Cardtronics, plc.
CARDTRONICS INC (Form: 10-Q, Received: 08/04/2011 17:19:20)  

 



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 June 30, 2011  

 

or  

 

 

o  

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

 

 

 

For the transition period from____ to____           

 

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

incorporation or organization)

Identification No.)

 

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  

 

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 þ  No  

 

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  £   

Accelerated filer   

Non-accelerated filer  £   

Smaller reporting company  £   

 

(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 No þ   

 

Common Stock, par value: $0.0001 per share.  Shares outstanding on August 1, 2011: 43,553,797


 

 


 
 

 

CARDTRONICS, INC.

 

TABLE OF CONTENTS

 

 

Page 

 

 

PART I.  FINANCIAL INFORMATION

 

Item 1.

Financial Statements (unaudited)

1

 

Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010

1

 

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2011 and 2010

2

 

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 and 2010

3

 

Notes to Consolidated Financial Statements

4

Cautionary Statement Regarding Forward-Looking Statements

30

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

31

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

47

Item 4.

Controls and Procedures

49

 

 

 

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

50

Item 1A.

Risk Factors

50

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

50

Item 6.

Exhibits

50

 

Signatures

51

 

 

 

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

 

 

 

 

 

 

 

 

 

 

                   

 

 


 
 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

 

 

 

 

 

 

CARDTRONICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, excluding share and per share amounts)

 

 

 

 

 

 

 

June 30, 2011

 

December 31, 2010

 

 

(unaudited)

 

 

 

ASSETS

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

3,998

 

$

3,189

Accounts and notes receivable, net of allowance of $286 and $507 as of June 30, 2011 and December 31, 2010, respectively

 

26,787

 

 

20,270

Inventory

 

1,770

 

 

1,795

Restricted cash

 

3,396

 

 

4,466

Current portion of deferred tax asset, net

 

13,780

 

 

15,017

Prepaid expenses, deferred costs, and other current assets

 

13,821

 

 

10,222

Total current assets

 

63,552

 

 

54,959

Property and equipment, net

 

162,209

 

 

156,465

Intangible assets, net

 

69,596

 

 

74,799

Goodwill

 

164,974

 

 

164,558

Deferred tax asset, net

 

738

 

 

715

Prepaid expenses, deferred costs, and other assets

 

20,338

 

 

3,819

Total assets

$

481,407

 

$

455,315

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

 

 

Current portion of long-term debt and notes payable

$

3,326

 

$

3,076

Current portion of other long-term liabilities

 

24,755

 

 

24,493

Accounts payable

 

15,972

 

 

20,167

Accrued liabilities

 

50,882

 

 

50,543

Current portion of deferred tax liability, net

 

738

 

 

715

Total current liabilities

 

95,673

 

 

98,994

Long-term liabilities:

 

 

 

 

 

Long-term debt, net of related discounts

 

244,399

 

 

251,757

Deferred tax liability, net

 

16,276

 

 

10,268

Asset retirement obligations

 

29,052

 

 

26,657

Other long-term liabilities

 

32,899

 

 

23,385

Total liabilities

 

418,299

 

 

411,061

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.0001 par value; 125,000,000 shares authorized; 49,121,869 and 48,396,134 shares issued as of June 30, 2011 and December 31, 2010, respectively; 43,401,326 and 42,833,342 shares outstanding as of June 30, 2011 and December 31, 2010, respectively

 

4

 

 

4

Additional paid-in capital

 

225,361

 

 

213,754

Accumulated other comprehensive loss, net

 

(70,347)

 

 

(65,053)

Accumulated deficit

 

(40,768)

 

 

(55,963)

Treasury stock; 5,720,543 and 5,562,792 shares at cost as of June 30, 2011 and December 31, 2010, respectively

 

(53,209)

 

 

(50,351)

Total parent stockholders’ equity

 

61,041

 

 

42,391

Noncontrolling interests

 

2,067

 

 

1,863

Total stockholders’ equity

 

63,108

 

 

44,254

Total liabilities and stockholders’ equity

$

481,407

 

$

455,315

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

1

 


 
 

 

CARDTRONICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, excluding share and per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

ATM operating revenues

$

141,429

 

$

130,560

 

$

274,528

 

$

256,247

ATM product sales and other revenues

 

5,865

 

 

2,388

 

 

10,807

 

 

4,477

Total revenues

 

147,294

 

 

132,948

 

 

285,335

 

 

260,724

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

Cost of ATM operating revenues (excludes depreciation, accretion, and amortization shown separately below.  See Note 1

 

93,117

 

 

87,414

 

 

181,903

 

 

173,293

Cost of ATM product sales and other revenues

 

5,214

 

 

2,314

 

 

9,561

 

 

