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

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

Commission File Number: 001-33864

 

CARDTRONICS, INC.

(Exact name of registrant as specified in its charter)

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

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 August 3, 2009: 40,432,445

 

 

CARDTRONICS, INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)			1
Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008			1
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2009 and 2008			2
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008			3
Notes to Consolidated Financial Statements			4
Cautionary Statement Regarding Forward-Looking Statements			25
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
Item 3. Quantitative and Qualitative Disclosures About Market Risk			40
Item 4. Controls and Procedures			42
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			43
Item 1A. Risk Factors			43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			44
Item 4. Submission of Matters to a Vote of Security Holders			44
Item 6. Exhibits			45
Signatures			46
Exhibit 10.1
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.

		June 30, 2009				December 31, 2008
ASSETS
Current assets:
Cash and cash equivalents		$	6,492			$	3,424
Accounts and notes receivable, net of allowance of $526 and $504 as of June 30, 2009 and December 31, 2008, respectively			23,384				25,317
Inventory			2,903				3,011
Restricted cash, short-term			3,833				2,423
Prepaid expenses, deferred costs, and other current assets			11,110				17,273
Total current assets			47,722				51,448
Property and equipment, net			150,676				153,430
Intangible assets, net			99,942				108,327
Goodwill			165,483				163,784
Prepaid expenses, deferred costs, and other assets			4,313				3,839
Total assets		$	468,136			$	480,828
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current portion of long-term debt and notes payable		$	1,748			$	1,373
Current portion of capital lease obligations			605				757
Current portion of other long-term liabilities			25,855				24,302
Accounts payable			12,202				17,212
Accrued liabilities			57,426				55,174
Total current liabilities			97,836				98,818
Long-term liabilities:
Long-term debt, net of related discounts			326,698				344,816
Capital lease obligations			—				235
Deferred tax liability, net			13,564				11,673
Asset retirement obligations			22,777				21,069
Other long-term liabilities			17,512				23,967
Total liabilities			478,387				500,578
Commitments and contingencies
Stockholders’ deficit:
Common stock, $0.0001 par value; 125,000,000 shares authorized; 45,750,333 and 45,642,282 shares issued as of June 30, 2009 and December 31, 2008, respectively; 40,440,310 and 40,636,533 shares outstanding as of June 30, 2009 and December 31, 2008, respectively			4				4
Subscriptions receivable (at face value)			—				(34	)
Additional paid-in capital			196,221				194,101
Accumulated other comprehensive loss, net			(53,792	)			(64,025	)
Accumulated deficit			(104,779	)			(102,199	)
Treasury stock; 5,310,023 and 5,005,749 shares at cost as of June 30, 2009 and December 31, 2008, respectively			(48,612	)			(48,221	)
Total parent stockholders’ deficit			(10,958	)			(20,374	)
Noncontrolling interests			707				624
Total stockholders’ deficit			(10,251	)			(19,750	)
Total liabilities and stockholders’ deficit		$	468,136			$	480,828

See accompanying notes to consolidated financial statements.

CARDTRONICS, INC.

		Three Months Ended June 30,								Six Months Ended June 30,
		2009				2008				2009				2008
Revenues:
ATM operating revenues		$	121,362			$	122,868			$	234,942			$	239,165
ATM product sales and other revenues			3,286				4,107				5,051				8,385
Total revenues			124,648				126,975				239,993				247,550
Cost of revenues:
Cost of ATM operating revenues (excludes depreciation, accretion, and amortization shown separately below. See Note 1)			83,975				93,904				166,204				183,336
Cost of ATM product sales and other revenues			3,153				3,662				4,967				7,826
Total cost of revenues			87,128				97,566				171,171				191,162
Gross profit			37,520				29,409				68,822				56,388
Operating expenses:
Selling, general, and administrative expenses			10,584				9,800				21,439				18,351
Depreciation and accretion expense			9,935				9,978				19,574				19,010
Amortization expense			4,504				4,501				9,031				9,004
Loss on disposal of assets			1,676				1,115				3,784				2,435
Total operating expenses			26,699				25,394				53,828				48,800
Income from operations			10,821				4,015				14,994				7,588
Other expense (income):
Interest expense, net			7,644				7,722				15,355				15,354
Amortization of deferred financing costs and bond discounts			603				530				1,171				1,038
Other (income) expense			(1,041	)			17				(1,127	)			(115	)
Total other expense			7,206				8,269				15,399				16,277
Income (loss) before income taxes			3,615				(4,254	)			(405	)			(8,689	)
Income tax expense (benefit)			1,016				(633	)			2,033				(181	)
Net income (loss)			2,599				(3,621	)			(2,438	)			(8,508	)
Net income attributable to noncontrolling interests			111				—				142				—
Net income (loss) attributable to controlling interests and available to common stockholders		$	2,488			$	(3,621	)		$	(2,580	)		$	(8,508	)
Net income (loss) per common share — basic		$	0.06			$	(0.09	)		$	(0.07	)		$	(0.22	)
Net income (loss) per common share — diluted		$	0.06			$	(0.09	)		$	(0.07	)		$	(0.22	)
Weighted average shares outstanding — basic			39,032,087				38,735,027				39,005,202				38,662,452
Weighted average shares outstanding — diluted			39,651,363				38,735,027				39,005,202				38,662,452

See accompanying notes to consolidated financial statements.

