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SECURITIES AND EXCHANGE COMMISSION
þ | ANNUAL 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 incorporation or organization) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices including Zip code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, $0.001 par value per share | New York Stock Exchange |
None
Large accelerated filero | Accelerated filerþ | Non-accelerated filero | Smaller reporting companyo | |||
(Do not check if a smaller reporting company) |
FOR FISCAL YEAR ENDED DECEMBER 31, 2008
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Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 |
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CAUTIONARY NOTICE REGARDING
FORWARD-LOOKING STATEMENTS
Unless the context requires otherwise, references in this report to “Global Cash Access” the “Company,” “we,” “us,” and “our” refer to Global Cash Access Holdings, Inc. and our respective subsidiaries.
We believe that it is important to communicate our plans and expectations about the future to our shareholders and to the public. Some of the statements we use in this report, and in some of the documents we incorporate by reference in this report, contain forward-looking statements concerning our business operations, economic performance and financial condition, including in particular: our business strategy and means to implement the strategy; the amount of future results of operations, such as revenue, certain expenses, operating margins, income tax rates, shares outstanding, capital expenditures, operating metrics, and earnings per share; our success and our timing in developing and introducing new products or services and expanding our business; and the successful integration of future acquisitions. You can sometimes identify forward looking-statements by our use of the words “believes,” “anticipates,” “expects,” “intends,” “plan,” “forecast,” “guidance” and similar expressions. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, but are not limited to, statements regarding the following matters: trends in gaming establishment and patron usage of our products; benefits realized by using our products; product development and regulatory approval; gaming regulatory, card association and statutory compliance; consumer collection activities; future competition; future tax liabilities; international expansion; resolution of litigation; dividend policy; new customer contracts and contract renewals; future results of operations (including revenue, expenses, margins, earnings, cash flow and capital expenditures); future interest rates and interest expense; future borrowings; and future equity incentive activity and compensation expense.
These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or assumed, including but not limited to the following: gaming establishment and patron preferences; national and international economic conditions; changes in gaming regulatory, card association and statutory requirements; regulatory approval difficulties; competitive pressures; operational limitations; gaming market contraction; changes to tax laws; uncertainty of litigation outcome; interest rate fluctuation; inaccuracies in underlying operating assumptions; unanticipated expenses or capital needs; technological obsolescence; and employee turnover. In addition, the forward-looking statements regarding out future results of operations are based on our assumptions that revenue will increase in 2009 as a result of our 2008 acquisitions, interest expense will be lower due to lower debt balances and interest rates, and we do not lose key customer relationships. If any of these assumptions prove to be incorrect, the results contemplated by the forward-looking statements regarding our future results of operations are unlikely to be realized. Additional factors that could cause actual results to differ materially are included under the heading “Risk Factors” These factors include, but are not limited to, those set forth in Item 1A—Risk Factors of this report, those set forth elsewhere in this report and those set forth in our press releases, reports and other filings made with the Securities and Exchange Commission, or SEC. These cautionary statements qualify all of our forward-looking statements, and you are cautioned not to place undue reliance on these forward-looking statements.
Our forward-looking statements speak only as of the date they are made and should not be relied upon as representing our plans and expectations as of any subsequent date. While we may elect to update or revise forward-looking statements at some time in the future, we specifically disclaim any obligation to publicly release the results of any revisions to our forward-looking statements.
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Cash Access Products and Services | Information Services | Cashless Gaming Products | ||
• Casino Cash Plus 3-in-1 ATM | • Central Credit | • 3-in-1 Enabled Redemption Devices | ||
• QuikCash | • QuikCash Plus Web | • Powercash | ||
• Check verification and warranty | • QuikReports | |||
• Money transfers | • QuikMarketing |
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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 or a new service provider; |
• | 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; |
• | reduced ability to control maintenance schedules, system availability, functionality or customer service levels of a new service provider; |
• | 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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• | 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; |
• | 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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Price Range | ||||||||
High | Low | |||||||
2008: | ||||||||
First Quarter | $ | 5.93 | $ | 5.48 | ||||
Second Quarter | 6.88 | 6.48 | ||||||
Third Quarter | 5.98 | 5.65 | ||||||
Fourth Quarter | 2.99 | 2.72 | ||||||
2007: | ||||||||
First Quarter | $ | 16.69 | $ | 14.33 | ||||
Second Quarter | 16.81 | 15.35 | ||||||
Third Quarter | 16.56 | 10.55 | ||||||
Fourth Quarter | 11.25 | 3.06 |
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Maximum | ||||||||||||||||
Approximate Dollar | ||||||||||||||||
Total Number of Shares | Value of Shares that | |||||||||||||||
Total Number of | Average Price per | Purchased as Part of | May Yet Be Purchased | |||||||||||||
Shares Purchased or | Share Purchased or | Publicly Announced | Under the Plans or | |||||||||||||
Withheld | Withheld | Plans or Programs | Programs | |||||||||||||
10/1/08 – 10/31/08 | 0 | (1) | 0.00 | (3) | 0 | (1) | 0 | (5) | ||||||||
2,422 | (2) | 3.58 | (4) | 2,422 | (2) | |||||||||||
11/1/08 – 11/30/08 | 0 | (1) | 0.00 | (3) | 0 | (1) | 0 | (5) | ||||||||
2,679 | (2) | 3.47 | (4) | 2,679 | (2) | |||||||||||
12/1/08 – 12/31/08 | 0 | (1) | 0.00 | (3) | 0 | (1) | 0 | (5) | ||||||||
2,193 | (2) | 2.64 | (4) | 2,193 | (2) | |||||||||||
Subtotals | 0 | (1) | 0.00 | (3) | 0 | (1) | ||||||||||
7,294 | (2) | 0.00 | (4) | 7,294 | (2) | |||||||||||
Total | 7,294 | 0.00 | 7,294 |
(1) | Represents shares of common stock that we repurchased in open market transactions pursuant to the Rule 10b-18 share repurchase authorization 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. No time frame for the completion of the authorized repurchases was specified in the board of directors’ authorization. The maximum authorized repurchases were completed during the quarter ending 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 of common stock repurchased pursuant to the Rule 10b-18 share buyback program. | |
(4) | Represents the average price per share of shares of common stock withheld from restricted stock awards on the date of withholding. | |
(5) | Represents the maximum approximate dollar value of shares of common stock available for repurchase pursuant to the Rule 10b-18 share repurchase authorization 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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For the Years Ended December 31, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
(amounts in thousands, except per share) | ||||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Cash advance | $ | 326,476 | $ | 316,094 | $ | 287,053 | $ | 235,055 | $ | 209,962 | ||||||||||
ATM | 289,122 | 240,575 | 221,727 | 182,291 | 158,433 | |||||||||||||||
Check services | 42,366 | 31,126 | 29,166 | 26,376 | 23,768 | |||||||||||||||
Central Credit and other revenues | 13,644 | 10,145 | 9,827 | 10,358 | 10,840 | |||||||||||||||
Total revenues | 671,608 | 597,940 | 547,773 | 454,080 | 403,003 | |||||||||||||||
Cost of revenues (exclusive of depreciation and amortization) | (492,974 | ) | (428,508 | ) | (384,718 | ) | (308,481 | ) | (270,095 | ) | ||||||||||
Operating expenses | (83,962 | ) | (79,614 | ) | (65,021 | ) | (51,206 | ) | (45,339 | ) | ||||||||||
Depreciation and amortization | (16,026 | ) | (11,600 | ) | (9,794 | ) | (12,109 | ) | (13,548 | ) | ||||||||||
Operating income | 78,646 | 78,218 | 88,240 | 82,284 | 74,021 | |||||||||||||||
Interest expense, net (1) | (27,888 | ) | (34,515 | ) | (42,038 | ) | (51,879 | ) | (32,025 | ) | ||||||||||
Income from continuing operations before income tax (provision) benefit and minority ownership loss | 50,758 | 43,703 | 46,202 | 30,405 | 41,996 | |||||||||||||||
Income tax (provision) benefit | (23,349 | ) | (16,709 | ) | (17,832 | ) | (7,953 | ) | 212,422 | |||||||||||
Income from continuing operations before minority ownership loss | 27,409 | 26,994 | 28,370 | 22,452 | 254,418 | |||||||||||||||
Minority ownership loss, net of tax (2) | 86 | 236 | 183 | 139 | 137 | |||||||||||||||
Income from continuing operations | 27,495 | 27,230 | 28,553 | 22,591 | 254,555 | |||||||||||||||
Loss from discontinued operations, net of tax | (3,939 | ) | (3,526 | ) | (1,944 | ) | — | — | ||||||||||||
Net income | $ | 23,556 | $ | 23,704 | $ | 26,609 | $ | 22,591 | $ | 254,555 | ||||||||||
Basic earnings per share: | ||||||||||||||||||||
Continuing operations | $ | 0.36 | $ | 0.34 | $ | 0.35 | $ | 0.49 | $ | 7.91 | ||||||||||
Discontinued operations | $ | (0.05 | ) | $ | (0.05 | ) | $ | (0.02 | ) | $ | — | $ | — | |||||||
Net income | $ | 0.31 | $ | 0.29 | $ | 0.33 | $ | 0.49 | $ | 7.91 | ||||||||||
Diluted earnings per share: | ||||||||||||||||||||
Continuing operations | $ | 0.36 | $ | 0.33 | $ | 0.35 | $ | 0.30 | $ | 3.56 | ||||||||||
