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SECURITIES AND EXCHANGE COMMISSION
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE | 20-0723270 | |
(State or Other Jurisdiction of | (I.R.S. Employer I.D. No.) | |
Incorporation or Organization) | ||
3525 EAST POST ROAD, SUITE 120 | ||
LAS VEGAS, NEVADA | 89120 | |
(Address of Principal Executive Offices) | (Zip Code) |
(800) 833-7110
Large accelerated filerþ | Accelerated filero | Non-accelerated filero | Smaller reporting companyo | |||
(Do not check if a smaller reporting company) |
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Exhibit 4.1 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 |
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March 31, | December 31, | |||||||
2008 | 2007 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 163,234 | $ | 71,063 | ||||
Restricted cash and cash equivalents | 1,383 | 1,380 | ||||||
Settlement receivables | 40,606 | 61,066 | ||||||
Other receivables, net | 8,483 | 14,424 | ||||||
Prepaid and other assets | 7,545 | 6,905 | ||||||
Assets held for sale | 6,053 | 12,180 | ||||||
Property, equipment and leasehold improvements, net | 23,617 | 23,516 | ||||||
Goodwill, net | 156,855 | 156,889 | ||||||
Other intangibles, net | 12,307 | 13,652 | ||||||
Deferred income taxes, net | 174,282 | 177,227 | ||||||
Total assets | $ | 594,365 | $ | 538,302 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
LIABILITIES: | ||||||||
Settlement liabilities | $ | 71,159 | $ | 93,727 | ||||
Accounts payable | 26,993 | 22,402 | ||||||
Accrued expenses | 15,438 | 20,262 | ||||||
Borrowings | 347,230 | 263,480 | ||||||
Total liabilities | 460,820 | 399,871 | ||||||
COMMITMENTS AND CONTINGENCIES (NOTE 5) | ||||||||
MINORITY INTEREST | 62 | 135 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock, $0.001 par value, 500,000 shares authorized and 82,986 and 82,981 shares issued at March 31, 2008 and December 31, 2007, respectively | 83 | 83 | ||||||
Preferred stock, $0.001 par value, 50,000 shares authorized and 0 shares outstanding at March 31, 2008 and December 31, 2007, respectively | — | — | ||||||
Additional paid in capital | 165,015 | 163,070 | ||||||
Retained earnings | 15,849 | 14,103 | ||||||
Accumulated other comprehensive income | 2,622 | 2,708 | ||||||
Treasury stock, at cost, 5,991 and 4,563 shares at March 31, 2008 and December 31, 2007, respectively | (50,086 | ) | (41,668 | ) | ||||
Total stockholders’ equity | 133,483 | 138,296 | ||||||
Total liabilities and stockholders’ equity | $ | 594,365 | $ | 538,302 | ||||
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Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
REVENUES: | ||||||||
Cash advance | $ | 73,388 | $ | 77,412 | ||||
ATM | 59,772 | 60,766 | ||||||
Check services | 7,681 | 7,351 | ||||||
Central Credit and other revenues | 2,644 | 2,648 | ||||||
Total revenues | 143,485 | 148,177 | ||||||
Cost of revenues (exclusive of depreciation and amortization) | (103,374 | ) | (105,705 | ) | ||||
Operating expenses | (18,640 | ) | (17,346 | ) | ||||
Amortization | (1,362 | ) | (1,281 | ) | ||||
Depreciation | (1,855 | ) | (1,431 | ) | ||||
OPERATING INCOME | 18,254 | 22,414 | ||||||
INTEREST INCOME (EXPENSE), NET | ||||||||
Interest income | 942 | 887 | ||||||
Interest expense | (7,664 | ) | (9,643 | ) | ||||
Total interest income (expense), net | (6,722 | ) | (8,756 | ) | ||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX PROVISION AND MINORITY OWNERSHIP LOSS | 11,532 | 13,658 | ||||||
INCOME TAX PROVISION | (5,430 | ) | (5,106 | ) | ||||
INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY OWNERSHIP LOSS | 6,102 | 8,552 | ||||||
MINORITY OWNERSHIP LOSS, NET OF TAX | 46 | 64 | ||||||
INCOME FROM CONTINUING OPERATIONS | 6,148 | 8,616 | ||||||
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX | (4,403 | ) | (716 | ) | ||||
NET INCOME | 1,745 | 7,900 | ||||||
Foreign currency translation, net of tax | (85 | ) | 56 | |||||
COMPREHENSIVE INCOME | $ | 1,660 | $ | 7,956 | ||||
Basic net income per share of common stock: | ||||||||
Continuing operations | $ | 0.08 | $ | 0.11 | ||||
Discontinued operations | $ | (0.06 | ) | $ | (0.01 | ) | ||
Basic net income per share of common stock | $ | 0.02 | $ | 0.10 | ||||
Diluted net income per share of common stock: | ||||||||
Continuing operations | $ | 0.08 | $ | 0.11 | ||||
Discontinued operations | $ | (0.06 | ) | $ | (0.01 | ) | ||
Basic net income per share of common stock | $ | 0.02 | $ | 0.10 | ||||
Weighted average number of common shares outstanding | ||||||||
Basic | 76,977 | 81,764 | ||||||
Diluted | 76,979 | 82,044 |
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Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 1,745 | $ | 7,900 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Amortization of financing costs | 243 | 243 | ||||||
Amortization of intangibles | 1,409 | 1,326 | ||||||
Depreciation | 1,855 | 1,431 | ||||||
Provision for bad debts | 9,092 | 1,159 | ||||||
Deferred income taxes | 2,946 | 4,352 | ||||||
Minority ownership loss | (73 | ) | (100 | ) | ||||
Stock-based compensation | 1,945 | 2,936 | ||||||
Changes in operating assets and liabilities: | ||||||||
Settlement receivables | 20,046 | 64,592 | ||||||
Other receivables, net | 3,674 | (3,401 | ) | |||||
Prepaid and other assets | (342 | ) | 440 | |||||
Settlement liabilities | (22,616 | ) | (61,314 | ) | ||||
Accounts payable | 4,568 | (205 | ) | |||||
Accrued expenses | (5,267 | ) | (3,176 | ) | ||||
Net cash provided by operating activities | 19,225 | 16,183 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property, equipment and leasehold improvements | (1,955 | ) | (1,941 | ) | ||||
Purchase of other intangibles | (16 | ) | (485 | ) | ||||
Changes in restricted cash and cash equivalents | (3 | ) | — | |||||
Net cash used in investing activities | (1,974 | ) | (2,426 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Borrowings under credit facility | 84,000 | — | ||||||
Repayments under credit facility | (250 | ) | (250 | ) | ||||
Debt issuance costs | — | (23 | ) | |||||
Proceeds from exercise of stock options | — | 341 | ||||||
Purchase of treasury stock | (9,347 | ) | (2,093 | ) | ||||
Net cash provided by (used in) financing activities | 74,403 | (2,025 | ) | |||||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | $ | 517 | $ | (32 | ) | |||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 92,171 | 11,700 | ||||||
CASH AND CASH EQUIVALENTS—Beginning of period | 71,063 | 40,919 | ||||||
CASH AND CASH EQUIVALENTS—End of period | $ | 163,234 | $ | 52,619 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Cash paid for interest | $ | 11,080 | $ | 12,848 | ||||
Cash paid for income taxes, net of refunds | $ | 111 | $ | 449 | ||||
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1. | BUSINESS AND BASIS OF PRESENTATION | |
Business —Global Cash Access Holdings, Inc. is a holding company, the principal asset of which is the capital stock of Global Cash Access, Inc. (‘‘GCA’’). Unless otherwise indicated, the terms ‘‘the Company,’’ “Holdings,” ‘‘we,’’ ‘‘us’’ and ‘‘our’’ refer to Global Cash Access Holdings, Inc. together with its consolidated subsidiaries. Holdings was formed on February 4, 2004, to hold all of the outstanding capital stock of GCA and to guarantee the obligations under GCA’s senior secured credit facilities. | ||
GCA is a financial services company that provides cash access products and services to the gaming industry. The Company’s cash access products and services allow gaming patrons to access funds through a variety of methods, including credit card cash advances, point-of-sale debit card cash advances, automated teller machine (“ATM”) withdrawals, check cashing transactions and money transfers. These services are provided to patrons at gaming establishments directly by the Company or through one of its consolidated subsidiaries. GCA’s subsidiaries are: Global Cash Access (Canada) Inc. (formerly known as CashCall Systems Inc). (“GCA Canada”), Global Cash Access (UK) Ltd. (“GCA UK”), Global Cash Access (BVI), Inc. (“BVI”), Arriva Card, Inc. (“Arriva”), Global Cash Access Switzerland A.G. (“GCA Switzerland”), Global Cash Access (Belgium), S.A. (“GCA Belgium”), Innovative Funds Transfer, LLC (“IFT”), Global Cash Access (HK) Ltd. (“GCA HK”), GCA (Macau), S.A. (“GCA Macau”) and Global Cash Access (South Africa) (Pty.) Ltd. (“GCA SA”). | ||
The Company also owns and operates a credit reporting agency for the gaming industry through a wholly-owned subsidiary, Central Credit, LLC (“Central”), and provides credit-information services and credit-reporting history on gaming patrons to various gaming establishments. Central operates in both international and domestic gaming markets. | ||
Commencing in the third quarter of 2006, the Company, through Arriva, began marketing a credit card aimed at consumers who perform cash advance transactions in gaming establishments. The Company has since discontinued such marketing efforts and intends to exit the Arriva business. See further discussion in Note 10. | ||
The accompanying unaudited condensed consolidated financial statements include the accounts of Holdings and its consolidated subsidiaries: GCA, GCA Canada, GCA UK, Central, BVI, Arriva, GCA Switzerland, GCA Belgium, IFT, GCA HK, GCA Macau and GCA SA. | ||
Basis of Presentation —The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Some of the information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for a fair presentation of results for the interim periods have been made. The results for the three and ended March 31, 2008 are not necessarily indicative of results to be expected for the full fiscal year. | ||
These unaudited condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements and notes thereto included within the Company’s Annual Report on Form 10-K for the year ended December 31, 2007. |
On February 7, 2008, the Company’s Board of Directors approved a plan to exit the Arriva business. The Company has since actively marketed the Arriva business for sale. The assets associated with the Company’s Arriva Card operations, have been segregated and reported as held for sale in the accompanying condensed consolidated balance sheet as of December 31, 2007, and the results of operations for the Arriva Card line of business have been reclassified to discontinued operations for the three months ended March 31, 2007.
