | 10,611 | ||||||||||||
2009 | 8,342 | 571 | 1,428 | 10,341 | ||||||||||||
2010 | 7,092 | 475 | 1,103 | 8,670 | ||||||||||||
2011 | 5,645 | 361 | 944 | 6,950 | ||||||||||||
Thereafter | 11,446 | 577 | 1,798 | 13,821 | ||||||||||||
Total | $ | 54,259 | $ | 3,520 | $ | 8,536 | $ | 66,315 | ||||||||
June 30, | December 31, | |||||||
2006 | 2005 | |||||||
Accounts payable | $ | 9,095 | $ | 7,285 | ||||
Accrued merchant fees | 8,595 | 7,923 | ||||||
Accrued armored fees | 4,150 | 2,662 | ||||||
Accrued interest | 7,840 | 7,328 | ||||||
Accrued cash management fees | 2,490 | 3,430 | ||||||
Accrued maintenance fees | 1,335 | 1,431 | ||||||
Accrued compensation | 1,726 | 1,722 | ||||||
Accrued purchases | 1,385 | 2,292 | ||||||
Other accrued expenses | 7,739 | 8,365 | ||||||
Total | $ | 44,355 | $ | 42,438 | ||||
June 30, | December 31, | ||||||||
2006 | 2005 | ||||||||
Revolving credit facility | $ | 45,600 | $ | 45,800 | |||||
Senior subordinated notes due August 2013 (net of unamortized discount of $1.3 million as of both dates) | 198,718 | 198,656 | |||||||
Total | $ | 244,318 | $ | 244,456 | |||||
Revolving Credit Facility |
F-23
Table of Contents
Senior Subordinated Notes |
F-24
Table of Contents
June 30, | December 31, | |||||||
2006 | 2005 | |||||||
Asset retirement obligations | $ | 8,900 | $ | 8,339 | ||||
Deferred revenue | 475 | 1,075 | ||||||
Minority interest in subsidiary | 252 | 25 | ||||||
Other long-term liabilities | 3,923 | 4,954 | ||||||
Total | $ | 13,550 | $ | 14,393 | ||||
Asset retirement obligation at December 31, 2005 | $ | 8,339 | ||
Additional obligations | 363 | |||
Accretion expense | 554 | |||
Payments | (427 | ) | ||
Foreign currency translation adjustments | 71 | |||
Asset retirement obligation at June 30, 2006 | $ | 8,900 | ||
F-25
Table of Contents
F-26
Table of Contents
Notional Amount | Weighted Average Fixed Rate | Period | ||||||
$300,000 | 3.70% | July 1, 2006-December 31, 2006 | ||||||
$300,000 | 3.86% | January 1, 2007-December 31, 2007 | ||||||
$300,000 | 4.35% | January 1, 2008-December 31, 2008 | ||||||
$200,000 | 4.36% | January 1, 2009-December 31, 2009 | ||||||
$100,000 | 4.34% | January 1, 2010-December 31, 2010 |
F-27
Table of Contents
Six Months Ended | ||||||||||
June 30, | ||||||||||
2006 | 2005 | |||||||||
Revenues: | ||||||||||
United States | $ | 124,727 | $ | 122,018 | ||||||
United Kingdom | 17,636 | 5,436 | ||||||||
Mexico | 202 | — | ||||||||
Intercompany eliminations | (170 | ) | — | |||||||
Total | $ | 142,395 | $ | 127,454 | ||||||
Income (loss) before income taxes: | ||||||||||
United States | $ | (3,512 | ) | $ | 3,256 | |||||
United Kingdom | 103 | (94 | ) | |||||||
Mexico | (56 | ) | — | |||||||
Intercompany eliminations | (47 | ) | 4 | |||||||
Total | $ | (3,512 | ) | $ | 3,166 | |||||
Intersegment revenues: | ||||||||||
United States | $ | 170 | $ | — | ||||||
As of | ||||||||||
June 30, | December 31, | |||||||||
2006 | 2005 | |||||||||
Identifiable assets: | ||||||||||
United States | $ | 240,940 | $ | 240,600 | ||||||
United Kingdom | 107,819 | 103,151 | ||||||||
Mexico | 857 | — | ||||||||
Total | $ | 349,616 | $ | 343,751 | ||||||
F-28
Table of Contents
Condensed Consolidating Statements of Operations |
Six Months Ended June 30, 2006 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Revenues | $ | — | $ | 124,727 | $ | 17,838 | $ | (170 | ) | $ | 142,395 | |||||||||
Operating costs and expenses | 485 | 117,590 | 16,136 | (126 | ) | 134,085 | ||||||||||||||
Operating income | (485 | ) | 7,137 | 1,702 | (44 | ) | 8,310 | |||||||||||||
Interest expense, net | 4,106 | 6,831 | 1,599 | — | 12,536 | |||||||||||||||
Equity in (earnings) losses of subsidiaries | (1,120 | ) | — | — | 1,120 | — | ||||||||||||||
Other (income) expense, net | — | (772 | ) | 55 | 3 | (714 | ) | |||||||||||||
Income (loss) before income taxes | (3,471 | ) | 1,078 | 48 | (1,167 | ) | (3,512 | ) | ||||||||||||
Income tax provision (benefit) | (1,163 | ) | (26 | ) | 32 | — | (1,157 | ) | ||||||||||||
Net income (loss) | (2,308 | ) | 1,104 | 16 | (1,167 | ) | (2,355 | ) | ||||||||||||
Preferred stock dividends and accretion expense | 132 | — | — | — | 132 | |||||||||||||||
Net income (loss) available to common stockholders | $ | (2,440 | ) | $ | 1,104 | $ | 16 | $ | (1,167 | ) | $ | (2,487 | ) | |||||||
Six Months Ended June 30, 2005 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Revenues | $ | — | $ | 122,018 | $ | 5,436 | $ | — | $ | 127,454 | ||||||||||
Operating costs and expenses | 2,176 | 110,426 | 4,843 | (4 | ) | 117,441 | ||||||||||||||
Operating income | (2,176 | ) | 11,592 | 593 | 4 | 10,013 | ||||||||||||||
Interest expense, net | 971 | 4,761 | 668 | — | 6,400 | |||||||||||||||
Equity in (earnings) losses of subsidiaries | (6,193 | ) | — | — | 6,193 | — | ||||||||||||||
Other (income) expense, net | — | 428 | 19 | — | 447 | |||||||||||||||
Income (loss) before income taxes | 3,046 | 6,403 | (94 | ) | (6,189 | ) | 3,166 | |||||||||||||
Income tax provision (benefit) | 1,035 | 142 | (26 | ) | — | 1,151 | ||||||||||||||
Net income (loss) | 2,011 | 6,261 | (68 | ) | (6,189 | ) | 2,015 | |||||||||||||
Preferred stock dividends and accretion expense | 1,262 | — | — | — | 1,262 | |||||||||||||||
Net income (loss) available to common stockholders | $ | 749 | $ | 6,261 | $ | (68 | ) | $ | (6,189 | ) | $ | 753 | ||||||||
F-29
Table of Contents
Condensed Consolidating Balance Sheets |
As of June 30, 2006 | |||||||||||||||||||||
Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 125 | $ | 853 | $ | 2,958 | $ | — | $ | 3,936 | |||||||||||
Receivables, net | 2,145 | 8,751 | 991 | (2,227 | ) | 9,660 | |||||||||||||||
Other current assets | 1,785 | 6,979 | 3,166 | — | 11,930 | ||||||||||||||||
Total current assets | 4,055 | 16,583 | 7,115 | (2,227 | ) | 25,526 | |||||||||||||||
Property and equipment, net | — | 56,480 | 17,003 | (170 | ) | 73,313 | |||||||||||||||
Intangible assets, net | 7,275 | 49,888 | 13,026 | — | 70,189 | ||||||||||||||||
Goodwill | 4,160 | 87,692 | 74,836 | — | 166,688 | ||||||||||||||||
Investments and advances to subsidiaries | 71,751 | — | 56 | (71,807 | ) | — | |||||||||||||||
Intercompany receivable | 2,507 | 882 | (3,389 | ) | — | — | |||||||||||||||
Prepaid and other assets | 205,148 | 13,871 | 29 | (205,148 | ) | 13,900 | |||||||||||||||
Total assets | $ | 294,896 | $ | 225,396 | $ | 108,676 | $ | (279,352 | ) | $ | 349,616 | ||||||||||
Liabilities and Stockholders’ Deficit: | |||||||||||||||||||||
Current portion of notes payable and capital leases | $ | — | $ | 6 | $ | 141 | $ | — | $ | 147 | |||||||||||
Current portion of other long-term liabilities | — | 2,251 | 30 | — | 2,281 | ||||||||||||||||
Accounts payable and accrued liabilities | 9,035 | 28,754 | 8,809 | (2,243 | ) | 44,355 | |||||||||||||||
Total current liabilities | 9,035 | 31,011 | 8,980 | (2,243 | ) | 46,783 | |||||||||||||||
Long-term debt, less current portion | 244,318 | 133,051 | 72,097 | (205,148 | ) | 244,318 | |||||||||||||||
Other non-current liabilities and minority interest | 7,492 | 13,671 | 3,317 | (16 | ) | 24,464 | |||||||||||||||
Total liabilities | 260,845 | 177,733 | 84,394 | (207,407 | ) | 315,565 | |||||||||||||||
Preferred stock | 76,462 | — | — | — | 76,462 | ||||||||||||||||
Stockholders’ equity (deficit) | (42,411 | ) | 47,663 | 24,282 | (71,945 | ) | (42,411 | ) | |||||||||||||
Total liabilities and stockholders’ deficit | $ | 294,896 | $ | 225,396 | $ | 108,676 | $ | (279,352 | ) | $ | 349,616 | ||||||||||
F-30
Table of Contents
As of December 31, 2005 | |||||||||||||||||||||
Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 118 | $ | 1,544 | $ | 37 | $ | — | $ | 1,699 | |||||||||||
Receivables, net | 2,047 | 10,706 | 836 | (3,843 | ) | 9,746 | |||||||||||||||
Other current assets | 1,669 | 4,968 | 5,691 | — | 12,328 | ||||||||||||||||
Total current assets | 3,834 | 17,218 | 6,564 | (3,843 | ) | 23,773 | |||||||||||||||
Property and equipment, net | — | 58,283 | 15,991 | (123 | ) | 74,151 | |||||||||||||||
Intangible assets, net | 10,906 | 52,243 | 12,816 | — | 75,965 | ||||||||||||||||
Goodwill | 5,907 | 85,122 | 70,528 | — | 161,557 | ||||||||||||||||
Investments and advances to subsidiaries | 60,339 | — | — | (60,339 | ) | — | |||||||||||||||
Intercompany receivable | 487 | 2,288 | (2,775 | ) | — | — | |||||||||||||||
Prepaid and other assets | 205,389 | 8,988 | 27 | (206,099 | ) | 8,305 | |||||||||||||||
Total assets | $ | 286,862 | $ | 224,142 | $ | 103,151 | $ | (270,404 | ) | $ | 343,751 | ||||||||||
Liabilities and Stockholders’ Deficit: | |||||||||||||||||||||
Current portion of long-term debt and notes payable | $ | — | $ | 42 | $ | 3,126 | $ | — | $ | 3,168 | |||||||||||
Current portion of other long-term liabilities | — | 2,251 | — | — | 2,251 | ||||||||||||||||
Accounts payable and accrued liabilities | 8,650 | 29,444 | 8,203 | (3,859 | ) | 42,438 | |||||||||||||||
Total current liabilities | 8,650 | 31,737 | 11,329 | (3,859 | ) | 47,857 | |||||||||||||||
Long-term debt, less current portion | 244,456 | 139,551 | 66,548 | (206,099 | ) | 244,456 | |||||||||||||||
Other non-current liabilities and minority interest | 6,511 | 14,629 | 3,053 | — | 24,193 | ||||||||||||||||
Total liabilities | 259,617 | 185,917 | 80,930 | (209,958 | ) | 316,506 | |||||||||||||||
Preferred stock | 76,329 | — | — | — | 76,329 | ||||||||||||||||
Stockholders’ equity (deficit) | (49,084 | ) | 38,225 | 22,221 | (60,446 | ) | (49,084 | ) | |||||||||||||
Total liabilities and stockholders’ deficit | $ | 286,862 | $ | 224,142 | $ | 103,151 | $ | (270,404 | ) | $ | 343,751 | ||||||||||
F-31
Table of Contents
Condensed Consolidating Statements of Cash Flows |
Six Months Ended June 30, 2006 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Cash flows provided by (used in) operating activities | $ | (4,100 | ) | $ | 12,634 | $ | 5,356 | $ | — | $ | 13,890 | |||||||||
Capital expenditures, net | — | (7,851 | ) | (3,437 | ) | — | (11,288 | ) | ||||||||||||
Acquisitions, net of cash acquired | (1,026 | ) | 26 | 1,000 | — | — | ||||||||||||||
Cash flows used in investing activities | (1,026 | ) | (7,825 | ) | (2,437 | ) | — | (11,288 | ) | |||||||||||
Proceeds from issuance of long-term debt | 19,800 | — | — | (5,500 | ) | 14,300 | ||||||||||||||
Repayments of long-term debt | (14,500 | ) | (5,500 | ) | — | 5,500 | (14,500 | ) | ||||||||||||
Issuance of capital stock | — | — | — | — | — | |||||||||||||||
Other financing activities | (167 | ) | — | — | — | (167 | ) | |||||||||||||
Cash flows provided by (used in) financing activities | 5,133 | (5,500 | ) | — | — | (367 | ) | |||||||||||||
Effect of exchange rate changes | — | — | 2 | — | 2 | |||||||||||||||
Increase (decrease) in cash and cash equivalents | 7 | (691 | ) | 2,921 | — | 2,237 | ||||||||||||||
Cash and cash equivalents at beginning of period | 118 | 1,544 | 37 | — | 1,699 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 125 | $ | 853 | $ | 2,958 | $ | — | $ | 3,936 | ||||||||||
F-32
Table of Contents
Six Months Ended June 30, 2005 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Cash flows provided by (used in) operating activities | $ | (201 | ) | $ | 17,037 | $ | 1,997 | $ | — | $ | 18,833 | |||||||||
Capital expenditures, net | — | (9,637 | ) | (1,007 | ) | — | (10,644 | ) | ||||||||||||
Acquisitions, net of cash acquired | — | (17,099 | ) | (88,669 | ) | — | (105,768 | ) | ||||||||||||
Cash flows used in investing activities | — | (26,736 | ) | (89,676 | ) | — | (116,412 | ) | ||||||||||||
Proceeds from issuance of long-term debt | 233,700 | 164,551 | 65,820 | (203,787 | ) | 260,284 | ||||||||||||||
Repayments of long-term debt | (229,718 | ) | (155,568 | ) | — | 229,745 | (155,541 | ) | ||||||||||||
Issuance of preferred stock | 73,297 | — | — | — | 73,297 | |||||||||||||||
Redemption of preferred stock | (24,795 | ) | — | — | — | (24,795 | ) | |||||||||||||
Issuance of capital stock | 88 | — | 25,954 | (25,958 | ) | 84 | ||||||||||||||
Redemption of capital stock | (46,453 | ) | — | — | — | (46,453 | ) | |||||||||||||
Other financing activities | (5,256 | ) | 304 | — | (4,952 | ) | ||||||||||||||
Cash flows provided by financing activities | 863 | 9,287 | 91,774 | — | 101,924 | |||||||||||||||
Effect of exchange rate changes | — | — | (105 | ) | — | (105 | ) | |||||||||||||
Increase (decrease) in cash and cash equivalents | 662 | (412 | ) | 3,990 | — | 4,240 | ||||||||||||||
Cash and cash equivalents at beginning of period | — | 1,412 | — | — | 1,412 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 662 | $ | 1,000 | $ | 3,990 | $ | — | $ | 5,652 | ||||||||||
F-33
Table of Contents
F-34
Table of Contents
F-35
Table of Contents
December 31, | |||||||||
2005 | 2004 | ||||||||
(As restated — | |||||||||
see Note 2) | |||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 1,699 | $ | 1,412 | |||||
Accounts receivable, net of allowance for doubtful accounts of $559 and $558 as of December 31, 2005 and 2004, respectively | 9,535 | 10,895 | |||||||
Notes receivable short-term, net of allowance for doubtful notes short-term of $65 and $156 as of December 31, 2005 and 2004, respectively | 211 | 578 | |||||||
Inventory | 2,747 | 2,609 | |||||||
Prepaid expenses, deferred costs, and other current assets | 4,244 | 2,503 | |||||||
Restricted cash, short-term | 4,232 | — | |||||||
Deferred tax asset, net | 1,105 | 1,924 | |||||||
Total current assets | 23,773 | 19,921 | |||||||
Restricted cash | 33 | 32 | |||||||
Notes receivable, net of allowance for doubtful notes of $0 and $7 as of December 31, 2005 and 2004, respectively | 83 | 155 | |||||||
Property and equipment, net | 74,151 | 44,992 | |||||||
Intangible assets, net | 75,965 | 45,923 | |||||||
Goodwill | 161,557 | 84,977 | |||||||
Prepaid expenses and other assets | 8,189 | 1,667 | |||||||
Total assets | $ | 343,751 | $ | 197,667 | |||||
Liabilities and Stockholders’ Deficit | |||||||||
Current liabilities: | |||||||||
Current portion of long-term debt and notes payable | $ | 3,126 | $ | 15,000 | |||||
Current portion of capital leases | 42 | — | |||||||
Current portion of other long-term liabilities | 2,251 | 1,176 | |||||||
Accounts payable | 7,285 | 2,397 | |||||||
Accounts payable to affiliates | 310 | 308 | |||||||
Accrued liabilities | 34,843 | 22,063 | |||||||
Income tax payable | — | 29 | |||||||
Total current liabilities | 47,857 | 40,973 | |||||||
Long-term liabilities: | |||||||||
Long-term debt, net of current portion and related discount | 244,456 | 113,541 | |||||||
Deferred tax liability, net | 9,800 | 6,782 | |||||||
Other long-term liabilities and minority interest in subsidiary | 14,393 | 13,077 | |||||||
Total liabilities | 316,506 | 174,373 | |||||||
Series A redeemable preferred stock, $0.0001 par value; 17,500 shares authorized; zero and 17,500 shares issued and outstanding at December 31, 2005 and 2004, respectively, and liquidation value of $0 and $24,521 at December 31, 2005 and 2004, respectively | — | 23,634 | |||||||
Series B redeemable preferred stock, $0.0001 par value, 1,500,000 shares authorized; 929,789 shares issued and outstanding at December 31, 2005; liquidation value of $78,000 at December 31, 2005 | 76,329 | — | |||||||
Stockholders’ deficit: | |||||||||
Common stock, $0.0001 par value; 2,500,000 shares authorized; 2,394,509 and 2,373,398 shares issued at December 31, 2005 and 2004, respectively; 1,771,349 and 2,303,257 outstanding at December 31, 2005 and 2004, respectively | — | — | |||||||
Subscriptions receivable (at face value) | (1,476 | ) | (1,862 | ) | |||||
Additional paid-in capital | 2,033 | — | |||||||
Accumulated other comprehensive income (loss), net | (346 | ) | 886 | ||||||
Retained earnings (accumulated deficit) | (2,252 | ) | 1,495 | ||||||
Treasury stock; 623,160 and 70,141 shares at cost at December 31, 2005 and 2004, respectively | (47,043 | ) | (859 | ) | |||||
Total stockholders’ deficit | (49,084 | ) | (340 | ) | |||||
Total liabilities and stockholders’ deficit | $ | 343,751 | $ | 197,667 | |||||
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Table of Contents
Years Ended December 31, | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
(As restated — | ||||||||||||||
see Note 2) | ||||||||||||||
Revenues: | ||||||||||||||
ATM operating revenues | $ | 258,992 | $ | 182,711 | $ | 101,950 | ||||||||
ATM product sales and other revenues | 9,973 | 10,204 | 8,493 | |||||||||||
Total revenues | 268,965 | 192,915 | 110,443 | |||||||||||
Cost of revenues: | ||||||||||||||
Cost of ATM operating revenues (includes stock-based compensation of $0.2 million in 2005) | 199,763 | 143,504 | 80,286 | |||||||||||
Cost of ATM product sales and other revenues | 9,685 | 8,703 | 7,903 | |||||||||||
Total cost of revenues | 209,448 | 152,207 | 88,189 | |||||||||||
