UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2010

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

CARDTRONICS, INC.

(Exact name of registrant as specified in its charter)

Delaware		76-0681190
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
3250 Briarpark Drive, Suite 400
Houston, TX		77042
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (832) 308-4000

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer’’ and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Common Stock, par value: $0.0001 per share. Shares outstanding on May 3, 2010: 41,782,077

 

 

CARDTRONICS, INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)			1
Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009			1
Consolidated Statements of Operations for the Three Months Ended March 31, 2010 and 2009			2
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2010 and 2009			3
Notes to Consolidated Financial Statements			4
Cautionary Statement Regarding Forward-Looking Statements			22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			37
Item 4. Controls and Procedures			40
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			41
Item 1A. Risk Factors			41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			44
Item 6. Exhibits			44
Signatures			45
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1

When we refer to “us,” “we,” “our,” “ours” or “the Company,” we are describing Cardtronics, Inc. and/or our subsidiaries.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CARDTRONICS, INC.

		March 31, 2010				December 31, 2009
		(Unaudited)				(Audited)
ASSETS
Current assets:
Cash and cash equivalents		$	10,694			$	10,449
Accounts and notes receivable, net of allowance of $503 and $560 as of March 31, 2010 and December 31, 2009, respectively			27,004				27,700
Inventory			1,977				2,617
Restricted cash, short-term			3,151				3,452
Prepaid expenses, deferred costs, and other current assets			9,333				8,850
Total current assets			52,159				53,068
Property and equipment, net			144,657				147,348
Intangible assets, net			84,084				89,036
Goodwill			164,235				165,166
Prepaid expenses, deferred costs, and other assets			4,187				5,786
Total assets		$	449,322			$	460,404
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current portion of long-term debt and notes payable		$	2,353			$	2,122
Capital lease obligations			96				235
Current portion of other long-term liabilities			26,242				26,047
Accounts payable			15,091				12,904
Accrued liabilities			41,837				57,583
Current portion of deferred tax liability, net			3,127				3,121
Total current liabilities			88,746				102,012
Long-term liabilities:
Long-term debt, net of related discounts			304,835				304,930
Deferred tax liability, net			13,189				12,250
Asset retirement obligations			24,655				24,003
Other long-term liabilities			20,174				18,499
Total liabilities			451,599				461,694
Commitments and contingencies
Stockholders’ deficit:
Common stock, $0.0001 par value; 125,000,000 shares authorized; 47,111,943 and 46,238,028 shares issued as of March 31, 2010 and December 31, 2009, respectively; 41,749,447 and 40,900,532 shares outstanding as of March 31, 2010 and December 31, 2009, respectively			4				4
Additional paid-in capital			201,995				200,323
Accumulated other comprehensive loss, net			(64,337	)			(57,618	)
Accumulated deficit			(92,957	)			(96,922	)
Treasury stock; 5,362,496 and 5,337,496 shares at cost as of March 31, 2010 and December 31, 2009, respectively			(48,938	)			(48,679	)
Total parent stockholders’ deficit			(4,233	)			(2,892	)
Noncontrolling interests			1,956				1,602
Total stockholders’ deficit			(2,277	)			(1,290	)
Total liabilities and stockholders’ deficit		$	449,322			$	460,404

See accompanying notes to consolidated financial statements.

CARDTRONICS, INC.

		Three Months Ended March 31,
		2010				2009
Revenues:
ATM operating revenues		$	125,687			$	113,580
ATM product sales and other revenues			2,089				1,765
Total revenues			127,776				115,345
Cost of revenues:
Cost of ATM operating revenues (excludes depreciation, accretion, and amortization shown separately below. See Note 1)			85,879				82,229
Cost of ATM product sales and other revenues			2,193				1,814
Total cost of revenues			88,072				84,043
Gross profit			39,704				31,302
Operating expenses:
Selling, general, and administrative expenses			11,143				10,855
Depreciation and accretion expense			10,222				9,639
Amortization expense			3,979				4,527
Loss on disposal of assets			377				2,108
Total operating expenses			25,721				27,129
Income from operations			13,983				4,173
Other expense (income):
Interest expense, net			7,318				7,711
Amortization of deferred financing costs and bond discounts			630				568
Other expense (income)			366				(86	)
Total other expense			8,314				8,193
Income (loss) before income taxes			5,669				(4,020	)
Income tax expense			1,439				1,017
Net income (loss)			4,230				(5,037	)
Net income attributable to noncontrolling interests			265				31
Net income (loss) attributable to controlling interests and available to common stockholders		$	3,965			$	(5,068	)
Net income (loss) per common share — basic		$	0.10			$	(0.13	)
Net income (loss) per common share — diluted		$	0.09			$	(0.13	)
Weighted average shares outstanding — basic			39,850,122				38,960,083
Weighted average shares outstanding — diluted			40,721,310				38,960,083

See accompanying notes to consolidated financial statements.

CARDTRONICS, INC.

		Three Months Ended March 31,
		2010				2009
Cash flows from operating activities:
Net income (loss)		$	4,230			$	(5,037	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, accretion, and amortization expense			14,201				14,166
Amortization of deferred financing costs and bond discounts			630				568
Stock-based compensation expense			1,459				1,058
Deferred income taxes			945				946
Loss on disposal of assets			377				2,108
Unrealized gain on derivative instruments			(248	)			—
Amortization of accumulated other comprehensive losses associated with derivative instruments no longer designated as hedging instruments			493				—
Other reserves and non-cash items			475				(456	)
Changes in assets and liabilities:
Decrease in accounts and notes receivable, net			623				2,240
(Increase) decrease in prepaid, deferred costs, and other current assets			(845	)			4,631
Decrease (increase) in inventory			460				(181	)
Decrease in other assets			980				561
Increase (decrease) in accounts payable			1,969				(1,920	)
Decrease in accrued liabilities			(15,199	)			(10,464	)
Decrease in other liabilities			(1,364	)			(1,273	)
Net cash provided by operating activities			9,186				6,947
Cash flows from investing activities:
Additions to property and equipment			(8,526	)			(4,917	)
Payments for exclusive license agreements and site acquisition costs			(79	)			(59	)
Net cash used in investing activities			(8,605	)			(4,976	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt			—				23,500
Repayments of long-term debt and capital leases			(647	)			(18,936	)
Repayments of borrowings under bank overdraft facility, net			—				(142	)
Payments received on subscriptions receivable			—				34
Proceeds from exercises of stock options			110				—
Debt issuance and modification costs			—				(438	)
Repurchase of capital stock			(260	)			(1	)
Net cash (used in) provided by financing activities			(797	)			4,017
Effect of exchange rate changes on cash			461				39
Net increase in cash and cash equivalents			245				6,027
Cash and cash equivalents as of beginning of period			10,449				3,424
Cash and cash equivalents as of end of period		$	10,694			$	9,451
Supplemental disclosure of cash flow information:
Cash paid for interest, including interest on capital leases		$	14,271			$	14,634
Cash paid for income taxes		$	100			$	—

See accompanying notes to consolidated financial statements.