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• | the estimated reserve for warranty expense associated with our check warranty receivables, | ||
• | the valuation and recognition of share-based compensation, | ||
• | the estimated useful lives for depreciable and amortizable assets, | ||
• | the valuation allowance on our deferred tax asset, | ||
• | the expected loss on discontinuation of Arriva, | ||
• | the estimated cash flows in assessing the recoverability of long-lived assets, and | ||
• | the estimated reserve for bad debts on Arriva Card receivables purchased from CIT Bank. |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation — The unaudited condensed consolidated financial statements presented for the three months ended March 31, 2008 and 2007 and as of March 31, 2008 and December 31, 2007 include the accounts of Global Cash Access Holdings, Inc. and its subsidiaries. | ||
All significant intercompany transactions and balances have been eliminated in consolidation. | ||
Earnings Applicable to Common Stock —In accordance with the provisions of Statement of Financial Accounting Standards (‘‘SFAS’’) No. 128,Earnings per Share, basic earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflect the effect of potential common stock, which consists of non-vested shares of restricted stock outstanding and assumed stock option exercises. The weighted-average number of common shares outstanding used in the computation of basic and diluted earnings per share is as follows (in thousands): |
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Weighted average common shares outstanding — basic | 76,977 | 81,764 | ||||||
Potential dilution from equity grants (1)(2) | 2 | 280 | ||||||
Weighted average common shares outstanding — diluted | 76,979 | 82,044 | ||||||
(1) – | The potential dilution excludes the weighted average effect of stock options to acquire 6,667,642 and 3,946,785 shares of common stock for the three months ended March 31, 2008 and 2007, respectively, as the application of the treasury stock method, as required by SFAS No. 128, makes them anti-dilutive. | |
(2) – | The potential dilution excludes the weighted average effect of shares of time-based restricted stock of 341,335 and 1,085,251 shares for the three months ended March 31, 2008 and 2007, respectively, because the application of the treasury stock method, as required by SFAS No. 128, makes them anti-dilutive. |
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Balance at | Additions | Balance at | ||||||||||||||
Beginning of | Charged to | End of | ||||||||||||||
Period | Expense | Deductions | Period | |||||||||||||
Quarter ended March 31, 2008 | $ | 7,422 | $ | 2,364 | $ | (1,245 | ) | $ | 8,541 |
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In December 2007, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 110 (“SAB No. 110”) to amend the SEC’s views discussed in Staff Accounting Bulletin No. 107 regarding the use of the simplified method in developing an estimate of expected life of share options in accordance with SFAS No. 123(R). SAB No. 110 is effective beginning January 1, 2008. Because our stock incentive plan has only been in place since 2005, we will continue to use the simplified method until we have the historical data necessary to provide a reasonable estimate of expected life in accordance with SAB No. 107, as amended by SAB No. 110. | ||
3. | ATM FUNDING AGREEMENTS | |
Bank of America Amended Treasury Services Agreement —On March 13, 2008, the Company entered into an Amendment of the Treasury Services Agreement (“Bank of America ATM Funding Agreement”) with Bank of America, N.A. that allowed for the Company to utilize up to $410 million in funds owned by Bank of America to provide the currency needed for normal operating requirements for all the Company’s ATMs. The amount provided by Bank of America can be increased above $410 million at the option of Bank of America. For use of these funds, GCA pays Bank of America a cash usage fee equal to the average daily balance of funds utilized multiplied by the one-month LIBOR plus 25 basis points. For the three months ended March 31, 2008 and 2007, $2.3 million and $3.9 million, respectively, of cash usage fees have been included in interest expense in the accompanying condensed consolidated statements of income. At March 31, 2008, the outstanding balance of ATM cash utilized by GCA was $197.4 million and the cash usage interest rate in effect was 3.1%. | ||
Site Funded ATMs —GCA operates some ATMs at customer locations where the customer provides the cash required for ATM operational needs. GCA is required to reimburse the customer for the amount of cash dispensed from these site-funded ATMs. The site-funded ATM liability is included within settlement liabilities in the accompanying balance sheets and was $51.6 million and $58.1 million as of March 31, 2008 and December 31, 2007, respectively. As of March 31, 2008 and December 31, 2007, GCA operated 956 and 944 devices (ATMs and redemption kiosks), respectively, that were site funded. | ||
4. | BENEFIT PLANS | |
Stock Options — The Company has issued stock options to directors, officers and key employees under the 2005 Stock Incentive Plan (the “2005 Plan”). Generally, options under the 2005 Plan (other than those granted to non-employee directors) will vest at a rate of 25% of the shares underlying the option after one year and the remaining shares vest in equal portions over the following 36 months, such that all shares are vested after four years. Stock options are issued at the current market price on the date of grant, with a contractual term of 10 years. | ||
A summary of award activity under the Company’s stock option plans as of March 31, 2008 and changes during the three month periods then ended is as follows: |
Weighted | ||||||||||||||||
Average | Weighted | |||||||||||||||
Exercise | Average Life | Aggregate | ||||||||||||||
Options | Prices | Remaining | Intrinsic Value | |||||||||||||
(in thousands) | ||||||||||||||||
Outstanding — December 31, 2007 | 4,878,371 | $ | 12.58 | 7.7 years | $ | 30,560 | ||||||||||
Granted | 4,090,000 | 6.76 | ||||||||||||||
Exercised | — | — | ||||||||||||||
Forfeited | (714,068 | ) | 9.11 | |||||||||||||
Outstanding — March 31, 2008 | 8,254,303 | $ | 10.00 | 8.7 years | $ | 40,510 | ||||||||||
Exercisable — March 31, 2008 | 2,269,907 | 14.10 | 6.9 years | $ | 16,540 | |||||||||||
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Shares Outstanding | ||||
Balance — December 31, 2007 | 396,784 | |||
Granted | 5,500 | |||
Vested | (97,741 | ) | ||
Canceled | (892 | ) | ||
Balance — March 31, 2008 | 303,651 | |||
There were 0.1 million time-based restricted shares vested during the three months ended March 31, 2008. During the three months ended March 31, 2008 and 2007, we recorded $0.3 million and $1.1 million in non-cash compensation expense related to the restricted stock granted that is expected to vest. As of March 31, 2008, there was $5.0 million in unrecognized compensation expense related to time-based restricted shares expected to vest. This cost is expected to be recognized on a straight-line basis over a weighted average period of 2.5 years. | ||
5. | COMMITMENTS AND CONTINGENCIES | |
Litigation Claims and Assessments | ||
Canadian Goods and Services Tax (‘‘GST’’) —In April 2004, GCA Canada was notified through one of its customers that the Canadian Revenue Agency (‘‘CRA’’) Appeals Division had taken a position, on audit of the customer’s two locations, that the customer was liable for GST on commissions it received in connection with the cash advance services provided by GCA Canada. The CRA’s position is disputed by both GCA Canada and the customer based upon their interpretation of the Canadian Excise Tax Act (‘‘ETA’’). |
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Commitments | ||
Registration Agreement.The Company and some of its stockholders are party to a Registration Agreement. The Registration Agreement provides the stockholders with rights to cause the Company to register their shares of common stock on a registration statement filed with the Securities and Exchange Commission. Under the terms of this agreement, some holders of registration rights may require the Company to file a registration statement under the Securities Act at the Company’s expense with respect to their shares of common stock. Under this agreement, the Company has agreed to bear all registration and offering expenses (other than underwriting discounts and commissions and fees), and specific fees and disbursements of counsel of the holders of registration rights. The Company has agreed to indemnify the holders of registration rights against specific liabilities under the Securities Act. | ||
USA Payments Processing Commitments. The Company obtains transaction processing services pursuant to the Amended and Restated Agreement for Electronic Payment Processing from USA Payments, a company controlled by Karim Maskatiya and Robert Cucinotta, the principals of M&C International (“M&C”) both of whom were members of our Board of Directors through March 31, 2008. Under terms of this agreement, GCA is obligated to pay USA Payments $2.3 million annually in fixed monthly processing fees and minimum annual transaction volume fees through the termination of this agreement in March 2014. | ||
Fiserv Processing Commitments. Arriva entered into a Letter of Understanding with Fiserv Solutions, Inc. (“Fiserv”), which was effective March 10, 2008, related to the processing of our private label credit card. Under the terms of the agreement with Fiserv, Arriva is committed to pay the greater of 120% of the prevailing prices for the services utilized or $25,000 in monthly minimum processing fees through May 9, 2008 or until the services are no longer utilized. | ||
