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As filed with the Securities and Exchange Commission on July 10, 2006
Registration No. 333-131199
Registration No. 333-131199-01
Registration No. 333-131199-02
Registration No. 333-131199-03
 
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Amendment No. 1
to
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
CARDTRONICS, INC.*
(exact name of registrant as specified in its charter)
         
Delaware   7389   76-0681190
(State or Other Jurisdiction of
Incorporation or Organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)
     
3110 Hayes Road, Suite 300
Houston, Texas 77082
(281) 596-9988
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant’s Principal Executive Offices)
  J. Chris Brewster
Chief Financial Officer
3110 Hayes Road, Suite 300
Houston, Texas 77082
(281) 596-9988
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
 
Copy to:
David P. Oelman, Esq.
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
713-758-3708
713-615-5861 (fax)
 
      Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
 
      If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.     o
      If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.     o
      If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o


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  Includes certain subsidiaries of Cardtronics, Inc. identified below.
Cardtronics GP, Inc.
(Exact Name of Registrant As Specified In Its Charter)
         
Delaware       75-3003720
(State or Other Jurisdiction of
Incorporation or Organization)
      (I.R.S. Employer
Identification Number)
Cardtronics LP, Inc.
(Exact Name of Registrant As Specified In Its Charter)
         
Delaware       51-0412519
(State or Other Jurisdiction of
Incorporation or Organization)
      (I.R.S. Employer
Identification Number)
Cardtronics, LP
(Exact Name of Registrant As Specified In Its Charter)
         
Delaware       76-0419117
(State or Other Jurisdiction of
Incorporation or Organization)
      (I.R.S. Employer
Identification Number)
      Each Registrant hereby amends this Registration Statement on such dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
 
 


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PROSPECTUS
Cardtronics, Inc.
Offer to Exchange up to
$200,000,000 of 9.250% Senior Notes due 2013
for
$200,000,000 of 9.250% Senior Notes due 2013
that have been Registered under the Securities Act of 1933
Terms of the Exchange Offer
  •  We are offering to exchange up to $200,000,000 of our outstanding 9.250% Senior Notes due 2013 for new notes with substantially identical terms that have been registered under the Securities Act and are freely tradable.
 
  •  We will exchange all outstanding notes that you validly tender and do not validly withdraw before the exchange offer expires for an equal principal amount of new notes.
 
  •  The exchange offer expires at 5:00 p.m., New York City time, on                   , 2006, unless extended. We do not currently intend to extend the exchange offer.
 
  •  Tenders of outstanding notes may be withdrawn at any time prior to the expiration of the exchange offer.
 
  •  The exchange of outstanding notes for new notes will not be a taxable event for U.S. federal income tax purposes.
Terms of the New 9.250% Senior Notes Offered in the Exchange Offer
Maturity
  •  The new notes will mature on August 15, 2013.
Interest
  •  Interest on the new notes is payable on February 15 and August 15 of each year.
 
  •  Interest will accrue from August 12, 2005 or the most recent date to which interest has been paid.
Redemption
  •  We may redeem some or all of the new notes at any time on or after August 15, 2009 at redemption prices listed in “Description of the New Notes — Optional Redemption,” and we may redeem some or all of the notes before that date by the payment of a make-whole premium.
 
  •  Subject to certain limitations, we may also redeem up to 35% of the new notes using the proceeds of certain equity offerings completed before August 15, 2008.
Change of Control
  •  If we experience a change of control, subject to certain conditions, we must offer to purchase the new notes.
Ranking
  •  The new notes are unsecured senior subordinated obligations. The new notes rank junior in right of payment with all of our other existing and future senior debt including borrowings under our bank credit facilities. As of March 31, 2006, approximately $53.2 million of indebtedness would have ranked senior in right of payment to the new notes.
Guarantees
  •  All payments on the new notes, including principal and interest, will be jointly and severally guaranteed on a senior subordinated basis by all of our existing domestic subsidiaries and certain of our future subsidiaries.
 
       Please read “Risk Factors” on page 9 for a discussion of factors you should consider before participating in the exchange offer.
 
     These securities have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
 
     Each broker-dealer that receives new notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes received in exchange for old notes where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. You may not participate in the exchange offer if you are a broker-dealer that acquired outstanding notes directly from us. See “Plan of Distribution.”
 
The date of this prospectus is                     , 2006.