CARDTRONICS, INC.

(1) General and Basis of Presentation

General

Cardtronics, Inc., along with its wholly- and majority-owned subsidiaries (collectively, the “Company”) provides convenient automated consumer financial services through its network of automated teller machines (“ATMs”) and multi-function financial services kiosks. As of March 31, 2010, the Company operated over 33,700 devices across its portfolio, which included over 28,100 devices located in all 50 states of the United States (“U.S.”) (including the U.S. territories of Puerto Rico and the U.S. Virgin Islands), over 2,700 devices throughout the United Kingdom (“U.K.”), and approximately 2,900 devices throughout Mexico. Included within this number were approximately 2,200 multi-function financial services kiosks deployed in the U.S. that, in addition to traditional ATM functions such as cash dispensing and bank account balance inquiries, perform other consumer financial services, including bill payments, check cashing, remote deposit capture (which is deposit taking at off-premise ATMs using electronic imaging), and money transfers.

Through its network, the Company provides ATM management and equipment-related services (typically under multi-year contracts) to large, nationally-known retail merchants as well as smaller retailers and operators of facilities such as shopping malls and airports. Additionally, the Company operates the largest surcharge-free network of ATMs within the United States (based on the number of participating ATMs) and works with financial institutions to place their logos on the Company’s ATM machines, thus providing convenient surcharge-free access to the financial institutions’ customers. The Company’s surcharge-free network, which operates under the Allpoint brand name, has more than 37,000 participating ATMs, including a majority of the Company’s ATMs in the United States and all of the Company’s ATMs in the United Kingdom. Finally, the Company provides electronic funds transfer (“EFT”) transaction processing services to its network of ATMs as well as approximately 1,900 ATMs owned and operated by third parties.

Basis of Presentation

This Quarterly Report on Form 10-Q (this “Form 10-Q”) has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial information. Because this is an interim period filing presented using a condensed format, it does not include all of the disclosures required by accounting principles generally accepted in the United States (“U.S. GAAP”), although the Company believes that the disclosures are adequate to make the information not misleading. You should read this Form 10-Q along with the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 (“2009 Form 10-K”), which includes a summary of the Company’s significant accounting policies and other disclosures.

The financial statements as of March 31, 2010 and for the three month periods ended March 31, 2010 and 2009 are unaudited. The Consolidated Balance Sheet as of December 31, 2009 was derived from the audited balance sheet filed in the Company’s 2009 Form 10-K. In management’s opinion, all normal recurring adjustments necessary for a fair presentation of the Company’s interim and prior period results have been made. The results of operations for the three month periods ended March 31, 2010 and 2009 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year. Additionally, the financial statements for prior periods include certain minor reclassifications. Those reclassifications did not impact the Company’s total reported net loss or stockholders’ deficit.

The unaudited interim consolidated financial statements include the accounts of Cardtronics, Inc. and its wholly- and majority-owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. Because the Company owns a majority (51.0%) interest in and realizes a majority of the earnings and/or losses of Cardtronics Mexico, S.A. de C.V. (“Cardtronics Mexico”), this entity is reflected as a consolidated subsidiary in the accompanying consolidated financial statements, with the remaining ownership interest not held by the Company being reflected as a noncontrolling interest.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, and these differences could be material to the financial statements.

Cost of ATM Operating Revenues and Gross Profit Presentation

The Company presents “Cost of ATM operating revenues” and “Gross profit” within its Consolidated Statements of Operations exclusive of depreciation, accretion, and amortization expense related to ATMs and ATM-related assets. The following table sets forth the amounts excluded from Cost of ATM operating revenues and Gross profit for the three month periods ended March 31:

		2010				2009
		(In thousands)
Depreciation and accretion expense related to ATMs and ATM-related assets		$	8,299			$	8,037
Amortization expense			3,979				4,527
Total depreciation, accretion, and amortization expense excluded from Cost of ATM operating revenues and Gross profit		$	12,278			$	12,564

Property and Equipment, net

In accounting for property and equipment, the Company is required to make estimates regarding the expected useful lives of its assets, which ranged historically from three to seven years. To ensure its useful life estimates accurately reflect the economic use of the assets, the Company periodically evaluates whether changes to the assigned estimated useful lives are necessary. As a result of its most recent evaluation, which was based on historical information on its existing and disposed assets, the Company revised the estimated useful lives of several asset classes. Specifically, the Company determined that it was appropriate to extend the estimated useful life of new ATMs by one year and reduce the estimated useful life of used ATMs by two years starting January 1, 2010. The Company also decreased the estimated useful lives of deployment costs and asset retirement obligations by two years each to more accurately align the periods over which these assets are depreciated with the average time period an ATM is installed in a location before being deinstalled. The Company anticipates that the above changes will increase its future depreciation expense amounts slightly relative to prior years, and reduce the frequency and amount of losses on disposals of assets in future periods.

(2) Stock-Based Compensation

The Company calculates the fair value of stock-based awards granted to employees and directors on the date of grant and recognizes the calculated fair value, net of estimated forfeitures, as compensation expense over the requisite service periods of the related awards. The following table reflects the total stock-based compensation expense amounts included in the Company’s Consolidated Statements of Operations for the three month periods ended March 31:

		2010				2009
		(In thousands)
Cost of ATM operating revenues		$	199			$	191
Selling, general, and administrative expenses			1,260				867
Total stock-based compensation expense		$	1,459			$	1,058

The increase in stock-based compensation expense during the three months ended March 31, 2010 was due to the issuance of additional shares of restricted stock and stock options to certain of the Company’s employees and directors during 2009 and 2010. Both the restricted shares and the stock options were granted under the Company’s 2007 Stock Incentive Plan.

Options. The number of the Company’s outstanding stock options as of March 31, 2010, and changes during the three months ended March 31, 2010, are presented below:

						Weighted
		Number				Average
		of Shares				Exercise Price
Options outstanding as of January 1, 2010			3,803,771			$	8.34
Granted			23,000			$	10.95
Exercised			(143,975	)		$	1.48
Options outstanding as of March 31, 2010			3,682,796			$	8.63
Options vested and exercisable as of March 31, 2010			3,080,349			$	8.34

The options granted during the first quarter of 2010 had a total grant-date fair value of approximately $126,500, or $5.50 per share. As of March 31, 2010, the unrecognized compensation expense associated with outstanding options was approximately $1.5 million.