Gross profit (exclusive of depreciation and amortization shown separately below) | 59,517 | 40,708 | 22,254 | |||||||||||
Operating expenses: | ||||||||||||||
Selling, general and administrative expenses (includes stock-based compensation of $2.2 million, $1.0 million and $1.6 million in 2005, 2004 and 2003, respectively) | 17,865 | 13,571 | 7,229 | |||||||||||
Depreciation and accretion expense | 12,951 | 6,785 | 3,632 | |||||||||||
Amortization expense | 8,980 | 5,508 | 3,842 | |||||||||||
Total operating expenses | 39,796 | 25,864 | 14,703 | |||||||||||
Income from operations | 19,721 | 14,844 | 7,551 | |||||||||||
Other expenses: | ||||||||||||||
Interest expense, net (includes amortization and write-off of financing costs of $6.9 million, $1.1 million and $0.5 million in 2005, 2004 and 2003, respectively) | 22,426 | 5,235 | 2,157 | |||||||||||
Minority interest in subsidiary | 15 | 19 | — | |||||||||||
Other | 968 | 209 | 106 | |||||||||||
Total other expenses | 23,409 | 5,463 | 2,263 | |||||||||||
Income (loss) before income taxes and cumulative effect of change in accounting principle | (3,688 | ) | 9,381 | 5,288 | ||||||||||
Income tax provision (benefit) | (1,270 | ) | 3,576 | 1,955 | ||||||||||
Income (loss) before cumulative effect of change in accounting principle | (2,418 | ) | 5,805 | 3,333 | ||||||||||
Cumulative effect of change in accounting principle for asset retirement obligations, net of related income tax benefit of $80 | — | — | 134 | |||||||||||
Net income (loss) | (2,418 | ) | 5,805 | 3,199 | ||||||||||
Preferred stock dividends and accretion expense | 1,395 | 2,312 | 2,089 | |||||||||||
Net income (loss) available to common stockholders | $ | (3,813 | ) | $ | 3,493 | $ | 1,110 | |||||||
F-37
Table of Contents
Retained | Accumulated | ||||||||||||||||||||||||||||||
Additional | Earnings | Other | |||||||||||||||||||||||||||||
Common | Paid-In | Treasury | (Accumulated | Comprehensive | Subscriptions | ||||||||||||||||||||||||||
Stock | Capital | Stock | Deficit) | Income (Loss) | Receivable | Total | |||||||||||||||||||||||||
Balances — December 31, 2002, as reported | $ | — | $ | — | $ | (3,970 | ) | $ | (4,939 | ) | $ | — | $ | — | $ | (8,909 | ) | ||||||||||||||
Adjustments | — | — | — | (116 | ) | — | — | (116 | ) | ||||||||||||||||||||||
Balances — December 31, 2002, as restated | $ | — | $ | — | $ | (3,970 | ) | $ | (5,055 | ) | $ | — | $ | — | $ | (9,025 | ) | ||||||||||||||
Issuance of restricted stock | — | — | 941 | — | — | (941 | ) | — | |||||||||||||||||||||||
Issuance of capital stock | — | — | 2,133 | (769 | ) | — | (1,364 | ) | — | ||||||||||||||||||||||
Dividends on preferred stock | — | (546 | ) | — | (1,543 | ) | — | — | (2,089 | ) | |||||||||||||||||||||
Non-cash compensation charges | — | 1,585 | — | — | — | — | 1,585 | ||||||||||||||||||||||||
Net income and comprehensive income | — | — | — | 3,199 | — | — | 3,199 | ||||||||||||||||||||||||
Balances — December 31, 2003 | $ | — | $ | 1,039 | $ | (896 | ) | $ | (4,168 | ) | $ | — | $ | (2,305 | ) | $ | (6,330 | ) | |||||||||||||
Issuance of capital stock | — | 27 | 37 | — | — | 443 | 507 | ||||||||||||||||||||||||
Dividends on preferred stock | — | (2,153 | ) | — | (159 | ) | — | — | (2,312 | ) | |||||||||||||||||||||
Tax benefit from stock option exercises | — | 184 | — | — | — | — | 184 | ||||||||||||||||||||||||
Non-cash compensation charges | — | 903 | — | 53 | — | — | 956 | ||||||||||||||||||||||||
Distributions | — | — | — | (36 | ) | — | — | (36 | ) | ||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||
Net income | — | — | — | 5,805 | — | — | 5,805 | ||||||||||||||||||||||||
Unrealized gain on cash flow hedges, net of tax of $566 | — | — | — | — | 886 | — | 886 | ||||||||||||||||||||||||
Total comprehensive income | — | — | — | — | — | — | 6,691 | ||||||||||||||||||||||||
Balances — December 31, 2004 | $ | — | $ | — | $ | (859 | ) | $ | 1,495 | $ | 886 | $ | (1,862 | ) | $ | (340 | ) | ||||||||||||||
Repayment of subscriptions | — | — | — | — | — | 386 | 386 | ||||||||||||||||||||||||
Issuance of capital stock | — | 1,590 | 269 | — | — | — | 1,859 | ||||||||||||||||||||||||
Purchase of treasury stock | — | — | (46,453 | ) | — | — | — | (46,453 | ) | ||||||||||||||||||||||
Dividends on preferred stock | — | (98 | ) | — | (1,063 | ) | — | — | (1,161 | ) | |||||||||||||||||||||
Non-cash compensation charges | — | 541 | — | — | — | — | 541 | ||||||||||||||||||||||||
Preferred stock issuance cost accretion | — | — | — | (234 | ) | — | — | (234 | ) | ||||||||||||||||||||||
Distributions | — | — | — | (32 | ) | — | — | (32 | ) | ||||||||||||||||||||||
Comprehensive loss: | |||||||||||||||||||||||||||||||
Net loss | — | — | — | (2,418 | ) | — | — | (2,418 | ) | ||||||||||||||||||||||
Foreign currency translations | — | — | — | — | (5,491 | ) | — | (5,491 | ) | ||||||||||||||||||||||
Unrealized gain on cash flow hedges, net of tax of $2.5 million | — | — | — | — | 4,259 | — | 4,259 | ||||||||||||||||||||||||
Total comprehensive loss | — | — | — | — | — | — | (3,650 | ) | |||||||||||||||||||||||
Balances — December 31, 2005 | $ | — | $ | 2,033 | $ | (47,043 | ) | $ | (2,252 | ) | $ | (346 | ) | $ | (1,476 | ) | $ | (49,084 | ) | ||||||||||||
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Table of Contents
Years Ended December 31, | |||||||||||||||
2005 | 2004 | 2003 | |||||||||||||
(As restated — | |||||||||||||||
see Note 2 | |||||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income (loss) | $ | (2,418 | ) | $ | 5,805 | $ | 3,199 | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||
Depreciation, amortization and accretion expense | 21,931 | 12,293 | 7,474 | ||||||||||||
Amortization and write-off of deferred financing costs and bond discount | 6,941 | 1,080 | 528 | ||||||||||||
Non-cash compensation expense | 541 | 956 | 1,585 | ||||||||||||
Deferred income taxes | (1,270 | ) | 3,490 | 1,862 | |||||||||||
Minority interest | 15 | 19 | — | ||||||||||||
Loss on disposal of assets | 1,036 | 209 | 106 | ||||||||||||
Cumulative effect of change in accounting principle, net | — | — | 134 | ||||||||||||
Changes in assets and liabilities, net of acquisitions: | |||||||||||||||
(Increase) decrease in accounts receivable, net | 2,258 | (4,344 | ) | (2,163 | ) | ||||||||||
(Increase) decrease in prepaid, deferred costs and other current assets | 378 | (407 | ) | (1,205 | ) | ||||||||||
Decrease in inventory | 1,342 | 487 | 523 | ||||||||||||
Decrease in notes receivable, net | 439 | 758 | 959 | ||||||||||||
(Increase) decrease in other assets | (600 | ) | 79 | (22 | ) | ||||||||||
Increase (decrease) in accounts payable | (1,085 | ) | (4,349 | ) | 413 | ||||||||||
Increase in accrued liabilities | 7,189 | 2,107 | 6,747 | ||||||||||||
Increase (decrease) in other liabilities | (3,490 | ) | 2,283 | 1,489 | |||||||||||
Net cash provided by operating activities | 33,207 | 20,466 | 21,629 | ||||||||||||
Cash flows from investing activities: | |||||||||||||||
Additions to property and equipment | (31,926 | ) | (19,747 | ) | (7,300 | ) | |||||||||
Sale of property and equipment | 78 | 446 | 335 | ||||||||||||
Acquisitions, net of cash acquired | (108,112 | ) | (99,625 | ) | (22,698 | ) | |||||||||
Net cash used in investing activities | (139,960 | ) | (118,926 | ) | (29,663 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from issuance of long-term debt | 478,009 | 136,041 | 42,500 | ||||||||||||
Repayments of long-term debt and capital leases | (362,141 | ) | (38,925 | ) | (29,863 | ) | |||||||||
Redemption of Series A preferred stock | (24,795 | ) | — | — | |||||||||||
Purchase of treasury stock | (46,453 | ) | — | — | |||||||||||
Issuance of Series B preferred stock | 73,297 | — | — | ||||||||||||
Issuance of capital stock | 89 | 64 | — | ||||||||||||
Repayment of subscriptions receivable | 386 | 443 | — | ||||||||||||
Distributions | (31 | ) | (36 | ) | — | ||||||||||
Debt issuance costs | (11,127 | ) | (3,269 | ) | (2,233 | ) | |||||||||
Net cash provided by financing activities | 107,234 | 94,318 | 10,404 | ||||||||||||
Effect of exchange rate changes | (194 | ) | — | — | |||||||||||
Net increase (decrease) in cash and cash equivalents | 287 | (4,142 | ) | 2,370 | |||||||||||
Cash and cash equivalents at beginning of period | 1,412 | 5,554 | 3,184 | ||||||||||||
Cash and cash equivalents at end of period | $ | 1,699 | $ | 1,412 | $ | 5,554 | |||||||||
Supplemental disclosure of cash flow information: | |||||||||||||||
Cash paid for interest | $ | 8,359 | $ | 4,517 | $ | 1,666 | |||||||||
Cash paid for income taxes | 92 | 327 | 39 |
F-39
Table of Contents
(1) | Business and Summary of Significant Accounting Policies |
(a) | Description of Business |
(b) | Organizational History |
(c) | Principles of Consolidation |
F-40
Table of Contents
(d) | Use of Estimates in the Preparation of Financial Statements |
(e) | Cash and Cash Equivalents |
(f) | ATM Cash Management Program |
(g) | Accounts Receivable |
F-41
Table of Contents
(h) | Notes Receivable |
(i) | Inventory |
December 31, | |||||||||
2005 | 2004 | ||||||||
ATMs | $ | 1,447 | $ | 1,021 | |||||
ATM parts and supplies | 1,300 | 1,588 | |||||||
Total | $ | 2,747 | $ | 2,609 | |||||
(j) | Property and Equipment, net |
F-42
Table of Contents
(k) | Intangible Assets |
Intangible Assets with Indefinite Lives |
Goodwill | Trade Name | Total | ||||||||||
Balance at December 31, 2004 | $ | 84,977 | $ | — | $ | 84,977 | ||||||
Purchase price adjustments | 145 | — | 145 | |||||||||
Acquisitions | 80,727 | 3,882 | 84,609 | |||||||||
Foreign currency translation adjustments | (4,292 | ) | (211 | ) | (4,503 | ) | ||||||
Balance at December 31, 2005 | $ | 161,557 | $ | 3,671 | $ | 165,228 | ||||||
F-43
Table of Contents
Weighted | |||||||||||||||||
Average | Gross | Net | |||||||||||||||
Amortization | Carrying | Accumulated | Carrying | ||||||||||||||
Period | Amount | Amortization | Amount | ||||||||||||||
Customer contracts and relationships | 8.9 years | $ | 80,682 | $ | (19,934 | ) | $ | 60,748 | |||||||||
Exclusive license agreements | 6.3 years | 2,457 | (432 | ) | 2,025 | ||||||||||||
Deferred financing costs | 6.9 years | 11,176 | (1,655 | ) | 9,521 | ||||||||||||
Total | 8.6 years | $ | 94,315 | $ | (22,021 | ) | $ | 72,294 | |||||||||
Amortization Expense for the Next Five Years | |||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | |||||||||||||||||
Contract intangibles | $ | 9,208 | $ | 8,949 | $ | 8,921 | $ | 8,553 | $ | 7,326 | |||||||||||
Exclusive license agreements | 414 | 414 | 353 | 349 | 250 | ||||||||||||||||
Total | $ | 9,622 | $ | 9,363 | $ | 9,274 | $ | 8,902 | $ | 7,576 | |||||||||||
F-44
Table of Contents
Amortization for the Next Five Years | ||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||
Deferred financing costs | $ | 1,773 | $ | 1,288 | $ | 1,355 | $ | 1,428 | $ | 1,103 | ||||||||||
(l) | Income Taxes |
(m) | Impairment of Long-Lived Assets and Goodwill |
F-45
Table of Contents
(n) | Asset Retirement Obligations |
F-46
Table of Contents
(o) | Revenue Recognition |
F-47
Table of Contents
(p) | Stock Based Compensation |
Years Ended | |||||||||||||
December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Net income (loss), as reported | $ | (2,418 | ) | $ | 5,805 | $ | 3,199 | ||||||
Add: Stock-based employee compensation expense included in reported net income, net of tax | 1,492 | 589 | 997 | ||||||||||
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax | (1,694 | ) | (637 | ) | (997 | ) | |||||||
Net income (loss), as adjusted | (2,620 | ) | 5,757 | 3,199 | |||||||||
Preferred stock dividends and accretion expense | 1,395 | 2,312 | 2,089 | ||||||||||
Net income (loss) available to common stockholders, as adjusted | $ | (4,015 | ) | $ | 3,445 | $ | 1,110 | ||||||
(q) | Derivative Instruments |
F-48
Table of Contents
(r) | Foreign Currency Translation |
(s) | Comprehensive Income (Loss) |
Years Ended | ||||||||||||
December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Net income (loss) | $ | (2,418 | ) | $ | 5,805 | $ | 3,199 | |||||
Foreign currency translation adjustments | (5,491 | ) | — | — | ||||||||
Unrealized gain on interest rate hedges, net of tax | 4,259 | 886 | — | |||||||||
Total comprehensive income (loss) | $ | (3,650 | ) | $ | 6,691 | $ | 3,199 | |||||
(t) | Treasury Stock |
(u) | Advertising Costs |
F-49
Table of Contents
(v) | Fair Value of Financial Instruments |
(w) | New Accounting Pronouncements |
(x) | Working Capital Deficit |
F-50
Table of Contents
(2) | Restatement of Financial Statements |
Year ended December 31,2002 | $ | (157 | ) | ||
Year ended December 31, 2003 | 1,189 | ||||
Year ended December 31,2004 | 1,815 | ||||
Nine months ended September 30, 2005 | (2,369 | ) | |||
Total | $ | 478 | |||
F-51
Table of Contents
Impact on Selected Balance Sheet Amounts |
As of December 31, 2004 | ||||||||||||
As Reported | Adjustment | As Restated | ||||||||||
Deferred tax asset, net | $ | 2,412 | $ | (488 | ) | $ | 1,924 | |||||
Total current assets | 20,409 | (488 | ) | 19,921 | ||||||||
Intangible assets, net | 43,077 | 2,846 | 45,923 | |||||||||
Total assets | 195,309 | 2,358 | 197,667 | |||||||||
Income taxes payable | 46 | (17 | ) | 29 | ||||||||
Total current liabilities | 40,990 | (17 | ) | 40,973 | ||||||||
Deferred tax liability, net | 6,231 | 551 | 6,782 | |||||||||
Total liabilities | 173,839 | 534 | 174,373 | |||||||||
Retained earnings (accumulated deficit) | (329 | ) | 1,824 | 1,495 | ||||||||
Total stockholders’ deficit | (2,164 | ) | 1,824 | (340 | ) | |||||||
Total liabilities and stockholders’ deficit | 195,309 | 2,358 | 197,667 |
Impact on Selected Statement of Operations Amounts |
For the Year Ended December 31, 2004 | ||||||||||||
As Reported | Adjustment | As Restated | ||||||||||
Interest expense, net | $ | 7,050 | $ | (1,815 | ) | $ | 5,235 | |||||
Total other expenses | 7,278 | (1,815 | ) | 5,463 | ||||||||
Income before income taxes | 7,566 | 1,815 | 9,381 | |||||||||
Income tax provision | 2,956 | 620 | 3,576 | |||||||||
Net income | 4,610 | 1,195 | 5,805 |
For the Year Ended December 31, 2003 | ||||||||||||
As Reported | Adjustment | As Restated | ||||||||||
Interest expense, net | $ | 3,346 | $ | (1,189 | ) | $ | 2,157 | |||||
Total other expenses | 3,452 | (1,189 | ) | 2,263 | ||||||||
Income before income taxes and cumulative effect of change in accounting principle | 4,099 | 1,189 | 5,288 | |||||||||
Income tax provision | 1,511 | 444 | 1,955 | |||||||||
Income before cumulative effect of change in accounting principle | 2,588 | 745 | 3,333 | |||||||||
Net income | 2,454 | 745 | 3,199 |
F-52
Table of Contents
For the Nine Months Ended | ||||||||||||
September 30, 2005 | ||||||||||||
As Reported | Adjustment | As Restated | ||||||||||
(unaudited) | ||||||||||||
Cost of ATM operating revenues | $ | 148,528 | $ | 172 | $ | 148,700 | ||||||
Total cost of revenues | 155,504 | 172 | 155,676 | |||||||||
Gross profit | 43,684 | (172 | ) | 43,512 | ||||||||
Selling, general and administrative expenses | 11,552 | 1,660 | 13,212 | |||||||||
Total operating expenses | 25,771 | 1,660 | 27,431 | |||||||||
Income from operations | 17,913 | (1,832 | ) | 16,081 | ||||||||
Interest expense, net | 14,224 | 2,369 | 16,593 | |||||||||
Total other expenses | 15,106 | 2,369 | 17,475 | |||||||||
Income (loss) before income taxes | 2,807 | (4,201 | ) | (1,394 | ) | |||||||
Income tax provision (benefit) | 972 | (1,517 | ) | (545 | ) | |||||||
Net income (loss) | 1,835 | (2,684 | ) | (849 | ) |
Impact on Accumulated Deficit Amounts |
As of | ||||
December 31, | ||||
2003 | ||||
Accumulated deficit as of December 31, 2003, as reported | $ | (4,797 | ) | |
2003 adjustment, net of income taxes | 745 | |||
2002 adjustment, net of income taxes | (116 | ) | ||
Accumulated deficit as of December 31, 2003, as restated | $ | (4,168 | ) | |
As of | ||||
December 31, | ||||
2002 | ||||
Accumulated deficit as of December 31, 2002, as reported | $ | (4,939 | ) | |
2002 adjustment, net of income taxes | (116 | ) | ||
Accumulated deficit as of December 31, 2002, as restated | $ | (5,055 | ) | |
(3) | Acquisitions |
Acquisition of Bank Machine (Acquisitions) Limited |
F-53
Table of Contents
Cash | $ | 3,400 | |||
Trade accounts receivable, net | 407 | ||||
Inventory | 82 | ||||
Other current assets | 4,936 | ||||
Property and equipment | 12,590 | ||||
Intangible assets subject to amortization (7 year weighted-average life) | 6,812 | ||||
Intangible assets not subject to amortization | 3,682 | ||||
Goodwill | 77,043 | ||||
Total assets acquired | 108,952 | ||||
Accounts payable | (2,467 | ) | |||
Accrued liabilities | (5,307 | ) | |||
Current portion of notes payable | (3,232 | ) | |||
Deferred income taxes, non-current | (1,700 | ) | |||
Other long-term liabilities | (1,225 | ) | |||
Total liabilities assumed | (13,931 | ) | |||
Net assets acquired | $ | 95,021 | |||