CIT Receivable Repurchases. Under terms of the First Amendment to the Receivables Sale Agreement entered into on December 13, 2007, Arriva is required to purchase the originated receivable from CIT three business days (the “Holding Period”) from the loan settlement date. Arriva is entitled to receive all fees and interest income associated with the receivable. | ||
Innovative Funds Transfer, LLC Required Capital Investment.Pursuant to the terms of our agreement with International Game Technology (“IGT”), we are obligated to invest up to our pro rata share of $10.0 million in capital to IFT. Our obligation to invest additional capital in IFT is conditioned upon capital calls, which are in our sole discretion. As of March 31, 2008, we had invested a total of $4.6 million in IFT, and are committed to invest up to $1.4 million in additional capital investments if required. | ||
First Data Sponsorship Indemnification Agreement.On March 10, 2004, GCA and First Data Corporation (“First Data”) entered into a Sponsorship Indemnification Agreement whereby First Data agreed to continue its guarantee of performance by us to Bank of America for our sponsorship as a Bank Identification Number and Interbank Card Association licensee under the applicable VISA and MasterCard rules. GCA has agreed to indemnify First Data and its affiliates against any and all losses and expenses arising from its indemnification obligations pursuant to that agreement. As collateral security for prompt and complete performance of GCA’s obligations under this agreement, GCA was required to cause a letter of credit in the amount of $3.0 million to be issued to First Data to cover any indemnified amounts not paid under terms of this agreement. The required amount of this letter of credit will be adjusted annually based upon the underlying cash advance volume covered by the Sponsorship Indemnification Agreement. In March 2008, the $3.2 million letter of credit expired. In April 2008, the letter of credit was reissued for $3.4 million. | ||
6. | BORROWINGS | |
Second Amended and Restated Credit Agreement.On November 1, 2006, GCA and Holdings entered into a Second Amended and Restated Credit Agreement with certain lenders. The Second Amended and Restated Credit Agreement significantly amended and restated the terms of GCA’s existing senior secured credit facilities to provide for a $100.0 million term loan facility and a $100.0 million five-year revolving credit facility, with a $25.0 million letter of credit sublimit and a $5.0 million swingline loan sublimit. |
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On February 19, 2008, the Company borrowed $84.0 million on the revolving portion of the Credit Facility. As of March 31, 2008 and December 31, 2007, the Company had $98.8 million and $99.0 million, respectively, in borrowings under the term loan, $95.7 million and $11.7 million, respectively, under the revolving portion and $50,000 and $3.2 million, respectively, in letters of credit issued and outstanding. The letters of credit issued and outstanding reduce amounts available under the revolving portion of the Second Amended and Restated Credit Agreement. Borrowings under this loan facility bear interest at a specified number of basis points above a specified base interest rate. At March 31, 2008, the weighted average interest rate, inclusive of the applicable margin of 87.5 basis points, was 3.52%. | ||
The Second Amended and Restated Credit Agreement contains customary affirmative and negative covenants, financial covenants, representations and warranties and events of defaults, which are subject to important exceptions and qualifications, as set forth in the Second Amended and Restated Credit Agreement. As of March 31, 2008, the Company is in compliance with the required covenants. | ||
In April 2008, the Company repaid $31.7 million of the revolving credit facility. | ||
Senior Subordinated Notes. On March 10, 2004, GCA completed a private placement offering of $235 million 8.75% Senior Subordinated Notes due March 15, 2012 (the “Notes Offering”). On October 14, 2004, we completed an exchange offer of the notes for registered notes of like tenor and effect. Interest on the notes accrues based upon a 360-day year comprised of twelve 30-day months and is payable semiannually on March 15th and September 15th. All of the Company’s existing and future domestic wholly owned subsidiaries are guarantors of the notes on a senior subordinated basis. As of March 31, 2008 and December 31, 2007, the Company had $152.8 million in borrowings outstanding under the Notes Offering. | ||
7. | CAPITAL STOCK | |
Common Stock Repurchase Program. On February 6, 2007, the Company’s Board of Directors authorized the repurchase of up to $50.0 million of the Company’s issued and outstanding common stock, subject to compliance with any contractual limitations on such repurchases under the Company’s financing agreements in effect from time to time, including but not limited to those relating to the Company’s senior secured indebtedness and senior subordinated notes. During the three months ended March 31, 2008, the Company repurchased or withheld from restricted stock awards to satisfy the minimum applicable tax withholding obligations incident to the vesting of such restricted stock awards 1.4 million shares of common stock at an aggregate purchase price of $8.4 million. The Company completed the repurchases under this authorization on February 11, 2008. | ||
8. | RELATED PARTY TRANSACTIONS | |
At March 31, 2008, two members of our Board of Directors, Karim Maskatiya and Robert Cucinotta, are the owners of approximately 25.5% of the outstanding equity interests of the Company. The Company made payments for software development costs and system maintenance to Infonox on the Web (“Infonox”) pursuant to agreements with Infonox. At the time we entered into these agreements, Infonox was controlled by two members of our Board of Directors and during the period presented, Infonox was controlled by family members of one of those directors. These family members now own a majority of the ownership interests, and hold two of the three director seats, of Infonox. The Company obtains transaction processing services from USA Payments, a company controlled by Messrs. Maskatiya and Cucinotta, pursuant to the Amended and Restated Agreement for Electronic Payment Processing. |
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The following table represents the transactions with related parties for the three months ended March 31, 2008 and March 31, 2007 (amounts in thousands): |
Name of | March 31, | |||||||||
Related Party | Description of Transaction | 2008 | 2007 | |||||||
M&C Affiliates: | ||||||||||
Infonox on the Web | Software development costs and maintenance expense included in operating expenses and other intangibles, net | $ | 575 | $ | 812 | |||||
USA Payments | Transaction processing charges included in cost of revenues (exclusive of depreciation and amortization) | 950 | 958 | |||||||
USA Payments | Pass through billing related to gateway fees, telecom and other items included in cost of revenues (exclusive of depreciation and amortization) and operating expenses | 278 | 367 |
The following table details the amounts receivable from or (liabilities to) these related parties that are recorded as part of other receivables, net, accounts payable or accrued expenses in the unaudited condensed consolidated balance sheets (amounts in thousands): |
March 31, | December 31, | |||||||
2008 | 2007 | |||||||
M&C and related companies | $ | 21 | $ | 31 | ||||
Total included within other receivables, net | $ | 21 | $ | 31 | ||||
USA Payment Systems | $ | (437 | ) | $ | (193 | ) | ||
Infonox on the Web | (360 | ) | (372 | ) | ||||
Total included within accounts payable and accrued expenses | $ | (797 | ) | $ | (565 | ) | ||
9. | INCOME TAXES | |
Our effective income tax rate for continuing operations was 46.9% for the three months ended March 31, 2008 compared to 37.7% for the three months ended March 31, 2007. The effective tax rate for the three months ended March 31, 2008 was negatively impacted by the expiration of non-qualified stock options, and shortfall resulting from the vesting of restricted stock options. Due to the amortization of our deferred tax assets for income tax purposes, actual cash taxes paid on pretax income generated in the first quarter of 2008 are expected to be substantially lower than the provision. |
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The following table presents the recorded income tax expense for the three months ended March 31, (amounts are in thousands): |
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Provision for income taxes: | ||||||||
Provision for income taxes on continuing operations, as reported | $ | 5,430 | $ | 5,106 | ||||
Provision for income taxes, minority loss | 26 | 36 | ||||||
Income tax benefit, discontinued operations | (2,476 | ) | (392 | ) | ||||
Provision for income taxes, consolidated | $ | 2,980 | $ | 4,750 | ||||
On January 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109, (“FIN 48”) with no material effect on the financial statements. As of March 31, 2008, there has been no change to the balance of unrecognized tax benefits reported at December 31, 2007. | ||
10. | DISCONTINUED OPERATIONS | |
On February 7, 2008, the Company’s Board of Directors approved a plan to exit the Arriva business. The Company has since actively marketed the Arriva business for sale and accordingly, has classified the net assets of Arriva as available for sale on the Condensed consolidated Balance Sheets. The Company estimated the fair value of the Arriva net assets as of March 31, 2008 based on preliminary offers the Company had received in connection with its marketing efforts as well as through the application of a net present value methodology. The Company recorded a pre-tax loss of $5.5 million to reduce the net assets of the Arriva business to their estimated fair value at March 31, 2008. The Company currently anticipates completing the sale of Arriva within one year. As of March 31, 2008 and December 31, 2007 the components of assets held for sale is as follows (amounts in thousands): |