Restricted Stock. The number of the Company’s outstanding restricted shares as of March 31, 2010, and changes during the three months ended March 31, 2010, are presented below:

		Number
		of Shares
Restricted shares outstanding as of January 1, 2010			1,114,437
Granted			729,940
Restricted shares outstanding as of March 31, 2010			1,844,377

The restricted shares granted to employees and directors during the first quarter of 2010 had a total grant-date fair value of approximately $7.9 million, or $10.89 per share. As of March 31, 2010, the unrecognized compensation expense associated with restricted share grants was approximately $14.3 million.

(3) Earnings per Share

The Company reports its earnings per share under the two-class method. Under this method, potentially dilutive securities are excluded from the calculation of diluted earnings per share (as well as their related income statement impacts) when their impact on net income (loss) available to common stockholders is anti-dilutive. For the three month period ended March 31, 2009, the Company incurred a net loss and, accordingly, excluded all potentially dilutive securities from the calculation of diluted earnings per share as their impact on the net loss available to common stockholders was anti-dilutive. Such securities included all outstanding stock options and shares of restricted stock. However, dilutive securities were included in the calculation of diluted earnings per share for the three month period ended March 31, 2010 as the Company reported net income for this period.

Additionally, the shares of restricted stock issued by the Company have a non-forfeitable right to cash dividends, if and when declared by the Company. Accordingly, such restricted shares are considered to be participating securities and as such, the Company has allocated the undistributed earnings for the three months ended March 31, 2010 among the Company’s outstanding shares of common stock and issued but unvested restricted shares, as follows:

Earnings per Share (in thousands, excluding share and per share amounts):

		Three Months Ended March 31, 2010
						Weighted
						Average Shares				Earnings
		Income				Outstanding				Per Share
Basic:
Net income attributable to controlling interests and available to common stockholders		$	3,965
Less: undistributed earnings allocated to unvested restricted shares			(157	)
Net income available to common stockholders		$	3,808				39,850,122			$	0.10
Diluted:
Effect of dilutive securities:
Add: Undistributed earnings allocated to restricted shares			157
Stock options added to the denominator under the treasury stock method							871,188
Less: Undistributed earnings reallocated to restricted shares			(154	)
Net income available to common stockholders and assumed conversions		$	3,811				40,721,310			$	0.09

The computation of diluted earnings per share for the three month period ended March 31, 2010 excluded 422,090 shares of potentially dilutive common shares related to restricted stock because the effect would have been anti-dilutive.

(4) Comprehensive Income (Loss)

Total comprehensive income (loss) consisted of the following:

		Three Months Ended
		March 31,
		2010				2009
		(In thousands)
Net income (loss)		$	4,230			$	(5,037	)
Unrealized (losses) gains on interest rate hedges			(3,384	)			1,193
Foreign currency translation adjustments			(3,335	)			(1,415	)
Total comprehensive loss			(2,489	)			(5,259	)
Less: comprehensive income attributable to noncontrolling interests			354				10
Comprehensive loss attributable to controlling interests		$	(2,843	)		$	(5,269	)

Accumulated other comprehensive loss is displayed as a separate component of stockholders’ deficit in the Consolidated Balance Sheets and consisted of the following:

		March 31, 2010				December 31, 2009
		(In thousands)
Foreign currency translation adjustments		$	(27,755	)		$	(24,420	)
Unrealized losses on interest rate hedges			(36,582	)			(33,198	)
Total accumulated other comprehensive loss		$	(64,337	)		$	(57,618	)

The Company currently believes that the unremitted earnings of its United Kingdom and Mexico subsidiaries will be reinvested in the corresponding country of origin for an indefinite period of time. While the Company’s United Kingdom subsidiary has recently begun repaying certain working capital advances provided by the Company’s domestic entities during the past few years, the Company’s original capital investment amounts are not expected to be repaid in the foreseeable future. Accordingly, no deferred taxes have been provided for on the differences between the Company’s book basis and underlying tax basis in those subsidiaries or on the foreign currency translation adjustment amounts.

Additionally, as a result of the Company’s overall net loss position for tax purposes, the Company has not recorded deferred tax benefits on the loss amounts related to its interest rate swaps, as management does not currently believe the Company will be able to realize the benefits associated with its net deferred tax asset positions.

(5) Intangible Assets

Intangible Assets with Indefinite Lives

The following table presents the net carrying amount of the Company’s intangible assets with indefinite lives as of March 31, 2010, as well as the changes in the net carrying amounts for the three months ended March 31, 2010, by segment:

		Goodwill												Trade Name
		U.S.				U.K.				Mexico				U.S.				U.K.				Total
		(In thousands)
Balance as of January 1, 2010:
Gross balance		$	150,461			$	63,994			$	714			$	200			$	3,243			$	218,612
Accumulated impairment loss			—				(50,003	)			—				—				—				(50,003	)
		$	150,461			$	13,991			$	714			$	200			$	3,243			$	168,609
Foreign currency translation adjustments			—				(925	)			(6	)			—				(213	)			(1,144	)
Balance as of March 31, 2010:
Gross balance		$	150,461			$	63,069			$	708			$	200			$	3,030			$	217,468
Accumulated impairment loss			—				(50,003	)			—				—				—				(50,003	)
		$	150,461			$	13,066			$	708			$	200			$	3,030			$	167,465

Intangible Assets with Definite Lives

The following is a summary of the Company’s intangible assets that are subject to amortization as of March 31, 2010:

		Gross
		Carrying				Accumulated				Net Carrying
		Amount				Amortization				Amount
		(In thousands)
Customer and branding contracts/relationships		$	156,361			$	(84,284	)		$	72,077
Deferred financing costs			14,535				(8,078	)			6,457
Exclusive license agreements			5,525				(3,444	)			2,081
Non-compete agreements			437				(198	)			239
Total		$	176,858			$	(96,004	)		$	80,854

(6) Accrued Liabilities

Accrued liabilities consisted of the following:

		March 31, 2010				December 31, 2009
		(In thousands)
Accrued merchant commissions		$	13,013			$	11,470
Accrued armored fees			3,816				5,234
Accrued interest expense			3,469				10,406
Accrued merchant settlement amounts			3,217				3,603
Accrued compensation			3,050				8,470
Accrued cash rental and management fees			2,394				2,866
Accrued interest rate swap payments			2,236				1,937
Accrued maintenance fees			1,659				4,133
Accrued processing costs			1,148				1,556
Accrued ATM telecommunications costs			1,099				1,169
Other accrued expenses			6,736				6,739
Total		$	41,837			$	57,583

(7) Long-Term Debt

The Company’s long-term debt consisted of the following:

		March 31, 2010				December 31, 2009
		(In thousands)
Senior subordinated notes due August 2013 (net of unamortized discounts of $2.6 million and $2.8 million as of March 31, 2010 and December 31, 2009)		$	297,402			$	297,242
Other			9,786				9,810
Total			307,188				307,052
Less: current portion			2,353				2,122
Total long-term debt, excluding current portion		$	304,835			$	304,930

Revolving Credit Facility

As of March 31, 2010 and December 31, 2009, no borrowings were outstanding under the Company’s $175.0 million revolving credit facility. However, as of March 31, 2010, the Company had $0.1 million in letters of credit posted under the facility in favor of the lessors under the Company’s ATM equipment leases and $4.3 million in letters of credit to secure borrowings under the Company’s United Kingdom subsidiary’s overdraft facility (as further discussed below). These letters of credit, which the applicable third parties may draw upon in the event the Company defaults on the related obligations, reduce the Company’s borrowing capacity under its revolving credit facility. As of March 31, 2010, the Company’s available borrowing capacity under the facility, as determined under the earnings before interest expense, income taxes, depreciation and accretion expense, and amortization expense (“EBITDA”) and interest expense covenants contained in the credit agreement, totaled $170.6 million, and the Company was in compliance with all applicable covenants and ratios under the facility.

Other Facilities

Cardtronics Mexico equipment financing agreements. As of March 31, 2010, other long-term debt consisted of nine separate equipment financing agreements entered into by Cardtronics Mexico. These agreements, each of which had an original term of five-years, are denominated in Mexican pesos and bear interest at an average fixed rate of 10.55%. Proceeds from these agreements were utilized for the purchase of additional ATMs to support the Company’s Mexico operations. Pursuant to the terms of the equipment financing agreements, the Company has issued guarantees for 51.0% of the obligations under such agreements (consistent with its ownership percentage in Cardtronics Mexico.) As of March 31, 2010, the total amount of the guarantees was $62.0 million pesos (or approximately $5.0 million U.S.).

Bank Machine overdraft facility. In addition to Cardtronics, Inc.’s $175.0 million revolving credit facility, Bank Machine, Ltd., the Company’s wholly-owned subsidiary operating in the United Kingdom, has a £1.0 million overdraft facility. This facility, which bears interest at 1.75% over the bank’s base rate (0.5% as of March 31, 2010) and is secured by a letter of credit posted under the Company’s corporate revolving credit facility, is utilized for general corporate purposes for the Company’s United Kingdom operations. As of March 31, 2010, no amount was outstanding under this facility.

(8) Asset Retirement Obligations

Asset retirement obligations consist primarily of costs to deinstall the Company’s ATMs and costs to restore the ATM sites to their original condition. In most cases, the Company is legally required to perform this deinstallation and restoration work. For each group of ATMs, the Company has recognized the fair value of a liability for an asset retirement obligation and capitalized that cost as part of the cost basis of the related asset. The related assets are being depreciated on a straight-line basis over 5 years, which is the average time period an ATM is installed in a location before being deinstalled, and the related liabilities are being accreted to their full value over the same period of time.

The following table is a summary of the changes in Company’s asset retirement obligation liability for the three months ended March 31, 2010 (in thousands):

Asset retirement obligation as of January 1, 2010		$	24,003
Additional obligations			814
Accretion expense			621
Change in estimate			61
Payments			(357	)
Foreign currency translation adjustments			(487	)
Asset retirement obligation as of March 31, 2010		$	24,655

The change in estimate during the three month period ended March 31, 2010 related to the Company’s most recent evaluation of the useful lives of its various asset classes. For additional information on this change, see Note 1, General and Basis of Presentation — Property and Equipment, net. Additionally, see Note 11, Fair Value Measurements for additional disclosures on the Company’s asset retirement obligations in respect to its fair value measurements.

(9) Other Liabilities

Other liabilities consisted of the following:

		March 31, 2010				December 31, 2009
		(In thousands)
Current Portion of Other Long-Term Liabilities:
Interest rate swaps		$	23,949			$	23,423
Deferred revenue			2,132				2,464
Other			161				160
Total		$	26,242			$	26,047
Other Long-Term Liabilities:
Interest rate swaps		$	15,004			$	12,656
Deferred revenue			2,005				2,393
Other			3,165				3,450
Total		$	20,174			$	18,499

The increase in the non-current portion of other long-term liabilities was primarily related to the liabilities associated with the Company’s interest rate swaps, which increased as a result of market interest rate movements.

(10) Derivative Financial Instruments

Accounting Policy

The Company recognizes all of its derivative instruments as either assets or liabilities in the accompanying Consolidated Balance Sheets at fair value. The accounting for changes in the fair value (e.g., gains or losses) of those derivative instruments depends on (i) whether these instruments have been designated (and qualify) as part of a hedging relationship and (ii) the type of hedging relationship actually designated. For derivative instruments that are designated and qualify as hedging instruments, the Company designates the hedging instrument, based upon the exposure being hedged, as a cash flow hedge, a fair value hedge, or a hedge of a net investment in a foreign operation.

The Company is exposed to certain risks relating to its ongoing business operations, including interest rate risk associated with its vault cash rental obligations and, to a lesser extent, borrowings under its revolving credit facility if and when outstanding. The Company is also exposed to foreign currency rate risk with respect to its investments in its foreign subsidiaries, most notably its investment in Bank Machine, Ltd. in the United Kingdom. While the Company does not currently utilize derivative instruments to hedge its foreign currency rate risk, it does utilize interest rate swap contracts to manage the interest rate risk associated with its vault cash rental obligations in the United States and the United Kingdom. The Company does not currently utilize any derivative instruments to manage the interest rate risk associated with its vault cash rental obligations in Mexico, nor does it utilize derivative instruments to manage the interest rate risk associated with the borrowings outstanding under its revolving credit facility.

The notional amounts, weighted-average fixed rates, and terms associated with the Company’s interest rate swap contracts accounted for as cash flow hedges that are currently in place are as follows:

Notional Amounts				Notional Amounts				Notional Amounts				Weighted Average
United States				United Kingdom				Consolidated(1)				Fixed Rate				Term
(In thousands)
$	600,000			£	75,000			$	713,613				3.77	%		April 1, 2010 – December 31, 2010
$	625,000			£	75,000			$	738,613				3.44	%		January 1, 2011 – December 31, 2011
$	525,000			£	50,000			$	600,742				3.56	%		January 1, 2012 – December 31, 2012
$	275,000			£	25,000			$	312,871				3.53	%		January 1, 2013 – December 31, 2013
$	100,000			£	—			$	100,000				3.61	%		January 1, 2014 – December 31, 2014

The Company has designated a majority of its interest rate swap contracts as cash flow hedges of the Company’s forecasted vault cash rental obligations. Accordingly, changes in the fair values of the related interest rate swap contracts have been reported in accumulated other comprehensive loss in the Consolidated Balance Sheets. As a result of the Company’s overall net loss position for tax purposes, the Company has not recorded any deferred tax benefits on the loss amounts related to these interest rate swap contracts, as management does not currently believe that it is more likely than not that the Company will be able to realize the benefits associated with its net deferred tax asset positions.