F-54
Table of Contents
Acquisition of the E*TRADE Access, Inc. ATM Portfolio |
F-55
Table of Contents
Cash | $ | 8,137 | ||||
Trade accounts receivable, net | 574 | |||||
Surcharge and interchange receivable | 1,240 | |||||
Inventory | 395 | |||||
Other current assets | 319 | |||||
Property and equipment | 8,496 | |||||
Intangible assets subject to amortization (10 year weighted-average life) | 23,954 | |||||
Goodwill | 84,977 | |||||
Total assets acquired | 128,092 | |||||
Accounts payable | (5,762 | ) | ||||
Accrued liabilities | (9,204 | ) | ||||
Other long-term liabilities | (6,258 | ) | ||||
Total liabilities assumed | (21,224 | ) | ||||
Net assets acquired | $ | 106,868 | ||||
F-56
Table of Contents
Pro Forma Results of Operations |
Years Ended | ||||||||
December 31, | ||||||||
2005 | 2004 | |||||||
Revenues | $ | 279,149 | $ | 278,416 | ||||
Income from continuing operations | 21,083 | 23,470 | ||||||
Net income (loss) | (1,162 | ) | 1,263 |
Other 2005 Acquisitions |
F-57
Table of Contents
Cash | $ | 142 | ||||
Trade accounts receivable, net | 546 | |||||
Other current assets | 6 | |||||
Property and equipment | 14 | |||||
Intangible assets subject to amortization (8 year weighted-average life) | 3,000 | |||||
Intangible assets not subject to amortization | 200 | |||||
Other assets | 11 | |||||
Goodwill | 3,684 | |||||
Total assets acquired | 7,603 | |||||
Accounts payable and accrued liabilities | (1,710 | ) | ||||
Deferred income taxes | (1,113 | ) | ||||
Total liabilities assumed | (2,823 | ) | ||||
Net assets acquired | $ | 4,780 | ||||
2003 Acquisitions |
F-58
Table of Contents
(4) | Stock Compensation |
2005 | 2004 | 2003 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||
Beginning balance | 300,567 | $ | 23.06 | 210,736 | $ | 6.62 | 392,556 | $ | 7.03 | |||||||||||||||
Granted | 210,500 | 83.84 | 109,500 | 52.00 | — | — | ||||||||||||||||||
Exercised | 22,903 | 3.86 | 10,956 | 7.78 | 181,820 | 7.50 | ||||||||||||||||||
Forfeited | 24,000 | 78.53 | 8,713 | 8.39 | — | — | ||||||||||||||||||
Ending balance | 464,164 | $ | 48.70 | 300,567 | $ | 23.06 | 210,736 | $ | 6.62 | |||||||||||||||
Weighted average fair value of options granted during the year | $ | 7.85 | $ | 4.36 | $ | — | ||||||||||||||||||
Weighted | ||||||||||||
Average | Shares | |||||||||||
Exercise Price | Shares | Remaining Life | Exercisable | |||||||||
$0.04 | 17,895 | 5.42 years | 17,895 | |||||||||
$0.20 | 9,459 | 5.42 years | 9,459 | |||||||||
$5.87-5.88 | 76,942 | 5.43 years | 76,942 | |||||||||
$11.73-11.76 | 65,232 | 5.96 years | 57,545 | |||||||||
$52.00 | 104,136 | 8.19 years | 31,761 | |||||||||
$83.84 | 190,500 | 9.36 years | — |
2005 | 2004 | 2003 | ||||||||||
Expected dividend yield | — | — | — | |||||||||
Expected stock price volatility | — | — | — | |||||||||
Risk-free interest rate | 3.85 | % | 2.96 | % | — | |||||||
Expected life of options | 5.00 | 5.00 | — |
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(5) | Related Party Transactions |
(6) | Prepaid Expenses, Deferred Costs, and Other Current Assets |
December 31, | |||||||||
2005 | 2004 | ||||||||
Prepaid expenses | $ | 3,258 | $ | 2,197 | |||||
Deferred costs and other current assets | 986 | 306 | |||||||
Total | $ | 4,244 | $ | 2,503 | |||||
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(7) | Property and Equipment, net |
December 31, | |||||||||
2005 | 2004 | ||||||||
ATM equipment and related costs | $ | 89,136 | $ | 52,514 | |||||
Office furniture, fixtures, and other | 7,157 | 4,840 | |||||||
Total | 96,293 | 57,354 | |||||||
Less accumulated depreciation | (22,142 | ) | (12,362 | ) | |||||
Net property and equipment | $ | 74,151 | $ | 44,992 | |||||
(8) | Intangible Assets, net |
December 31, | |||||||||
2005 | 2004 | ||||||||
Contract intangibles | $ | 80,682 | $ | 51,277 | |||||
Exclusive license agreements | 2,457 | 1,432 | |||||||
Deferred financing costs | 11,176 | 6,192 | |||||||
Total | 94,315 | 58,901 | |||||||
Less accumulated amortization | (22,021 | ) | (12,978 | ) | |||||
Total amortizable intangible assets | 72,294 | 45,923 | |||||||
Acquired trade names | 3,671 | — | |||||||
Net intangible assets | $ | 75,965 | $ | 45,923 | |||||
(9) | Prepaid Expenses and Other Non-current Assets |
December 31, | |||||||||
2005 | 2004 | ||||||||
Unrealized gains on cash flow hedges, non-current | $ | 7,422 | $ | 1,452 | |||||
Prepaid expenses | 376 | 15 | |||||||
Other | 391 | 200 | |||||||
Total | $ | 8,189 | $ | 1,667 | |||||
(10) | Preferred Stock |
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(11) | Accrued Liabilities |
December 31, | |||||||||
2005 | 2004 | ||||||||
Accrued cash management fees | $ | 3,430 | $ | 1,600 | |||||
Accrued maintenance | 1,431 | 2,498 | |||||||
Accrued merchant fees | 7,613 | 5,955 | |||||||
Accrued interest | 7,328 | 447 | |||||||
Accrued armored | 2,662 | 1,272 | |||||||
Accrued purchases | 2,292 | 603 | |||||||
Accrued compensation | 1,722 | 1,348 | |||||||
Other accrued expenses | 8,365 | 8,340 | |||||||
Total | $ | 34,843 | $ | 22,063 | |||||
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(12) | Other Long-Term Liabilities and Minority Interest in Subsidiary |
December 31, | |||||||||
2005 | 2004 | ||||||||
Asset retirement obligations | $ | 8,339 | $ | 5,305 | |||||
Deferred revenue | 1,075 | 2,277 | |||||||
Minority interest in subsidiary | 25 | 30 | |||||||
Other long-term liabilities | 4,954 | 5,465 | |||||||
Total | $ | 14,393 | $ | 13,077 | |||||
(13) | Operating and Capital Lease Obligations |
2006 | $ | 7,510 | |||
2007 | 5,275 | ||||
2008 | 4,660 | ||||
2009 | 1,900 | ||||
2010 | 493 | ||||
Thereafter | 606 | ||||
Total minimum lease payments | $ | 20,444 | |||
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(14) | Long-Term Debt |
December 31, | |||||||||
2005 | 2004 | ||||||||
Term loan bearing interest at LIBOR + 3.25% as of December 31, 2004 (combined rate of 5.60% at December 31, 2004) | $ | — | $ | 100,000 | |||||
Revolving credit loan facility bearing interest at LIBOR + 3.25% as of December 31, 2005 and 2004, and PRIME + 2.50% for swing-line borrowings as of December 31, 2005 and 2004 (weighted-average combined rate of 7.05% and 5.86% at December 31, 2005 and 2004, respectively) | 45,800 | 28,541 | |||||||
Senior subordinated notes due August 2013, net of unamortized discount of $1.3 million (91/4% stated rate, 93/8% effective yield) | 198,656 | — | |||||||
Total | 244,456 | 128,541 | |||||||
Less current portion | — | (15,000 | ) | ||||||
Total excluding current portion | $ | 244,456 | $ | 113,541 | |||||
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Amount | |||||
Year ending December 31: | |||||
2006 — 2009 | $ | — | |||
2010 | 45,800 | ||||
2011 | — | ||||
2012 | — | ||||
2013(a) | 200,000 | ||||
Total | $ | 245,800 | |||
(a) | Reflects the full face value of the Company’s senior subordinated notes, which have been reflected net of unamortized discount of approximately $1.3 million in the accompanying consolidated balance sheet. |
(15) | Employee Benefits |
(16) | Commitments and Contingencies |
(17) | Asset Retirement Obligations |
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Years Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Asset retirement obligation at the beginning of the period | $ | 5,305 | $ | 3,005 | $ | 1,642 | ||||||
Additional ATMs | 2,968 | 2,483 | 1,201 | |||||||||
Accretion expense | 1,024 | 278 | 162 | |||||||||
Payments | (958 | ) | (461 | ) | — | |||||||
Asset retirement obligation at the end of the period | $ | 8,339 | $ | 5,305 | $ | 3,005 | ||||||
(18) | Derivative Financial Instruments |
Notional Amount | Weighted Average Fixed Rate | Period | ||||||
$300,000 | 3.63 | % | January 1, 2006-December 31, 2006 | |||||
$300,000 | 3.86 | % | January 1, 2007-December 31, 2007 | |||||
$300,000 | 4.35 | % | January 1, 2008-December 31, 2008 | |||||
$200,000 | 4.36 | % | January 1, 2009-December 31, 2009 | |||||
$100,000 | 4.34 | % | January 1, 2010-December 31, 2010 |
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(19) | Income Taxes |
2005 | 2004 | 2003 | |||||||||||||
Current: | |||||||||||||||
U.S. federal | $ | — | $ | 22 | $ | 27 | |||||||||
State and local | — | 64 | 66 | ||||||||||||
Total current | $ | — | $ | 86 | $ | 93 | |||||||||
Deferred: | |||||||||||||||
U.S. federal | $ | (1,831 | ) | $ | 3,117 | $ | 1,697 | ||||||||
State and local | 332 | 373 | 165 | ||||||||||||
Foreign | 229 | — | — | ||||||||||||
Total deferred | (1,270 | ) | 3,490 | 1,862 | |||||||||||
Total | $ | (1,270 | ) | $ | 3,576 | $ | 1,955 | ||||||||
2005 | 2004 | 2003 | ||||||||||||
Income tax expense at the statutory rate of 34% | $ | (1,254 | ) | $ | 3,190 | $ | 1,798 | |||||||
State tax, net of federal benefit | 131 | 316 | 145 | |||||||||||
Impact of foreign rate differential | (31 | ) | — | — | ||||||||||
Change in effective state tax rate | (72 | ) | 66 | — | ||||||||||
Other | (44 | ) | 4 | 12 | ||||||||||
Income tax expense on income before income taxes and cumulative effect of accounting change | (1,270 | ) | 3,576 | 1,955 | ||||||||||
Income tax (benefit) allocated to cumulative effect of accounting change | — | — | (80 | ) | ||||||||||
Total tax provision | $ | (1,270 | ) | $ | 3,576 | $ | 1,875 | |||||||
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2005 | 2004 | |||||||||
Current deferred tax assets: | ||||||||||
Net operating loss carryforward | $ | — | $ | 1,727 | ||||||
Employment agreements | — | 206 | ||||||||
Reserve for receivables | 59 | 94 | ||||||||
Accrued liabilities | 1,032 | — | ||||||||
Other | 52 | 91 | ||||||||
Current deferred tax assets | 1,143 | 2,118 | ||||||||
Noncurrent deferred tax assets: | ||||||||||
Net operating loss carryforward | 6,998 | — | ||||||||
Employment agreements | 87 | — | ||||||||
SFAS No. 143 deinstallation costs | 851 | 724 | ||||||||
Deferred revenue | 758 | 1,186 | ||||||||
Other | 69 | 3 | ||||||||
Noncurrent deferred tax assets | 8,763 | 1,913 | ||||||||
Current deferred tax liabilities: | ||||||||||
Deferred stock compensation | (67 | ) | (180 | ) | ||||||
Other | 29 | (14 | ) | |||||||
Current deferred tax liabilities | (38 | ) | (194 | ) | ||||||
Noncurrent deferred tax liabilities: | ||||||||||
Property and equipment | (5,981 | ) | (4,184 | ) | ||||||
Intangible assets and goodwill | (7,196 | ) | (2,778 | ) | ||||||
Deferred stock compensation | — | (94 | ) | |||||||
Deployment costs | (2,352 | ) | (1,073 | ) | ||||||
Unrealized gain on derivative instruments | (3,034 | ) | (566 | ) | ||||||
Noncurrent deferred tax liabilities | (18,563 | ) | (8,695 | ) | ||||||
Net deferred tax liability | $ | (8,695 | ) | $ | (4,858 | ) | ||||
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(20) | Significant Suppliers |
(21) | Segment and Geographical Information |
Revenues: | ||||||
Domestic | $ | 247,501 | ||||
International | 21,822 | |||||
Intercompany elimination | (358 | ) | ||||
Total | $ | 268,965 | ||||
Stock-based compensation expense: | ||||||
Domestic | $ | 2,372 | ||||
International | — | |||||
Total | $ | 2,372 | ||||
Depreciation, accretion and amortization expense: | ||||||
Domestic | $ | 19,210 | ||||
International | 2,721 | |||||
Total | $ | 21,931 | ||||
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Interest expense, net: | ||||||
Domestic | $ | 20,777 | ||||
International | 1,649 | |||||
Total | $ | 22,426 | ||||
Income (loss) before income taxes: | ||||||
Domestic | $ | (4,454 | ) | |||
International | 766 | |||||
Total | $ | (3,688 | ) | |||
Income tax provision (benefit): | ||||||
Domestic | $ | (1,499 | ) | |||
International | 229 | |||||
Total | $ | (1,270 | ) | |||
Identifiable assets: | ||||||
Domestic | $ | 240,600 | ||||
International | 103,151 | |||||
Total | $ | 343,751 | ||||
Capital expenditures: | ||||||
Domestic | $ | 23,344 | ||||
International | 8,582 | |||||
Total | $ | 31,926 | ||||
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(22) | Supplemental Guarantor Financial Information |
Condensed Consolidating Statements of Operations |
Year Ended December 31, 2005 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Revenues | $ | — | $ | 247,501 | $ | 21,822 | $ | (358 | ) | $ | 268,965 | |||||||||
Operating costs and expenses | 2,547 | 227,682 | 19,254 | (239 | ) | 249,244 | ||||||||||||||
Operating income | (2,547 | ) | 19,819 | 2,568 | (119 | ) | 19,721 | |||||||||||||
Interest expense, net | 8,062 | 12,715 | 1,649 | — | 22,426 | |||||||||||||||
Equity in (earnings) losses of subsidiaries | (6,399 | ) | — | — | 6,399 | — | ||||||||||||||
Other expense (income), net | — | 830 | 153 | — | 983 | |||||||||||||||
Income (loss) before income taxes | (4,210 | ) | 6,274 | 766 | (6,518 | ) | (3,688 | ) | ||||||||||||
Income tax provision (benefit) | (1,911 | ) | 412 | 229 | — | (1,270 | ) | |||||||||||||
Net income (loss) | (2,299 | ) | 5,862 | 537 | (6,518 | ) | (2,418 | ) | ||||||||||||
Preferred stock dividends and accretion expense | 1,395 | — | — | — | 1,395 | |||||||||||||||
Net income (loss) available to common stockholders | $ | (3,694 | ) | $ | 5,862 | $ | 537 | $ | (6,518 | ) | $ | (3,813 | ) | |||||||
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Year Ended December 31, 2004 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Revenues | $ | — | $ | 192,915 | $ | — | $ | — | $ | 192,915 | ||||||||||
Operating costs and expenses | 2,542 | 175,529 | — | — | 178,071 | |||||||||||||||
Operating income | (2,542 | ) | 17,386 | — | — | 14,844 | ||||||||||||||
Interest expense, net | (155 | ) | 5,390 | — | — | 5,235 | ||||||||||||||
Equity in (earnings) losses of subsidiaries | (7,354 | ) | — | — | 7,354 | — | ||||||||||||||
Other expense (income), net | — | 228 | — | — | 228 | |||||||||||||||
Income before income taxes | 4,967 | 11,768 | — | (7,354 | ) | 9,381 | ||||||||||||||
Income tax provision (benefit) | (838 | ) | 4,414 | — | — | 3,576 | ||||||||||||||
Net income | 5,805 | 7,354 | — | (7,354 | ) | 5,805 | ||||||||||||||
Preferred stock dividends and accretion expense | 2,312 | — | — | — | 2,312 | |||||||||||||||
Net income available to common stockholders | $ | 3,493 | $ | 7,354 | $ | — | $ | (7,354 | ) | $ | 3,493 | |||||||||
Year Ended December 31, 2003 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Revenues | $ | — | $ | 110,443 | $ | — | $ | — | $ | 110,443 | ||||||||||
Operating costs and expenses | 1,583 | 101,309 | — | — | 102,892 | |||||||||||||||
Operating income | (1,583 | ) | 9,134 | — | — | 7,551 | ||||||||||||||
Interest expense, net | — | 2,157 | — | — | 2,157 | |||||||||||||||
Equity in (earnings) losses of subsidiaries | (4,782 | ) | — | — | 4,782 | — | ||||||||||||||
Other expense (income), net | — | 106 | — | — | 106 | |||||||||||||||
Income before income taxes | 3,199 | 6,871 | — | (4,782 | ) | 5,288 | ||||||||||||||
Income tax provision | — | 1,955 | — | — | 1,955 | |||||||||||||||
Income before cumulative effect of change in accounting principle | 3,199 | 4,916 | — | (4,782 | ) | 3,333 | ||||||||||||||
Cumulative effect of change in accounting principle | — | 134 | — | — | 134 | |||||||||||||||
Net income | 3,199 | 4,782 | — | (4,782 | ) | 3,199 | ||||||||||||||
Preferred stock dividends and accretion expense | 2,089 | — | — | — | 2,089 | |||||||||||||||
Net income available to common stockholders | $ | 1,110 | $ | 4,782 | $ | — | $ | (4,782 | ) | $ | 1,110 | |||||||||
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Condensed Consolidating Balance Sheets |
As of December 31, 2005 | |||||||||||||||||||||
Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 118 | $ | 1,544 | $ | 37 | $ | — | $ | 1,699 | |||||||||||
Receivables, net | 2,047 | 10,706 | 836 | (3,843 | ) | 9,746 | |||||||||||||||
Other current assets | 1,669 | 4,968 | 5,691 | — | 12,328 | ||||||||||||||||
Total current assets | 3,834 | 17,218 | 6,564 | (3,843 | ) | 23,773 | |||||||||||||||
Property and equipment, net | — | 58,283 | 15,991 | (123 | ) | 74,151 | |||||||||||||||
Intangible assets, net | 10,906 | 52,243 | 12,816 | — | 75,965 | ||||||||||||||||
Goodwill | 5,907 | 85,122 | 70,528 | — | 161,557 | ||||||||||||||||
Investments and advances to subsidiaries | 60,339 | — | — | (60,339 | ) | — | |||||||||||||||
Intercompany receivable | 487 | 2,288 | (2,775 | ) | — | — | |||||||||||||||
Prepaid and other assets | 205,389 | 8,988 | 27 | (206,099 | ) | 8,305 | |||||||||||||||
Total assets | $ | 286,862 | $ | 224,142 | $ | 103,151 | $ | (270,404 | ) | $ | 343,751 | ||||||||||
Liabilities and Stockholders’ Deficit: | |||||||||||||||||||||
Current portion of long-term debt and notes payable | $ | — | $ | 42 | $ | 3,126 | $ | — | $ | 3,168 | |||||||||||
Current portion of other long-term liabilities | — | 2,251 | — | — | 2,251 | ||||||||||||||||
Accounts payable and accrued liabilities | 8,650 | 29,444 | 8,203 | (3,859 | ) | 42,438 | |||||||||||||||