4,507

Total cost of revenues

 

98,331

 

 

89,728

 

 

191,464

 

 

177,800

Gross profit

 

48,963

 

 

43,220

 

 

93,871

 

 

82,924

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

13,268

 

 

10,272

 

 

26,272

 

 

21,415

Depreciation and accretion expense

 

11,437

 

 

10,264

 

 

22,807

 

 

20,486

Amortization expense

 

3,667

 

 

3,765

 

 

7,294

 

 

7,744

Loss on disposal of assets

 

86

 

 

1,095

 

 

163

 

 

1,472

Total operating expenses

 

28,458

 

 

25,396

 

 

56,536

 

 

51,117

Income from operations

 

20,505

 

 

17,824

 

 

37,335

 

 

31,807

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

4,754

 

 

7,314

 

 

9,567

 

 

14,632

Amortization of deferred financing costs and bond discounts

 

213

 

 

642

 

 

424

 

 

1,272

Other expense (income)

 

139

 

 

(332)

 

 

(60)

 

 

34

Total other expense

 

5,106

 

 

7,624

 

 

9,931

 

 

15,938

Income before income taxes

 

15,399

 

 

10,200

 

 

27,404

 

 

15,869

Income tax expense

 

6,657

 

 

1,952

 

 

12,104

 

 

3,391

Net income

 

8,742

 

 

8,248

 

 

15,300

 

 

12,478

Net income attributable to noncontrolling interests

 

27

 

 

45

 

 

105

 

 

310

Net income attributable to controlling interests and available to common stockholders

$

8,715

 

$

8,203

 

$

15,195

 

$

12,168

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share – basic

$

0.20

 

$

0.20

 

$

0.35

 

$

0.29

Net income per common share – diluted

$

0.20

 

$

0.19

 

$

0.35

 

$

0.29

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding – basic

 

41,910,944

 

 

40,017,215

 

 

41,712,659

 

 

39,910,928

Weighted average shares outstanding – diluted

 

42,659,587

 

 

41,092,258

 

 

42,476,101

 

 

40,894,506

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 


2

 


 
 

 

CARDTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

Six Months Ended June 30

 

 

2011

 

2010

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

15,300

 

$

12,478

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation, accretion, and amortization expense

 

 

30,101

 

 

28,230

Amortization of deferred financing costs and bond discounts

 

 

424

 

 

1,272

Stock-based compensation expense

 

 

4,624

 

 

2,896

Deferred income taxes

 

 

11,554

 

 

1,891

Loss on disposal of assets

 

 

163

 

 

1,472

Unrealized gain on derivative instruments

 

 

(519)

 

 

(506)

Amortization of accumulated other comprehensive losses associated with derivative instruments no longer designated as hedging instruments

 

 

232

 

 

946

Other reserves and non-cash items

 

 

678

 

 

959

Changes in assets and liabilities:

 

 

 

 

 

 

(Increase) decrease in accounts and notes receivable, net

 

 

(6,484)

 

 

7,525

Decrease (increase) in prepaid, deferred costs, and other current assets

 

 

60

 

 

(2,185)

(Increase) decrease in inventory

 

 

(333)

 

 

535

(Increase) decrease in other assets

 

 

(19,024)

 

 

1,328

(Decrease) increase in accounts payable

 

 

(4,382)

 

 

5,646

Increase (decrease) in accrued liabilities

 

 

558

 

 

(7,067)

Decrease in other liabilities

 

 

(1,913)

 

 

(2,819)

Net cash provided by operating activities

 

 

31,039

 

 

52,601

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Additions to property and equipment

 

 

(23,090)

 

 

(20,783)

Payments for exclusive license agreements, site acquisition costs and other intangible assets

 

 

(2,307)

 

 

(229)

Net cash used in investing activities

 

 

(25,397)

 

 

(21,012)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from borrowings of long-term debt

 

 

107,900

 

 

Repayments of long-term debt and capital leases

 

 

(115,445)

 

 

(1,277)

Repayments of borrowings under bank overdraft facility, net

 

 

(1,042)

 

 

Proceeds from exercises of stock options

 

 

5,931

 

 

301

Repurchase of capital stock

 

 

(2,015)

 

 

(1,390)

Net cash used in financing activities

 

 

(4,671)

 

 

(2,366)

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

(162)

 

 

417

Net increase in cash and cash equivalents

 

 

809

 

 

29,640

 

 

 

 

 

 

 

Cash and cash equivalents as of beginning of period

 

 

3,189

 

 

10,449

Cash and cash equivalents as of end of period

 

$

3,998

 

$

40,089

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for interest, including interest on capital leases

 

$

9,911

 

$

14,667

Cash paid for income taxes

 

$

1,691

 

$

398

Fixed assets financed by direct debt

 

$

 

$

542

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

3

 


 
 

 

CARDTRONICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

(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 June 30, 2011, the Company provided services to over 37,800 devices across its portfolio, which included over 31,600 devices located in all 50 states of the United States ("U.S.") as well as in the U.S. territories of Puerto Rico and the U.S. Virgin Islands, approximately 3,300 devices throughout the United Kingdom ("U.K."), and approximately 2,900 devices throughout Mexico. Included in the U.S. number are 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. Also included in the total count of 37,800 devices are approximately 4,300 devices for which the Company provides various forms of managed services solutions, which may include services such as transaction processing, monitoring, maintenance, cash management, and customer service.

