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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) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o | ||||||
(Do not check if a smaller reporting company) |
Proposed Maximum | Proposed Maximum | Amount of | ||||||||||
Title of Each Class of | Amount to be | Offering | Aggregate | Registration | ||||||||
Securities to be Registered | Registered | Price per Note(1) | Offering Price(1) | Fee | ||||||||
9.250% Senior Subordinated Notes due 2013 — Series B | $100,000,000 | 100% | $100,000,000 | $3,930 | ||||||||
Guarantees by certain of Cardtronics, Inc.’s subsidiaries | — | — | — | —(2) | ||||||||
(1) | Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(f) under the Securities Act of 1933. | |
(2) | Pursuant to Rule 457(n), no separate fee for the guarantees is payable because the guarantees relate to other securities that are being registered concurrently. |
* | Includes certain subsidiaries of Cardtronics, Inc. identified below. |
Subsidiary Guarantors | State or Other Jurisdiction of | I.R.S. Employer | ||||
(Exact Name of Registrant As Specified In Its Charter) | Incorporation or Organization | Identification Number | ||||
Cardtronics GP, Inc. | Delaware | 75-3003720 | ||||
Cardtronics LP, Inc. | Delaware | 51-0412519 | ||||
Cardtronics, LP | Delaware | 76-0419117 | ||||
Cardtronics Holdings, LLC | Delaware | 04-3848807 | ||||
ATM National, LLC | Delaware | 01-0851708 | ||||
ATM Ventures, LLC | Oregon | 93-1219295 | ||||
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
![CARDTRONICS LOGO](https://capedge.com/proxy/S-4/0000950129-08-000955/h53387h5338700.gif)
• | We are offering to exchange up to $100,000,000 of our outstanding 9.250% Senior Subordinated Notes due 2013 — Series B for new notes with substantially identical terms that have been registered under the Securities Act of 1933, as amended, and are freely tradable. | |
• | We will exchange all outstanding notes that are validly tendered and not validly withdrawn before the exchange offer expires for an equal principal amount of new notes. | |
• | The exchange offer expires at 12:00 a.m. midnight, New York City time, on , 2008, 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 February 15, 2008. |
• | We may redeem some or all of the 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. |
• | The notes are unsecured senior subordinated obligations of the Company. The notes 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. The notes arepari passuin right of payment with all existing and any future senior subordinated indebtedness of the Company. The notes are senior in right of payment to any future subordinated indebtedness of the Company. The notes are guaranteed by the Guarantors as described under “— Description of the New Notes — Note Guarantees”. The notes are effectively subordinated to all existing and any future indebtedness and other liabilities of the Company’s subsidiaries that are not Guarantors. |
• | If we experience a change of control, subject to certain conditions, we must offer to purchase the new notes. |
• | 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. |
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Opinion of Vinson & Elkins L.L.P. | ||||||||
Employment Agreement | ||||||||
2007 Bonus Plan | ||||||||
Subsidiares | ||||||||
Consent of KPMG LLP | ||||||||
Consent of PricewaterhouseCoopers LLP | ||||||||
Form T-1 |
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Exchange Offer | We are offering to exchange new notes for outstanding notes. | |
Expiration Date | The exchange offer will expire at 12:00 a.m. midnight, New York City time, on , 2008, unless we decide to extend it. We do not currently intend to extend the exchange offer. | |
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. For additional information, see “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 additional information, see “Exchange Offer — Terms of the Exchange Offer” and “Exchange Offer — 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 12:00 a.m. midnight, New York City time, on the expiration date of the exchange offer. For additional information, see “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 that you properly tender in the exchange offer on or before 12:00 a.m. midnight, New York City time, on the expiration date. We will return any outstanding note that we do not accept for exchange to |
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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. For additional information, see “Exchange Offer — Terms of the Exchange Offer.” | ||
Fees and Expenses | We will bear all expenses related to the exchange offer. See “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. See “Federal Income Tax Considerations.” | |
Exchange Agent | We have appointed Wells Fargo, 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 Avenue, MAC N9303-121, Minneapolis, MN 55479. Eligible institutions may make requests by facsimile at (612) 667-6282. |
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Issuer | Cardtronics, Inc. | |
Notes Offered | $100.0 million aggregate principal amount of 9.25% Senior Subordinated Notes due 2013 — Series B (the “Notes”). | |
Maturity | The Notes will mature on August 15, 2013. | |
Interest | Interest on the Notes will accrue at the rate of 9.25% per annum from February 15, 2008 and will be payable semi-annually, in cash, in arrears on February 15 and August 15 of each year, commencing on August 15, 2008. | |
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 — Note Guarantees.” | |
Ranking | The Notes and the guarantees will be general unsecured obligations and will rank: | |
• junior in right of payment to all of our existing and future senior indebtedness, including borrowings under our bank credit facility; | ||
• pari passuin right of payment with all of our existing and any future senior subordinated debt, including the $200.0 million aggregate principal amount of 9.25% senior subordinated notes due 2013 issued under the indenture dated as of August 12, 2005 (the “Series A Notes”); and | ||
• senior in right of payment to any future subordinated debt. | ||
As of December 31, 2007, we had outstanding indebtedness of approximately $310.7 million. Of this amount, approximately $14.6 million would have ranked senior in right of payment to the new Notes and guarantees, which consisted of $4.0 million outstanding under our revolving credit facility, $8.5 million outstanding under certain borrowing arrangement in place with respect to our foreign subsidiaries, including guarantees of such amounts, and $2.1 million of capital lease obligations. | ||
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 109.25% 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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• | the operations, technology, and personnel of any acquired companies may be difficult to integrate; | |
• | the allocation of management resources to consummate these transactions may disrupt our day-to-day business; and | |
• | acquired networks may not achieve anticipated revenues, earnings or cash flow. Such a shortfall could require us to write down the carrying value of the intangible assets associated with any acquired company, which would adversely affect our reported earnings. |
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• | exposure to currency fluctuations, including the risk that our future reported operating results could be negatively impacted by unfavorable movements in the functional currencies of our international operations relative to the United States dollar, which represents our consolidated reporting currency; | |
• | difficulties in complying with the different laws and regulations in each country and jurisdiction in which we operate, including unique labor and reporting laws; | |
• | unexpected changes in laws, regulations, and policies of foreign governments or other regulatory bodies, including changes that could potentially disallow surcharging or that could result in a reduction in the amount of interchange fees received per transaction; | |
• | difficulties in staffing and managing foreign operations, including hiring and retaining skilled workers in those countries in which we operate; and | |
• | potentially adverse tax consequences, including restrictions on the repatriation of foreign earnings. |
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• | changes in general economic conditions and specific market conditions in the ATM and financial services industries; | |
• | changes in payment trends and offerings in the markets in which we operate; | |
• | competition from other companies providing the same or similar services that we offer; |
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• | the timing and magnitude of operating expenses, capital expenditures, and expenses related to the expansion of sales, marketing, and operations, including as a result of acquisitions, if any; | |
• | the timing and magnitude of any impairment charges that may materialize over time relating to our goodwill, intangible assets or long-lived assets; | |
• | changes in the general level of interest rates in the markets in which we operate; | |
• | changes in regulatory requirements associated with the ATM and financial services industries; | |
• | changes in the mix of our current services; and | |
• | changes in the financial condition and credit risk of our customers. |
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• | make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including financial and other restrictive covenants, could result in an event of default under the indentures governing our senior subordinated notes and the agreements governing our 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; | |
• | 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. |
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• | 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; | |
• | engage in transactions with affiliates; | |
• | issue or sell preferred stock of restricted subsidiaries; and | |
• | enter into sale and leaseback transactions. |
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• | 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. |
• | were insolvent or rendered insolvent by reason of such incurrence; | |
• | 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. |
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• | 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; | |
• | 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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• | within 240 days after the original issuance of the outstanding notes on July 20, 2007, 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 360 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 20 business 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 360 days from July 20, 2007, 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 360 days after July 20, 2007, 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. |
• | cannot rely on such interpretations by the SEC staff; and |
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• | must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. |
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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. |
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• | 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. |
• | 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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Nine Months Ended | ||||||||||||||||||||||||||||
Years Ended December 31, | September 30, | |||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2006 | 2007 | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(in thousands, except share and per share amounts, ratios, and number of ATMs) | ||||||||||||||||||||||||||||
Consolidated Statements of Operations Data: | ||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
ATM operating revenues | $ | 59,183 | $ | 101,950 | $ | 182,711 | $ | 258,979 | $ | 280,985 | $ | 209,542 | $ | 251,854 | ||||||||||||||
Vcom operating revenues | — | — | — | — | — | — | 685 | |||||||||||||||||||||
ATM product sales and other revenues | 9,603 | 8,493 | 10,204 | 9,986 | 12,620 | 9,218 | 9,805 | |||||||||||||||||||||
Total revenues | 68,786 | 110,443 | 192,915 | 268,965 | 293,605 | 218,760 | 262,344 | |||||||||||||||||||||
Cost of revenues: | ||||||||||||||||||||||||||||
Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization, shown separately below)(1) | 49,134 | 80,286 | 143,504 | 199,767 | 209,850 | 157,225 | 191,046 | |||||||||||||||||||||
Cost of Vcom operating revenues | — | — | — | — | — | — | 2,644 | |||||||||||||||||||||
Cost of ATM product sales and other revenues | 8,984 | 7,903 | 8,703 | 9,681 | 11,443 | 8,142 | 9,196 | |||||||||||||||||||||
Total cost of revenues | 58,118 | 88,189 | 152,207 | 209,448 | 221,293 | 165,367 | 202,886 | |||||||||||||||||||||
Gross profit | 10,668 | 22,254 | 40,708 | 59,517 | 72,312 | 53,393 | 59,458 | |||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||
Selling, general, and administrative expenses(2)(3) | 6,142 | 7,229 | 13,571 | 17,865 | 21,667 | 15,709 | 20,985 | |||||||||||||||||||||
Depreciation and accretion expense | 1,650 | 3,632 | 6,785 | 12,951 | 18,595 | 14,072 | 18,541 | |||||||||||||||||||||
Amortization expense(4) | 1,641 | 3,842 | 5,508 | 8,980 | 11,983 | 9,610 | 14,062 | |||||||||||||||||||||
Total operating expenses | 9,433 | 14,703 | 25,864 | 39,796 | 52,245 | 39,391 | 53,588 | |||||||||||||||||||||
Income from operations | 1,235 | 7,551 | 14,844 | 19,721 | 20,067 | 14,002 | 5,870 | |||||||||||||||||||||
Other expense: | ||||||||||||||||||||||||||||
Interest expense(5) | 1,039 | 2,157 | 5,235 | 22,426 | 25,072 | 18,769 | 21,592 | |||||||||||||||||||||
Minority interest in subsidiary | — | — | 19 | 15 | (225 | ) | (128 | ) | (286 | ) | ||||||||||||||||||
Other(6) | 58 | 106 | 209 | 968 | (4,761 | ) | (740 | ) | 1,037 | |||||||||||||||||||
Total other expense | 1,097 | 2,263 | 5,463 | 23,409 | 20,086 | 17,901 | 22,343 | |||||||||||||||||||||
Income (loss) before income taxes | 138 | 5,288 | 9,381 | (3,688 | ) | (19 | ) | (3,899 | ) | (16,473 | ) | |||||||||||||||||
Income tax provision (benefit) | 111 | 1,955 | 3,576 | (1,270 | ) | 512 | (1,217 | ) | 3,212 | |||||||||||||||||||
Income (loss) before cumulative effect of change in accounting principle | 27 | 3,333 | 5,805 | (2,418 | ) | (531 | ) | (2,682 | ) | (19,685 | ) | |||||||||||||||||
Cumulative effect of change in accounting principle for asset retirement obligations, net of related income tax benefit of $80(7) | — | 134 | — | — | — | — | — | |||||||||||||||||||||
Net income (loss) | 27 | 3,199 | 5,805 | (2,418 | ) | (531 | ) | (2,682 | ) | (19,685 | ) | |||||||||||||||||
Preferred stock dividends and accretion expense | 1,880 | 2,089 | 2,312 | 1,395 | 265 | 199 | 200 | |||||||||||||||||||||
Net income (loss) available to common stockholders | $ | (1,853 | ) | $ | 1,110 | $ | 3,493 | $ | (3,813 | ) | $ | (796 | ) | $ | (2,881 | ) | $ | (19,885 | ) | |||||||||
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Nine Months Ended | ||||||||||||||||||||||||||||
Years Ended December 31, | September 30, | |||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2006 | 2007 | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(in thousands, except share and per share amounts, ratios, and number of ATMs) | ||||||||||||||||||||||||||||
Net income (loss) per common share(8): | ||||||||||||||||||||||||||||
Basic | $ | (0.12 | ) | $ | 0.07 | $ | 0.20 | $ | (0.27 | ) | $ | (0.06 | ) | $ | (0.21 | ) | $ | (1.42 | ) | |||||||||
Diluted | $ | (0.12 | ) | $ | 0.06 | $ | 0.19 | $ | (0.27 | ) | $ | (0.06 | ) | $ | (0.21 | ) | $ | (1.42 | ) | |||||||||
Weighted average shares outstanding(8): | ||||||||||||||||||||||||||||
Basic | 16,050,739 | 16,521,361 | 17,795,073 | 14,040,353 | 13,904,505 | 13,929,257 | 14,006,822 | |||||||||||||||||||||
Diluted | 16,050,739 | 17,262,708 | 18,855,425 | 14,040,353 | 13,904,505 | 13,929,257 | 14,006,822 | |||||||||||||||||||||
Other Financial Data (unaudited): | ||||||||||||||||||||||||||||
Ratio of earnings to fixed charges(9) | — | 1.3 | x | 1.5 | x | — | — | — | — | |||||||||||||||||||
Cash flows from operating activities | $ | 4,491 | $ | 21,629 | $ | 20,466 | $ | 33,227 | $ | 25,446 | $ | 16,867 | $ | 35,189 | ||||||||||||||
Cash flows from investing activities | (15,023 | ) | (29,663 | ) | (118,926 | ) | (139,960 | ) | (35,973 | ) | (25,933 | ) | (179,469 | ) | ||||||||||||||
Cash flows from financing activities | 10,741 | 10,404 | 94,318 | 107,214 | 11,192 | 7,773 | 147,693 | |||||||||||||||||||||
Operating Data (unaudited): | ||||||||||||||||||||||||||||
Total number of ATMs (at period end) | 8,298 | 12,021 | 24,581 | 26,208 | 25,259 | 25,709 | 31,586 | |||||||||||||||||||||
Total transactions | 36,212 | 64,605 | 111,577 | 158,851 | 172,808 | 128,539 | 166,183 | |||||||||||||||||||||
Total withdrawal transactions | 28,955 | 49,859 | 86,821 | 118,960 | 125,078 | 93,756 | 113,934 |
As of December 31, | As of September 30, | |||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2005 | 2006 | 2006 | 2007 | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 3,184 | $ | 5,554 | $ | 1,412 | $ | 1,699 | $ | 2,718 | $ | 475 | $ | 6,118 | ||||||||||||||
Total assets | 34,843 | 65,295 | 197,667 | 343,751 | 367,756 | 354,914 | 562,201 | |||||||||||||||||||||
Total long-term debt, including current portion | 18,475 | 31,371 | 128,541 | 247,624 | 252,895 | 252,995 | 408,910 | |||||||||||||||||||||
Preferred stock(10) | 19,233 | 21,322 | 23,634 | 76,329 | 76,594 | 76,528 | 76,794 | |||||||||||||||||||||
Total stockholders’ deficit | (9,024 | ) | (6,329 | ) | (340 | ) | (49,084 | ) | (37,168 | ) | (44,887 | ) | (59,329 | ) |
(1) | Excludes depreciation, accretion, and amortization expense of $3.1 million, $6.8 million, $11.4 million, $20.6 million, and $29.2 million for the years ended December 31, 2002, 2003, 2004, 2005, and 2006, respectively, and $22.6 million and $31.3 million for the nine month periods ended September 30, 2006 and 2007, respectively. | |
(2) | Includes non-cash stock-based compensation totaling $1.6 million, $1.0 million, $2.2 million, and $0.8 million in 2003, 2004, 2005, and 2006, respectively, as well as $0.6 million for the nine months ended September 30, 2006 and $0.7 million for the nine months ended September 30, 2007, related to options granted to certain employees and a restricted stock grant made to our Chief Executive Officer in 2003. Additionally, the 2004 results include a bonus of $1.8 million paid to our Chief Executive Officer related to the tax liability associated with such grant. No stock-based compensation was recorded in 2002. See Note 3 to our consolidated financial statements. | |
(3) | Includes the write-off in 2004 of approximately $1.8 million in costs associated with our decision to not pursue a financing transaction to completion. | |
(4) | Includes pre-tax impairment charges of $1.2 million and $2.8 million in 2005 and 2006, respectively, as well as $2.8 million and $5.3 million for the nine months ended September 30, 2006 and 2007, respectively. | |
(5) | Includes the write-off of $5.0 million and $0.5 million of deferred financing costs in 2005 and 2006, respectively, as a result of (i) amendments to our existing credit facility and the repayment of our existing term loans in August 2005, and (ii) certain modifications made to our revolving credit facility in February 2006. | |
(6) | The “Other” line item in 2002, 2003, 2004, and 2005 primarily consists of losses on the sale or disposal of assets. “Other” in 2006 reflects the recognition of approximately $4.8 million in other income primarily related to settlement proceeds received from Winn-Dixie Stores, Inc. (“Winn-Dixie”), one of our merchant customers, as part of its emergence from bankruptcy, a $1.1 million contract termination payment received from one of our customers, and a $0.5 million payment received from one of our customers related to the sale of a number of its stores to another party, which were partially offset by $1.6 million of losses on the sale or disposal of fixed assets. “Other” for the nine months ended September 30, 2007 includes $1.5 million of losses on the disposal of fixed assets during the period, which were partially offset by $0.6 million of gains related to the sale of the Winn-Dixie equity securities, which we received from Winn-Dixie in 2006 as a part of its bankruptcy settlement. |
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(7) | Reflects the effect of our adoption of Statement of Financial Accounting Standards (“SFAS”) No. 143,Accounting for Asset Retirement Obligations. See Note 1(m) to our consolidated financial statements included elsewhere within this prospectus. | |
(8) | Gives effect to the 7.9485 to 1 stock split that occurred in conjunction with our initial public offering in December 2007. | |
(9) | For purposes of determining the ratio of earnings to fixed charges, earnings are defined as our income from operations before income taxes, plus fixed charges. Fixed charges consist of interest expense on all indebtedness, amortization of debt issuance costs and the interest portion of lease payments. Earnings were insufficient to cover fixed charges by approximately $2.7 million for the year ended December 31, 2002, $5.4 million for the year ended December 31, 2005, and $0.2 million for the year ended December 31, 2006. Earnings were insufficient to cover fixed charges by approximately $4.0 million and $16.8 million for the nine months ended September 30, 2006 and 2007, respectively. | |
(10) | The amount reflected on our balance sheet is shown net of issuance costs of $1.4 million as of December 31, 2006, and $1.2 million as of September 30, 2007. The aggregate redemption price for the preferred stock was $78.0 million as of September 30, 2007. |
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Quarters Ended | ||||||||||||||||||||
March 31 | June 30 | September 30 | December 31 | Total | ||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||||||
2007 | ||||||||||||||||||||
Total revenues | $ | 74,518 | $ | 77,239 | $ | 110,587 | N/A | $ | 262,344 | |||||||||||
Gross profit (exclusive of depreciation, accretion, and amortization)(1) | 16,985 | 17,607 | 24,866 | N/A | 59,458 | |||||||||||||||
Net loss(2) | (3,387 | ) | (5,615 | ) | (10,683 | ) | N/A | (19,685 | ) | |||||||||||
Net loss available to common stockholders(2) | (3,454 | ) | (5,681 | ) | (10,750 | ) | N/A | (19,885 | ) | |||||||||||
Net loss per common share(2)(3): | ||||||||||||||||||||
Basic | $ | (0.25 | ) | $ | (0.41 | ) | $ | (0.77 | ) | N/A | $ | (1.42 | ) | |||||||
Diluted | $ | (0.25 | ) | $ | (0.41 | ) | $ | (0.77 | ) | N/A | $ | (1.42 | ) | |||||||
2006 | ||||||||||||||||||||
Total revenues | $ | 69,141 | $ | 73,254 | $ | 76,365 | $ | 74,845 | $ | 293,605 | ||||||||||
Gross profit (exclusive of depreciation, accretion, and amortization)(4) | 16,043 | 18,370 | 18,980 | 18,919 | 72,312 | |||||||||||||||
Net income (loss)(5) | (3,124 | ) | 769 | (327 | ) | 2,151 | (531 | ) | ||||||||||||
Net income (loss) available to common stockholders(5) | (3,190 | ) | 703 | (394 | ) | 2,085 | (796 | ) | ||||||||||||
Net income (loss) per common share(3)(5): | ||||||||||||||||||||
Basic | $ | (0.23 | ) | $ | 0.05 | $ | (0.03 | ) | $ | 0.15 | $ | (0.06 | ) | |||||||
Diluted | $ | (0.23 | ) | $ | 0.03 | $ | (0.03 | ) | $ | 0.09 | $ | (0.06 | ) | |||||||
2005 | ||||||||||||||||||||
Total revenues | $ | 58,264 | $ | 68,520 | $ | 71,734 | $ | 69,777 | $ | 268,295 | ||||||||||
Gross profit (exclusive of depreciation, accretion, and amortization)(6) | 11,857 | 15,707 | 15,949 | 16,004 | 59,517 | |||||||||||||||
Net income (loss)(7) | 569 | 1,446 | (2,864 | ) | (1,569 | ) | (2,418 | ) | ||||||||||||
Net income (loss) available to common stockholders(7) | (627 | ) | 1,380 | (2,881 | ) | (1,685 | ) | (3,813 | ) | |||||||||||
Net income (loss) per common share(3)(7): | ||||||||||||||||||||
Basic | $ | (0.04 | ) | $ | 0.10 | $ | (0.21 | ) | $ | (0.12 | ) | $ | (0.27 | ) | ||||||
Diluted | $ | (0.04 | ) | $ | 0.06 | $ | (0.21 | ) | $ | (0.12 | ) | $ | (0.27 | ) |
(1) | Excludes $8.5 million, $7.1 million, and $15.7 million of depreciation, accretion, and amortization for the quarters ended March 31, 2007, June 30, 2007, and September 30, 2007, respectively. | |
(2) | Includes pre-tax impairment charges of $0.1 million for the quarter ended March 31, 2007 and $5.2 million for the quarter ended September 30, 2007 related to certain contract-based intangible assets. | |
(3) | Gives effect to the 7.9485 to 1 stock split that occurred in conjunction with our initial public offering in December 2007. | |
(4) | Excludes $8.9 million, $6.6 million, $7.1 million, and $6.6 million of depreciation, accretion, and amortization for the quarters ended March 31, 2006, June 30, 2006, September 30, 2006, and December 31, 2006, respectively. |
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(5) | Includes pre-tax impairment charge of $2.8 million for the quarter ended March 31, 2006 related to certain contract-based intangible assets. Also includes $4.8 million in other income for the quarter ended December 31, 2006 primarily related to settlement proceeds received from Winn-Dixie, one of our merchant customers, as part of its emergence from bankruptcy. | |
(6) | Excludes $3.6 million, $4.7 million, $5.0 million, and $7.3 million of depreciation, accretion, and amortization for the quarters ended March 31, 2005, June 30, 2005, September 30, 2005, and December 31, 2005, respectively. | |
(7) | Includes write-off of deferred financing costs of $0.2 million for the quarter ended June 30, 2005 and $4.8 million for the quarter ended September 30, 2005. |
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
(in thousands)
7-Eleven | ||||||||||||||||||||
Financial | ||||||||||||||||||||
Services | ||||||||||||||||||||
Cardtronics | Business | Pro Forma | ||||||||||||||||||
Historical | (See Note 1) | Adjustments | Notes | Pro Forma | ||||||||||||||||
Revenues: | ||||||||||||||||||||
ATM operating revenues | $ | 280,985 | $ | 135,976 | $ | — | $ | 416,961 | ||||||||||||
Vcom operating revenues | — | 27,686 | — | 27,686 | ||||||||||||||||
ATM product sales and other revenues | 12,620 | — | — | 12,620 | ||||||||||||||||
Total revenues | 293,605 | 163,662 | — | 457,267 | ||||||||||||||||
Cost of revenues: | ||||||||||||||||||||
Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization, shown separately below. See Note 7) | 209,850 | 107,547 | (7,964 | ) | 2 | 309,433 | ||||||||||||||
Cost of Vcom operating revenues | — | 16,309 | — | 16,309 | ||||||||||||||||
Cost of ATM product sales and other revenues | 11,443 | — | — | 11,443 | ||||||||||||||||
Total cost of revenues | 221,293 | 123,856 | (7,964 | ) | 337,185 | |||||||||||||||
Gross profit | 72,312 | 39,806 | 7,964 | 120,082 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Selling, general, and administrative expenses | 21,667 | 5,913 | — | 27,580 | ||||||||||||||||
Depreciation and accretion expense | 18,595 | 12,649 | (7,542 | ) | 4 | 23,702 | ||||||||||||||
Amortization expense | 11,983 | 3,171 | 8,143 | 4 | 23,297 | |||||||||||||||
Total operating expenses | 52,245 | 21,733 | 601 | 74,579 | ||||||||||||||||
Income from operations | 20,067 | 18,073 | 7,363 | 45,503 | ||||||||||||||||
Interest expense, net | 25,072 | 520 | 13,741 | 3 | 39,333 | |||||||||||||||
Other income, net | (4,986 | ) | — | — | (4,986 | ) | ||||||||||||||
Income (loss) before income taxes | (19 | ) | 17,553 | (6,378 | ) | 11,156 | ||||||||||||||
Income tax provision (benefit) | 512 | 6,776 | (2,630 | ) | 5 | 4,658 | ||||||||||||||
Net income (loss) | (531 | ) | 10,777 | (3,748 | ) | 6,498 | ||||||||||||||
Preferred stock accretion expense | 265 | — | — | 265 | ||||||||||||||||
Net income (loss) available to common stockholders | $ | (796 | ) | $ | 10,777 | $ | (3,748 | ) | $ | 6,233 | ||||||||||
Net income (loss) per common share (see Note 6): | ||||||||||||||||||||
Basic | $ | (0.06 | ) | $ | 0.45 | |||||||||||||||
Diluted | $ | (0.06 | ) | $ | 0.27 | |||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||
Basic | 13,904,505 | 13,904,505 | ||||||||||||||||||
Diluted | 13,904,505 | 22,830,199 | ||||||||||||||||||
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(in thousands)
7-Eleven | ||||||||||||||||||||
Financial | ||||||||||||||||||||
Services | ||||||||||||||||||||
Cardtronics | Business | Pro Forma | ||||||||||||||||||
Historical | (See Note 1) | Adjustments | Notes | Pro Forma | ||||||||||||||||
Revenues: | ||||||||||||||||||||
ATM operating revenues | $ | 251,854 | $ | 79,313 | $ | — | $ | 331,167 | ||||||||||||
Vcom operating revenues | 685 | 8,197 | — | 8,882 | ||||||||||||||||
ATM product sales and other revenues | 9,805 | — | — | 9,805 | ||||||||||||||||
Total revenues | 262,344 | 87,510 | — | 349,854 | ||||||||||||||||
Cost of revenues: | ||||||||||||||||||||
Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization, shown separately below. See Note 7) | 191,046 | 63,234 | (4,389 | ) | 2 | 249,891 | ||||||||||||||
Cost of Vcom operating revenues | 2,644 | 9,126 | — | 11,770 | ||||||||||||||||
Cost of ATM product sales and other revenues | 9,196 | — | — | 9,196 | ||||||||||||||||
Total cost of revenues | 202,886 | 72,360 | (4,389 | ) | 270,857 | |||||||||||||||
Gross profit | 59,458 | 15,150 | 4,389 | 78,997 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Selling, general, and administrative expenses | 20,985 | 2,437 | — | 23,422 | ||||||||||||||||
Depreciation and accretion expense | 18,541 | 9,739 | (6,923 | ) | 4 | 21,357 | ||||||||||||||
Amortization expense | 14,062 | 346 | 4,495 | 4 | 18,903 | |||||||||||||||
Total operating expenses | 53,588 | 12,522 | (2,428 | ) | 63,682 | |||||||||||||||
Income from operations | 5,870 | 2,628 | 6,817 | 15,315 | ||||||||||||||||
Interest expense, net | 21,592 | 100 | 7,480 | 3 | 29,172 | |||||||||||||||
Other expense, net | 751 | — | — | 751 | ||||||||||||||||
Income (loss) before income taxes | (16,473 | ) | 2,528 | (663 | ) | (14,608 | ) | |||||||||||||
Income tax provision (benefit) | 3,212 | 976 | (976 | ) | 5 | 3,212 | ||||||||||||||
Net income (loss) | (19,685 | ) | 1,552 | 313 | (17,820 | ) | ||||||||||||||
Preferred stock accretion expense | 200 | — | — | 200 | ||||||||||||||||
Net income (loss) available to common stockholders | $ | (19,885 | ) | $ | 1,552 | $ | 313 | $ | (18,020 | ) | ||||||||||
Net income (loss) per common share (see Note 6): | ||||||||||||||||||||
Basic | $ | (1.42 | ) | $ | (1.29 | ) | ||||||||||||||
Diluted | $ | (1.42 | ) | $ | (1.29 | ) | ||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||
Basic | 14,006,822 | 14,006,822 | ||||||||||||||||||
Diluted | 14,006,822 | 14,006,822 | ||||||||||||||||||
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Total cash consideration | $ | 135,000 | ||
Working capital adjustment and other related closing costs | 2,980 | |||
Total estimated purchase price of acquisition | $ | 137,980 | ||
The total purchase price has been allocated on a preliminary basis as follows (in thousands): | ||||
Current assets | $ | 13,549 | ||
Property and equipment | 22,428 | |||
Intangible assets: | ||||
Customer contracts and relationships | 78,000 | |||
Goodwill | 62,367 | |||
Current liabilities | (19,167 | ) | ||
Other non-current liabilities | (19,197 | ) | ||
Total purchase price of acquisition | $ | 137,980 | ||
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$200.0 million 9.25% senior subordinated notes due 2013 issued in August 2005, net of the related discount | $ | 198,851 | ||
$100.0 million 9.25% senior subordinated notes due 2013 — Series B issued in July 2007, net of the related discount | 97,000 | |||
Revolving credit facility (including additional borrowings to fund the 7-Eleven ATM Transaction) | 102,954 | |||
Other long-term and current debt obligations, including capital lease obligations | 6,881 | |||
Total pro forma debt | $ | 405,686 | ||
Nine Months | ||||||||
Year Ended | Ended | |||||||
December 31, | September 30, | |||||||
2006 | 2007 | |||||||
Interest expense associated with the senior subordinated notes issued in August 2005 ($198.9 million at an effective interest rate of 9.4%) | $ | 18,620 | $ | 13,965 | ||||
Interest expense associated with the Series B Notes issued in July 2007 ($97.0 million at an effective interest rate of 9.5%) | 9,250 | 6,937 | ||||||
Interest expense associated with the pro forma revolving credit facility balance ($103.0 million at an effective interest rate of 7.8%) | 8,030 | 6,023 | ||||||
Interest expense associated with other indebtedness, including acquired capital lease obligations | 651 | 452 | ||||||
Amortization of deferred financing costs associated with the Series B Notes issued in July 2007 and amended revolving credit facility ($1.7 million and $0.4 million amortized on a straight-line basis over 6 years and 5 years, respectively) | 353 | 265 | ||||||
Amortization of discount associated with the Series B Notes issued in July 2007 | 500 | 375 | ||||||
Amortization of deferred financing costs associated with the senior subordinated notes issued in August 2005 and revolving credit facility | 1,929 | 1,155 | ||||||
Pro forma interest expense | 39,333 | 29,172 | ||||||
Elimination of the historical interest expense of Cardtronics, Inc. and the 7-Eleven Financial Services Business | (25,592 | ) | (21,692 | ) | ||||
Pro forma interest expense adjustment | $ | 13,741 | $ | 7,480 | ||||
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2007 | 2008 | 2009 | 2010 | 2011 | Thereafter | Total | ||||||||||||||||||||||
Long-term debt and capital lease obligations | $ | 968 | $ | 1,454 | $ | 1,692 | $ | 1,327 | $ | 1,189 | $ | 403,205 | $ | 409,835 |
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• | Overview of Business | |
• | Recent Events | |
• | Impact of 7-Eleven ATM Transaction | |
• | Results of Operations | |
• | Liquidity and Capital Resources | |
• | Critical Accounting Polices and Estimates | |
• | New Accounting Pronouncements | |
• | Disclosure about Market Risk |
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• | Surcharge Revenue. A surcharge fee represents a convenience fee paid by the cardholder for making a cash withdrawal from an ATM. Surcharge fees often vary by the type of arrangement under which we place our ATMs and can vary widely based on the location of the ATM and the nature of the contracts negotiated with our merchants. In the future, we expect that surcharge fees per surcharge-bearing transaction will vary depending upon negotiated surcharge fees at newly-deployed ATMs, the roll-out of additional branding arrangements, and future negotiations with existing merchant partners, as well as our ongoing efforts to improve profitability through improved pricing. For those ATMs that we own or operate on surcharge-free networks, we do not receive surcharge fees related to withdrawal transactions from cardholders who are participants of such networks, but rather we receive interchange and branding revenues (as discussed below). Surcharge fees in the United Kingdom are typically higher than the surcharge fees charged in the United States. In Mexico, surcharge fees are generally less than those charged in the United States. | |
• | Interchange Revenue. An interchange fee is a fee paid by the cardholder’s financial institution for the use of the applicable EFT network that transmits data between the ATM and the cardholder’s financial institution. We typically receive a majority of the interchange fee paid by the cardholder’s financial institution, with the remaining portion being retained by the EFT network. In the United States and Mexico, interchange fees are earned not only on cash withdrawal transactions but on any ATM transaction, including balance inquiries, transfers, and surcharge-free transactions. In the United Kingdom, interchange fees are earned on all ATM transactions other than surcharge-bearing cash withdrawals. Interchange fees are set by the EFT networks and vary according to EFT network arrangements with financial institutions, as well as the type of transaction. Such fees are typically lower (except for in the U.K.) for balance inquiries and fund transfers and higher for withdrawals transactions. | |
• | Branding Revenue. We generate branding revenue in a variety of ways. Under a bank branding agreement, ATMs that are owned and operated by us are branded with the logo of and operated as if they were owned by the branding financial institution. Customers of the branding institution can use those machines without paying a surcharge, and, in exchange, the financial institution pays us a monthly per-machine fee for such branding. We 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. Additionally, although we forego the surcharge fee on ATM transactions by the branding institution’s customers, we continue to earn interchange fees on those transactions along with the monthly branding fee, and typically enjoy an increase in surcharge-bearing transactions from users who are not customers of the branding institution as a result of having a bank brand on our ATMs. Overall, based on the above, we believe a branding arrangement can substantially increase the profitability of an ATM versus operating the same machine in an unbranded mode. Fees paid for branding an ATM vary widely within our industry, as well as within our own operations. We expect that this variance in |
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Pro Forma | ||||||||||||||||||||||||||||
Pro Forma | Nine Months | Nine Months | Nine Months | |||||||||||||||||||||||||
Year Ended | Year Ended | Ended | Ended | Ended | ||||||||||||||||||||||||
December 31, | December 31, | September 30, | September 30, | September 30, | ||||||||||||||||||||||||
2004 | 2005 | 2006 | 2006 | 2006 | 2007 | 2007 | ||||||||||||||||||||||
Per withdrawal transaction(1): | ||||||||||||||||||||||||||||
Surcharge revenue(2) | $ | 1.45 | $ | 1.52 | $ | 1.52 | $ | 1.39 | $ | 1.52 | $ | 1.40 | $ | 1.32 | ||||||||||||||
Interchange revenue(3) | 0.60 | 0.56 | 0.55 | 0.57 | 0.55 | 0.57 | 0.59 | |||||||||||||||||||||
Branding revenue(4) | 0.02 | 0.06 | 0.13 | 0.18 | 0.12 | 0.20 | 0.21 | |||||||||||||||||||||
Other revenue(5) | 0.03 | 0.04 | 0.05 | 0.03 | 0.04 | 0.04 | 0.02 | |||||||||||||||||||||
Total ATM operating revenues | $ | 2.10 | $ | 2.18 | $ | 2.25 | $ | 2.17 | $ | 2.23 | $ | 2.21 | $ | 2.14 | ||||||||||||||
(1) | Amounts calculated based on total withdrawal transactions, including surcharge withdrawal transactions and surcharge-free withdrawal transactions. | |
(2) | Excluding surcharge-free withdrawal transactions, the per transaction amounts would have been $1.53, $1.70, and $1.80 for the years ended December 31, 2004, 2005 and 2006, respectively, $1.77 and $1.87 for the nine months ended September 30, 2006 and 2007, respectively, and $1.76 and $1.84 for the pro forma year ended December 31, 2006 and pro forma nine months ended September 30, 2007, respectively. | |
(3) | Amounts calculated based on total interchange revenues earned on all transaction types, including withdrawals, balance inquiries, transfers, and surcharge-free transactions. | |
(4) | Amounts include all bank and network branding revenues, the majority of which are not earned on a per transaction basis. | |
(5) | Amounts include other miscellaneous ATM operating revenues. |
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Pro Forma | ||||||||||||||||||||||||||||
Pro Forma | Nine Months | Nine Months | Nine Months | |||||||||||||||||||||||||
Year Ended | Ended | Ended | Ended | |||||||||||||||||||||||||
Year Ended December 31, | December 31, | September 30, | September 30, | September 30, | ||||||||||||||||||||||||
2004 | 2005 | 2006 | 2006 | 2006 | 2007 | 2007 | ||||||||||||||||||||||
Surcharge revenues | 68.9 | % | 69.9 | % | 67.5 | % | 64.2 | % | 68.1 | % | 63.2 | % | 61.7 | % | ||||||||||||||
Interchange revenues | 28.3 | 25.7 | 24.5 | 26.2 | 24.6 | 26.0 | 27.4 | |||||||||||||||||||||
Branding revenues | 1.3 | 2.6 | 6.0 | 8.3 | 5.3 | 9.2 | 9.7 | |||||||||||||||||||||
Other revenues | 1.5 | 1.8 | 2.0 | 1.3 | 2.0 | 1.6 | 1.2 | |||||||||||||||||||||
Total ATM operating revenues | 100.0 | % | 100.0 | % | 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. The merchant fees to be paid to 7-Eleven pursuant to the placement agreement executed upon the closing of the transaction are consistent with the types and amounts of fees that are paid to our other merchant customers. | |
• | Processing Fees. We pay fees to third-party vendors for processing transactions originated at our ATMs. These vendors, which include Star Systems, Fiserv, RBSLynk (“Lynk”, a subsidiary of The Royal Bank of Scotland Group), and Elan Financial Services, communicate with the cardholder’s |
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financial institution through EFT networks to gain transaction authorization and to settle transactions. As previously noted, we are in the process of converting most of our ATMs over to our own in-house processing switch, which should result in a slight reduction in our overall processing costs in the future. For the acquired 7-Eleven ATMs, Fiserv is currently under contract to provide the transaction processing services through 2009. For the Vcom units, 7-Eleven utilizes its own in-house transaction processing switch, which we acquired as part of the 7-Eleven ATM Transaction, that is the same type of processing switch we utilize for our own in-house processing activities. Accordingly, we will continue to utilize this switch to process the transactions conducted on the acquired Vcom units subsequent to the acquisition. |
• | Cost of Cash. Cost of cash includes all costs associated with our provision of vault cash for our ATMs, including fees for the use of cash, armored courier services, insurance, cash reconciliation, and associated wire fees. We entered into a new cash provider agreement with Wells Fargo Bank to provide vault cash for the ATM and Vcom units acquired from 7-Eleven. As the fees we pay under our contracts with our cash providers are based on market rates of interest, changes in interest rates could affect our cost of cash. However, we have entered into a number of interest rate swap transactions to hedge our exposure through 2010 on varying amounts of our current and anticipated outstanding domestic ATM cash balances, including the acquired 7-Eleven ATMs. | |
• | Communications. Under our Company-owned arrangements, we are generally responsible for expenses associated with providing telecommunications capabilities to the ATMs, allowing the ATMs to connect with the applicable EFT network. | |
• | Repairs and Maintenance. Depending on the type of arrangement with the merchant, we may be responsible for firstand/or second line maintenance for the ATM. We typically use third parties with national operations to provide these services. Our primary maintenance vendors are Diebold, NCR, and Pendum. NCR will serve as the primary maintenance provider for the acquired 7-Eleven ATMs. | |
• | 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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Year Ended | ||||||||
December 31, | ||||||||
2006 | ||||||||
Actual | Pro Forma | |||||||
(Unaudited) | ||||||||
(in thousands) | ||||||||
Revenues | $ | 293,605 | $ | 439,285 | (1) | |||
Cost of revenues (exclusive of depreciation, accretion, and amortization expense, shown separately below) | 221,293 | 337,185 | ||||||
Selling, general and administrative expenses | 21,667 | 27,580 | ||||||
Depreciation, accretion, and amortization expense | 30,578 | 46,999 | ||||||
Interest expense | 25,072 | 39,333 | ||||||
Loss before income taxes | (19 | ) | (6,826 | )(1) |
(1) | Excludes $18.0 million of upfront placement fees associated with the acquired Vcom operations. |
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Nine Months Ended | ||||||||||||||||||||
Years Ended December 31, | September 30, | |||||||||||||||||||
2004 | 2005 | 2006 | 2006 | 2007 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
ATM operating revenues | 94.7 | % | 96.3 | % | 95.7 | % | 95.8 | % | 96.0 | % | ||||||||||
Vcom operating revenues | — | — | — | — | 0.3 | |||||||||||||||
ATM product sales and other revenues | 5.3 | 3.7 | 4.3 | 4.2 | 3.7 | |||||||||||||||
Total revenues | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||
Cost of revenues: | ||||||||||||||||||||
Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization, shown separately below)(1) | 74.4 | 74.3 | 71.5 | 71.9 | 72.8 | |||||||||||||||
Cost of Vcom operating revenues | — | — | — | — | 1.0 | |||||||||||||||
Cost of ATM product sales and other revenues | 4.5 | 3.6 | 3.9 | 3.7 | 3.5 | |||||||||||||||
Total cost of revenues | 78.9 | 77.9 | 75.4 | 75.6 | 77.3 | |||||||||||||||
Gross profit | 21.1 | 22.1 | 24.6 | 24.4 | 22.7 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Selling, general, and administrative expenses | 7.0 | 6.6 | 7.4 | 7.2 | 8.0 | |||||||||||||||
Depreciation and accretion expense | 3.5 | 4.8 | 6.3 | 6.4 | 7.1 | |||||||||||||||
Amortization expense(2) | 2.9 | 3.3 | 4.1 | 4.4 | 5.4 | |||||||||||||||
Total operating expenses | 13.4 | 14.7 | 17.8 | 18.0 | 20.4 | |||||||||||||||
Income from operations | 7.7 | 7.4 | 6.8 | 6.4 | 2.2 | |||||||||||||||
Other expense (income): | ||||||||||||||||||||
Interest expense, net | 2.7 | 8.4 | 8.5 | 8.6 | 8.2 | |||||||||||||||
Minority interest in subsidiary | — | — | (0.1 | ) | (0.1 | ) | (0.1 | ) | ||||||||||||
Other, net | 0.1 | 0.4 | (1.6 | ) | (0.3 | ) | 0.4 | |||||||||||||
Total other expense | 2.8 | 8.8 | 6.8 | 8.2 | 8.5 | |||||||||||||||
Income (loss) before income taxes | 4.9 | (1.4 | ) | — | (1.8 | ) | (6.3 | ) | ||||||||||||
Income tax provision (benefit) | 1.9 | (0.5 | ) | (0.2 | ) | (0.6 | ) | 1.2 | ||||||||||||
Net income (loss) | 3.0 | % | (0.9 | )% | (0.2 | )% | (1.2 | )% | (7.5 | )% | ||||||||||
(1) | Excludes effects of depreciation, accretion, and amortization expense of $11.4 million, $20.6 million, and $29.2 million for the years ended December 31, 2004, 2005, and 2006, respectively, and $22.6 million and $31.3 million for the nine month periods ended September 30, 2006 and 2007, respectively. The inclusion of this depreciation, accretion, and amortization expense in “Cost of ATM operating revenues” would have increased our Cost of ATM operating revenues as a percentage of total revenues by 5.9%, 7.7%, and 9.9% for the years ended December 31, 2004, 2005, and 2006, respectively, and 10.3% and 12.0% for the nine month periods ended September 30, 2006 and 2007, respectively. | |
(2) | Includes pretax impairment charges of $1.2 million and $2.8 million in 2005 and 2006, respectively, and $2.8 million and $5.3 million for the nine months ended September 30, 2006 and 2007, respectively. |
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Pro Forma | Pro Forma | |||||||||||||||||||||||||||
Year Ended | Nine Months Ended | Nine Months Ended | ||||||||||||||||||||||||||
Year Ended December 31, | December 31, | September 30, | September 30, | |||||||||||||||||||||||||
2004 | 2005 | 2006 | 2006 | 2006 | 2007 | 2007 | ||||||||||||||||||||||
Average number of transacting ATMs | 17,936 | 26,164 | 25,778 | 31,301 | 25,913 | 27,149 | 31,033 | |||||||||||||||||||||
Total transactions (in thousands) | 111,577 | 156,851 | 172,808 | 264,431 | 128,539 | 166,183 | 222,360 | |||||||||||||||||||||
Monthly total transactions per ATM(1) | 518 | 500 | 559 | 704 | 551 | 680 | 796 | |||||||||||||||||||||
Total withdrawal transactions (in thousands) | 86,821 | 118,960 | 125,078 | 192,107 | 93,756 | 113,934 | 155,100 | |||||||||||||||||||||
Monthly withdrawal transactions per ATM | 403 | 379 | 404 | 511 | 402 | 466 | 555 | |||||||||||||||||||||
Per withdrawal transaction: | ||||||||||||||||||||||||||||
ATM operating revenues | $ | 2.10 | $ | 2.18 | $ | 2.25 | $ | 2.17 | $ | 2.23 | $ | 2.21 | $ | 2.14 | ||||||||||||||
Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization)(2) | 1.65 | 1.68 | 1.68 | 1.61 | 1.67 | 1.68 | 1.62 | |||||||||||||||||||||
ATM operating gross profit(2)(3)(4) | $ | 0.45 | $ | 0.50 | $ | 0.57 | $ | 0.56 | $ | 0.56 | $ | 0.53 | $ | 0.52 | ||||||||||||||
Per ATM per month: | ||||||||||||||||||||||||||||
ATM operating revenues | $ | 849 | $ | 825 | $ | 908 | $ | 1,110 | $ | 898 | $ | 1,031 | $ | 1,186 | ||||||||||||||
Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization)(5) | 667 | 636 | 678 | 825 | 674 | 782 | 895 | |||||||||||||||||||||
ATM operating gross profit(3)(4)(5) | $ | 182 | $ | 189 | $ | 230 | $ | 285 | $ | 224 | $ | 249 | $ | 291 | ||||||||||||||
ATM operating gross profit margin (exclusive of depreciation, accretion, and amortization)(2)(4) | 21.4 | % | 22.9 | % | 25.3 | % | 25.8 | % | 25.0 | % | 24.1 | % | 24.5 | % | ||||||||||||||
ATM operating gross profit margin (inclusive of depreciation, accretion, and amortization)(6) | 15.2 | % | 14.9 | % | 14.9 | % | 14.9 | % | 14.2 | % | 11.7 | % | 12.8 | % |
(1) | The historical 2007 average number of transacting ATMs for the nine months ended September 30, 2007 includes the ATMs acquired in the 7-Eleven ATM Transaction beginning from the acquisition date (July 20, 2007) and continuing through September 30, 2007. The historical |
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2006 average numbers of transacting ATMs for the year ended December 31, 2006 and nine months ended September 30, 2006 includes the ATMs of our Mexico operations beginning from the acquisition date (February 8, 2006) and continuing through December 31, 2006 and September 30, 2006, respectively. | ||
(2) | Excludes effects of depreciation, accretion, and amortization expense of $11.4 million, $20.6 million, and $29.2 million for the years ended December 31, 2004, 2005, and 2006, respectively, $45.6 million for the pro forma year ended December 31, 2006, $22.6 million and $31.3 million for the nine month periods ended September 30, 2006 and 2007, respectively, and $39.0 million for the pro forma nine month period ended September 30, 2007. The inclusion of this depreciation, accretion, and amortization expense in “Cost of ATM operating revenues” would have increased our Cost of ATM operating revenues per withdrawal transaction and decreased our ATM operating gross profit per withdrawal transaction by $0.13, $0.17, and $0.23 for the years ended December 31, 2004, 2005, and 2006, respectively, $0.24 for the pro forma year ended December 31, 2006, $0.24 and $0.27 for the nine month periods ended September 30, 2006 and 2007, respectively, and $0.25 for the pro forma nine month period ended September 30, 2007. | |
(3) | ATM operating gross profit is a measure of profitability that uses only the revenues and expenses that are transaction-based. The revenues and expenses from ATM equipment sales, Vcom Services, and other ATM-related services are not included. | |
(4) | The increase in ATM operating gross profit margin (exclusive of depreciation, accretion, and amortization) in 2006 when compared to 2005 is due to the increases in revenues associated with the Company’s bank and network branding initiatives, increased surcharge rates in selected merchant retail locations, and higher gross profit margins associated with our United Kingdom portfolio of ATMs (which was acquired in May 2005). The decrease in ATM operating gross profit margins in 2007 is primarily due to higher vault cash costs and costs incurred in connection with our Triple-DES upgrade and in-house processing conversion costs. | |
(5) | The inclusion in “Cost of ATM operating revenues” of the depreciation, accretion, and amortization expensed referenced in Note 2 above would have increased our Cost of ATM operating revenues per ATM per month and decreased our ATM operating gross profit per ATM per month by $53, $66, and $94 for the years ended December 31, 2004, 2005, and 2006, respectively, $121 for the pro forma year ended December 31, 2006, $97 and $128 for the nine month periods ended September 30, 2006 and 2007, respectively, and $140 for the pro forma nine month period ended September 30, 2007. | |
(6) | The decrease in ATM operating gross profit margin (inclusive of depreciation, accretion, and amortization) in 2007 when compared to 2006 is primarily due to higher depreciation and accretion expense associated with recent ATM deployments in the United Kingdom and Mexico, which have yet to achieve the higher consistent recurring transaction levels seen in our more mature ATMs, and the incremental amortization expense related to an intangible asset impairment recorded in the third quarter of 2007. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2006 | 2007 | % Change | 2006 | 2007 | % Change | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||
ATM operating revenues | $ | 72,887 | $ | 106,234 | 45.8 | % | $ | 209,542 | $ | 251,854 | 20.2 | % | ||||||||||||
Vcom operating revenues | — | 685 | 100.0 | % | — | 685 | 100.0 | % | ||||||||||||||||
ATM product sales and other revenues | 3,478 | 3,668 | 5.5 | % | 9,218 | 9,805 | 6.4 | % | ||||||||||||||||
Total revenues | $ | 76,365 | $ | 110,587 | 44.8 | % | $ | 218,760 | $ | 262,344 | 19.9 | % | ||||||||||||
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2006 | 2007 | % Change | 2006 | 2007 | % Change | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||
Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization, shown separately below)(1) | $ | 54,280 | $ | 79,966 | 47.3 | % | $ | 157,225 | $ | 191,046 | 21.5 | % | ||||||||||||
Cost of Vcom operating revenues | — | 2,644 | 100.0 | % | — | 2,644 | 100.0 | % | ||||||||||||||||
Cost of ATM product sales and other revenues | 3,105 | 3,111 | 0.2 | % | 8,142 | 9,196 | 12.9 | % | ||||||||||||||||
Total cost of revenues (exclusive of depreciation, accretion, and amortization, shown separately below)(1) | $ | 57,385 | $ | 85,721 | 49.4 | % | $ | 165,367 | $ | 202,886 | 22.7 | % | ||||||||||||
ATM operating gross profit margin (exclusive of depreciation, accretion, and amortization, shown separately below)(1) | 25.5 | % | 24.7 | % | 25.0 | % | 24.1 | % | ||||||||||||||||
Vcom operating gross profit margin | — | (286.0 | )% | — | (286.0 | )% | ||||||||||||||||||
ATM product sales and other revenues gross profit margin | 10.7 | % | 15.2 | % | 11.7 | % | 6.2 | % | ||||||||||||||||
Total gross profit margin (exclusive of depreciation, accretion, and amortization, shown separately below)(1) | 24.9 | % | 22.5 | % | 24.4 | % | 22.7 | % | ||||||||||||||||
ATM operating gross profit margin (inclusive of depreciation, accretion, and amortization) | 15.8 | % | 10.0 | % | 14.2 | % | 11.7 | % | ||||||||||||||||
Total gross profit margin (inclusive of depreciation, accretion, and amortization) | 15.5 | % | 8.3 | % | 14.1 | % | 10.7 | % |
(1) | Excludes depreciation, accretion, and amortization expense of $15.7 million and $7.1 million for the three month periods ended September 30, 2007 and 2006, respectively, and $31.3 million and $22.6 million for the nine month periods ended September 30, 2007 and 2006, respectively. |
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2006 | 2007 | % Change | 2006 | 2007 | % Change | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||
Selling, general and administrative expenses, excluding stock-based compensation | $ | 5,571 | $ | 7,324 | 31.5 | % | $ | 15,109 | $ | 20,264 | 34.1 | % | ||||||||||||
Stock-based compensation | 240 | 297 | 23.8 | % | 600 | 721 | 20.2 | % | ||||||||||||||||
Total selling, general, and administrative expenses | $ | 5,811 | $ | 7,621 | 31.1 | % | $ | 15,709 | $ | 20,985 | 33.6 | % | ||||||||||||
Percentage of revenues: | ||||||||||||||||||||||||
Selling, general, and administrative expenses | 7.3 | % | 6.6 | % | 6.9 | % | 7.7 | % | ||||||||||||||||
Stock-based compensation | 0.3 | % | 0.3 | % | 0.3 | % | 0.3 | % | ||||||||||||||||
Total selling, general, and administrative expenses | 7.6 | % | 6.9 | % | 7.2 | % | 8.0 | % |
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2006 | 2007 | % Change | 2006 | 2007 | % Change | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||
Depreciation expense | $ | 4,583 | $ | 6,600 | 44.0 | % | $ | 12,888 | $ | 17,710 | 37.4 | % | ||||||||||||
Accretion expense | 631 | 361 | (42.8 | )% | 1,184 | 831 | (29.8 | )% | ||||||||||||||||
Depreciation and accretion expense | $ | 5,214 | $ | 6,961 | 33.5 | % | $ | 14,072 | $ | 18,541 | 31.8 | % | ||||||||||||
Percentage of revenues: | ||||||||||||||||||||||||
Depreciation expense | 6.0 | % | 6.0 | % | 5.9 | % | 6.8 | % | ||||||||||||||||
Accretion expense | 0.8 | % | 0.3 | % | 0.5 | % | 0.3 | % | ||||||||||||||||
Total depreciation and accretion | 6.8 | % | 6.3 | % | 6.4 | % | 7.1 | % |
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2006 | 2007 | % Change | 2006 | 2007 | % Change | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||
Amortization expense | $ | 2,263 | $ | 9,204 | 306.7 | % | $ | 9,610 | $ | 14,062 | 46.3 | % | ||||||||||||
Percentage of revenues | 3.0 | % | 8.3 | % | 4.4 | % | 5.4 | % |
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2006 | 2007 | % Change | 2006 | 2007 | % Change | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||
Interest expense, net | $ | 5,871 | $ | 8,545 | 45.5 | % | $ | 17,193 | $ | 20,437 | 18.9 | % | ||||||||||||
Amortization and write-off of financing costs and bond discount | 362 | 439 | 21.3 | % | 1,576 | 1,155 | (26.7 | )% | ||||||||||||||||
Total interest expense, net | $ | 6,233 | $ | 8,984 | 44.1 | % | $ | 18,769 | $ | 21,592 | 15.0 | % | ||||||||||||
Percentage of revenues | 8.2 | % | 8.1 | % | 8.6 | % | 8.2 | % |
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Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2006 | 2007 | % Change | 2006 | 2007 | % Change | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||
Minority interest | $ | (71 | ) | $ | (174 | ) | 145.1 | % | $ | (128 | ) | $ | (286 | ) | 123.4 | % | ||||||||
Other expense (income) | (83 | ) | 678 | (916.9 | )% | (740 | ) | 1,037 | (240.1 | )% | ||||||||||||||