Discontinued operations | $ | (0.05 | ) | $ | (0.04 | ) | $ | (0.03 | ) | $ | — | $ | — | |||||||
Net income | $ | 0.31 | $ | 0.29 | $ | 0.32 | $ | 0.30 | $ | 3.56 | ||||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||||||
Basic | 76,787 | 81,108 | 81,641 | 45,643 | 32,175 | |||||||||||||||
Diluted | 76,796 | 81,377 | 81,921 | 74,486 | 71,566 | |||||||||||||||
Pro forma computation related to conversion to corporation for income tax purposes | ||||||||||||||||||||
Income before income tax benefit (provision) and minority ownership loss—historical | N/A | N/A | N/A | N/A | $ | 41,996 | ||||||||||||||
Income tax provision—historical, exclusive of one-time tax benefit (3) | N/A | N/A | N/A | N/A | (10,443 | ) | ||||||||||||||
Pro forma income tax provision—unaudited (4) | N/A | N/A | N/A | N/A | (4,600 | ) | ||||||||||||||
Minority ownership loss — historical loss, net of tax | N/A | N/A | N/A | N/A | 137 | |||||||||||||||
Pro forma net income | N/A | N/A | N/A | N/A | $ | 27,090 | ||||||||||||||
Pro forma earnings per share | ||||||||||||||||||||
Basic | N/A | N/A | N/A | N/A | $ | 0.84 | ||||||||||||||
Diluted | N/A | N/A | N/A | N/A | $ | 0.38 | ||||||||||||||
Balance Sheet Data: (at end of period) | ||||||||||||||||||||
Cash and cash equivalents | $ | 77,148 | $ | 71,063 | $ | 42,269 | $ | 35,123 | $ | 49,577 | ||||||||||
Total assets | 559,150 | 538,302 | 587,474 | 510,418 | 496,625 | |||||||||||||||
Total borrowings | 265,750 | 263,480 | 274,480 | 321,412 | 478,250 | |||||||||||||||
Stockholders’ equity (deficiency) and members’ capital | 160,878 | 138,296 | 132,157 | 94,484 | (56,779 | ) |
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For the Years Ended December 31, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Other Data: | ||||||||||||||||||||
Net cash provided by operating activities | $ | 71,324 | $ | 91,874 | $ | 70,079 | $ | 38,585 | $ | 75,212 | ||||||||||
Net cash used in investing activities (5) | (58,708 | ) | (10,960 | ) | (17,061 | ) | (17,860 | ) | (4,861 | ) | ||||||||||
Net cash used in financing activities | (7,217 | ) | (49,715 | ) | (46,761 | ) | (35,190 | ) | (43,950 | ) | ||||||||||
Other Data (unaudited): | ||||||||||||||||||||
Aggregate dollar amount processed (in billions): | ||||||||||||||||||||
Cash advance | $ | 6.5 | $ | 6.4 | $ | 5.7 | $ | 4.7 | $ | 4.2 | ||||||||||
ATM | $ | 15.2 | $ | 13.6 | $ | 12.3 | $ | 9.9 | $ | 8.4 | ||||||||||
Check warranty | $ | 1.8 | $ | 1.4 | $ | 1.3 | $ | 1.1 | $ | 0.9 | ||||||||||
Number of transactions completed (in millions): | ||||||||||||||||||||
Cash advance | 12.2 | 11.3 | 10.4 | 9.1 | 8.8 | |||||||||||||||
ATM | 84.7 | 73.5 | 69.2 | 58.9 | 53.2 | |||||||||||||||
Check warranty | 6.5 | 5.3 | 5.1 | 4.7 | 4.3 |
(1) | Interest expense, net, includes interest income and loss on early extinguishment of debt. | |
(2) | Minority ownership loss, net of tax, represents the portion of the loss from operations of IFT that is attributable to the 40% ownership interest in IFT that is not owned by us. | |
(3) | In connection with our conversion to a taxable corporate entity for United States income tax purposes, we recognized a net tax asset created by a step up in the tax basis of our net assets due to the redemption of ownership interests in us by First Data and the sale of ownership interests in us to private equity investors. For purposes of determining the pro forma net income, the recognition of this one-time step up in basis has been excluded from our pro forma tax computation. | |
(4) | The pro forma un-audited income tax adjustments represent the tax effects that would have been reported had the Company been subject to United States federal and state income taxes as a corporation. Pro forma expenses are based upon the statutory income tax rates and adjustments to income for estimated permanent differences occurring during the period. Actual rates and expenses could have differed had the Company been subject to United States federal and state income taxes for all periods presented. Therefore, the un-audited pro forma amounts are for informational purposes only and are intended to be indicative of the results of operations had the Company been subject to United States federal and state income taxes for all periods presented. |
For the Years Ended December 31, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Income before income taxes, as reported | N/A | N/A | N/A | N/A | $ | 41,996 | ||||||||||||||
Effective pro forma income tax rate | N/A | N/A | N/A | N/A | 36.00 | % | ||||||||||||||
Pro forma income tax expense | N/A | N/A | N/A | N/A | $ | 15,119 | ||||||||||||||
(5) | In 2004, net cash used in investing activities includes $1.0 million of non-compete payments to two former executives. |
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December 31, 2008 | December 31, 2007 | |||||||||||||||
$ | % | $ | % | |||||||||||||
Revenues | ||||||||||||||||
Cash advance | $ | 326,476 | 48.6 | % | $ | 316,094 | 52.9 | % | ||||||||
ATM | 289,122 | 43.0 | 240,575 | 40.2 | ||||||||||||
Check services | 42,366 | 6.3 | 31,126 | 5.2 | ||||||||||||
Central Credit and other revenues | 13,644 | 2.0 | 10,145 | 1.7 | ||||||||||||
Total revenues | 671,608 | 100.0 | 597,940 | 100.0 | ||||||||||||
Cost of revenues (exclusive of depreciation and amortization) | (492,974 | ) | (73.4 | ) | (428,508 | ) | (71.7 | ) | ||||||||
Operating expenses | (83,962 | ) | (12.5 | ) | (79,614 | ) | (13.3 | ) | ||||||||
Depreciation and amortization | (16,026 | ) | (2.4 | ) | (11,600 | ) | (1.9 | ) | ||||||||
Operating income | 78,646 | 11.7 | 78,218 | 13.1 | ||||||||||||
Interest expense, net | (27,888 | ) | (4.2 | ) | (34,515 | ) | (5.8 | ) | ||||||||
Income from continuing operations before income tax provision and minority ownership loss | 50,758 | 7.6 | 43,703 | 7.3 | ||||||||||||
Income tax provision | (23,349 | ) | (3.5 | ) | (16,709 | ) | (2.8 | ) | ||||||||
Income from continuing operations before minority ownership loss | 27,409 | 4.1 | 26,994 | 4.5 | ||||||||||||
Minority ownership loss, net of tax | 86 | 0.0 | 236 | 0.0 | ||||||||||||
Income from continuing operations | $ | 27,495 | 4.1 | $ | 27,230 | 4.6 | ||||||||||
Loss from discontinued operations, net of tax | $ | (3,939 | ) | (0.6 | ) | $ | (3,526 | ) | (0.6 | ) | ||||||
Net income | $ | 23,556 | 3.5 | % | $ | 23,704 | 4.0 | % | ||||||||
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December 31, 2007 | December 31, 2006 | |||||||||||||||
$ | % | $ | % | |||||||||||||
Revenues | ||||||||||||||||
Cash advance | $ | 316,094 | 52.9 | % | $ | 287,053 | 52.4 | % | ||||||||
ATM | 240,575 | 40.2 | 221,727 | 40.5 | ||||||||||||
Check services | 31,126 | 5.2 | 29,166 | 5.3 | ||||||||||||
Central Credit and other revenues | 10,145 | 1.7 | 9,827 | 1.8 | ||||||||||||
Total revenues | 597,940 | 100.0 | 547,773 | 100.0 | ||||||||||||
Cost of revenues (exclusive of depreciation and amortization) | (428,508 | ) | (71.7 | ) | (384,718 | ) | (70.2 | ) | ||||||||
Operating expenses | (79,614 | ) | (13.3 | ) | (65,021 | ) | (11.9 | ) | ||||||||
Depreciation and amortization | (11,600 | ) | (1.9 | ) | (9,794 | ) | (1.8 | ) | ||||||||
Operating income | 78,218 | 13.1 | 88,240 | 16.1 | ||||||||||||
Interest income (expense), net | (34,515 | ) | (5.8 | ) | (42,038 | ) | (7.7 | ) | ||||||||
Income from continuing operations before income tax (provision) benefit and minority ownership loss | 43,703 | 7.3 | 46,202 | 8.4 | ||||||||||||
Income tax (provision) benefit | (16,709 | ) | (2.8 | ) | (17,832 | ) | (3.3 | ) | ||||||||
Income from continuing operations before minority ownership loss | 26,994 | 4.5 | 28,370 | 5.2 | ||||||||||||
Minority ownership loss, net of tax | 236 | 0.0 | 183 | 0.1 | ||||||||||||
Income from continuing operations | $ | 27,230 | 4.6 | $ | 28,553 | 5.2 | ||||||||||
Loss from discontinued operations, net of tax | $ | (3,526 | ) | (0.6 | ) | $ | (1,944 | ) | (0.4 | ) | ||||||
Net income | $ | 23,704 | 4.0 | % | $ | 26,609 | 4.9 | % | ||||||||
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Years Ended December 31, | ||||||||
2008 | 2007 | |||||||
Net cash provided by operating activities | $ | 71,324 | $ | 91,874 | ||||
Net cash used in investing activities | (58,708 | ) | (10,960 | ) | ||||
Net cash used in financing activities | (7,217 | ) | (49,715 | ) | ||||
Net effect of exchange rates on cash and cash equivalents | 686 | (1,055 | ) | |||||
Net increase in cash and cash equivalents | 6,085 | 30,144 | ||||||
CASH AND CASH EQUIVALENTS—Beginning of period | 71,063 | 40,919 | ||||||
CASH AND CASH EQUIVALENTS—End of period | $ | 77,148 | $ | 71,063 | ||||
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2 - 3 | 4 - 5 | After | ||||||||||||||||||
Contractual Cash Obligations | Total | 1 Year | Years | Years | 5 Years | |||||||||||||||
(amounts in thousands) | ||||||||||||||||||||
Long-term debt obligations | $ | 265,750 | $ | 16,000 | $ | 1,000 | $ | 96,000 | $ | 152,750 | ||||||||||
Estimated interest obligations (1) | 53,194 | 15,647 | 15,626 | 15,238 | 6,683 | |||||||||||||||
Operating lease obligations | 1,222 | 697 | 522 | 3 | — | |||||||||||||||
Purchase obligations (2) | 7,476 | 2,341 | 2,341 | 2,341 | 453 | |||||||||||||||
Total cash obligations (3) | $ | 327,642 | $ | 34,685 | $ | 19,489 | $ | 113,582 | $ | 159,886 | ||||||||||
(1) | Estimated interest payments are computed using the interest rate in effect at December 31, 2008 multiplied by the principal balance outstanding after scheduled principal amortization payments. For the senior secured credit facility and the senior subordinated notes the rates assumed are 2.09% and 8.75%, respectively. | |
(2) | Included in purchase obligations are minimum transaction processing services from USA Payments, a company controlled by Robert Cucinotta and Karim Maskatiya and minimum account maintenance charges under our Fiserv agreement. | |
(3) | We have entered into three year employment contracts with certain of our executive officers that will expire over the next two years. Significant contract provisions include minimum annual base salaries, bonus compensation, and non-compete provisions. These contracts are “at will” employment agreements, under which the employee or we may terminate employment. If we terminate any of these employees without cause, then we are obligated to pay the employee severance benefits as specified in their individual contract. We have excluded these obligations under employment contracts from the totals presented in this table as the amount and timing of the amount settled in cash is not known. |