CARDTRONICS, INC.

		Six Months Ended June 30,
		2009				2008
Cash flows from operating activities:
Net loss		$	(2,438	)		$	(8,508	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, accretion, and amortization expense			28,605				28,014
Amortization of deferred financing costs and bond discounts			1,171				1,038
Stock-based compensation expense			2,120				811
Deferred income taxes			1,891				(317	)
Loss on disposal of assets			3,784				2,435
Other reserves and non-cash items			(1,922	)			(3,805	)
Changes in assets and liabilities, net of acquisitions:
Decrease in accounts and notes receivable, net			2,070				1,534
Decrease (increase) in prepaid, deferred costs, and other current assets			6,734				(1,621	)
(Increase) decrease in inventory			(47	)			157
Decrease in other assets			1,192				394
Decrease in accounts payable and accrued liabilities			(7,710	)			(10,335	)
Decrease in other liabilities			(2,745	)			(2,371	)
Net cash provided by operating activities			32,705				7,426
Cash flows from investing activities:
Additions to property and equipment			(10,712	)			(42,456	)
Payments for exclusive license agreements and site acquisition costs			(87	)			(497	)
Principal payments received under direct financing leases			—				17
Net cash used in investing activities			(10,799	)			(42,936	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt			27,812				76,236
Repayments of long-term debt and capital leases			(46,486	)			(43,829	)
Repayments of borrowings under bank overdraft facility, net			(142	)			(3,881	)
Payments received on subscriptions receivable			34				101
Proceeds from exercises of stock options			—				286
Equity offering costs			—				(1,489	)
Debt issuance and modification costs			(458	)			(54	)
Repurchase of common stock			(92	)			—
Net cash (used in) provided by financing activities			(19,332	)			27,370
Effect of exchange rate changes on cash			494				(144	)
Net increase (decrease) in cash and cash equivalents			3,068				(8,284	)
Cash and cash equivalents as of beginning of period			3,424				13,439
Cash and cash equivalents as of end of period		$	6,492			$	5,155
Supplemental disclosure of cash flow information:
Cash paid for interest, including interest on capital leases		$	15,525			$	16,096
Cash paid for income taxes		$	285			$	220

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”) owns or operates approximately 32,880 automated teller machines (“ATMs”) located in all 50 states of the United States, including 2,530 ATMs located throughout the United Kingdom, and 2,100 ATMs located throughout Mexico. 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. This 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 United Kingdom. Finally, the Company provides electronic funds transfer (“EFT”) transaction processing services to its network of ATMs as well as over 1,500 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, 2008 (“2008 Form 10-K”), which includes a summary of the Company’s significant accounting policies and other disclosures.

The financial statements as of June 30, 2009 and for the three and six month periods ended June 30, 2009 and 2008 are unaudited. The Consolidated Balance Sheet as of December 31, 2008 was derived from the audited balance sheet filed in the Company’s 2008 Form 10-K. In management’s opinion, all adjustments necessary for a fair presentation of the Company’s interim and prior period results have been made, including those described in Note 2 Revision of Prior Period Financial Statements. The results of operations for the three and six month periods ended June 30, 2009 and 2008 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 reclassifications that were made to conform to the current period presentation. 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. See Note 16 for additional information on the presentation of noncontrolling interests in the Company’s financial statements and the Company’s adoption of Statement of Financial Accounting Standards (“SFAS”) No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 5, which the Company adopted effective January 1, 2009.

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.

The Company has evaluated subsequent events through August 7, 2009, which represents the date the financial statements were issued.

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 and six month periods ended June 30:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(In thousands)
Depreciation and accretion expenses related to ATMs and ATM-related assets		$	8,237			$	8,673			$	16,274			$	16,585
Amortization expense			4,503				4,501				9,030				9,004
Total depreciation, accretion, and amortization expenses excluded from Cost of ATM operating revenues and Gross profit		$	12,740			$	13,174			$	25,304			$	25,589

During the second quarter of 2009, the Company identified an error related to certain capitalized costs associated with its United Kingdom operation. Upon analysis of the Company’s fixed asset records, management identified certain assets primarily related to previously cancelled ATM sites that should have been expensed in prior periods. The impact of such error was an overstatement of fixed assets and depreciation expense, and an understatement of cost of sales and loss on disposal of assets for the years ended December 31, 2007 and 2008, including the related quarterly periods contained therein. The cumulative impact of such error on the statement of operations for the years affected would have been a total additional expense of approximately $1.7 million. In accordance with Staff Accounting Bulletin No. 108 (“SAB 108”), as issued by the Securities and Exchange Commission (“SEC”), management determined that the effects of the misstatement were not material to any previously reported quarterly or annual period. As such, the related corrections will be made to the applicable prior periods as such financial information is included in future filings with the SEC.