Total other expense (income) | $ | (154 | ) | $ | 504 | (427.3 | )% | $ | (868 | ) | $ | 751 | (186.5 | )% | ||||||||||
Percentage of revenues | (0.2 | )% | 0.5 | % | (0.4 | )% | 0.3 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2006 | 2007 | % Change | 2006 | 2007 | % Change | |||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||
Income tax provision (benefit) | $ | (60 | ) | $ | 2,275 | (3,891.7 | )% | $ | (1,217 | ) | $ | 3,212 | (363.9 | )% | ||||||||||
Effective tax rate | 15.5 | % | (27.1 | )% | 31.2 | % | (19.5 | )% |
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For the Years Ended December 31, | ||||||||||||||||||||
% Change | % Change | |||||||||||||||||||
2004 | 2005 | 2004 to 2005 | 2006 | 2005 to 2006 | ||||||||||||||||
(in thousands, excluding percentages) | ||||||||||||||||||||
ATM operating revenues | $ | 182,711 | $ | 258,979 | 41.7 | % | $ | 280,985 | 8.5 | % | ||||||||||
ATM product sales and other revenues | 10,204 | 9,986 | (2.1 | )% | 12,620 | 26.4 | % | |||||||||||||
Total revenues | $ | 192,915 | $ | 268,965 | 39.4 | % | $ | 293,605 | 9.2 | % | ||||||||||
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For the Years Ended December 31, | ||||||||||||||||||||
% Change | % Change | |||||||||||||||||||
2004 | 2005 | 2004 to 2005 | 2006 | 2005 to 2006 | ||||||||||||||||
(in thousands, excluding percentages) | ||||||||||||||||||||
Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization, shown separately below)(1) | $ | 143,504 | $ | 199,767 | 39.2 | % | $ | 209,850 | 5.0 | % | ||||||||||
Cost of ATM product sales and other revenues | 8,703 | 9,681 | 11.2 | % | 11,443 | 18.2 | % | |||||||||||||
Total cost of revenues (exclusive of depreciation, accretion, and amortization, shown separately below)(1) | $ | 152,207 | $ | 209,448 | 37.6 | % | $ | 221,293 | 5.7 | % | ||||||||||
ATM operating gross profit margin (exclusive of depreciation, accretion, and amortization, shown separately below)(1) | 21.4 | % | 22.9 | % | 25.3 | % | ||||||||||||||
ATM product sales and other revenues gross profit margin | 14.7 | % | 3.1 | % | 9.3 | % | ||||||||||||||
Total gross profit margin (exclusive of depreciation, accretion, and amortization, shown separately below)(1) | 21.1 | % | 22.1 | % | 24.6 | % | ||||||||||||||
ATM operating gross profit margin (inclusive of depreciation, accretion, and amortization) | 15.2 | % | 14.9 | % | 14.9 | % | ||||||||||||||
Total gross profit margin (inclusive of depreciation, accretion, and amortization) | 15.2 | % | 14.5 | % | 14.7 | % |
(1) | Excludes depreciation, accretion, and amortization expense of $11.4 million, $20.6 million, and $29.2 million for the years ended December 31, 2004, 2005, and 2006, respectively. |
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For The Years Ended December 31, | ||||||||||||||||||||
% Change | % Change | |||||||||||||||||||
2004 | 2005 | 2004 to 2005 | 2006 | 2005 to 2006 | ||||||||||||||||
(in thousands, excluding percentages) | ||||||||||||||||||||
Stock-based compensation | $ | 956 | $ | 2,201 | 130.2 | % | $ | 828 | (62.4 | )% | ||||||||||
Other selling, general, and administrative expenses | 12,615 | 15,664 | 24.2 | % | 20,839 | 33.0 | % | |||||||||||||
Total selling, general, and administrative expenses | $ | 13,571 | $ | 17,865 | 31.6 | % | $ | 21,667 | 21.3 | % | ||||||||||
Percentages of revenues: | ||||||||||||||||||||
Stock-based compensation | 0.5 | % | 0.8 | % | 0.3 | % | ||||||||||||||
Other selling, general, and administrative expenses | 6.5 | % | 5.8 | % | 7.1 | % | ||||||||||||||
Total selling, general, and administrative expenses | 7.0 | % | 6.6 | % | 7.4 | % |
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For the Years Ended December 31, | ||||||||||||||||||||
% Change | % Change | |||||||||||||||||||
2004 | 2005 | 2004 to 2005 | 2006 | 2005 to 2006 | ||||||||||||||||
(in thousands, excluding percentages) | ||||||||||||||||||||
Depreciation expense | $ | 6,506 | $ | 11,949 | 83.7 | % | $ | 18,323 | 53.3 | % | ||||||||||
Accretion expense | 279 | 1,002 | 259.1 | % | 272 | (72.9 | )% | |||||||||||||
Depreciation and accretion | $ | 6,785 | $ | 12,951 | 90.9 | % | $ | 18,595 | 43.6 | % | ||||||||||
Percentage of Revenues: | ||||||||||||||||||||
Depreciation expense | 3.4 | % | 4.4 | % | 6.2 | % | ||||||||||||||
Accretion expense | 0.1 | % | 0.4 | % | 0.1 | % | ||||||||||||||
Total depreciation and accretion expense | 3.5 | % | 4.8 | % | 6.3 | % |
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For the Years Ended December 31, | ||||||||||||||||||||
% Change | % Change | |||||||||||||||||||
2004 | 2005 | 2004 to 2005 | 2006 | 2005 to 2006 | ||||||||||||||||
(in thousands, excluding percentages) | ||||||||||||||||||||
Amortization | $ | 5,508 | $ | 8,980 | 63.0 | % | $ | 11,983 | 33.4 | % | ||||||||||
Percentages of revenues | 2.9 | % | 3.3 | % | 4.1 | % |
For the Years Ended December 31, | ||||||||||||||||||||
% Change | % Change | |||||||||||||||||||
2004 | 2005 | 2004 to 2005 | 2006 | 2005 to 2006 | ||||||||||||||||
(in thousands, excluding percentages) | ||||||||||||||||||||
Interest expense, net | $ | 4,155 | $ | 15,485 | 272.6 | % | $ | 23,143 | 49.5 | % | ||||||||||
Amortization and write-off of financing costs and bond discount | 1,080 | 6,941 | 542.7 | % | 1,929 | (72.2 | )% | |||||||||||||
Total interest expense, net | $ | 5,235 | $ | 22,426 | 328.4 | % | $ | 25,072 | 11.8 | % | ||||||||||
Percentages of revenues | 2.7 | % | 8.4 | % | 8.5 | % |
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For the Years Ended December 31, | ||||||||||||||||||||
% Change | % Change | |||||||||||||||||||
2004 | 2005 | 2004 to 2005 | 2006 | 2005 to 2006 | ||||||||||||||||
(in thousands, excluding percentages) | ||||||||||||||||||||
Minority interest | $ | 19 | $ | 15 | (21.1 | )% | $ | (225 | ) | (1,600.0 | )% | |||||||||
Other expense (income) | 209 | 968 | 363.2 | % | (4,761 | ) | (591.8 | )% | ||||||||||||
Total other expense (income) | $ | 228 | $ | 983 | 331.1 | % | $ | (4,986 | ) | (607.2 | )% | |||||||||
Percentages of revenues | 0.1 | % | 0.4 | % | (1.7 | )% |
For the Years Ended December 31, | ||||||||||||||||||||
% Change | % Change | |||||||||||||||||||
2004 | 2005 | 2004 to 2005 | 2006 | 2005 to 2006 | ||||||||||||||||
(in thousands, excluding percentages) | ||||||||||||||||||||
Income tax provision (benefit) | $ | 3,576 | $ | (1,270 | ) | (135.5 | )% | $ | 512 | 140.3 | % | |||||||||
Effective tax rate | 38.1 | % | 34.4 | % | (2,694.7 | )% |
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Payments Due by Period | ||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | Thereafter | Total | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Long-term financings: | ||||||||||||||||||||||||||||
Principal(1) | $ | 63 | $ | 537 | $ | 1,150 | $ | 1,297 | $ | 1,425 | $ | 406,033 | $ | 410,505 | ||||||||||||||
Interest(2) | 2,315 | 36,797 | 36,701 | 36,566 | 36,415 | 58,783 | 207,577 | |||||||||||||||||||||
Notes payable(3) | 165 | — | — | — | — | — | 165 | |||||||||||||||||||||
Operating leases | 1,363 | 5,374 | 5,115 | 1,044 | 538 | 2,907 | 16,341 | |||||||||||||||||||||
Capital leases | 385 | 1,048 | 755 | 240 | — | — | 2,428 | |||||||||||||||||||||
Merchant space leases | 1,166 | 4,645 | 2,247 | 1,408 | 1,347 | 2,347 | 13,160 | |||||||||||||||||||||
Total contractual obligations | $ | 5,457 | $ | 48,401 | $ | 45,968 | $ | 40,555 | $ | 39,725 | $ | 470,070 | $ | 650,176 | ||||||||||||||
(1) | Represents the face value of our Series B Notes of $100.0 million, the face value of our 9.25% senior subordinated notes due in 2013 issued in August 2005 of $200.0 million, $105.6 million outstanding under our amended revolving credit facility, and approximately $4.9 million outstanding under our Mexico equipment financing facilities. | |
(2) | Represents the estimated interest payments associated with our long-term debt outstanding as of September 30, 2007. | |
(3) | Represents a fully-funded note issued in conjunction with the Bank Machine acquisition in 2005. |
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Weighted Average Fixed | ||||||||
Notional Amount | Rate | Period | ||||||
$300,000 | 4.00 | % | October 1, 2007 — December 31, 2007 | |||||
$300,000 | 4.35 | % | January 1, 2008 — December 31, 2008 | |||||
$200,000 | 4.36 | % | January 1, 2009 — December 31, 2009 | |||||
$100,000 | 4.34 | % | January 1, 2010 — December 31, 2010 |
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![Average Surcharge Rates](https://capedge.com/proxy/S-4/0000950129-08-000955/h53387h5338703.gif)
Source: | © Dove Consulting, 2006 ATM Deployer Study. Reprinted with Permission. |
![Average Surcharge Rates](https://capedge.com/proxy/S-4/0000950129-08-000955/h53387h5338704.gif)
Source: | ©2005 American Bankers Association and Dove Consulting,a division of Hitachi Consulting. Reprinted with Permission. All Rights Reserved. |
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![(BAR CHART)](https://capedge.com/proxy/S-4/0000950129-08-000955/h53387h5338705.gif)
Source: | APACS’ U.K. Payment Statistics 2007 |
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![(BAR CHART)](https://capedge.com/proxy/S-4/0000950129-08-000955/h53387h5338706.gif)
Source: | APACS’ U.K. Payment Statistics 2007 |
![(BAR CHART)](https://capedge.com/proxy/S-4/0000950129-08-000955/h53387h5338707.gif)
Source: | APACS’ U.K. Payment Statistics 2007. |
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U.S. Rank | U.S. ATMs | % of Total | ||||||||||
1 | Cardtronics | 28,600 | 6.9 | % | ||||||||
2 | Bank of America | 18,600 | 4.5 | % | ||||||||
3 | ATM Express | 16,700 | 4.0 | % | ||||||||
4 | TRM | 10,500 | 2.5 | % | ||||||||
5 | PAI ATM Services | 8,700 | 2.1 | % | ||||||||
6 | JPMorgan Chase | 8,600 | 2.1 | % | ||||||||
7 | Wells Fargo | 6,800 | 1.6 | % | ||||||||
8 | International Merchant Services | 5,900 | 1.4 | % | ||||||||
9 | Wachovia Bank | 5,100 | 1.2 | % | ||||||||
10 | Access to Money | 5,000 | 1.2 | % | ||||||||
Top 10 | 114,500 | 27.6 | % | |||||||||
U.S. Market | 415,000 | 100.0 | % |
Source: | 2008 EFT Data Book, excluding Cardtronics’ data which is based on internal data as of September 30, 2007. |
World-Wide | World-Wide | |||||||||||
Rank | ATMs | % of Total | ||||||||||
1 | Cardtronics (USA) | 31,500 | 2.0 | % | ||||||||
2 | Japan Post (Japan) | 26,500 | 1.7 | % | ||||||||
3 | Banco de Brasil (Brazil) | 26,300 | 1.7 | % | ||||||||
4 | Banco Itau (Brazil) | 21,100 | 1.4 | % | ||||||||
5 | Nat’l Agricultural Co-op (South Korea) | 20,400 | 1.3 | % | ||||||||
6 | Ind. & Commercial Bank of China (China) | 18,900 | 1.2 | % | ||||||||
7 | Caixa Economica Federal (Brazil) | 18,900 | 1.2 | % | ||||||||
8 | Bank of America (USA) | 18,600 | 1.2 | % | ||||||||
9 | Bradesco (Brazil) | 16,600 | 1.1 | % | ||||||||
10 | China Construction Bank (China) | 15,800 | 1.0 | % | ||||||||
Top 10 | 214,600 | 13.9 | % | |||||||||
World-wide Market | 1,540,000 | 100.0 | % |
Source: | Retail Banking Research, excluding Bank of America’s data which is based on the 2008 EFT Data Book and Cardtronics’ data which is based on internal data as of September 30, 2007. |
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• | In February 2006, we acquired a 51.0% ownership stake in CCS Mexico, an independent ATM operator located in Mexico, for approximately $1.0 million in cash consideration and the assumption of approximately $0.4 million in additional liabilities. At the time of the acquisition, CCS Mexico operated approximately 300 ATMs. | |
• | In December 2005, we acquired all of the outstanding shares of ATM National, Inc., the owner and operator of the Allpoint nationwide surcharge-free ATM network. The consideration for such acquisition totaled $4.8 million. | |
• | In May 2005, we purchased 100% of the outstanding shares of Bank Machine (Acquisitions) Limited for approximately $95.0 million. At the time of the acquisition, Bank Machine (Acquisitions) Limited operated approximately 1,000 ATMs in the United Kingdom. | |
• | In April 2005, we acquired a portfolio of 330 ATMs, primarily at BP Amoco locations throughout the midwest region, for approximately $9.0 million in cash. | |
• | In March 2005, we acquired a portfolio of 475 ATMs located in the greater New York Metro area from BAS Communications for approximately $8.2 million in cash. | |
• | In June 2004, we acquired the ATM business owned by E*TRADE Access, Inc. for $106.9 million in cash. At the time of the acquisition, E*TRADE Access, Inc. operated 13,155 ATMs in the United States. Historical audited financial statements for this company (“ATM Company”) are included elsewhere herein. |
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Company-Owned | Merchant-Owned | Total | ||||||||||
Number of ATMs | 19,649 | 11,937 | 31,586 | |||||||||
Percent of total ATMs | 62.2 | % | 37.8 | % | 100.0 | % |
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• | an initial term of five to seven years; | |
• | exclusive deployment of ATMs at locations where we install an ATM; | |
• | our right to increase surcharge fees; | |
• | our right to remove ATMs at underperforming locations without having to pay a termination fee; | |
• | in the United States, our right to terminate or remove ATMs or renegotiate the fees payable 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. |
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• | 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 ATMs at any time its stores are open for business; and | |
• | provisions, when possible, that require the assumption of our contract in the event a merchant sells its stores. |
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Name | Age | |||
Fred R. Lummis | 54 | |||
Jack Antonini | 54 | |||
Tim Arnoult | 58 | |||
Robert P. Barone | 70 | |||
Jorge M. Diaz | 43 | |||
Dennis F. Lynch | 59 | |||
Michael A.R. Wilson | 40 |
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Name | Age | Position | ||||
Jack Antonini | 54 | Chief Executive Officer, President, and Director | ||||
J. Chris Brewster | 58 | Chief Financial Officer | ||||
Michael H. Clinard | 40 | Chief Operating Officer | ||||
Thomas E. Upton | 51 | Chief Administrative Officer | ||||
Rick Updyke | 48 | Chief Strategy and Development Officer | ||||
Ronald Delnevo | 53 | Managing Director of Bank Machine |
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• | 2007 Plan. In August 2007, our Board of Directors and our stockholders approved our 2007 Plan. The adoption, approval, and effectiveness of this plan were contingent upon the successful completion of |
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our initial public offering, which occurred in December 2007. The number of shares of common stock that may be issued under the 2007 Plan may not exceed 3,179,393 shares, subject to further adjustment to reflect stock dividends, stock splits, recapitalizations and similar changes in our capital structure. As of December 31, 2007, no equity awards had been granted under the 2007 Plan. |
• | 2001 Plan. In June 2001, our Board of Directors adopted our 2001 Plan. Various plan amendments have been approved since that time, the most recent being in November 2007. As a result of the adoption of the 2007 Plan, at the direction of the Board of Directors, no further awards will be granted under our 2001 Stock Incentive Plan. As of December 31, 2007, options to purchase an aggregate of 6,915,082 shares of common stock (net of options cancelled) had been granted pursuant to the 2001 Plan, all of which are classified as non-qualified stock options, and options to purchase 1,955,041 shares of common stock had been exercised. |
• | 401(k) Savings Plan. We have a defined contribution 401(k) plan, which is designed to assist our employees in providing for their retirement. Each of our named executive officers is entitled to participate in this plan to the same extent that our other employees are entitled to participate. In 2007, we began matching 25% of employee contributions up to 6.0% of the employee’s salary (for a maximum matching contribution of 1.5% of the executive’s salary by the Company). Employees are immediately vested in their contributions while our matching contributions will vest at a rate of 20% per year. | |
• | Health and Welfare Benefits. Our executive officers are eligible to participate in medical, dental, vision, disability and life insurance, and flexible healthcare and dependent care spending accounts to meet their health and welfare needs under the same plans and terms as the rest of our employees. These |
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benefits are provided so as to assure that we are able to maintain a competitive position in terms of attracting and retaining executive officers and other employees. This program is a fixed component of compensation and the benefits are provided on a non-discriminatory basis to all of our employees. |
• | Perquisites and Other Personal Benefits. We believe that the total mix of compensation and benefits provided to our executive officers is competitive and perquisites should generally not play a large role in our executive officers’ total compensation. As a result, the perquisites and other personal benefits we provide to our executive officers are very limited in nature. |
Non-Equity | ||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | All Other | |||||||||||||||||||||||||
Name & Principal Position | Year | Salary | Awards(1) | Awards(2) | Compensation | Compensation | Total | |||||||||||||||||||||
Jack Antonini - | 2007 | $ | 364,651 | $ | 11,025 | $ | — | $ | — | (3) | $ | — | $ | 375,676 | (3) | |||||||||||||
Chief Executive Officer and President | 2006 | $ | 347,287 | $ | 215,894 | $ | — | $ | 223,653 | $ | — | $ | 786,834 | |||||||||||||||
J. Chris Brewster - | 2007 | $ | 275,000 | — | $ | 132,449 | — | (3) | $ | — | $ | 407,449 | (3) | |||||||||||||||
Chief Financial Officer | 2006 | $ | 248,063 | — | $ | 103,929 | $ | 209,753 | $ | — | $ | 561,745 | ||||||||||||||||
Michael H. Clinard - | 2007 | $ | 243,101 | — | $ | 88,300 | — | (3) | $ | 10,739 | (4) | $ | 342,140 | (3) | ||||||||||||||
Chief Operating Officer | 2006 | $ | 231,525 | — | $ | 69,286 | $ | 149,102 | $ | 9,000 | (4) | $ | 458,913 | |||||||||||||||
Thomas E. Upton - | 2007 | $ | 231,525 | — | $ | 88,300 | — | (3) | $ | — | $ | 319,825 | (3) | |||||||||||||||
Chief Administrative Officer | 2006 | $ | 220,500 | — | $ | 69,286 | $ | 234,902 | $ | — | $ | 524,688 | ||||||||||||||||
Ronald Delnevo(5) - | 2007 | $ | 353,714 | — | $ | 47,250 | (6) | — | (3) | $ | 51,188 | (7) | $ | 452,152 | (3) | |||||||||||||
Managing Director of Bank Machine | 2006 | $ | 281,937 | — | $ | — | $ | 153,868 | $ | 49,180 | (7) | $ | 484,985 |
(1) | Amounts represent the compensation expense recognized by our company for the years ended December 31, 2007 and 2006 related to restricted stock granted to Mr. Antonini in 2003. | |
(2) | Amounts were calculated utilizing the provisions of SFAS No. 123R. For a description of the assumptions underlying the valuation of these option awards, see Note 3 in the notes to our consolidated financial statements included elsewhere herein. For purposes of this disclosure, estimates of forfeitures related to service-based vesting conditions have been omitted. | |
(3) | The Board of Directors has determined that the non-equity incentive plan bonuses for the year ended December 31, 2007 are currently not calculable as our audited financial statements for fiscal 2007 have not been completed. It is expected that a final determination will be made on or before March 31, 2008. If these bonuses are determined to be payable, we will disclose the amounts in a Current Report onForm 8-K filed with the SEC. Additionally, as a result of our inability to determine the non-equity incentive plan bonuses for the year ended December 31, 2007, the total compensation amounts presented above for one or more of the named executive officers will change if the bonuses are determined to be payable. | |
(4) | Amount presented for 2007 represents a car allowance provided to Mr. Clinard in accordance with the terms of his employment agreement and matching contributions under our 401(k) plan. Amount presented for 2006 represents a car allowance provided in accordance with the terms of his employment agreement. | |
(5) | Amounts presented for Mr. Delnevo in 2007 and 2006 were converted from pounds sterling to U.S. dollars at $2.0074 and $1.9613, respectively, which represent the exchange rate in effect as of December 31, 2007 and 2006, respectively. | |
(6) | During 2007, the compensation committee granted option awards to Mr. Delnevo. For details on this grant, see “— Compensation Components — Long-term Inventive Program” above. | |
(7) | Amounts presented represent a car allowance and monthly contributions made on behalf of Mr. Delnevo to a personal retirement account selected by Mr. Delnevo in accordance with the terms of his employment agreement. |
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All Other | Grant Date | |||||||||||||||||||||||||||||||||||
Estimated Possible/Future | Option Awards: | Fair Value | ||||||||||||||||||||||||||||||||||
Payouts Under Non-Equity | Number of Securities | Exercise or Base | of Stock | |||||||||||||||||||||||||||||||||
Approval | Incentive Plan Awards(1) | Underlying | Price of Option | and Option | ||||||||||||||||||||||||||||||||
Name | Grant Date | Date(3) | Threshold | Target(4) | Maximum | Options | Awards(2) | Awards | ||||||||||||||||||||||||||||
J. Antonini | — | — | $ | — | $ | 182,326 | — | (5) | — | — | — | |||||||||||||||||||||||||
J. C. Brewster | — | — | $ | — | $ | 137,500 | — | (5) | — | — | — | |||||||||||||||||||||||||
M. H. Clinard | — | — | $ | — | $ | 121,551 | — | (5) | — | — | — | |||||||||||||||||||||||||
T. E. Upton | — | — | $ | — | $ | 115,763 | — | (5) | — | — | — | |||||||||||||||||||||||||
R. Delnevo(6)(7) | 07-02-07 | 06-29-07 | — | — | — | 317,940 | $ | 11.46 | $ | 1,639,346 | ||||||||||||||||||||||||||
— | — | $ | — | $ | 142,483 | — | (5) | — | — | — |
(1) | Represents the dollar value of the applicable range (threshold, target and maximum amounts) of bonuses estimated to be awarded to each named executive officer for 2007. As the Board of Directors has determined that the non-equity incentive plan bonuses for the year ended December 31, 2007 are currently not calculable because our audited financial statements for fiscal 2007 have not been completed, no amounts have been reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. It is expected that a final determination will be made on or before March 31, 2008. If these bonuses are determined to be payable, we will disclose the amounts in a Current Report onForm 8-K filed with the SEC. |
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(2) | There was no public market for our common stock prior to December 2007. As this award was granted in July 2007, the exercise price of $11.46 per share represented management’s estimate of the fair value of our common stock at the date of grant. This fair value was estimated utilizing the probability-weighted expected return cash flow method, and included (a) estimates of fair value based on our anticipated future cash flows and (b) the enterprise value of other similar publicly-traded companies within our industry, including those that had been recently acquired. | |
(3) | Represents the date the compensation committee formally approved the option grants. | |
(4) | Represents the targeted bonus amount based on the terms of our 2007 Executive Bonus Plan, as the Board of Directors has determined that the non-equity incentive plan bonuses for the year ended December 31, 2007 are currently not calculable because our audited financial statements for fiscal 2007 have not been completed. It is expected that a final determination will be made on or before March 31, 2008. If these bonuses are determined to be payable, we will disclose such amounts in a Current Report onForm 8-K filed with the SEC. | |
(5) | Under the 2007 Executive Bonus Plan, there is no formal cap on the amount of bonus an executive may receive. Rather, the annual bonuses for our executives are determined at the sole discretion of our compensation committee. As a result, the actual amounts awarded may exceed or fall short of the targeted level. As we are unable to predict the committee’s ultimate actions regarding the bonus awards, we are unable to estimate the maximum possible grants that could potentially be made and paid out under the bonus plan. | |
(6) | Amounts shown for Mr. Delnevo were converted from pounds sterling to U.S. dollars at $2.0074, which represents the exchange rate in effect as of December 31, 2007. | |
(7) | The non-equity incentive plan awards information presented for Mr. Delnevo excludes amounts that may become payable under our U.K. long-term incentive bonus program (see “— Long-Term Incentive Bonus Program — U.K. Operations” above). Future payouts under such program, which was established to provide a long-term incentive for Mr. Delnevo and his direct reports to achieve certain cumulative earnings objectives over a four-year period, are contingent upon the actual results exceeding the cumulative earnings benchmark, less an investment charge on the capital employed to achieve such results. Under the terms of the incentive plan, such payouts would not occur until 2009 and are dependent on cumulative earnings for future periods. As a result, we are unable to estimate at this time what the ultimate payout will be, if any. |
Option Awards | ||||||||||||||||||||||||
Equity Incentive | ||||||||||||||||||||||||
# of Securities | Plan Awards: | |||||||||||||||||||||||
# of Securities | Underlying | # of Securities | ||||||||||||||||||||||
Underlying | Unexercised | Underlying | Option | Option | ||||||||||||||||||||
Unexercised Options | Options | Unexercised | Exercise | Expiration | ||||||||||||||||||||
Name | Exercisable | Unexercisable | Unearned Options | Price | Date | |||||||||||||||||||
J. C. Brewster | 357,682 | — | — | $ | 6.54 | 03-31-2014 | ||||||||||||||||||
29,807 | 89,420 | (1) | — | $ | 10.55 | 03-05-2016 | ||||||||||||||||||
M. H. Clinard | 98,696 | — | — | $ | 0.74 | 06-03-2011 | ||||||||||||||||||
49,805 | — | — | $ | 1.48 | 03-02-2012 | |||||||||||||||||||
19,871 | 59,614 | (1) | — | $ | 10.55 | 03-05-2016 | ||||||||||||||||||
T. E. Upton | 157,809 | — | — | $ | 0.74 | 06-03-2011 | ||||||||||||||||||
29,807 | — | — | $ | 1.48 | 03-02-2012 | |||||||||||||||||||
19,871 | 59,614 | (1) | — | $ | 10.55 | 03-05-2016 | ||||||||||||||||||
R. Delnevo | 158,970 | 158,969 | (2) | — | $ | 10.55 | 05-16-2015 | |||||||||||||||||
— | — | 317,940 | (3) | $ | 11.46 | 06-30-2017 |
(1) | These remaining options will vest in three equal annual installments, the first of which will occur on March 6, 2008 and the last of which will occur on March 6, 2010. | |
(2) | These remaining options will vest in two equal annual installments, the first of which will occur on May 17, 2008 and the last of which will occur on May 17, 2009. | |
(3) | These options are performance-based options granted in July 2007 that become eligible for vesting upon the achievement of certain EBITDA targets by our U.K. reportable segment for 2007, 2008, and 2009. It is uncertain as to whether the EBITDA targets will be met, including targets for 2007, and whether such options will become eligible for vesting. All options are considered unearned as of |
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December 31, 2007. In the event the EBITDA targets are met, the awards will continue to remain subject to service-based vesting conditions. |
Termination in | Termination by | |||||||||||||||||||||
Involuntary, | Good Reason | Connection with | Executive upon | |||||||||||||||||||
Not-for-Cause | Termination | a Change in | a Change in | Death or | ||||||||||||||||||
Executive | Benefits | Termination | by Executive | Control | Control | Disability | ||||||||||||||||
J. Antonini | Base salary(1) | $ | 30,388 | (2) | $ | — | $ | 30,388 | (3) | $ | 30,388 | (3) | $ | — | ||||||||
Bonus | — | (4) | $ | — | — | (4) | — | (4) | — | (4) | ||||||||||||
J. C. Brewster | Base salary(1)(5) | $ | 275,000 | (5) | $ | 275,000 | $ | 275,000 | $ | 275,000 | $ | — | ||||||||||
Bonus | — | (4) | — | (4) | — | (4) | — | (4) | — | (4) | ||||||||||||
Post-employment health care(6) | $ | 8,672 | $ | 8,672 | $ | 8,672 | $ | 8,672 | $ | — | ||||||||||||
M. H. Clinard | Base salary(1) | $ | 20,258 | (2) | $ | 20,258 | $ | — | $ | — | $ | 15,925 | (7) | |||||||||
Bonus | — | (4) | $ | — | $ | — | $ | — | — | (4) | ||||||||||||
T. E. Upton | Base salary(1) | $ | 19,294 | (2) | $ | — | $ | — | $ | — | $ | 19,294 | ||||||||||
Bonus | — | (4) | $ | — | $ | — | $ | — | — | (4) | ||||||||||||
R. Delnevo(8) | Base salary(1) | $ | 356,207 | (2) | $ | 356,207 | $ | — | $ | — | $ | 109,602 | (9) | |||||||||
Bonus | — | (4) | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Accrued vacation | $ | 6,850 | $ | 6,850 | $ | 6,850 | $ | — | $ | 6,850 |