 

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. The Company also partners with leading national and regional financial institutions to brand selected ATMs and financial services kiosks within its network. As of June 30, 2011, over 12,300 of the Company's devices were under contract with financial institutions to place their logos on those machines, thus providing convenient surcharge-free access for their banking customers. Additionally, the Company owns and operates the Allpoint network, the largest surcharge-free ATM network within the United States (based on the number of participating ATMs). The Allpoint network, which has more than 43,000 participating ATMs, provides surcharge-free ATM access to customers of participating financial institutions that lack a significant ATM network. The Allpoint network includes a majority of the Company's ATMs in the U.S., Puerto Rico and Mexico, all of the Company's ATMs in the U.K., and over 5,000 locations in Australia through a partnership with a local ATM owner and operator in that market. Finally, the Company owns and operates an electronic funds transfer ("EFT") transaction processing platform that provides transaction processing services to its network of ATMs and financial services kiosks as well as other ATMs under managed services arrangements.

 

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, 2010 ("2010 Form 10-K"), which includes a summary of the Company's significant accounting policies and other disclosures.

 

The financial statements as of June 30, 2011 and for the three and six month periods ended June 30, 2011 and 2010 are unaudited. The Consolidated Balance Sheet as of December 31, 2010 was derived from the audited balance sheet filed in the Company's 2010 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 and six month periods ended June 30, 2011 and 2010 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 income or stockholders' equity.

 

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 interests not held by the Company being reflected as noncontrolling interests.

 

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.

4

 


 
 

 

 

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 periods indicated: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended  

 

 

Six Months Ended  

 

 

 

June 30,  

 

 

June 30,  

 

 

 

2011  

 

 

2010  

 

 

2011  

 

 

2010  

 

 

 

(In thousands)  

 

Depreciation and accretion expenses related to ATMs and ATM-related assets

 

$

9,855

 

 

$

8,337

 

 

$

19,641

 

 

$

16,636

 

Amortization expense

 

 

3,667

 

 

 

3,765

 

 

 

7,294

 

 

 

7,744

 

Total depreciation, accretion, and amortization expenses excluded from Cost of ATM operating revenues and Gross profit

 

$

13,522

 

 

$

12,102

 

 

$

26,935

 

 

 $

24,380

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  (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 periods indicated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended  

 

 

Six Months Ended  

 

 

 

June 30,  

 

 

June 30,  

 

 

 

2011  

 

 

2010  

 

 

2011  

 

 

2010  

 

 

 

(In thousands)  

 

Cost of ATM operating revenues

 

$

253

 

 

$

169

 

 

$

519

 

 

$

368

 

Selling, general, and administrative expenses

 

 

2,140

 

 

 

1,268

 

 

 

4,105

 

 

 

2,528

 

Total stock-based compensation expense

 

$

2,393

 

 

$

1,437

 

 

$

4,624

 

 

$

2,896

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 The increase in stock-based compensation expense during the three and six month periods ended June 30, 2011 was due to the issuance of additional shares of restricted stock awards ("RSAs"), stock options and restricted stock units ("RSUs") to certain of the Company's employees and directors during the second half of 2010 and in 2011. All grants during the periods above were granted under the Company's Amended and Restated 2007 Stock Incentive Plan (the "2007 Stock Incentive Plan").

 

During the first quarter of 2011, the Company granted RSUs under the Company's 2011 Long Term Incentive Plan (the "2011 LTIP"), which is an equity program under the 2007 Stock Incentive Plan. A base pool of 273,411 RSUs has been set aside for the 2011 LTIP. From this amount, the Compensation Committee of the Company's Board of Directors (the "Committee") granted RSUs totaling 264,750, which could result in the issuance of up to 546,822 shares of common stock in the future, depending on the Company's achievement of certain performance levels during calendar year 2011. The fair value of an individual RSU granted under the 2011 LTIP was $16.82 on the date of the grant. These grants have both a performance-based and a service-based vesting schedule; accordingly, the number of RSUs potentially earned by an individual will be based on the level of performance achieved during calendar year 2011. Once the performance-based vesting requirements are determined to be met by the Committee, the RSUs will be earned by the individual and will vest 50% on the second anniversary of the grant date and 25% each on the third and fourth anniversaries of the grant date. Although the RSUs will not be considered earned and outstanding until at least the minimum performance metrics are met, the Company recognizes the related compensation expense over the requisite service period using a graded vesting methodology, based on the estimated performance levels that management believes will ultimately be met.