Total current liabilities | 8,650 | 31,737 | 11,329 | (3,859 | ) | 47,857 | |||||||||||||||
Long-term debt, less current portion | 244,456 | 139,551 | 66,548 | (206,099 | ) | 244,456 | |||||||||||||||
Other non-current liabilities and minority interest | 6,511 | 14,629 | 3,053 | — | 24,193 | ||||||||||||||||
Total liabilities | 259,617 | 185,917 | 80,930 | (209,958 | ) | 316,506 | |||||||||||||||
Preferred stock | 76,329 | — | — | — | 76,329 | ||||||||||||||||
Stockholders’ equity (deficit) | (49,084 | ) | 38,225 | 22,221 | (60,446 | ) | (49,084 | ) | |||||||||||||
Total liabilities and stockholders’ deficit | $ | 286,862 | $ | 224,142 | $ | 103,151 | $ | (270,404 | ) | $ | 343,751 | ||||||||||
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As of December 31, 2004 | |||||||||||||||||||||
Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | |||||||||||||||||
Assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 1,412 | $ | — | $ | — | $ | 1,412 | |||||||||||
Receivables, net | — | 11,473 | — | — | 11,473 | ||||||||||||||||
Other current assets | 2,504 | 4,532 | — | — | 7,036 | ||||||||||||||||
Total current assets | 2,504 | 17,417 | — | — | 19,921 | ||||||||||||||||
Property and equipment, net | — | 44,992 | — | — | 44,992 | ||||||||||||||||
Intangible assets, net | — | 45,923 | — | — | 45,923 | ||||||||||||||||
Goodwill | — | 84,977 | — | — | 84,977 | ||||||||||||||||
Investments and advances to subsidiaries | 28,396 | — | — | (28,396 | ) | — | |||||||||||||||
Intercompany receivable | (1,091 | ) | 1,091 | — | — | — | |||||||||||||||
Prepaid and other assets | — | 1,854 | — | — | 1,854 | ||||||||||||||||
Total assets | $ | 29,809 | $ | 196,254 | $ | — | $ | (28,396 | ) | $ | 197,667 | ||||||||||
Liabilities and Stockholders’ Deficit: | |||||||||||||||||||||
Current portion of long-term debt and notes payable | $ | — | $ | 15,000 | $ | — | $ | — | $ | 15,000 | |||||||||||
Current portion of other long-term liabilities | — | 1,176 | — | — | 1,176 | ||||||||||||||||
Accounts payable and accrued liabilities | 284 | 24,513 | — | — | 24,797 | ||||||||||||||||
Total current liabilities | 284 | 40,689 | — | — | 40,973 | ||||||||||||||||
Long-term debt, less current portion | — | 113,541 | — | — | 113,541 | ||||||||||||||||
Other non-current liabilities and minority interest | 6,231 | 13,628 | — | — | 19,859 | ||||||||||||||||
Total liabilities | 6,515 | 167,858 | — | — | 174,373 | ||||||||||||||||
Preferred stock | 23,634 | — | — | — | 23,634 | ||||||||||||||||
Stockholders’ equity (deficit) | (340 | ) | 28,396 | — | (28,396 | ) | (340 | ) | |||||||||||||
Total liabilities and stockholders’ deficit | $ | 29,809 | $ | 196,254 | $ | — | $ | (28,396 | ) | $ | 197,667 | ||||||||||
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Condensed Consolidating Statements of Cash Flows |
Year Ended December 31, 2005 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Cash flows provided by operating activities | $ | 5,693 | $ | 18,747 | $ | 8,767 | $ | — | $ | 33,207 | ||||||||||
Capital expenditures, net | — | (23,112 | ) | (8,736 | ) | — | (31,848 | ) | ||||||||||||
Acquisitions, net of cash acquired | (2,196 | ) | (17,247 | ) | (88,669 | ) | — | (108,112 | ) | |||||||||||
Cash flows used in investing activities | (2,196 | ) | (40,359 | ) | (97,405 | ) | — | (139,960 | ) | |||||||||||
Proceeds from issuance of long-term debt | 237,392 | 174,908 | 65,709 | — | 478,009 | |||||||||||||||
Repayments of long-term debt | (206,099 | ) | (156,042 | ) | — | — | (362,141 | ) | ||||||||||||
Issuance of capital stock | (23,071 | ) | — | 23,160 | — | 89 | ||||||||||||||
Other financing activities | (11,602 | ) | 2,879 | — | — | (8,723 | ) | |||||||||||||
Cash flows provided by (used in) financing activities | (3,380 | ) | 21,745 | 88,869 | — | 107,234 | ||||||||||||||
Effect of exchange rate increases | — | — | (194 | ) | — | (194 | ) | |||||||||||||
Increase in cash and cash equivalents | 117 | 133 | 37 | — | 287 | |||||||||||||||
Cash and cash equivalents at beginning of period | — | 1,412 | — | — | 1,412 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 117 | $ | 1,545 | $ | 37 | $ | — | $ | 1,699 | ||||||||||
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Year Ended December 31, 2004 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Cash flows provided by operating activities | $ | — | $ | 20,466 | $ | — | $ | — | $ | 20,466 | ||||||||||
Capital expenditures, net | — | (19,301 | ) | — | — | (19,301 | ) | |||||||||||||
Acquisitions, net of cash acquired | — | (99,625 | ) | — | — | (99,625 | ) | |||||||||||||
Cash flows used in investing activities | — | (118,926 | ) | — | — | (118,926 | ) | |||||||||||||
Proceeds from issuance of long-term debt | — | 136,041 | — | — | 136,041 | |||||||||||||||
Repayments of long-term debt | — | (38,925 | ) | — | — | (38,925 | ) | |||||||||||||
Issuance of capital stock | — | 64 | — | — | 64 | |||||||||||||||
Other financing activities | — | (2,862 | ) | — | — | (2,862 | ) | |||||||||||||
Cash flows provided by financing activities | — | 94,318 | — | — | 94,318 | |||||||||||||||
Effect of exchange rate increases | — | — | — | — | — | |||||||||||||||
Decrease in cash and cash equivalents | — | (4,142 | ) | — | — | (4,142 | ) | |||||||||||||
Cash and cash equivalents at beginning of period | — | 5,554 | — | — | 5,554 | |||||||||||||||
Cash and cash equivalents at end of period | $ | — | $ | 1,412 | $ | — | $ | — | $ | 1,412 | ||||||||||
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Year Ended December 31, 2003 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Cash flows provided by operating activities | $ | — | $ | 21,629 | $ | — | $ | — | $ | 21,629 | ||||||||||
Capital expenditures, net | — | (6,965 | ) | — | — | (6,965 | ) | |||||||||||||
Acquisitions, net of cash acquired | — | (22,698 | ) | — | — | (22,698 | ) | |||||||||||||
Cash flows used in investing activities | — | (29,663 | ) | — | — | (29,663 | ) | |||||||||||||
Proceeds from issuance of long-term debt | — | 42,500 | — | — | 42,500 | |||||||||||||||
Repayments of long-term debt | — | (29,863 | ) | — | — | (29,863 | ) | |||||||||||||
Issuance of capital stock | — | — | — | — | — | |||||||||||||||
Other financing activities | — | (2,233 | ) | — | — | (2,233 | ) | |||||||||||||
Cash flows provided by financing activities | — | 10,404 | — | — | 10,404 | |||||||||||||||
Effect of exchange rate increases | — | — | — | — | — | |||||||||||||||
Increase in cash and cash equivalents | — | 2,370 | — | — | 2,370 | |||||||||||||||
Cash and cash equivalents at beginning of period | — | 3,184 | — | — | 3,184 | |||||||||||||||
Cash and cash equivalents at end of period | $ | — | $ | 5,554 | $ | — | $ | — | $ | 5,554 | ||||||||||
(23) | Subsequent Events |
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Year ended | Year ended | |||||||||||
31 December, | 31 December, | |||||||||||
Note | 2004 | 2003 | ||||||||||
£’000 | £’000 | |||||||||||
Turnover | 2 | (d) | 15,614 | 12,431 | ||||||||
Operating profit | 3 | 3,028 | 1,977 | |||||||||
Net interest payable and similar charges | 4 | (1,481 | ) | (1,559 | ) | |||||||
Profit on ordinary activities before taxation | 1,547 | 418 | ||||||||||
Tax on profit on ordinary activities | 5 | 649 | 337 | |||||||||
Net profit for the financial year | 16 | 898 | 81 | |||||||||
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31 December | 31 December | |||||||||||
Note | 2004 | 2003 | ||||||||||
£’000 | £’000 | |||||||||||
Fixed assets | ||||||||||||
Intangible assets | 7 | 14,638 | 15,444 | |||||||||
Tangible assets | 8 | 6,890 | 4,878 | |||||||||
21,528 | 20,322 | |||||||||||
Current assets | ||||||||||||
Stock | 47 | — | ||||||||||
Debtors: amounts due within one year | 9 | 1,446 | 482 | |||||||||
Debtors: amounts due after more than one year — deferred tax | 12 | 521 | 857 | |||||||||
Investment | — | 3,200 | ||||||||||
Cash at bank and in hand | 3,568 | 1,081 | ||||||||||
5,582 | 5,620 | |||||||||||
Creditors:amounts falling due within one year | 10 | (5,514 | ) | (4,406 | ) | |||||||
Net current assets | 68 | 1,214 | ||||||||||
Total assets less current liabilities | 21,596 | 21,536 | ||||||||||
Creditors:amounts falling due after more than one year | 11 | (19,025 | ) | (19,951 | ) | |||||||
Provisions for liabilities and charges | 13 | (642 | ) | (554 | ) | |||||||
Net assets | 1,929 | 1,031 | ||||||||||
Capital and reserves | ||||||||||||
Called up share capital | 14 | 950 | 950 | |||||||||
Profit and loss account | 15 | 979 | 81 | |||||||||
Total equity shareholders’ funds | 16 | 1,929 | 1,031 | |||||||||
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Year ended | Year ended | |||||||||||
31 December, | 31 December, | |||||||||||
Note | 2004 | 2003 | ||||||||||
£’000 | £’000 | |||||||||||
Net cash inflow from operating activities | 18 | (a) | 4,212 | 5,706 | ||||||||
Returns on investments and servicing of finance | 18 | (b) | (522 | ) | (1,400 | ) | ||||||
Taxation | 18 | (b) | (156 | ) | — | |||||||
Capital expenditure and financial investment | 18 | (b) | (3,185 | ) | (1,138 | ) | ||||||
Acquisitions and disposals | 18 | (b) | — | (15,514 | ) | |||||||
349 | 12,346 | |||||||||||
Management of liquid resources | 18 | (b) | 3,200 | (3,200 | ) | |||||||
Financing | 18 | (b) | (1,062 | ) | 16,627 | |||||||
Increase in cash | 2,487 | 1,081 | ||||||||||
Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Increase in cash | 2,487 | 1,081 | ||||||
Cash outflow/(inflow) from decrease/(increase) in debt and lease financing | 1,062 | (20,718 | ) | |||||
Cash used to (decrease)/increase liquid resources | (3,200 | ) | 3,200 | |||||
Change in net debt resulting from cash flows | 349 | (16,437 | ) | |||||
Movement in un-amortised element of finance costs | (140 | ) | 570 | |||||
Interest costs capitalised into loan notes | (821 | ) | (725 | ) | ||||
Movement in net debt in the year | (612 | ) | (16,592 | ) | ||||
Net debt at start of year | (16,592 | ) | — | |||||
Net debt at 31 December | (17,204 | ) | (16,592 | ) | ||||
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Bank Machine (Acquisitions) Limited (the “Company”) together with its subsidiary, Bank Machine Limited (collectively with the Company, the “Group”) is an independent Automated Teller Machine (ATM) operator with approximately 1,000 ATMs located throughout the United Kingdom. On 17 January, 2003 the Company acquired its subsidiary Bank Machine Limited from Euronet Worldwide, Inc., and commenced operations on that date. As at the date of these financial statements the Company was a wholly owned subsidiary of Bank Machine (Holdings) Limited. |
a) Basis of preparation |
The financial statements are prepared under the historical cost convention and in accordance with applicable United Kingdom law and accounting standards (“UK GAAP”). The accounting policies applied are set out below. |
b) Basis of consolidation |
The consolidated financial statements comprise the financial statements of the Company and its subsidiary undertaking. All significant intercompany accounts and transactions have been eliminated on consolidation. | |
The accompanying financial statements of the Company do not comprise “statutory accounts” within the meaning of Section 240 of the Companies Act 1985 (United Kingdom). The Company’s statutory accounts for the year ended 31 December 2004, prepared in accordance to UK GAAP, have been reported on by the Company’s auditors, Deloitte & Touche LLP. The report of the Auditors was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985 (United Kingdom). |
Goodwill is the difference between the cost of an acquired entity and the aggregate fair value of the entity’s identifiable assets and liabilities. | |
Positive goodwill is amortised on a straight-line basis over its useful economic life, which the directors estimate to be 20 years, commencing at the time of acquisition. The carrying value of goodwill is reviewed for impairment wherever events or circumstances indicate that the carrying value may not be recoverable. No impairment of goodwill has been recognized in any of the periods presented. |
Turnover principally comprises the amounts receivable from the deployment of ATMs in the form of transaction based fee and services. It also includes income from ATM sales, operating fees, fees for moving ATMs and ATM rental charges. The transaction based fees are recognized at the time the ATM transactions are processed and the service fees are recognized at the time the service is performed. The Company recognizes revenues related to the sale of ATM’s when the equipment is delivered to the merchant customer and the Company has completed all required installation and set up procedures. |
All tangible fixed assets are shown at historical cost less accumulated depreciation and any provision for impairment. |
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Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost of each asset evenly over the expected useful life as follows: |
ATM’s and related assets | 5 to 7 years | |||
Fixtures and fittings | 3 to 5 years | |||
Motor vehicles | 4 years | |||
Computer equipment | 3 years |
The Group reviews the carrying values of its tangible fixed assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable or that the useful lives of these assets are no longer appropriate. Measurement of the impairment loss is based on the fair value of the asset. Generally, fair value will be determined using valuation techniques such as the present value of expected future cash flows. |
Costs associated with the installation of ATM’s are capitalised and written-off over the same period as the ATM asset. |
Operating lease payments are charged to the profit and loss account on a straight-line basis. |
Pension costs in respect of contributions to certain employees’ stakeholder pension plans and Group contributions to personal pension plans are charged to the profit and loss account as they accrue. |
Interest payable on the interest rate SWAP agreement mirrors the repayment profile of the Facilities Agreement and interest is charged or credited to the profit and loss account accordingly. |
All taxable profits are sourced from the UK. Corporation tax is therefore payable on such taxable profits at the UK statutory rate of 30% in both years. |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or right to pay less or to receive more, tax. The exception to this is that deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the underlying timing differences can be deducted. | |
Deferred tax is measured on an undiscounted basis at the rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date. |
In accordance with the provisions of Financial Reporting Standard (“FRS”) 12Provisions, Contingent Liabilities and Contingent assetsthe Group records the fair value of its liability for asset retirement |
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obligations in the period in which it is incurred, and a corresponding increase in the carrying amount of the related long lived assets. Over time, the liability is accreted to its present value at the end of each reporting period, and the capitalized cost is depreciated over the useful life of the related assets. Upon settlement of the liability, the Group will either settle the obligation for its recorded amount or incur a gain or loss upon settlement. The Group’s asset retirement obligations relate to the obligation for the deinstallation of ATM machines from the customer’s site at the expiry of the contracts. |
The preparation of financial statements in conformity with UK GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Year ended | Year ended | ||||||||
31 December, | 31 December, | ||||||||
2004 | 2003 | ||||||||
£’000 | £’000 | ||||||||
Turnover | 15,614 | 12,431 | |||||||
Cost of sales | (9,991 | ) | (8,265 | ) | |||||
Gross profit | 5,623 | 4,166 | |||||||
Administrative expenses | (2,595 | ) | (2,189 | ) | |||||
Operating profit | 3,028 | 1,977 | |||||||
This is stated after charging: | |||||||||
Depreciation of tangible fixed assets — owned assets | 1,316 | 1,117 | |||||||
Operating lease rentals — land and buildings | 116 | 100 | |||||||
— other | 2 | 1 | |||||||
Auditors’ fees — audit — Group | 26 | 29 | |||||||
— other — Group | 19 | 19 | |||||||
Loss on disposal of tangible fixed assets | 76 | 226 | |||||||
Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Loan and overdraft interest payable | (1,765 | ) | (1,628 | ) | ||||
Interest receivable | 194 | 88 | ||||||
Net receipts/(payments) under interest rate contract | 90 | (19 | ) | |||||
Net interest payable | (1,481 | ) | (1,559 | ) | ||||
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Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