(1) | Upon the occurrence of any of the termination events listed, or in the event of a for-cause termination or a voluntary termination (neither of which are not shown in the above table), the terminated executive would receive any base salary amount that had been earned but had not been paid at the time of termination. The total amounts shown above do not include such amounts. | |
(2) | In the event of a not-for-cause termination, a terminated executive would receive severance pay equal to his current base salary for the lesser of a period of 12 months or the number of months remaining under the executive’s employment agreement. The employment agreements of Messrs. Antonini, Brewster, Clinard, and Upton expired on January 31, 2008. As a result, only one month of salary is reflected in the above table for Messrs. Antonini, Clinard, and Upton. See footnote (5) below for information on the amount shown for |
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Mr. Brewster in the event of an involuntary not-for-cause termination. The employment agreement of Mr. Delnevo expires on May 17, 2009. For each executive, such amount would be payable in bi-weekly installments with the exception of Mr. Delnevo, whose employment agreement calls for such amount to be paid within 14 days of receiving a notice of termination. Additionally, each executive would receive a pro-rata bonus for services provided during the year. | ||
(3) | In the event of a termination upon a change in control, Mr. Antonini would receive severance pay equal to his current base salary for the lesser of a period of 12 months or the number of months remaining under his employment agreement (i.e., one month as of December 31, 2007). There is no specified time period following a change in control in which Mr. Antonini must notify us of his intention to terminate his employment with us. | |
(4) | The Board of Directors has determined that the non-equity incentive plan bonuses for the year ended December 31, 2007 are currently not calculable. It is expected that a final determination will be made on or before March 31, 2008. If these bonuses are determined to be payable, we will disclose such amounts in a Current Report onForm 8-K filed with the SEC. As a result of our inability to determine the non-equity incentive plan bonuses for the year ended December 31, 2007, the amounts presented above for one or more of the named executive officers will change if such bonuses are determined to be payable. | |
(5) | Under the terms of his employment agreement, in the event of a not-for-cause termination, a good reason termination, or termination upon a change in control, Mr. Brewster would receive payment in the amount of his base salary for a period of 12 months. To be eligible to receive such payments in the event of a good reason termination or a termination by the executive upon a change in control, Mr. Brewster must notify us within one year of the occurrence that he intends to terminate his employment with us. However, in the event he accepts another full-time employment position (defined as 20 hours per week) within one year after termination, remaining payments to be made by us would be reduced by the gross amount being earned under his new employment arrangement. | |
(6) | If Mr. Brewster, in the event of a not-for-cause termination, a good reason termination, or a termination in connection with a change in control, elected to continue benefits coverage through our group health plan under the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA), we would partially subsidize Mr. Brewster’s incremental healthcare premiums. Amount shown represents the difference in Mr. Brewster’s current insurance premiums and current COBRA rates for a similar plan. | |
(7) | In the event Mr. Clinard’s employment is terminated as a result of death or disability, Mr. Clinard would be entitled to receive payments equal to the difference between his base salary and any disability benefits received by him under our disability benefits plans (under which benefits are calculated as the lesser of 60% of base salary or $52,000) for the lessor of 12 months or the number of months remaining in his contract. As his contract expired on January 31, 2008, only one month of benefits is reflected in the above table. | |
(8) | Amounts shown for Mr. Delnevo were converted from pounds sterling to U.S. dollars at $2.0074, which represents the exchange rate in effect as of December 31, 2007. | |
(9) | In the event Mr. Delnevo becomes disabled, Mr. Delveno would be entitled to receive payments equal to his base salary for a maximum of 16 weeks (i.e., 80 work days.) |
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Fees Earned or | ||||
Name | Paid in Cash | |||
Fred R. Lummis | — | |||
Jack Antonini | — | |||
Robert P. Barone | $ | 2,000 | ||
Frederick W. Brazelton | — | |||
Ralph H. Clinard | — | |||
Ronald Coben | — | |||
Ronald Delnevo | — | |||
Jorge M. Diaz | $ | 2,000 | ||
Roger B. Kafker | — | |||
Michael A.R. Wilson | — |
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• | each person known by us to beneficially own more than 5% of our common stock; | |
• | each of our directors; | |
• | each of our named executive officers; and | |
• | all directors and executive officers as a group. |
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Number of Shares | Percent of | |||||||
of Common Stock | Common Stock | |||||||
Name of Beneficial Owner(1) | Beneficially Owned(2) | Beneficially Owned | ||||||
5% Stockholders: | ||||||||
The CapStreet Group, LLC(3) | 9,041,074 | 21.9 | % | |||||
CapStreet II, L.P. | 8,091,222 | 19.6 | % | |||||
CapStreet Parallel II, L.P. | 949,852 | 2.3 | % | |||||
TA Associates, Inc.(4) | 12,259,286 | 29.6 | % | |||||
TA IX, L.P. | 7,583,447 | 18.3 | % | |||||
TA/Atlantic and Pacific V L.P. | 3,033,370 | 7.3 | % | |||||
TA/Atlantic and Pacific IV L.P. | 1,307,663 | 3.2 | % | |||||
TA Strategic Partners Fund A L.P. | 155,268 | * | ||||||
TA Investors II, L.P. | 151,663 | * | ||||||
TA Strategic Partners Fund B L.P. | 27,675 | * | ||||||
Ralph H. Clinard(5) | 2,798,990 | 6.8 | % | |||||
Laura Clinard(6) | 2,798,986 | 6.8 | % | |||||
Directors and Executive Officers: | ||||||||
Fred R. Lummis(7) | 9,041,074 | 21.9 | % | |||||
Michael A.R. Wilson(8) | 12,259,286 | 29.6 | % | |||||
Michael H. Clinard(9) | 1,270,469 | 3.1 | % | |||||
J. Chris Brewster(10) | 387,489 | * | ||||||
Jack Antonini | 316,969 | * | ||||||
Thomas E. Upton(11) | 300,755 | * | ||||||
Ronald Delnevo(12) | 263,962 | * | ||||||
Robert P. Barone(13) | 34,306 | * | ||||||
Jorge M. Diaz(14) | 29,807 | * | ||||||
Rick Updyke | — | — | ||||||
Tim Arnoult | — | — | ||||||
Dennis F. Lynch | — | — | ||||||
All directors and executive officers as a group (13 persons) | 26,567,815 | 64.2 | % |
* | Less than 1.0% of the outstanding common stock | |
(1) | “Beneficial ownership” is a term broadly defined by the SEC inRule 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 December 31, 2007, if that person or group has the right to acquire shares within 60 days after such date. | |
(2) | The share information presented above gives effect to the stock split and conversion of the Series B Convertible Preferred Stock into shares of our common stock in conjunction with the offering. The stock split reflects (i) the conversion mechanics applicable to the Series B Convertible Preferred Stock held by TA Associates, as described in “Certain Relationships and Related Party Transactions,” (ii) the conversion of the remaining Series B Convertible Preferred Stock into an equal number of common shares, and (iii) a resulting 7.9485 to 1 stock split for all common shares, which was effected in conjunction with the offering. | |
(3) | The shares owned by The CapStreet Group, LLC are owned through its affiliated funds, CapStreet II, L.P. and CapStreet Parallel II, L.P. |
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(4) | The shares owned by TA Associates, Inc. through 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., and TA Investors II, L.P., which we collectively refer to as the TA Funds, represent common shares issued upon the conversion of Series B Convertible Preferred Stock into shares of our common stock. See “Certain Relationships and Related Party Transactions.” | |
(5) | Mr. Clinard is currently a member of our Board of Directors. The shares indicated as being beneficially owned by Mr. Clinard include 1,209,290 shares owned directly by him, 541,168 shares owned by four family trusts for the benefit of his children of which Mr. Clinard is a co-trustee and has shared voting power, and 1,048,532 shares owned by Mr. Clinard’s wife (Laura Clinard) of which Mr. Clinard may be deemed to be the beneficial owner. | |
(6) | The shares indicated as being beneficially owned by Laura Clinard include 1,048,532 shares owned directly by her, 541,164 shares owned by the Ralph Clinard Family Trust of which Laura Clinard is a co-trustee and has shared voting power, and 1,209,290 shares owned by Laura Clinard’s husband (Ralph Clinard) of which Laura Clinard may be deemed to be the beneficial owner. | |
(7) | The shares indicated as being beneficially owned by Mr. Lummis are owned directly by CapStreet II, L.P. and CapStreet Parallel II, L.P. Mr. Lummis serves as a senior advisor of The CapStreet Group, LLC, 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. | |
(8) | 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, except to the extent of his pecuniary interest therein and 22,310 shares of our common stock. | |
(9) | Includes 425,641 shares owned directly by Michael Clinard and 168,372 options that are exercisable within 60 days of December 31, 2007. Also included in the shares indicated as being beneficially owned by Michael Clinard are 541,164 shares owned by the Ralph Clinard Family Trust and 135,292 shares owned by a trust for the benefit of Michael Clinard, of which Michael Clinard is a co-trustee of and has shared voting power of and of which he may be deemed to be the beneficial owner. | |
(10) | Includes 387,489 options that are exercisable within 60 days of December 31, 2007. | |
(11) | Includes 207,487 options that are exercisable within 60 days of December 31, 2007. | |
(12) | Includes 158,970 options that are exercisable within 60 days of December 31, 2007. | |
(13) | Includes 34,306 options that are exercisable within 60 days of December 31, 2007. | |
(14) | Includes 29,807 options that are exercisable within 60 days of December 31, 2007. |
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• | any person who is, or at any time during the applicable period was, one of our directors; | |
• | any person who is known by us to be the beneficial owner of more than 5.0% of our common stock; | |
• | any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling,mother-in-law,father-in-law,son-in-law,daughter-in-law,brother-in-law, orsister-in-law of a director or a more than 5.0% beneficial owner of our common stock, and any person (other than a tenant or employee) sharing the household of such director or a more than 5.0% beneficial owner of our common stock; and | |
• | any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10.0% or greater beneficial ownership interest. |
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• | general unsecured obligations of the Company; | |
• | 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; | |
• | pari passuin right of payment with all existing and any future senior subordinated Indebtedness of the Company, including the $200.0 million aggregate principal amount of 9.250% senior subordinated notes due 2013 issued under the indenture dated as of August 12, 2005 (the “Series A Notes”); | |
• | senior in right of payment to any future subordinated Indebtedness of the Company | |
• | guaranteed by the Guarantors as described under “— Note Guarantees”; and | |
• | 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; |
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• | 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, including the Guarantee by that Guarantor of the Series A notes; and | |
• | is senior in right of payment to any future subordinated Indebtedness of that Guarantor. |
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Year | Percentage | |||
2009 | 104.625 | % | ||
2010 | 102.313 | % | ||
2011 and thereafter | 100.000 | % |
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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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171
CARDTRONICS, INC. AND SUBSIDIARIES | ||||
Unaudited Interim Condensed Consolidated Financial Statements: | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
Annual Financial Statements: | ||||
F-37 | ||||
F-38 | ||||
F-39 | ||||
F-40 | ||||
F-41 | ||||
F-42 | ||||
F-43 | ||||
7-ELEVEN FINANCIAL SERVICES BUSINESS | ||||
Unaudited Interim Financial Statements: | ||||
F-87 | ||||
F-88 | ||||
F-89 | ||||
F-90 | ||||
Annual Financial Statements: | ||||
F-93 | ||||
F-94 | ||||
F-95 | ||||
F-96 | ||||
F-97 | ||||
F-98 | ||||
ATM COMPANY | ||||
Annual and Interim Financial Statements | ||||
F-108 | ||||
F-109 | ||||
F-110 | ||||
F-111 | ||||
F-112 | ||||
F-113 |
F-1
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F-2
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September 30, | December 31, | |||||||
2007 | 2006 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 6,118 | $ | 2,718 | ||||
Accounts and notes receivable, net of allowance of $400 and $409 as of September 30, 2007 and December 31, 2006, respectively | 24,076 | 14,891 | ||||||
Inventory | 5,294 | 4,444 | ||||||
Prepaid expenses, deferred costs, and other current assets | 11,955 | 16,334 | ||||||
Total current assets | 47,443 | 38,387 | ||||||
Property and equipment, net | 138,324 | 86,668 | ||||||
Intangible assets, net | 134,690 | 67,763 | ||||||
Goodwill | 236,488 | 169,563 | ||||||
Prepaid expenses and other assets | 5,256 | 5,375 | ||||||
Total assets | $ | 562,201 | $ | 367,756 | ||||
Liabilities and Stockholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 529 | $ | 194 | ||||
Current portion of capital lease obligations | 1,098 | — | ||||||
Current portion of other long-term liabilities | 12,552 | 2,501 | ||||||
Accounts payable and accrued liabilities | 79,018 | 51,256 | ||||||
Total current liabilities | 93,197 | 53,951 | ||||||
Long-term liabilities: | ||||||||
Long-term debt, net of related discounts | 406,100 | 252,701 | ||||||
Capital lease obligations | 1,183 | — | ||||||
Deferred tax liability, net | 9,943 | 7,625 | ||||||
Asset retirement obligations | 16,392 | 9,989 | ||||||
Other long-term liabilities and minority interest in subsidiaries | 17,921 | 4,064 | ||||||
Total liabilities | 544,736 | 328,330 | ||||||
Redeemable convertible preferred stock | 76,794 | 76,594 | ||||||
Stockholders’ deficit: | ||||||||
Common stock, $0.0001 par value; 125,000,000 shares authorized; 19,032,716 shares issued at September 30, 2007 and December 31, 2006, respectively; 14,026,967 and 13,995,674 outstanding at September 30, 2007 and December 31, 2006, respectively | — | — | ||||||
Subscriptions receivable (at face value) | (324 | ) | (324 | ) | ||||
Additional paid-in capital | 3,625 | 2,857 | ||||||
Accumulated other comprehensive income, net | 8,577 | 11,658 | ||||||
Accumulated deficit | (22,986 | ) | (3,092 | ) | ||||
Treasury stock; 5,005,749 and 5,037,042 shares at cost at September 30, 2007 and December 31, 2006, respectively | (48,221 | ) | (48,267 | ) | ||||
Total stockholders’ deficit | (59,329 | ) | (37,168 | ) | ||||
Total liabilities and stockholders’ deficit | $ | 562,201 | $ | 367,756 | ||||
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
(unaudited) | ||||||||||||||||
Revenues: | ||||||||||||||||
ATM operating revenues | $ | 106,234 | $ | 72,887 | $ | 251,854 | $ | 209,542 | ||||||||
Vcom operating revenues | 685 | — | 685 | — | ||||||||||||
ATM product sales and other revenues | 3,668 | 3,478 | 9,805 | 9,218 | ||||||||||||
Total revenues | 110,587 | 76,365 | 262,344 | 218,760 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Cost of ATM operating revenues (includes stock-based compensation of $16 and $15 for the three months ended September 30, 2007 and 2006, respectively, and $47 and $35 for the nine months ended September 30, 2007 and 2006, respectively. Excludes depreciation, accretion, and amortization, shown separately below.) | 79,966 | 54,280 | 191,046 | 157,225 | ||||||||||||
Cost of Vcom operating revenues | 2,644 | — | 2,644 | — | ||||||||||||
Cost of ATM product sales and other revenues | 3,111 | 3,105 | 9,196 | 8,142 | ||||||||||||
Total cost of revenues | 85,721 | 57,385 | 202,886 | 165,367 | ||||||||||||
Gross profit | 24,866 | 18,980 | 59,458 | 53,393 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general, and administrative expenses (includes stock-based compensation of $297 and $240 for the three months ended September 30, 2007 and 2006, respectively, and $721 and $600 for the nine months ended September 30, 2007 and 2006, respectively) | 7,621 | 5,811 | 20,985 | 15,709 | ||||||||||||
Depreciation and accretion expense | 6,961 | 5,214 | 18,541 | 14,072 | ||||||||||||
Amortization expense | 9,204 | 2,263 | 14,062 | 9,610 | ||||||||||||
Total operating expenses | 23,786 | 13,288 | 53,588 | 39,391 | ||||||||||||
Income from operations | 1,080 | 5,692 | 5,870 | 14,002 | ||||||||||||
Other expense (income): | ||||||||||||||||
Interest expense, net | 8,545 | 5,871 | 20,437 | 17,193 | ||||||||||||
Amortization and write-off of financing costs and bond discounts | 439 | 362 | 1,155 | 1,576 | ||||||||||||
Minority interest in subsidiary | (174 | ) | (71 | ) | (286 | ) | (128 | ) | ||||||||
Other | 678 | (83 | ) | 1,037 | (740 | ) | ||||||||||
Total other expense | 9,488 | 6,079 | 22,343 | 17,901 | ||||||||||||
Loss before income taxes | (8,408 | ) | (387 | ) | (16,473 | ) | (3,899 | ) | ||||||||
Income tax provision (benefit) | 2,275 | (60 | ) | 3,212 | (1,217 | ) | ||||||||||
Net loss | (10,683 | ) | (327 | ) | (19,685 | ) | (2,682 | ) | ||||||||
Preferred stock accretion expense | 67 | 67 | 200 | 199 | ||||||||||||
Net loss available to common stockholders | $ | (10,750 | ) | $ | (394 | ) | $ | (19,885 | ) | $ | (2,881 | ) | ||||
Net loss per common share: | ||||||||||||||||
Basic | $ | (0.77 | ) | $ | (0.03 | ) | $ | (1.42 | ) | $ | (0.21 | ) | ||||
Diluted | $ | (0.77 | ) | $ | (0.03 | ) | $ | (1.42 | ) | $ | (0.21 | ) | ||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 14,026,960 | 13,952,303 | 14,006,822 | 13,929,257 | ||||||||||||
Diluted | 14,026,960 | 13,952,303 | 14,006,822 | 13,929,257 | ||||||||||||
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Nine Months Ended | ||||||||
September 30, | ||||||||
2007 | 2006 | |||||||
(unaudited) | ||||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (19,685 | ) | $ | (2,682 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation, amortization, and accretion expense | 32,603 | 23,682 | ||||||
Amortization and write-off of financing costs and bond discounts | 1,155 | 1,576 | ||||||
Stock-based compensation expense | 768 | 635 | ||||||
Deferred income taxes | 3,065 | (1,316 | ) | |||||
Minority interest | (286 | ) | (128 | ) | ||||
Loss on sale or disposal of assets | 1,672 | 731 | ||||||
Gain on sale of Winn-Dixie equity securities | (569 | ) | — | |||||
Other reserves and non-cash items | 829 | — | ||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||
Increase in accounts and notes receivable, net | (1,607 | ) | (938 | ) | ||||
Decrease (increase) in prepaid, deferred costs, and other current assets | 2,855 | (3,598 | ) | |||||
Decrease (increase) in inventory | 3,231 | (1,184 | ) | |||||
Increase in other assets | (5,193 | ) | (907 | ) | ||||
Increase in accounts payable and accrued liabilities | 19,031 | 3,972 | ||||||
Decrease in other liabilities | (2,680 | ) | (2,976 | ) | ||||
Net cash provided by operating activities | 35,189 | 16,867 | ||||||
Cash flows from investing activities: | ||||||||
Additions to property and equipment | (43,957 | ) | (24,179 | ) | ||||
Proceeds from disposals of property and equipment | 3 | 100 | ||||||
Payments for exclusive license agreements and site acquisition costs | (1,381 | ) | (1,842 | ) | ||||
Additions to equipment to be leased to customers | (412 | ) | — | |||||
Principal payments received under direct financing leases | 22 | — | ||||||
Acquisition of 7-Eleven Financial Services Business, net of cash acquired | (138,570 | ) | — | |||||
Other acquisitions, net of cash acquired | — | (12 | ) | |||||
Proceeds from sale of Winn-Dixie equity securities | 3,950 | — | ||||||
Proceeds received out of escrow related to BASC acquisition | 876 | — | ||||||
Net cash used in investing activities | (179,469 | ) | (25,933 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of long-term debt | 170,258 | 30,300 | ||||||
Repayments of long-term debt | (22,363 | ) | (22,000 | ) | ||||
Proceeds from borrowings under bank overdraft facility, net | 54 | — | ||||||
Issuance of capital stock | 46 | — | ||||||
Minority interest shareholder capital contributions | 174 | — | ||||||
Purchase of treasury stock | — | (50 | ) | |||||
Deferred equity offering costs | (150 | ) | — | |||||
Debt issuance and modification costs | (326 | ) | (477 | ) | ||||
Net cash provided by financing activities | 147,693 | 7,773 | ||||||
Effect of exchange rate changes on cash | (13 | ) | 69 | |||||
Net increase (decrease) in cash and cash equivalents | 3,400 | (1,224 | ) | |||||
Cash and cash equivalents at beginning of period | 2,718 | 1,699 | ||||||
Cash and cash equivalents at end of period | $ | 6,118 | $ | 475 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 22,872 | $ | 21,554 | ||||
Cash paid for income taxes | $ | 27 | $ | 49 | ||||
Fixed assets financed by direct debt | $ | 3,125 | $ | — |
F-5
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1. | General and Basis of Presentation |
F-6
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Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
(in thousands) | ||||||||||||||||
Depreciation and accretion related to ATMs and ATM-related assets | $ | 6,479 | $ | 4,855 | $ | 17,257 | $ | 13,033 | ||||||||
Amortization | 9,204 | 2,263 | 14,062 | 9,610 | ||||||||||||
Total depreciation, accretion, and amortization excluded from cost of ATM operating revenues and gross profit | $ | 15,683 | $ | 7,118 | $ | 31,319 | $ | 22,643 | ||||||||
2. | Acquisitions |
F-7
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Cash | $ | 1,427 | ||
Trade accounts receivable, net | 3,388 | |||
Surcharge and interchange receivable | 3,769 | |||
Inventory | 1,953 | |||
Other current assets | 3,012 | |||
Property and equipment | 18,315 | |||
Software | 4,113 | |||
Intangible assets subject to amortization | 78,000 | |||
Goodwill | 62,367 | |||
Total assets acquired | 176,344 | |||
Current portion of capital lease obligations | (1,119 | ) | ||
Accounts payable | (688 | ) | ||
Accrued liabilities and deferred income | (9,583 | ) | ||
Current portion of other long-term liabilities | (7,777 | ) | ||
Non-current portion of capital lease obligations | (1,388 | ) | ||
Other long-term liabilities | (17,809 | ) | ||
Total liabilities assumed | (38,364 | ) | ||
Net assets acquired | $ | 137,980 | ||
F-8
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Nine Months ended | ||||||||
September 30, | ||||||||
2007 | 2006 | |||||||
(in thousands) | ||||||||
Revenues | $ | 349,854 | $ | 343,261 | ||||
Income from operations | 15,315 | 34,178 | ||||||
Net (loss) income | (17,820 | ) | 3,233 |
3. | Stock-based Compensation |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
(in thousands) | ||||||||||||||||
Cost of ATM operating revenues | $ | 16 | $ | 15 | $ | 47 | $ | 35 | ||||||||
Selling, general, and administrative expenses | 297 | 240 | 721 | 600 | ||||||||||||
Total stock-based compensation expense | $ | 313 | $ | 255 | $ | 768 | $ | 635 | ||||||||
F-9
Table of Contents
Weighted | ||||||||
Number | Average | |||||||
of Shares | Exercise Price | |||||||
Balance as of January 1, 2007 | 4,049,442 | $ | 6.64 | |||||
Granted | 604,085 | $ | 11.33 | |||||
Exercised | (31,293 | ) | $ | 1.48 | ||||
Forfeited | (198,712 | ) | $ | 10.55 | ||||
Balance as of September 30, 2007 | 4,423,522 | $ | 7.14 | |||||
Options vested and exercisable as of September 30, 2007 | 2,650,017 | $ | 4.85 |
4. | Earnings per Share |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
(in thousands) | ||||||||||||||||
Net loss | $ | (10,683 | ) | $ | (327 | ) | $ | (19,685 | ) | $ | (2,682 | ) | ||||
Less: Preferred stock accretion | 67 | 67 | 200 | 199 | ||||||||||||
Net loss available to common stockholders | $ | (10,750 | ) | $ | (394 | ) | $ | (19,885 | ) | $ | (2,881 | ) | ||||
Numerator for basic and diluted net loss per share | $ | (10,750 | ) | $ | (394 | ) | $ | (19,885 | ) | $ | (2,881 | ) | ||||
Denominator for net loss per share: | ||||||||||||||||
Weighted average common shares outstanding — basic | 14,026,960 | 13,952,303 | 14,006,822 | 13,929,257 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Stock options | — | — | — | — | ||||||||||||
Restricted shares | — | — | — | — | ||||||||||||
Series B redeemable convertible preferred shares | — | — | — | — | ||||||||||||
Weighted average common shares outstanding — diluted | 14,026,960 | 13,952,303 | 14,006,822 | 13,929,257 | ||||||||||||
F-10
Table of Contents
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
(in thousands) | ||||||||||||||||
Net loss per common share: | ||||||||||||||||
Basic | $ | (0.77 | ) | $ | (0.03 | ) | $ | (1.42 | ) | $ | (0.21 | ) | ||||
Diluted | $ | (0.77 | ) | $ | (0.03 | ) | $ | (1.42 | ) | $ | (0.21 | ) | ||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
(in thousands) | ||||||||||||||||
Stock options | 1,961,113 | 1,499,028 | 1,720,354 | 1,520,950 | ||||||||||||
Restricted shares | — | — | 17,010 | 73,261 | ||||||||||||
Series B redeemable convertible preferred stock | 7,390,413 | 7,390,413 | 7,390,413 | 7,390,413 | ||||||||||||
Total potentially dilutive securities | 9,351,526 | 8,889,441 | 9,127,777 | 8,984,624 | ||||||||||||
5. | Comprehensive Income (Loss) |
F-11
Table of Contents
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
(in thousands) | ||||||||||||||||
Net loss | $ | (10,683 | ) | $ | (327 | ) | $ | (19,685 | ) | $ | (2,682 | ) | ||||
Foreign currency translation adjustments | 1,878 | 1,706 | 4,378 | 7,015 | ||||||||||||
Changes in unrealized gains on interest rate hedges, net of taxes | (7,155 | ) | (3,919 | ) | (6,961 | ) | (439 | ) | ||||||||
Reclassifications of unrealized gains onavailable-for-sale securities, net of taxes | — | — | (498 | ) | — | |||||||||||
Total comprehensive (loss) income | $ | (15,960 | ) | $ | (2,540 | ) | $ | (22,766 | ) | $ | 3,894 | |||||
September 30, | December 31, | |||||||
2007 | 2006 | |||||||
(in thousands) | ||||||||
Foreign currency translation adjustments | $ | 11,089 | $ | 6,711 | ||||
Unrealized (losses) gains on interest rate hedges, net of taxes as of December 31, 2006 | (2,512 | ) | 4,449 | |||||
Unrealized gains onavailable-for-sale securities, net of taxes | — | 498 | ||||||
Total accumulated other comprehensive income | $ | 8,577 | $ | 11,658 | ||||
F-12
Table of Contents
6. | Intangible Assets |
Goodwill | Trade Name | |||||||||||||||||||||||
U.S. | U.K. | Mexico | U.S. | U.K. | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Balance as of December 31, 2006 | $ | 86,702 | $ | 82,172 | $ | 689 | $ | 200 | $ | 3,923 | $ | 173,686 | ||||||||||||
Acquisition of 7-Eleven Financial Services Business | 62,367 | — | — | — | — | 62,367 | ||||||||||||||||||
Purchase price adjustment | 1,558 | — | — | — | — | 1,558 | ||||||||||||||||||
Foreign currency translation adjustments | — | 2,999 | 1 | — | 147 | 3,147 | ||||||||||||||||||
Balance as of September 30, 2007 | $ | 150,627 | $ | 85,171 | $ | 690 | $ | 200 | $ | 4,070 | $ | 240,758 | ||||||||||||
Gross Carrying | Accumulated | Net Carrying | ||||||||||
Amount | Amortization | Amount | ||||||||||
(in thousands) | ||||||||||||
Customer contracts and relationships | $ | 162,426 | $ | (45,010 | ) | $ | 117,416 | |||||
Deferred financing costs | 13,864 | (3,903 | ) | 9,961 | ||||||||
Exclusive license agreements | 4,568 | (1,583 | ) | 2,985 | ||||||||
Non-compete agreements | 100 | (42 | ) | 58 | ||||||||
Total | $ | 180,958 | $ | (50,538 | ) | $ | 130,420 | |||||
F-13
Table of Contents
Customer Contracts | Deferred | Exclusive License | Non-compete | |||||||||||||||||
and Relationships | Financing Costs | Agreements | Agreements | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
2007 | $ | 4,171 | $ | 357 | $ | 173 | $ | 6 | $ | 4,707 | ||||||||||
2008 | 16,698 | 1,516 | 633 | 25 | 18,872 | |||||||||||||||
2009 | 16,384 | 1,628 | 628 | 25 | 18,665 | |||||||||||||||
2010 | 14,941 | 1,752 | 531 | 2 | 17,226 | |||||||||||||||
2011 | 13,120 | 1,891 | 417 | — | 15,428 | |||||||||||||||
2012 | 11,909 | 1,751 | 349 | — | 14,009 | |||||||||||||||
Thereafter | 40,193 | 1,066 | 254 | — | 41,513 | |||||||||||||||
Total | $ | 117,416 | $ | 9,961 | $ | 2,985 | $ | 58 | $ | 130,420 | ||||||||||
F-14