The Company’s prior period financial statements included in this filing have been revised to reflect these adjustments, the effects of which have been summarized below.

Consolidated Balance Sheet:

		December 31, 2008
		As Reported				Adjustments				As Adjusted
		(In thousands)
Property and equipment, net		$	154,829			$	(1,399	)		$	153,430
Total assets			482,227				(1,399	)			480,828
Accumulated other comprehensive loss, net			(64,355	)			330				(64,025	)
Accumulated deficit			(100,470	)			(1,729	)			(102,199	)
Total parent stockholders’ deficit			(18,975	)			(1,399	)			(20,374	)
Total stockholders’ deficit			(18,351	)			(1,399	)			(19,750	)
Total liabilities and stockholders’ deficit			482,227				(1,399	)			480,828

Consolidated Statements of Operations:

		Three Months Ended												Six Months Ended
		June 30, 2008												June 30, 2008
		As Reported				Adjustments				As Adjusted				As Reported				Adjustments				As Adjusted
		(In thousands, excluding per share amounts)
Cost of ATM operating revenues		$	93,601			$	303			$	93,904			$	182,702			$	634			$	183,336
Total cost of revenues			97,263				303				97,566				190,528				634				191,162
Gross profit			29,712				(303	)			29,409				57,022				(634	)			56,388
Depreciation and accretion expense			10,039				(61	)			9,978				19,121				(111	)			19,010
Loss on disposal of assets(1)			—				1,115				1,115				—				2,435				2,435
Total operating expenses(2)			24,340				1,054				25,394				46,476				2,324				48,800
Income from operations(2)			5,372				(1,357	)			4,015				10,546				(2,958	)			7,588
Other expense(2)			1,042				(1,025	)			17				2,103				(2,218	)			(115	)
Total other expense(2)			9,294				(1,025	)			8,269				18,495				(2,218	)			16,277
Loss before income taxes			(3,922	)			(332	)			(4,254	)			(7,949	)			(740	)			(8,689	)
Income tax (benefit) expense			(540	)			(93	)			(633	)			25				(206	)			(181	)
Net loss			(3,382	)			(239	)			(3,621	)			(7,974	)			(534	)			(8,508	)
Net loss attributable to controlling interests and available to common stockholders			(3,382	)			(239	)			(3,621	)			(7,974	)			(534	)			(8,508	)
Net loss per common share — basic and diluted			(0.09	)			—				(0.09	)			(0.21	)			(0.01	)			(0.22	)

		Year Ended December 31, 2008												Year Ended December 31, 2007
		As Reported				Adjustments				As Adjusted				As Reported				Adjustments				As Adjusted
		(In thousands, excluding per share amounts)
Cost of ATM operating revenues		$	361,902			$	1,014			$	362,916			$	281,351			$	354			$	281,705
Total cost of revenues			377,527				1,014				378,541				293,293				354				293,647
Gross profit			115,487				(1,014	)			114,473				85,005				(354	)			84,651
Depreciation and accretion expense			39,414				(250	)			39,164				26,859				(78	)			26,781
Loss on disposal of assets(1)			—				5,807				5,807				—				2,485				2,485
Total operating expenses(2)			147,034				5,557				152,591				75,086				2,407				77,493
(Loss) Income from operations(2)			(31,547	)			(6,571	)			(38,118	)			9,919				(2,761	)			7,158
Minority interest in subsidiary(3)			(1,022	)			1,022				—				(376	)			376				—
Other expense (income)(2)			5,377				(5,284	)			93				1,585				(2,211	)			(626	)
Total other expense(2) (3)			37,552				(4,262	)			33,290				32,373				(1,835	)			30,538
Loss before income taxes			(69,099	)			(2,309	)			(71,408	)			(22,454	)			(926	)			(23,380	)
Income tax (benefit) expense			938				51				989				4,636				(159	)			4,477
Net loss			(70,037	)			(2,360	)			(72,397	)			(27,090	)			(767	)			(27,857	)
Net loss attributable to noncontrolling interests			—				(1,022	)			(1,022	)			—				(376	)			(376	)
Net loss attributable to controlling interests and available to common stockholders			(70,037	)			(1,338	)			(71,375	)			(63,362	)			(391	)			(63,753	)
Net loss per common share — basic and diluted			(1.81	)			(0.03	)			(1.84	)			(4.11	)			(0.02	)			(4.13	)

Consolidated Statement of Cash Flows:

		Six Months Ended June 30, 2008
		As Reported				Adjustments				As Adjusted
		(In thousands)
Cash flows from operating activities:
Net loss		$	(7,974	)		$	(534	)		$	(8,508	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, accretion, and amortization expense			28,125				(111	)			28,014
Deferred income taxes			(111	)			(206	)			(317	)
Loss on disposal of assets(1)			2,056				379				2,435
Other reserves and non-cash items(1)			(3,643	)			(162	)			(3,805	)
Net cash provided by operating activities			8,060				(634	)			7,426
Cash flows from investing activities:
Additions to property and equipment			(43,090	)			634				(42,456	)
Net cash used in investing activities			(43,570	)			634				(42,936	)