 

5

 


 
 

 

Options.   The number of the Company's  outstanding stock options as of June 30, 2011, and changes during the six month period ended June 30, 2011, are presented below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted  

 

 

 

Number  

 

 

Average  

 

 

 

of Shares  

 

 

Exercise Price  

 

Options outstanding as of January 1, 2011

 

 

2,511,105

 

 

$

9.63

 

Exercised

 

 

(704,239

)

 

$

9.91

 

Forfeited

 

 

(5,000

)

 

$

8.96

 

Options outstanding as of June 30, 2011

 

 

1,801,866

 

 

$

9.52

 

 

 

 

 

 

 

 

 

Options vested and exercisable as of June 30, 2011

 

 

1,657,741

 

 

$

9.76

 

 

As of June 30, 2011, the unrecognized compensation expense associated with outstanding options was approximately $0.4 million.

 

Restricted Stock Awards.   The number of the Company's outstanding RSAs as of June 30, 2011, and changes during the six month period ended June 30, 2011, are presented below:

 

 

 

 

 

 

 

Number  

 

 

 

of Shares  

 

RSAs outstanding as of January 1, 2011

 

 

1,558,315

 

Granted

 

 

21,496

 

Vested

 

 

(516,628

)

Forfeited

 

 

(12,500

)

RSAs outstanding as of June 30, 2011

 

 

1,050,683

 

 

 

 

 

The restricted shares granted during the six month period ended June 30, 2011 had a total grant-date fair value of approximately $0.4 million, or $19.27 per share.  As of June 30, 2011, the unrecognized compensation expense associated with restricted share grants was approximately $10.4 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 impact on the statements of operations) when their impact on net income available to common stockholders is anti-dilutive. Potentially dilutive securities for the three and six month periods ended June 30, 2011 and 2010 included all outstanding stock options and shares of restricted stock, which were included in the calculation of diluted earnings per share for these periods.

 

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, restricted shares are considered to be participating securities and, as such, the Company has allocated the undistributed earnings for the three and six month periods ended June 30, 2011 and 2010 among the Company's outstanding shares of common stock and issued but unvested restricted shares, as follows:

 

6

 


 
 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2011  

 

 

Six Months Ended June 30, 2011   

 

 

 

 

 

 

 

Weighted  

 

 

 

 

 

 

 

 

 

Weighted  

 

 

 

 

 

 

 

 

 

 

Average  

 

 

Earnings  

 

 

 

 

 

 

Average  

 

 

Earnings   

 

 

 

 

 

 

 

Shares

 

 

Per  

 

 

 

 

 

 

Shares  

 

 

Per  

 

 

 

Income  

 

 

Outstanding  

 

 

Share  

 

 

Income  

 

 

Outstanding  

 

 

Share  

 

Basic:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to controlling interests and available to common stockholders

 

$

8,715

 

 

 

 

 

 

 

 

 

 

$

15,195

 

 

 

 

 

 

 

 

 

Less: undistributed earnings allocated to unvested restricted shares

 

 

(262

)

 

 

 

 

 

 

 

 

 

 

(478

)

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

8,453

 

 

 

41,910,944

 

 

$

0.20

 

 

$

14,717

 

 

 

41,712,659

 

 

$

0.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add: Undistributed earnings allocated to restricted shares

 

$

262

 

 

 

 

 

 

 

 

 

 

$

478

 

 

 

 

 

 

 

 

 

Stock options added to the denominator under the treasury stock method

 

 

 

 

 

 

748,643

 

 

 

 

 

 

 

 

 

 

 

763,442

 

 

 

 

 

Less: Undistributed earnings reallocated to restricted shares

 

 

(258

)

 

 

 

 

 

 

 

 

 

 

(470

)

 

 

 

 

 

 

 

 

Net income available to common stockholders and assumed conversions

 

$

8,457

 

 

 

42,659,587

 

 

$

0.20

 

 

$

14,725

 

 

 

42,476,101

 

 

$

0.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2010  

 

 

Six Months Ended June 30, 2010  

 

 

 

 

 

 

 

Weighted  

 

 

 

 

 

 

 

 

 

Weighted  

 

 

 

 

 

 

 

 

 

 

Average  

 

 

  Earnings  

 

 

 

 

 

 

Average  

 

 

Earnings   

 

 

 

 

 

 

 

Shares  

 