Table of Contents
7. | Accounts Payable and Accrued Liabilities |
September 30, | December 31, | |||||||
2007 | 2006 | |||||||
(in thousands) | ||||||||
Accounts payable | $ | 28,478 | $ | 16,915 | ||||
Accrued merchant fees | 11,741 | 7,915 | ||||||
Accrued interest | 5,759 | 7,954 | ||||||
Accrued cash management fees | 6,632 | 2,740 | ||||||
Accrued armored fees | 5,097 | 3,242 | ||||||
Accrued maintenance fees | 3,000 | 2,090 | ||||||
Accrued compensation | 2,806 | 3,499 | ||||||
Accrued purchases | 2,581 | 343 | ||||||
Accrued ATM telecommunications fees | 1,665 | 650 | ||||||
Other accrued expenses | 11,259 | 5,908 | ||||||
Total | $ | 79,018 | $ | 51,256 | ||||
8. | Long-term Debt |
September 30, | December 31, | |||||||
2007 | 2006 | |||||||
(in thousands) | ||||||||
Revolving credit facility | $ | 105,600 | $ | 53,100 | ||||
Senior subordinated notes issued in 2005 and due August 2013 (net of unamortized discount of $1.1 million as of September 30, 2007 and $1.2 million as of December 31, 2006) | 198,886 | 198,783 | ||||||
Senior subordinated notes issued in 2007 and due August 2013 (net of unamortized discount of $2.9 million as September 30, 2007) | 97,073 | — | ||||||
Other | 5,070 | 1,012 | ||||||
Total | 406,629 | 252,895 | ||||||
Less current portion | 529 | 194 | ||||||
Total excluding current portion | $ | 406,100 | $ | 252,701 | ||||
F-15
Table of Contents
F-16
Table of Contents
9. | Asset Retirement Obligations |
F-17
Table of Contents
Asset retirement obligation as of January 1, 2007 | $ | 9,989 | ||
Additional obligations | 8,357 | |||
Accretion expense | 831 | |||
Payments | (902 | ) | ||
Change in estimates | (1,974 | ) | ||
Foreign currency translation adjustments | 91 | |||
Asset retirement obligation as of September 30, 2007 | $ | 16,392 | ||
10. | Other Long-term Liabilities |
September 30, | December 31, | |||||||
2007 | 2006 | |||||||
(in thousands) | ||||||||
Deferred revenue | $ | 1,760 | $ | 481 | ||||
Other deferred liabilities | 10,347 | 161 | ||||||
Interest rate swaps | 3,417 | — | ||||||
Minority interest in subsidiary | — | 112 | ||||||
Other long-term liabilities | 2,397 | 3,310 | ||||||
Total | $ | 17,921 | $ | 4,064 | ||||
F-18
Table of Contents
11. | Preferred Stock |
12. | Income Taxes |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
(in thousands) | ||||||||||||||||
Income tax provision (benefit) | $ | 2,275 | $ | (60 | ) | $ | 3,212 | $ | (1,217 | ) | ||||||
Effective tax rate | (27.1 | )% | 15.5 | % | (19.5 | )% | 31.2 | % |
F-19
Table of Contents
13. | Commitments and Contingencies |
F-20
Table of Contents
F-21
Table of Contents
14. | Derivative Financial Instruments |
Notional Amount | Weighted Average Fixed Rate | Period | ||||||
$300,000 | 4.00 | % | October 1, 2007 — December 31, 2007 | |||||
$300,000 | 4.35 | % | January 1, 2008 — December 31, 2008 | |||||
$200,000 | 4.36 | % | January 1, 2009 — December 31, 2009 | |||||
$100,000 | 4.34 | % | January 1, 2010 — December 31, 2010 |
F-22
Table of Contents
15. | Segment Information |
F-23
Table of Contents
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
(in thousands) | ||||||||||||||||
EBITDA | $ | 16,741 | $ | 13,323 | $ | 37,722 | $ | 38,552 | ||||||||
Depreciation and accretion expense | 6,961 | 5,214 | 18,541 | 14,072 | ||||||||||||
Amortization expense | 9,204 | 2,263 | 14,062 | 9,610 | ||||||||||||
Interest expense, net, including the amortization and write-off of financing costs and bond discounts | 8,984 | 6,233 | 21,592 | 18,769 | ||||||||||||
Income tax provision (benefit) | 2,275 | (60 | ) | 3,212 | (1,217 | ) | ||||||||||
Net loss | $ | (10,683 | ) | $ | (327 | ) | $ | (19,685 | ) | $ | (2,682 | ) | ||||
F-24
Table of Contents
For the Three Months Ended September 30, 2007 | ||||||||||||||||||||||||
United | Advanced | |||||||||||||||||||||||
United States | Kingdom | Mexico | Functionality | Eliminations | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Revenue from external customers | $ | 91,259 | $ | 17,192 | $ | 1,451 | $ | 685 | $ | — | $ | 110,587 | ||||||||||||
Cost of revenues | 69,586 | 12,339 | 1,152 | 2,644 | — | 85,721 | ||||||||||||||||||
Selling, general, and administrative expense | 6,091 | 1,116 | 344 | 121 | (51 | ) | 7,621 | |||||||||||||||||
EBITDA | $ | 15,036 | $ | 3,611 | $ | (50 | ) | $ | (2,080 | ) | $ | 224 | $ | 16,741 | ||||||||||
Depreciation and accretion expense | $ | 4,862 | $ | 1,997 | $ | 93 | $ | — | $ | 9 | $ | 6,961 | ||||||||||||
Amortization expense | 8,743 | 449 | 12 | — | — | 9,204 | ||||||||||||||||||
Interest expense, net | 7,778 | 1,124 | 82 | — | — | 8,984 | ||||||||||||||||||
Capital expenditures(1)(2) | $ | 9,685 | $ | 9,833 | $ | 865 | $ | 226 | $ | — | $ | 20,609 | ||||||||||||
Additions to equipment to be leased to customers | — | — | (10 | ) | — | — | (10 | ) |
For the Three Months Ended September 30, 2006 | ||||||||||||||||||||||||
United | Advanced | |||||||||||||||||||||||
United States | Kingdom | Mexico | Functionality | Eliminations | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Revenue from external customers | $ | 64,346 | $ | 11,747 | $ | 272 | $ | — | $ | — | $ | 76,365 | ||||||||||||
Intersegment revenues | 46 | — | — | (46 | ) | — | — | |||||||||||||||||
Cost of revenues | 49,550 | 7,719 | 144 | — | (28 | ) | 57,385 | |||||||||||||||||
Selling, general, and administrative expense | 4,814 | 803 | 194 | — | — | 5,811 | ||||||||||||||||||
EBITDA | $ | 10,259 | $ | 3,210 | $ | (128 | ) | $ | — | $ | (18 | ) | $ | 13,323 | ||||||||||
Depreciation and accretion expense | $ | 4,096 | $ | 1,106 | $ | 12 | $ | — | $ | — | $ | 5,214 | ||||||||||||
Amortization expense | 1,888 | 342 | 33 | — | — | 2,263 | ||||||||||||||||||
Interest expense, net | 5,416 | 831 | (14 | ) | — | — | 6,233 | |||||||||||||||||
Capital expenditures(1)(2) | $ | 8,592 | $ | 5,744 | $ | 91 | $ | — | $ | — | $ | 14,427 |
F-25
Table of Contents
For the Nine Months Ended September 30, 2007 | ||||||||||||||||||||||||
United | Advanced | |||||||||||||||||||||||
United States | Kingdom | Mexico | Functionality | Eliminations | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Revenue from external customers | $ | 213,186 | $ | 45,533 | $ | 2,940 | $ | 685 | $ | — | $ | 262,344 | ||||||||||||
Intersegment revenues | (82 | ) | — | — | — | 82 | — | |||||||||||||||||
Cost of revenues | 165,188 | 32,650 | 2,454 | 2,644 | (50 | ) | 202,886 | |||||||||||||||||
Selling, general, and administrative expense | 16,735 | 3,152 | 961 | 121 | 16 | 20,985 | ||||||||||||||||||
EBITDA | $ | 30,773 | $ | 9,394 | $ | (491 | ) | $ | (2,080 | ) | $ | 126 | $ | 37,722 | ||||||||||
Depreciation and accretion expense | $ | 13,392 | $ | 5,007 | $ | 162 | $ | — | $ | (20 | ) | $ | 18,541 | |||||||||||
Amortization expense | 12,747 | 1,278 | 37 | — | — | 14,062 | ||||||||||||||||||
Interest expense, net | 18,262 | 3,156 | 174 | — | — | 21,592 | ||||||||||||||||||
Capital expenditures(1)(2) | $ | 21,795 | $ | 21,058 | $ | 2,259 | $ | 226 | $ | — | $ | 45,338 | ||||||||||||
Additions to equipment to be leased to customers | — | — | 412 | — | — | 412 |
For the Nine Months Ended September 30, 2006 | ||||||||||||||||||||||||
United | Advanced | |||||||||||||||||||||||
United States | Kingdom | Mexico | Functionality | Eliminations | Total | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Revenue from external customers | $ | 188,903 | $ | 29,383 | $ | 474 | $ | — | $ | — | $ | 218,760 | ||||||||||||
Intersegment revenues | (216 | ) | — | — | — | 216 | — | |||||||||||||||||
Cost of revenues | 145,767 | 19,456 | 295 | — | (151 | ) | 165,367 | |||||||||||||||||
Selling, general, and administrative expense | 12,979 | 2,372 | 361 | — | (3 | ) | 15,709 | |||||||||||||||||
EBITDA | $ | 31,378 | $ | 7,394 | $ | (155 | ) | $ | — | $ | (65 | ) | $ | 38,552 | ||||||||||
Depreciation and accretion expense | $ | 10,979 | $ | 3,067 | $ | 26 | $ | — | $ | — | $ | 14,072 | ||||||||||||
Amortization expense | 8,698 | 879 | 33 | — | — | 9,610 | ||||||||||||||||||
Interest expense, net | 16,353 | 2,415 | 1 | — | — | 18,769 | ||||||||||||||||||
Capital expenditures(1)(2) | $ | 16,749 | $ | 9,052 | $ | 220 | $ | — | $ | — | $ | 26,021 |
(1) | Capital expenditure amounts presented above include payments made for exclusive license agreements and site acquisition costs. | |
(2) | Capital expenditure amounts for Cardtronics Mexico are reflected gross of any minority interest amounts. Additionally, the 2006 capital expenditure amount excludes the Company’s initial $1.0 million investment in Cardtronics Mexico. |
September 30, | December 31, | |||||||
2007 | 2006 | |||||||
(in thousands) | ||||||||
United States | $ | 396,339 | $ | 238,127 | ||||
United Kingdom | 148,467 | 126,070 | ||||||
Mexico | 9,730 | 3,559 | ||||||
Advanced Functionality | 7,665 | — | ||||||
Total | $ | 562,201 | $ | 367,756 | ||||
F-26
Table of Contents
16. | New Accounting Pronouncements |
F-27
Table of Contents
17. | Related Party Transactions |
18. | Supplemental Guarantor Financial Information |
F-28
Table of Contents
Three Months Ended September 30, 2007 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenues | $ | — | $ | 91,944 | $ | 18,643 | $ | — | $ | 110,587 | ||||||||||
Operating costs and expenses | 320 | 91,727 | 17,502 | (42 | ) | 109,507 | ||||||||||||||
Operating (loss) income | (320 | ) | 217 | 1,141 | 42 | 1,080 | ||||||||||||||
Interest expense, net | 2,142 | 5,636 | 1,206 | — | 8,984 | |||||||||||||||
Equity in (earnings) losses of subsidiaries | 6,005 | — | — | (6,005 | ) | — | ||||||||||||||
Other (income) expense, net | — | 547 | 131 | (174 | ) | 504 | ||||||||||||||
(Loss) income before income taxes | (8,467 | ) | (5,966 | ) | (196 | ) | 6,221 | (8,408 | ) | |||||||||||
Income tax provision (benefit) | 2,432 | 53 | (210 | ) | — | 2,275 | ||||||||||||||
Net (loss) income | (10,899 | ) | (6,019 | ) | 14 | 6,221 | (10,683 | ) | ||||||||||||
Preferred stock accretion expense | 67 | — | — | — | 67 | |||||||||||||||
Net (loss) income available to common stockholders | $ | (10,966 | ) | $ | (6,019 | ) | $ | 14 | $ | 6,221 | $ | (10,750 | ) | |||||||
Three Months Ended September 30, 2006 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenues | $ | — | $ | 64,392 | $ | 12,019 | $ | (46 | ) | $ | 76,365 | |||||||||
Operating costs and expenses | 311 | 60,037 | 10,353 | (28 | ) | 70,673 | ||||||||||||||
Operating (loss) income | (311 | ) | 4,355 | 1,666 | (18 | ) | 5,692 | |||||||||||||
Interest expense, net | 2,229 | 3,187 | 817 | — | 6,233 | |||||||||||||||
Equity in (earnings) losses of subsidiaries | (1,778 | ) | — | — | 1,778 | — | ||||||||||||||
Other (income) expense, net | — | (184 | ) | 78 | (48 | ) | (154 | ) | ||||||||||||
(Loss) income before income taxes | (762 | ) | 1,352 | 771 | (1,748 | ) | (387 | ) | ||||||||||||
Income tax (benefit) provision | (405 | ) | 63 | 282 | — | (60 | ) | |||||||||||||
Net (loss) income | (357 | ) | 1,289 | 489 | (1,748 | ) | (327 | ) | ||||||||||||
Preferred stock accretion expense | 67 | — | — | — | 67 | |||||||||||||||
Net (loss) income available to common stockholders | $ | (424 | ) | $ | 1,289 | $ | 489 | $ | (1,748 | ) | $ | (394 | ) | |||||||
F-29
Table of Contents
Nine Months Ended September 30, 2007 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenues | $ | — | $ | 213,953 | $ | 48,473 | $ | (82 | ) | $ | 262,344 | |||||||||
Operating costs and expenses | 909 | 209,918 | 45,701 | (54 | ) | 256,474 | ||||||||||||||
Operating (loss) income | (909 | ) | 4,035 | 2,772 | (28 | ) | 5,870 | |||||||||||||
Interest expense, net | 6,502 | 11,760 | 3,330 | — | 21,592 | |||||||||||||||
Equity in (earnings) losses of subsidiaries | 9,240 | — | — | (9,240 | ) | — | ||||||||||||||
Other (income) expense, net | (112 | ) | 684 | 353 | (174 | ) | 751 | |||||||||||||
(Loss) income before income taxes | (16,539 | ) | (8,409 | ) | (911 | ) | 9,386 | (16,473 | ) | |||||||||||
Income tax provision (benefit) | 3,292 | 158 | (238 | ) | — | 3,212 | ||||||||||||||
Net (loss) income | (19,831 | ) | (8,567 | ) | (673 | ) | 9,386 | (19,685 | ) | |||||||||||
Preferred stock accretion expense | 200 | — | — | — | 200 | |||||||||||||||
Net (loss) income available to common stockholders | $ | (20,031 | ) | $ | (8,567 | ) | $ | (673 | ) | $ | 9,386 | $ | (19,885 | ) | ||||||
Nine Months Ended September 30, 2006 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Revenues | $ | — | $ | 189,119 | $ | 29,857 | $ | (216 | ) | $ | 218,760 | |||||||||
Operating costs and expenses | 796 | 177,627 | 26,489 | (154 | ) | 204,758 | ||||||||||||||
Operating (loss) income | (796 | ) | 11,492 | 3,368 | (62 | ) | 14,002 | |||||||||||||
Interest expense, net | 6,335 | 10,018 | 2,416 | — | 18,769 | |||||||||||||||
Equity in (earnings) losses of subsidiaries | (2,898 | ) | — | — | 2,898 | — | ||||||||||||||
Other (income) expense, net | — | (956 | ) | 133 | (45 | ) | (868 | ) | ||||||||||||
(Loss) income before income taxes | (4,233 | ) | 2,430 | 819 | (2,915 | ) | (3,899 | ) | ||||||||||||
Income tax (benefit) provision | (1,568 | ) | 37 | 314 | — | (1,217 | ) | |||||||||||||
Net (loss) income | (2,665 | ) | 2,393 | 505 | (2,915 | ) | (2,682 | ) | ||||||||||||
Preferred stock accretion expense | 199 | — | — | — | 199 | |||||||||||||||
Net (loss) income available to common stockholders | $ | (2,864 | ) | $ | 2,393 | $ | 505 | $ | (2,915 | ) | $ | (2,881 | ) | |||||||
F-30
Table of Contents
As of September 30, 2007 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 14 | $ | 5,527 | $ | 577 | $ | — | $ | 6,118 | ||||||||||
Receivables, net | (4,104 | ) | 21,067 | 3,322 | 3,791 | 24,076 | ||||||||||||||
Other current assets | 1,051 | 7,879 | 8,647 | (328 | ) | 17,249 | ||||||||||||||
Total current assets | (3,039 | ) | 34,473 | 12,546 | 3,463 | 47,443 | ||||||||||||||
Property and equipment, net | — | 90,203 | 48,336 | (215 | ) | 138,324 | ||||||||||||||
Intangible assets, net | 9,074 | 110,305 | 15,311 | — | 134,690 | |||||||||||||||
Goodwill | — | 150,627 | 85,861 | — | 236,488 | |||||||||||||||
Investments and advances to subsidiaries | 65,906 | — | — | (65,906 | ) | — | ||||||||||||||
Intercompany receivable | (636 | ) | 6,226 | (5,590 | ) | — | — | |||||||||||||
Prepaid and other assets | 359,675 | 3,523 | 1,733 | (359,675 | ) | 5,256 | ||||||||||||||
Total assets | $ | 430,980 | $ | 395,357 | $ | 158,197 | $ | (422,333 | ) | $ | 562,201 | |||||||||
Liabilities and Stockholders’ Deficit: | ||||||||||||||||||||
Current portion of long-term debt and notes payable | $ | — | $ | — | $ | 529 | $ | — | $ | 529 | ||||||||||
Current portion of capital leases | — | 1,098 | — | — | 1,098 | |||||||||||||||
Current portion of other long-term liabilities | — | 12,399 | 153 | — | 12,552 | |||||||||||||||
Accounts payable and accrued liabilities | 6,369 | 47,727 | 21,453 | 3,469 | 79,018 | |||||||||||||||
Total current liabilities | 6,369 | 61,224 | 22,135 | 3,469 | 93,197 | |||||||||||||||
Long-term debt, less current portion | 401,559 | 266,925 | 97,291 | (359,675 | ) | 406,100 | ||||||||||||||
Capital leases | — | 1,183 | — | — | 1,183 | |||||||||||||||
Deferred tax liability | 5,587 | 1,230 | 3,126 | — | 9,943 | |||||||||||||||
Asset retirement obligations | — | 11,946 | 4,446 | — | 16,392 | |||||||||||||||
Other non-current liabilities and minority interest | — | 17,425 | 496 | — | 17,921 | |||||||||||||||
Total liabilities | 413,515 | 359,933 | 127,494 | (356,206 | ) | 544,736 | ||||||||||||||
Preferred stock | 76,794 | — | — | — | 76,794 | |||||||||||||||
Stockholders’ equity (deficit) | (59,329 | ) | 30,703 | (66,127 | ) | (58,493 | ) | (59,329 | ) | |||||||||||
Total liabilities and stockholders’ deficit | $ | 430,980 | $ | 395,357 | $ | 158,197 | $ | (422,333 | ) | $ | 562,201 | |||||||||
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Table of Contents
As of December 31, 2006 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 97 | $ | 1,818 | $ | 803 | $ | — | $ | 2,718 | ||||||||||
Receivables, net | 3,463 | 13,068 | 1,966 | (3,606 | ) | 14,891 | ||||||||||||||
Other current assets | 544 | 14,069 | 6,204 | (39 | ) | 20,778 | ||||||||||||||
Total current assets | 4,104 | 28,955 | 8,973 | (3,645 | ) | 38,387 | ||||||||||||||
Property and equipment, net | — | 59,512 | 27,326 | (170 | ) | 86,668 | ||||||||||||||
Intangible assets, net | 6,982 | 45,757 | 15,024 | — | 67,763 | |||||||||||||||
Goodwill | — | 86,702 | 82,861 | — | 169,563 | |||||||||||||||
Investments and advances to subsidiaries | 81,076 | — | — | (81,076 | ) | — | ||||||||||||||
Intercompany receivable | (122 | ) | 5,046 | (4,924 | ) | — | — | |||||||||||||
Prepaid and other assets | 211,175 | 5,006 | 369 | (211,175 | ) | 5,375 | ||||||||||||||
Total assets | $ | 303,215 | $ | 230,978 | $ | 129,629 | $ | (296,066 | ) | $ | 367,756 | |||||||||
Liabilities and Stockholders’ Deficit: | ||||||||||||||||||||
Current portion of long-term debt and notes payable | $ | — | $ | — | $ | 194 | $ | — | $ | 194 | ||||||||||
Current portion of other long-term liabilities | — | 2,458 | 43 | — | 2,501 | |||||||||||||||
Accounts payable and accrued liabilities | 8,458 | 32,202 | 14,218 | (3,622 | ) | 51,256 | ||||||||||||||
Total current liabilities | 8,458 | 34,660 | 14,455 | (3,622 | ) | 53,951 | ||||||||||||||
Long-term debt, less current portion | 251,883 | 132,351 | 79,641 | (211,174 | ) | 252,701 | ||||||||||||||
Deferred tax liability | 3,340 | 1,040 | 3,245 | — | 7,625 | |||||||||||||||
Asset retirement obligations | — | 7,673 | 2,316 | — | 9,989 | |||||||||||||||
Other non-current liabilities and minority interest | 108 | 3,806 | 150 | — | 4,064 | |||||||||||||||
Total liabilities | 263,789 | 179,530 | 99,807 | (214,796 | ) | 328,330 | ||||||||||||||
Preferred stock | 76,594 | — | — | — | 76,594 | |||||||||||||||
Stockholders’ equity (deficit) | (37,168 | ) | 51,448 | 29,822 | (81,270 | ) | (37,168 | ) | ||||||||||||
Total liabilities and stockholders’ deficit | $ | 303,215 | $ | 230,978 | $ | 129,629 | $ | (296,066 | ) | $ | 367,756 | |||||||||
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Table of Contents
Nine Months Ended September 30, 2007 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Net cash (used in) provided by operating activities | $ | (4,328) | $ | 25,198 | $ | 14,319 | $ | — | $ | 35,189 | ||||||||||
Capital expenditures, net | — | (21,711) | (22,243) | — | (43,954) | |||||||||||||||
Payments for exclusive license agreements and site acquisition costs | — | (307) | (1,074) | — | (1,381) | |||||||||||||||
Additions to equipment to be leased to customers, net of principal payments received | — | — | (390) | — | (390) | |||||||||||||||
Acquisition of 7-Eleven Financial Services Business, net of cash acquired | — | (138,570) | — | — | (138,570) | |||||||||||||||
Proceeds from sale of Winn-Dixie equity securities | — | 3,950 | — | — | 3,950 | |||||||||||||||
Proceeds received out of escrow related to BASC acquisition | — | 876 | — | — | 876 | |||||||||||||||
Net cash used in investing activities | — | (155,762) | (23,707) | — | (179,469) | |||||||||||||||
Proceeds from issuance of long-term debt | 169,434 | 155,934 | 8,872 | (163,982) | 170,258 | |||||||||||||||
Repayments of long-term debt | (22,000) | (21,609) | (114) | 21,360 | (22,363) | |||||||||||||||
Issuance of long-term notes receivable | (163,982) | — | — | 163,982 | — | |||||||||||||||
Payments received on long-term notes receivable | 21,360 | — | — | (21,360) | — | |||||||||||||||
Proceeds from borrowings under overdraft facility, net | — | — | 54 | — | 54 | |||||||||||||||
Issuance of capital stock | 46 | (363) | 363 | — | 46 | |||||||||||||||
Minority interest shareholder capital contribution | — | 174 | — | — | 174 | |||||||||||||||
Other financing activities | (613) | 137 | — | — | (476) | |||||||||||||||
Net cash provided by financing activities | 4,245 | 134,273 | 9,175 | — | 147,693 | |||||||||||||||
Effect of exchange rate changes on cash | — | — | (13) | — | (13) | |||||||||||||||
Net increase (decrease) in cash and cash equivalents | (83) | 3,709 | (226) | — | 3400 | |||||||||||||||
Cash and cash equivalents at beginning of period | 97 | 1,818 | 803 | — | 2,718 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 14 | $ | 5,527 | $ | 577 | $ | — | $ | 6,118 | ||||||||||
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Table of Contents
Nine Months Ended September 30, 2006 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Net cash (used in) provided by operating activities | $ | (11,866 | ) | $ | 20,876 | $ | 7,857 | $ | — | $ | 16,867 | |||||||||
Capital expenditures, net | — | (15,196 | ) | (8,883 | ) | — | (24,079 | ) | ||||||||||||
Payments for exclusive license agreements and site acquisition costs | — | (1,544 | ) | (298 | ) | — | (1,842 | ) | ||||||||||||
Acquisitions, net of cash acquired | (1,039 | ) | 27 | — | 1,000 | (12 | ) | |||||||||||||
Net cash (used in) provided by investing activities | (1,039 | ) | (16,713 | ) | (9,181 | ) | 1,000 | (25,933 | ) | |||||||||||
Proceeds from issuance of long-term debt | 30,300 | 9,900 | — | (9,900 | ) | 30,300 | ||||||||||||||
Repayments of long-term debt | (22,000 | ) | (14,900 | ) | — | 14,900 | (22,000 | ) | ||||||||||||
Issuance of long-term notes receivable | (9,900 | ) | — | — | 9,900 | — | ||||||||||||||
Payments received on long-term notes receivable | 14,900 | — | — | (14,900 | ) | — | ||||||||||||||
Issuance of capital stock | — | — | 1,000 | (1,000 | ) | — | ||||||||||||||
Purchase of treasury stock | (50 | ) | — | — | — | (50 | ) | |||||||||||||
Other financing activities | (447 | ) | (30 | ) | — | — | (477 | ) | ||||||||||||
Net cash provided by (used in) financing activities | 12,803 | (5,030 | ) | 1,000 | (1,000 | ) | 7,773 | |||||||||||||
Effect of exchange rate changes on cash | — | — | 69 | — | 69 | |||||||||||||||
Net decrease in cash and cash equivalents | (102 | ) | (867 | ) | (255 | ) | — | (1,224 | ) | |||||||||||
Cash and cash equivalents at beginning of period | 118 | 1,544 | 37 | — | 1,699 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 16 | $ | 677 | $ | (218 | ) | $ | — | $ | 475 | |||||||||
19. | Subsequent Events |
F-34
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F-35
Table of Contents
F-36
Table of Contents
F-37
Table of Contents
December 31, | ||||||||
2006 | 2005 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 2,718 | $ | 1,699 | ||||
Accounts and notes receivable, net of allowance of $373 and $686 as of December 31, 2006 and 2005, respectively | 14,891 | 9,746 | ||||||
Inventory | 4,444 | 2,747 | ||||||
Restricted cash, short-term | 883 | 4,232 | ||||||
Deferred tax asset, net | 273 | 1,105 | ||||||
Prepaid expenses, deferred costs, and other current assets | 15,178 | 6,756 | ||||||
Total current assets | 38,387 | 26,285 | ||||||
Restricted cash | 34 | 33 | ||||||
Property and equipment, net | 86,668 | 74,151 | ||||||
Intangible assets, net | 67,763 | 75,965 | ||||||
Goodwill | 169,563 | 161,557 | ||||||
Prepaid expenses and other assets | 5,341 | 5,760 | ||||||
Total assets | $ | 367,756 | $ | 343,751 | ||||
Liabilities and Stockholders’ Deficit | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt and notes payable | $ | 194 | $ | 3,168 | ||||
Current portion of other long-term liabilities | 2,501 | 2,251 | ||||||
Accounts payable | 16,915 | 7,285 | ||||||
Accounts payable to affiliates | — | 310 | ||||||
Accrued liabilities | 34,341 | 34,843 | ||||||
Total current liabilities | 53,951 | 47,857 | ||||||
Long-term liabilities: | ||||||||
Long-term debt, net of related discount | 252,701 | 244,456 | ||||||
Deferred tax liability, net | 7,625 | 9,800 | ||||||
Other long-term liabilities and minority interest in subsidiary | 14,053 | 14,393 | ||||||
Total liabilities | 328,330 | 316,506 | ||||||
Series B redeemable convertible preferred stock, $0.0001 par value; 1,500,000 shares authorized; 929,789 shares issued and outstanding as of December 31, 2006 and 2005; liquidation value of $78,000 as of December 31, 2006 and 2005 | 76,594 | 76,329 | ||||||
Stockholders’ deficit: | ||||||||
Common stock, $0.0001 par value; 125,000,000 shares authorized; 19,032,716 shares issued as of December 31, 2006 and 2005; 13,995,674 and 14,079,539 outstanding at December 31, 2006 and 2005, respectively | — | — | ||||||
Subscriptions receivable (at face value) | (324 | ) | (1,476 | ) | ||||
Additional paid-in capital | 2,857 | 2,033 | ||||||
Accumulated other comprehensive income (loss), net | 11,658 | (346 | ) | |||||
Accumulated deficit | (3,092 | ) | (2,252 | ) | ||||
Treasury stock; 5,037,042 and 4,953,177 shares at cost at December 31, 2006 and 2005, respectively | (48,267 | ) | (47,043 | ) | ||||
Total stockholders’ deficit | (37,168 | ) | (49,084 | ) | ||||
Total liabilities and stockholders’ deficit | $ | 367,756 | $ | 343,751 | ||||
F-38
Table of Contents
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Revenues: | ||||||||||||
ATM operating revenues | $ | 280,985 | $ | 258,979 | $ | 182,711 | ||||||
ATM product sales and other revenues | 12,620 | 9,986 | 10,204 | |||||||||
Total revenues | 293,605 | 268,965 | 192,915 | |||||||||
Cost of revenues: | ||||||||||||
Cost of ATM operating revenues (includes stock-based compensation of $51 and $172 in 2006 and 2005, respectively. Excludes depreciation, accretion, and amortization expense, shown separately below.) | 209,850 | 199,767 | 143,504 | |||||||||
Cost of ATM product sales and other revenues | 11,443 | 9,681 | 8,703 | |||||||||
Total cost of revenues | 221,293 | 209,448 | 152,207 | |||||||||
Gross profit | 72,312 | 59,517 | 40,708 | |||||||||
Operating expenses: | ||||||||||||
Selling, general and administrative expenses (includes stock-based compensation of $828, $2,201, and $956 in 2006, 2005, and 2004, respectively) | 21,667 | 17,865 | 13,571 | |||||||||
Depreciation and accretion expense | 18,595 | 12,951 | 6,785 | |||||||||
Amortization expense | 11,983 | 8,980 | 5,508 | |||||||||
Total operating expenses | 52,245 | 39,796 | 25,864 | |||||||||
Income from operations | 20,067 | 19,721 | 14,844 | |||||||||
Other (income) expense: | ||||||||||||
Interest expense, net | 23,143 | 15,485 | 4,155 | |||||||||
Amortization and write-off of financing costs and bond discount | 1,929 | 6,941 | 1,080 | |||||||||
Minority interest in subsidiaries | (225 | ) | 15 | 19 | ||||||||
Other | (4,761 | ) | 968 | 209 | ||||||||
Total other expense | 20,086 | 23,409 | 5,463 | |||||||||
(Loss) income before income taxes | (19 | ) | (3,688 | ) | 9,381 | |||||||
Income tax provision (benefit) | 512 | (1,270 | ) | 3,576 | ||||||||
Net (loss) income | (531 | ) | (2,418 | ) | 5,805 | |||||||
Preferred stock dividends and accretion expense | 265 | 1,395 | 2,312 | |||||||||
Net (loss) income available to common stockholders | $ | (796 | ) | $ | (3,813 | ) | $ | 3,493 | ||||
Net (loss) income per common share: | ||||||||||||
Basic | $ | (0.06 | ) | $ | (0.27 | ) | $ | 0.20 | ||||
Diluted | $ | (0.06 | ) | $ | (0.27 | ) | $ | 0.19 | ||||
Weighted average shares outstanding: | ||||||||||||
Basic | 13,904,505 | 14,040,353 | 17,795,073 | |||||||||
Diluted | 13,904,505 | 14,040,353 | 18,855,425 | |||||||||
F-39
Table of Contents
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Common Stock, par value $0.0001 per share: | ||||||||||||
Balance at beginning of year | $ | — | $ | — | $ | — | ||||||
Equity offering | — | — | — | |||||||||
Balance at end of year | $ | — | $ | — | $ | — | ||||||
Subscriptions Receivable: | ||||||||||||
Balance at beginning of year | $ | (1,476 | ) | $ | (1,862 | ) | $ | (2,305 | ) | |||
Settlement of subscriptions receivable through repurchases of capital stock | 1,152 | — | — | |||||||||
Repayment of subscriptions | — | 386 | 443 | |||||||||
Balance at end of year | $ | (324 | ) | $ | (1,476 | ) | $ | (1,862 | ) | |||
Additional Paid in Capital: | ||||||||||||
Balance at beginning of year | $ | 2,033 | $ | — | $ | 1,039 | ||||||
Issuance of capital stock | (55 | ) | 1,590 | 27 | ||||||||
Dividends on preferred stock | — | (98 | ) | (2,153 | ) | |||||||
Tax benefit from stock option exercise | — | — | 184 | |||||||||
Stock-based compensation charges | 879 | 541 | 903 | |||||||||
Balance at end of year | $ | 2,857 | $ | 2,033 | $ | — | ||||||
Accumulated Other Comprehensive Income (Loss): | ||||||||||||
Balance at beginning of year | $ | (346 | ) | $ | 886 | $ | — | |||||
Other comprehensive income (loss) | 12,004 | (1,232 | ) | 886 | ||||||||
Balance at end of year | $ | 11,658 | $ | (346 | ) | $ | 886 | |||||
Retained Earnings (Accumulated Deficit): | ||||||||||||
Balance at beginning of year | $ | (2,252 | ) | $ | 1,495 | $ | (4,168 | ) | ||||
Dividends on preferred stock | — | (1,063 | ) | (159 | ) | |||||||
Non-cash compensation charges | — | — | 53 | |||||||||
Preferred stock issuance cost accretion | (265 | ) | (234 | ) | — | |||||||
Distributions | (44 | ) | (32 | ) | (36 | ) | ||||||
Net (loss) income | (531 | ) | (2,418 | ) | 5,805 | |||||||
Balance at end of year | $ | (3,092 | ) | $ | (2,252 | ) | $ | 1,495 | ||||
Treasury Stock: | ||||||||||||
Balance at beginning of year | $ | (47,043 | ) | $ | (859 | ) | $ | (896 | ) | |||
Issuance of capital stock | 55 | 269 | 37 | |||||||||