Cash Flow Hedging Strategy

For each derivative instrument that is designated and qualifies as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income/loss (“OCI”) and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedge transaction affects earnings. Gains and losses on the derivative instrument representing either hedge ineffectiveness or hedge components that are excluded from the assessment of effectiveness are recognized in earnings. However, because the Company currently only utilizes fixed-for-floating interest rate swaps in which the underlying pricing terms agree, in all material respects, with the pricing terms of the Company’s vault cash rental obligations, the amount of ineffectiveness associated with such interest rate swap contracts has historically been immaterial. Accordingly, no ineffectiveness amounts associated with the Company’s cash flow hedges have been recorded in the Company’s consolidated financial statements. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the Consolidated Statements of Operations during the current period.

The interest rate swap contracts entered into with respect to the Company’s vault cash rental obligations effectively modify the Company’s exposure to interest rate risk by converting a portion of the Company’s monthly floating-rate vault cash rental obligations to a fixed rate. Such contracts are in place through December 31, 2014 for the Company’s United States vault cash rental obligations and December 31, 2013 for the Company’s United Kingdom vault cash rental obligations. By converting such amounts to a fixed rate, the impact of future interest rate changes (both favorable and unfavorable) on the Company’s monthly vault cash rental expense amounts has been reduced. The interest rate swap contracts typically involve the receipt of floating rate amounts from the Company’s counterparties that match, in all material respects, the floating rate amounts required to be paid by the Company to its vault cash providers for the portions of the Company’s outstanding vault cash obligations that have been hedged. In return, the Company typically pays the interest rate swap counterparties a fixed rate amount per month based on the same notional amounts outstanding. At no point is there an exchange of the underlying principal or notional amounts associated with the interest rate swaps. Additionally, none of the Company’s existing interest rate swap contracts contain credit-risk-related contingent features.

The Company is also a party to certain derivative instruments that were originally, but are no longer, designated as cash flow hedges. Specifically, during 2009, the Company entered into a number of interest rate swaps to hedge its exposure to changes in market rates of interest on its vault cash rental expense in the United Kingdom. During the fourth quarter of 2009, the Company’s vault cash provider in that market exercised its rights under the contract to modify the pricing terms and changed the target vault cash rental rate within the agreement. As a result of this change, the Company was no longer able to apply cash flow hedge accounting treatment to the underlying interest rate swap agreements. In December 2009, the Company entered into a series of additional trades, the effects of which were to offset the existing swaps and establish new swaps to match the modified underlying vault cash rental rate. Since the underlying swaps were not deemed to be effective hedges of the Company’s underlying vault cash rental costs, during the three months ended March 31, 2010, an unrealized gain of $0.2 million and a corresponding realized loss of $0.3 million related to these swaps have been reflected in the other expense (income) line item in the accompanying Consolidated Statements of Operations.

Tabular Disclosures

The following tables depict the effects of the use of the Company’s derivative contracts on its Consolidated Balance Sheets and Consolidated Statements of Operations.

Balance Sheet Data

		March 31, 2010						December 31, 2009
		Balance Sheet						Balance Sheet
		Location		Fair Value				Location		Fair Value
		(In thousands)
Asset Derivative Instruments:
Derivatives Designated as Hedging Instruments:
Interest rate swap contracts		Prepaid expenses, deferred costs, and other assets		$	17			Prepaid expenses, deferred costs, and other assets		$	1,445
Derivatives Not Designated as Hedging Instruments:
Interest rate swap contracts		Prepaid expenses, deferred costs, and other current assets		$	779			Prepaid expenses, deferred costs, and other current assets		$	—
Liability Derivative Instruments:
Derivatives Designated as Hedging Instruments:
Interest rate swap contracts		Current portion of other long-term liabilities		$	22,121			Current portion of other long-term liabilities		$	22,286
Interest rate swap contracts		Other long-term liabilities			13,818			Other long-term liabilities			11,139
Total				$	35,939					$	33,425
Derivatives Not Designated as Hedging Instruments:
Interest rate swap contracts		Current portion of other long-term liabilities		$	1,828			Current portion of other long-term liabilities		$	1,137
Interest rate swap contracts		Other long-term liabilities			1,186			Other long-term liabilities			1,517
Total				$	3,014					$	2,654
Total Derivatives:				$	38,157					$	34,634

The Asset Derivative Instruments reflected in the table above related to the current portion of certain derivative instruments that were in an overall liability position, for which the non-current portion is reflected in the Liability Derivative Instrument portion above.

Statements of Operations Data

		Three Months Ended March 31,
		Amount of Loss Recognized								Location of Gain		Amount of Loss Reclassified
		in OCI on Derivative								(Loss) Reclassified		from Accumulated OCI into
		Instruments (Effective								from Accumulated		Income
Derivatives in Cash Flow		Portion)								OCI into Income		(Effective Portion)
Hedging Relationships		2010				2009				(Effective Portion)		2010				2009
		(In thousands)										(In thousands)
Interest rate swap contracts		$	(10,147	)		$	(4,254	)		Cost of ATM operating revenues		$	(6,763	)		$	(5,447	)

		Three Months Ended March 31,
Derivatives Not				Amount of Loss Recognized
Designated as Hedging		Location of Loss Recognized		into Income on Derivative
Instruments		into Income on Derivative		2010				2009
				(In thousands)
Interest rate swap contracts		Other expense (income)		$	(25	)		$	—

The Company does not currently have any derivative instruments that have been designated as fair value or net investment hedges. The Company has not historically, and does not currently anticipate, discontinuing its existing derivative instruments prior to their expiration date. If the Company concludes that it is no longer probable that the anticipated future vault cash rental obligations that have been hedged will occur, or if changes are made to the underlying terms and conditions of the Company’s vault cash rental agreements, thus creating some amount of ineffectiveness associated with the Company’s current interest rate swap contracts, as occurred during the fourth quarter of 2009, any resulting gains or losses will be recognized within the Other expense (income) line item of the Company’s Consolidated Statements of Operations.

As of March 31, 2010, the Company expects to reclassify $23.1 million of net derivative-related losses contained within accumulated OCI to earnings during the next twelve months concurrent with the recording of the related vault cash rental expense amounts.