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53 | ||||
54 | ||||
55 | ||||
56 | ||||
57 |
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March 9, 2009
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(amounts in thousands, except share amounts)
2008 | 2007 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 77,148 | $ | 71,063 | ||||
Restricted cash and cash equivalents | 388 | 1,380 | ||||||
Settlement receivables | 51,604 | 61,066 | ||||||
Other receivables, net | 16,759 | 14,424 | ||||||
Prepaid and other assets | 11,867 | 7,618 | ||||||
Assets held for sale | 1,540 | 12,180 | ||||||
Property, equipment and leasehold improvements, net | 24,419 | 22,803 | ||||||
Goodwill, net | 183,929 | 156,889 | ||||||
Other intangibles, net | 34,982 | 13,652 | ||||||
Deferred income taxes, net | 156,514 | 177,227 | ||||||
Total assets | $ | 559,150 | $ | 538,302 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
LIABILITIES | ||||||||
Settlement liabilities | $ | 79,150 | $ | 93,727 | ||||
Accounts payable | 35,561 | 22,402 | ||||||
Accrued expenses | 17,811 | 20,262 | ||||||
Borrowings | 265,750 | 263,480 | ||||||
Total liabilities | 398,272 | 399,871 | ||||||
COMMITMENTS AND CONTINGENCIES (NOTE 7) | ||||||||
MINORITY INTEREST | — | 135 | ||||||
STOCKHOLDERS’ EQUITY | ||||||||
Common stock, $0.001 par value, 500,000 shares authorized and 82,961 and 82,981 shares outstanding at December 31, 2008 and 2007, respectively | 83 | 83 | ||||||
Convertible preferred stock, $0.001 par value, 50,000 shares authorized and 0 shares outstanding at December 31, 2008 and 2007, respectively | — | — | ||||||
Additional paid in capital | 172,119 | 163,070 | ||||||
Retained earnings | 37,659 | 14,103 | ||||||
Accumulated other comprehensive income | 1,243 | 2,708 | ||||||
Treasury stock, at cost, 6,017 and 4,563 shares at December 31, 2008 and 2007, respectively | (50,226 | ) | (41,668 | ) | ||||
Total stockholders’ equity | 160,878 | 138,296 | ||||||
Total liabilities and stockholders’ equity | $ | 559,150 | $ | 538,302 | ||||
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(amounts in thousands, except earnings per share amounts)
2008 | 2007 | 2006 | ||||||||||
REVENUES: | ||||||||||||
Cash advance | $ | 326,476 | $ | 316,094 | $ | 287,053 | ||||||
ATM | 289,122 | 240,575 | 221,727 | |||||||||
Check services | 42,366 | 31,126 | 29,166 | |||||||||
Central Credit and other revenues | 13,644 | 10,145 | 9,827 | |||||||||
Total revenues | 671,608 | 597,940 | 547,773 | |||||||||
Cost of revenues (exclusive of depreciation and amortization) | (492,974 | ) | (428,508 | ) | (384,718 | ) | ||||||
Operating expenses | (83,962 | ) | (79,614 | ) | (65,021 | ) | ||||||
Amortization | (7,151 | ) | (5,301 | ) | (5,425 | ) | ||||||
Depreciation | (8,875 | ) | (6,299 | ) | (4,369 | ) | ||||||
OPERATING INCOME | 78,646 | 78,218 | 88,240 | |||||||||
INTEREST INCOME (EXPENSE), NET | ||||||||||||
Interest income | 2,229 | 3,631 | 3,477 | |||||||||
Interest expense | (30,117 | ) | (38,146 | ) | (42,098 | ) | ||||||
Loss on early extinguishment of debt | — | — | (3,417 | ) | ||||||||
Total interest income (expense), net | (27,888 | ) | (34,515 | ) | (42,038 | ) | ||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX PROVISION AND MINORITY LOSS | 50,758 | 43,703 | 46,202 | |||||||||
INCOME TAX PROVISION | (23,349 | ) | (16,709 | ) | (17,832 | ) | ||||||
INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY OWNERSHIP LOSS | 27,409 | 26,994 | 28,370 | |||||||||
MINORITY OWNERSHIP LOSS, NET OF TAX | 86 | 236 | 183 | |||||||||
INCOME FROM CONTINUING OPERATIONS | 27,495 | 27,230 | 28,553 | |||||||||
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX | (3,939 | ) | (3,526 | ) | (1,944 | ) | ||||||
NET INCOME | 23,556 | 23,704 | 26,609 | |||||||||
Foreign currency translation, net of tax | (1,465 | ) | 547 | 435 | ||||||||
COMPREHENSIVE INCOME | $ | 22,091 | $ | 24,251 | $ | 27,044 | ||||||
Basic earnings per share: | ||||||||||||
Continuing operations | $ | 0.36 | $ | 0.34 | $ | 0.35 | ||||||
Discontinued operations | $ | (0.05 | ) | $ | (0.05 | ) | $ | (0.02 | ) | |||
Net income | $ | 0.31 | $ | 0.29 | $ | 0.33 | ||||||
Diluted earnings per share: | ||||||||||||
Continuing operations | $ | 0.36 | $ | 0.33 | $ | 0.35 | ||||||
Discontinued operations | $ | (0.05 | ) | $ | (0.04 | ) | $ | (0.03 | ) | |||
Net income | $ | 0.31 | $ | 0.29 | $ | 0.32 | ||||||
Weighted average number of common shares outstanding: | ||||||||||||
Basic | 76,787 | 81,108 | 81,641 | |||||||||
Diluted | 76,796 | 81,377 | 81,921 | |||||||||
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(amounts in thousands, except shares)
Retained | Accumulated | |||||||||||||||||||||||||||
Common Stock - Series A | Additional | Earnings | Other | |||||||||||||||||||||||||
Number of | Paid in | (Accumulated | Comprehensive | |||||||||||||||||||||||||
Shares | Amount | Capital | Deficit) | Income | Treasury Stock | Total | ||||||||||||||||||||||
BALANCE—December 31, 2005 | 81,553,568 | $ | 82 | $ | 128,886 | $ | (36,210 | ) | $ | 1,726 | $ | — | $ | 94,484 | ||||||||||||||
Net income | — | — | — | 26,609 | — | — | 26,609 | |||||||||||||||||||||
Foreign currency translation | — | — | — | — | 435 | — | 435 | |||||||||||||||||||||
Share-based compensation expense | — | — | 9,141 | — | — | — | 9,141 | |||||||||||||||||||||
Restricted stock grants | 619,747 | — | — | — | — | — | — | |||||||||||||||||||||
Restricted stock cancellations | (10,500 | ) | — | — | — | — | — | — | ||||||||||||||||||||
Exercise of stock options | 149,709 | — | 1,488 | — | — | — | 1,488 | |||||||||||||||||||||
BALANCE—December 31, 2006 | 82,312,524 | $ | 82 | $ | 139,515 | $ | (9,601 | ) | $ | 2,161 | $ | — | $ | 132,157 | ||||||||||||||
Net income | — | — | — | 23,704 | — | — | 23,704 | |||||||||||||||||||||
Foreign currency translation | — | — | — | — | 547 | — | 547 | |||||||||||||||||||||
Share-based compensation expense | — | — | 22,269 | — | — | — | 22,269 | |||||||||||||||||||||
Restricted stock grants | 747,000 | 1 | (1 | ) | — | — | — | — | ||||||||||||||||||||
Restricted stock cancellations | (181,061 | ) | — | — | — | — | — | — | ||||||||||||||||||||
Exercise of stock options | 103,249 | — | — | — | — | — | — | |||||||||||||||||||||
Treasury share repurchases | — | — | — | — | — | (38,462 | ) | (38,462 | ) | |||||||||||||||||||
Restricted share vesting withholdings | — | — | 1,287 | — | — | (3,206 | ) | (1,919 | ) | |||||||||||||||||||
BALANCE—December 31, 2007 | 82,981,712 | $ | 83 | $ | 163,070 | $ | 14,103 | $ | 2,708 | $ | (41,668 | ) | $ | 138,296 | ||||||||||||||
Net income | — | — | — | 23,556 | — | — | 23,556 | |||||||||||||||||||||
Foreign currency translation | — | — | — | — | (1,465 | ) | — | (1,465 | ) | |||||||||||||||||||
Share-based compensation expense | — | — | 9,049 | — | — | — | 9,049 | |||||||||||||||||||||
Restricted stock grants | 5,500 | — | — | — | — | — | — | |||||||||||||||||||||
Restricted stock cancellations | (26,083 | ) | — | — | — | — | — | — | ||||||||||||||||||||
Treasury share repurchases | — | — | — | — | — | (8,233 | ) | (8,233 | ) | |||||||||||||||||||
Restricted share vesting withholdings | — | — | — | — | — | (325 | ) | (325 | ) | |||||||||||||||||||
BALANCE—December 31, 2008 | 82,961,129 | $ | 83 | $ | 172,119 | $ | 37,659 | $ | 1,243 | $ | (50,226 | ) | $ | 160,878 | ||||||||||||||
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(amounts in thousands)
2008 | 2007 | 2006 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net income | $ | 23,556 | $ | 23,704 | $ | 26,609 | ||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||||
Amortization of financing costs | 973 | 973 | 1,584 | |||||||||
Amortization of intangibles | 6,802 | 5,487 | 5,520 | |||||||||
Depreciation | 9,418 | 6,302 | 4,369 | |||||||||
(Gain)loss on sale or disposal of assets | — | 139 | (6 | ) | ||||||||
Loss on early extinguishment of debt | — | — | 3,417 | |||||||||
Provision for bad debts | 17,565 | 11,184 | 6,483 | |||||||||
Deferred income taxes | 20,677 | 14,514 | 15,899 | |||||||||
Minority ownership loss | (135 | ) | (368 | ) | (287 | ) | ||||||
Stock-based compensation | 9,050 | 22,269 | 9,141 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Settlement receivables | 16,474 | 76,737 | (76,654 | ) | ||||||||
Other receivables, net | 4,281 | (22,827 | ) | (10,503 | ) | |||||||
Prepaid and other assets | (1,400 | ) | 1,071 | (1,906 | ) | |||||||
Settlement liabilities | (30,649 | ) | (44,797 | ) | 78,188 | |||||||
Accounts payable | 8,393 | (3,855 | ) | 5,867 | ||||||||
Accrued expenses | (13,681 | ) | 1,341 | 2,358 | ||||||||
Net cash provided by operating activities | 71,324 | 91,874 | 70,079 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Certegy Gaming acquisition, net of cash | (20,783 | ) | — | — | ||||||||
Cash Systems Inc acquisition, net of cash | (30,098 | ) | — | — | ||||||||
Purchase of property, equipment and leasehold improvements | (8,135 | ) | (9,502 | ) | (14,195 | ) | ||||||
Purchase of other intangibles | (684 | ) | (1,428 | ) | (1,516 | ) | ||||||
Changes in restricted cash and cash equivalents | 992 | (30 | ) | (1,350 | ) | |||||||
Net cash used in investing activities | (58,708 | ) | (10,960 | ) | (17,061 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Borrowings under credit facility | 121,000 | — | 121,730 | |||||||||
Repayments under credit facility | (118,730 | ) | (11,000 | ) | (168,662 | ) | ||||||
Debt issuance costs | (23 | ) | (1,557 | ) | ||||||||
Proceeds from exercise of stock options | 1,287 | 1,488 | ||||||||||
Purchase of treasury stock | (9,487 | ) | (40,379 | ) | — | |||||||
Minority capital contributions | — | 400 | 240 | |||||||||
Net cash used in financing activities | (7,217 | ) | (49,715 | ) | (46,761 | ) | ||||||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | $ | 686 | $ | (1,055 | ) | $ | (461 | ) | ||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 6,085 | 30,144 | 5,796 | |||||||||
CASH AND CASH EQUIVALENTS—Beginning of period | 71,063 | 40,919 | 35,123 | |||||||||
CASH AND CASH EQUIVALENTS—End of period | $ | 77,148 | $ | 71,063 | $ | 40,919 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||
Cash paid during year for: | ||||||||||||
Interest | $ | 29,459 | $ | 37,549 | $ | 38,735 | ||||||
Income taxes | $ | 617 | $ | 1,055 | $ | 410 | ||||||
Difference in timing of treasury share purchases | $ | 929 | $ | — | $ | — | ||||||
See notes to consolidated financial statements.