The Company accounts for stock-based compensation arrangements under SFAS No. 123 (revised 2004), Share-Based Payment, which requires a company to calculate the fair value of stock-based instruments awarded to employees on the date of grant and recognize 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 Consolidated Statements of Operations for the three and six month periods ended June 30:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(In thousands)
Cost of ATM operating revenues		$	193			$	132			$	384			$	197
Selling, general, and administrative expenses			869				413				1,736				614
Total stock-based compensation expense		$	1,062			$	545			$	2,120			$	811

The increase in stock-based compensation expense during the three and six months ended June 30, 2009 was due to the issuance of 1,782,750 shares of restricted stock and 293,000 stock options to certain of its employees during 2008 and 2009. Both the restricted shares and the stock options were granted under the Company’s 2007 Stock Incentive Plan.

Options. A summary of the Company’s outstanding stock options as of June 30, 2009 and changes during the six months ended June 30, 2009 are presented below:

						Weighted
		Number				Average
		of Shares				Exercise Price
Options outstanding as of January 1, 2009			4,288,942			$	7.96
Granted			40,000			$	2.11
Exercised			(8,051	)		$	0.03
Forfeited			(44,807	)		$	10.02
Options outstanding as of June 30, 2009			4,276,084			$	7.90
Options vested and exercisable as of June 30, 2009			3,416,352			$	7.20

The options granted in 2009 had a total grant-date fair value of approximately $41,600, or $1.04 per share.

Restricted Stock. A summary of the Company’s outstanding restricted shares as of June 30, 2009 and changes during the six months ended June 30, 2009 are presented below:

		Number
		of Shares
Restricted shares outstanding as of January 1, 2009			1,679,250
Granted			100,000
Forfeited			(195,000	)
Vested			(375,438	)
Restricted shares outstanding as of June 30, 2009			1,208,812

During the second quarter of 2009, the Company granted 100,000 restricted shares to certain members of its board of directors with a total grant-date fair value of $290,000, or $2.90 per share. Compensation expense associated with the restricted stock grants totaled approximately $74,000 during the three and six month periods ended June 30, 2009, leaving approximately $216,000 of unrecognized compensation cost associated with these shares as of June 30, 2009. Such amount will be amortized over the remainder of 2009. Additionally, as of June 30, 2009, there was approximately $8.9 million in unrecognized compensation expense associated with prior restricted share grants.

(4) Earnings per Share

The Company reports its earnings per share in accordance with SFAS No. 128, Earnings per Share. 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. Such securities include all outstanding stock options and all shares of restricted stock. For the three month period ended June 30, 2008, and for the six month periods ended June 30, 2009 and 2008, the Company incurred net losses 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. Dilutive securities were included in the calculation of diluted earnings per share for the three month period ended June 30, 2009 since the Company reported net income for the 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 pursuant to Financial Accounting Standards Board (“FASB”) Staff Position (“FSP”) Emerging Issues Task Force (“EITF”) 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities. The Company has allocated the undistributed earnings for the three months ended June 30, 2009 among the Company’s outstanding common shares and issued but unvested restricted shares as follows:

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

		Three months ended June 30, 2009
						Unvested
		Common Stock				Restricted Shares
Net income attributed to each class of common stock and participating security		$	2,398			$	90
Weighted-average shares outstanding — Basic			39,032,087				1,487,744
Weighted-average shares outstanding — Diluted			39,651,363				1,487,744
Earnings per share — Basic and Diluted		$	0.06			$	0.06

For the three months ended June 30, 2009, 5,805 potentially dilutive common shares related to restricted stock were excluded from the computation of diluted EPS for common shares as their effect was antidulutive.

(5) Comprehensive Income (Loss)

SFAS No. 130, Reporting Comprehensive Income, establishes standards for reporting comprehensive income (loss) and its components in the financial statements. Total comprehensive income (loss) consisted of the following:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(In thousands)
Net income (loss)		$	2,599			$	(3,621	)		$	(2,438	)		$	(8,508	)
Unrealized gains on interest rate hedges, net of taxes			343				18,421				1,536				4,956
Foreign currency translation adjustments			10,113				157				8,697				(1,249	)
Total comprehensive income (loss)			13,055				14,957				7,795				(4,801	)
Less: comprehensive income (loss) attributable to noncontrolling interests			162				(14	)			171				10
Comprehensive income (loss) attributable to controlling interests		$	12,893			$	14,971			$	7,624			$	(4,811	)

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

		June 30, 2009				December 31, 2008
		(In thousands)
Unrealized losses on interest rate hedges		$	(30,616	)		$	(32,152	)
Foreign currency translation adjustments			(23,176	)			(31,873	)
Total accumulated other comprehensive loss		$	(53,792	)		$	(64,025	)

The Company currently believes that a majority of the unremitted earnings of its foreign subsidiaries will be reinvested in the foreign countries in which those subsidiaries operate for an indefinite period of time. Accordingly, no deferred taxes have been provided for the differences between the Company’s book basis and underlying tax basis in those subsidiaries or the foreign currency translation adjustment amounts reflected in the tables above. 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.