See Note 11, Fair Value Measurements for additional disclosures on the Company’s interest rate swap contracts in respect to its fair value measurements.

(11) Fair Value Measurements

The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant non-observable inputs. An asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis using the fair value hierarchy prescribed by U.S. GAAP.

		Fair Value Measurements at March 31, 2010
		Total				Level 1				Level 2				Level 3
		(In thousands)
Assets:
Assets associated with interest rate swaps		$	796			$	—			$	796			$	—
Liabilities:
Liabilities associated with interest rate swaps		$	38,953			$	—			$	38,953			$	—

		Fair Value Measurements at December 31, 2009
		Total				Level 1				Level 2				Level 3
		(In thousands)
Assets:
Assets associated with interest rate swaps		$	1,445			$	—			$	1,445			$	—
Liabilities:
Liabilities associated with interest rate swaps		$	36,079			$	—			$	36,079			$	—

Liabilities added to the asset retirement obligations line in the Company’s Consolidated Balance Sheets are measured at fair value on a non-recurring basis using Level 3 inputs. The liabilities added during the three month periods ended March 31, 2010 and 2009 were $814,000 and $776,000, respectively.

Additionally, below are descriptions of the Company’s valuation methodologies for assets and liabilities measured at fair value. The methods described below may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Cash and cash equivalents, accounts and notes receivable, net of the allowance for doubtful accounts, other current assets, accounts payable, accrued expenses, and other current liabilities. These financial instruments are not carried at fair value, but are carried at amounts that approximate fair value due to their short-term nature and generally negligible credit risk.

Interest rate swaps. The fair value of the Company’s interest rate swaps was a net liability of $38.2 million as of March 31, 2010. These financial instruments are carried at fair value, calculated as the present value of amounts estimated to be received or paid to a marketplace participant in a selling transaction. These derivatives are valued using pricing models based on significant other observable inputs (Level 2 inputs), while taking into account the creditworthiness of the party that is in the liability position with respect to each trade.

Additions to asset retirement obligation liability. The Company estimates the fair value of additions to its asset retirement obligation liability using expected future cash outflows discounted at the Company’s credit-adjusted risk-free interest rate.

Long-term debt. The carrying amount of the long-term debt balance related to borrowings under the Company’s revolving credit facility, if and when there is an amount outstanding, approximates fair value due to the fact that any borrowings are subject to short-term floating market interest rates. As of March 31, 2010, the fair value of the Company’s $300.0 million senior subordinated notes (see Note 7, Long-Term Debt) totaled $310.5 million, based on the quoted market price for such notes as of that date.

(12) Commitments and Contingencies

Legal Matters

In June 2004, the Company acquired from E*Trade Access, Inc. (“E*Trade”) a portfolio of several thousand ATMs. In connection with that acquisition, the Company assumed E*Trade’s position in a lawsuit in the United States District Court for the District of Massachusetts (the “Court”) wherein the Commonwealth of Massachusetts (the “Commonwealth”) and the National Federation of the Blind (the “NFB”) had sued E*Trade alleging that E*Trade had the obligation to make its ATMs accessible to blind patrons via voice guidance. In June 2007, the Company, the Commonwealth, and the NFB entered into a class action settlement agreement (the “Settlement Agreement”) regarding this matter. The Court approved the Settlement Agreement in December 2007. In 2009, the Company requested a modification to the Settlement Agreement so as to permit it to complete the upgrading or replacement of approximately 2,200 non-voice-guided ATMs by June 30, 2010, with respect to that portion of these non-voice-guided ATMs located in the Commonwealth, and by December 31, 2010, with respect to that portion of these

non-voice-guided ATMs located in other states. The Commonwealth, the NFB, and the Company have reached an agreement on a proposed modification to the Settlement Agreement and have submitted a joint motion to the Court requesting its approval. The material terms of the proposed modification include that the Company must: (i) ensure all Company-owned ATMs in the state of Massachusetts are voice-guided no later than June 30, 2010; (ii) ensure all of its Company-owned ATMs located anywhere but in 7-Eleven locations are voice-guided by December 31, 2010; (iii) ensure all of its ATMs located in 7-Eleven locations are voice-guided by March 31, 2011; (iv) affix Braille signage on all Company-owned ATMs; (v) distribute Braille signage to non-Company-owned voice-guided ATMs in its portfolio that have not previously been provided such signage by the Company; (vi) keep the Company’s internet-based ATM Locator updated as to the location of the Company’s voice-guided ATMs; and (vii) ensure that all voice-guided ATMs in its portfolio have tactilely discernable controls, a headphone jack, and a voice script that enables the consumer to complete an ATM transaction. Currently, the Company expects the proposed modification to the Settlement Agreement to be approved by both the class of plaintiffs indentified in the lawsuit and the Court within the next 120 days. As the proposed settlement modification does not impact the Company’s obligations under the June 2007 settlement agreement but rather only the timing of fulfilling its obligations, the Company does not believe that the proposed settlement modification, if approved, will have a material impact on its financial condition or results of operations.

In addition to the above item, the Company is subject to various legal proceedings and claims arising in the ordinary course of its business. The Company has provided reserves where necessary for all claims and the Company’s management does not expect the outcome in any of these legal proceedings, individually or collectively, to have a material adverse impact on the Company’s financial condition or results of operations.

Regulatory Matters

In early October 2009, the Central Bank of Mexico adopted new rules regarding how ATM operators disclose fees to consumers. The objective of these rules is to provide more transparency to the consumer regarding the cost of a specific ATM transaction, rather than to limit the amount of fees charged to the consumer. These rules, which became effective on May 4, 2010, required ATM operators to elect between receiving interchange fees from card issuers or surcharge fees from consumers. Cardtronics Mexico has elected to assess an additional surcharge fee on the consumer rather than select the interchange fee-only option. The additional surcharge fees to be assessed are intended to offset the interchange fees that Cardtronics Mexico will no longer be receiving. Because the overall fee being charged to the consumer is not expected to increase (i.e., the higher surcharge fees will be offset by lower interchange fees assessed by the consumer’s financial institution), the Company does not anticipate that these new rules will have a material adverse impact on Cardtronics Mexico’s operations. However, if the higher surcharge fees result in a significant reduction in the number of transactions being conducted on Cardtronics Mexico’s ATMs, the Company’s financial results would be adversely impacted.

Other Commitments

Asset Retirement Obligations. The Company’s asset retirement obligations consist primarily of deinstallation costs of the ATM and costs to restore the ATM site to its original condition. In most cases, the Company is legally required to perform this deinstallation and restoration work. The Company had $24.7 million accrued for these liabilities as of March 31, 2010. For additional information, see Note 8, Asset Retirement Obligations.