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Balance, December 31, 2006 | $ | 9,481 | ||
Warranty expense provision | 6,776 | |||
Charge offs against reserve | (8,835 | ) | ||
Balance, December 31, 2007 | $ | 7,422 | ||
Warranty expense provision | 12,647 | |||
Charge offs against reserve | (8,954 | ) | ||
Balance, December 31, 2008 | $ | 11,115 | ||
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Cash | ||||||||||||||||||||
Advance | ATM | Credit Reporting | Check Services | Total | ||||||||||||||||
Balance as of January 1, 2008 | $ | 93,385 | $ | 24,033 | $ | 17,127 | $ | 22,344 | $ | 156,889 | ||||||||||
Goodwill acquired during the year | 13,869 | 11,530 | — | 1,641 | 27,040 | |||||||||||||||
Impairment losses | — | — | — | — | — | |||||||||||||||
Balance as of December 31, 2008 | $ | 107,254 | $ | 35,563 | $ | 17,127 | $ | 23,985 | $ | 183,929 | ||||||||||
2008 | 2007 | |||||||
Computer software | $ | 19,882 | $ | 12,979 | ||||
Patents and trademarks | 10,066 | 10,000 | ||||||
Customer contracts | 34,451 | 34,516 | ||||||
Non-compete agreements | 200 | 60 | ||||||
64,600 | 57,555 | |||||||
Less accumulated amortization | (29,617 | ) | (43,903 | ) | ||||
Total | $ | 34,982 | $ | 13,652 | ||||
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2009 | 7,487 | |||
2010 | 6,477 | |||
2011 | 4,669 | |||
2012 | 4,270 | |||
2013 | 4,040 | |||
Thereafter | 8,039 | |||
Total | $ | 34,982 | ||
Fair Value | Carrying Value | |||||||
December 31, 2008: | ||||||||
Senior secured credit facility | $ | 113,000 | $ | 113,000 | ||||
Senior subordinated notes | $ | 120,863 | $ | 152,750 | ||||
December 31, 2007: | ||||||||
Senior secured credit facility | $ | 108,514 | $ | 110,730 | ||||
Senior subordinated notes | $ | 143,585 | $ | 152,750 |
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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 estimated cash flows in assessing the recoverability of long-lived assets, and | ||
• | the estimated fair value of our reporting units determined as part of our annual impairment tests. |
2008 | 2007 | 2006 | ||||||||||
Weighted average number of common shares outstanding — basic | 76,787 | 81,108 | 81,641 | |||||||||
Potential dilution from equity grants (1) | 9 | 269 | 280 | |||||||||
Weighted average number of common shares outstanding — diluted | 76,796 | 81,377 | 81,921 | |||||||||
(1)— | The potential dilution excludes stock options to acquire 7,640,100, 2,640,906 and 4,016,684, shares of common stock at December 31, 2008, 2007 and 2006, respectively, and 199,686, 321,485 and 554,076 shares of unvested restricted stock at December 31, 2008, 2007 and 2006, respectively, as the application of the treasury stock method, as required by SFAS No. 128, makes them anti-dilutive. |
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2008 | 2007 | 2006 | ||||||||||
Risk-free interest rate | 2.9 | % | 4.2 | % | 4.8 | % | ||||||
Expected life of options (in years) | 6.3 | 6.3 | 6.3 | |||||||||
Expected volatility | 46.3 | % | 33.6 | % | 37.3 | % | ||||||
Expected dividend yield | 0.0 | % | 0.0 | % | 0.0 | % |
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Receivable balance, 12/31/07 | $ | 12,180 | ||
Collections and write-offs | (5,263 | ) | ||
Fair value adjustment | (5,377 | ) | ||
Reserves | ||||
Carrying value, 12/31/08 | $ | 1,540 | ||
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Net working capital (excluding cash) | $ | (762 | ) | |
Property, plant and equipment, net | 815 | |||
Intangible assets | 14,356 | |||
Goodwill | 15,689 | |||
Net assets acquired (excluding cash) | $ | 30,098 |
Amount | 2009 | 2010 | 2011 | 2012 | 2013 | Thereafter | ||||||||||||||||||||||
Customer contracts | $ | 12,045 | $ | 2,508 | $ | 1,933 | $ | 1,655 | $ | 1,541 | $ | 1,268 | $ | 3,140 |
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Net working capital (excluding cash) | $ | (4,601 | ) | |
Property, plant and equipment, net | 1,568 | |||
Intangible assets | 12,300 | |||
Goodwill | 11,517 | |||
Net assets acquired (excluding cash) | 20,784 |
Amount | 2009 | 2010 | 2011 | 2012 | 2013 | Thereafter | ||||||||||||||||||||||
Customer contracts | $ | 10,780 | $ | 1,906 | $ | 2,105 | $ | 1,622 | $ | 1,523 | $ | 1,039 | $ | 2,585 |
(in thousands, except per share data)
For the years ended | ||||||||
2008 | 2007 | |||||||
Revenue | $ | 737,396 | $ | 799,204 | ||||
Income (loss) from continuing operations | $ | 20,307 | $ | 3,116 | ||||
Net income (loss) | $ | 16,368 | $ | (410 | ) | |||
Net income (loss) per common share: | ||||||||
Basic | $ | 0.21 | $ | (0.01 | ) | |||
Diluted | $ | 0.21 | $ | (0.01 | ) | |||
Weighted average shares outstanding: | ||||||||
Basic | 76,787 | 81,108 | ||||||
Diluted | 76,796 | 81,377 |
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2008 | 2007 | |||||||
ATM equipment | $ | 58,929 | $ | 51,405 | ||||
Cash advance equipment | 8,320 | 7,099 | ||||||
Office, computer and other equipment | 5,193 | 3,692 | ||||||
Leasehold and building improvements | 2,554 | 2,486 | ||||||
74,996 | 64,682 | |||||||
Less accumulated depreciation | (50,577 | ) | (41,879 | ) | ||||
Total | $ | 24,419 | $ | 22,803 | ||||
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Stock Option - | Number of Common Shares | |||||||||||||||
Weighted Average | Equity Awards | |||||||||||||||
Exercise Price | Stock Options | Restricted Stock | Available for | |||||||||||||
(Per Share) | Granted | Granted | Grant | |||||||||||||
Balance outstanding — December 31, 2006 | $ | 14.20 | 3,625,135 | 602,997 | 2,004,131 | |||||||||||
Additional authorized shares | N/A | — | — | 2,469,376 | ||||||||||||
Granted | $ | 10.21 | 1,050,000 | 747,000 | (1,797,000 | ) | ||||||||||
Exercised | $ | 16.33 | (76,248 | ) | (771,652 | ) | — | |||||||||
Forfeited or canceled | $ | 14.30 | (315,731 | ) | (181,561 | ) | 497,292 | |||||||||
Balance outstanding — December 31, 2007 | $ | 13.21 | 4,283,156 | 396,784 | 3,173,799 | |||||||||||
Additional authorized shares | N/A | — | — | 2,493,570 | ||||||||||||
Granted | $ | 6.66 | 4,531,500 | 5,500 | (4,537,000 | ) | ||||||||||
Exercised | $ | 16.34 | — | (185,950 | ) | — | ||||||||||
Forfeited or canceled | $ | 13.16 | (1,819,164 | ) | (26,083 | ) | 1,845,247 | |||||||||
Balance outstanding — December 31, 2008 | $ | 8.93 | 6,995,492 | 190,251 | 2,975,616 | |||||||||||
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Weighted Avg. | Weighted | |||||||||||||||
Number of | Exercise Price | Average Life | Aggregate | |||||||||||||
Common Shares | (Per Share) | Remaining | Intrinsic Value | |||||||||||||
(in thousands) | ||||||||||||||||
Balance outstanding — December 31, 2007 | 4,878,371 | $ | 12.58 | $ | 30,560 | |||||||||||
Granted | 4,531,500 | $ | — | |||||||||||||
Exercised | 0 | $ | — | |||||||||||||
Cancelled or forfeited | (2,576,546 | ) | $ | — | ||||||||||||
Balance outstanding — December 31, 2008 | 6,833,325 | $ | 8.90 | 8.51 years | $ | — | ||||||||||
Balance exercisable — December 31, 2008 | 1,676,518 | $ | 13.19 | 6.92 years | $ | — | ||||||||||
Balance expected to be exercised | 0 | $ | — | — | $ | — | ||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||
Weighted | ||||||||||||||||||||
Average | Weighted | Weighted | ||||||||||||||||||
Range of | Remaining | Average | Average | |||||||||||||||||
Exercise | Number | Contract | Exercise | Number | Exercise | |||||||||||||||
Prices | Outstanding | Life | Prices | Exercisable | Price | |||||||||||||||
$0.00 - - $6.99 | 4,284,000 | 9.2 years | $ | 6.66 | 87,499 | $ | 6.71 | |||||||||||||
$9.00 - $9.99 | 1,000,000 | 8.8 years | $ | 9.99 | 270,833 | $ | 9.99 | |||||||||||||
$13.00 - $13.99 | 1,092,657 | 6.1 years | $ | 13.99 | 1,039,024 | $ | 13.99 | |||||||||||||
$14.00 - $14.99 | 160,000 | 7.4 years | $ | 14.22 | 103,749 | $ | 14.13 | |||||||||||||
$15.00 - $15.99 | 151,668 | 7.5 years | $ | 15.22 | 91,874 | $ | 15.24 | |||||||||||||
$16.00 - $16.99 | 105,000 | 7.8 years | $ | 16.05 | 56,874 | $ | 16.05 | |||||||||||||
$18.00 - $18.99 | 40,000 | 7.3 years | $ | 18.94 | 26,665 | $ | 18.94 | |||||||||||||
6,833,325 | 1,676,518 | |||||||||||||||||||
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Weighted | ||||||||||||
Shares | Average Grant | Aggregate Fair | ||||||||||
Outstanding | Date Fair Value | Value | ||||||||||
(in thousands) | ||||||||||||
Balance — December 31, 2006 | 602,997 | $ | 16.95 | $ | 10,221 | |||||||
Granted | 747,000 | $ | 16.19 | $ | 12,094 | |||||||
Vested | (771,652 | ) | $ | 16.72 | $ | (12,902 | ) | |||||
Forfeited | (181,561 | ) | $ | 16.52 | $ | (2,999 | ) | |||||
Balance — December 31, 2007 | 396,784 | $ | 16.18 | $ | 6,414 | |||||||
Granted | 5,500 | $ | 6.87 | $ | 38 | |||||||
Vested | (185,950 | ) | $ | 16.34 | $ | (3,038 | ) | |||||
Forfeited | (26,083 | ) | $ | 16.54 | $ | (431 | ) | |||||
Balance — December 31, 2008 | 190,251 | $ | 15.67 | $ | 2,983 | |||||||
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2009 | 697 | |||
2010 | 522 | |||
2011 | 3 | |||
2012 | — | |||
Thereafter | — | |||
Total | $ | 1,222 | ||
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2009 | $ | 16,000 | ||
2010 | 1,000 | |||
2011 | 96,000 | |||
2012 | 152,750 | |||
2013 | — | |||
Total | $ | 265,750 | ||
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Total Number | ||||||||||||
of Shares | Average Price per | Cost of Shares | ||||||||||
Purchased or | Share Purchased | Purchased or | ||||||||||
Withheld | or Withheld | Withheld | ||||||||||
Balance, December 31, 2007 | 4,563 | $ | 9.13 | $ | 41,668 | |||||||
Shares purchase | 1,398 | $ | 5.89 | 8,233 | ||||||||
Shares withheld from restricted stock vesting | 56 | $ | 5.79 | 325 | ||||||||
Balance, December 31, 2008 | 6,017 | $ | 8.35 | $ | 50,226 | |||||||
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Description of Transaction | 2008 | 2007 | 2006 | |||||||||
Infonox on the Web: | ||||||||||||
Software development costs and maintenance expense | $ | 3,536 | $ | 3,594 | $ | 1,976 | ||||||
USA Payments & USA Payments Systems: | ||||||||||||
Transaction processing charges | 3,171 | 3,010 | 2,908 | |||||||||
Pass through billing related to gateway fees, telecom and other items | 1,185 | 1,384 | 1,312 | |||||||||
Sublease income earned for leasing out corporate office space for backup servers | (20 | ) | (18 | ) | (18 | ) | ||||||
MCA Processing LLC: | ||||||||||||
Equipment purchases | 710 | — | — |
2008 | 2007 | 2006 | ||||||||||
M&C International and related companies | $ | (1 | ) | $ | 31 | $ | 42 | |||||
Total included within receivables, other | $ | (1 | ) | $ | 31 | $ | 42 | |||||
USA Payment Systems | $ | (212 | ) | $ | (193 | ) | $ | (149 | ) | |||
Infonox on the Web | (447 | ) | (372 | ) | (633 | ) | ||||||
Total included within accounts payable and accrued expenses | $ | (659 | ) | $ | (565 | ) | $ | (782 | ) | |||
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2008 | 2007 | 2006 | ||||||||||
Continuing Operations | $ | 23,349 | $ | 16,709 | $ | 17,832 | ||||||
Discontinued Operations | (2,214 | ) | $ | (1,983 | ) | $ | (1,094 | ) | ||||
$ | 21,135 | $ | 14,726 | $ | 16,738 | |||||||
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2008 | 2007 | 2006 | ||||||||||
Components of pretax income: | ||||||||||||
Domestic | $ | 49,043 | $ | 39,914 | $ | 41,257 | ||||||
Foreign | 1,715 | 3,789 | 4,945 | |||||||||
Consolidated | $ | 50,758 | $ | 43,703 | $ | 46,202 | ||||||
Provision for income taxes: | ||||||||||||
Domestic | $ | 22,978 | $ | 16,018 | $ | 16,678 | ||||||
Foreign | 420 | 823 | 1,257 | |||||||||
Consolidated | $ | 23,398 | $ | 16,841 | $ | 17,935 | ||||||
Income tax benefit from minority ownership loss | (49 | ) | (132 | ) | (103 | ) | ||||||
Provision for income taxes, as reported | $ | 23,349 | $ | 16,709 | $ | 17,832 | ||||||
The Company’s income tax provision attributable to income from continuing operations before income taxes consists of the following components as of December 31, (amounts in thousands): |
2008 | 2007 | 2006 | ||||||||||
Current | $ | 437 | $ | 858 | $ | 1,257 | ||||||
Deferred | 22,912 | 15,851 | 16,575 | |||||||||
Total provision for income taxes | $ | 23,349 | $ | 16,709 | $ | 17,832 | ||||||
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2008 | 2007 | 2006 | ||||||||||
Federal statutory rate | 35.00 | % | 35.00 | % | 35.00 | % | ||||||
Effect of: | ||||||||||||
Foreign provision | (0.37 | ) | (0.28 | ) | (0.06 | ) | ||||||
State/Province income tax | 1.29 | 0.97 | 1.05 | |||||||||
Non-deductible compensation cost | 10.51 | 3.59 | 2.00 | |||||||||
Change in valuation allowance | (0.73 | ) | 3.02 | — | ||||||||
Non-deductible expenses and other items | 0.30 | 0.34 | 0.61 | |||||||||
Adjustment to carrying value | — | (4.41 | ) | — | ||||||||
Effective tax rate | 46.00 | % | 38.23 | % | 38.60 | % | ||||||
2008 | 2007 | 2006 | ||||||||||
Deferred tax assets related to: | ||||||||||||
Property, equipment and leasehold improvements | $ | 49 | $ | 919 | $ | 603 | ||||||
Accounts receivable allowances | 5,786 | 4,283 | 3,857 | |||||||||
Foreign tax credits | 4,297 | 4,297 | 3,872 | |||||||||
Net operating losses | 2,492 | 4,469 | 3,939 | |||||||||
Stock options FAS 123(R) expense | 2,374 | 4,973 | 2,269 | |||||||||
Intangibles | 142,394 | 160,446 | 178,190 | |||||||||
Accrued and prepaid expenses | — | 45 | ||||||||||
Other | 315 | 262 | — | |||||||||
Valuation allowance | (949 | ) | (1,319 | ) | — | |||||||
Total deferred income tax assets | 156,758 | 178,330 | 192,775 | |||||||||
Deferred tax liabilities related to: | ||||||||||||
Basis differences related to foreign currency translation adjustments | — | 514 | — | |||||||||
Accrued and prepaid expenses | 87 | 314 | — | |||||||||
Other | 157 | 275 | 1,034 | |||||||||
Total deferred income tax liabilities | 244 | 1,103 | 1,034 | |||||||||
Deferred income taxes, net | $ | 156,514 | $ | 177,227 | $ | 191,741 | ||||||
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2008 | 2007 | |||||||
Unrecognized Tax Benefit — January 1, | $ | — | $ | 500 | ||||
Gross increases — tax positions in prior period | — | — | ||||||
Gross decreases — tax positions in prior period | — | $ | (500 | ) | ||||
Settlements | — | — | ||||||
Lapse of statute of limitations | — | — | ||||||
Unrecognized Tax Benefit — December 31, | $ | — | $ | — | ||||
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
Total assets | $ | 1,616 | $ | 13,201 | ||||
Total liabilities | (76 | ) | (1,021 | ) | ||||
Assets held for sale | $ | 1,540 | $ | 12,180 | ||||
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Revenue | $ | 2,305 | $ | 2,949 | $ | 376 | ||||||
Pretax income(loss) | $ | (6,149 | ) | $ | (5,508 | ) | $ | (2,452 | ) |
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Cash | Check | |||||||||||||||||||||||
Advance | ATM | Services | Other | Corporate | Total | |||||||||||||||||||
December 31, 2008: | ||||||||||||||||||||||||
Revenues | $ | 326,476 | $ | 289,122 | $ | 42,366 | $ | 13,644 | $ | 0 | $ | 671,608 | ||||||||||||
Operating income exclusive of depreciation and amortization | 74,684 | 45,550 | 18,594 | 11,078 | (71,260 | ) | 78,646 | |||||||||||||||||
December 31, 2007: | ||||||||||||||||||||||||
Revenues | $ | 316,094 | $ | 240,575 | $ | 31,126 | $ | 10,145 | $ | — | $ | 597,940 | ||||||||||||
Operating income exclusive of depreciation and amortization | 77,672 | 43,738 | 13,697 | 8,627 | (65,516 | ) | 78,218 | |||||||||||||||||
December 31, 2006: | ||||||||||||||||||||||||
Revenues | $ | 287,053 | $ | 221,727 | $ | 29,166 | $ | 9,827 | $ | — | $ | 547,773 | ||||||||||||
Operating income exclusive of depreciation and amortization | 76,294 | 41,817 | 9,846 | 5,442 | (45,159 | ) | 88,240 |
December 31, | December 31, | |||||||
Total Assets | 2008 | 2007 | ||||||
Cash advance | $ | 172,882 | $ | 153,444 | ||||
ATM | 111,781 | 68,627 | ||||||
Check services | 39,412 | 29,749 | ||||||
Other | 22,732 | 27,756 | ||||||
Discontinued operations | 1,560 | 18,731 | ||||||
Corporate | 210,783 | 239,995 | ||||||
Total assets | $ | 559,150 | $ | 538,302 | ||||
On February 13, 2009, the Company received written notice from USA Payments of the termination of the Amended and Restated Agreement for Electronic Payment Processing, dated as of March 10, 2004, by and among GCA, USA Payments and USA Payment Systems (the “Agreement”). The Company disputes the alleged breaches of the Agreement upon which the notice of termination was based, as well as the right of USA Payments to terminate the Agreement.