Purchase of treasury stock | (1,279 | ) | (46,453 | ) | — | |||||||
Balance at end of year | $ | (48,267 | ) | $ | (47,043 | ) | $ | (859 | ) | |||
Total stockholders’ deficit | $ | (37,168 | ) | $ | (49,084 | ) | $ | (340 | ) | |||
F-40
Table of Contents
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Net (loss) income | $ | (531 | ) | $ | (2,418 | ) | $ | 5,805 | ||||
Foreign currency translation adjustments | 12,202 | (5,491 | ) | — | ||||||||
Unrealized (losses) gains on interest rate cash flow hedges, net of taxes of $258 in 2006, $(2,469) in 2005, and $(566) in 2004 | (696 | ) | 4,259 | 886 | ||||||||
Unrealized gains on available-for-sale securities, net of taxes of $293 in 2006 | 498 | — | — | |||||||||
Other comprehensive income (loss) | 12,004 | (1,232 | ) | 886 | ||||||||
Total comprehensive income (loss) | $ | 11,473 | $ | (3,650 | ) | $ | 6,691 | |||||
F-41
Table of Contents
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net (loss) income | $ | (531 | ) | $ | (2,418 | ) | $ | 5,805 | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation, amortization and accretion expense | 30,578 | 21,931 | 12,293 | |||||||||
Amortization and write-off of financing costs and bond discount | 1,929 | 6,941 | 1,080 | |||||||||
Stock-based compensation expense | 879 | 541 | 956 | |||||||||
Deferred income taxes | 454 | (1,270 | ) | 3,490 | ||||||||
Non-cash receipt of Winn-Dixie equity securities | (3,394 | ) | — | — | ||||||||
Minority interest | (225 | ) | 15 | 19 | ||||||||
Loss on disposal of assets | 1,603 | 1,036 | 209 | |||||||||
Other reserves and non-cash items | 1,219 | 363 | — | |||||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||||||
(Increase) decrease in accounts receivable, net | (4,105 | ) | 2,176 | (4,344 | ) | |||||||
(Increase) decrease in prepaid, deferred costs, and other current assets | (3,783 | ) | 378 | (407 | ) | |||||||
(Increase) decrease in inventory | (694 | ) | 1,060 | 487 | ||||||||
Decrease in notes receivable, net | 155 | 439 | 758 | |||||||||
(Increase) decrease in other assets | (1,718 | ) | (600 | ) | 79 | |||||||
Increase (decrease) in accounts payable | 5,436 | (1,085 | ) | (4,349 | ) | |||||||
Increase in accrued liabilities | 813 | 7,190 | 2,107 | |||||||||
(Decrease) increase in other liabilities | (3,170 | ) | (3,470 | ) | 2,283 | |||||||
Net cash provided by operating activities | 25,446 | 33,227 | 20,466 | |||||||||
Cash flows from investing activities: | ||||||||||||
Additions to property and equipment | (32,537 | ) | (27,261 | ) | (18,622 | ) | ||||||
Payments for exclusive license agreements and site acquisition costs | (3,357 | ) | (4,665 | ) | (1,125 | ) | ||||||
Additions to equipment to be leased to customers | (197 | ) | — | — | ||||||||
Proceeds from sale of property and equipment | 130 | 78 | 446 | |||||||||
Acquisitions, net of cash acquired | (12 | ) | (108,112 | ) | (99,625 | ) | ||||||
Net cash used in investing activities | (35,973 | ) | (139,960 | ) | (118,926 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from issuance of long-term debt | 45,661 | 478,009 | 136,041 | |||||||||
Repayments of long-term debt and capital leases | (37,503 | ) | (362,141 | ) | (38,925 | ) | ||||||
Utilization of bank overdraft facility, net | 3,818 | — | — | |||||||||
Redemption of Series A preferred stock | — | (24,795 | ) | — | ||||||||
Purchase of treasury stock | (50 | ) | (46,453 | ) | — | |||||||
Issuance of Series B preferred stock | — | 73,297 | — | |||||||||
Issuance of capital stock | — | 89 | 64 | |||||||||
Repayment of subscriptions receivable | — | 386 | 443 | |||||||||
Distributions | (18 | ) | (51 | ) | (36 | ) | ||||||
Debt issuance costs | (716 | ) | (11,127 | ) | (3,269 | ) | ||||||
Net cash provided by financing activities | 11,192 | 107,214 | 94,318 | |||||||||
Effect of exchange rate changes | 354 | (194 | ) | — | ||||||||
Net increase (decrease) in cash and cash equivalents | 1,019 | 287 | (4,142 | ) | ||||||||
Cash and cash equivalents at beginning of period | 1,699 | 1,412 | 5,554 | |||||||||
Cash and cash equivalents at end of period | $ | 2,718 | $ | 1,699 | $ | 1,412 | ||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid for interest | $ | 22,939 | $ | 8,359 | $ | 4,517 | ||||||
Cash paid for income taxes | $ | 67 | $ | 92 | $ | 327 |
F-42
Table of Contents
(1) | Business and Summary of Significant Accounting Policies |
(a) | Description of Business |
(b) | Basis of Presentation |
2006 | 2005 | 2004 | ||||||||||
Depreciation and accretion related to ATMs and ATM-related assets | $ | 17,190 | $ | 11,639 | $ | 5,875 | ||||||
Amortization | 11,983 | 8,980 | 5,508 | |||||||||
Total depreciation, accretion, and amortization excluded from cost of ATM operating revenues and gross profit | $ | 29,173 | $ | 20,619 | $ | 11,383 | ||||||
(c) | Use of Estimates in the Preparation of Financial Statements |
F-43
Table of Contents
(d) | Cash and Cash Equivalents |
(e) | ATM Cash Management Program |
(f) | Accounts Receivable |
F-44
Table of Contents
(g) | Notes Receivable |
(h) | Inventory |
December 31, | ||||||||
2006 | 2005 | |||||||
ATMs | $ | 1,612 | $ | 1,447 | ||||
ATM parts and supplies | 2,832 | 1,300 | ||||||
Total | $ | 4,444 | $ | 2,747 | ||||
(i) | Property and Equipment, net |
(j) | Goodwill and Other Intangible Assets |
F-45
Table of Contents
(k) | Impairment of Long-Lived Assets and Goodwill |
F-46
Table of Contents
(l) | Income Taxes |
(m) | Asset Retirement Obligations |
F-47
Table of Contents
2006 | 2005 | |||||||
Asset retirement obligation as of beginning of period | $ | 8,339 | $ | 5,305 | ||||
Additional ATMs | 2,291 | 3,038 | ||||||
Accretion expense | 279 | 1,024 | ||||||
Payments | (1,079 | ) | (958 | ) | ||||
Foreign currency translation adjustments | 159 | (70 | ) | |||||
Asset retirement obligation as of end of period | $ | 9,989 | $ | 8,339 | ||||
(n) | Revenue Recognition |
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(o) | Stock-Based Compensation |
Year Ended | ||||||||
December 31, | ||||||||
2005 | 2004 | |||||||
Net (loss) income, as reported | $ | (2,418 | ) | $ | 5,805 | |||
Add: Stock-based employee compensation expense included in reported net income, net of tax | 1,492 | 589 | ||||||
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax | (1,694 | ) | (637 | ) | ||||
Net (loss) income, as adjusted | (2,620 | ) | 5,757 | |||||
Preferred stock dividends and accretion expense | 1,395 | 2,312 | ||||||
Net (loss) income available to common stockholders, as adjusted | $ | (4,015 | ) | $ | 3,445 | |||
(p) | Derivative Instruments |
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(q) | Fair Value of Financial Instruments |
(r) | Foreign Currency Translation |
(s) | Comprehensive Income (Loss) |
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2006 | 2005 | |||||||
Foreign currency translation adjustments | $ | 6,711 | $ | (5,491 | ) | |||
Unrealized gains on interest rate hedges | 4,449 | 5,145 | ||||||
Unrealized gains on available-for-sale securities | 498 | — | ||||||
Total accumulated other comprehensive income (loss) | $ | 11,658 | $ | (346 | ) | |||
(t) | Treasury Stock |
(u) | Advertising Costs |
(v) | Working Capital Deficit |
(w) | Accounting Changes and Errors Corrections |
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(x) | New Accounting Pronouncements Issued but Not Yet Adopted |
(y) | Earnings per Share |
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Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Net (loss) income | $ | (531 | ) | $ | (2,418 | ) | $ | 5,805 | ||||
Preferred stock dividends and accretion | 265 | 1,395 | 2,312 | |||||||||
Net (loss) income available to common stockholders | $ | (796 | ) | $ | (3,813 | ) | $ | 3,493 | ||||
Weighted average common shares outstanding — basic | 13,904,505 | 14,040,353 | 17,795,073 | |||||||||
Effect of dilutive securities: | ||||||||||||
Stock options | — | — | 916,103 | |||||||||
Restricted stock | — | — | 144,249 | |||||||||
Series A redeemable preferred stock | — | — | — | |||||||||
Series B convertible preferred stock | — | — | — | |||||||||
Weighted average common shares outstanding — diluted | 13,904,505 | 14,040,353 | 18,855,425 | |||||||||
Earnings Per Share: | ||||||||||||
Basic | $ | (0.06 | ) | $ | (0.27 | ) | $ | 0.20 | ||||
Diluted | $ | (0.06 | ) | $ | (0.27 | ) | $ | 0.19 | ||||
Year Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Stock options | 1,535,289 | 1,024,695 | — | |||||||||
Restricted shares | 94,070 | 157,396 | — | |||||||||
Series B convertible preferred stock | 7,390,413 | 6,502,249 | — | |||||||||
Total potentially dilutive securities | 9,019,772 | 7,684,340 | — | |||||||||
(2) | Acquisitions |
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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 | 77,269 | |||
Total assets acquired | 109,178 | |||
Accounts payable | (2,467 | ) | ||
Accrued liabilities | (5,307 | ) | ||
Current portion of notes payable | (3,232 | ) | ||
Deferred income taxes, non-current | (1,926 | ) | ||
Other long-term liabilities | (1,225 | ) | ||
Total liabilities assumed | (14,157 | ) | ||
Net assets acquired | $ | 95,021 | ||
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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 | |||
Deferred income taxes | 2,219 | |||
Goodwill | 82,758 | |||
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 | ||
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Years Ended | ||||||||
December 31, | ||||||||
2005 | 2004 | |||||||
Revenues | $ | 279,149 | $ | 278,416 | ||||
Income from continuing operations | 21,083 | 23,470 | ||||||
Net (loss) income | (1,162 | ) | 1,263 |
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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 | ||
(3) | Stock-based Compensation |
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2006 | 2005 | 2004 | ||||||||||
Cost of ATM operating revenues | $ | 51 | $ | 172 | $ | — | ||||||
Selling, general and administrative expenses | 828 | 2,201 | 956 | |||||||||
Total stock-based compensation expense | $ | 879 | $ | 2,373 | $ | 956 | ||||||
Number of | Weighted Average | |||||||
Shares | Exercise Price | |||||||
Balance as of January 1, 2006 | 3,689,400 | $ | 6.13 | |||||
Granted | 774,977 | $ | 10.55 | |||||
Exercised | (37,382 | ) | $ | .01 | ||||
Forfeited | (377,553 | ) | $ | 10.34 | ||||
Balance as of December 31, 2006 | 4,049,442 | $ | 6.64 | |||||
Options vested and exercisable as of December 31, 2006 | 2,219,304 | $ | 4.03 | |||||
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Weighted average estimated fair value per stock option granted | $4.24 | |
Valuation assumptions: | ||
Expected option term (years) | 6.25 | |
Expected volatility | 34.50% - 35.90% | |
Expected dividend yield | 0.00% | |
Risk-free interest rate | 4.74% - 4.85% |
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Number of | Weighted | |||||||
Shares Under | Average | |||||||
Outstanding | Grant Date | |||||||
Options | Fair Value | |||||||
Non-vested options as of January 1, 2006 | 2,150,558 | $ | 0.84 | |||||
Granted | 774,977 | $ | 4.24 | |||||
Vested | (737,715 | ) | $ | 0.77 | ||||
Forfeited | (357,682 | ) | $ | 1.03 | ||||
Non-vested options as of December 31, 2006 | 1,830,138 | $ | 2.27 | |||||
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(4) | Related Party Transactions |
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(5) | Prepaid Expenses, Deferred Costs, and Other Current Assets |
December 31, | ||||||||
2006 | 2005 | |||||||
Prepaid expenses | $ | 6,469 | $ | 3,258 | ||||
Available for sale securities, at market value | 4,184 | — | ||||||
Current portion of interest rate swaps | 4,079 | 3,270 | ||||||
Deferred costs and other current assets | 446 | 228 | ||||||
Total | $ | 15,178 | $ | 6,756 | ||||
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(6) | Property and Equipment, net |
December 31, | ||||||||
2006 | 2005 | |||||||
ATM equipment and related costs | $ | 114,803 | $ | 89,136 | ||||
Office furniture, fixtures, and other | 9,299 | 7,157 | ||||||
Total | 124,102 | 96,293 | ||||||
Less accumulated depreciation | (37,434 | ) | (22,142 | ) | ||||
Net property and equipment | $ | 86,668 | $ | 74,151 | ||||
(7) | Intangible Assets |
Goodwill | Trade Name | |||||||||||||||||||||||
U.S. | U.K. | Mexico | U.S. | U.K. | Total | |||||||||||||||||||
Balance at December 31, 2005 | $ | 88,806 | $ | 72,751 | $ | — | $ | 200 | $ | 3,471 | $ | 165,228 | ||||||||||||
Acquisitions | 115 | — | 1,030 | — | — | 1,145 | ||||||||||||||||||
Purchase price adjustments | (2,219 | ) | 241 | (334 | ) | — | — | (2,312 | ) | |||||||||||||||
Foreign currency translation adjustments | — | 9,180 | (7 | ) | — | 452 | 9,625 | |||||||||||||||||
Balance as of December 31, 2006 | $ | 86,702 | $ | 82,172 | $ | 689 | $ | 200 | $ | 3,923 | $ | 173,686 | ||||||||||||
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Weighted | ||||||||||||||||
Average | ||||||||||||||||
Remaining | Gross | Net | ||||||||||||||
Amortization | Carrying | Accumulated | Carrying | |||||||||||||
Period | Amount | Amortization | Amount | |||||||||||||
Customer contracts and relationships | 6.0 years | $ | 83,670 | $ | (31,378 | ) | $ | 52,292 | ||||||||
Exclusive license agreements | 5.4 years | 4,261 | (1,066 | ) | 3,195 | |||||||||||
Non-compete agreements | 3.1 years | 99 | (23 | ) | 76 | |||||||||||
Deferred financing costs | 5.4 years | 11,001 | (2,924 | ) | 8,077 | |||||||||||
Total | 5.9 years | $ | 99,031 | $ | (35,391 | ) | $ | 63,640 | ||||||||
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Customer | ||||||||||||||||||||
Contracts | Exclusive | |||||||||||||||||||
and | License | Non-Compete | Deferred | |||||||||||||||||
Relationships | Agreements | Agreements | Financing Costs | Total | ||||||||||||||||
2007 | $ | 9,105 | $ | 636 | $ | 25 | $ | 1,313 | $ | 11,079 | ||||||||||
2008 | 9,112 | 576 | 25 | 1,382 | 11,095 | |||||||||||||||
2009 | 8,796 | 571 | 25 | 1,459 | 10,851 | |||||||||||||||
2010 | 7,813 | 475 | 1 | 1,134 | 9,423 | |||||||||||||||
2011 | 5,839 | 361 | — | 977 | 7,177 | |||||||||||||||
Thereafter | 11,627 | 576 | — | 1,812 | 14,015 | |||||||||||||||
Total | $ | 52,292 | $ | 3,195 | $ | 76 | $ | 8,077 | $ | 63,640 | ||||||||||
(8) | Prepaid Expenses and Other Non-current Assets |
December 31, | ||||||||
2006 | 2005 | |||||||
Interest rate swaps, non-current | $ | 2,994 | $ | 4,910 | ||||
Prepaid expenses | 627 | 376 | ||||||
Other | 1,720 | 474 | ||||||
Total | $ | 5,341 | $ | 5,760 | ||||
(9) | Preferred Stock |
2006 | 2005 | |||||||
Balance as of beginning of period | $ | 76,329 | $ | — | ||||
Issuances, net of issuance costs of $1,858 | — | 76,095 | ||||||
Accretion of issuance costs | 265 | 234 | ||||||
Balance as of end of period | $ | 76,594 | $ | 76,329 | ||||
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(10) | Accrued Liabilities |
December 31, | ||||||||
2006 | 2005 | |||||||
Accrued interest | $ | 7,954 | $ | 7,328 | ||||
Accrued merchant fees | 7,915 | 7,613 | ||||||
Accrued purchases | 4,467 | 2,292 | ||||||
Accrued compensation | 3,499 | 1,722 | ||||||
Accrued armored | 3,242 | 2,662 | ||||||
Accrued cash management fees | 2,740 | 3,430 | ||||||
Accrued maintenance | 2,090 | 1,431 | ||||||
Other accrued expenses | 2,434 | 8,365 | ||||||
Total | $ | 34,341 | $ | 34,843 | ||||
(11) | Other Long-term Liabilities and Minority Interest in Subsidiary |
December 31, | ||||||||
2006 | 2005 | |||||||
Asset retirement obligations | $ | 9,989 | $ | 8,339 | ||||
Deferred revenue | 642 | 1,075 | ||||||
Minority interest in subsidiary | 111 | 25 | ||||||
Other long-term liabilities | 3,311 | 4,954 | ||||||
Total | $ | 14,053 | $ | 14,393 | ||||
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(12) | Long-term Debt |
2006 | 2005 | |||||||
Revolving credit loan facility bearing interest at LIBOR + 3.25% as of December 31, 2006 and 2005 and PRIME + 2.50% for swing-line borrowings as of December 31, 2006 and 2005 (weighted-average combined rate of 8.67% and 7.05% at December 31, 2006 and 2005, respectively) | $ | 53,100 | $ | 45,800 | ||||
Senior subordinated notes due August 2013, net of unamortized discount of $1.2 million and $1.3 million as of December 31, 2006 and 2005, respectively (9.25% stated rate, 9.375% effective yield) | 198,783 | 198,656 | ||||||
Other | 1,012 | 3,168 | ||||||
Total | 252,895 | 247,624 | ||||||
Less current portion | 194 | 3,168 | ||||||
Total excluding current portion | $ | 252,701 | $ | 244,456 | ||||
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Amount | ||||
2007 | $ | 194 | ||
2008 | 145 | |||
2009 | 207 | |||
2010 | 53,331 | |||
2011 | 235 | |||
2012 | — | |||
2013 | 200,000 | |||
Total | $ | 254,112 | ||
(13) | Employee Benefits |
(14) | Commitments and Contingencies |
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2007 | $ | 5,586 | ||
2008 | 5,412 | |||
2009 | 3,061 | |||
2010 | 1,723 | |||
2011 | 1,533 | |||
Thereafter | 2,760 | |||
Total minimum lease payments | $ | 20,075 | ||
(15) | Derivative Financial Instruments |
Notional Amount | Weighted Average Fixed Rate | Period | ||
$300,000 | 3.86% | January 1, 2007 — December 31, 2007 | ||
$300,000 | 4.35% | January 1, 2008 — December 31, 2008 | ||
$200,000 | 4.36% | January 1, 2009 — December 31, 2009 | ||
$100,000 | 4.34% | January 1, 2010 — December 31, 2010 |
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(16) | Income Taxes |
2006 | 2005 | 2004 | ||||||||||
Current: | ||||||||||||
U.S. federal | $ | — | $ | — | $ | 22 | ||||||
State and local | 28 | — | 64 | |||||||||
Foreign | 30 | — | — | |||||||||
Total current | $ | 58 | $ | — | $ | 86 | ||||||
Deferred: | ||||||||||||
U.S. federal | $ | (584 | ) | $ | (1,831 | ) | $ | 3,117 | ||||
State and local | 251 | 332 | 373 | |||||||||
Foreign | 787 | 229 | — | |||||||||
Total deferred | 454 | (1,270 | ) | 3,490 | ||||||||
Total | $ | 512 | $ | (1,270 | ) | $ | 3,576 | |||||
2006 | 2005 | 2004 | ||||||||||
Income tax (benefit) expense at the statutory rate of 34.0% | $ | (6 | ) | $ | (1,254 | ) | $ | 3,190 | ||||
State tax, net of federal benefit | 195 | 131 | 316 | |||||||||
Non-deductible expenses | 52 | 22 | 11 | |||||||||
Potential non-deductible interest of foreign subsidiary | 205 | — | — | |||||||||
Impact of foreign rate differential | (55 | ) | (31 | ) | — | |||||||
Change in effective state tax rate | — | (72 | ) | 66 | ||||||||
Other | 16 | (66 | ) | (7 | ) | |||||||
Subtotal | $ | 407 | $ | (1,270 | ) | $ | 3,576 | |||||
Change in valuation allowance | 105 | — | — | |||||||||
Total tax provision (benefit) | $ | 512 | $ | (1,270 | ) | $ | 3,576 | |||||
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United States | United Kingdom | Mexico | Consolidated | |||||||||||||||||||||||||||||
2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | |||||||||||||||||||||||||
Current deferred tax asset | $ | 440 | $ | 1,143 | $ | 149 | $ | — | $ | 47 | $ | — | $ | 636 | $ | 1,143 | ||||||||||||||||
Valuation allowance | — | — | — | — | (47 | ) | — | (47 | ) | — | ||||||||||||||||||||||
Current deferred tax liability | (316 | ) | (38 | ) | — | — | — | — | (316 | ) | (38 | ) | ||||||||||||||||||||
Net current deferred tax asset | $ | 124 | $ | 1,105 | $ | 149 | $ | — | $ | — | $ | — | $ | 273 | $ | 1,105 | ||||||||||||||||
Non-current deferred tax asset | $ | 11,740 | $ | 8,080 | $ | 248 | $ | 466 | $ | 187 | $ | — | $ | 12,175 | $ | 8,546 | ||||||||||||||||
Valuation allowance | — | — | — | — | (101 | ) | — | (101 | ) | — | ||||||||||||||||||||||
Non-current deferred tax liability | (16,120 | ) | (16,054 | ) | (3,493 | ) | (2,292 | ) | (86 | ) | — | (19,699 | ) | (18,346 | ) | |||||||||||||||||
Net non-current deferred tax liability | $ | (4,380 | ) | $ | (7,974 | ) | $ | (3,245 | ) | $ | (1,826 | ) | $ | — | $ | — | $ | (7,625 | ) | $ | (9,800 | ) | ||||||||||
Net deferred tax liability | $ | (4,256 | ) | $ | (6,869 | ) | $ | (3,096 | ) | $ | (1,826 | ) | $ | — | $ | — | $ | (7,352 | ) | $ | (8,695 | ) | ||||||||||
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2006 | 2005 | |||||||
Current deferred tax assets: | ||||||||
Reserve for receivables | $ | 98 | $ | 59 | ||||
Accrued liabilities and reserves | 438 | 1,032 | ||||||
Other | 100 | 52 | ||||||
Subtotal | 636 | 1,143 | ||||||
Valuation allowance | (47 | ) | — | |||||
Current deferred tax assets | 589 | 1,143 | ||||||
Non-current deferred tax assets: | ||||||||
Net operating loss carryforward | 8,827 | 6,998 | ||||||
Share-based compensation | 353 | 87 | ||||||
SFAS No. 143 deinstallation costs | 367 | 634 | ||||||
Deferred revenue and reserves | 1,679 | 758 | ||||||
Other | 949 | 69 | ||||||
Subtotal | 12,175 | 8,546 | ||||||
Valuation allowance | (101 | ) | — | |||||
Non-current deferred tax assets | 12,074 | 8,546 | ||||||
Current deferred tax liabilities: | ||||||||
Deferred stock compensation | — | (67 | ) | |||||
Unrealized gain on marketable securities | (293 | ) | — | |||||
Other | (23 | ) | 29 | |||||
Current deferred tax liabilities | (316 | ) | (38 | ) | ||||
Non-current deferred tax liabilities: | ||||||||
Tangible and intangible assets | (13,506 | ) | (12,960 | ) | ||||
Deployment costs | (3,569 | ) | (2,352 | ) | ||||
Unrealized gain on derivative instruments | (2,624 | ) | (3,034 | ) | ||||
Non-current deferred tax liabilities | (19,699 | ) | (18,346 | ) | ||||
Net deferred tax liability | $ | (7,352 | ) | $ | (8,695 | ) | ||
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(17) | Significant Suppliers |
(18) | Segment Information |
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As of or for the Year Ended December 31, 2006 | ||||||||||||||||||||
United | ||||||||||||||||||||
United States | Kingdom | Mexico | Eliminations | Total | ||||||||||||||||
Revenue from external customers | $ | 250,425 | $ | 42,157 | $ | 1,023 | $ | — | $ | 293,605 | ||||||||||
Intersegment revenue | 340 | — | — | (340 | ) | — | ||||||||||||||
Depreciation, depletion, and amortization expense | 24,819 | 5,675 | 84 | — | 30,578 | |||||||||||||||
Interest income | (3,676 | ) | (164 | ) | (5 | ) | 3,464 | (381 | ) | |||||||||||
Interest expense | 25,443 | 3,464 | 10 | (3,464 | ) | 25,453 | ||||||||||||||
(Loss) income before income taxes | (1,503 | ) | 1,957 | (388 | ) | (85 | ) | (19 | ) | |||||||||||
Identifiable Assets | $ | 238,127 | $ | 126,070 | $ | 3,559 | $ | — | $ | 367,756 | ||||||||||
Capital expenditures(1) | $ | 19,384 | $ | 14,912 | $ | 1,795 | $ | — | $ | 36,091 |
As of or for the Year Ended December 31, 2005 | ||||||||||||||||||||
United | ||||||||||||||||||||
United States | Kingdom | Mexico(2) | Eliminations | Total | ||||||||||||||||
Revenue from external customers | $ | 247,143 | $ | 21,822 | — | $ | — | $ | 268,965 | |||||||||||
Intersegment revenue | 358 | — | — | (358 | ) | — | ||||||||||||||
Depreciation, depletion, and amortization expense | 19,211 | 2,720 | — | — | 21,931 | |||||||||||||||
Interest income | (3,238 | ) | (988 | ) | — | 2,637 | (1,589 | ) | ||||||||||||
Interest expense | 24,015 | 2,637 | — | (2,637 | ) | 24,015 | ||||||||||||||
(Loss) income before income taxes | (4,335 | ) | 766 | — | (119 | ) | (3,688 | ) | ||||||||||||
Identifiable Assets | $ | 238,377 | $ | 105,374 | — | $ | — | $ | 343,751 | |||||||||||
Capital expenditures | $ | 23,344 | $ | 8,582 | — | $ | — | $ | 31,926 |
As of or for the Year Ended December 31, 2004 | ||||||||||||||||||||
United | ||||||||||||||||||||
United States | Kingdom(3) | Mexico(2) | Eliminations | Total | ||||||||||||||||
Revenue from external customers | $ | 192,915 | — | — | $ | — | $ | 192,915 | ||||||||||||
Intersegment revenue | — | — | — | — | — | |||||||||||||||
Depreciation, depletion, and amortization expense | 12,293 | — | — | — | 12,293 | |||||||||||||||
Interest income | (283 | ) | — | — | — | (283 | ) | |||||||||||||
Interest expense | 5,518 | — | — | — | 5,518 | |||||||||||||||
(Loss) income before income taxes | 9,381 | — | — | — | 9,381 | |||||||||||||||
Identifiable Assets | $ | 197,667 | — | — | $ | — | $ | 197,667 | ||||||||||||
Capital expenditures | $ | 19,747 | — | — | $ | — | $ | 19,747 |
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(1) | Capital expenditure amounts in 2006 exclude the Company’s initial investment in Mexico but include the purchase of assets to be leased. | |
(2) | No information is shown in 2005 or 2004 for the Company’s Mexico operations, as they were not acquired until 2006. | |
(3) | No information is shown in 2004 for the Company’s United Kingdom operations, as they were not acquired until 2005. |
(19) | Supplemental Guarantor Financial Information |
Year Ended December 31, 2006 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Revenues | $ | — | $ | 250,765 | $ | 43,180 | $ | (340 | ) | $ | 293,605 | |||||||||
Operating costs and expenses | 865 | 235,450 | 37,480 | (257 | ) | 273,538 | ||||||||||||||
Operating income (loss) | (865 | ) | 15,315 | 5,700 | (83 | ) | 20,067 | |||||||||||||
Interest expense, net | 8,491 | 13,276 | 3,305 | — | 25,072 | |||||||||||||||
Equity in (earnings) losses of subsidiaries | (8,151 | ) | — | — | 8,151 | — | ||||||||||||||
Other (income) expense, net | (175 | ) | (5,639 | ) | 826 | 2 | (4,986 | ) | ||||||||||||
(Loss) income before income taxes | (1,030 | ) | 7,678 | 1,569 | (8,236 | ) | (19 | ) | ||||||||||||
Income tax provision (benefit) | (584 | ) | 278 | 818 | — | 512 | ||||||||||||||
Net (loss) income | (446 | ) | 7,400 | 751 | (8,236 | ) | (531 | ) | ||||||||||||
Preferred stock dividends and accretion expense | 265 | — | — | — | 265 | |||||||||||||||
Net (loss) income available to common stockholders | $ | (711 | ) | $ | 7,400 | $ | 751 | $ | (8,236 | ) | $ | (796 | ) | |||||||
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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 (loss) | (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, net | — | 830 | 153 | — | 983 | |||||||||||||||
(Loss) income before income taxes | (4,210 | ) | 6,274 | 766 | (6,518 | ) | (3,688 | ) | ||||||||||||
Income tax provision (benefit) | (1,911 | ) | 412 | 229 | — | (1,270 | ) | |||||||||||||
Net (loss) income | (2,299 | ) | 5,862 | 537 | (6,518 | ) | (2,418 | ) | ||||||||||||
Preferred stock dividends and accretion expense | 1,395 | — | — | — | 1,395 | |||||||||||||||
Net (loss) income available to common stockholders | $ | (3,694 | ) | $ | 5,862 | $ | 537 | $ | (6,518 | ) | $ | (3,813 | ) | |||||||
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 (loss) | (2,542 | ) | 17,386 | — | — | 14,844 | ||||||||||||||
Interest expense (income), net | (155 | ) | 5,390 | — | — | 5,235 | ||||||||||||||
Equity in (earnings) losses of subsidiaries | (7,354 | ) | — | — | 7,354 | — | ||||||||||||||
Other expense, net | — | 228 | — | — | 228 | |||||||||||||||
(Loss) income before income taxes | 4,967 | 11,768 | — | (7,354 | ) | 9,381 | ||||||||||||||
Income tax provision (benefit) | (838 | ) | 4,414 | — | — | 3,576 | ||||||||||||||
Net (loss) income | 5,805 | 7,354 | — | (7,354 | ) | 5,805 | ||||||||||||||
Preferred stock dividends and accretion expense | 2,312 | — | — | — | 2,312 | |||||||||||||||
Net (loss) income available to common stockholders | $ | 3,493 | $ | 7,354 | $ | — | $ | (7,354 | ) | $ | 3,493 | |||||||||
F-80
Table of Contents
As of December 31, 2006 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 97 | $ | 1,818 | $ | 803 | $ | — | $ | 2,718 | ||||||||||
Accounts and notes receivable, net | 3,463 | 13,068 | 1,966 | (3,606 | ) | 14,891 | ||||||||||||||
Other current assets | 544 | 14,069 | 6,204 | (39 | ) | 20,778 | ||||||||||||||
Total current assets | 4,104 | 28,955 | 8,973 | (3,645 | ) | 38,387 | ||||||||||||||
Property and equipment, net | — | 59,512 | 27,326 | (170 | ) | 86,668 | ||||||||||||||
Intangible assets, net | 6,982 | 45,757 | 15,024 | — | 67,763 | |||||||||||||||
Goodwill | 1,228 | 85,474 | 82,861 | — | 169,563 | |||||||||||||||
Investments and advances to subsidiaries | 79,848 | — | — | (79,848 | ) | — | ||||||||||||||
Intercompany receivable | (122 | ) | 5,046 | (4,924 | ) | — | — | |||||||||||||
Prepaid expenses and other assets | 211,175 | 5,006 | 369 | (211,175 | ) | 5,375 | ||||||||||||||
Total assets | $ | 303,215 | $ | 229,750 | $ | 129,629 | $ | (294,838 | ) | $ | 367,756 | |||||||||
Liabilities and Stockholders’ Deficit: | ||||||||||||||||||||
Current portion of long-term debt and notes payable | $ | — | $ | — | $ | 194 | $ | — | $ | 194 | ||||||||||
Current portion of other long-term liabilities | — | 2,458 | 43 | — | 2,501 | |||||||||||||||
Accounts payable and accrued liabilities | 8,458 | 32,202 | 14,218 | (3,622 | ) | 51,256 | ||||||||||||||
Total current liabilities | 8,458 | 34,660 | 14,455 | (3,622 | ) | 53,951 | ||||||||||||||
Long-term debt, less current portion | 251,883 | 132,351 | 79,641 | (211,174 | ) | 252,701 | ||||||||||||||
Other non-current liabilities and minority interest | 3,448 | 12,519 | 5,711 | — | 21,678 | |||||||||||||||
Total liabilities | 263,789 | 179,530 | 99,807 | (214,796 | ) | 328,330 | ||||||||||||||
Preferred stock | 76,594 | — | — | — | 76,594 | |||||||||||||||
Stockholders’ (deficit) equity | (37,168 | ) | 50,220 | 29,822 | (80,042 | ) | (37,168 | ) | ||||||||||||