 

Per  

 

 

 

 

 

 

Shares  

 

 

Per  

 

 

 

Income  

 

 

Outstanding  

 

 

Share  

 

 

Income  

 

 

Outstanding  

 

 

Share  

 

Basic:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to controlling interests and available to common stockholders

 

$

8,203

 

 

 

 

 

 

 

 

 

 

$

12,168

 

 

 

 

 

 

 

 

 

Less: undistributed earnings allocated to unvested restricted shares

 

 

(347

)

 

 

 

 

 

 

 

 

 

 

(499

)

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

7,856

 

 

 

40,017,215

 

 

$

0.20

 

 

$

11,669

 

 

 

39,910,928

 

 

$

0.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted:  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Add: Undistributed earnings allocated to restricted shares

 

$

347

 

 

 

 

 

 

 

 

 

 

$

499

 

 

 

 

 

 

 

 

 

Stock options added to the denominator under the treasury stock method

 

 

 

 

 

 

1,075,043

 

 

 

 

 

 

 

 

 

 

 

983,578

 

 

 

 

 

Less: Undistributed earnings reallocated to restricted shares

 

 

(338

)

 

 

 

 

 

 

 

 

 

 

(487

)

 

 

 

 

 

 

 

 

Net income available to common stockholders and assumed conversions

 

$

7,865

 

 

 

41,092,258

 

 

$

0.19

 

 

$

11,681

 

 

 

40,894,506

 

 

$

0.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The computation of diluted earnings per share excluded potentially dilutive common shares related to RSAs of 531,127 and 526,487 shares for the three and six month periods ended June 30, 2011, respectively, and 558,585 and 339,481 shares for the three and six month periods ended June 30, 2010, respectively, because the effect of including these shares in the computation would have been anti-dilutive.

 

7

 


 

 

(4) Comprehensive Income (Loss)  

 

Total comprehensive income (loss) consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended  

 

 

Six Months Ended  

 

 

 

June 30,  

 

 

June 30,  

 

 

 

2011  

 

 

2010  

 

 

2011  

 

 

2010  

 

 

 

(In thousands)  

 

Net income

 

$

8,742

 

 

$

8,248

 

 

$

15,300

 

 

$

12,478

 

Unrealized losses on interest rate swap contracts, net of income tax benefit of $5.5 million and $4.3 million for the three and six months ended June 30, 2011, respectively

 

 

(9,747

)

 

 

(7,717

)

 

 

(6,724

)

 

 

(11,101

Foreign currency translation adjustments

 

 

(184

)

 

 

(487

)

 

 

1,430

 

 

 

(3,822

)

Total comprehensive (loss) income

 

 

(1,189

)

 

 

44

 

 

 

10,006

 

 

 

(2,445

)

Less: comprehensive income (loss) attributable to noncontrolling interests

 

 

53

 

 

 

(25

)

 

 

204

 

 

 

329

 

Comprehensive (loss) income attributable to controlling interests

 

$

(1,242

)

 

$

69

 

 

$

9,802

 

 

$

(2,774

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 Accumulated other comprehensive loss, net is displayed as a separate component of stockholders' equity in the accompanying Consolidated Balance Sheets and consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

June 30, 2011  

 

 

December 31, 2010  

 

 

 

(In thousands)  

 

Foreign currency translation adjustments

 

$

(25,139

)

 

$

(26,569

)

Unrealized losses on interest rate swap contracts, net of income tax benefit of $5.7 million and $1.4 million as of June 30, 2011 and December 31, 2010, respectively

 

 

(45,208

)

 

 

(38,484

)

Total accumulated other comprehensive loss

 

$

(70,347

)

 

$

(65,053

)

 

 

 

 

 

 

 

 The Company records the unrealized loss amounts related to its domestic interest rate swaps net of estimated taxes in the Accumulated other comprehensive loss, net line item within Stockholders' equity in the accompanying Consolidated Balance Sheets since it is more likely than not that the Company will be able to realize the benefits associated with its net deferred tax asset positions in the future.

 

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. Accordingly, no deferred taxes have been provided for the differences between the Company's book basis and underlying tax basis in those subsidiaries or on the foreign currency translation adjustment amounts.

 

(5) Noncurrent Prepaid Expenses and Other Assets  

 

As of June 30, 2011, the Company had $20.3 million of noncurrent prepaid expenses, deferred costs, and other assets, compared to $3.8 million as of December 31, 2010.  Included in the balance as of June 30, 2011 was a $16.2 million receivable recorded for an insurance receivable, related to the loss sustained as a result of the misappropriation of cash in February 2010 by the president and principal owner of Mount Vernon Money Center ("MVMC"), one of the Company's third-party armored service providers in the Northeast United States.    