March 31, | December 31, | |||||||
2008 | 2007 | |||||||
Total assets | $ | 6,803 | $ | 13,201 | ||||
Total liabilities | (750 | ) | (1,021 | ) | ||||
Assets held for sale | $ | 6,053 | $ | 12,180 | ||||
As a result of the implementation of the plan to dispose of the Arriva business, the operating results of the Arriva business have been removed from continuing operations and reported as discontinued operations in the condensed consolidated statements of income and comprehensive income. Selected financial information that has been reported as discontinued operations for the three months ended March 31, 2007 and 2008 are as follows (amounts in thousands): |
March 31, | March 31, | |||||||
2008 | 2007 | |||||||
Revenue | $ | 859 | $ | 567 | ||||
Pretax loss | $ | (6,879 | ) | $ | (1,079 | ) |
Cash flows from discontinued operations for the quarter ended March 31, 2008 have not been separately identified in the condensed consolidated statement of cash flows. |
11. | SEGMENT INFORMATION | |
Operating segments as defined by SFAS No. 131,Disclosures About Segments of an Enterprise and Related Information, are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision-making group consists of the Chief Executive Officer and Chief Financial Officer. The operating segments are reviewed separately because each represents products or services that can be, and often are, marketed and sold separately to our customers. |
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The Company operates in four distinct business segments: (i) cash advance, (ii) ATM, (iii) check services and (iv) credit reporting services. These segments are monitored separately by management for performance against its internal forecast and are consistent with the Company’s internal management reporting. | ||
Other lines of business, none of which exceed the established materiality for segment reporting, include Arriva, Western Union, direct marketing and IFT, among others. | ||
The Company’s business is predominantly domestic, with no specific regional concentrations. | ||
Major customers —For the three months ended March 31, 2008 and 2007, the combined revenues from all segments from our largest customer was approximately $28.0 million and $28.2 million, respectively representing 19.4% and 19.2% of the Company’s total consolidated revenues, respectively. | ||
For the three months ended March 31, 2008 and 2007, the combined revenues from all segments for our second largest customer was approximately $15.0 million and $15.1 million, respectively, representing 10.4% and 10.3%, of the Company’s total consolidated revenues. | ||
The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. The tables below present the results of operations by operating segment for the three months ended March 31, 2008 and 2007 and total assets by operating segment as of March 31, 2008 and December 31, 2007 (amounts in thousands): |
Cash | Check | Credit | ||||||||||||||||||||||||||
Advance | ATM | Services | Reporting | Other | Corporate | Total | ||||||||||||||||||||||
Three Months Ended March 31, 2008 | ||||||||||||||||||||||||||||
Revenues | $ | 73,388 | $ | 59,772 | $ | 7,681 | $ | 2,202 | $ | 442 | $ | — | $ | 143,485 | ||||||||||||||
Operating income exclusive of depreciation and amortization(1) | 17,501 | 10,941 | 3,121 | 1,664 | 301 | (15,274 | ) | 18,254 | ||||||||||||||||||||
Three Months Ended March 31, 2007 | ||||||||||||||||||||||||||||
Revenues | $ | 77,412 | $ | 60,766 | $ | 7,351 | $ | 2,267 | $ | 273 | $ | 108 | $ | 148,177 | ||||||||||||||
Operating income exclusive of depreciation and amortization(1) | 18,499 | 11,811 | 3,123 | 1,551 | 43 | (12,613 | ) | 22,414 |
(1) | Depreciation and amortization expense for segment presentation purposes has been included within the Corporate segment, and has not been allocated to individual operating segments. |
March 31, | December 31, | |||||||
Total Assets | 2008 | 2007 | ||||||
Cash advance | $ | 140,248 | $ | 153,444 | ||||
ATM | 60,633 | 68,627 | ||||||
Check services | 29,572 | 29,749 | ||||||
Credit reporting | 21,057 | 21,204 | ||||||
Other | 1,318 | 6,552 | ||||||
Discontinued operations | 7,371 | 18,731 | ||||||
Corporate | 334,166 | 239,995 | ||||||
Total assets | $ | 594,365 | $ | 538,302 | ||||
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12. | SUBSEQUENT EVENTS | |
Acquisition of Certegy Gaming Services — On April 1, 2008, the Company completed its acquisition of all of the issued and outstanding shares (the “Shares”) of Certegy Gaming Services, Inc. (“CGS”), pursuant to a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Fidelity National Transaction Services, Inc. and CGS. | ||
In connection with the acquisition, GCA purchased the Shares from Seller for an aggregate purchase price of $25,000,000 in cash. Additionally at closing GCA was obligated to pay $57.3 million for the estimate of cash and cash equivalents owned by CGS at closing and an additional $1.4 million for working capital surplus, severance and commission payments to certain employees not retained by Seller following the closing of the acquisition. The estimated cash and cash equivalents and working capital surplus amounts paid are subject to a post closing adjustment for differences identified between the amounts paid at closing and actual amounts identified. In April 2008, the Company has received a refund of some of the estimate of cash and cash equivalents owned by CGS at closing | ||
Borrowings on Senior Secured Credit Facility —In April 2008, the Company repaid $31.7 million of the outstanding balance on the revolving portion of the Credit Facility. | ||
Class Action —On April 11, 2008, a class action was filed by a stockholder in the United States District Court, Southern District of New York against the Company, certain of our current and former directors, M&C International, Summit Partners, L.P., Goldman Sachs & Co., Inc., and J.P. Morgan Securities, Inc, claiming violation of Sections 11, 12(a)(2) and 15 the Securities Act of 1934. The action includes claims for, among other things, damages and rescission. The Company has indemnification agreements with each of the individual defendants and certain of the other defendants that may cause the Company to incur expenses associated with the defense of this action and that may also protect such individuals from liability to the Company. The Company also maintains director and officer liability insurance that may provide for reimbursement of some of the expenses associated with this action. | ||
Derivative Action —On May 5, 2008, the two separate derivative actions filed by stockholders on behalf of the Company in the United States District Court, District of Nevada against our current directors, two of our former directors, our former chief executive officer and our former chief financial officer were consolidated. The amended complaint alleges breach of fiduciary duties, waste of corporate assets, and unjust enrichment. The action includes claims for, among other things, damages in favor of the Company, certain corporate actions to purportedly improve the Company’s corporate governance, and an award of costs and expenses to the plaintiff stockholders including attorneys’ fees. The Company has indemnification agreements with each of the individual defendants that may cause the Company to incur expenses associated with the defense of this action and that may also protect such individuals from liability to the Company. The Company also maintains director and officer liability insurance that may provide for reimbursement of some of the expenses associated with this action. |
Board of Directors Appointment —On May 7, 2008, Patrick Olson has been appointed to the Board of the Company as a Class I director, whose term shall expire at the annual meeting of stockholders to be held in 2009. Mr. Olson was also appointed to the Audit Committee and to the Compensation Committee of the Company.
In connection with his appointment to the Board of Directors of the Company, Mr. Olson will receive an option to purchase 100,000 shares of Common Stock of the Company pursuant to the Company’s 2005 Stock Incentive Plan, at an exercise price of $5.93 per share. Subject to Mr. Olson’s continuous service to the Company, which includes service as a member of the Board of Directors of the Company, one-eighth of the shares subject to the option shall vest after six months of service, and the remainder will vest ratably in equal monthly installments over the succeeding forty-two months, provided, however, that the option will vest in its entirety upon a change of control in the Company. In addition, as a member of the Board of Directors of the Company, Mr. Olson is expected to receive an annual fee of $20,000, an additional annual fee of $5,000 for his service as a member of the Audit Committee of the Company, and an additional annual fee of $5,000 for his service as a member of the Compensation Committee.
On May 7, 2008, Karim Maskatiya resigned from the Board of Directors and E. Miles Kilburn was appointed to the office of sole Chairman.
TeleCheck Marketing Agreement — On May 13, 2008, GCA and TRS Recovery Services, Inc. entered into an agreement to extend the term of the TeleCheck Marketing Agreement dated as of July 9, 1998, between TRS Recovery Services, Inc. and Global Cash Access, Inc. on behalf of itself and its affiliates, as amended, through September 30, 2008.