To the Company’s knowledge, Karim Maskatiya and Robert Cucinotta directly or indirectly hold significant ownership interests in, and serve on the boards of directors of, USA Payment Systems and USA Payments. At the time that the Company entered into the Agreement, Messrs. Maskatiya and Cucinotta were members of the Company’s board of directors and controlled a majority of the outstanding equity interests in the Company.
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This Agreement was to expire according to its terms on March 10, 2014. USA Payment Systems and USA Payments have acknowledged their obligation pursuant to the Agreement to continue to provide services to the Company during a 180-day transition period. The Company disputes the right of USA Payments to terminate the Agreement. If this dispute is resolved with the mutual agreement of the Company and USA Payments, the Company may continue to receive services under the Agreement or a successor agreement with USA Payments or USA Payment Systems. If the Company and USA are unable to resolve the dispute, the Company will transition to another provider of electronic payment processing services in the 180-day transition period. To prepare for the potential need to transition to a new provider, the Company is already engaged in discussions with an alternate provider.
First | Second | Third | Fourth | |||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Year | ||||||||||||||||
(amounts in thousands, except earnings per share) | ||||||||||||||||||||
2008 | ||||||||||||||||||||
Revenue | $ | 143,485 | $ | 166,808 | $ | 185,059 | $ | 176,256 | $ | 671,608 | ||||||||||
Operating income | 18,254 | 20,627 | 21,316 | 18,449 | 78,646 | |||||||||||||||
Income from continuing operations | 6,148 | 8,456 | 8,405 | 4,487 | 27,495 | |||||||||||||||
Net income | 1,746 | 8,696 | 8,560 | 4,560 | 23,556 | |||||||||||||||
Basic earnings per share: | ||||||||||||||||||||
Continuing operations | $ | 0.08 | $ | 0.11 | $ | 0.11 | $ | 0.06 | $ | 0.36 | ||||||||||
Net income | $ | 0.02 | $ | 0.11 | $ | 0.11 | $ | 0.06 | $ | 0.31 | ||||||||||
Diluted earnings per share: | ||||||||||||||||||||
Continuing operations | $ | 0.08 | $ | 0.11 | $ | 0.11 | $ | 0.06 | $ | 0.36 | ||||||||||
Net income | $ | 0.02 | $ | 0.11 | $ | 0.11 | $ | 0.06 | $ | 0.31 | ||||||||||
2007 | ||||||||||||||||||||
Revenue | $ | 148,177 | $ | 150,797 | $ | 155,762 | $ | 143,204 | $ | 597,940 | ||||||||||
Operating income | 22,383 | 23,685 | 19,027 | 13,123 | 78,218 | |||||||||||||||
Income from continuing operations | 8,587 | 9,303 | 6,497 | 2,843 | 27,230 | |||||||||||||||
Net income | 7,914 | 8,568 | 5,323 | 1,899 | 23,704 | |||||||||||||||
Basic earnings per share: | ||||||||||||||||||||
Continuing operations | $ | 0.11 | $ | 0.11 | $ | 0.08 | $ | 0.04 | $ | 0.34 | ||||||||||
Net income | $ | 0.10 | $ | 0.10 | $ | 0.07 | $ | 0.02 | $ | 0.29 | ||||||||||
Diluted earnings per share: | ||||||||||||||||||||
Continuing operations | $ | 0.10 | $ | 0.11 | $ | 0.08 | $ | 0.04 | $ | 0.33 | ||||||||||
Net income | $ | 0.10 | $ | 0.10 | $ | 0.07 | $ | 0.02 | $ | 0.29 | ||||||||||
2006 | ||||||||||||||||||||
Revenue | $ | 129,835 | $ | 133,574 | $ | 142,789 | $ | 141,575 | $ | 547,773 | ||||||||||
Operating income | 20,792 | 20,426 | 22,607 | 24,415 | 88,240 | |||||||||||||||
Income from continuing operations | 7,013 | 6,490 | 8,015 | 7,035 | 28,553 | |||||||||||||||
Net income | 6,963 | �� | 6,279 | 7,815 | 5,552 | 26,609 | ||||||||||||||
Basic earnings per share: | ||||||||||||||||||||
Continuing operations | $ | 0.08 | $ | 0.20 | $ | 0.25 | $ | 0.05 | $ | 0.35 | ||||||||||
Net income | $ | 0.08 | $ | 0.09 | $ | 0.11 | $ | 0.05 | $ | 0.33 | ||||||||||
Diluted earnings per share: | ||||||||||||||||||||
Continuing operations | $ | 0.08 | $ | 0.08 | $ | 0.10 | $ | 0.09 | $ | 0.35 | ||||||||||
Net income | $ | 0.07 | $ | 0.08 | $ | 0.10 | $ | 0.07 | $ | 0.32 | ||||||||||
2008 | ||||||||||||||||||||
Basic shares | 76,977 | 76,702 | 76,723 | 76,745 | 76,787 | |||||||||||||||
Diluted shares | 76,979 | 76,703 | 76,724 | 76,755 | 76,796 | |||||||||||||||
2007 | ||||||||||||||||||||
Basic shares | 81,764 | 81,752 | 81,484 | 79,450 | 81,108 | |||||||||||||||
Diluted shares | 82,044 | 82,084 | 81,705 | 79,466 | 81,377 | |||||||||||||||
2006 | ||||||||||||||||||||
Basic shares | 81,556 | 81,619 | 81,690 | 81,699 | 81,641 | |||||||||||||||
Diluted shares | 81,556 | 82,230 | 82,212 | 82,036 | 81,921 |
(1)— | The sum of the quarterly per share amounts may not equal the annual amount reported, as per share amounts are computed independently for each quarter and for the full year. |
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CONDENSED CONSOLIDATING SCHEDULE — BALANCE SHEET INFORMATION
DECEMBER 31, 2008
(amounts in thousands)
Combined | Combined Non- | Elimination | ||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Entries * | Consolidated | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 45,122 | $ | 17,555 | $ | 14,471 | $ | — | $ | 77,148 | ||||||||||||
Restricted cash and cash equivalents | — | 388 | — | — | — | 388 | ||||||||||||||||||
Settlement receivables | — | 48,649 | 87 | 2,868 | — | 51,604 | ||||||||||||||||||
Other receivables, net | — | 36,305 | 69,868 | 474 | (89,888 | ) | 16,759 | |||||||||||||||||
Prepaid and other assets | — | 10,888 | 670 | 309 | — | 11,867 | ||||||||||||||||||
Investment in subsidiaries | 162,973 | 78,820 | — | — | (241,793 | ) | — | |||||||||||||||||
Asset held for sale | — | — | 1,540 | — | — | 1,540 | ||||||||||||||||||
Property, equipment and leasehold improvements, net | — | 22,808 | 906 | 705 | — | 24,419 | ||||||||||||||||||
Goodwill, net | — | 128,191 | 55,061 | 677 | — | 183,929 | ||||||||||||||||||
Other intangibles, net | — | 21,911 | 12,788 | 283 | — | 34,982 | ||||||||||||||||||
Deferred income taxes, net | — | 156,522 | 13 | (21 | ) | — | 156,514 | |||||||||||||||||
TOTAL | $ | 162,973 | $ | 549,604 | $ | 158,488 | $ | 19,766 | $ | (331,681 | ) | $ | 559,150 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||||||||
LIABILITIES: | ||||||||||||||||||||||||
Settlement liabilities | $ | — | $ | 70,132 | $ | 322 | $ | 8,696 | $ | — | $ | 79,150 | ||||||||||||
Accounts payable | — | 34,445 | 927 | 189 | — | 35,561 | ||||||||||||||||||
Accrued expenses | — | 20,709 | 82,327 | 4,660 | (89,885 | ) | 17,811 | |||||||||||||||||
Borrowings | — | 265,750 | — | — | — | 265,750 | ||||||||||||||||||
Total liabilities | — | 391,036 | 83,576 | 13,545 | (89,885 | ) | 398,272 | |||||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||||||||
MINORITY INTEREST | — | — | — | — | — | — | ||||||||||||||||||
STOCKHOLDERS’ EQUITY | 162,973 | 158,568 | 72,912 | 6,221 | (241,796 | ) | 160,878 | |||||||||||||||||
TOTAL | $ | 162,973 | $ | 549,604 | $ | 158,488 | $ | 19,766 | $ | (331,681 | ) | $ | 559,150 | |||||||||||
* | Eliminations include intercompany investments and management fees |
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CONDENSED CONSOLIDATING SCHEDULE — BALANCE SHEET INFORMATION
DECEMBER 31, 2007
(amounts in thousands)
Combined | Combined Non- | Elimination | ||||||||||||||||||||||
Parent | Issuer | Guarantors | 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 | — | 7,279 | 3 | 336 | — | 7,618 | ||||||||||||||||||
Investment in subsidiaries | 138,296 | 97,306 | — | — | (235,602 | ) | — | |||||||||||||||||
Asset held for sale | — | — | 12,180 | — | 12,180 | |||||||||||||||||||
Property, equipment and leasehold improvements, net | — | 21,721 | 164 | 918 | — | 22,803 | ||||||||||||||||||
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 (DEFICIT) | ||||||||||||||||||||||||
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
YEAR ENDED DECEMBER 31, 2008
(amounts in thousands)
Combined | Combined Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
REVENUES: | ||||||||||||||||||||||||
Cash advance | $ | — | $ | 311,091 | $ | 3,249 | $ | 12,136 | $ | — | $ | 326,476 | ||||||||||||
ATM | — | 283,820 | 4,121 | 1,181 | — | 289,122 | ||||||||||||||||||
Check services | — | 16,447 | 25,919 | — | — | 42,366 | ||||||||||||||||||
Central Credit and other revenues | 25,644 | 1,243 | 9,356 | 14 | (22,613 | ) | 13,644 | |||||||||||||||||
Total revenues | 25,644 | 612,601 | 42,645 | 13,331 | (22,613 | ) | 671,608 | |||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization) | — | (448,750 | ) | (35,005 | ) | (9,219 | ) | — | (492,974 | ) | ||||||||||||||
Operating expenses | — | (75,898 | ) | (6,162 | ) | (2,717 | ) | 815 | (83,962 | ) | ||||||||||||||
Amortization | — | (5,801 | ) | (1,183 | ) | (167 | ) | — | (7,151 | ) | ||||||||||||||
Depreciation | — | (7,900 | ) | (690 | ) | (285 | ) | — | (8,875 | ) | ||||||||||||||
OPERATING INCOME (LOSS) | 25,649 | 74,252 | (395 | ) | 943 | (21,798 | ) | 78,646 | ||||||||||||||||
INTEREST INCOME (EXPENSE), NET | ||||||||||||||||||||||||
Interest income | — | 2,002 | 43 | 184 | — | 2,229 | ||||||||||||||||||
Interest expense | — | (29,935 | ) | (134 | ) | (48 | ) | — | (30,117 | ) | ||||||||||||||
Total interest income (expense), net | — | (27,933 | ) | (91 | ) | 136 | — | (27,888 | ) | |||||||||||||||
INCOME (LOSS) BEFORE INCOME TAX PROVISION AND MINORITY OWNERSHIP LOSS | 25,644 | 46,319 | (486 | ) | 1,079 | (21,798 | ) | 50,758 | ||||||||||||||||
INCOME TAX PROVISION | (2,088 | ) | (22,849 | ) | — | (496 | ) | 2,084 | (23,349 | ) | ||||||||||||||
INCOME (LOSS) BEFORE MINORITY OWNERSHIP LOSS | 23,556 | 23,470 | (486 | ) | 583 | (19,714 | ) | 27,409 | ||||||||||||||||
MINORITY OWNERSHIP LOSS, NET OF TAX | — | 86 | — | — | — | 86 | ||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | 23,556 | 23,556 | (486 | ) | 583 | (19,714 | ) | 27,495 | ||||||||||||||||
LOSS FROM DISCONTINUED OPERATIONS | (3,939 | ) | (3,939 | ) | ||||||||||||||||||||
NET INCOME (LOSS) | $ | 23,556 | $ | 23,556 | $ | (4,425 | ) | $ | 583 | $ | (19,714 | ) | $ | 23,556 | ||||||||||
* | Eliminations include earnings on subsidiaries and management fees |
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CONDENSED CONSOLIDATING SCHEDULE — STATEMENT OF INCOME INFORMATION
YEAR ENDED DECEMBER 31, 2007
(amounts in thousands)
Combined | Combined Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
REVENUES: | ||||||||||||||||||||||||
Cash advance | $ | — | $ | 307,862 | $ | — | $ | 8,232 | $ | — | $ | 316,094 | ||||||||||||
ATM | — | 240,318 | — | 257 | — | 240,575 | ||||||||||||||||||