  

In March 2011, Cardtronics filed a claim under its own cash insurance policy for $16.2 million, the total amount of the cash misappropriated by MVMC. In May 2011, the Company's supplier of the vault cash demanded repayment from the Company for the $16.2 million that MVMC had misappropriated. The Company subsequently repaid this amount to the vault cash provider through a borrowing under its revolving credit facility. The Company's insurance provider has acknowledged that the loss event is a covered event under the policy, but has taken the position that the final amount of the loss is not yet determinable because the Company may recover portions or all of the loss through a combination of MVMC insurance, seized and forfeited assets and other potential sources of recovery. As a result of making the repayment to the vault cash provider, the Company recorded a receivable, currently classified as non-current, as the Company expects to receive full reimbursement of the amount of misappropriated cash. In July 2011, the Company's insurer reimbursed the Company for its interest carrying costs incurred from the date of repayment of the loss to the vault cash provider through June 30, 2011. Based on current facts and circumstances, the Company believes that it is probable that it will be able to fully recover the $16.2 million recorded as a receivable. Events continue to develop in this matter, and as a result, the expected timing and ultimate amount expected to be recovered are subject to change.

 

8

 


 

 

(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, 2011, as well as the changes in the net carrying amounts for the six month period ended June 30, 2011, by segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill  

 

 

 

U.S.  

 

 

U.K.  

 

 

Mexico  

 

 

Total  

 

 

 

(In thousands)  

 

Balance as of January 1, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross balance

 

$

150,461

 

 

$

63,393

 

 

$

707

 

 

$

214,561

 

Accumulated impairment loss

 

 

 

 

 

(50,003

)

 

 

 

 

 

(50,003

)

 

 

$

150,461

 

 

$

13,390

 

 

$

707

 

 

$

164,558

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

 

 

 

423

 

 

 

(7

)

 

 

416

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross balance

 

$

150,461

 

 

$

63,816

 

 

$

700

 

 

$

214,977

 

Accumulated impairment loss

 

 

 

 

 

(50,003

)

 

 

 

 

 

(50,003

)

 

 

$

150,461

 

 

$

13,813

 

 

$

700

 

 

$

164,974

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade Name  

 

 

 

U.S.  

 

 

U.K.  

 

 

Total  

 

 

 

(In thousands)  

Balance as of January 1, 2011

 

$

200

 

 

$

3,105

 

 

$

3,305

 

Foreign currency translation adjustments

 

 

 

 

 

98

 

 

 

98

 

Balance as of June 30, 2011

 

$

200

 

 

$

3,203

 

 

$

3,403

 

 

 

 

 

 

 

 

 

 

 

  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, 2011:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross  

 

 

 

 

 

  Net   

 

 

 

Carrying  

 

 

Accumulated  

 

 

Carrying  

 

 

 

Amount  

 

 

Amortization  

 

 

Amount  

 

 

 

(In thousands)  

 

Customer and branding contracts/relationships

 

$

160,731

 

 

$

(102,293

)

 

$

58,438

 

Deferred financing costs

 

 

8,514

 

 

 

(2,909

)

 

 

5,605

 

Exclusive license agreements

 

 

6,517

 

 

 

(4,425

)

 

 

2,092

 

Non-compete agreements

 

 

167

 

 

 

(109

)

 

 

58

 

Total

 

$

175,929

 

 

$

(109,736

)

 

$

66,193

 

 

 

 

 

 

 

 

 

 

 

9

 


 

 

  (7) Accrued Liabilities  

 

Accrued liabilities consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

June 30, 2011  

 

 

December 31, 2010  

 

 

 

(In thousands)  

 

Accrued merchant fees

 

$

14,379

 

 

$

12,310

 

Accrued armored fees

 

 

5,700

 

 

 

4,322

 

Accrued interest expense

 

 

5,506

 

 

 

5,740

 

Accrued compensation

 

 

4,222

 

 

 

7,038

 

Accrued merchant settlement amounts

 

 

3,729

 

 

 

4,583

 

Accrued cash rental and management fees

 

 

2,469

 

 

 

2,411

 

Accrued interest rate swap payments

 

 

2,053

 

 

 

2,199

 

Accrued purchases

 

 

1,208

 

 

 

2,046

 

Accrued ATM telecommunications costs

 

 

940

 

 

 

1,402

 

Accrued processing costs

 

 

914

 

 

 

764

 

Accrued maintenance fees

 

 

776

 

 

 

949

 

Other accrued expenses

 

 

8,986

 

 

 

6,779

 

Total

 

$

50,882

 

 

$

50,543

 

 

 

 

 

 

 

 

 (8) Long-Term Debt  

 

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

 

 

 

 

 

 

 

 

 

 

 