UK Corporation tax on profits for the year | 313 | — | ||||||
Deferred tax charge (note 12) | 335 | 337 | ||||||
Deferred tax charge — under provision in prior year (note 12) | 1 | — | ||||||
Total charge | 649 | 337 | ||||||
Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Profit on ordinary activities before tax | 1,547 | 418 | ||||||
Profit on ordinary activities multiplied by standard rate of Corporation tax in the UK of 30% | 464 | 125 | ||||||
Effects of: | ||||||||
Utilisation of tax losses brought forward | — | (758 | ) | |||||
Capital allowances in excess of depreciation | (319 | ) | 410 | |||||
Expenses not deductible for tax purposes | 179 | 223 | ||||||
Short-term timing differences | (13 | ) | — | |||||
Adjustments to tax charge in respect of previous periods | 2 | — | ||||||
Total current tax charge | 313 | — | ||||||
Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
Staff costs including Directors’ emoluments | £’000 | £’000 | ||||||
Wages and salaries | 1,280 | 790 | ||||||
Social security costs | 136 | 86 | ||||||
Pension costs | 38 | 35 | ||||||
1,454 | 911 | |||||||
Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
Average monthly number employed including executive Directors | No. | No. | ||||||
Sales staff | 5 | 5 | ||||||
General administration staff | 31 | 17 | ||||||
36 | 22 | |||||||
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Fair Value | ||||
£’000 | ||||
Tangible fixed assets | 4,283 | |||
Stocks | 52 | |||
Debtors | 997 | |||
Cash | 326 | |||
Creditors | (6,279 | ) | ||
Provision for liabilities and charges | (497 | ) | ||
Deferred tax | 1,194 | |||
Goodwill | 16,215 | |||
Total consideration | 16,291 | |||
2004 | ||||
£’000 | ||||
Cost: | ||||
At 1 January 2004 and at 31 December 2004 | 16,215 | |||
Amortisation: | ||||
At 1 January 2004 | (771 | ) | ||
Charge for the year | (806 | ) | ||
At 31 December 2004 | (1,577 | ) | ||
Net book value: | ||||
At 31 December 2004 | 14,638 | |||
At 31 December 2003 | 15,444 | |||
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Fixture and | ||||||||||||||||
fittings & | ||||||||||||||||
computer | Motor | |||||||||||||||
ATM’s | equipment | vehicles | Total | |||||||||||||
£’000 | £’000 | £’000 | £’000 | |||||||||||||
Cost | ||||||||||||||||
At 1 January 2004 | 7,383 | 937 | — | 8,320 | ||||||||||||
Additions | 3,156 | 202 | 147 | 3,505 | ||||||||||||
Disposals | (722 | ) | — | — | (722 | ) | ||||||||||
Re-classification | 85 | — | — | 85 | ||||||||||||
At 31 December 2004 | 9,902 | 1,139 | 147 | 11,188 | ||||||||||||
Depreciation | ||||||||||||||||
At 1 January 2004 | (2,812 | ) | (630 | ) | — | (3,442 | ) | |||||||||
Depreciation on disposals | 545 | — | — | 545 | ||||||||||||
Charge for the year | (1,063 | ) | (235 | ) | (18 | ) | (1,316 | ) | ||||||||
Re-classification | (85 | ) | — | — | (85 | ) | ||||||||||
At 31 December 2004 | (3,415 | ) | (865 | ) | (18 | ) | (4,298 | ) | ||||||||
Net book value | ||||||||||||||||
At 31 December 2004 | 6,487 | 274 | 129 | 6,890 | ||||||||||||
At 31 December 2003 | 4,571 | 307 | — | 4,878 | ||||||||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Trade debtors | 243 | 167 | ||||||
Prepayments | 859 | 111 | ||||||
Other debtors | 344 | 204 | ||||||
1,446 | 482 | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Bank overdraft and loans (Note 11) | 1,747 | 922 | ||||||
Trade creditors | 2,368 | 1,760 | ||||||
Other taxation and social security | 49 | 57 | ||||||
Corporation tax | 162 | 4 | ||||||
Other creditors | 61 | 32 | ||||||
Accruals | 1,127 | 1,631 | ||||||
5,514 | 4,406 | |||||||
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2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Total loan facilities | 9,163 | 10,928 | ||||||
Shareholder fixed rate subordinated unsecured Loan Notes | 9,862 | 9,023 | ||||||
19,025 | 19,951 | |||||||
2004 | 2003 | |||||||
Total loan facilities | £’000 | £’000 | ||||||
Amounts falling due: | ||||||||
In one year or less, or on demand | 1,875 | 1,062 | ||||||
Between one and two years | 2,437 | 1,875 | ||||||
Between two and five years | 6,938 | 7,125 | ||||||
In five years or more | — | 2,250 | ||||||
11,250 | 12,312 | |||||||
Less: issue costs un-amortised at 31 December | (322 | ) | (445 | ) | ||||
10,928 | 11,867 | |||||||
Less: included in creditors falling due within one year, including amortisation of issue costs | (1,765 | ) | (939 | ) | ||||
9,163 | 10,928 | |||||||
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2004 | 2003 | |||||||
Fixed rate subordinated unsecured Loan Notes | £’000 | £’000 | ||||||
Amounts falling due: | ||||||||
In one year or less, or on demand | — | — | ||||||
Between one and two years | — | — | ||||||
Between two and five years | — | — | ||||||
In five years or more | 9,951 | 9,130 | ||||||
9,951 | 9,130 | |||||||
Less: issue costs un-amortised at 31 December | (107 | ) | (125 | ) | ||||
9,844 | 9,005 | |||||||
Add: amortisation of issue costs within one year | 18 | 18 | ||||||
9,862 | 9,023 | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Depreciation in excess of capital allowances | 521 | 848 | ||||||
Short term timing differences | — | 9 | ||||||
Deferred tax asset | 521 | 857 | ||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
At 1 January | 857 | — | ||||||
Deferred tax on acquisition | — | 1,194 | ||||||
Charge to profit and loss account (note 5) | (336 | ) | (337 | ) | ||||
At 31 December | 521 | 857 | ||||||
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13. | Provisions for liabilities and charges |
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Beginning balance at 1 January | 554 | 497 | ||||||
Liabilities incurred during the year | 126 | 112 | ||||||
Liabilities settled during the year | (85 | ) | (94 | ) | ||||
Accretion of interest | 47 | 39 | ||||||
Ending balance at 31 December | 642 | 554 | ||||||
14. | Called up share capital |
Allotted, called | Allotted, called | |||||||||||||||
up and fully | up and fully | |||||||||||||||
Authorised | Authorised | paid | paid | |||||||||||||
No. | No. | £’000 | £’000 | |||||||||||||
2004 | 2003 | 2004 | 2003 | |||||||||||||
Equity shares: Ordinary shares of £1.00 each | 950,001 | 950,001 | 950 | 950 | ||||||||||||
15. | Reserves |
Profit | ||||
and loss | ||||
account | ||||
£’000 | ||||
Balance at 1 January 2004 | 81 | |||
Profit for the year | 898 | |||
Balance at 31 December 2004 | 979 | |||
16. | Reconciliation of movement in equity shareholders’ funds |
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Net profit for the year | 898 | 81 | ||||||
Issue of ordinary share capital | — | 950 | ||||||
Net movement in equity shareholders’ funds | 898 | 1,031 | ||||||
Opening equity shareholders’ funds | 1,031 | — | ||||||
Closing equity shareholders’ funds | 1,929 | 1,031 | ||||||
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17. | Operating lease commitments |
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Leases which expire: | ||||||||
Within two to five years — Other | 2 | 1 | ||||||
Within two to five years — Land and buildings | 116 | 100 | ||||||
a) Reconciliation of operating profit to net cash inflow from operating activities |
Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Operating profit | 3,028 | 1,977 | ||||||
Depreciation and amortisation | 2,123 | 1,888 | ||||||
Loss on disposal of tangible fixed assets | 98 | 266 | ||||||
Increase in debtors | (866 | ) | (92 | ) | ||||
(Increase)/decrease in stocks | (47 | ) | 52 | |||||
(Decrease)/increase in creditors | (52 | ) | 1,607 | |||||
Other non-cash movements | (72 | ) | 8 | |||||
Net cash inflow from operating activities | 4,212 | 5,706 | ||||||
b) Analysis of cash flows: |
Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Returns on investments and servicing of finance | ||||||||
Interest received | 285 | 89 | ||||||
Interest paid | (807 | ) | (766 | ) | ||||
Issue costs of loan financing | — | (723 | ) | |||||
(522 | ) | (1,400 | ) | |||||
Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Taxation | ||||||||
Corporation tax paid | (156 | ) | — | |||||
(156 | ) | — | ||||||
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Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Capital expenditure and financial investment | ||||||||
Payment to acquire tangible fixed assets | (3,379 | ) | (1,905 | ) | ||||
Payment of capital creditors | 116 | 742 | ||||||
Receipts from sales of tangible fixed assets | 78 | 25 | ||||||
(3,185 | ) | (1,138 | ) | |||||
Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Acquisitions and disposals | ||||||||
Purchase of subsidiary undertaking | — | (15,836 | ) | |||||
Net cash held by acquired subsidiary | — | 322 | ||||||
— | (15,514 | ) | ||||||
Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Management of Liquid Resources | ||||||||
Net transfers from/to money markets | 3,200 | (3,200 | ) | |||||
3,200 | (3,200 | ) | ||||||
Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Financing | ||||||||
Issue of ordinary share capital | — | 950 | ||||||
Repayment of secured loan | (1,062 | ) | (3,351 | ) | ||||
Repayment of lease and hire purchase obligations | — | (1,690 | ) | |||||
New secured loan | — | 20,718 | ||||||
(1,062 | ) | 16,627 | ||||||
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c) Analysis of changes in net debt |
At | Other | At | ||||||||||||||
1 January, | non-cash | 31 December, | ||||||||||||||
2004 | Cash flow | changes | 2004 | |||||||||||||
��’000 | £’000 | £’000 | £’000 | |||||||||||||
Cash at bank and in hand | 1,081 | 2,487 | — | 3,568 | ||||||||||||
Current asset investment | 3,200 | (3,200 | ) | — | — | |||||||||||
Bank loans due within one year | (922 | ) | 1,062 | (1,887 | ) | (1,747 | ) | |||||||||
Bank loans due after one year | (19,951 | ) | — | 926 | (19,025 | ) | ||||||||||
Net debt | (16,592 | ) | 349 | (961 | ) | (17,204 | ) | |||||||||
Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Group stakeholder pension scheme | 18 | 17 | ||||||
Individual personal pension schemes | 20 | 18 | ||||||
38 | 35 | |||||||
22. | Related party transactions |
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23. | Subsequent event |
24. | Reconciliation of differences between UK GAAP and US GAAP |
Year ended | Year ended | ||||||||||||
31 December, | 31 December, | ||||||||||||
2004 | 2003 | ||||||||||||
£’000 | £’000 | ||||||||||||
Net profit in accordance with UK GAAP | 898 | 81 | |||||||||||
US GAAP adjustments: | |||||||||||||
Business combinations: | (a | ) | |||||||||||
Reversal of goodwill amortized under UK GAAP but not US GAAP | 806 | 771 | |||||||||||
Amortization of intangible assets recognized under US GAAP but not UK GAAP | (1,456 | ) | (1,743 | ) | |||||||||
Vacation accrual | (b | ) | (11 | ) | (4 | ) | |||||||
Derivative financial instruments | (c | ) | (63 | ) | 131 | ||||||||
Deferred tax effect of US GAAP adjustments | (d | ) | 459 | 484 | |||||||||
Net income/(loss) in accordance with US GAAP | 633 | (280 | ) | ||||||||||
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31 December, | 31 December, | ||||||||||||
2004 | 2003 | ||||||||||||
£’000 | £’000 | ||||||||||||
Total equity shareholders’ funds in accordance with UK GAAP | 1,929 | 1,031 | |||||||||||
US GAAP adjustments: | |||||||||||||
Business combinations: | (a | ) | |||||||||||
Reversal of goodwill amortized under UK GAAP but not US GAAP | 1,577 | 771 | |||||||||||
Amortization of intangible assets recognized under US GAAP but not UK GAAP | (3,199 | ) | (1,743 | ) | |||||||||
Vacation accrual | (b | ) | (15 | ) | (4 | ) | |||||||
Derivative financial instruments | (c | ) | 68 | 131 | |||||||||
Deferred tax effect of US GAAP adjustments | (d | ) | 943 | 484 | |||||||||
Total shareholders’ equity in accordance with US GAAP | 1,303 | 670 | |||||||||||
Year Ended | Year Ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Balance in accordance with US GAAP, beginning of year | 670 | — | ||||||
Issuance of share equity | — | 950 | ||||||
Net income/(loss) in accordance with US GAAP | 633 | (280 | ) | |||||
Balance in accordance with US GAAP, end of year | 1,303 | 670 | ||||||
Goodwill amortization |
Under FRS 10, UK GAAP requires that goodwill should be amortised over its useful economic life, which is generally presumed not to exceed 20 years. Accordingly, under UK GAAP goodwill is being amortized on a straight-line basis over an estimated useful life of 20 years. | |
Under US GAAP, Statement of Financial Accounting Standards (“SFAS”) No. 142,Goodwill and Other Intangible Assets(“SFAS 142”), requires that goodwill and intangibles with an indefinite life no longer be amortised but instead subject to an impairment test at least annually, and more frequently if conditions warrant. Accordingly, under US GAAP, no goodwill amortization was recorded during 2004 and 2003. Goodwill impairment test under US GAAP has two steps. The first identifies potential impairments and the second calculates the possible impairment loss. The Group compared its estimated fair value with the carrying value of the Group’s net assets, including goodwill, as at 31 December 2004 and 2003, and determined that no goodwill impairment existed as at such dates. |
Recognition of intangible assets other than goodwill |
UK GAAP requires intangible assets to be separately recognised in a business combination only if (i) they can be disposed of separately without disposing of the business of the entity, and (ii) if their value can be measured reliably on initial measurement. |
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Under US GAAP, SFAS No. 141,Business Combinations(“SFAS 141”), mandates the recognition of intangible assets in a business combination if (i) they arise from contractual rights or other legal rights, or (ii) they are capable of being separated or divided from the acquired entity and sold, transferred, licensed, rented or otherwise exchanged. Under SFAS 141, the Group established an additional £8,100,000 in intangible assets and a corresponding decrease in the goodwill, as part of the purchase price allocation process. Such amounts comprised of £7,800,000 in acquired merchant contract relationships and £300,000 for a covenant not to compete. | |
Under US GAAP, SFAS 142 requires that intangible assets with finite lives be amortized over their estimated useful lives in a manner that reflects the pattern in which the economic benefits of such intangible assets are expected to be consumed or otherwise used up. Accordingly, under US GAAP, the Group is amortizing the above merchant contract relationship intangible on an accelerated basis over an estimated useful life of approximately 12 years, and the non-compete covenant on a straight-line basis over a period of three years. Such amortization expense totalled £1,456,000 and £1,743,000 in 2004 and 2003, respectively. |
Under UK GAAP, there is no comprehensive requirement to accrue for vacation pay or other compensated absences during the same accounting period, although accrual in certain industries where it is common for all staff to take holiday at the same time is not prohibited. | |
Under US GAAP, in accordance with SFAS No. 43,Accounting for Compensated Absences(“SFAS 43”), an employer should accrue a liability for employees’ compensation for future absences if all of the following conditions are met: (i) the employer’s obligation relating to employees’ rights to receive compensation for future absences is attributable to employees’ services already rendered; (ii) the obligation relates to rights that vest or accumulate; (iii) payment of the compensation is probable; and (iv) the amount can be reasonably estimated. Under US GAAP, the vacation accruals relating to compensated absences were £15,000 and £4,000 as at 31 December 2004 and 2003, respectively. |
Under UK GAAP, payments made or received under the Group’s interest rate swap agreement are reflected as an increase or decrease to interest expense when incurred, and the fair market value of the swap is not reflected in the Group’s consolidated balance sheet. | |
Under US GAAP, the Group accounts for derivative financial instruments in accordance with SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities(“SFAS 133”). SFAS 133 requires that all derivative instruments be recognized as assets or liabilities in the consolidated balance sheet and measured at fair value, regardless of the purpose or intent in holding them. Changes in the fair value of derivative instruments are recognized periodically either in earnings or equity (as a component of other comprehensive income or loss), depending on whether the derivative is designated as a hedge of changes in fair value or cash flows. For derivatives designated as a fair value hedges, changes in fair value of the hedged item and the derivative are recognized currently in earnings. For derivatives designated as cash flow hedges, fair value changes of the effective portion of the hedging instrument are recognized in accumulated other comprehensive income or loss in the consolidated balance sheet until the hedged item is recognized in earnings. The ineffective portion of the fair value changes is recognized in earnings immediately. Changes in the fair value of the underlying debt instrument are not recognized in net income or equity. | |