(6) 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 June 30, 2009, as well as the changes in the net carrying amounts for the six months ended June 30, 2009, by segment:

		Goodwill												Trade Name
		U.S.				U.K.				Mexico				U.S.				U.K.				Total
		(In thousands)
Balance as of January 1, 2009		$	150,461			$	12,603			$	720			$	200			$	2,922			$	166,906
Foreign currency translation adjustments			—				1,704				(5	)			—				395				2,094
Balance as of June 30, 2009		$	150,461			$	14,307			$	715			$	200			$	3,317			$	169,000

Intangible Assets with Definite Lives

The following is a summary of the Company’s intangible assets that are subject to amortization as of June 30, 2009:

		Gross
		Carrying				Accumulated				Net Carrying
		Amount				Amortization				Amount
		(In thousands)
Customer and branding contracts/relationships		$	158,585			$	(72,895	)		$	85,690
Deferred financing costs			14,535				(6,694	)			7,841
Exclusive license agreements			5,475				(2,885	)			2,590
Non-compete agreements			432				(128	)			304
Total		$	179,027			$	(82,602	)		$	96,425

(7) Accrued Liabilities

Accrued liabilities consisted of the following:

		June 30, 2009				December 31, 2008
		(In thousands)
Accrued merchant fees		$	11,588			$	10,291
Accrued interest expense			10,565				10,643
Accrued maintenance fees			6,663				4,273
Accrued armored fees			5,229				5,372
Accrued compensation			4,919				3,396
Accrued merchant settlement amounts			3,856				3,111
Accrued cash rental and management fees			2,943				3,693
Accrued processing costs			2,403				1,804
Accrued purchases			1,872				1,085
Accrued interest rate swap payments			1,847				1,836
Accrued ATM telecommunications costs			1,249				1,916
Other accrued expenses			4,292				7,754
Total		$	57,426			$	55,174

(8) Long-Term Debt

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

		June 30, 2009				December 31, 2008
		(In thousands)
Revolving credit facility		$	24,500			$	43,500
Senior subordinated notes due August 2013 (net of unamortized discounts of $3.1 million and $3.4 million as of June 30, 2009 and December 31, 2008)			296,932				296,637
Other			7,014				6,052
Total			328,446				346,189
Less: current portion			1,748				1,373
Total long-term debt, excluding current portion		$	326,698			$	344,816

Revolving Credit Facility

In February 2009, the Company amended its revolving credit facility to (i) authorize the repurchase of common stock up to an aggregate of $10.0 million; (ii) increase the amount of aggregate “Investments” (as such term is defined in the revolving credit facility) that the Company may make in non wholly-owned subsidiaries from $10.0 million to $20.0 million and correspondingly increase the aggregate amount of Investments that may be made in subsidiaries that are not Loan Parties (as such term is defined in the revolving credit facility) from $25.0 million to $35.0 million; (iii) increase the maximum amount of letters of credit that may be issued under the revolving credit facility from $10.0 million to $15.0 million; and (iv) modify the amount of capital expenditures that may be incurred on a rolling 12-month basis, as measured on a quarterly basis.

As of June 30, 2009, $24.5 million of borrowings were outstanding under the Company’s $175.0 million revolving credit facility. Additionally, the Company had posted $2.7 million in letters of credit 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 the Company’s borrowing under its 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, further reduce the Company’s borrowing capacity under its revolving credit facility. As of June 30, 2009, 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 agreement, totaled approximately $143.5 million. As of June 30, 2009, the Company was in compliance with all applicable covenants and ratios under the facility.

Other Facilities

Cardtronics Mexico equipment financing agreements. As of June 30, 2009, other long-term debt consisted of seven separate equipment financing agreements entered into by Cardtronics Mexico. These agreements, which are denominated in Mexican pesos and bear interest at an average fixed rate of 10.98%, 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 a guaranty for 51.0% of the obligations under these agreements (consistent with its ownership percentage in Cardtronics Mexico.) As of June 30, 2009, the total amount of the guaranty was $47.2 million pesos (approximately $3.6 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 June 30, 2009) 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 June 30, 2009, no amounts were outstanding under this facility.

(9) 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. In accordance with SFAS No. 143, Asset Retirement Obligations, 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 the estimated useful lives of the underlying ATMs, 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 six months ended June 30, 2009 (in thousands):

Asset retirement obligation as of January 1, 2009		$	21,069
Additional obligations			1,522
Accretion expense			973
Payments			(1,783	)
Foreign currency translation adjustments			996
Asset retirement obligation as of June 30, 2009		$	22,777

See Note 12 for additional disclosures on the Company’s asset retirement obligations required by SFAS No. 157, Fair Value Measurements.