June 30, 2011  

 

 

December 31, 2010  

 

 

 

(In thousands)  

 

8.25% Senior subordinated notes due September 2018

 

$

200,000

 

 

$

200,000

 

Revolving credit facility, including swing-line credit facility (weighted-average combined rate of 3.1% as of June 30, 2011 and December 31, 2010)

 

 

40,100

 

 

 

46,200

 

Equipment financing notes

 

 

7,625

 

 

 

8,633

 

Total

 

 

247,725

 

 

 

254,833

 

Less: current portion

 

 

3,326

 

 

 

3,076

 

Total long-term debt, excluding current portion

 

$

 244,399

 

 

$

251,757

 

 

 

 

 

 

 

 

  Revolving Credit Facility  

 

As of June 30, 2011, the Company's revolving credit facility provided for $175.0 million in borrowings and letters of credit (subject to the covenants contained within the facility), had a termination date of July 2015, and contained a feature that allows the Company to expand the facility up to $250.0 million, subject to the availability of additional bank commitments by existing or new syndicate participants. On July 25, 2011, concurrent with the closing of the acquisition of the EDC ATM business, the Company amended its credit facility to expand the borrowing capacity to $250.0 million and extend the term of the facility by one year through July 15, 2016. In addition, the amended credit facility further allows the Company to expand the facility up to $325.0 million, subject to the availability of additional bank commitments by existing or new syndicate participants. The amendment also modifies certain pricing terms and restrictive covenants. See Note 18, Subsequent Events , for additional details on the EDC acquisition and the amendment of the revolving credit facility.

 

This revolving credit facility includes a $15.0 million swing line facility, a $60.0 million foreign currency sub-limit, and a $20.0 million letter of credit sub-limit. Borrowings under the facility bear interest at a variable rate, based upon the Company’s total leverage ratio and the London Interbank Offered Rate ("LIBOR") or Alternative Base Rate (as defined in the agreement) at the Company's option. Additionally, the Company is required to pay a commitment fee on the unused portion of the revolving credit facility. Substantially all of the Company's assets, including the stock of its wholly-owned domestic subsidiaries and 66% of the stock of its foreign subsidiaries, are pledged to secure borrowings made under the revolving credit facility. Furthermore, each of the Company's domestic subsidiaries has guaranteed the Company's obligations under such facility. There are currently no restrictions on the ability of the Company's wholly-owned subsidiaries to declare and pay dividends directly to us.

 

The primary restrictive covenants within the facility include (i) limitations on the amount of senior debt and total debt that the Company can have outstanding at any given point in time and (ii) the maintenance of a set ratio of earnings to fixed charges, as computed quarterly on a trailing 12-month basis. Additionally, the Company is limited on the amount of restricted payments, including dividends, which it can make pursuant to the terms of the facility. These limitations are generally governed by a senior leverage ratio test and the existing fixed charge ratio covenant.

10

 


 

 

 

The failure to comply with the covenants will constitute an event of default (subject, in the case of certain covenants, to applicable notice and/or cure periods) under the agreement.  Other events of default under the agreement include, among other things, (i) the failure to timely pay principal, interest, fees or other amounts due and owing, (ii) the inaccuracy of representations or warranties in any material respect, (iii) the occurrence of certain bankruptcy or insolvency events, (iv) loss of lien perfection or priority and (v) the occurrence of a change in control.  The occurrence and continuance of an event of default could result in, among other things, termination of the lenders' commitments and acceleration of all amounts outstanding.  The Company's obligations under the credit agreement are guaranteed by certain of the Company's existing and future domestic subsidiaries, subject to certain limitations.  In addition, the Company's obligations under the agreement, subject to certain exceptions, are secured on a first-priority basis by liens on substantially all of the tangible and intangible assets of the Company and the guarantors. As of June 30, 2011, the Company was in compliance with all applicable covenants and ratios under the facility.

 

As of June 30, 2011, the Company had $40.1 million of borrowings under the revolving credit facility and had a $4.3 million letter of credit posted under the facility to secure borrowings under the Company's United Kingdom subsidiary's overdraft facility (discussed below). This letter of credit, which may be drawn upon in the event the Company defaults under the overdraft facility, reduces the Company's borrowing capacity under its revolving credit facility. As of June 30, 2011, 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 $130.6 million, and the Company was in compliance with all applicable covenants and ratios under the facility.

 

$200.0 Million 8.25% Senior Subordinated Notes Due 2018

 

The $200.0 million 8.25% senior subordinated notes due September 2018 (the "2018 Notes"), which are guaranteed by the Company's domestic subsidiaries, contain no maintenance covenants and only limited incurrence covenants, under which the Company has considerable flexibility. Interest under the 2018 Notes is paid semi-annually in arrears on March 1st and September 1st of each year. As of June 30, 2011, the Company was in compliance with all applicable covenants required under the 2018 Notes.