The Group has not designated its interest rate swap transaction as a hedge under SFAS 133. As a result, under US GAAP, such transaction is reflected in the consolidated balance sheet at its fair market value, |
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with any resulting changes in that value being recorded in earnings in the applicable period. As at 31 December 2004 and 2003, derivative assets of £68,000 and £131,000, respectively, were reflected in the Group’s consolidated balance sheet. In 2004, a £63,000 loss was included in the Group’s earnings reflecting the change in the fair value of such swap during that period. In 2003, such change in value resulted in a gain of £131,000. |
Under UK GAAP, the Group provides for deferred taxes on an undiscounted basis in respect of timing differences that have originated but not reversed as at the balance sheet date. A net deferred tax asset is regarded as recoverable and therefore recognized only when, on the basis of available evidence, it is regarded as more likely than not that there will be suitable taxable profits against which to recover carried forward tax losses and from which the future reversal of underlying timing differences can be deducted. | |
Under US GAAP, deferred taxation is provided for all temporary differences (differences between the carrying value of assets and liabilities and their corresponding tax bases) on a full liability basis. Deferred tax assets are also recognized (net of a valuation allowance) to the extent that it is more likely than not that the benefit will be realized. Under US GAAP, discounting of deferred taxes is prohibited. Under US GAAP, the Group has recognized additional deferred taxes for the temporary differences resulting from the US GAAP adjustments (a) — (c) described above. |
Classification differences |
In addition to the differences between UK and US GAAP related to the recognition and measurement of transactions by the Company, there are also a number of differences in the manner in which items are classified in the consolidated profit and loss account and consolidated balance sheet. These classification differences have no impact on net income or shareholders’ equity. |
General |
The format of a balance sheet prepared in accordance with UK GAAP differs in certain respects from US GAAP. UK GAAP requires assets to be presented in ascending order of liquidity in accordance with the requirements of the Companies Act 1985, whereas under US GAAP assets are presented in descending order of liquidity. In addition current assets under UK GAAP include amounts that fall due after more than one year, whereas under US GAAP, such assets are classified as non-current assets. |
Consolidated statement of cashflow |
Cash flow under UK GAAP represents increases or decreases in “cash,” which comprises cash in hand, deposits repayable on demand and bank overdrafts. Under US GAAP, cash flow represents increases or decreases in “Cash and Cash Equivalents”, which includes short-term, highly liquid investments with original maturities of less than three months, and excludes overdrafts. | |
Under UK GAAP, cash flows are presented separately for operating activities, returns on investment and servicing of finance, taxation, capital expenditure and financial investment, acquisitions and disposals, equity dividends, management of liquid resources and financing activities. Under US GAAP, only three categories of cash flow activity are presented, being cash flows relating to operating activities, investing activities and financing activities. Cash flows from taxation and returns on investments and servicing of finance are, with the exception of servicing of shareholder finance, included as operating. |
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The following statements summarize the statements of cash flows as if they had been presented in accordance with US GAAP, and include the adjustments that reconcile cash and cash equivalents under US GAAP to cash on demand reported under UK GAAP. |
Year ended | Year ended | |||||||
31 December, | 31 December, | |||||||
2004 | 2003 | |||||||
£’000 | £’000 | |||||||
Net cash provided by operating activities | 3,534 | 4,306 | ||||||
Net cash (used in)/provided by investing activities | (3,185 | ) | (16,652 | ) | ||||
Net cash (used in)/provided by financing activities | (1,062 | ) | 16,627 | |||||
Net (decrease)/increase in cash and cash equivalents | (713 | ) | 4,281 | |||||
Cash and cash equivalents under US GAAP at beginning of period | 4,281 | — | ||||||
Cash and cash equivalents under US GAAP at end of period | 3,568 | 4,281 | ||||||
Short-term investments with original maturities of less than three months | — | 3,200 | ||||||
Cash on demand under UK GAAP at end of year | 3,568 | 1,081 |
New accounting pronouncements not yet adopted |
(a) | Interpretation 47, “Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143.” |
In March 2005, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. (“FIN”) 47, “Accounting for Conditional Asset Retirement Obligations — an Interpretation of FASB Statement No. 143.” This Interpretation clarifies that the term conditional asset retirement obligation as used in SFAS 143, refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and (or) method of settlement. Thus, the timing and (or) method of settlement may be conditional on a future event. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. The fair value of a liability for the conditional asset retirement obligation should be recognized when incurred — generally upon acquisition, construction, or development and (or) through the normal operation of the asset. Uncertainty about the timing and (or) method of settlement of a conditional asset retirement obligation should be factored into the measurement of the liability when sufficient information exists. SFAS 143 acknowledges that in some cases, sufficient information may not be available to reasonably estimate the fair value of an asset retirement obligation. This Interpretation also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. This Interpretation is effective no later than the end of fiscal years ending after December 15, 2005. The Group is currently assessing the impact FIN 47 may have on its financial position and results of operations. |
(b) | FSP FAS 143-1, “Accounting for Electronic Equipment Waste Obligations”. |
In June 2005, the FASB issued FSP FAS 143-1, “Accounting for Electronic Equipment Waste Obligations,” which addresses the accounting for obligations associated with Directive 2002/96/ EC, Waste Electrical and Electronic Equipment (the “Directive”), which was adopted by the European Union. FSP FAS 143-1 provides guidance on how to account for the effects of the Directive with respect to historical waste, waste associated with products placed on the market on or before August 13, 2005. FSP FAS 143-1 is required to be applied to the later of the first reporting period ending after June 8, 2005 or the date of the adoption of the law by the applicable European Union member country. The Group is currently evaluating the effect that the adoption of FSP FAS 143-1 will have on its consolidated results of operations and financial condition. |
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Three months | Three months | |||||||||||
ended | ended | |||||||||||
31 March, | 31 March, | |||||||||||
Note | 2005 | 2004 | ||||||||||
£’000 | £’000 | |||||||||||
Turnover | 3,989 | 3,485 | ||||||||||
Operating profit | 390 | 600 | ||||||||||
Net interest payable and similar charges | (380 | ) | (400 | ) | ||||||||
Profit on ordinary activities before taxation | 10 | 200 | ||||||||||
Tax on profit on ordinary activities | 3 | 66 | 66 | |||||||||
Net Profit/(loss) for the financial period | 9 | (56 | ) | 134 | ||||||||
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31 March, | 31 December, | |||||||||||
Note | 2005 | 2004 | ||||||||||
£’000 | £’000 | |||||||||||
Fixed assets | ||||||||||||
Intangible assets | 4 | 14,436 | 14,638 | |||||||||
Tangible assets | 5 | 7,362 | 6,890 | |||||||||
21,798 | 21,528 | |||||||||||
Current assets | ||||||||||||
Stock | 48 | 47 | ||||||||||
Debtors: amounts due within one year | 1,937 | 1,446 | ||||||||||
Debtors: amounts due after more than one year — deferred tax | 507 | 521 | ||||||||||
Cash at bank and in hand | 2,886 | 3,568 | ||||||||||
5,378 | 5,582 | |||||||||||
Creditors:amounts falling due within one year | 6 | (5,584 | ) | (5,514 | ) | |||||||
Net current (liabilities)/assets | (206 | ) | 68 | |||||||||
Total assets less current liabilities | 21,592 | 21,596 | ||||||||||
Creditors:amounts falling due after more than one year | 7 | (19,054 | ) | (19,025 | ) | |||||||
Provisions for liabilities and charges | 8 | (665 | ) | (642 | ) | |||||||
Net assets | 1,873 | 1,929 | ||||||||||
Capital and reserves | ||||||||||||
Called up share capital | 950 | 950 | ||||||||||
Profit and loss account | 923 | 979 | ||||||||||
Total equity shareholders’ funds | 9 | 1,873 | 1,929 | |||||||||
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Three months | Three months | |||||||||||
ended | ended | |||||||||||
31 March, | 31 March, | |||||||||||
Note | 2005 | 2004 | ||||||||||
£’000 | £’000 | |||||||||||
Net cash inflow from operating activities | 10(a) | 1,055 | 1,248 | |||||||||
Returns on investments and servicing of finance | 10(b) | (122 | ) | 39 | ||||||||
Taxation | 10(b) | (83 | ) | — | ||||||||
Capital expenditure and financial investment | 10(b) | (1,532 | ) | (722 | ) | |||||||
(682 | ) | 565 | ||||||||||
Management of liquid resources | 10(b) | — | (600 | ) | ||||||||
Decrease in cash | (682 | ) | (35 | ) | ||||||||
Three | Three | |||||||
months | months | |||||||
ended | ended | |||||||
31 March, | 31 March, | |||||||
2005 | 2004 | |||||||
£’000 | £’000 | |||||||
Decrease in cash | (682 | ) | (35 | ) | ||||
Cash outflow/(inflow) from decrease/(increase) in debt and lease financing | — | — | ||||||
Cash used to increase liquid resources | — | 600 | ||||||
Change in net debt resulting from cash flows | (682 | ) | 565 | |||||
Movement in un-amortised element of finance costs | (33 | ) | (35 | ) | ||||
Movement in net debt in the period | (715 | ) | 530 | |||||
Net debt at start of year | (17,204 | ) | (16,591 | ) | ||||
Net debt at 31 March | (17,919 | ) | (16,061 | ) | ||||
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1. | Nature of business |
Bank Machine (Acquisitions) Limited (the “Company”) together with its subsidiary, Bank Machine Limited (collectively with the Company, the “Group”) is an independent Automated Teller Machine (ATM) operator with approximately 1,000 ATMs located throughout the United Kingdom. On 17 January, 2003 the Company acquired its subsidiary Bank Machine Limited from Euronet Worldwide, Inc., the operations of which are presented in these financial statements. As at the date of these financial statements the Company was a wholly owned subsidiary of Bank Machine (Holdings) Limited. |
2. | Basis of Preparation |
The accompanying condensed consolidated financial statements are unaudited and are prepared on the basis of the accounting policies as set forth in the Group’s financial statements for the year ended 31 December, 2004. These financial statements reflect all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary to present the financial results for these interim periods fairly. Certain information and footnote disclosures normally included in financial statements prepared in accordance with applicable UK accounting standards (“UK GAAP”) have been condensed or omitted. Accordingly, these financial statements should be read in conjunction with the financial statements and related notes thereto for the year ended 31 December, 2004. Interim results are not necessarily indicative of results to be expected for the full year. | |
The 31 December, 2004 consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by UK GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading. |
3. | Tax on profit on ordinary activities |
(a) | Analysis of taxation charge: |
Three months | Three months | |||||||
ended | ended | |||||||
31 March, | 31 March, | |||||||
2005 | 2004 | |||||||
£’000 | £’000 | |||||||
UK Corporation tax on profits for the period | 52 | 49 | ||||||
Deferred tax charge | 14 | 17 | ||||||
Total charge | 66 | 66 | ||||||
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3. | Tax on profit on ordinary activities — (continued) |
(b) | Factors affecting the tax charge for the period: |
Three months | Three months | |||||||
ended | ended | |||||||
31 March | 31 March | |||||||
2005 | 2004 | |||||||
£’000 | £’000 | |||||||
Profit on ordinary activities before tax | 10 | 200 | ||||||
Profit on ordinary activities multiplied by standard rate of Corporation tax in the UK of 30% | 3 | 60 | ||||||
Effects of: | ||||||||
Utilisation of tax losses brought forward | — | (64 | ) | |||||
Depreciation in excess of capital allowances | 14 | 17 | ||||||
Expenses not deductible for tax purposes | 35 | 36 | ||||||
Total current tax charge | 52 | 49 | ||||||
4. | Intangible fixed assets |
£’000 | ||||
Cost: | ||||
At 1 January 2005 and at 31 March 2005 | 16,215 | |||
Amortisation: | ||||
At 1 January 2005 | (1,577 | ) | ||
Charge for the period | (202 | ) | ||
At 31 March 2005 | (1,779 | ) | ||
Net book value: | ||||
At 31 March 2005 | 14,436 | |||
At 31 December 2004 | 14,638 | |||
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5. | Tangible fixed assets |
Fixture and | ||||||||||||||||
fittings & | ||||||||||||||||
computer | Motor | |||||||||||||||
ATMs | equipment | vehicles | Total | |||||||||||||
£’000 | £’000 | £’000 | £’000 | |||||||||||||
Cost | ||||||||||||||||
At 1 January 2005 | 9,902 | 1,139 | 147 | 11,188 | ||||||||||||
Additions | 853 | 13 | 11 | 877 | ||||||||||||
Disposals | (74 | ) | — | — | (74 | ) | ||||||||||
At 31 March 2005 | 10,681 | 1,152 | 158 | 11,991 | ||||||||||||
Depreciation | ||||||||||||||||
At 1 January 2005 | (3,415 | ) | (865 | ) | (18 | ) | (4,298 | ) | ||||||||
Depreciation on disposals | 37 | — | — | 37 | ||||||||||||
Charge for the period | (324 | ) | (35 | ) | (9 | ) | (368 | ) | ||||||||
At 31 March 2005 | (3,702 | ) | (900 | ) | (27 | ) | (4,629 | ) | ||||||||
Net book value | ||||||||||||||||
At 31 March 2005 | 6,979 | 252 | 131 | 7,362 | ||||||||||||
At 31 December 2004 | 6,487 | 274 | 129 | 6,890 | ||||||||||||
6. | Creditors: amounts falling due within one year |
31 March | 31 December | |||||||
2005 | 2004 | |||||||
£’000 | £’000 | |||||||
Bank overdraft and loans | 1,752 | 1,747 | ||||||
Trade creditors | 1,666 | 2,368 | ||||||
Other taxation and social security | 66 | 49 | ||||||
Corporation tax | 174 | 162 | ||||||
Other creditors | 304 | 61 | ||||||
Accruals | 1,622 | 1,127 | ||||||
5,584 | 5,514 | |||||||
7. | Creditors: amounts falling due after more than one year |
31 March | 31 December | |||||||
2005 | 2004 | |||||||
£’000 | £’000 | |||||||
Total loan facilities | 9,187 | 9,163 | ||||||
Shareholder fixed rate subordinated unsecured Loan Notes | 9,867 | 9,862 | ||||||
19,054 | 19,025 | |||||||
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Total loan facilities | £’000 | £’000 | ||||||
Amounts falling due: | ||||||||
In one year or less, or on demand | 1,875 | 1,875 | ||||||
Between one and two years | 2,437 | 2,437 | ||||||
Between two and five years | 6,938 | 6,938 | ||||||
In five years or more | — | — | ||||||
11,250 | 11,250 | |||||||
Less: issue costs un-amortised | (293 | ) | (322 | ) | ||||
10,957 | 10,928 | |||||||
Less: included in creditors falling due within one year, including amortisation of issue costs | (1,770 | ) | (1,765 | ) | ||||
9,187 | 9,163 | |||||||
Fixed rate subordinated unsecured Loan Notes | £’000 | £’000 | ||||||
Amounts falling due: | ||||||||
In one year or less, or on demand | — | — | ||||||
Between one and two years | — | — | ||||||
Between two and five years | — | — | ||||||
In five years or more | 9,952 | 9,951 | ||||||
9,952 | 9,951 | |||||||
Less: issue costs un-amortised | (103 | ) | (107 | ) | ||||
9,849 | 9,844 | |||||||
Add: included in creditors falling due within one year, including amortisation of issue costs | 18 | 18 | ||||||
9,867 | 9,862 | |||||||
8. | Provisions for liabilities and charges |