Check services | — | 15,050 | 16,076 | — | — | 31,126 | ||||||||||||||||||
Central Credit and other revenues | 23,704 | 11,376 | 8,770 | 117 | (33,822 | ) | 10,145 | |||||||||||||||||
Total revenues | 23,704 | 574,606 | 24,846 | 8,606 | (33,822 | ) | 597,940 | |||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization) | — | (415,215 | ) | (8,070 | ) | (5,223 | ) | — | (428,508 | ) | ||||||||||||||
Operating expenses | — | (73,885 | ) | (3,523 | ) | (2,795 | ) | 589 | (79,614 | ) | ||||||||||||||
Amortization | — | (5,078 | ) | (76 | ) | (147 | ) | — | (5,301 | ) | ||||||||||||||
Depreciation | — | (6,062 | ) | (33 | ) | (204 | ) | — | (6,299 | ) | ||||||||||||||
OPERATING INCOME (LOSS) | 23,704 | 74,366 | 13,144 | 237 | (33,233 | ) | 78,218 | |||||||||||||||||
INTEREST INCOME (EXPENSE), NET | ||||||||||||||||||||||||
Interest income | — | 3,480 | — | 151 | — | 3,631 | ||||||||||||||||||
Interest expense | — | (38,077 | ) | (1 | ) | (68 | ) | — | (38,146 | ) | ||||||||||||||
Total interest income (expense), net | — | (34,597 | ) | (1 | ) | 83 | — | (34,515 | ) | |||||||||||||||
INCOME (LOSS) BEFORE INCOME TAX PROVISION AND MINORITY OWNERSHIP LOSS | 23,704 | 39,769 | 13,143 | 320 | (33,233 | ) | 43,703 | |||||||||||||||||
INCOME TAX PROVISION | — | (16,301 | ) | — | (408 | ) | — | (16,709 | ) | |||||||||||||||
INCOME (LOSS) BEFORE MINORITY OWNERSHIP LOSS | 23,704 | 23,468 | 13,143 | (88 | ) | (33,233 | ) | 26,994 | ||||||||||||||||
MINORITY OWNERSHIP LOSS, NET OF TAX | — | 236 | — | — | — | 236 | ||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | 23,704 | 23,704 | 13,143 | (88 | ) | (33,233 | ) | 27,230 | ||||||||||||||||
LOSS FROM DISCONTINUED OPERATIONS | (3,526 | ) | (3,526 | ) | ||||||||||||||||||||
NET INCOME (LOSS) | $ | 23,704 | $ | 23,704 | $ | 9,617 | $ | (88 | ) | $ | (33,233 | ) | $ | 23,704 | ||||||||||
* | Eliminations include earnings on subsidiaries and management fees |
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CONDENSED CONSOLIDATING SCHEDULE — STATEMENT OF INCOME INFORMATION
YEAR ENDED DECEMBER 31, 2006
(amounts in thousands)
Combined | Combined Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
REVENUES: | ||||||||||||||||||||||||
Cash advance | $ | — | $ | 281,733 | $ | — | $ | 5,320 | $ | — | $ | 287,053 | ||||||||||||
ATM | — | 221,727 | — | — | — | 221,727 | ||||||||||||||||||
Check services | — | 18,345 | 10,821 | — | — | 29,166 | ||||||||||||||||||
Central Credit and other revenues | 26,609 | 7,944 | 8,511 | 100 | (33,337 | ) | 9,827 | |||||||||||||||||
Total revenues | 26,609 | 529,749 | 19,332 | 5,420 | (33,337 | ) | 547,773 | |||||||||||||||||
Cost of revenues (exclusive of depreciation and amortization) | — | (373,899 | ) | (7,752 | ) | (3,067 | ) | — | (384,718 | ) | ||||||||||||||
Operating expenses | — | (60,218 | ) | (3,444 | ) | (1,930 | ) | 571 | (65,021 | ) | ||||||||||||||
Amortization | — | (5,259 | ) | (72 | ) | (94 | ) | — | (5,425 | ) | ||||||||||||||
Depreciation | — | (4,317 | ) | (7 | ) | (45 | ) | — | (4,369 | ) | ||||||||||||||
OPERATING INCOME (LOSS) | 26,609 | 86,056 | 8,057 | 284 | (32,766 | ) | 88,240 | |||||||||||||||||
INTEREST INCOME (EXPENSE), NET | ||||||||||||||||||||||||
Interest income | — | 3,325 | — | 152 | — | 3,477 | ||||||||||||||||||
Interest expense | — | (42,098 | ) | — | — | — | (42,098 | ) | ||||||||||||||||
Loss on extinguishment of debt | — | (3,417 | ) | — | — | — | (3,417 | ) | ||||||||||||||||
Total interest income (expense), net | — | (42,190 | ) | — | 152 | — | (42,038 | ) | ||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAX PROVISION AND MINORITY OWNERSHIP LOSS | 26,609 | 43,866 | 8,057 | 436 | (32,766 | ) | 46,202 | |||||||||||||||||
INCOME TAX PROVISION | — | (17,441 | ) | — | (391 | ) | — | (17,832 | ) | |||||||||||||||
INCOME (LOSS) BEFORE MINORITY OWNERSHIP LOSS | 26,609 | 26,425 | 8,057 | 45 | (32,766 | ) | 28,370 | |||||||||||||||||
MINORITY OWNERSHIP LOSS, NET OF TAX | — | 183 | — | — | — | 183 | ||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | 26,609 | 26,609 | 8,057 | 45 | (32,766 | ) | 28,553 | |||||||||||||||||
LOSS FROM DISCONTINUED OPERATIONS | (1,944 | ) | (1,944 | ) | ||||||||||||||||||||
NET INCOME (LOSS) | $ | 26,609 | $ | 26,609 | $ | 6,113 | $ | 45 | $ | (32,766 | ) | $ | 26,609 | |||||||||||
* | Eliminations include earnings on subsidiaries and management fees |
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CONDENSED CONSOLIDATING SCHEDULE — STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2008
(amounts in thousands)
Combined | Combined Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||||||||||
Net income (loss) | $ | 23,556 | $ | 23,556 | $ | (4,422 | ) | $ | 684 | $ | (19,818 | ) | $ | 23,556 | ||||||||||
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | ||||||||||||||||||||||||
Amortization of financing costs | — | 973 | — | — | — | 973 | ||||||||||||||||||
Amortization of intangibles | — | 8,440 | 693 | 285 | — | 9,418 | ||||||||||||||||||
Depreciation | — | 5,263 | 1,372 | 167 | — | 6,802 | ||||||||||||||||||
Loss on disposal of assets | — | — | — | — | — | — | ||||||||||||||||||
Provision for bad debts | — | — | 17,565 | — | — | 17,565 | ||||||||||||||||||
Deferred income taxes | — | 20,677 | — | — | — | 20,677 | ||||||||||||||||||
Equity income | (23,556 | ) | 3,738 | — | — | 19,818 | — | |||||||||||||||||
Minority ownership loss | — | (135 | ) | — | — | — | (135 | ) | ||||||||||||||||
Stock-based compensation | — | 9,050 | — | — | — | 9,050 | ||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Settlement receivables | — | 10,164 | 4,456 | 1,854 | — | 16,474 | ||||||||||||||||||
Other receivables, net | 929 | (16,401 | ) | (31,672 | ) | 12,587 | 38,838 | 4,281 | ||||||||||||||||
Prepaid and other assets | — | (2,193 | ) | 987 | (194 | ) | — | (1,400 | ) | |||||||||||||||
Settlement liabilities | — | (20,413 | ) | (10,956 | ) | 720 | — | (30,649 | ) | |||||||||||||||
Accounts payable | — | 10,988 | (2,435 | ) | (160 | ) | — | 8,393 | ||||||||||||||||
Accrued expenses | (929 | ) | (39,143 | ) | 63,998 | 1,231 | (38,838 | ) | (13,681 | ) | ||||||||||||||
Net cash provided by operating activities | — | 14,564 | 39,586 | 17,174 | — | 71,324 | ||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||||||
Certegy Gaming acquisition, net of cash | — | (20,783 | ) | — | — | — | (20,783 | ) | ||||||||||||||||
Cash Systems, Inc. acquisition, net of cash | — | — | (30,098 | ) | — | — | (30,098 | ) | ||||||||||||||||
Purchase of property, equipment and leasehold improvements | — | (8,205 | ) | (76 | ) | 146 | — | (8,135 | ) | |||||||||||||||
Purchase of other intangibles | — | (541 | ) | — | (143 | ) | — | (684 | ) | |||||||||||||||
Changes in restricted cash and cash equivalents | — | (8 | ) | 1,000 | — | — | 992 | |||||||||||||||||
Investments in subsidiaries | 9,487 | 11,310 | — | — | (20,797 | ) | — | |||||||||||||||||
Net cash used in investing activities | 9,487 | (18,227 | ) | (29,174 | ) | 3 | (20,797 | ) | (58,708 | ) | ||||||||||||||
* | Eliminations include earnings on subsidiaries and management fees |
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CONDENSED CONSOLIDATED SCHEDULE — STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2008
(amounts in thousands)
Combined | Combined Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||||||
Borrowings under credit facility | $ | — | $ | 121,000 | $ | — | $ | — | $ | — | $ | 121,000 | ||||||||||||
Repayments under credit facility | — | (118,730 | ) | — | — | — | (118,730 | ) | ||||||||||||||||
Debt issuance costs | — | — | — | — | — | — | ||||||||||||||||||
Exercise of stock options | — | — | — | — | — | — | ||||||||||||||||||
Purchase of treasury stock | (9,487 | ) | — | — | — | — | (9,487 | ) | ||||||||||||||||
Minority capital contributions | — | — | — | — | — | |||||||||||||||||||
Capital contributions | — | (9,486 | ) | (11,311 | ) | — | 20,797 | — | ||||||||||||||||
Net cash provided by (used in) financing activities | (9,487 | ) | (7,216 | ) | (11,311 | ) | — | 20,797 | (7,217 | ) | ||||||||||||||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | — | 1,586 | — | (900 | ) | — | 686 | |||||||||||||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | — | (9,293 | ) | (899 | ) | 16,277 | — | 6,085 | ||||||||||||||||
CASH AND CASH EQUIVALENTS—Beginning of period | — | 54,411 | 5,411 | 11,241 | — | 71,063 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS—End of period | $ | — | $ | 45,118 | $ | 4,512 | $ | 27,518 | $ | — | $ | 77,148 | ||||||||||||
* | Eliminations include intercompany investments and management fees |
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CONDENSED CONSOLIDATING SCHEDULE — STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2007
(amounts in thousands)
Combined | Combined Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||||||||||
Net income (loss) | $ | 23,704 | $ | 23,704 | $ | 7,637 | $ | (90 | ) | $ | (31,251 | ) | $ | 23,704 | ||||||||||
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | ||||||||||||||||||||||||
Amortization of financing costs | — | 973 | — | — | — | 973 | ||||||||||||||||||
Amortization of intangibles | — | 5,078 | 262 | 147 | — | 5,487 | ||||||||||||||||||
Depreciation | — | 6,062 | 37 | 203 | — | 6,302 | ||||||||||||||||||
Loss on disposal of assets | — | 139 | — | — | — | 139 | ||||||||||||||||||
Provision for bad debts | — | — | 11,184 | — | — | 11,184 | ||||||||||||||||||
Deferred income taxes | — | 14,542 | — | (28 | ) | — | 14,514 | |||||||||||||||||
Equity income | (23,704 | ) | (7,547 | ) | — | — | 31,251 | — | ||||||||||||||||
Minority ownership loss | — | (368 | ) | — | — | — | (368 | ) | ||||||||||||||||
Stock-based compensation | — | 22,269 | — | — | — | 22,269 | ||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Settlement receivables | — | 81,867 | 236 | (948 | ) | (4,418 | ) | 76,737 | ||||||||||||||||
Other receivables, net | 36 | 11,796 | (37,194 | ) | 375 | 2,160 | (22,827 | ) | ||||||||||||||||
Prepaid and other assets | — | 1,676 | (588 | ) | (17 | ) | — | 1,071 | ||||||||||||||||
Settlement liabilities | — | (50,545 | ) | (4,418 | ) | 5,748 | 4,418 | (44,797 | ) | |||||||||||||||
Accounts payable | — | (3,709 | ) | 108 | (254 | ) | — | (3,855 | ) | |||||||||||||||
Accrued expenses | (360 | ) | (9,558 | ) | 11,731 | 1,688 | (2,160 | ) | 1,341 | |||||||||||||||
Net cash provided by operating activities | (324 | ) | 96,379 | (11,005 | ) | 6,824 | — | 91,874 | ||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||||||