13. | GUARANTOR INFORMATION | |
In March 2004, GCA issued $235 million in aggregate principal amount of 83/4% senior subordinated notes due 2012 (the “Notes”). At March 31, 2008 and December 31, 2007 there were $152.8 million in Notes outstanding. The Notes are guaranteed by all of GCA’s existing domestic 100% owned subsidiaries. In addition, effective upon the closing of the Company’s initial public offering of common stock, Holdings guaranteed, on a subordinated basis, GCA’s obligations under the Notes. These guarantees are full, unconditional, joint and several. GCA Canada, GCA UK, BVI, GCA Switzerland, GCA Belgium, GCA HK, GCA Macau and GCA SA, which are 100% owned non-domestic subsidiaries, and IFT, which is a consolidated joint venture, do not guaranty the Notes. The following consolidating schedules present separate unaudited condensed financial statement information on a combined basis for the parent only, the issuer, as well as the Company’s guarantor subsidiaries and non-guarantor subsidiaries and affiliate, as of March 31, 2008 and December 31, 2007, and for the three months ended March 31, 2008 and 2007: |
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CONDENSED CONSOLIDATING SCHEDULE — BALANCE SHEET INFORMATION
MARCH 31, 2008
(amounts in thousands)
(unaudited)
Combined | Combined | Elimination | ||||||||||||||||||||||
Parent | Issuer | Guarantors | Non-Guarantors | Entries * | Consolidated | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 152,764 | $ | 422 | $ | 10,048 | $ | — | $ | 163,234 | ||||||||||||
Restricted cash and cash equivalents | — | 383 | 1,000 | — | — | 1,383 | ||||||||||||||||||
Settlement receivables | — | 35,754 | — | 4,906 | (54 | ) | 40,606 | |||||||||||||||||
Other receivables, net | — | 17,979 | 47,013 | 679 | (57,188 | ) | 8,483 | |||||||||||||||||
Prepaid and other assets | — | 7,411 | 6 | 128 | — | 7,545 | ||||||||||||||||||
Investment in subsidiaries | 133,483 | 88,667 | — | — | (222,150 | ) | — | |||||||||||||||||
Assets held for sales | — | — | 6,053 | — | — | 6,053 | ||||||||||||||||||
Property, equipment and leasehold improvements, net | — | 22,396 | 144 | 1,077 | — | 23,617 | ||||||||||||||||||
Goodwill, net | — | 116,574 | 39,471 | 810 | — | 156,855 | ||||||||||||||||||
Other intangibles, net | — | 12,003 | 46 | 258 | — | 12,307 | ||||||||||||||||||
Deferred income taxes, net | — | 174,252 | — | 30 | — | 174,282 | ||||||||||||||||||
TOTAL | $ | 133,483 | $ | 628,183 | $ | 94,155 | $ | 17,936 | $ | (279,392 | ) | $ | 594,365 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||
LIABILITIES: | ||||||||||||||||||||||||
Settlement liabilities | $ | — | $ | 64,754 | $ | — | $ | 6,459 | $ | (54 | ) | $ | 71,159 | |||||||||||
Accounts payable | — | 26,669 | 2 | 322 | — | 26,993 | ||||||||||||||||||
Accrued expenses | — | 55,985 | 12,083 | 4,558 | (57,188 | ) | 15,438 | |||||||||||||||||
Borrowings | — | 347,230 | — | — | — | 347,230 | ||||||||||||||||||
Total liabilities | — | 494,638 | 12,085 | 11,339 | (57,242 | ) | 460,820 | |||||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||||||||
MINORITY INTEREST | — | 62 | — | — | — | 62 | ||||||||||||||||||
STOCKHOLDERS’ EQUITY | 133,483 | 133,483 | 82,070 | 6,597 | (222,150 | ) | 133,483 | |||||||||||||||||
TOTAL | $ | 133,483 | $ | 628,183 | $ | 94,155 | $ | 17,936 | $ | (279,392 | ) | $ | 594,365 | |||||||||||
* | Eliminations include intercompany investments and management fees |
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CONDENSED CONSOLIDATING SCHEDULE — BALANCE SHEET INFORMATION
DECEMBER 31, 2007
(amounts in thousands)
(unaudited)
Combined | Combined | Elimination | ||||||||||||||||||||||
Parent | Issuer | Guarantors | Non-Guarantors | Entries * | Consolidated | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 54,411 | $ | 5,411 | $ | 11,241 | $ | — | $ | 71,063 | ||||||||||||
Restricted cash and cash equivalents | — | 380 | 1,000 | — | — | 1,380 | ||||||||||||||||||
Settlement receivables | — | 56,344 | 635 | 4,722 | (635 | ) | 61,066 | |||||||||||||||||
Other receivables, net | 928 | 18,010 | 44,324 | 121 | (48,959 | ) | 14,424 | |||||||||||||||||
Prepaid and other assets | — | 6,786 | 3 | 116 | — | 6,905 | ||||||||||||||||||
Investment in subsidiaries | 138,296 | 97,306 | — | — | (235,602 | ) | — | |||||||||||||||||
Assets held for sale | — | — | 12,180 | — | — | 12,180 | ||||||||||||||||||
Property, equipment and leasehold improvements, net | — | 22,213 | 165 | 1,138 | — | 23,516 | ||||||||||||||||||
Goodwill, net | — | 116,574 | 39,471 | 844 | — | 156,889 | ||||||||||||||||||
Other intangibles, net | — | 13,290 | 55 | 307 | — | 13,652 | ||||||||||||||||||
Deferred income taxes, net | — | 177,199 | — | 28 | — | 177,227 | ||||||||||||||||||
TOTAL | $ | 139,224 | $ | 562,513 | $ | 103,244 | $ | 18,517 | $ | (285,196 | ) | $ | 538,302 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||
LIABILITIES: | ||||||||||||||||||||||||
Settlement liabilities | $ | — | $ | 85,751 | $ | 635 | $ | 7,976 | $ | (635 | ) | $ | 93,727 | |||||||||||
Accounts payable | — | 21,947 | 107 | 348 | — | 22,402 | ||||||||||||||||||
Accrued expenses | 928 | 52,904 | 11,856 | 3,533 | (48,959 | ) | 20,262 | |||||||||||||||||
Borrowings | — | 263,480 | — | — | — | 263,480 | ||||||||||||||||||
Total liabilities | 928 | 424,082 | 12,598 | 11,857 | (49,594 | ) | 399,871 | |||||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||||||||
MINORITY INTEREST | — | 135 | — | — | — | 135 | ||||||||||||||||||
STOCKHOLDERS’ EQUITY | 138,296 | 138,296 | 90,646 | 6,660 | (235,602 | ) | 138,296 | |||||||||||||||||
TOTAL | $ | 139,224 | $ | 562,513 | $ | 103,244 | $ | 18,517 | $ | (285,196 | ) | $ | 538,302 | |||||||||||
* | Eliminations include intercompany investments and management fees |
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CONDENSED CONSOLIDATING SCHEDULE — STATEMENT OF INCOME INFORMATION
THREE MONTHS ENDED MARCH 31, 2008
(amounts in thousands)
(unaudited)
Combined | ||||||||||||||||||||||||
Combined | Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
REVENUES: | ||||||||||||||||||||||||
Cash advance | $ | — | $ | 70,542 | $ | — | $ | 2,846 | $ | — | $ | 73,388 | ||||||||||||
ATM | — | 59,499 | — | 273 | — | 59,772 | ||||||||||||||||||
Check services | — | 3,373 | 4,308 | — | — | 7,681 | ||||||||||||||||||
Central Credit and other revenues | 1,745 | (865 | ) | 2,202 | 14 | (452 | ) | 2,644 | ||||||||||||||||
Total revenues | 1,745 | 132,549 | 6,510 | 3,133 | (452 | ) | 143,485 | |||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization) | — | (98,507 | ) | (2,784 | ) | (2,083 | ) | — | (103,374 | ) | ||||||||||||||
Operating expenses | — | (17,136 | ) | (804 | ) | (830 | ) | 130 | (18,640 | ) | ||||||||||||||
Amortization | — | (1,303 | ) | (9 | ) | (50 | ) | — | (1,362 | ) | ||||||||||||||
Depreciation | — | (1,761 | ) | (16 | ) | (78 | ) | — | (1,855 | ) | ||||||||||||||
OPERATING INCOME | 1,745 | 13,842 | 2,897 | 92 | (322 | ) | 18,254 | |||||||||||||||||
INTEREST INCOME (EXPENSE), NET | ||||||||||||||||||||||||
Interest income | — | 871 | 8 | 63 | — | 942 | ||||||||||||||||||
Interest expense | — | (7,645 | ) | — | (19 | ) | — | (7,664 | ) | |||||||||||||||
Total interest income (expense) , net | — | (6,774 | ) | 8 | 44 | — | (6,722 | ) | ||||||||||||||||
INCOME BEFORE INCOME TAX PROVISION AND MINORITY OWNERSHIP LOSS | 1,745 | 7,068 | 2,905 | 136 | (322 | ) | 11,532 | |||||||||||||||||
INCOME TAX PROVISION | — | (5,369 | ) | — | (61 | ) | — | (5,430 | ) | |||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY OWNERSHIP LOSS | 1,745 | 1,699 | 2,905 | 75 | (322 | ) | 6,102 | |||||||||||||||||
MINORITY OWNERSHIP LOSS, NET OF TAX | — | 46 | — | — | — | 46 | ||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | 1,745 | 1,745 | 2,905 | 75 | (322 | ) | 6,148 | |||||||||||||||||
LOSS ON DISCONTINUED OPERATIONS, NET OF TAX | — | — | (4,403 | ) | — | — | (4,403 | ) | ||||||||||||||||
NET INCOME (LOSS) | $ | 1,745 | $ | 1,745 | $ | (1,498 | ) | $ | 75 | $ | (322 | ) | $ | 1,745 | ||||||||||
* | Eliminations include earnings on subsidiaries and management fees |
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CONDENSED CONSOLIDATING SCHEDULE — STATEMENT OF INCOME INFORMATION
THREE MONTHS ENDED MARCH 31, 2007
(amounts in thousands)
(unaudited)
Combined | ||||||||||||||||||||||||
Combined | Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
REVENUES: | ||||||||||||||||||||||||
Cash advance | $ | — | $ | 75,992 | $ | — | $ | 1,420 | $ | — | $ | 77,412 | ||||||||||||
ATM | — | 60,766 | — | — | — | 60,766 | ||||||||||||||||||
Check services | — | 4,061 | 3,290 | — | — | 7,351 | ||||||||||||||||||
Central Credit and other revenues | 7,900 | 2,920 | 2,267 | 28 | (10,467 | ) | 2,648 | |||||||||||||||||
Total revenues | 7,900 | 143,739 | 5,557 | 1,448 | (10,467 | ) | 148,177 | |||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization) | — | (103,564 | ) | (1,450 | ) | (691 | ) | — | (105,705 | ) | ||||||||||||||
Operating expenses | — | (15,987 | ) | (884 | ) | (618 | ) | 143 | (17,346 | ) | ||||||||||||||
Amortization | — | (1,233 | ) | (19 | ) | (29 | ) | — | (1,281 | ) | ||||||||||||||
Depreciation | — | (1,390 | ) | (3 | ) | (38 | ) | — | (1,431 | ) | ||||||||||||||