Other Contingencies

In February 2010, Mount Vernon Money Center (“MVMC”), one of the Company’s third-party armored service providers in the Northeast United States, ceased all cash replenishment operations for its customers following the arrest on charges of bank fraud of its founder and principal owner. Shortly thereafter, the U.S. District Court in the Southern District of New York (the “Court”) appointed a receiver (the “Receiver”) to, among other things, seize all of the assets in the possession of MVMC. As a result of these actions, the Company was required to convert over 1,000 ATMs that were being serviced by MVMC to another third-party armored service provider, resulting in a minor amount of downtime being experienced by those ATMs. Further, based upon the Receiver’s report dated March 1, 2010, and filed with the Court on that same date, it appears that a portion of the vault cash that was delivered to MVMC on the Company’s behalf was either commingled with vault cash belonging to MVMC’s other customers or was misappropriated by MVMC. The Company estimates that the amount of vault cash held on the Company’s behalf immediately prior to the cessation of MVMC’s operations totaled $16.2 million.

The Company is currently working with the Receiver and federal authorities to recover the vault cash it is currently owed. At this point, it is uncertain what amount, if any, may ultimately be made available to the Company from the seized assets mentioned above, or from other potential sources of recovery, including proceeds from any insurance policies previously held by MVMC and its owner. Regardless, the Company currently believes that its existing insurance policies will cover any residual cash losses resulting from this incident, less related deductible payments. Because the Company cannot reasonably estimate the amount of residual cash losses that may ultimately result from this incident at this point in time, no contingent loss has been reflected in the accompanying Consolidated Statements of Operations. If new information comes to light and the recovery of any resulting cash losses is no longer deemed to be probable, the Company may be required to recognize such losses without a corresponding insurance receivable.

(13) Income Taxes

Income tax expense based on the Company’s income (loss) before income taxes was as follows for the three month periods ended March 31:

		2010				2009
		(In thousands)
Income tax expense		$	1,439			$	1,017
Effective tax rate			25.4	%			(25.3	)%

The Company has established valuation allowances for its net deferred tax asset positions in all of its jurisdictions as it believes it is more likely than not that such benefits will not be realized. In addition, during each of the three month periods ended March 31, 2010 and 2009, the Company increased its domestic valuation allowance by approximately $0.9 million. The recording of such valuation allowance, along with current state income tax amounts, resulted in the negative effective tax rate reflected above for 2009.

Although the Company continued to establish valuation allowances in all of its operating segments during the three month period ended March 31, 2010, if the Company continues to generate substantial pre-tax operating profits, as it has during the past twelve months, its existing and future valuation allowances may no longer be necessary. It should also be noted that as of December 31, 2009, the Company had approximately $38.0 million in federal net operating loss carryforwards that can be utilized to reduce the Company’s taxable income in future periods, subject to certain restrictions and limitations. The anticipated utilization of a portion of such carryforwards has been factored into the income tax provision estimate reflected above for the quarter ended March 31, 2010.

(14) Segment Information

As of March 31, 2010, the Company’s operations consisted of its United States, United Kingdom, and Mexico segments. The Company’s operations in Puerto Rico and the U.S. Virgin Islands are included in its United States segment. While each of these reporting segments provides similar kiosk-based and/or ATM-related services, each segment is currently managed separately as they require different marketing and business strategies.

Management uses EBITDA to assess the operating results and effectiveness of its segments. Management believes EBITDA is useful because it allows them to more effectively evaluate the Company’s operating performance and compare the results of its operations from period to period without regard to its financing methods or capital structure. Additionally, the Company excludes depreciation, accretion, and amortization expense as these amounts can vary substantially from company to company within its industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. EBITDA, as defined by the Company, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with U.S. GAAP. In evaluating our performance as measured by EBITDA, management recognizes and considers the limitations of this measurement. EBITDA does not reflect our obligations for the payment of income taxes, interest expense or other obligations such as capital expenditures. Accordingly, EBITDA is only one of the measurements that management utilizes. Therefore, EBITDA should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating, investing, and financing activities or other income or cash flow statement data prepared in accordance with U.S. GAAP.

Below is a reconciliation of EBITDA to net income (loss) attributable to controlling interests for the three month periods ended March 31:

		2010				2009
		(In thousands)
EBITDA		$	27,553			$	18,394
Depreciation and accretion expense			10,222				9,639
Amortization expense			3,979				4,527
Interest expense, net, including amortization of deferred financing costs and bond discounts			7,948				8,279
Income tax expense			1,439				1,017
Net income (loss) attributable to controlling interests		$	3,965			$	(5,068	)

The following tables reflect certain financial information for each of the Company’s reporting segments for the three month periods ended March 31, 2010 and 2009. All intercompany transactions between the Company’s reporting segments have been eliminated.

		For the Three Month Period Ended March 31, 2010
		U.S.				U.K.				Mexico				Eliminations				Total
		(In thousands)
Revenue from external customers		$	101,909			$	18,621			$	7,246			$	—			$	127,776
Intersegment revenues			678				—				—				(678	)			—
Cost of revenues			69,149				14,351				5,250				(678	)			88,072
Selling, general, and administrative expenses			9,275				1,305				563				—				11,143
Loss (gain) on disposal of assets			161				223				(7	)			—				377
EBITDA			23,652				2,713				1,453				(265	)			27,553
Depreciation and accretion expense			6,626				2,943				658				(5	)			10,222
Amortization expense			3,329				643				7				—				3,979
Interest expense, net			6,575				1,127				246				—				7,948
Capital expenditures (1)		$	6,001			$	2,251			$	353			$	—			$	8,605

		For the Three Month Period Ended March 31, 2009
		U.S.				U.K.				Mexico				Eliminations				Total
		(In thousands)
Revenue from external customers		$	96,767			$	14,777			$	3,801			$	—			$	115,345
Intersegment revenues			374				—				—				(374	)			—
Cost of revenues			70,782				10,707				2,928				(374	)			84,043
Selling, general, and administrative expenses (2)			9,636				1,017				202				—				10,855
Loss on disposal of assets			395				1,713				—				—				2,108
EBITDA			16,517				1,291				617				(31	)			18,394
Depreciation and accretion expense			6,805				2,436				403				(5	)			9,639
Amortization expense			4,119				399				9				—				4,527
Interest expense, net			6,922				1,216				141				—				8,279
Capital expenditures (1)		$	3,055			$	1,767			$	154			$	—			$	4,976

Identifiable Assets:

		March 31, 2010				December 31, 2009
		(In thousands)
United States		$	449,600			$	450,410
United Kingdom			68,570				76,109
Mexico			19,185				17,235
Eliminations			(88,033	)			(83,350	)
Total		$	449,322			$	460,404

(15) New Accounting Pronouncements

Adopted

Subsequent Events. In March 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-09, Subsequent Events, which amends FASB Accounting Standards Codification (“ASC”) 855, Subsequent Events. Under this updated guidance, SEC filers, as defined in the ASU, no longer are required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. The ASU became effective immediately after it was issued, and except for the removal of the date, the adoption of ASU 2010-09 did not have any impact on the Company’s consolidated financial statements.