Purchase of property, equipment and leasehold improvements | — | (8,364 | ) | (183 | ) | (955 | ) | — | (9,502 | ) | ||||||||||||||
Purchase of other intangibles | — | (1,094 | ) | (77 | ) | (257 | ) | — | (1,428 | ) | ||||||||||||||
Changes in restricted cash and cash equivalents | — | (30 | ) | — | — | — | (30 | ) | ||||||||||||||||
Investments in subsidiaries | 39,416 | (15,100 | ) | — | — | (24,316 | ) | — | ||||||||||||||||
Net cash used in investing activities | 39,416 | (24,588 | ) | (260 | ) | (1,212 | ) | (24,316 | ) | (10,960 | ) | |||||||||||||
* | Eliminations include intercompany investments and management fees |
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CONDENSED CONSOLIDATED SCHEDULE — STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2007
(amounts in thousands)
Combined | Combined Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||||||
Repayments under credit facility | $ | — | $ | (11,000 | ) | $ | — | $ | — | $ | — | $ | (11,000 | ) | ||||||||||
Debt issuance costs | — | (23 | ) | — | — | — | (23 | ) | ||||||||||||||||
Exercise of stock options | 1,287 | — | — | — | — | 1,287 | ||||||||||||||||||
Purchase of treasury stock | (40,379 | ) | — | — | — | — | (40,379 | ) | ||||||||||||||||
Minority capital contributions | — | — | — | 400 | 400 | |||||||||||||||||||
Capital contributions | — | (39,416 | ) | 14,500 | 1,000 | 23,916 | — | |||||||||||||||||
Net cash provided by (used in) financing activities | (39,092 | ) | (50,439 | ) | 14,500 | 1,000 | 24,316 | (49,715 | ) | |||||||||||||||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | — | (1,963 | ) | — | 908 | — | (1,055 | ) | ||||||||||||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | — | 19,389 | 3,235 | 7,520 | — | 30,144 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS—Beginning of period | — | 35,022 | 2,176 | 3,721 | — | 40,919 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS—End of period | $ | — | $ | 54,411 | $ | 5,411 | $ | 11,241 | $ | — | $ | 71,063 | ||||||||||||
* | Eliminations include earnings on subsidiaries and management fees |
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CONDENSED CONSOLIDATING SCHEDULE — STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2006
(amounts in thousands)
Combined | Combined Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||||||||||
Net income (loss) | $ | 26,609 | $ | 26,609 | $ | 5,021 | $ | 42 | $ | (31,672 | ) | $ | 26,609 | |||||||||||
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | ||||||||||||||||||||||||
Amortization of financing costs | — | 1,584 | — | — | — | 1,584 | ||||||||||||||||||
Amortization of intangibles | — | 5,259 | 167 | 94 | — | 5,520 | ||||||||||||||||||
Depreciation | — | 4,317 | 7 | 45 | — | 4,369 | ||||||||||||||||||
Gain on sale or disposal of assets | — | (6 | ) | — | — | — | (6 | ) | ||||||||||||||||
Loss on early extinguishment of debt | — | 3,417 | — | — | — | 3,417 | ||||||||||||||||||
Provision for bad debts | — | 6,483 | — | — | 6,483 | |||||||||||||||||||
Deferred income taxes | — | 15,899 | — | — | 15,899 | |||||||||||||||||||
Equity income | (26,609 | ) | (5,063 | ) | — | — | 31,672 | — | ||||||||||||||||
Minority ownership loss | — | (287 | ) | — | — | — | (287 | ) | ||||||||||||||||
Stock-based compensation | — | 9,141 | — | — | — | 9,141 | ||||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Settlement receivables | — | (78,621 | ) | (2,186 | ) | (2,639 | ) | 6,792 | (76,654 | ) | ||||||||||||||
Other receivables, net | — | (19,211 | ) | (15,141 | ) | (858 | ) | 24,707 | (10,503 | ) | ||||||||||||||
Prepaid and other assets | — | (1,833 | ) | (1 | ) | (72 | ) | — | (1,906 | ) | ||||||||||||||
Settlement liabilities | — | 76,965 | 5,053 | 1,223 | (5,053 | ) | 78,188 | |||||||||||||||||
Accounts payable | — | 5,552 | (10 | ) | 325 | — | 5,867 | |||||||||||||||||
Accrued expenses | — | 22,950 | 3,103 | 2,751 | (26,446 | ) | 2,358 | |||||||||||||||||
Net cash provided by operating activities | — | 66,672 | 2,496 | 911 | — | 70,079 | ||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||||||
Purchase of property, equipment and leasehold improvements | — | (13,830 | ) | (30 | ) | (335 | ) | — | (14,195 | ) | ||||||||||||||
Purchase of other intangibles | — | (820 | ) | (566 | ) | (130 | ) | — | (1,516 | ) | ||||||||||||||
Changes in restricted cash and cash equivalents | — | (350 | ) | (1,000 | ) | — | — | (1,350 | ) | |||||||||||||||
Investments in subsidiaries | (1,488 | ) | (1,360 | ) | — | — | 2,848 | — | ||||||||||||||||
Net cash used in investing activities | (1,488 | ) | (16,360 | ) | (1,596 | ) | (465 | ) | 2,848 | (17,061 | ) | |||||||||||||
* | Eliminations include intercompany investments and management fees |
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CONDENSED CONSOLIDATED SCHEDULE — STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2006
(amounts in thousands)
Combined | Combined Non- | |||||||||||||||||||||||
Parent | Issuer | Guarantors | Guarantors | Eliminations * | Consolidated | |||||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||||||
Borrowings under credit facility | $ | — | $ | 121,730 | $ | — | $ | — | $ | — | $ | 121,730 | ||||||||||||
Repayments under credit facility | — | (168,662 | ) | — | — | — | (168,662 | ) | ||||||||||||||||
Debt issuance costs | — | (1,557 | ) | — | — | — | (1,557 | ) | ||||||||||||||||
Exercise of stock options | 1,488 | — | — | — | — | 1,488 | ||||||||||||||||||
Minority capital contributions | — | — | — | — | 240 | 240 | ||||||||||||||||||
Capital contributions | — | 1,488 | 1,000 | 600 | (3,088 | ) | — | |||||||||||||||||
Net cash provided by (used in) financing activities | 1,488 | (47,001 | ) | 1,000 | 600 | (2,848 | ) | (46,761 | ) | |||||||||||||||
NET EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | — | (526 | ) | — | 65 | — | (461 | ) | ||||||||||||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | — | 2,785 | 1,900 | 1,111 | — | 5,796 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS—Beginning of period | — | 32,237 | 276 | 2,610 | — | 35,123 | ||||||||||||||||||
CASH AND CASH EQUIVALENTS—End of period | $ | — | $ | 35,022 | $ | 2,176 | $ | 3,721 | $ | — | $ | 40,919 | ||||||||||||
* | Eliminations include intercompany investments and management fees |
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March 9, 2009
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(a) | The following documents are filed as part of this Annual Report on Form 10-K: |
1. | Financial Statements | ||
Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm | |||
Consolidated Balance Sheets as of December 31, 2008 and 2007 | |||
Consolidated Statements of Income and Comprehensive Income for the three years ended December 31, 2008 | |||
Consolidated Statement of Stockholders’ Equity (Deficiency) for the three years ended December 31, 2008 | |||
Consolidated Statements of Cash Flows for the three years ended December 31, 2008 | |||
Notes to Consolidated Financial Statements | |||
2. | Financial Statement Schedules | ||
All schedules have been omitted as they are either not required or not applicable or the required information is included in the consolidated financial statements or notes thereto. | |||
3. | See Item 15(b) |
(b) | Exhibits: |
Exhibit Number | Exhibit Description | |||
2.1 | (16) | Stock Purchase Agreement, by and among Fidelity National Transaction Services, Inc., Certegy Gaming Services, Inc. and Global Cash Access, Inc., dated February 28, 2008. | ||
2.2 | (17) | Agreement and Plan of Merger, by and among Cash Systems, Inc., Global Cash Access, Inc., and Card Acquisition Subsidiary, Inc., a wholly owned subsidiary of Global Cash Access, Inc., dated June 13, 2008. | ||
3.1 | (1) | Amended and Restated Certificate of Incorporation. | ||
3.2 | (4) | Amended and Restated Bylaws. | ||
4.2 | (1) | Indenture relating to $235,000,000 aggregate principal amount of 8 3/4% Senior Subordinated Notes due 2012. | ||
4.3 | (1) | Form of 8 3/4% Senior Subordinated Notes due 2012. | ||
4.4 | (1) | Assumption Agreement, dated as of June 7, 2004, by Global Cash Access, Inc. and the Subsidiary Guarantors named therein. | ||
4.5 | (1) | Supplemental Indenture by and among Global Cash Access Holdings, Inc., Global Cash Access, Inc., GCA Access Card, Inc., Central Credit, LLC and The Bank of New York Trust Company, N.A. and form of notation of Guarantee by Global Cash Access Holdings, Inc. | ||
4.6 | (1) | Supplemental Indenture by and among Global Cash Access, Inc., GCA Access Card, Inc., Central Credit, LLC and The Bank of New York Trust Company, N.A. and notation of Guarantee by GCA Access Card, Inc. |
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Exhibit Number | Exhibit Description | |||
4.7 | (14) | Supplemental Indenture dated as of April 17, 2008, by and among Certegy Gaming Services, Inc., a wholly-owned subsidiary of Global Cash Access, Inc., and successor to Global Cash Access, L.L.C.; Arriva Card, Inc., formerly known as GCA Access Card, Inc.; Central Credit, LLC; Global Cash Access Holdings, Inc., and The Bank of New York Trust Company, N.A., as trustee under the Indenture. | ||
10.1 | (1) | Lease Agreement, dated as of March 8, 2000, by and between Global Cash Access, L.L.C. and American Pacific Capital Gateway Bldg D Co., L.L.C. | ||
10.4 | (1) | Guaranty, dated as of March 10, 2004, among GCA Holdings, L.L.C., the guarantors from time to time party hereto and Bank of America, N.A., as Administrative Agent. | ||
10.5 | (1) | Security Agreement including First and Second Amendments thereto, dated as of March 10, 2004, among the loan parties from time to time party thereto and Bank of America, N.A., as Collateral Agent. | ||
10.6 | (1) | Pledge Agreement, dated as of March 10, 2004, among the loan parties from time to time party thereto and Bank of America, N.A., as Collateral Agent. | ||
10.7 | (1) | Membership Unit Redemption Agreement, dated as of March 10, 2004, between FDFS Holdings, LLC and GCA Holdings, L.L.C. | ||
10.8 | (1) | Sponsorship Agreement, dated as of November 1999, by and between BA Merchant Services, Inc. and Global Cash Access, L.L.C., as amended by Amendment Number 1 to the Sponsorship Agreement, dated as of September 2000, among BA Merchant Services, Global Cash Access, L.L.C. and First Data Corporation. | ||
10.9 | (1) | Sponsorship Indemnification Agreement, dated as of March 10, 2004, by and between Global Cash Access, L.L.C. and First Data Corporation. | ||