OPERATING INCOME | 7,900 | 21,565 | 3,201 | 72 | (10,324 | ) | 22,414 | |||||||||||||||||
INTEREST INCOME (EXPENSE), NET | ||||||||||||||||||||||||
Interest income | — | 844 | — | 43 | — | 887 | ||||||||||||||||||
Interest expense | — | (9,643 | ) | — | — | — | (9,643 | ) | ||||||||||||||||
Total interest income (expense), net | — | (8,799 | ) | — | 43 | — | (8,756 | ) | ||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAX PROVISION AND MINORITY OWNERSHIP LOSS | 7,900 | 12,766 | 3,201 | 115 | (10,324 | ) | 13,658 | |||||||||||||||||
INCOME TAX PROVISION | — | (4,930 | ) | — | (176 | ) | — | (5,106 | ) | |||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE MINORITY OWNERSHIP LOSS | 7,900 | 7,836 | 3,201 | (61 | ) | (10,324 | ) | 8,552 | ||||||||||||||||
MINORITY OWNERSHIP LOSS, NET OF TAX | — | 64 | — | — | — | 64 | ||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | 7,900 | 7,900 | 3,201 | (61 | ) | (10,324 | ) | 7,900 | ||||||||||||||||
LOSS ON DISCONTINUED OPERATIONS, NET OF TAX | — | — | (716 | ) | — | — | (716 | ) | ||||||||||||||||
NET INCOME (LOSS) | $ | 7,900 | $ | 7,900 | $ | 2,485 | $ | (61 | ) | $ | (10,324 | ) | $ | 7,900 | ||||||||||
* | Eliminations include earnings on subsidiaries and management fees |
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CONDENSED CONSOLIDATING SCHEDULE — STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2008
(amounts in thousands)
(unaudited)
Combined | ||||||||||||||||||||||||
Combined | Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||||||||||
Net income (loss) | $ | 1,745 | $ | 1,745 | $ | (1,499 | ) | $ | 75 | $ | (321 | ) | $ | 1,745 | ||||||||||
Adjustments to reconcile net income (loss) to cash (used in) provided by operating activities: | ||||||||||||||||||||||||
Amortization of financing costs | — | 243 | — | — | — | 243 | ||||||||||||||||||
Amortization of intangibles | — | 1,303 | 56 | 50 | — | 1,409 | ||||||||||||||||||
Depreciation | — | 1,761 | 17 | 77 | — | 1,855 | ||||||||||||||||||
Provision for bad debts | — | — | 9,092 | — | — | 9,092 | ||||||||||||||||||
Deferred income taxes | — | 2,946 | — | — | — | 2,946 | ||||||||||||||||||
Equity income in subsidiaries | (1,745 | ) | 1,424 | — | — | 321 | — | |||||||||||||||||
Minority ownership loss | — | (73 | ) | — | — | — | (73 | ) | ||||||||||||||||
Stock-based compensation | — | 1,945 | — | — | — | 1,945 | ||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Settlement receivables | — | 20,590 | (428 | ) | (170 | ) | 54 | 20,046 | ||||||||||||||||
Other receivables, net | 929 | 3,101 | (8,022 | ) | (563 | ) | 8,229 | 3,674 | ||||||||||||||||
Prepaid and other assets | — | (867 | ) | 540 | (15 | ) | — | (342 | ) | |||||||||||||||
Settlement liabilities | — | (20,996 | ) | 54 | (1,620 | ) | (54 | ) | (22,616 | ) | ||||||||||||||
Accounts payable | — | 4,722 | (137 | ) | (17 | ) | — | 4,568 | ||||||||||||||||
Accrued expenses | (929 | ) | 3,082 | (66 | ) | 875 | (8,229 | ) | (5,267 | ) | ||||||||||||||
Net cash (used in) provided by operating activities | — | 20,926 | (393 | ) | (1,308 | ) | — | 19,225 | ||||||||||||||||
* | Eliminations include intercompany investments and management fees |
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CONDENSED CONSOLIDATED SCHEDULE — STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2008
(amounts in thousands)
(unaudited)
Combined | ||||||||||||||||||||||||
Combined | Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||||||
Purchase of property, equipment and leasehold improvements | $ | — | $ | (1,943 | ) | $ | 4 | $ | (16 | ) | $ | — | $ | (1,955 | ) | |||||||||
Purchase of other intangibles | — | (16 | ) | — | — | — | (16 | ) | ||||||||||||||||
Changes in restricted cash and cash equivalents | — | (3 | ) | — | — | — | (3 | ) | ||||||||||||||||
Investments in subsidiaries | 9,347 | 4,600 | — | — | (13,947 | ) | — | |||||||||||||||||
Net cash provided by (used in) investing activities | 9,347 | 2,638 | 4 | (16 | ) | (13,947 | ) | (1,974 | ) | |||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||||||
Borrowings under credit facility | — | 84,000 | — | — | — | 84,000 | ||||||||||||||||||
Repayments under credit facility | — | (250 | ) | — | — | — | (250 | ) | ||||||||||||||||
Purchase of treasury stock | (9,347 | ) | — | — | — | — | (9,347 | ) | ||||||||||||||||
Minority capital contributions | — | — | — | — | — | — | ||||||||||||||||||
Capital contributions | — | (9,347 | ) | (4,600 | ) | — | 13,947 | — | ||||||||||||||||
Net cash (used in) provided by financing activities | (9,347 | ) | 74,403 | (4,600 | ) | — | 13,947 | 74,403 | ||||||||||||||||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | — | 386 | — | 131 | — | 517 | ||||||||||||||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | — | 98,353 | (4,989 | ) | (1,193 | ) | — | 92,171 | ||||||||||||||||
CASH AND CASH EQUIVALENTS—Beginning of period | — | 54,411 | 5,411 | 11,241 | — | 71,063 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS—End of period | $ | — | $ | 152,764 | $ | 422 | $ | 10,048 | $ | — | $ | 163,234 | ||||||||||||
* | Eliminations include intercompany investments and management fees |
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CONDENSED CONSOLIDATING SCHEDULE — STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2007
(amounts in thousands)
(unaudited)
Combined | ||||||||||||||||||||||||
Combined | Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||||||||||
Net income | $ | 7,900 | $ | 7,900 | $ | 2,485 | $ | (61 | ) | $ | (10,324 | ) | $ | 7,900 | ||||||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||||||||||||||||
Amortization of financing costs | — | 243 | — | — | — | 243 | ||||||||||||||||||
Amortization of intangibles | — | 1,232 | 65 | 29 | — | 1,326 | ||||||||||||||||||
Depreciation | — | 1,390 | 3 | 38 | — | 1,431 | ||||||||||||||||||
Gain on disposal of assets | — | — | — | — | — | — | ||||||||||||||||||
Provision for bad debts | — | — | 1,159 | — | — | 1,159 | ||||||||||||||||||
Deferred income taxes | — | 4,352 | — | — | — | 4,352 | ||||||||||||||||||
Equity income in subsidiaries | (7,900 | ) | (2,424 | ) | — | — | 10,324 | — | ||||||||||||||||
Minority ownership loss | — | (100 | ) | — | — | — | (100 | ) | ||||||||||||||||
Stock-based compensation | — | 2,936 | — | — | — | 2,936 | ||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Settlement receivables | — | 66,860 | 174 | 2,257 | (4,699 | ) | 64,592 | |||||||||||||||||
Other receivables, net | 2,104 | (864 | ) | (8,803 | ) | 156 | 4,006 | (3,401 | ) | |||||||||||||||
Prepaid and other assets | — | 486 | (22 | ) | (24 | ) | — | 440 | ||||||||||||||||
Settlement liabilities | — | (61,330 | ) | (4,699 | ) | 16 | 4,699 | (61,314 | ) | |||||||||||||||
Accounts payable | — | 174 | 13 | (392 | ) | — | (205 | ) | ||||||||||||||||
Accrued expenses | — | (9,456 | ) | 9,903 | 383 | (4,006 | ) | (3,176 | ) | |||||||||||||||
Net cash provided by operating activities | 2,104 | 11,399 | 278 | 2,402 | — | 16,183 | ||||||||||||||||||
* | Eliminations include intercompany investments and management fees |
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CONDENSED CONSOLIDATED SCHEDULE — STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2007
(amounts in thousands)
(unaudited)
Combined | ||||||||||||||||||||||||
Combined | Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||||||
Purchase of property, equipment and leasehold improvements | $ | — | $ | (1,927 | ) | $ | (12 | ) | $ | (2 | ) | $ | — | $ | (1,941 | ) | ||||||||
Purchase of other intangibles | — | (419 | ) | (35 | ) | (31 | ) | — | (485 | ) | ||||||||||||||
Investments in subsidiaries | (352 | ) | — | — | 352 | — | ||||||||||||||||||
Net cash used in investing activities | (352 | ) | (2,346 | ) | (47 | ) | (33 | ) | 352 | (2,426 | ) | |||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||||||
Repayments under credit facility | — | (250 | ) | — | — | — | (250 | ) | ||||||||||||||||
Debt issuance costs | — | (23 | ) | — | — | — | (23 | ) | ||||||||||||||||
Exercise of stock options | 341 | — | — | — | — | 341 | ||||||||||||||||||
Minority capital contributions | (2,093 | ) | — | — | — | — | (2,093 | ) | ||||||||||||||||
Capital contributions | — | 352 | — | — | (352 | ) | — | |||||||||||||||||
Net cash provided by (used in) financing activities | (1,752 | ) | 79 | — | — | (352 | ) | (2,025 | ) | |||||||||||||||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | — | (82 | ) | — | 50 | — | (32 | ) | ||||||||||||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | — | 9,050 | 231 | 2,419 | — | 11,700 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS—Beginning of period | — | 35,022 | 2,176 | 3,721 | — | 40,919 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS—End of period | $ | — | $ | 44,072 | $ | 2,407 | $ | 6,140 | $ | — | $ | 52,619 | ||||||||||||
* | Eliminations include intercompany investments and management fees |
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Three Months Ended | ||||||||||||||||
March 31, 2008 | March 31, 2007 | |||||||||||||||
$ | % | $ | % | |||||||||||||
REVENUES: | ||||||||||||||||
Cash advance | $ | 73,388 | 51.1 | % | $ | 77,412 | 52.2 | % | ||||||||
ATM | 59,772 | 41.7 | % | 60,766 | 41.0 | % | ||||||||||
Check services | 7,681 | 5.4 | % | 7,351 | 5.0 | % | ||||||||||