Total liabilities and stockholders’ deficit | $ | 303,215 | $ | 229,750 | $ | 129,629 | $ | (294,838 | ) | $ | 367,756 | |||||||||
F-81
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 | ||||||||||
Accounts and notes receivable, net | 2,047 | 10,706 | 836 | (3,843 | ) | 9,746 | ||||||||||||||
Other current assets | 1,669 | 7,480 | 5,691 | — | 14,840 | |||||||||||||||
Total current assets | 3,834 | 19,730 | 6,564 | (3,843 | ) | 26,285 | ||||||||||||||
Property and equipment, net | — | 58,283 | 15,991 | (123 | ) | 74,151 | ||||||||||||||
Intangible assets, net | 10,906 | 52,243 | 12,816 | — | 75,965 | |||||||||||||||
Goodwill | 3,684 | 85,122 | 72,751 | — | 161,557 | |||||||||||||||
Investments and advances to subsidiaries | 62,562 | — | — | (62,562 | ) | — | ||||||||||||||
Intercompany receivable | 487 | 2,288 | (2,775 | ) | — | — | ||||||||||||||
Prepaid expenses and other assets | 205,389 | 6,476 | 27 | (206,099 | ) | 5,793 | ||||||||||||||
Total assets | $ | 286,862 | $ | 224,142 | $ | 105,374 | $ | (272,627 | ) | $ | 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’ (deficit) equity | (49,084 | ) | 38,225 | 24,444 | (62,669 | ) | (49,084 | ) | ||||||||||||
Total liabilities and stockholders’ deficit | $ | 286,862 | $ | 224,142 | $ | 105,374 | $ | (272,627 | ) | $ | 343,751 | |||||||||
F-82
Table of Contents
Year Ended December 31, 2006 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Cash flows provided by (used in) operating activities | $ | (12,940 | ) | $ | 27,065 | $ | 11,321 | $ | — | $ | 25,446 | |||||||||
Capital expenditures, net of sales | — | (17,534 | ) | (15,070 | ) | — | (32,604 | ) | ||||||||||||
Payments for exclusive license agreements and site acquisition costs | — | (1,842 | ) | (1,515 | ) | — | (3,357 | ) | ||||||||||||
Acquisitions, net of cash acquired | (1,039 | ) | 27 | — | 1,000 | (12 | ) | |||||||||||||
Cash flows (used in) provided by investing activities | (1,039 | ) | (19,349 | ) | (16,585 | ) | 1,000 | (35,973 | ) | |||||||||||
Proceeds from issuance of long-term debt | 44,800 | 23,200 | 861 | (23,200 | ) | 45,661 | ||||||||||||||
Repayments of long-term debt | (37,500 | ) | (30,400 | ) | (3 | ) | 30,400 | (37,503 | ) | |||||||||||
Issuance of long-term notes receivable | (4,300 | ) | — | — | 4,300 | — | ||||||||||||||
Payments received on long-term notes receivable | 11,500 | — | — | (11,500 | ) | — | ||||||||||||||
Utilization of bank overdraft facility, net | — | — | 3,818 | — | 3,818 | |||||||||||||||
Issuance of capital stock | — | — | 1,000 | (1,000 | ) | — | ||||||||||||||
Purchase of treasury stock | (50 | ) | — | — | — | (50 | ) | |||||||||||||
Other financing activities | (492 | ) | (242 | ) | — | — | (734 | ) | ||||||||||||
Cash flows (used in) provided by financing activities | 13,958 | (7,442 | ) | 5,676 | (1,000 | ) | 11,192 | |||||||||||||
Effect of exchange rate changes | — | — | 354 | — | 354 | |||||||||||||||
(Decrease) increase in cash and cash equivalents | (21 | ) | 274 | 766 | — | 1,019 | ||||||||||||||
Cash and cash equivalents at beginning of period | 118 | 1,544 | 37 | — | 1,699 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 97 | $ | 1,818 | $ | 803 | $ | — | $ | 2,718 | ||||||||||
F-83
Table of Contents
Year Ended December 31, 2005 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Cash flows provided by (used in) operating activities | $ | (4,607 | ) | $ | 32,563 | $ | 5,271 | $ | — | $ | 33,227 | |||||||||
Capital expenditures, net of sales | — | (22,300 | ) | (4,883 | ) | — | (27,183 | ) | ||||||||||||
Payments for exclusive license agreements and site acquisition costs | — | (988 | ) | (3,677 | ) | — | (4,665 | ) | ||||||||||||
Acquisitions, net of cash acquired | (25,369 | ) | (17,108 | ) | (88,669 | ) | 23,034 | (108,112 | ) | |||||||||||
Cash flows (used in) provided by investing activities | (25,369 | ) | (40,396 | ) | (97,229 | ) | 23,034 | (139,960 | ) | |||||||||||
Proceeds from issuance of long-term debt | 451,056 | 173,037 | 66,235 | (212,319 | ) | 478,009 | ||||||||||||||
Repayments of long-term debt | (206,600 | ) | (162,141 | ) | — | 6,600 | (362,141 | ) | ||||||||||||
Issuance of long-term notes receivable | (215,083 | ) | — | — | 215,083 | — | ||||||||||||||
Payments received on long-term notes receivable | 6,600 | — | — | (6,600 | ) | — | ||||||||||||||
Issuance of preferred stock | 73,142 | — | — | 155 | 73,297 | |||||||||||||||
Redemption of preferred stock | (24,795 | ) | — | — | — | (24,795 | ) | |||||||||||||
Purchase of treasury stock | (46,453 | ) | — | — | — | (46,453 | ) | |||||||||||||
Issuance of capital stock | 88 | — | 25,954 | (25,953 | ) | 89 | ||||||||||||||
Other financing activities | (7,861 | ) | (2,931 | ) | — | — | (10,792 | ) | ||||||||||||
Cash flows (used in) provided by financing activities | 30,094 | 7,965 | 92,189 | (23,034 | ) | 107,214 | ||||||||||||||
Effect of exchange rate changes | — | — | (194 | ) | — | (194 | ) | |||||||||||||
Increase in cash and cash equivalents | 118 | 132 | 37 | — | 287 | |||||||||||||||
Cash and cash equivalents at beginning of period | — | 1,412 | — | — | 1,412 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 118 | $ | 1,544 | $ | 37 | $ | — | $ | 1,699 | ||||||||||
F-84
Table of Contents
Year Ended December 31, 2004 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Total | ||||||||||||||||
Cash flows provided by operating activities | $ | — | $ | 20,466 | $ | — | $ | — | $ | 20,466 | ||||||||||
Capital expenditures, net | — | (18,176 | ) | — | — | (18,176 | ) | |||||||||||||
Payments for exclusive license agreements and site acquisition costs | — | (1,125 | ) | — | — | (1,125 | ) | |||||||||||||
Acquisitions, net of cash acquired | — | (99,625 | ) | — | — | (99,625 | ) | |||||||||||||
Cash flows (used in) investing activities | — | (118,926 | ) | — | — | (118,926 | ) | |||||||||||||
Proceeds from issuance of long-term debt | — | 136,041 | — | — | 136,041 | |||||||||||||||
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 | |||||||||||||||
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 | ||||||||||
20. | Subsequent Events |
F-85
Table of Contents
F-86
Table of Contents
December 31, | June 30, | |||||||
2006 | 2007 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash | $ | 13,015 | $ | 10,304 | ||||
Accounts receivable | 74,565 | 65,868 | ||||||
Other current assets | 7,215 | 2,986 | ||||||
Total current assets | 94,795 | 79,158 | ||||||
Property and equipment, net | 90,484 | 85,901 | ||||||
Goodwill | 35,593 | 35,593 | ||||||
Total assets | $ | 220,872 | $ | 200,652 | ||||
Liabilities and Shareholder’s Equity | ||||||||
Current liabilities | ||||||||
Accrued expenses and other liabilities | $ | 72,242 | $ | 69,020 | ||||
Capital lease obligations due within one year | 1,465 | 1,244 | ||||||
Total current liabilities | 73,707 | 70,264 | ||||||
Deferred credits and other liabilities | 13,004 | 11,594 | ||||||
Long-term capital lease obligations | 1,900 | 1,381 | ||||||
Commitments and contingencies | ||||||||
Shareholder’s equity | ||||||||
Common stock, $.10 par value | — | — | ||||||
Additional paid-in capital | 128,273 | 111,570 | ||||||
Accumulated earnings | 3,988 | 5,843 | ||||||
Total shareholder’s equity | 132,261 | 117,413 | ||||||
Total liabilities and shareholder’s equity | $ | 220,872 | $ | 200,652 | ||||
F-87
Table of Contents
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||
2006 | 2007 | 2006 | 2007 | |||||||||||||
restated | ||||||||||||||||
Revenues: | ||||||||||||||||
Commissions | $ | 39,449 | $ | 37,111 | $ | 71,030 | $ | 73,464 | ||||||||
Other income | 5,407 | 951 | 10,049 | 6,119 | ||||||||||||
Total revenues | 44,856 | 38,062 | 81,079 | 79,583 | ||||||||||||
Expenses: | ||||||||||||||||
Commission expense to 7-Eleven | 12,343 | 13,709 | 23,273 | 26,124 | ||||||||||||
Other expenses | 22,735 | 25,312 | 47,338 | 50,347 | ||||||||||||
Operating, selling, general and administrative expenses | 35,078 | 39,021 | 70,611 | 76,471 | ||||||||||||
Interest expense, net | 170 | 42 | 408 | 91 | ||||||||||||
Total expenses | 35,248 | 39,063 | 71,019 | 76,562 | ||||||||||||
Earnings (loss) before income taxes | 9,608 | (1,001 | ) | 10,060 | 3,021 | |||||||||||
Income tax expense (benefit) | 3,709 | (386 | ) | 3,883 | 1,166 | |||||||||||
Net earnings (loss) | $ | 5,899 | $ | (615 | ) | $ | 6,177 | $ | 1,855 | |||||||
F-88
Table of Contents
Six Months Ended June 30 | ||||||||
2006 | 2007 | |||||||
restated | ||||||||
Cash Flows From Operating Activities | ||||||||
Net earnings | $ | 6,177 | $ | 1,855 | ||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||
Depreciation and amortization of equipment | 7,516 | 9,121 | ||||||
Deferred income taxes | 690 | (763 | ) | |||||
Net (gain) loss on disposal of equipment | (9 | ) | 36 | |||||
(Increase) decrease in accounts receivable | (2,414 | ) | 8,697 | |||||
Decrease in other assets | 3,557 | 4,195 | ||||||
Decrease in trade accounts payable and other liabilities | (14,798 | ) | (3,835 | ) | ||||
Net cash provided by operating activities | 719 | 19,306 | ||||||
Cash Flows From Investing Activities | ||||||||
Payments for purchase of equipment | (12,188 | ) | (4,574 | ) | ||||
Net cash used in investing activities | (12,188 | ) | (4,574 | ) | ||||
Cash Flows From Financing Activities | ||||||||
Principal payments under capital lease obligations | (4,203 | ) | (740 | ) | ||||
Capital contributions from (returned to) 7-Eleven, net | 35,650 | (16,703 | ) | |||||
Payments related to capital lease purchase | (22,639 | ) | — | |||||
Net cash provided by (used in) financing activities | 8,808 | (17,443 | ) | |||||
Net decrease in cash | (2,661 | ) | (2,711 | ) | ||||
Cash at beginning of year | 15,392 | 13,015 | ||||||
Cash at end of period | $ | 12,731 | $ | 10,304 | ||||
F-89
Table of Contents
NOTE 1: | Basis of Presentation and Summary of Significant Accounting Policies |
2006 | ||||||||
Impact of | As | |||||||
restatement | restated | |||||||
(dollars in thousands) | ||||||||
Six Months Ended June 30: | ||||||||
OSG&A | $ | 210 | $ | 70,611 | ||||
Earnings before income taxes | (210 | ) | 10,060 | |||||
Income tax expense | (81 | ) | 3,883 | |||||
Net earnings | (129 | ) | 6,177 | |||||
Net cash provided by operating activities | (2 | ) | 719 | |||||
Net cash provided by financing activities | 2 | 8,808 |
F-90
Table of Contents
NOTE 2: | Recently Issued Accounting Standards |
NOTE 3: | Subsequent Event |
F-91
Table of Contents
F-92
Table of Contents
of 7-Eleven, Inc.
March 29, 2007,
except for the restatement discussed
in Note 1 to the financial statements,
as to which the date is
July 16, 2007
F-93
Table of Contents
December 31, | December 31, | |||||||
2005 | 2006 | |||||||
restated | restated | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash | $ | 15,392 | $ | 13,015 | ||||
Accounts receivable | 43,093 | 74,565 | ||||||
Other current assets | 9,094 | 7,215 | ||||||
Total current assets | 67,579 | 94,795 | ||||||
Property and equipment, net | 86,970 | 90,484 | ||||||
Goodwill | 35,593 | 35,593 | ||||||
Other assets | 34 | — | ||||||
Total assets | $ | 190,176 | $ | 220,872 | ||||
Liabilities and Shareholder’s Equity | ||||||||
Current liabilities | ||||||||
Accrued expenses and other liabilities | $ | 50,002 | $ | 72,242 | ||||
Capital lease obligations due within one year | 9,008 | 1,465 | ||||||
Total current liabilities | 59,010 | 73,707 | ||||||
Deferred credits and other liabilities | 18,912 | 13,004 | ||||||
Long-term capital lease obligations | 21,921 | 1,900 | ||||||
Commitments and contingencies | ||||||||
Shareholder’s equity | ||||||||
Common stock, $.10 par value; 1,000 shares issued and outstanding | — | — | ||||||
Additional paid-in capital | 97,122 | 128,273 | ||||||
Accumulated (deficit) earnings | (6,789 | ) | 3,988 | |||||
Total shareholder’s equity | 90,333 | 132,261 | ||||||
Total liabilities and shareholder’s equity | $ | 190,176 | $ | 220,872 | ||||
F-94
Table of Contents
Years Ended December 31 | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
restated | restated | |||||||||||
Revenues: | ||||||||||||
Commissions | $ | 65,363 | $ | 138,243 | $ | 142,735 | ||||||
Other income | 31,754 | 19,748 | 20,927 | |||||||||
Total revenues | 97,117 | 157,991 | 163,662 | |||||||||
Expenses: | ||||||||||||
Commission expense to 7-Eleven | 25,816 | 47,413 | 49,233 | |||||||||
Other expenses | 68,577 | 101,657 | 96,356 | |||||||||
Operating, selling, general and administrative expenses | 94,393 | 149,070 | 145,589 | |||||||||
Interest expense, net | 909 | 1,056 | 520 | |||||||||
Total expenses | 95,302 | 150,126 | 146,109 | |||||||||
Earnings before income taxes | 1,815 | 7,865 | 17,553 | |||||||||
Income tax expense | 702 | 3,036 | 6,776 | |||||||||
Net earnings | $ | 1,113 | $ | 4,829 | $ | 10,777 | ||||||
F-95
Table of Contents
Years Ended December 31 | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
restated | restated | |||||||||||
Cash Flows from Operating Activities | ||||||||||||
Net earnings | $ | 1,113 | $ | 4,829 | $ | 10,777 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization of equipment | 12,465 | 14,456 | 15,820 | |||||||||
Deferred income taxes | 1,815 | 2,454 | 228 | |||||||||
Net loss (gain) on disposal of equipment | 116 | (13 | ) | (115 | ) | |||||||
Increase in accounts receivable | (16,274 | ) | (13,326 | ) | (31,472 | ) | ||||||
Increase in other assets | (919 | ) | (1,437 | ) | (708 | ) | ||||||
Increase in trade accounts payable and other liabilities | 18,078 | 18,508 | 18,725 | |||||||||
Net cash provided by operating activities | 16,394 | 25,471 | 13,255 | |||||||||
Cash Flows from Investing Activities | ||||||||||||
Payments for purchase of equipment | (11,151 | ) | (26,296 | ) | (19,325 | ) | ||||||
Proceeds from sale of equipment | 1,243 | 13 | 106 | |||||||||
Acquisition of a business | (44,743 | ) | — | — | ||||||||
Net cash used in investing activities | (54,651 | ) | (26,283 | ) | (19,219 | ) | ||||||
Cash Flows from Financing Activities | ||||||||||||
Principal payments under capital lease obligations | (6,348 | ) | (9,549 | ) | (4,932 | ) | ||||||
Capital contributions from 7-Eleven, net | 54,324 | 15,713 | 31,151 | |||||||||
Payments related to capital lease purchase | — | — | (22,632 | ) | ||||||||
Payments to 7-Eleven for return of Vcomtm kiosks’ cash inventory | (96,298 | ) | — | — | ||||||||
Net cash (used in) provided by financing activities | (48,322 | ) | 6,164 | 3,587 | ||||||||
Net (decrease) increase in cash | (86,579 | ) | 5,352 | (2,377 | ) | |||||||
Cash at beginning of year | 96,619 | 10,040 | 15,392 | |||||||||
Cash at end of year | $ | 10,040 | $ | 15,392 | $ | 13,015 | ||||||
Related disclosures for cash flow reporting | ||||||||||||
Assets obtained by entering into capital leases | $ | 3,291 | $ | — | $ | — | ||||||
F-96
Table of Contents
Common Stock | Additional | Accumulated | ||||||||||||||||||
Par | Paid-in | (Deficit) | Shareholder’s | |||||||||||||||||
Shares | Value | Capital | Earnings | Equity | ||||||||||||||||
Balance at December 31, 2003 | 1 | $ | — | $ | 123,383 | $ | (12,731 | ) | $ | 110,652 | ||||||||||
Net earnings | 1,113 | 1,113 | ||||||||||||||||||
Payments to 7-Eleven for return of Vcomtm kiosks’ cash inventory | (96,298 | ) | (96,298 | ) | ||||||||||||||||
Capital contributions from 7-Eleven, net | 54,324 | 54,324 | ||||||||||||||||||
Balance at December 31, 2004 | 1 | — | 81,409 | (11,618 | ) | 69,791 | ||||||||||||||
Net earnings, as restated (see Note 1) | 4,829 | 4,829 | ||||||||||||||||||
Capital contributions from 7-Eleven, net, as restated (see Note 1) | 15,713 | 15,713 | ||||||||||||||||||
Balance at December 31, 2005, as restated | 1 | — | 97,122 | (6,789 | ) | 90,333 | ||||||||||||||
Net earnings, as restated (see Note 1) | 10,777 | 10,777 | ||||||||||||||||||
Capital contributions from 7-Eleven, net, as restated (see Note 1) | 31,151 | 31,151 | ||||||||||||||||||
Balance at December 31, 2006, as restated | 1 | $ | — | $ | 128,273 | $ | 3,988 | $ | 132,261 | |||||||||||
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NOTE 1: | Basis of Presentation and Summary of Significant Accounting Policies |
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NOTES TO FINANCIAL STATEMENTS — (Continued)
2005 | 2006 | |||||||||||||||
Impact of | Impact of | |||||||||||||||
Restatement | As Restated | Restatement | As Restated | |||||||||||||
(dollars in thousands) | ||||||||||||||||
As of December 31: | ||||||||||||||||
Total current assets | — | — | $ | (379 | ) | $ | 94,795 | |||||||||
Property and equipment, net | — | — | (1,333 | ) | 90,484 | |||||||||||
Total current liabilities | — | — | (99 | ) | 73,707 | |||||||||||
Deferred credits and other liabilities | — | — | (168 | ) | 13,004 | |||||||||||
Additional paid-in capital | $ | 1,066 | $ | 97,122 | 57 | 128,273 | ||||||||||
Accumulated (deficit) earnings | (1,066 | ) | (6,789 | ) | (1,502 | ) | 3,988 | |||||||||
Year Ended December 31: | ||||||||||||||||
OSG&A | $ | 1,736 | $ | 149,070 | $ | 709 | $ | 145,589 | ||||||||
Earnings before income taxes | (1,736 | ) | 7,865 | (709 | ) | 17,553 | ||||||||||
Income tax expense | (670 | ) | 3,036 | (273 | ) | 6,776 | ||||||||||
Net earnings | (1,066 | ) | 4,829 | (436 | ) | 10,777 | ||||||||||
Net cash provided by operating activities | (1,066 | ) | 25,471 | 106 | 13,255 | |||||||||||
Net cash used in investing activities | — | — | 903 | (19,219 | ) | |||||||||||
Net cash provided by financing activities | 1,066 | 6,164 | (1,009 | ) | 3,587 |
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Table of Contents
NOTES TO FINANCIAL STATEMENTS — (Continued)
Years | ||||
Leasehold improvements | 3 to 20 | |||
Equipment | 3 to 10 | |||
Software | 3 to 7 |
F-100
Table of Contents
NOTES TO FINANCIAL STATEMENTS — (Continued)
Years Ended December 31 | ||||||||
2004 | 2005 | |||||||
(dollars in thousands) | ||||||||
restated | ||||||||
Net earnings as reported | $ | 1,113 | $ | 4,829 | ||||
Add: Stock-based compensation expense included in reported net earnings, net of tax | — | 1,147 | ||||||
Less: Total stock-based compensation expense determined under the fair-value-based method for all stock-option awards, net of tax | (90 | ) | (1,019 | ) | ||||
Pro forma net earnings | $ | 1,023 | $ | 4,957 | ||||
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NOTES TO FINANCIAL STATEMENTS — (Continued)
NOTE 2: | Accounts Receivable |
December 31 | ||||||||
2005 | 2006 | |||||||
(dollars in thousands) | ||||||||
restated | ||||||||
ATM receivables | $ | 35,606 | $ | 61,787 | ||||
Placement fee receivables | 3,551 | 5,511 | ||||||
Other receivables | 3,936 | 7,267 | ||||||
$ | 43,093 | $ | 74,565 | |||||
NOTE 3: | Other Current Assets |
December 31 | ||||||||
2005 | 2006 | |||||||
(dollars in thousands) | ||||||||
Prepaid expenses | $ | 5,550 | $ | 6,291 | ||||
Deferred income taxes | 3,544 | 924 | ||||||
$ | 9,094 | $ | 7,215 | |||||
NOTE 4: | Property and Equipment |
December 31 | ||||||||
2005 | 2006 | |||||||
(dollars in thousands) | ||||||||
restated | ||||||||
Cost | ||||||||
Leasehold improvements | $ | 10 | $ | 10 | ||||
Developed software | 26,772 | 28,645 | ||||||
Equipment | 48,846 | 88,335 | ||||||
75,628 | 116,990 | |||||||
Original value | ||||||||
Capital lease equipment | 46,399 | 3,699 | ||||||
122,027 | 120,689 | |||||||
Accumulated depreciation and amortization (includes $8,442 and $13,081 related to developed software) | (35,057 | ) | (30,205 | ) | ||||
$ | 86,970 | $ | 90,484 | |||||
NOTE 5: | Goodwill |
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NOTES TO FINANCIAL STATEMENTS — (Continued)
NOTE 6: | Accrued Expenses and Other Liabilities |
December 31 | ||||||||
2005 | 2006 | |||||||
(dollars in thousands) | ||||||||
restated | ||||||||
Interest | $ | 81 | $ | 79 | ||||
Accrued advertising | 390 | 432 | ||||||
Accrued rent | 885 | 432 | ||||||
Deferred income | 2,038 | 824 | ||||||
Settlement payables | 41,180 | 65,808 | ||||||
Other | 5,428 | 4,667 | ||||||
$ | 50,002 | $ | 72,242 | |||||
NOTE 7: | Deferred Credits and Other Liabilities |
December 31 | ||||||||
2005 | 2006 | |||||||
(dollars in thousands) | ||||||||
restated | ||||||||
Deferred income taxes | $ | 13,489 | $ | 11,096 | ||||
Deferred income | 5,423 | 1,908 | ||||||
$ | 18,912 | $ | 13,004 | |||||
NOTE 8: | Leases |
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NOTES TO FINANCIAL STATEMENTS — (Continued)
Capital | Operating | |||||||
Leases | Leases | |||||||
(dollars in thousands) | ||||||||
2007 | $ | 1,638 | $ | 4,016 | ||||
2008 | 1,048 | 3,965 | ||||||
2009 | 755 | 3,837 | ||||||
2010 | 233 | 225 | ||||||
Future minimum lease payments | 3,674 | $ | 12,043 | |||||
Amount representing imputed interest | (309 | ) | ||||||
Present value of future minimum lease payments | $ | 3,365 | ||||||
2007 | $ | 1,465 | ||
2008 | 955 | |||
2009 | 716 | |||
2010 | 229 | |||
$ | 3,365 | |||
NOTE 9: | Benefit Plans |
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NOTES TO FINANCIAL STATEMENTS — (Continued)
NOTE 10: | Commitments and Contingencies |
NOTE 11: | Income Taxes |
Years Ended December 31 | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(dollars in thousands) | ||||||||||||
restated | restated | |||||||||||
Current | ||||||||||||
Federal | $ | (1,613 | ) | $ | (118 | ) | $ | 5,798 | ||||
State | 500 | 700 | 750 | |||||||||
Subtotal | (1,113 | ) | 582 | 6,548 | ||||||||
Deferred | 1,815 | 2,454 | 228 | |||||||||
Income tax expense on earnings | $ | 702 | $ | 3,036 | $ | 6,776 | ||||||
Years Ended December 31 | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(dollars in thousands) | ||||||||||||
restated | restated | |||||||||||
Tax expense at federal statutory rate | $ | 635 | $ | 2,753 | $ | 6,144 | ||||||
State income tax expense, net of federal income tax benefit | 67 | 283 | 632 | |||||||||
$ | 702 | $ | 3,036 | $ | 6,776 | |||||||
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NOTES TO FINANCIAL STATEMENTS — (Continued)
December 31 | ||||||||
2005 | 2006 | |||||||
(dollars in thousands) | ||||||||
restated | ||||||||
Deferred tax assets | ||||||||
Property and equipment | $ | 3,544 | $ | 924 | ||||
Deferred tax liabilities | ||||||||
Property and equipment | (12,178 | ) | (9,925 | ) | ||||
Intangible assets and other | (1,311 | ) | (1,171 | ) | ||||
Subtotal | (13,489 | ) | (11,096 | ) | ||||
Net deferred tax liability | $ | (9,945 | ) | $ | (10,172 | ) | ||
Current deferred tax assets | $ | 3,544 | $ | 924 | ||||
Noncurrent deferred tax liabilities | (13,489 | ) | (11,096 | ) | ||||
Net deferred tax liability | $ | (9,945 | ) | $ | (10,172 | ) | ||
NOTE 12: | Recently Issued Accounting Standards |
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December 31, 2002 and 2003 and June 30, 2004
(With Independent Auditors’ Report Thereon)
F-107
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F-108
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As of December 31, 2002 and 2003 and June 30, 2004
(000’s)
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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For the Years Ended December 31, 2002 and 2003 and Six Months Ended June 30, 2004
Six Months | ||||||||||||
Years Ended | Ended | |||||||||||
December 31, | 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 (exclusive of depreciation, accretion, and amortization expense, shown separately below) | 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 | 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 | |||||||||
Total operating expenses | 19,150 | 20,793 | 9,519 | |||||||||
Operating loss | (4,748 | ) | (5,314 | ) | (3,295 | ) | ||||||
Other (income)/expense | (110 | ) | 305 | (154 | ) | |||||||
Equity in (earnings)/losses of unconsolidated affiliates | (96 | ) | (62 | ) | (310 | ) | ||||||
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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For the Years Ended December 31, 2002 and 2003 and Six Months Ended June 30, 2004
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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For the Years Ended December 31, 2002 and 2003 and Six Months Ended June 30, 2004
Six Months | ||||||||||||
Years Ended | Ended | |||||||||||
December 31, | 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 |
(a) | Description of Business and Basis of Presentation |
Years Ended | Six months | |||||||||||
December 31, | Ended June 30, | |||||||||||
2002 | 2003 | 2004 | ||||||||||
Depreciation and accretion related to ATMs and ATM related assets | $ | 3,578 | $ | 4,852 | $ | 2,015 | ||||||
Amortization | 4,829 | 6,185 | 2,835 | |||||||||
Total depreciation, accretion, and amortization excluded from cost of ATM service revenues | $ | 8,407 | $ | 11,037 | $ | 4,850 | ||||||
(b) | Principles of Consolidation |
(c) | Cash Equivalents |
(d) | ATM Vault Cash |
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(e) | Accounts Receivable |
(f) | Note Receivable |
(g) | Inventory |
(h) | Property and Equipment, net |
(i) | Goodwill and Other Intangible Assets, net |
F-114
Table of Contents
(j) | Income Taxes |
(k) | Impairment of Long-Lived Assets |
(l) | Use of Estimates in the Preparation of Financial Statements |
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(m) | Revenue Recognition |
(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 | ||
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(3) | Affiliated Party Transactions |
(4) | Prepaid, Deferred Costs, and Other Current Assets |
As of | As of | |||||||||||
December 31, | 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 | As of | |||||||||||
December 31, | 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 | ||||||||||||
As of December 31, | 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 | ||||||||||||
As of December 31, | 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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Six Months | ||||||||||||
Years Ended | Ended | |||||||||||
December 31, | 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. |
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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-3
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A-4
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A-5
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A-6
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Item 20. | Indemnification Of Officers And Directors |
II-1
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II-2
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Item 21. | Exhibits and Financial Statement Schedules |
Exhibit | ||||
Number | Description | |||
1 | .1 | Underwriting Agreement (incorporated herein by reference to Exhibit 1.1 of the Current Report onForm 8-K, filed by Cardtronics, Inc. on December 14, 2007, RegistrationNo. 001-33864). | ||
2 | .1 | Share Sale and Purchase Agreement between Bank Machine (Holdings) Limited and Cardtronics Limited, dated effective as of May 17, 2005 (incorporated herein by reference to Exhibit 2.1 of the Amendment No. 1 to Registration Statement onForm S-4/A, filed by Cardtronics, Inc. on July 10, 2006, RegistrationNo. 333-131199). | ||
2 | .2 | Purchase and Sale Agreement Between E*TRADE Access, Inc., E*TRADE Bank, Cardtronics, LP and Cardtronics, Inc., dated effective as of June 2, 2004 (incorporated herein by reference to Exhibit 2.2 of the Amendment No. 1 to Registration Statement onForm S-4/A, filed by Cardtronics, Inc. on July 10, 2006, RegistrationNo. 333-131199). | ||
2 | .3 | Purchase and Sale Agreement, dated as of July 20, 2007, by and between Cardtronics, LP and 7-Eleven, Inc. (incorporated herein by reference to Exhibit 10.1 of the Current Report onForm 8-K filed on July 26, 2007 Registration No. 333-113470). | ||
3 | .1 | Third Amended and Restated Certificate of Incorporation of Cardtronics, Inc. (incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K, filed by Cardtronics, Inc. on December 14, 2007, Registration No. 001-33864). | ||
3 | .2 | Second Amended and Restated Bylaws of Cardtronics, Inc. (incorporated herein by reference to Exhibit 3.2 of the Current Report on Form 8-K, filed by Cardtronics, Inc. on December 14, 2007, Registration No. 001-33864). | ||
4 | .1 | Indenture dated as of July 20, 2007 among Cardtronics, Inc., the Subsidiary Guarantors party thereto, and Wells Fargo Bank, N.A. as Trustee (incorporated herein by reference to Exhibit 4.1 of the Quarterly Report onForm 10-Q filed by Cardtronics, Inc. on August 14, 2007). | ||
4 | .2 | Indenture dated as of August 12, 2005 by and among Cardtronics, Inc., the Subsidiary Guarantors party thereto and Wells Fargo Bank, NA as Trustee (incorporated herein by reference to Exhibit 4.1 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199). | ||
4 | .3 | Registration Rights Agreement dated as of July 20, 2007 among Cardtronics, Inc., the Guarantors named therein, Banc of America Securities LLC and BNP Paribas Securities Corp. (incorporated herein by reference to Exhibit 4.2 of the Quarterly Report onForm 10-Q filed by Cardtronics, Inc. on August 14, 2007). | ||