(10) Other Liabilities

Other liabilities consisted of the following:

		June 30, 2009				December 31, 2008
		(In thousands)
Current Portion of Other Long-Term Liabilities:
Interest rate swaps		$	19,834			$	13,788
Obligations associated with acquired unfavorable contracts			3,677				8,203
Deferred revenue			1,954				1,879
Other			390				432
Total		$	25,855			$	24,302
Other Long-Term Liabilities:
Interest rate swaps		$	10,782			$	18,364
Deferred revenue			2,922				3,604
Other long-term liabilities			3,808				1,999
Total		$	17,512			$	23,967

The decline in the non-current portion of other long-term liabilities was primarily the result of the reclassification of unrealized losses on the Company’s interest rate swap transactions from long-term to current.

(11) Derivative Financial Instruments

Accounting Policy

SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (“SFAS No. 133”), requires that the Company recognize all of its derivative instruments as either assets or liabilities in the balance sheet at fair value. The accounting for changes in the fair value (e.g., gains or losses) of those derivative instruments depends on (i) whether such instruments have been designated (and qualify) as part of a hedging relationship and (ii) on the type of hedging relationship actually designated. For derivative instruments that are designated and qualify as hedging instruments, the Company must designate 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. In addition to SFAS No. 133, SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS No. 161”), requires that the Company provide expanded qualitative and quantitative disclosures about its derivative instruments. The Company adopted SFAS No. 161 effective January 1, 2009 and has provided the additional disclosures required by such statement below.

The Company is exposed to certain risks relating to its ongoing business operations, including interest rate risk associated with the Company’s vault cash rental obligations and, to a lesser extent, outstanding borrowings under the Company’s revolving credit facility. 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 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.

As of June 30, 2009, the notional amounts, weighted-average fixed rates, and terms associated with the Company’s interest rate swap contracts were as follows:

											Weighted
Notional Amounts			Notional Amounts				Notional Amounts				Average Fixed
United States			United Kingdom				Consolidated(1)				Rate				Term
			(In thousands)
$	550,000		£	—			$	550,000				4.30	%		July 1, 2009 – December 31, 2009
$	600,000		£	50,000			$	682,936				3.92	%		January 1, 2010 – December 31, 2010
$	550,000		£	50,000			$	632,936				3.66	%		January 1, 2011 – December 31, 2011
$	350,000		£	25,000			$	391,468				3.82	%		January 1, 2012 – December 31, 2012
$	100,000		£	—			$	100,000				4.11	%		January 1, 2013 – December 31, 2013

In accordance with SFAS No. 133, the Company has designated 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 deferred tax benefits on the loss amounts related to these interest rate swap contracts as management does not currently believe that the Company will be able to realize the benefits associated with its net deferred tax asset positions.

Cash Flow Hedging Strategy

For derivative instruments that are designated and qualify 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 domestic vault cash rental obligations, the amount of ineffectiveness associated with such interest rate swap contracts has historically been immaterial. Accordingly, no ineffectiveness amounts have been recorded in the Company’s consolidated financial statements.

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, 2012 for the Company’s United Kingdom vault cash rental obligations, and December 31, 2013 for the Company’s United States 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 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 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.

Tabular Disclosures

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

Balance Sheet Data

Liability Derivative Instruments

June 30, 2009

December 31, 2008

Derivatives Designated as Hedging

Balance Sheet

Balance Sheet

Instruments Under SFAS No. 133

Location

Fair Value

Location

Fair Value

(In thousands)

Interest rate swap contracts

Current portion of other long-term liabilities

$

19,834

Current portion of other long-term liabilities

$

13,788

Interest rate swap contracts

Other long-term liabilities

10,782

Other long-term liabilities

18,364

Total

$

30,616

$

32,152

The Company does not currently have any derivative instruments that are not designated as hedging instruments under SFAS No. 133. Additionally, all of the Company’s derivative instruments that were designated as hedging instruments under SFAS No. 133 were in a liability position as of June 30, 2009 and December 31, 2008. Accordingly, no asset derivative instrument positions have been reflected in the table above.

Statements of Operations Data

		Three Months Ended June 30,
										Location of Gain (Loss)
		Amount of Gain (Loss)								Reclassified from				Amount of Loss Reclassified from
Derivatives in SFAS No. 133		Recognized in OCI on Derivative								Accumulated OCI into				Accumulated OCI into Income
Cash Flow Hedging		Instruments (Effective Portion)								Income (Effective				(Effective Portion)
Relationships		2009				2008				Portion)				2009				2008
		(In thousands)												(In thousands)
Interest rate swap contracts		$	5,934			$	21,551			Cost of ATM operating revenues				$	(5,591	)		$	(3,130	)

		Six Months Ended June 30,
										Location of Gain (Loss)
		Amount of Gain (Loss)								Reclassified from				Amount of Loss Reclassified from
Derivatives in SFAS No. 133		Recognized in OCI on Derivative								Accumulated OCI into				Accumulated OCI into Income
Cash Flow Hedging		Instruments (Effective Portion)								Income (Effective				(Effective Portion)
Relationships		2009				2008				Portion)				2009				2008
		(In thousands)												(In thousands)
Interest rate swap contracts		$	12,574			$	9,973			Cost of ATM operating revenues				$	(11,038	)		$	(5,017	)

The Company does not currently have any derivative instruments that have been designated as fair value or net investment hedges pursuant to SFAS No. 133. Additionally, the Company does not recognize any gains or losses related to the ineffective portion of its interest rate swaps as such amounts have historically been, and, based on the Company’s analysis as of June 30, 2009, are expected to continue to be, immaterial. Furthermore, the Company has not historically, and does not currently anticipate, discontinuing its existing derivative instruments prior to their expiration date. However, 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, 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 June 30, 2009, the Company expects to reclassify $19.8 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 12 for additional disclosures on the Company’s interest rate swap contracts required by SFAS No. 157, Fair Value Measurements.