 

Other Facilities  

 

Cardtronics Mexico equipment financing agreements. As of June 30, 2011, other long-term debt consisted of 10 separate equipment financing agreements entered into by Cardtronics Mexico. Each of these agreements, which are denominated in Mexican pesos, have an original term of five years and as of June 30, 2011, had an average fixed interest rate of 10.36%. 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 June 30, 2011, the total amount of the guarantees was $45.8 million pesos (or approximately $3.9 million U.S.).

 

Bank Machine overdraft facility.   Bank Machine, Ltd., the Company's wholly-owned subsidiary operating in the United Kingdom, currently has a £1.0 million overdraft facility in place. This facility, which bears interest at 1.0% over the Bank of England's base rate (0.5% as of June 30, 2011) and is secured by a letter of credit posted under the Company's corporate revolving credit facility, is utilized for general purposes for the Company's United Kingdom operations. As of June 30, 2011, no amount was 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 contractually required to perform this deinstallation and restoration work. For each group of ATMs, the Company has recognized the fair value of the asset retirement obligation as a liability on its balance sheet and capitalized that cost as part of the cost basis of the related asset. The related assets are depreciated on a straight-line basis over five years, which is the estimated average time period that an ATM is installed in a location before being deinstalled, and the related liabilities are accreted to their full value over the same period of time.

 

11

 


 

 

The following table is a summary of the changes in the Company's asset retirement obligation liability for the six month period ended June 30, 2011 (in thousands) :  

 

 

 

 

 

Asset retirement obligation as of January 1, 2011

 

$

26,657

 

Additional obligations

 

 

2,670

 

Accretion expense

 

 

1,093

 

Change in estimate

 

 

(708

)

Payments

 

 

(1,041

)

Foreign currency translation adjustments

 

 

381

 

Asset retirement obligation as of June 30, 2011

 

$

29,052

 

 

 

 

 

 The change in estimate during the six month period ended June 30, 2011 was the result of updating certain cost assumptions based on the actual deinstallation costs experienced by the Company in recent periods. In the United States, recent actual costs incurred were lower than the previously-estimated costs, and as a result, the Company determined that the liability should be reduced by approximately $2.0 million to account for the lower costs incurred to date and to reduce estimated future costs. In the United Kingdom, actual recent costs were higher than the previously-estimated costs, and as a result, the Company determined that the liability should be increased by approximately $1.3 million to account for higher expected costs in the future. See Note 12, Fair Value Measurements for additional disclosures on the Company's asset retirement obligations with respect to its fair value measurements.

 

(10) Other Liabilities  

 

Other liabilities consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

June 30, 2011  

 

 

December 31, 2010  

 

 

 

(In thousands)  

 

Current Portion of Other Long-Term Liabilities:  

 

 

 

 

 

 

 

 

Interest rate swaps

 

$

23,623

 

 

$

22,955

 

Deferred revenue

 

 

1,104

 

 

 

1,512

 

Other

 

 

28

 

 

 

26

 

Total

 

$

24,755

 

 

$

24,493

 

 

 

 

 

 

 

 

Other Long-Term Liabilities:  

 

 

 

 

 

 

 

 

Interest rate swaps

 

$

29,805

 

 

$

19,831

 

Deferred revenue

 

 

1,418

 

 

 

1,591

 

Other

 

 

1,676

 

 

 

1,963

 

Total

 

$

32,899

 

 

$

23,385

 

 

 

 

 

 

 

 

 The significant increase in the non-current portion of other long-term liabilities since December 31, 2010 is attributable to the Company's interest rate swaps, the liabilities for which increased due to the movement of the forward interest rate curve, particularly for the swaps recently entered into that extend through 2016, which resulted in an increase in the Company's estimated future liabilities under such contracts. See Note 11, Derivative Financial Instruments for additional information on the Company's interest rate swaps.  

 

(11) 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 exchange 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 exchange 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 borrowings outstanding under its revolving credit facility.

12

 


 

 

 

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)

 

 

 

 

$

625,000

 

£

75,000

 

$

745,101

 

3.43

%

 

July 1, 2011  December 31, 2011

$

750,000

 

£

50,000

 

$

830,068

 

3.45

%

 

January 1, 2012  December 31, 2012

$

750,000

 

£

25,000

 

$

790,034

 

3.35

%

 

January 1, 2013  December 31, 2013

$

750,000

 

£

 

$

750,000

 

3.29

%

 

January 1, 2014  December 31, 2014

$

550,000

 

£

 

$

550,000

 

3.27

%

 

January 1, 2015  December 31, 2015

$

350,000

 

£

 

$

350,000