4 | .4 | Supplemental Indenture dated as of June 22, 2007 among Cardtronics Holdings, LLC and Wells Fargo Bank, N.A. as Trustee (incorporated herein by reference to Exhibit 4.3 of the Quarterly Report onForm 10-Q filed by Cardtronics, Inc. on August 14, 2007). | ||
4 | .5 | Supplemental Indenture dated as of December 22, 2005 among ATM National, LLC and Wells Fargo Bank, N.A. as Trustee (incorporated herein by reference to Exhibit 4.4 of the Quarterly Report onForm 10-Q filed by Cardtronics, Inc. on August 14, 2007). | ||
4 | .6 | Form of Senior Subordinated Note (incorporated by reference to Exhibit A to Exhibit 4.2 hereto). | ||
4 | .7 | Registration Rights Agreement dated as of August 12, 2005 by and among Cardtronics, Inc., the Subsidiary Guarantors party thereto and the Initial Purchasers party thereto (incorporated herein by reference to Exhibit 4.3 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199). | ||
4 | .8 | Form of Senior Subordinated Note (incorporated by reference to Exhibit A to Exhibit 4.1 hereto). | ||
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 (incorporated herein by reference to Exhibit 10.1 of the Amendment No. 2 to Registration Statement onForm S-4/A filed by Cardtronics, Inc. on August 25, 2006, RegistrationNo. 333-131199). | ||
10 | .2 | Third Amended and Restated First Lien Credit Agreement, dated as of May 17, 2005, by and among Cardtronics, Inc., the Subsidiary Guarantors party thereto, Bank of America, N.A., BNP Paribas, and the other Lenders parties thereto (incorporated herein by reference to Exhibit 10.2 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199). |
II-3
Table of Contents
Exhibit | ||||
Number | Description | |||
10 | .3 | Amendment No. 1 to Credit Agreement, dated as of July 6, 2005 (incorporated herein by reference to Exhibit 10.3 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199). | ||
10 | .4 | Amendment No. 2 to Credit Agreement, dated as of August 5, 2005 (incorporated herein by reference to Exhibit 10.4 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199). | ||
10 | .5 | Amendment No. 3 to Credit Agreement, dated as of November 17, 2005 (incorporated herein by reference to Exhibit 10.5 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199). | ||
10 | .6 | Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated effective as of January 30, 2003 (incorporated by reference to Exhibit 10.10 of the Registration Statement onForm S-1 filed by Cardtronics, Inc. on March 10, 2004, RegistrationNo. 333-113470).† | ||
10 | .7 | First Amendment to Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated effective as of February 4, 2004 (incorporated by reference to Exhibit 10.11 of the Registration Statement onForm S-1 filed by Cardtronics, Inc. on March 10, 2004, RegistrationNo. 333-113470).† | ||
10 | .8 | Second Amendment to Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated effective as of January 1, 2005 (incorporated herein by reference to Exhibit 10.8 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .9 | Restricted Stock Agreement, dated as of February 4, 2004 between Cardtronics, Inc. and Jack M. Antonini (incorporated herein by reference to Exhibit 10.9 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .10 | First Amendment to Restricted Stock Agreement, dated as of March 1, 2004, between Cardtronics, Inc. and Jack M. Antonini (incorporated herein by reference to Exhibit 10.10 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .11 | Second Amendment to Restricted Stock Agreement, dated as of February 10, 2005, between Cardtronics, Inc. and Jack M. Antonini (incorporated herein by reference to Exhibit 10.11 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .12 | Employment Agreement between Cardtronics, LP and Michael H. Clinard, dated effective as of June 4, 2001 (incorporated by reference to Exhibit 10.12 of the Registration Statement onForm S-1 filed by Cardtronics, Inc. on March 10, 2004) (incorporated by reference to Exhibit 10.12 of the Registration Statement onForm S-1 filed by Cardtronics, Inc. on March 10, 2004, RegistrationNo. 333-113470).† | ||
10 | .13 | First Amendment to Employment Agreement between Cardtronics, LP and Michael H. Clinard, dated effective as of January 1, 2005 (incorporated herein by reference to Exhibit 10.13 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .14 | Employment Agreement between Cardtronics, LP and Thomas E. Upton, dated effective as of June 1, 2001 (incorporated by reference to Exhibit 10.13 of the Registration Statement onForm S-1 filed by Cardtronics, Inc. on March 10, 2004, RegistrationNo. 333-113470).† | ||
10 | .15 | First Amendment to Employment Agreement between Cardtronics, LP and Thomas E. Upton, dated effective as of January 1, 2005 (incorporated herein by reference to Exhibit 10.15 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .16 | Employment Agreement between Cardtronics, LP and J. Chris Brewster, dated effective as of March 31, 2004 (incorporated by reference to Exhibit 10.14 of the Registration Statement onForm S-1/A filed by Cardtronics, Inc. on May 14, 2004).† | ||
10 | .17 | First Amendment to Employment Agreement between Cardtronics, LP and J. Chris Brewster, dated effective as of January 1, 2005 (incorporated herein by reference to Exhibit 10.17 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .18 | Employment Agreement between Cardtronics, LP, Cardtronics, Inc. and Drew Soinski, dated effective as of July 12, 2005 (incorporated herein by reference to Exhibit 10.18 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† |
II-4
Table of Contents
Exhibit | ||||
Number | Description | |||
10 | .19 | Amended and Restated Service Agreement between Bank Machine Limited and Ron Delnevo, dated effective as of May 17, 2005 (incorporated herein by reference to Exhibit 10.19 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .20 | Bonus Agreement between Bank Machine Limited and Ron Delnevo, dated effective as of May 17, 2005 (incorporated herein by reference to Exhibit 10.20 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .21 | 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as of June 4, 2001 (incorporated herein by reference to Exhibit 10.21 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .22 | Amendment No. 1 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as of January 30, 2004 (incorporated herein by reference to Exhibit 10.22 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .23 | Amendment No. 2 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as of June 23, 2004 (incorporated herein by reference to Exhibit 10.23 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .24 | Form of Director Indemnification Agreement entered into by and between Cardtronics, Inc. and each of its directors, dated as of February 10, 2005 (incorporated herein by reference to Exhibit 10.24 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .25 | Amendment No. 1 to ATM Cash Services Agreement, dated August 2, 2004 (incorporated herein by reference to Exhibit 10.25 of the Amendment No. 2 to Registration Statement onForm S-4/A filed by Cardtronics, Inc. on August 25, 2006, RegistrationNo. 333-131199). | ||
10 | .26 | Amendment No. 2 to ATM Cash Services Agreement, dated February 9, 2006 (incorporated herein by reference to Exhibit 10.26 of the Amendment No. 2 to Registration Statement onForm S-4/A filed by Cardtronics, Inc. on August 25, 2006, RegistrationNo. 333-131199). | ||
10 | .27 | 2006 Bonus Plan of Cardtronics, Inc., effective as of January 1, 2006 (incorporated herein by reference to Exhibit 10.27 of the Annual Report onForm 10-K filed on April 2, 2007).† | ||
10 | .28 | Amendment No. 4 to Credit Agreement, dated as of February 14, 2006 (incorporated herein by reference to Exhibit 10.28 of the Annual Report onForm 10-K filed on April 2, 2007). | ||
10 | .29 | Amendment No. 5 to Credit Agreement, dated as of September 29, 2006 (incorporated herein by reference to Exhibit 10.29 of the Registration Statement onForm S-1 filed by Cardtronics, Inc. on September 7, 2007, Registration No. 145929). | ||
10 | .30 | Amendment No. 6 to Credit Agreement, dated as of May 3, 2007 (incorporated herein by reference to Exhibit 10.1 of the Current Report onForm 8-K filed on May 9, 2007). | ||
10 | .31 | Amendment No. 7 to Credit Agreement, dated as of July 18, 2007 (incorporated herein by reference to Exhibit 10.2 of the Quarterly Report onForm 10-Q filed on August 14, 2007). | ||
10 | .32 | Vault Cash Agreement, dated as of July 20, 2007, by and between Cardtronics, Inc. and Wells Fargo, N.A. (incorporated herein by reference to Exhibit 10.1 of our Quarterly Report onForm 10-Q filed on November 8, 2007). | ||
10 | .33 | Placement Agreement, dated as of July 20, 2007, by and between Cardtronics, Inc. and 7-Eleven, Inc. (incorporated herein by reference to Exhibit 10.2 of our Quarterly Report onForm 10-Q filed on November 8, 2007). | ||
10 | .34 | Cardtronics, Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 of our Quarterly Report onForm 10-Q filed on November 8, 2007). | ||
10 | .35 | First Amended and Restated Investors Agreement, dated as of February 10, 2005, by and among Cardtronics, Inc. and certain securityholders thereof. (incorporated herein by reference to Exhibit 10.35 of the Registration Statement onForm S-1, filed by Cardtronics, Inc. on December 11, 2007, RegistrationNo. 333-145929). | ||
10 | .36 | First Amendment to First Amended and Restated Investors Agreement, dated as of May 17, 2005, by and among Cardtronics, Inc. and certain securityholders thereof (incorporated herein by reference to Exhibit 10.36 of the Registration Statement onForm S-1, filed by Cardtronics, Inc. on December 11, 2007, RegistrationNo. 333-145929). |
II-5
Table of Contents
Exhibit | ||||
Number | Description | |||
10 | .37 | Second Amendment to First Amended and Restated Investors Agreement, dated as of November 26, 2007, by and among Cardtronics, Inc. and certain securityholders thereof. (incorporated herein by reference to Exhibit 10.1 of the Current Report on Form 8-K, filed by Cardtronics, Inc. on December 14, 2007, Registration No. 001-33864). | ||
10 | .38 | Amendment No. 3 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc. dated effective as of May 9, 2006 (incorporated herein by reference to Exhibit 10.38 of Post-effective Amendment No. 1 to the Registration Statement onForm S-1 filed on December 10, 2007, Registration No.333-145929).† | ||
10 | .39 | Amendment No. 4 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc. dated effective as of August 22, 2007 (incorporated herein by reference to Exhibit 10.39 of Post-effective Amendment No. 1 to the Registration Statement onForm S-1 filed on December 10, 2007, RegistrationNo. 333-145929).† | ||
10 | .40 | Amendment No. 5 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc. dated effective as of November 26, 2007 (incorporated herein by reference to Exhibit 10.40 of Post-effective Amendment No. 1 to the Registration Statement onForm S-1 filed on December 10, 2007, RegistrationNo. 333-145929).† | ||
10 | .41* | Employment Agreement between Cardtronics, LP, Cardtronics, Inc., and Rick Updyke, dated effective as of July 20, 2007.† | ||
10 | .42* | 2007 Bonus Plan of Cardtronics, Inc., effective as of January 1, 2007.† | ||
12 | .1 | Computation of Ratio of Earnings to Fixed Charges (incorporated herein by reference to Exhibit 12.1 of the Registration Statement onForm S-1, filed by Cardtronics, Inc. on November 9, 2007, RegistrationNo. 333-145929). | ||
21 | .1* | Subsidiaries of Cardtronics, Inc. | ||
23 | .1* | Consent of Independent Registered Public Accounting Firm KPMG LLP. | ||
23 | .2* | Consent of Independent Accountants PricewaterhouseCoopers LLP. | ||
23 | .3* | Consent of Vinson & Elkins L.L.P. (Contained in Exhibit 5.1). | ||
24 | .1* | Power of Attorney (included on the signature page to this Registration Statement). | ||
25 | .1* | Form T-1 of Wells Fargo Bank, N.A. |
* | Filed herewith. | |
† | Management contract or compensatory plan or arrangement. |
Item 22. | Undertakings |
II-6
Table of Contents
II-7
Table of Contents
By: | /s/ Jack Antonini |
Title: | President |
Signature | Title | |||
/s/ Jack Antonini Jack Antonini | President and Chief Executive Officer (Principal Executive Officer) | |||
/s/ J. Chris Brewster J. Chris Brewster | Chief Financial Officer (Principal Financial and Accounting Officer) | |||
/s/ Fred R. Lummis Fred R. Lummis | Director and Chairman of the Board of Directors | |||
/s/ Tim Arnoult Tim Arnoult | Director | |||
/s/ Robert P. Barone Robert P. Barone | Director | |||
/s/ Jorge M. Diaz Jorge M. Diaz | Director | |||
/s/ Dennis F. Lynch Dennis F. Lynch | Director | |||
/s/ Michael A. R. Wilson Michael A. R. Wilson | Director |
II-8
Table of Contents
By: | /s/ Jack Antonini |
Title: | President |
Signature | Title | |||
/s/ Jack Antonini Jack Antonini | Director, President and Chief Executive Officer (Principal Executive Officer) | |||
/s/ J. Chris Brewster J. Chris Brewster | Chief Financial Officer (Principal Financial and Accounting Officer) | |||
/s/ Fred R. Lummis Fred R. Lummis | Director and Chairman of the Board of Directors |
II-9
Table of Contents
By: | /s/ Jack Antonini |
Title: | President |
Signature | Title | |||
/s/ Jack Antonini Jack Antonini | President and Director (Principal Executive Officer) | |||
/s/ J. Chris Brewster J. Chris Brewster | Chief Financial Officer (Principal Financial and Accounting Officer) | |||
/s/ Fred R. Lummis Fred R. Lummis | Director |
II-10
Table of Contents
By: | /s/ Jack Antonini |
Title: | President |
Signature | Title | |||
/s/ Jack Antonini Jack Antonini | President and Manager (Principal Executive Officer) | |||
/s/ J. Chris Brewster J. Chris Brewster | Chief Financial Officer (Principal Financial and Accounting Officer) |
II-11
Table of Contents
By: | /s/ Benjamin Psillas |
Title: | President |
Signature | Title | |||
/s/ Benjamin Psillas Benjamin Psillas | President (Principal Executive Officer) | |||
/s/ J. Chris Brewster J. Chris Brewster | Chief Financial Officer (Principal Financial and Accounting Officer) | |||
/s/ Keith Myers Keith Myers | Chairman |
II-12
Table of Contents
By: | /s/ Jack Antonini |
Title: | President |
Signature | Title | |||
/s/ Jack Antonini Jack Antonini | President and Manager (Principal Executive Officer) | |||
/s/ J. Chris Brewster J. Chris Brewster | Chief Financial Officer (Principal Financial and Accounting Officer) |
II-13
Table of Contents
By | Cardtronics GP, Inc. |
By: | /s/ Jack Antonini |
Title: | President |
II-14
Table of Contents
Exhibit | ||||
Number | Description | |||
1 | .1 | Underwriting Agreement (incorporated herein by reference to Exhibit 1.1 of the Current Report on Form8-K, filed by Cardtronics, Inc. on December 14, 2007, RegistrationNo. 001-33864). | ||
2 | .1 | Share Sale and Purchase Agreement between Bank Machine (Holdings) Limited and Cardtronics Limited, dated effective as of May 17, 2005 (incorporated herein by reference to Exhibit 2.1 of the Amendment No. 1 to Registration Statement onForm S-4/A, filed by Cardtronics, Inc. on July 10, 2006, RegistrationNo. 333-131199). | ||
2 | .2 | Purchase and Sale Agreement Between E*TRADE Access, Inc., E*TRADE Bank, Cardtronics, LP and Cardtronics, Inc., dated effective as of June 2, 2004 (incorporated herein by reference to Exhibit 2.2 of the Amendment No. 1 to Registration Statement onForm S-4/A, filed by Cardtronics, Inc. on July 10, 2006, RegistrationNo. 333-131199). | ||
2 | .3 | Purchase and Sale Agreement, dated as of July 20, 2007, by and between Cardtronics, LP and 7-Eleven, Inc. (incorporated herein by reference to Exhibit 10.1 of the Current Report onForm 8-K filed on July 26, 2007 RegistrationNo. 333-113470). | ||
3 | .1 | Third Amended and Restated Certificate of Incorporation of Cardtronics, Inc. (incorporated herein by reference to Exhibit 3.1 of the Current Report on Form8-K, filed by Cardtronics, Inc. on December 14, 2007, RegistrationNo. 001-33864). | ||
3 | .2 | Second Amended and Restated Bylaws of Cardtronics, Inc. (incorporated herein by reference to the Current Report on Form8-K, filed by Cardtronics, Inc. on December 14, 2007, RegistrationNo. 001-33864). | ||
4 | .1 | Indenture dated as of July 20, 2007 among Cardtronics, Inc., the Subsidiary Guarantors party thereto, and Wells Fargo Bank, N.A. as Trustee (incorporated herein by reference to Exhibit 4.1 of the Quarterly Report onForm 10-Q filed by Cardtronics, Inc. on August 14, 2007). | ||
4 | .2 | Indenture dated as of August 12, 2005 by and among Cardtronics, Inc., the Subsidiary Guarantors party thereto and Wells Fargo Bank, NA as Trustee (incorporated herein by reference to Exhibit 4.1 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199). | ||
4 | .3 | Registration Rights Agreement dated as of July 20, 2007 among Cardtronics, Inc., the Guarantors named therein, Banc of America Securities, LLC and BNP Paribas Securities Corp. (incorporated herein by reference to Exhibit 4.2 of the Quarterly Report onForm 10-Q filed by Cardtronics, Inc. on August 14, 2007). | ||
4 | .4 | Supplemental Indenture dated as of June 22, 2007 among Cardtronics Holdings, LLC and Wells Fargo Bank, N.A. as Trustee (incorporated herein by reference to Exhibit 4.3 of the Quarterly Report onForm 10-Q filed by Cardtronics, Inc. on August 14, 2007). | ||
4 | .5 | Supplemental Indenture dated as of December 22, 2005 among ATM National, LLC and Wells Fargo Bank, N.A. as Trustee (incorporated herein by reference to Exhibit 4.4 of the Quarterly Report onForm 10-Q filed by Cardtronics, Inc. on August 14, 2007). | ||
4 | .6 | Form of Senior Subordinated Note (incorporated by reference to Exhibit A to Exhibit 4.2 hereto) | ||
4 | .7 | Registration Rights Agreement dated as of August 12, 2005 by and among Cardtronics, Inc., the Subsidiary Guarantors party thereto and the Initial Purchasers party thereto (incorporated herein by reference to Exhibit 4.3 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199). | ||
4 | .8 | Form of Senior Subordinated Note (incorporated by reference to Exhibit A to Exhibit 4.1 hereto). | ||
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 (incorporated herein by reference to Exhibit 10.1 of the Amendment No. 2 to Registration Statement onForm S-4/A filed by Cardtronics, Inc. on August 25, 2006, RegistrationNo. 333-131199). | ||
10 | .2 | Third Amended and Restated First Lien Credit Agreement, dated as of May 17, 2005, by and among Cardtronics, Inc., the Subsidiary Guarantors party thereto, Bank of America, N.A., BNP Paribas, and the other Lenders parties thereto (incorporated herein by reference to Exhibit 10.2 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199). | ||
10 | .3 | Amendment No. 1 to Credit Agreement, dated as of July 6, 2005 (incorporated herein by reference to Exhibit 10.3 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199). |
Table of Contents
Exhibit | ||||
Number | Description | |||
10 | .4 | Amendment No. 2 to Credit Agreement, dated as of August 5, 2005 (incorporated herein by reference to Exhibit 10.4 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199). | ||
10 | .5 | Amendment No. 3 to Credit Agreement, dated as of November 17, 2005 (incorporated herein by reference to Exhibit 10.5 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199). | ||
10 | .6 | Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated effective as of January 30, 2003 (incorporated by reference to Exhibit 10.10 of the Registration Statement onForm S-1 filed by Cardtronics, Inc. on March 10, 2004, RegistrationNo. 333-113470).† | ||
10 | .7 | First Amendment to Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated effective as of February 4, 2004 (incorporated by reference to Exhibit 10.11 of the Registration Statement onForm S-1 filed by Cardtronics, Inc. on March 10, 2004, RegistrationNo. 333-113470).† | ||
10 | .8 | Second Amendment to Employment Agreement between Cardtronics, LP and Jack M. Antonini, dated effective as of January 1, 2005 (incorporated herein by reference to Exhibit 10.8 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .9 | Restricted Stock Agreement, dated as of February 4, 2004 between Cardtronics, Inc. and Jack M. Antonini (incorporated herein by reference to Exhibit 10.9 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .10 | First Amendment to Restricted Stock Agreement, dated as of March 1, 2004, between Cardtronics, Inc. and Jack M. Antonini (incorporated herein by reference to Exhibit 10.10 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .11 | Second Amendment to Restricted Stock Agreement, dated as of February 10, 2005, between Cardtronics, Inc. and Jack M. Antonini (incorporated herein by reference to Exhibit 10.11 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .12 | Employment Agreement between Cardtronics, LP and Michael H. Clinard, dated effective as of June 4, 2001 (incorporated by reference to Exhibit 10.12 of the Registration Statement onForm S-1 filed by Cardtronics, Inc. on March 10, 2004) (incorporated by reference to Exhibit 10.12 of the Registration Statement onForm S-1 filed by Cardtronics, Inc. on March 10, 2004, RegistrationNo. 333-113470).† | ||
10 | .13 | First Amendment to Employment Agreement between Cardtronics, LP and Michael H. Clinard, dated effective as of January 1, 2005 (incorporated herein by reference to Exhibit 10.13 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .14 | Employment Agreement between Cardtronics, LP and Thomas E. Upton, dated effective as of June 1, 2001 (incorporated by reference to Exhibit 10.13 of the Registration Statement onForm S-1 filed by Cardtronics, Inc. on March 10, 2004, RegistrationNo. 333-113470).† | ||
10 | .15 | First Amendment to Employment Agreement between Cardtronics, LP and Thomas E. Upton, dated effective as of January 1, 2005 (incorporated herein by reference to Exhibit 10.15 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .16 | Employment Agreement between Cardtronics, LP and J. Chris Brewster, dated effective as of March 31, 2004 (incorporated by reference to Exhibit 10.14 of the Registration Statement onForm S-1/A filed by Cardtronics, Inc. on May 14, 2004).† | ||
10 | .17 | First Amendment to Employment Agreement between Cardtronics, LP and J. Chris Brewster, dated effective as of January 1, 2005 (incorporated herein by reference to Exhibit 10.17 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .18 | Employment Agreement between Cardtronics, LP, Cardtronics, Inc. and Drew Soinski, dated effective as of July 12, 2005 (incorporated herein by reference to Exhibit 10.18 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .19 | Amended and Restated Service Agreement between Bank Machine Limited and Ron Delnevo, dated effective as of May 17, 2005 (incorporated herein by reference to Exhibit 10.19 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .20 | Bonus Agreement between Bank Machine Limited and Ron Delnevo, dated effective as of May 17, 2005 (incorporated herein by reference to Exhibit 10.20 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† |
Table of Contents
Exhibit | ||||
Number | Description | |||
10 | .21 | 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as of June 4, 2001 (incorporated herein by reference to Exhibit 10.21 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .22 | Amendment No. 1 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as of January 30, 2004 (incorporated herein by reference to Exhibit 10.22 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .23 | Amendment No. 2 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc., dated effective as of June 23, 2004 (incorporated herein by reference to Exhibit 10.23 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .24 | Form of Director Indemnification Agreement entered into by and between Cardtronics, Inc. and each of its directors, dated as of February 10, 2005 (incorporated herein by reference to Exhibit 10.24 of the Registration Statement onForm S-4, filed by Cardtronics, Inc. on January 20, 2006, RegistrationNo. 333-131199).† | ||
10 | .25 | Amendment No. 1 to ATM Cash Services Agreement, dated August 2, 2004 (incorporated herein by reference to Exhibit 10.25 of the Amendment No. 2 to Registration Statement onForm S-4/A filed by Cardtronics, Inc. on August 25, 2006, RegistrationNo. 333-131199). | ||
10 | .26 | Amendment No. 2 to ATM Cash Services Agreement, dated February 9, 2006 (incorporated herein by reference to Exhibit 10.26 of the Amendment No. 2 to Registration Statement onForm S-4/A filed by Cardtronics, Inc. on August 25, 2006, RegistrationNo. 333-131199). | ||
10 | .27 | 2006 Bonus Plan of Cardtronics, Inc., effective as of January 1, 2006 (incorporated herein by reference to Exhibit 10.27 of the Annual Report onForm 10-K filed on April 2, 2007).† | ||
10 | .28 | Amendment No. 4 to Credit Agreement, dated as of February 14, 2006 (incorporated herein by reference to Exhibit 10.28 of the Annual Report onForm 10-K filed on April 2, 2007). | ||
10 | .29 | Amendment No. 5 to Credit Agreement, dated as of September 29, 2006 (incorporated herein by reference to Exhibit 10.29 of the Registration Statement onForm S-1 filed by Cardtronics, Inc. on September 7, 2007, Registration No. 145929). | ||
10 | .30 | Amendment No. 6 to Credit Agreement, dated as of May 3, 2007 (incorporated herein by reference to Exhibit 10.1 of the Current Report onForm 8-K filed on May 9, 2007). | ||
10 | .31 | Amendment No. 7 to Credit Agreement, dated as of July 18, 2007 (incorporated herein by reference to Exhibit 10.2 of the Quarterly Report onForm 10-Q filed on August 14, 2007). | ||
10 | .32 | Vault Cash Agreement, dated as of July 20, 2007, by and between Cardtronics, Inc. and Wells Fargo, N.A. (incorporated herein by reference to Exhibit 10.1 of our Quarterly Report onForm 10-Q filed on November 8, 2007). | ||
10 | .33 | Placement Agreement, dated as of July 20, 2007, by and between Cardtronics, Inc. and 7-Eleven, Inc. (incorporated herein by reference to Exhibit 10.2 of our Quarterly Report onForm 10-Q filed on November 8, 2007). | ||
10 | .34 | Cardtronics, Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 of our Quarterly Report onForm 10-Q filed on November 8, 2007). | ||
10 | .35 | First Amended and Restated Investors Agreement, dated as of February 10, 2005, by and among Cardtronics, Inc. and certain securityholders thereof. (incorporated herein by reference to Exhibit 10.35 of the Registration Statement onForm S-1, filed by Cardtronics, Inc. on December 11, 2007, RegistrationNo. 333-145929). | ||
10 | .36 | First Amendment to First Amended and Restated Investors Agreement, dated as of May 17, 2005, by and among Cardtronics, Inc. and certain securityholders thereof (incorporated herein by reference to Exhibit 10.36 of the Registration Statement onForm S-1, filed by Cardtronics, Inc. on December 11, 2007, RegistrationNo. 333-145929). | ||
10 | .37 | Second Amendment to First Amended and Restated Investors Agreement, dated as of November 26, 2007, by and among Cardtronics, Inc. and certain securityholders thereof. (incorporated herein by reference to Exhibit 10.1 of the Current Report onForm 8-K, filed by Cardtronics, Inc. on December 14, 2007, RegistrationNo. 001-33864). | ||
10 | .38 | Amendment No. 3 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc. dated effective as of May 9, 2006 (incorporated herein by reference to Exhibit 10.38 of Post-effective Amendment No. 1 to the Registration Statement on Form S-1 filed on December 10, 2007, Registration No. 333-145929).† |
Table of Contents
Exhibit | ||||
Number | Description | |||
10 | .39 | Amendment No. 4 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc. dated effective as of August 22, 2007 (incorporated herein by reference to Exhibit 10.39 of Post-effective Amendment No. 1 to the Registration Statement on Form S-1 filed on December 10, 2007, Registration No. 333-145929).† | ||
10 | .40 | Amendment No. 5 to the 2001 Stock Incentive Plan of Cardtronics Group, Inc. dated effective as of November 26, 2007 (incorporated herein by reference to Exhibit 10.40 of Post-effective Amendment No. 1 to the Registration Statement on Form S-1 filed on December 10, 2007, Registration No. 333-145929).† | ||
10 | .41* | Employment Agreement between Cardtronics, LP, Cardtronics, Inc., and Rick Updyke, dated effective as of July 20, 2007.† | ||
10 | .42* | 2007 Bonus Plan of Cardtronics, Inc., effective as of January 1, 2007.† | ||
12 | .1 | Computation of Ratio of Earnings to Fixed Charges (incorporated herein by reference to Exhibit 12.1 of the Registration Statement onForm S-1, filed by Cardtronics, Inc. on November 9, 2007, RegistrationNo. 333-145929). | ||
21 | .1* | Subsidiaries of Cardtronics, Inc. | ||
23 | .1* | Consent of Independent Registered Public Accounting Firm KPMG LLP. | ||
23 | .2* | Consent of Independent Accountants PricewaterhouseCoopers LLP. | ||
23 | .3* | Consent of Vinson & Elkins L.L.P. (Contained in Exhibit 5.1). | ||
24 | .1* | Power of Attorney (included on the signature page to this Registration Statement). | ||
25 | .1* | FormT-1 of Wells Fargo Bank, N.A. |
* | Filed herewith. | |
† | Management contract or compensatory plan or arrangement. |