Central Credit and other revenues | 2,644 | 1.8 | % | 2,648 | 1.8 | % | ||||||||||
Total revenues | 143,485 | 100.0 | % | 148,177 | 100.0 | % | ||||||||||
Cost of revenues (exclusive of depreciation and amortization) | (103,374 | ) | (72.0 | )% | (105,705 | ) | (71.3 | )% | ||||||||
Operating expenses | (18,640 | ) | (13.0 | )% | (17,346 | ) | (11.7 | )% | ||||||||
Amortization | (1,362 | ) | (0.9 | )% | (1,281 | ) | (0.9 | )% | ||||||||
Depreciation | (1,855 | ) | (1.3 | )% | (1,431 | ) | (1.0 | )% | ||||||||
OPERATING INCOME | 18,254 | 12.7 | % | 22,414 | 15.1 | % | ||||||||||
INTEREST INCOME (EXPENSE), NET | ||||||||||||||||
Interest income | 942 | 0.7 | % | 887 | 0.6 | % | ||||||||||
Interest expense | (7,664 | ) | (5.3 | )% | (9,643 | ) | (6.5 | )% | ||||||||
Total interest income (expense), net | (6,722 | ) | (4.7 | )% | (8,756 | ) | (5.9 | )% | ||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX PROVISION AND MINORITY OWNERSHIP LOSS | 11,532 | 8.0 | % | 13,658 | 9.2 | % | ||||||||||
INCOME TAX PROVISION | (5,430 | ) | (3.8 | )% | (5,106 | ) | (3.4 | )% | ||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY OWNERSHIP LOSS | 6,102 | 4.3 | % | 8,552 | 5.8 | % | ||||||||||
MINORITY OWNERSHIP LOSS, NET OF TAX | 46 | 0.0 | % | 64 | 0.0 | % | ||||||||||
INCOME FROM CONTINUING OPERATIONS | 6,148 | 4.3 | % | 8,616 | 5.8 | % | ||||||||||
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX | (4,403 | ) | (3.1 | )% | (716 | ) | (0.5 | )% | ||||||||
NET INCOME | $ | 1,745 | 1.2 | % | $ | 7,900 | 5.3 | % | ||||||||
OTHER DATA: | ||||||||||||||||
Aggregate dollar amount processed (in billions): | ||||||||||||||||
Cash advance | $ | 1.5 | $ | 1.6 | ||||||||||||
ATM | 3.3 | 3.4 | ||||||||||||||
Check warranty | $ | 0.3 | $ | 0.3 | ||||||||||||
Number of transactions completed (in millions): | ||||||||||||||||
Cash advance | 2.7 | 2.8 | ||||||||||||||
ATM | 16.2 | 17.2 | ||||||||||||||
Check warranty | 1.3 | 1.3 |
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Three Months Ended | ||||||||
March 31, | March 31, | |||||||
2008 | 2007 | |||||||
Net cash provided by operating activities | $ | 19,225 | $ | 16,183 | ||||
Net cash used in investing activities | (1,974 | ) | (2,426 | ) | ||||
Net cash provided by (used in) financing activities | 74,403 | (2,025 | ) | |||||
Net effect of exchange rate changes on cash and cash equivalents | 517 | (32 | ) | |||||
Net increase in cash and cash equivalents | 92,171 | 11,700 | ||||||
Cash and cash equivalents, beginning of period | 71,063 | 40,919 | ||||||
Cash and cash equivalents, end of period | $ | 163,234 | $ | 52,619 | ||||
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• | makes it more difficult for us to satisfy our obligations with respect to either our senior secured debt or our senior subordinated notes, which, if we fail to do, could result in the acceleration of all of our debt; | ||
• | increases our vulnerability to general adverse economic and industry conditions; | ||
• | may require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, which would reduce the availability of our cash flow to fund working capital, capital expenditures, expansion efforts and other general corporate purposes; | ||
• | limits our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; | ||
• | restricts our ability to pay dividends or repurchase our common stock; | ||
• | places us at a competitive disadvantage compared to our competitors that have less debt; | ||
• | restricts our ability to acquire businesses or technologies that would benefit our business; | ||
• | restricts our ability to engage in transactions with affiliates or create liens or guarantees; and | ||
• | limits, along with the financial and other restrictive covenants in our other indebtedness, among other things, our ability to borrow additional funds. |
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• | difficulty integrating the technologies, operations and personnel from the acquired business; | ||
• | overestimation of potential synergies or a delay in realizing those synergies; | ||
• | disruption to our ongoing business, including the diversion of management’s attention and of resources from our principal business; | ||
• | inability to obtain the desired financial and strategic benefits from the acquisition or investment; | ||
• | loss of customers of an acquired business; | ||
• | assumption of unanticipated liabilities; | ||
• | loss of key employees of an acquired business; and | ||
• | entering into new markets in which we have limited prior experience. |
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• | Missed Payments. We face the risk that customers will miss payments. Receivable charge-offs (including from bankruptcies) are generally preceded by missed payments or other indications of worsening financial condition. Customers may be more likely to miss payments in the event of an economic downturn. In addition, we face the risk that consumer behavior may change (i.e. an increased willingness to fail to repay debt), causing a long-term rise in delinquencies and charge-offs. | ||
• | Estimates of future losses. We face the risk that we may underestimate our future losses and fail to hold a bad debt allowance sufficient to account for these losses. Incorrect assumptions could lead to material underestimates of future losses and inadequate allowance for bad debt. In addition, our estimate of future losses impacts the amount of reserves we build to account for those losses. The build or release of reserves impacts our current financial results. | ||
• | Underwriting. We face the risk that our ability to assess the credit worthiness of our customers may diminish. If the models and approaches we use to select, manage, and underwrite our customers become less predictive of future charge-offs (due, for example, to changes in the competitive environment or in the economy), our credit losses and returns may deteriorate. | ||
• | Industry practices. We face the risk that our charge-off and delinquency rates may be impacted by industry developments. |
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• | our failure to maintain our current customers, including because of consolidation in the gaming industry; |
• | increases in commissions paid to gaming establishments as a result of competition; |
• | increases in interchange rates or processing or other fees paid by us or decreases in reverse interchange rates; |
• | actual or anticipated fluctuations in our or our competitors’ revenue, operating results or growth rate; |
• | our inability to adequately protect or enforce our intellectual property rights; |
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• | any adverse results in litigation initiated by us or by others against us; |
• | our inability to make payments on our outstanding indebtedness as they become due or our inability to undertake actions that might otherwise benefit us based on the financial and other restrictive covenants contained in our senior secured credit facilities and the indenture for our senior subordinated notes; |
• | the loss of a significant supplier or strategic partner, or the failure of a significant supplier or strategic partner to provide the goods or services that we rely on them for; |
• | our inability to introduce successful, new products and services in a timely manner or the introduction of new products or services by our competitors that reduce the demand for our products and services; |
• | our failure to successfully enter new markets or the failure of new markets to develop in the time and manner that we anticipate; |
• | announcements by our competitors of significant new contracts or contract renewals or of new products or services; |
• | changes in general economic conditions, financial markets, the gaming industry or the payments processing industry; |
• | the trading volume of our common stock; |
• | sales of common stock or other actions by our current officers, directors and stockholders; |
• | acquisitions, strategic alliances or joint ventures involving us or our competitors; |
• | future sales of our common stock or other securities; |
• | the failure of securities analysts to cover our common stock or changes in financial estimates or recommendations by analysts; |
• | our failure to meet the revenue, net income or earnings per share estimates of securities analysts or investors; |
• | additions or departures of key personnel; |
• | terrorist acts, theft, vandalism, fires, floods or other natural disasters; and |
• | rumors or speculation as to any of the above which we may be unable to confirm or deny due to disclosure restrictions imposed on us by law or which we otherwise deem imprudent to comment upon. |
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• | divide our Board of Directors into three separate classes serving staggered three-year terms, which will have the effect of requiring at least two annual stockholder meetings instead of one, to replace a majority of our directors, which could have the effect of delaying of preventing a change in our control or management; |