10.10 | (1) | Amended and Restated Software License Agreement, dated as of March 10, 2004, between Infonox on the Web and Global Cash Access, L.L.C. | ||
10.11 | (1) | Professional Services Agreement, dated as of March 10, 2004, between Infonox on the Web and Global Cash Access, L.L.C. | ||
10.12 | (1) | Patent License Agreement, dated as of March 10, 2004, between USA Payments, Inc. and Global Cash Access, L.L.C. |
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Exhibit Number | Exhibit Description | |||
10.13 | (1) | Amended and Restated Electronic Payment Processing Agreement, dated as of March 10, 2004, between Global Cash Access, L.L.C., USA Payments Inc. and USA Payment Systems, Inc. | ||
10.14 | (1) | Letter Agreement Relating to Technology, dated May 13, 2004, among Global Cash Access, L.L.C., USA Payments, Inc., USA Payment Systems, Inc. and Infonox on the Web. | ||
10.15 | (1) | Automated Teller Machine Sponsorship Agreement by and between Global Cash Access, L.L.C. and Western Union Bank, dated as of November 12, 2002, and First Amendment to Automated Teller Machine Sponsorship Agreement, dated as of March 10, 2004, between Global Cash Access, L.L.C. and First Financial Bank. | ||
10.16 | (1) | Membership Unit Purchase Agreement, dated as of March 10, 2004, by and among Bank of America Corporation, M&C International and GCA Holdings, L.L.C. | ||
10.17 | (1) | Amendment to Treasury Services Terms and Conditions Booklet—ATM Cash Services, dated as of March 8, 2004, by and between Global Cash Access, L.L.C. and Bank of America, N.A. | ||
10.18 | (1) | Limited Liability Company Agreement of QuikPlay, LLC, dated as of December 6, 2000, between Global Cash Access, L.L.C. and IGT. | ||
10.19 | (1) | Registration Agreement, dated as of May 13, 2004, by and among GCA Holdings, L.L.C., the Investors named therein, M&C International and Bank of America Corporation. | ||
10.20 | (1) | Stockholders Agreement, dated as of May 13, 2004, by and among GCA Holdings, L.L.C., the Investors named therein, M&C International and Bank of America Corporation. | ||
10.21 | (1) | Investor Rights Agreement, dated as of May 13, 2004, by and among GCA Holdings, L.L.C., the Investors named therein and M&C International. | ||
*10.22 | (1) | Global Cash Access Holdings, Inc. 2005 Stock Incentive Plan. | ||
*10.23 | (1) | Form of Indemnification Agreement between Global Cash Access Holdings, Inc. and each of its executive officers and directors. | ||
10.24 | (1) | Patent Purchase and License Agreement, dated as of March 22, 2005, by and between Global Cash Access, Inc. and USA Payments, Inc. | ||
10.25 | (1) | Termination and Consent, dated as of March 16, 2005, by and among Global Cash Access Holdings, Inc. and the other parties thereto. | ||
10.26 | (1) | Amended and Restated Credit Agreement, dated as of April 13, 2005, by and among Global Cash Access Holdings, Inc., Global Cash Access, Inc., the banks and other financial institutions from time to time party thereto, and Bank of America, N.A., as Administrative Agent, Swingline Lender and L/C Issuer, as amended by Amendment No. 1 thereto. |
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Exhibit Number | Exhibit Description | |||
*10.27 | (1) | Employment Agreement, dated as of September 12, 2005, by and between Global Cash Access, Inc. and Kathryn S. Lever. | ||
*10.28 | (2) | Amendment No. 1 to Employment Agreement, dated as of March 16, 2006, by and between Global Cash Access, Inc. and Kathryn S. Lever. | ||
+10.29 | (20) | Master Service Agreement, dated as of November 27, 2006, by and between Global Cash Access, Inc. and Integrated Payment Systems, Inc. | ||
10.30 | (3) | Second Amended and Restated Credit Agreement, dated as of November 1, 2006, by and among Global Cash Access Holdings, Inc., Global Cash Access, Inc., the banks and other financial institutions from time to time party thereto, Bank of America, N.A., as Administrative Agent, and Wachovia Bank, N.A., as Syndication Agent. | ||
10.31 | (5) | Second Amendment to Security Agreement, dated as of January 25, 2007, by and among Global Cash Access Holdings, Inc., Global Cash Access, Inc., Central Credit, LLC, and Bank of America, N.A., as Administrative Agent. | ||
10.32 | (6) | Amendment No. 1 to Second Amended and Restated Credit Agreement dated as of June 22, 2007, by and among Global Cash Access Holdings, Inc., Global Cash Access, Inc., and Bank of America, N.A., as Administrative Agent. | ||
10.33 | (7) | Amendment No. 2 to Second Amended and Restated Credit Agreement dated as of August 8, 2007, by and among Global Cash Access Holdings, Inc., Global Cash Access, Inc., and Bank of America, N.A., as Administrative Agent. | ||
*10.34 | (8) | Employment Agreement with Scott Betts, dated October 31, 2007. | ||
*10.35 | (9) | Notices of Stock Option Award and Stock Option Award Agreements with Scott Betts, dated October 31, 2007. | ||
10.36 | (10) | Amendment to Treasury Services Terms and Conditions Booklet, dated December 19, 2007, by and between Global Cash Access, Inc. and Bank of America, N.A. | ||
*10.37 | (11) | Employment Agreement with George Gresham, dated February 25, 2008. | ||
*10.38 | (12) | Notice of Stock Option Award and Stock Option Award Agreement with George Gresham, dated February 25, 2008. |
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Exhibit Number | Exhibit Description | |||
10.39 | (13) | 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. | ||
10.40 | (15) | Addendum to Master Service Agreement, dated March 20, 2008, by and between Integrated Payment Systems Inc. and Global Cash Access, Inc. | ||
*10.41 | (18) | Amendment No. 1 to Employment Agreement, by and between the Company and Scott Betts, dated August 11, 2008. | ||
*10.42 | (19) | Amendment No. 2 to Employment Agreement, by and between the Company and Kathryn S. Lever dated August 11, 2008. | ||
12.1 | Computation of ratio of earnings to fixed charges. | |||
21.1 | Subsidiaries of the Registrant. | |||
23.1 | Consent of Deloitte & Touche LLP. | |||
24.1 | Power of Attorney (see page 115). | |||
31.1 | Certification of Scott Betts, Chief Executive Officer of Global Cash Access Holdings, Inc. dated March 10, 2009 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. | |||
31.2 | Certification of George Gresham, Chief Financial Officer of Global Cash Access Holdings, Inc. dated March 10, 2009 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 March 10, 2009 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 March 10, 2009 in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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(1) | Incorporated by reference to the same numbered exhibit of the Company’s Registration Statement on Form S-1 (Registration No. 333-123514) filed September 22, 2005. | |
(2) | Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed March 17, 2006. | |
(3) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed November 7, 2006. | |
(4) | Incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed December 26, 2007. | |
(5) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed January 25, 2007. | |
(6) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed June 26, 2007. | |
(7) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed August 9, 2007. | |
(8) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed November 2, 2007. | |
(9) | Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed November 2, 2007. | |
(10) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed December 26, 2007. | |
(11) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed February 25, 2008. |
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(12) | Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed February 25, 2008. | |
(13) | Incorporated by reference to Exhibit 10.43 of the Company’s Annual Report on Form 10-K filed March 17, 2008. | |
(14) | Incorporated by reference to Exhibit 4.1 of the Company’s Quarterly Report on Form 10-Q filed May 14, 2008. | |
(15) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed March 21, 2008. | |
(16) | Incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed April 2, 2008. | |
(17) | Incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed June 19, 2008. | |
(18) | Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed August 12, 2008. | |
(19) | Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed August 12, 2008. | |
(20) | Incorporated by reference to Exhibit 10.36 of the Company’s Annual Report on Form 10-K filed on March 30, 2007. | |
* | Management contracts or compensatory plans or arrangements. | |
+ | Confidential treatment was requested with regard to certain portions of this document. | |
(c) | See Item 15(a)(2). | |
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GLOBAL CASH ACCESS HOLDINGS, INC. | ||||
By: | /s/ Scott Betts | |||
Scott Betts | ||||
President and Chief Executive Officer (Principal Executive Officer) |
Signature | Title | Date | ||
/s/ Scott Betts | President and Chief Executive Officer (Principal Executive Officer) and Director | March 10, 2009 | ||
/s/ George Gresham | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | March 10, 2009 | ||
/s/ Karim Maskatiya | Director | March 10, 2009 | ||
/s/ Robert Cucinotta | Director | March 10, 2009 | ||
/s/ Walter G. Kortschak | Director | March 10, 2009 | ||
/s/ Charles J. Fitzgerald | Director | March 10, 2009 | ||
/s/ E. Miles Kilburn | Director | March 10, 2009 | ||
/s/ Geoff Judge | Director | March 10, 2009 | ||
/s/ Fred C. Enlow | Director | March 10, 2009 |
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Exhibit Number | Exhibit Description | |||
12.1 | Computation of ratio of earnings to fixed charges | |||
21.1 | Subsidiaries of the Registrant | |||
23.1 | Consent of Deloitte & Touche LLP | |||
24.1 | Power of Attorney (see page 112) | |||
31.1 | Certification of Scott Betts, Chief Executive Officer of Global Cash Access Holdings, Inc. dated March 10, 2009 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 | |||
31.2 | Certification of George Gresham, Chief Financial Officer of Global Cash Access Holdings, Inc. dated March 10, 2009 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 March 10, 2009 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 March 10, 2009 in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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