(12) Fair Value Measurements

The Company adopted the provisions of SFAS No. 157, Fair Value Measurements, on January 1, 2008, with the exception of the application of the statement to non-financial assets and non-financial liabilities measured at fair value on a nonrecurring basis. Effective January 1, 2009, in accordance with FSP No. 157-2, Effective Date of Financial Accounting Standards Board (“FASB”) Statement No. 157, the Company adopted the provisions of SFAS No. 157 for non-financial assets and non-financial liabilities, which include those measured at fair value in goodwill impairment testing, indefinite-lived intangible assets measured at fair value for impairment assessment, non-financial long-lived assets measured at fair value for impairment assessment, asset retirement obligations initially measured at fair value, and those initially measured at fair value in a business combination. The adoption did not have an impact on the Company’s financial statements.

The following table provides the liabilities carried at fair value measured on a recurring basis as of June 30, 2009:

		Fair Value Measurements
		Total Carrying
		Value				Level 1				Level 2				Level 3
		(In thousands)
Liabilities associated with interest rate swaps		$	30,616			$	—			$	30,616			$	—

The following table provides the liabilities measured at fair value on a non-recurring basis at June 30, 2009. These items are included in the “asset retirement obligations” line in the Company’s Consolidated Balance Sheet:

		Fair Value Measurements
		Total Carrying
		Value				Level 1				Level 2				Level 3
		(In thousands)
Asset retirement obligations — liabilities added during the six months ended June 30, 2009		$	1,522			$	—			$	—			$	1,522

The following is a description of the Company’s valuation methodology for assets and liabilities measured at fair value:

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. 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.

The methods described above 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.

SFAS No. 107, Disclosures about Fair Value of Financial Instruments, requires the disclosure of the estimated fair value of the Company’s financial instruments. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. SFAS No. 107 does not require the disclosure of the fair value of lease financing arrangements and non-financial instruments, including intangible assets such as goodwill and the Company’s merchant contracts/relationships.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments, to require publicly-traded companies, as defined in APB Opinion No. 28, Interim Financial Reporting, to provide disclosures on the fair value of financial instruments in interim financial statements. The Company adopted this standard effective June 30, 2009 and has provided the additional disclosures required below.

The carrying amount of the Company’s cash and cash equivalents and other current assets and liabilities approximates fair value due to the relatively short maturities of these instruments. The fair value of the Company’s interest rate swaps was a liability of $30.6 million as of June 30, 2009. Please refer to Note 11 for information on how the fair value of these swaps was calculated. The carrying amount of the long-term debt balance related to borrowings under the Company’s revolving credit facility approximates fair value due to the fact that such borrowings are subject to short-term floating market interest rates. As of June 30, 2009, the fair value of the Company’s $300.0 million senior subordinated notes (see Note 8) totaled $271.5 million, based on the quoted market price for such notes as of June 30, 2009.

(13) Commitments and Contingencies

Legal and Other Regulatory Matters

In June 2006, Duane Reade, Inc. (“Customer”), one of the Company’s merchant customers filed a complaint in the New York State Supreme Court alleging that the Company had breached its ATM operating agreement with the Customer by failing to pay the Customer the proper amount of fees under the agreement. Cardtronics denied any improper payment of fees. On May 8, 2009, Cardtronics and Duane Reade settled this lawsuit. In connection with that settlement, under which neither side admitted any wrongdoing, the Company agreed to terminate its ATM placement agreement with Duane Reade no later than October 31, 2009, and the related bank branding agreement associated with those ATMs. In connection with these terminations, Cardtronics made a termination payment to Duane Reade and received a termination payment from the associated bank branding partner, the net effect of which was not material to the Company’s financial condition or results of operations.

In the fall of 2008, the Company was made a party to Nathanson v. Cardtronics, Inc. et. al., a lawsuit concerning balance inquiry transactions at the Company’s ATMs located in California. The plaintiff alleged that the ATMs of the companies named in the lawsuit violated California state laws by not disclosing the possibility that consumers’ financial institutions would impose fees for balance inquiry transactions conducted through the Company’s ATMs. The plaintiff sought unspecified damages and injunctive relief for himself and a class of other consumers who allegedly paid such fees without notice in the four-year period prior to the filing of the lawsuit. The lawsuit was originally filed on or about October 21, 2008 in the Superior Court of California, County of Los Angeles, and the Company removed the lawsuit to the United States District Court, Central District of California. On July 24, 2009, the Company and the plaintiff entered into a settlement agreement wherein all claims were dismissed without the Company admitting any liability. Under the settlement agreement, the Company made a one-time payment to the plaintiff, which did not have a material impact upon the Company’s operations.