Three months | ||||||||
ended | ||||||||
31 March | 31 December | |||||||
2005 | 2004 | |||||||
£’000 | £’000 | |||||||
Beginning balance at 1 January | 642 | 554 | ||||||
Liabilities incurred during the year | 25 | 126 | ||||||
Liabilities settled during the year | (16 | ) | (85 | ) | ||||
Accretion of interest | 14 | 47 | ||||||
Ending balance at 31 March/31 December | 665 | 642 | ||||||
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9. | Reconciliation of movement in equity shareholders’ funds |
Three | ||||||||
months | For the year | |||||||
ended | ended | |||||||
31 March | 31 December | |||||||
2005 | 2004 | |||||||
£’000 | £’000 | |||||||
(Loss)/profit for the period/year | (56 | ) | 898 | |||||
Net movement in equity shareholders’ funds | (56 | ) | 898 | |||||
Opening equity shareholders’ funds | 1,929 | 1,031 | ||||||
Closing equity shareholders’ funds | 1,873 | 1,929 | ||||||
10. | Notes to the condensed consolidated cash flow statements |
(a) | Reconciliation of operating profit to net cash inflow from operating activities: |
Three | Three | |||||||
months | months | |||||||
ended | ended | |||||||
31 March | 31 March | |||||||
2005 | 2004 | |||||||
£’000 | £’000 | |||||||
Operating profit | 390 | 600 | ||||||
Depreciation and amortisation | 570 | 513 | ||||||
Loss on disposal of tangible fixed assets | 22 | 30 | ||||||
Increase in debtors | (491 | ) | (206 | ) | ||||
Increase in stocks | (1 | ) | — | |||||
Increase in creditors | 565 | 311 | ||||||
Net cash inflow from operating activities | 1,055 | 1,248 | ||||||
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10. | Notes to the condensed consolidated cash flow statements — (Continued) |
(b) | Analysis of cash flows: |
Three | Three | |||||||
months | months | |||||||
ended | ended | |||||||
31 March | 31 March | |||||||
2005 | 2004 | |||||||
£’000 | £’000 | |||||||
Returns on investments and servicing of finance | ||||||||
Interest received | 69 | 39 | ||||||
Interest paid | (191 | ) | — | |||||
(122 | ) | 39 | ||||||
Taxation | ||||||||
Corporation tax paid | (83 | ) | — | |||||
(83 | ) | — | ||||||
Capital expenditure and financial investment | ||||||||
Payment to acquire tangible fixed assets | (852 | ) | (70 | ) | ||||
Payment of capital creditors | (695 | ) | (711 | ) | ||||
Receipts from sales of tangible fixed assets | 15 | 59 | ||||||
(1,532 | ) | (722 | ) | |||||
Three | Three | |||||||
months | months | |||||||
ended | ended | |||||||
31 March | 31 March | |||||||
2005 | 2004 | |||||||
£’000 | £’000 | |||||||
Management of Liquid Resources | ||||||||
Net transfers to money markets | — | (600 | ) | |||||
— | (600 | ) | ||||||
11. | Subsequent event |
12. | Reconciliation of Differences Between UK GAAP and US GAAP |
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Three months | Three months | ||||||||||||
ended | ended | ||||||||||||
31 March, | 31 March, | ||||||||||||
2005 | 2004 | ||||||||||||
£’000 | £’000 | ||||||||||||
Net (loss)/profit in accordance with UK GAAP | (56 | ) | 133 | ||||||||||
US GAAP adjustments: | |||||||||||||
Business combinations: | |||||||||||||
Reversal of goodwill amortized under UK GAAP but not US GAAP | 202 | 202 | |||||||||||
Amortization of intangible assets recognized under US GAAP but not UK GAAP | (289 | ) | (364 | ) | |||||||||
Vacation accrual | (16 | ) | (13 | ) | |||||||||
Derivative financial instruments | (21 | ) | 9 | ||||||||||
Deferred tax effect of US GAAP adjustments | 97 | 110 | |||||||||||
Net profit in accordance with US GAAP | (83 | ) | 77 | ||||||||||
31 March, | 31 December, | ||||||||||||
2005 | 2004 | ||||||||||||
£’000 | £’000 | ||||||||||||
Total equity shareholders’ funds in accordance with UK GAAP | 1,873 | 1,929 | |||||||||||
US GAAP adjustments: | |||||||||||||
Business combinations: | |||||||||||||
Reversal of goodwill amortized under UK GAAP but not US GAAP | 1,779 | 1,577 | |||||||||||
Amortization of intangible assets recognized under US GAAP but not UK GAAP | (3,488 | ) | (3,199 | ) | |||||||||
Vacation accrual | (31 | ) | (15 | ) | |||||||||
Derivative financial instruments | 47 | 68 | |||||||||||
Deferred tax effect of US GAAP adjustments | 1,041 | 944 | |||||||||||
Total shareholders’ equity in accordance with US GAAP | 1,221 | 1,304 | |||||||||||
Three months | Three months | |||||||
ended | ended | |||||||
31 March | 31 March | |||||||
2005 | 2004 | |||||||
£’000 | £’000 | |||||||
Balance in accordance with US GAAP, beginning of year/ period | 1,304 | 670 | ||||||
Net profit in accordance with US GAAP | (83 | ) | 77 | |||||
Balance in accordance with US GAAP, end of year/ period | 1,221 | 747 | ||||||
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31 March, | 31 March, | |||||||
2005 | 2004 | |||||||
£’000 | £’000 | |||||||
Net cash provided by operating activities | 850 | 1,287 | ||||||
Net cash used in investing activities | (837 | ) | (11 | ) | ||||
Net cash (used in)/provided by financing activities | (695 | ) | (711 | ) | ||||
Net (decrease)/increase in cash and cash equivalents | (682 | ) | 565 | |||||
Cash and cash equivalents under US GAAP at beginning of year/period | 3,568 | 4,281 | ||||||
Cash and cash equivalents under US GAAP at end of period | 2,886 | 4,846 | ||||||
Short-term investments with original maturities of less than three months | — | 3,800 | ||||||
Cash on demand under UK GAAP at end of period | 2,886 | 1,046 |
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December 31, | |||||||||||||
June 30, | |||||||||||||
2002 | 2003 | 2004 | |||||||||||
Assets | |||||||||||||
Current assets: | |||||||||||||
Cash and cash equivalents | $ | 4,391 | $ | 11,081 | $ | 9,991 | |||||||
Accounts receivable, net of allowance for doubtful accounts of $614, $340, and $524, respectively | 3,273 | 4,816 | 4,868 | ||||||||||
Notes receivable, current | 70 | 30 | 32 | ||||||||||
Inventory | 279 | 306 | 325 | ||||||||||
Prepaid, deferred costs and other current assets | 411 | 90 | 135 | ||||||||||
Total current assets | 8,424 | 16,323 | 15,351 | ||||||||||
Notes receivable, non-current | 71 | 41 | 21 | ||||||||||
Property and equipment, net | 13,901 | 14,481 | 18,279 | ||||||||||
Intangible assets, net | 12,804 | 17,324 | 14,357 | ||||||||||
Goodwill, net | 69,852 | 69,852 | 69,852 | ||||||||||
Total assets | $ | 105,052 | $ | 118,021 | $ | 117,860 | |||||||
Liabilities and Stockholder’s Equity/(Deficit) | |||||||||||||
Current liabilities: | |||||||||||||
Accounts payable | $ | 6,334 | $ | 6,630 | $ | 5,794 | |||||||
Payable to affiliated party | 86,482 | 100,794 | 103,320 | ||||||||||
Accrued liabilities | 4,901 | 7,588 | 8,257 | ||||||||||
Total current liabilities | 97,717 | 115,012 | 117,371 | ||||||||||
Long-term liabilities: | |||||||||||||
Obligations under capital leases | 29 | — | — | ||||||||||
Other long-term liabilities | — | 1,436 | 1,747 | ||||||||||
Total liabilities | 97,746 | 116,448 | 119,118 | ||||||||||
Stockholder’s equity/(deficit) | 7,306 | 1,573 | (1,258 | ) | |||||||||
Total liabilities and stockholder’s equity/(deficit) | $ | 105,052 | $ | 118,021 | $ | 117,860 | |||||||
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Years Ended | Six Months | |||||||||||||
December 31, | Ended | |||||||||||||
June 30, | ||||||||||||||
2002 | 2003 | 2004 | ||||||||||||
Revenues: | ||||||||||||||
ATM service revenues | $ | 97,612 | $ | 112,530 | $ | 55,329 | ||||||||
ATM product revenues | 4,644 | 3,511 | 1,576 | |||||||||||
Total revenues | 102,256 | 116,041 | 56,905 | |||||||||||
Cost of revenues: | ||||||||||||||
Cost of ATM service revenues | 84,207 | 97,001 | 49,698 | |||||||||||
Cost of ATM product revenues | 3,647 | 3,561 | 983 | |||||||||||
Total cost of revenues | 87,854 | 100,562 | 50,681 | |||||||||||
Gross profit (exclusive of depreciation shown separately below) | 14,402 | 15,479 | 6,224 | |||||||||||
Operating expenses: | ||||||||||||||
Selling, general and administrative expenses | 8,341 | 7,362 | 3,159 | |||||||||||
Depreciation and accretion expense | 3,578 | 4,852 | 2,015 | |||||||||||
Amortization expense | 4,829 | 6,185 | 2,835 | |||||||||||
Affiliated party expense | 711 | 2,109 | 1,260 | |||||||||||
Restructuring expense | 1,691 | 285 | 250 | |||||||||||
Equity in (earnings)/losses of unconsolidated affiliates | (96 | ) | (62 | ) | (310 | ) | ||||||||
Total operating expenses | 19,054 | 20,731 | 9,209 | |||||||||||
Operating loss | (4,652 | ) | (5,252 | ) | (2,985 | ) | ||||||||
Other (income)/expense | (110 | ) | 305 | (154 | ) | |||||||||
Loss before income taxes and cumulative effect of change in accounting principle | (4,542 | ) | (5,557 | ) | (2,831 | ) | ||||||||
Income tax provision (benefit) | — | — | — | |||||||||||
Loss before cumulative effect of change in accounting principle | (4,542 | ) | (5,557 | ) | (2,831 | ) | ||||||||
Cumulative effect of change in accounting principle for asset retirement obligations, net of related income tax benefit of $0 | — | 176 | — | |||||||||||
Net loss | $ | (4,542 | ) | $ | (5,733 | ) | $ | (2,831 | ) | |||||
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Additional | |||||||||||||
Paid-In | Accumulated | ||||||||||||
Capital | Deficit | Total | |||||||||||
Balance — December 31, 2001 | $ | 33,812 | $ | (21,964 | ) | $ | 11,848 | ||||||
Net loss | — | (4,542 | ) | (4,542 | ) | ||||||||
Balance — December 31, 2002 | 33,812 | (26,506 | ) | 7,306 | |||||||||
Net loss | — | (5,733 | ) | (5,733 | ) | ||||||||
Balance — December 31, 2003 | 33,812 | (32,239 | ) | 1,573 | |||||||||
Net loss | — | (2,831 | ) | (2,831 | ) | ||||||||
Balance — June 30, 2004 | $ | 33,812 | $ | (35,070 | ) | $ | (1,258 | ) | |||||
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Years Ended | Six Months | |||||||||||||||
December 31, | Ended | |||||||||||||||
June 30, | ||||||||||||||||
2002 | 2003 | 2004 | ||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net loss | $ | (4,542 | ) | $ | (5,733 | ) | $ | (2,831 | ) | |||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||
Depreciation, amortization and accretion expense | 8,407 | 11,037 | 4,850 | |||||||||||||
Provision for doubtful accounts | 575 | (59 | ) | 416 | ||||||||||||
(Gain) loss on sale of assets | 27 | 684 | 74 | |||||||||||||
Cumulative effect of change in accounting principle | — | 176 | — | |||||||||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||||||||||
Accounts receivable | 78 | (1,484 | ) | (468 | ) | |||||||||||
Prepaid, deferred costs and other current assets | 311 | 320 | (45 | ) | ||||||||||||
Inventory | 456 | 1,014 | 532 | |||||||||||||
Notes receivable, net | (22 | ) | 70 | 17 | ||||||||||||
Accounts payable | 1,301 | 296 | (837 | ) | ||||||||||||
Accrued liabilities | (1,452 | ) | 2,688 | 669 | ||||||||||||
Other, net | (18 | ) | (229 | ) | (32 | ) | ||||||||||
Net cash provided by operating activities | 5,121 | 8,780 | 2,345 | |||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Additions to property and equipment | (8,439 | ) | (4,762 | ) | (5,934 | ) | ||||||||||
Acquisition of merchant portfolios and equipment | (172 | ) | (11,610 | ) | (28 | ) | ||||||||||
Net cash used in investing activities | (8,611 | ) | (16,372 | ) | (5,962 | ) | ||||||||||
Cash flows from financing activities: | ||||||||||||||||
Repayments of long-term debt and capital leases | (26 | ) | (29 | ) | — | |||||||||||
Advances from affiliated party | 6,506 | 14,311 | 2,527 | |||||||||||||
Net cash provided by financing activities | 6,480 | 14,282 | 2,527 | |||||||||||||
Net increase (decrease) in cash and cash equivalents | 2,990 | 6,690 | (1,090 | ) | ||||||||||||
Cash and cash equivalents at beginning of year | 1,401 | 4,391 | 11,081 | |||||||||||||
Cash and cash equivalents at end of year | $ | 4,391 | $ | 11,081 | $ | 9,991 | ||||||||||
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(1) | Business and Summary of Significant Accounting Policies |
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F-120
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(k) Impairment of Long-Lived Assets |
(l) Use of Estimates in the Preparation of Financial Statements |
(m) Revenue Recognition |
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(n) Stock-Based Compensation |
2002 | 2003 | 2004 | ||||||||||
Expected stock price volatility | 71 | % | 66 | % | 52 | % | ||||||
Risk-free interest rate | 4 | % | 3 | % | 2 | % | ||||||
Expected life of options following vesting (in months) | 36 | 19 | 22 |
(o) Recent Accounting Pronouncements |
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(2) | Acquisitions |
Estimated | |||||
Category | Fair Value | ||||
Net working capital | $ | 575 | |||
Property and equipment | 3,622 | ||||
Other assets | 875 | ||||
Total tangible assets | 5,072 | ||||
Intangible assets | 22,860 | ||||
Goodwill | 72,889 | ||||
Total net assets acquired | $ | 100,821 | |||
(3) | Affiliated Party Transactions |
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(4) | Prepaid, Deferred Costs, and Other Current Assets |
As of | |||||||||||||
December 31, | As of | ||||||||||||
June 30, | |||||||||||||
2002 | 2003 | 2004 | |||||||||||
Prepaids | $ | 404 | $ | 90 | $ | 71 | |||||||
Deferred costs and other current assets | 7 | — | 64 | ||||||||||
Total | $ | 411 | $ | 90 | $ | 135 | |||||||
(5) | Property and Equipment, net |
As of | |||||||||||||
December 31, | As of | ||||||||||||
June 30, | |||||||||||||
2002 | 2003 | 2004 | |||||||||||
Property and equipment | $ | 19,369 | $ | 23,923 | $ | 29,301 | |||||||
Software | 1,906 | 2,322 | 2,335 | ||||||||||
Total | 21,275 | 26,245 | 31,636 | ||||||||||
Less accumulated depreciation | (7,374 | ) | (11,764 | ) | (13,357 | ) | |||||||
Net property and equipment | $ | 13,901 | $ | 14,481 | $ | 18,279 | |||||||
(6) | Intangible Assets, net |
As of December 31, | As of | ||||||||||||
June 30, | |||||||||||||
2002 | 2003 | 2004 | |||||||||||
Merchant contracts | $ | 22,715 | $ | 30,985 | $ | 29,893 | |||||||
Less accumulated amortization | (9,911 | ) | (13,661 | ) | (15,536 | ) | |||||||
Net intangible assets | $ | 12,804 | $ | 17,324 | $ | 14,357 | |||||||
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(7) | Accrued Liabilities |
As of December 31, | As of | ||||||||||||
June 30, | |||||||||||||
2002 | 2003 | 2004 | |||||||||||
Restructuring accrual | $ | 1,500 | $ | 1,559 | $ | 1,706 | |||||||
Accrued armored fees | 843 | 991 | 920 | ||||||||||
Accrued communication fees | 426 | 424 | — | ||||||||||
Accrued maintenance fees | 306 | 343 | 1,352 | ||||||||||
Accrued bank and cash management fees | 97 | 2,141 | 951 | ||||||||||
Accrued ATM purchases | — | — | 577 | ||||||||||
Accrued sales and property taxes | — | — | 304 | ||||||||||
Other accrued expenses | 1,729 | 2,130 | 2,447 | ||||||||||
Total | $ | 4,901 | $ | 7,588 | $ | 8,257 | |||||||
(8) | Commitments and Contingencies |
Contractual Obligations | Total | 2004 | 2005 | 2006 | 2007 | |||||||||||||||
Operating lease obligations | $ | 2,920 | $ | 1,188 | $ | 1,174 | $ | 523 | $ | 35 | ||||||||||
(9) | Asset Retirement Obligations |
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Years Ended | |||||||||
December 31, | |||||||||
2002 | 2003 | ||||||||
Pro Forma | Pro Forma | ||||||||
Net loss | $ | (4,542 | ) | $ | (5,733 | ) | |||
(Increase) decrease in depreciation expense | (130 | ) | 130 | ||||||
(Increase) decrease in accretion expense | (46 | ) | 46 | ||||||
Net loss, as adjusted | $ | (4,718 | ) | $ | (5,557 | ) | |||
2003 | 2004 | ||||||||
Asset retirement at the beginning of the year | $ | 1,016 | $ | 1,436 | |||||
Additional ATMs | 602 | 257 | |||||||
Accretion expense | 86 | 54 | |||||||
Payments | (268 | ) | — | ||||||
�� | |||||||||
Total | $ | 1,436 | $ | 1,747 | |||||
December 31, | ||||||||
2002 | 2003 | |||||||
Liability for asset retirement — beginning | — | $ | 1,016 | |||||
Liability for asset retirement — ending | $ | 1,016 | $ | 1,436 |
(10) | Litigation |
(11) | Income Taxes |
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Years Ended | Six Months | ||||||||||||
December 31, | Ended | ||||||||||||
June 30, | |||||||||||||
2002 | 2003 | 2004 | |||||||||||
Income tax benefit at the statutory rate of 35% | $ | (1,590 | ) | $ | (2,007 | ) | $ | (991 | ) | ||||
State tax benefit, net of federal provision | (177 | ) | (224 | ) | (110 | ) | |||||||
Non-deductible meals and entertainment | 9 | 3 | 2 | ||||||||||
Change in valuation allowance | 1,758 | 2,228 | 1,099 | ||||||||||
Income tax benefit on loss before income taxes and cumulative effect of accounting change | — | — | — | ||||||||||
Income tax allocated to cumulative effect of accounting change | — | — | — | ||||||||||
Total income tax benefit per financial statements | $ | — | $ | — | $ | — | |||||||
December 31, | ||||||||||||||
June 30, | ||||||||||||||
2002 | 2003 | 2004 | ||||||||||||
Current deferred tax assets: | ||||||||||||||