• | provide that special meetings of stockholders can only be called by our Board of Directors, Chairman of the Board or Chief Executive Officer. In addition, the business permitted to be conducted at any special meeting of stockholders is limited to the business specified in the notice of such meeting to the stockholders; |
• | provide for an advance notice procedure with regard to business to be brought before a meeting of stockholders which may delay or preclude stockholders from bringing matters before a meeting of stockholders or from making nominations for directors at a meeting of stockholders, which could delay or deter takeover attempts or changes in management; |
• | eliminate the right of stockholders to act by written consent so that all stockholder actions must be effected at a duly called meeting; |
• | provide that directors may only be removed for cause with the approval of stockholders holding a majority of our outstanding voting stock; |
• | provide that vacancies on our Board of Directors may be filled by a majority, although less than a quorum, of directors in office and that our Board of Directors may fix the number of directors by resolution; |
• | allow our Board of Directors to issue shares of preferred stock with rights senior to those of the common stock and that otherwise could adversely affect the rights and powers, including voting rights and the right to approve or not to approve an acquisition or other change in control, of the holders of common stock, without any further vote or action by the stockholders; and |
• | do not provide for cumulative voting for our directors, which may make it more difficult for stockholders owning less than a majority of our stock to elect any directors to our Board of Directors. In addition, we are also subject to Section 203 of the Delaware General Corporation Law, which provides, subject to enumerated exceptions, that if a person acquires 15% or more of our voting stock, the person is an “interested stockholder” and may not engage in “business combinations” with us for a period of three years from the time the person acquired 15% or more of our voting stock. |
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Total Number of Shares | Maximum Approximate Dollar | |||||||||||||||
Purchased as Part of Publicly | Value of Shares that May Yet Be | |||||||||||||||
Total Number of Shares | Average Price per Share | Announced Plans or | Purchased Under the Plans or | |||||||||||||
Purchased orWithheld | Purchased or Withheld | Programs | Programs | |||||||||||||
1/1/08 - 1/31/08 | 1,047,700 | (1) | 5.67 | (3) | 1,047,700 | (1) | 2,381,500 | (5) | ||||||||
1,632 | (2) | 5.84 | (4) | 1,632 | (2) | |||||||||||
2/1/08 - 2/29/08 | 349,800 | (1) | 6.55 | (3) | 349,800 | (1) | — | (5) | ||||||||
18,354 | (2) | 6.87 | (4) | 18,354 | (2) | |||||||||||
3/1/08 - 3/31/08 | — | (1) | — | (3) | — | (1) | — | (5) | ||||||||
10,641 | (2) | 4.63 | (4) | 10,641 | (2) | |||||||||||
Subtotals | 1,397,500 | (1) | 5.89 | (3) | 1,397,500 | (1) | ||||||||||
30,627 | (2) | 6.04 | (4) | 30,627 | (2) | |||||||||||
Total | 1,428,127 | 5.89 | 1,428,127 | |||||||||||||
(1) | Represents shares of common stock that we repurchased in open market transactions pursuant to the Rule 10b-18 share buyback program that we publicly announced on February 8, 2007. Our board of directors authorized the repurchase up to $50 million worth of common stock. The share buyback program did not obligate us to repurchase any specific number of shares and could have been suspended or terminated at any time. The repurchase of the full $50 million authorized was completed during the quarter ended March 31, 2008. | |
(2) | Represents shares of common stock that were withheld from restricted stock awards to satisfy the minimum applicable tax withholding obligations incident to the vesting of such restricted stock awards. | |
(3) | Represents the average price per share of shares repurchased pursuant to the Rule 10b-18 share buyback program. | |
(4) | Represents the average price per share of shares withheld from restricted stock awards on the date of withholding. | |
(5) | Represents the maximum approximate dollar value of shares that may yet be purchased pursuant to the Rule 10b-18 share buyback program at the end of the stated period. There is no limitation on the number of shares of common stock that may be withheld from restricted stock awards to satisfy the minimum applicable tax withholding obligations incident to the vesting of such restricted stock awards. |
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Exhibit No. | Description. | |||
2.1 | (1) | Stock Purchase Agreement, dated as of February 28, 2008, by and among Global Cash Access, Inc., Fidelity National Transaction Services, Inc. and Certegy Gaming Services, Inc. | ||
4.1 | * | Supplemental Indenture dated as of April 17, 2008, by and among Certegy Gaming Services, Inc., Arriva Card, Inc.; Central Credit, LLC; Global Cash Access Holdings, Inc., and The Bank of New York Trust Company, N.A. | ||
10.1 | (2) | Employment Agreement with George Gresham, dated February 25, 2008. | ||
10.2 | (3) | Notice of Stock Option Award and Stock Option Award Agreement with George Gresham dated February 25, 2008. | ||
10.3 | (4) | Addendum to Master Service Agreement, dated as of March 20, 2008, by and between Global Cash Access, Inc. and Integrated Payment Systems, Inc. | ||
10.4 | (5) | Amendment to Treasury Services Terms and Conditions Booklet, dated as of March 13, 2008 by and between Global Cash Access, Inc. and Bank of America, N.A. | ||
31.1 | * | Certification of Scott Betts, Chief Executive Officer of Global Cash Access Holdings, Inc. dated May 14, 2008 in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31.2 | * | Certification of George Gresham, Chief Financial Officer of Global Cash Access Holdings, Inc. dated May 14, 2008 in accordance with Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32.1 | * | Certification of Scott Betts, Chief Executive Officer and Chief Financial Officer of Global Cash Access Holdings, Inc. dated May 14, 2008 in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
32.2 | * | Certification of George Gresham, Chief Financial Officer of Global Cash Access Holdings, Inc. dated May 14, 2008 in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
(1) | Incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed April 1, 2008. | |
(2) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed February 25, 2008. | |
(3) | Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed February 25, 2008. | |
(4) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed March 20, 2008. | |
(5) | Incorporated by reference to Exhibit 10.43 of the Company’s Annual Report on Form 10-K filed March 17, 2008. | |
* | Filed herewith. |
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May 14, 2008 | GLOBAL CASH ACCESS HOLDINGS, INC. | |||||
(Date) | (Registrant) | |||||
By: | /s/ George Gresham | |||||
George Gresham | ||||||
Chief Financial Officer | ||||||
(For the Registrant and as | ||||||
Principal Financial Officer | ||||||
and as Chief Accounting Officer) |
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Exhibit No. | Description. | |||
2.1 | (1) | Stock Purchase Agreement, dated as of February 28, 2008, by and among Global Cash Access, Inc., Fidelity National Transaction Services, Inc. and Certegy Gaming Services, Inc. | ||
4.1 | * | Supplemental Indenture dated as of April 17, 2008, by and among Certegy Gaming Services, Inc., Arriva Card, Inc.; Central Credit, LLC; Global Cash Access Holdings, Inc., and The Bank of New York Trust Company, N.A. | ||
10.1 | (2) | Employment Agreement with George Gresham, dated February 25, 2008. | ||
10.2 | (3) | Notice of Stock Option Award and Stock Option Award Agreement with George Gresham dated February 25, 2008. | ||
10.3 | (4) | Addendum to Master Service Agreement, dated as of March 20, 2008, by and between Global Cash Access, Inc. and Integrated Payment Systems, Inc. | ||
10.4 | (5) | Amendment to Treasury Services Terms and Conditions Booklet, dated as of March 13, 2008 by and between Global Cash Access, Inc. and Bank of America, N.A. | ||
31.1 | * | Certification of Scott Betts, Chief Executive Officer of Global Cash Access Holdings, Inc. dated May 14, 2008 in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31.2 | * | Certification of George Gresham, Chief Financial Officer of Global Cash Access Holdings, Inc. dated May 14, 2008 in accordance with Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32.1 | * | Certification of Scott Betts, Chief Executive Officer of Global Cash Access Holdings, Inc. dated May 14, 2008 in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | ||
32.2 | * | Certification of George Gresham, Chief Financial Officer of Global Cash Access Holdings, Inc. dated May 14, 2008 in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
(1) | Incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed April 1, 2008. | |
(2) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed February 25, 2008. | |
(3) | Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed February 25, 2008. | |
(4) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed March 20, 2008. | |
(5) | Incorporated by reference to Exhibit 10.43 of the Company’s Annual Report on Form 10-K filed March 17, 2008. | |
* | Filed herewith. |