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 that lawsuit in the United States District Court for the District of Massachusetts wherein the Commonwealth of Massachusetts (the “Commonwealth”) and the National Federation of the Blind (the “NFB”) has 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 regarding this matter. The Court approved the settlement in December 2007. The Company has requested a modification to the settlement agreement so as to permit it to upgrade or replace approximately 2,200 non-voice guided ATMs that it acquired in July 2007 over a period of time longer than originally contemplated by the 2007 settlement agreement. The Commonwealth and NFB are considering our proposal, but as of this date have not yet indicated whether they will accept it. If they demand a quicker conversion of these ATMs to voice-guidance and the Company agrees (or is ordered by the Court to comply with such demands), the Company’s capital budget for 2009 and 2010 may have to be increased.

In addition to the above items, 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 effect on the Company’s financial condition or results of operations.

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 $22.8 million accrued for these liabilities as of June 30, 2009. For additional information on the Company’s asset retirement obligations, see Note 9.

(14) Income Taxes

Income tax expense based on the Company’s loss before income taxes was as follows for the three month periods ended June 30:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(In thousands)								(In thousands)
Income tax expense (benefit)		$	1,016			$	(633	)		$	2,033			$	(181	)
Effective tax rate			28.1	%			14.9	%			(502.0	)%			2.1	%

The Company has established valuation allowances for its net deferred tax asset positions in all of its jurisdictions and is currently not recording any income tax benefits on current losses in those jurisdictions as it believes it is more likely than not that such benefits will not be realized. In addition, during the three and six month periods ended June 30, 2009, the Company increased its domestic valuation allowance by approximately $0.9 million and $1.9 million, respectively, resulting in the negative effective tax rate reflected above for the six month period ended June 30, 2009. The lower effective tax rates in 2008 were due to the recognition of certain deferred tax benefits in the Company’s United Kingdom jurisdiction as the Company did not begin establishing valuation allowances in that jurisdiction until the fourth quarter of 2008. Finally, the Company is in a taxable income position with respect to its domestic state income taxes, which further contributed to the negative effective tax rate reflected above for the six month period ended June 30, 2009.

(15) Segment Information

As of June 30, 2009, the Company’s operations consisted of its United States, United Kingdom, and Mexico segments. 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. 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 loss attributable to controlling interests for the three and six month periods ended June 30, 2009 and 2008:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(In thousands)								(In thousands)
EBITDA		$	26,190			$	18,477			$	44,584			$	35,717
Depreciation and accretion expense			9,935				9,978				19,574				19,010
Amortization expense			4,504				4,501				9,031				9,004
Interest expense, net, including amortization of deferred financing costs and bond discounts			8,247				8,252				16,526				16,392
Income tax expense (benefit)			1,016				(633	)			2,033				(181	)
Net income (loss) attributable to controlling interests		$	2,488			$	(3,621	)		$	(2,580	)		$	(8,508	)

The following tables reflect certain financial information for each of the Company’s reporting segments for the three and six month periods ended June 30, 2009 and 2008. All intercompany transactions between the Company’s reporting segments have been eliminated.

		For the Three Month Period Ended June 30, 2009
		United States				United Kingdom				Mexico				Eliminations				Total
		(In thousands)
Revenue from external customers		$	102,270			$	18,031			$	4,347			$	—			$	124,648
Intersegment revenues			512				—				—				(512	)			—
Cost of revenues			71,248				13,085				3,307				(512	)			87,128
Selling, general, and administrative expenses (1)			9,050				1,268				266				—				10,584
Loss on disposal of assets			995				681				—				—				1,676
EBITDA			22,393				3,057				850				(110	)			26,190
Depreciation and accretion expense			6,768				2,727				445				(5	)			9,935
Amortization expense			4,051				443				10				—				4,504
Interest expense, net			6,817				1,260				170				—				8,247
Capital expenditures, excluding acquisitions (2)		$	3,257			$	2,106			$	460			$	—			$	5,823

		For the Three Month Period Ended June 30, 2008
		United States				United Kingdom				Mexico				Eliminations				Total
		(In thousands)
Revenue from external customers		$	104,051			$	19,701			$	3,223			$	—			$	126,975
Intersegment revenues			365				—				—				(365	)			—
Cost of revenues			77,343				17,843	(1)			2,745				(365	)			97,566
Selling, general, and administrative expenses			7,985				1,538				277				—				9,800
Loss on disposal of assets			656				459				—				—				1,115
EBITDA			18,683				(255	)(1)			49				—				18,477
Depreciation and accretion expense			6,583				2,994				406				(5	)			9,978
Amortization expense			3,952				536				13				—				4,501
Interest expense, net			6,607				1,432				213				—				8,252
Capital expenditures, excluding acquisitions (2)		$	6,115			$	8,376			$	2,696			$	—			$	17,187