Accrued expenses | $ | 630 | $ | 83 | $ | 84 | ||||||||
Reserve for doubtful accounts | 370 | 347 | 507 | |||||||||||
Other | 17 | 18 | 18 | |||||||||||
Current deferred tax assets | 1,017 | 448 | 609 | |||||||||||
Non-current deferred tax assets: | ||||||||||||||
Amortization of intangibles | 3,329 | 4,941 | 5,571 | |||||||||||
Net operating loss carryforwards | 10,534 | 14,690 | 17,358 | |||||||||||
Non-current deferred tax assets | 13,863 | 19,631 | 22,929 | |||||||||||
Non-current deferred tax liabilities: | ||||||||||||||
Property and equipment | 1,698 | 2,752 | 4,092 | |||||||||||
Amortization of goodwill | 3,859 | 5,750 | 6,695 | |||||||||||
Non-current deferred tax liabilities | 5,557 | 8,502 | 10,787 | |||||||||||
Net non-current deferred tax assets | $ | 8,306 | $ | 11,129 | $ | 12,142 | ||||||||
Net current deferred tax assets | 1,017 | 448 | 609 | |||||||||||
Total deferred tax assets | 9,323 | 11,577 | 12,751 | |||||||||||
Less: Valuation allowance | (9,323 | ) | (11,577 | ) | (12,751 | ) | ||||||||
Net deferred taxes | $ | — | $ | — | $ | — | ||||||||
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(12) | Significant Suppliers |
(13) | Segment Information and Geographical Information |
(14) | Acquisition by Cardtronics, Inc. |
F-128
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A-1
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• | DTC has received your instructions to tender your Outstanding Notes; and | |
• | You agree to be bound by the terms of this Letter of Transmittal. |
A-2
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a. the New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of your business, whether or not you are the holder; | |
b. neither you nor any such other person is engaging in or intends to engage in a distribution of such New Notes; | |
c. neither you nor any such other person has an arrangement or understanding with any person to participate in the distribution of such New Notes; and | |
d. neither the holder nor any such other person is an “affiliate,” as such term is defined under Rule 405 promulgated under the Securities Act, of the Company. |
A-3
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A-4
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A-5
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Item 20. | Indemnification Of Officers And Directors |
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Item 21. | Exhibits And Financial Statement Schedules |
Exhibit No. | Description | |||
**2 | .1 | Share Sale and Purchase Agreement between Bank Machine (Holdings) Limited and Cardtronics Limited, dated effective as of May 17, 2005. | ||
**2 | .2 | Purchase and Sale Agreement Between E*TRADE Access, Inc., E*TRADE Bank, Cardtronics, LP and Cardtronics, Inc., dated effective as of June 2, 2004. | ||
**3 | .1 | First Amended and Restated Certificate of Incorporation of Cardtronics, Inc., dated as of March 10, 2005. | ||
**3 | .2 | Certificate of Amendment of the First Amended and Restated Certificate of Incorporation of Cardtronics, Inc. dated as of May 12, 2005. | ||
**3 | .3 | Certificate of Amendment of the First Amended and Restated Certificate of Incorporation of Cardtronics, Inc. dated as of August 9, 2005. | ||
**3 | .4 | First Amended and Restated Bylaws of Cardtronics, Inc. | ||
**4 | .1 | Indenture dated as of August 12, 2005 by and among Cardtronics, Inc., the Subsidiary Guarantors party thereto and Wells Fargo Bank, NA as Trustee | ||
**4 | .2 | Form of Senior Subordinated Note (incorporated by reference to Exhibit A to Exhibit 4.1). | ||
**4 | .3 | Registration Rights Agreement dated as of August 12, 2005 by and among Cardtronics, Inc., the Subsidiary Guarantors party thereto and the Initial Purchasers party thereto. | ||
**5 | .1 | Opinion of Vinson & Elkins L.L.P. | ||
***10 | .1 | ATM Cash Services Agreement between Bank of America and Cardtronics, LP, dated effective as of August 2, 2004. | ||
**10 | .2 | Third Amended and Restated First Lien Credit Agreement, dated as of May 17, 2005, by and among Cardtronics, Inc., the Subsidiary Guarantors party thereto, Bank of America, N.A., BNP Paribas, and the other Lenders parties thereto. | ||
**10 | .3 | Amendment No. 1 to Credit Agreement, dated as of July 6, 2005. | ||
**10 | .4 | Amendment No. 2 to Credit Agreement, dated as of August 5, 2005. | ||
**10 | .5 | Amendment No. 3 to Credit Agreement, dated as of November 17, 2005. | ||
10 | .6 | Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated effective as of January 30, 2003 (incorporated by reference to Exhibit 10.10 of the Registration Statement on Form S-1 filed by Cardtronics, Inc. on March 10, 2004). | ||
10 | .7 | First Amendment to Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated effective as of February 4, 2004 (incorporated by reference to Exhibit 10.11 of the Registration Statement on Form S-1 filed by Cardtronics, Inc. on March 10, 2004). | ||
**10 | .8 | Second Amendment to Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated effective as of January 1, 2005. | ||
**10 | .9 | Restricted Stock Agreement, dated as of February 4, 2004 between Cardtronics, Inc. and Jack M. Antonini. | ||
**10 | .10 | First Amendment to Restricted Stock Agreement, dated as of March 1, 2004, between Cardtronics, Inc. and Jack M. Antonini. | ||
**10 | .11 | Second Amendment to Restricted Stock Agreement, dated as of February 10, 2005, between Cardtronics, Inc. and Jack M. Antonini. | ||
10 | .12 | Employment Agreement between Cardtronics, LP and Michael H. Clinard, dated effective as of June 4, 2001 (incorporated by reference to Exhibit 10.12 of the Registration Statement on Form S-1 filed by Cardtronics, Inc. on March 10, 2004). | ||
**10 | .13 | First Amendment to Employment Agreement between Cardtronics, LP and Michael H. Clinard, dated effective as of January 1, 2005. |
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Exhibit No. | Description | |||
10 | .14 | Employment Agreement between Cardtronics, LP and Thomas E. Upton, dated effective as of June 1, 2001 (incorporated by reference to Exhibit 10.13 of the Registration Statement on Form S-1 filed by Cardtronics, Inc. on March 10, 2004). | ||
**10 | .15 | First Amendment to Employment Agreement between Cardtronics, LP and Thomas E. Upton, dated effective as of January 1, 2005. | ||
10 | .16 | Employment Agreement between Cardtronics, LP and J. Chris Brewster, dated effective as of March 31, 2004 (incorporated by reference to Exhibit 10.14 of the Registration Statement on Form S-1/A filed by Cardtronics, Inc. on May 14, 2004). | ||
**10 | .17 | First Amendment to Employment Agreement between Cardtronics, LP and J. Chris Brewster, dated effective as of January 1, 2005. | ||
**10 | .18 | Employment Agreement between Cardtronics, LP, Cardtronics, Inc. and Drew Soinski, dated effective as of July 12, 2005. | ||
**10 | .19 | Amended and Restated Service Agreement between Bank Machine Limited and Ron Delnevo, dated effective as of May 17, 2005. | ||
**10 | .20 | Bonus Agreement between Bank Machine Limited and Ron Delnevo, dated effective as of May 17, 2005. | ||
**10 | .21 | 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as of June 4, 2001. | ||
**10 | .22 | Amendment No. 1 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as of January 30, 2004. | ||
**10 | .23 | Amendment No. 2 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as of June 23, 2004. | ||
**10 | .24 | Form of Director Indemnification Agreement entered into by and between Cardtronics, Inc. and each of its directors, dated as of February 10, 2005. | ||
***10 | .25 | Amendment No. 1 to ATM Cash Services Agreement dated August 2, 2004. | ||
***10 | .26 | Amendment No. 2 to ATM Cash Services Agreement dated February 9, 2006. | ||
***12 | .1 | Computation of Ratio of Earnings to Fixed Charges. | ||
**21 | .1 | List of Subsidiaries. | ||
***23 | .1 | Consent of KPMG LLP. | ||
***23 | .2 | Consent of Deloitte and Touche, LLP. | ||
**23 | .3 | Consent of Vinson & Elkins L.L.P. (contained in Exhibit 5.1 hereto). | ||
**24 | .1 | Power of Attorney (included on the signature page to this Registration Statement). | ||
**25 | .1 | Statement of Eligibility on Form T-1. |
* | To be filed by amendment. |
** | Previously filed. |
*** | Filed herewith. |
Item 22. | Undertakings |
II-3
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(a) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; | |
(b) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; | |
(c) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; and |
(a) any preliminary prospectus or prospectus of the undersigned registrants relating to the offering required to be filed pursuant to Rule 424; | |
(b) any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrants or used or referred to by the undersigned registrants; |
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(c) the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrants or their securities provided by or on behalf of the undersigned registrants; and | |
(d) any other communication that is an offer in the offering made by the undersigned registrants to the purchaser. |
II-5
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CARDTRONICS, INC. |
By: | /s/Jack Antonini |
Jack Antonini | |
President and Chief Executive Officer | |
CARDTRONICS GP, INC. |
By: | /s/Jack Antonini |
Jack Antonini | |
President and Chief Executive Officer | |
CARDTRONICS, LP |
By: | /s/Jack Antonini |
Jack Antonini | |
President and Chief Executive Officer |
CARDTRONICS LP, INC. |
By: | /s/Peter J. Winnington |
Peter J. Winnington | |
President and Secretary | |
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Signature | Capacity (of Cardtronics, Inc.) | |||
/s/Jack Antonini | Chief Executive Officer, President and Director (Principal Executive Officer) | |||
/s/J. Chris Brewster | Chief Financial Officer (Principal Financial and Accounting Officer) | |||
/s/Fred R. Lummis | Director and Chairman of the Board of Directors | |||
/s/Robert P. Barone | Director | |||
/s/Frederick W. Brazelton | Director | |||
/s/Ralph H. Clinard | Director | |||
/s/Ron Coben | Director | |||
/s/Jorge M. Diaz | Director | |||
/s/Roger B. Kafker | Director | |||
/s/Michael A. R. Wilson | Director | |||
/s/Ronald Delnevo | Director and Chief Executive of Bank Machine Limited |
II-7
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Signature | Capacity (of Cardtronics GP, Inc.) | |||
/s/Jack Antonini | Chief Executive Officer, President and Director (Principal Executive Officer) | |||
/s/J. Chris Brewster | Chief Financial Officer (Principal Financial and Accounting Officer) | |||
/s/Fred R. Lummis | Director | |||
/s/Frederick W. Brazelton | Director |
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Signature | Capacity (of Cardtronics LP, Inc.) | |||
/s/Peter J. Winnington | President, Secretary and Director (Principal Executive, Financial and Accounting Officer) |
II-9
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Exhibit No. | Description | |||
**2 | .1 | Share Sale and Purchase Agreement between Bank Machine (Holdings) Limited and Cardtronics Limited, dated effective as of May 17, 2005. | ||
**2 | .2 | Purchase and Sale Agreement Between E*TRADE Access, Inc., E*TRADE Bank, Cardtronics, LP and Cardtronics, Inc., dated effective as of June 2, 2004. | ||
**3 | .1 | First Amended and Restated Certificate of Incorporation of Cardtronics, Inc., dated as of March 10, 2005. | ||
**3 | .2 | Certificate of Amendment of the First Amended and Restated Certificate of Incorporation of Cardtronics, Inc. dated as of May 12, 2005. | ||
**3 | .3 | Certificate of Amendment of the First Amended and Restated Certificate of Incorporation of Cardtronics, Inc. dated as of August 9, 2005. | ||
**3 | .4 | First Amended and Restated Bylaws of Cardtronics, Inc. | ||
**4 | .1 | Indenture dated as of August 12, 2005 by and among Cardtronics, Inc., the Subsidiary Guarantors party thereto and Wells Fargo Bank, NA as Trustee | ||
**4 | .2 | Form of Senior Subordinated Note (incorporated by reference to Exhibit A to Exhibit 4.1). | ||
**4 | .3 | Registration Rights Agreement dated as of August 12, 2005 by and among Cardtronics, Inc., the Subsidiary Guarantors party thereto and the Initial Purchasers party thereto. | ||
**5 | .1 | Opinion of Vinson & Elkins L.L.P. | ||
***10 | .1 | ATM Cash Services Agreement between Bank of America and Cardtronics, LP, dated effective as of August 2, 2004. | ||
**10 | .2 | Third Amended and Restated First Lien Credit Agreement, dated as of May 17, 2005, by and among Cardtronics, Inc., the Subsidiary Guarantors party thereto, Bank of America, N.A., BNP Paribas, and the other Lenders parties thereto. | ||
**10 | .3 | Amendment No. 1 to Credit Agreement, dated as of July 6, 2005. | ||
**10 | .4 | Amendment No. 2 to Credit Agreement, dated as of August 5, 2005. | ||
**10 | .5 | Amendment No. 3 to Credit Agreement, dated as of November 17, 2005. | ||
10 | .6 | Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated effective as of January 30, 2003 (incorporated by reference to Exhibit 10.10 of the Registration Statement on Form S-1 filed by Cardtronics, Inc. on March 10, 2004). | ||
10 | .7 | First Amendment to Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated effective as of February 4, 2004 (incorporated by reference to Exhibit 10.11 of the Registration Statement on Form S-1 filed by Cardtronics, Inc. on March 10, 2004). | ||
**10 | .8 | Second Amendment to Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated effective as of January 1, 2005. | ||
**10 | .9 | Restricted Stock Agreement, dated as of February 4, 2004 between Cardtronics, Inc. and Jack M. Antonini. | ||
**10 | .10 | First Amendment to Restricted Stock Agreement, dated as of March 1, 2004, between Cardtronics, Inc. and Jack M. Antonini. | ||
**10 | .11 | Second Amendment to Restricted Stock Agreement, dated as of February 10, 2005, between Cardtronics, Inc. and Jack M. Antonini. | ||
10 | .12 | Employment Agreement between Cardtronics, LP and Michael H. Clinard, dated effective as of June 4, 2001 (incorporated by reference to Exhibit 10.12 of the Registration Statement on Form S-1 filed by Cardtronics, Inc. on March 10, 2004). | ||
**10 | .13 | First Amendment to Employment Agreement between Cardtronics, LP and Michael H. Clinard, dated effective as of January 1, 2005. | ||
10 | .14 | Employment Agreement between Cardtronics, LP and Thomas E. Upton, dated effective as of June 1, 2001 (incorporated by reference to Exhibit 10.13 of the Registration Statement on Form S-1 filed by Cardtronics, Inc. on March 10, 2004). | ||
**10 | .15 | First Amendment to Employment Agreement between Cardtronics, LP and Thomas E. Upton, dated effective as of January 1, 2005. |
Table of Contents
Exhibit No. | Description | |||
10 | .16 | Employment Agreement between Cardtronics, LP and J. Chris Brewster, dated effective as of March 31, 2004 (incorporated by reference to Exhibit 10.14 of the Registration Statement on Form S-1/A filed by Cardtronics, Inc. on May 14, 2004). | ||
**10 | .17 | First Amendment to Employment Agreement between Cardtronics, LP and J. Chris Brewster, dated effective as of January 1, 2005. | ||
**10 | .18 | Employment Agreement between Cardtronics, LP, Cardtronics, Inc. and Drew Soinski, dated effective as of July 12, 2005. | ||
**10 | .19 | Amended and Restated Service Agreement between Bank Machine Limited and Ron Delnevo, dated effective as of May 17, 2005. | ||
**10 | .20 | Bonus Agreement between Bank Machine Limited and Ron Delnevo, dated effective as of May 17, 2005. | ||
**10 | .21 | 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as of June 4, 2001. | ||
**10 | .22 | Amendment No. 1 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as of January 30, 2004. | ||
**10 | .23 | Amendment No. 2 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as of June 23, 2004. | ||
**10 | .24 | Form of Director Indemnification Agreement entered into by and between Cardtronics, Inc. and each of its directors, dated as of February 10, 2005. | ||
***10 | .25 | Amendment No. 1 to ATM Cash Services Agreement dated August 2, 2004. | ||
***10 | .26 | Amendment No. 2 to ATM Cash Services Agreement dated February 9, 2006. | ||
***12 | .1 | Computation of Ratio of Earnings to Fixed Charges. | ||
**21 | .1 | List of Subsidiaries. | ||
***23 | .1 | Consent of KPMG LLP. | ||
***23 | .2 | Consent of Deloitte and Touche, LLP. | ||
**23 | .3 | Consent of Vinson & Elkins L.L.P. (contained in Exhibit 5.1 hereto). | ||
**24 | .1 | Power of Attorney (included on the signature page to this Registration Statement). | ||
**25 | .1 | Statement of Eligibility on Form T-1. |
* | To be filed by amendment. |
** | Previously filed. |
*** | Filed herewith. |