Disclosures about Fair Value Measurements. In January 2010, the FASB issued ASU 2010-06, which amends ASC 820, Fair Value Measurements and Disclosures. This update adds new requirements for disclosures about transfers into and out of Level 1 and 2 of the fair value hierarchy and activity in Level 3 of the hierarchy. Additionally, it clarifies existing fair value measurement disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The Company adopted the provisions of ASU 2010-06 on January 1, 2010, except for the disclosures about the activity in Level 3 fair value measurements, which is effective for the Company beginning January 1, 2011. The Company’s adoption of ASU 2010-06 did not, and is not expected to, have a material impact on the Company’s consolidated financial position or results of operations.

Issued but Not Yet Adopted

Multiple-Deliverable Revenue Arrangements. In October 2009, the FASB issued ASU 2009-13, which amends ASC 605, Revenue Recognition. This update removes the criterion that entities must use objective and reliable evidence of fair value in accounting for each deliverable separately. Instead, ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. ASU 2009-13 is effective for the Company beginning January 1, 2011 and may be applied on either a prospective or retrospective basis, with early adoption permitted. The Company does not expect the adoption of ASU 2009-13 to have a material impact on its consolidated financial position or results of operations.

(16) Supplemental Guarantor Financial Information

The Company’s $300.0 million of senior subordinated notes are guaranteed on a full and unconditional basis by all of the Company’s domestic subsidiaries. The following information sets forth the condensed consolidating statements of operations and cash flows for the three month periods ended March 31, 2010 and 2009 and the condensed consolidating balance sheets as of March 31, 2010 and December 31, 2009 of (1) Cardtronics, Inc., the parent company and issuer of the senior subordinated notes (“Parent”); (2) the Company’s domestic subsidiaries on a combined basis (collectively, the “Guarantors”); and (3) the Company’s international subsidiaries on a combined basis (collectively, the “Non-Guarantors”):

Condensed Consolidating Statements of Operations

		Three Months Ended March 31, 2010
										Non-
		Parent				Guarantors				Guarantors				Eliminations				Total
		(In thousands)
Revenues		$	—			$	102,587			$	25,867			$	(678	)		$	127,776
Operating costs and expenses			1,543				86,997				25,936				(683	)			113,793
Operating (loss) income			(1,543	)			15,590				(69	)			5				13,983
Interest expense, net, including amortization of deferred financing costs and bond discounts			1,779				4,796				1,373				—				7,948
Equity in earnings of subsidiaries			(9,027	)			—				—				9,027				—
Other expense (income)			380				(30	)			16				—				366
Income (loss) before income taxes			5,325				10,824				(1,458	)			(9,022	)			5,669
Income tax expense			1,100				339				—				—				1,439
Net income (loss)			4,225				10,485				(1,458	)			(9,022	)			4,230
Net income attributable to noncontrolling interests			—				—				—				265				265
Net income (loss) attributable to controlling interests and available to common stockholders		$	4,225			$	10,485			$	(1,458	)		$	(9,287	)		$	3,965

		Three Months Ended March 31, 2009
										Non-
		Parent				Guarantors				Guarantors				Eliminations				Total
		(In thousands)
Revenues		$	—			$	97,141			$	18,578			$	(374	)		$	115,345
Operating costs and expenses			1,133				90,604				19,814				(379	)			111,172
Operating (loss) income			(1,133	)			6,537				(1,236	)			5				4,173
Interest expense, net, including amortization of deferred financing costs and bond discounts			496				6,426				1,357				—				8,279
Equity in losses of subsidiaries			2,634				—				—				(2,634	)			—
Other (income) expense			(167	)			(22	)			103				—				(86	)
(Loss) income before income taxes			(4,096	)			133				(2,696	)			2,639				(4,020	)
Income tax expense			946				71				—				—				1,017
Net (loss) income			(5,042	)			62				(2,696	)			2,639				(5,037	)
Net income attributable to noncontrolling interests			—				—				—				31				31
Net (loss) income attributable to controlling interests and available to common stockholders		$	(5,042	)		$	62			$	(2,696	)		$	2,608			$	(5,068	)

Condensed Consolidating Balance Sheets

		As of March 31, 2010
										Non-
		Parent				Guarantors				Guarantors				Eliminations				Total
		(In thousands)
Assets:
Cash and cash equivalents		$	261			$	8,451			$	1,982			$	—			$	10,694
Accounts and notes receivable, net			30,339				22,918				4,020				(30,273	)			27,004
Other current assets			461				7,018				6,988				(6	)			14,461
Total current assets			31,061				38,387				12,990				(30,279	)			52,159
Property and equipment, net			—				86,833				57,972				(148	)			144,657
Intangible assets, net			6,045				70,064				7,975				—				84,084
Goodwill			—				150,461				13,774				—				164,235
Investments in subsidiaries			(20,037	)			—				—				20,037				—
Intercompany receivable (payable)			299,354				14,887				(5,813	)			(308,428	)			—
Prepaid expenses, deferred costs, and other assets			—				3,330				857				—				4,187
Total assets		$	316,423			$	363,962			$	87,755			$	(318,818	)		$	449,322
Liabilities and Stockholders’ (Deficit) Equity:
Current portion of long-term debt and notes payable		$	—			$	—			$	2,353			$	—			$	2,353
Capital lease obligations			—				96				—				—				96
Current portion of other long-term liabilities			—				22,658				3,584				—				26,242
Accounts payable and accrued liabilities			9,383				61,510				19,435				(30,273	)			60,055
Total current liabilities			9,383				84,264				25,372				(30,273	)			88,746
Long-term debt, net of related discounts			297,402				—				7,433				—				304,835
Intercompany payable			—				205,217				102,863				(308,080	)			—
Deferred tax liability, net			11,915				1,326				(52	)			—				13,189
Asset retirement obligations			—				14,893				9,762				—				24,655
Other long-term liabilities			—				18,432				1,742				—				20,174
Total liabilities			318,700				324,132				147,120				(338,353	)			451,599
Stockholders’ (deficit) equity			(2,277	)			39,830				(59,365	)			19,535				(2,277	)
Total liabilities and stockholders’ (deficit) equity		$	316,423			$	363,962			$	87,755			$	(318,818	)		$	449,322