 

      This prospectus is part of a registration statement we filed with the Securities and Exchange Commission. In making your investment decision, you should rely only on the information contained in this prospectus and in the accompanying letter of transmittal. We have not authorized anyone to provide you with any other information. If you receive any unauthorized information, you must not rely on it. We are not making an offer to sell these securities in any state where the offer is not permitted. You should not assume that the information contained in this prospectus, or the documents incorporated by reference into this prospectus, is accurate as of any date other than the date on the front cover of this prospectus or the date of such document, as the case may be.
 
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 Share Sale and Purchase Agreement
 Purchase and Sale Agreement
 Computation of Ratio of Earnings to Fixed Charges
 Consent of KPMG LLP
 Consent of Deloitte and Touche, LLP
 
INDUSTRY AND MARKET DATA
      In this prospectus, we rely on and refer to information and statistics regarding economic trends and conditions and other data pertaining to the ATM industry. We have obtained this data from our own research, surveys and studies conducted by third parties such as Dove Consulting Group, Inc., industry or other publications, such as ATM&Debit News, the UK Payment Statistics publication from APACS, and other publicly available sources. We believe that our sources of information and estimates are reliable and accurate, but we have not independently verified them. Our statements about the ATM industry generally, the number and type of ATMs in various markets, and the size and operations of our competitors in this prospectus are based on our management’s belief, this statistical data, internal studies and our knowledge of industry trends.
FORWARD-LOOKING STATEMENTS
      This prospectus contains “forward-looking statements.” Forward-looking statements include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation and availability of resources. These forward-looking statements include statements regarding:

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proposed new programs; expectations that regulatory developments or other matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity; statements concerning projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results and future economic performance; and statements of management’s goals and objectives and other similar expressions concerning matters that are not historical facts. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar expressions, as well as statements in future tense, identify forward-looking statements.
      You should not read forward-looking statements as a guarantee of future performance or results. They will not necessarily be accurate indications of the times at or by which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events. Such statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to reliance on third parties for cash management services; increased regulation and regulatory uncertainty; trends in ATM usage; decreases in the number of ATMs we can place with our top merchants; increased industry competition; our ability to continue to execute our growth strategies; risks associated with the acquisition of other ATM networks; changes in interest rates; declines in, or system failures that interrupt or delay, ATM transactions; changes in the ATM transaction fees we receive; changes in ATM technology; changes in foreign currency rates; general and economic conditions; and other factors discussed under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.”
      Forward-looking statements speak only as of the date the statements are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, you should draw no inference that we will make additional updates with respect to those or other forward-looking statements.

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SUMMARY
      This summary may not contain all the information that may be important to you. You should read this entire prospectus and the documents we have incorporated into this prospectus by reference before making an investment decision. You should carefully consider the information set forth under “Risk Factors.” In addition, certain statements include forward-looking information which involves risks and uncertainties. Please read “Forward-Looking Statements.” Unless this prospectus otherwise indicates or the context otherwise requires, the terms “we,” “our,” “us” “Cardtronics” or the “Company” as used in this prospectus refer to Cardtronics, Inc. and its subsidiaries. We refer to automated teller machines as “ATMs” throughout this prospectus. We refer to the ATMs that we own and/or operate as our “ATM Network” or our “network of ATMs”. Information referred to in this prospectus as “pro forma” gives effect to our May 17, 2005 acquisition of Bank Machine (Acquisitions) Ltd. (which we refer to as “Bank Machine”), as if the transaction had occurred on January 1, 2005.
Company Overview
      We operate the largest network of ATMs in the United States and are a leading independent ATM operator in the United Kingdom, based on number of ATMs operated. We also recently expanded our operations into Mexico with the purchase of a majority stake in CCS Mexico, an independent operator of approximately 300 ATMs located throughout the country. As of March 31, 2006, our network included approximately 26,000 ATMs. For the year ended December 31, 2005, and pro forma for our Bank Machine acquisition, our ATMs dispensed over $9.7 billion in cash and processed more than 163.2 million transactions. We deploy and operate ATMs under two distinct arrangements with our merchant partners: company-owned and merchant-owned. Under company-owned arrangements, we provide the ATM and are typically responsible for all aspects of its operation, including procuring cash, supplies and telecommunications as well as routine and technical maintenance. Under merchant-owned arrangements, the merchant owns the ATM and is responsible for providing cash and performing simple maintenance tasks, while we provide more complex maintenance services, transaction processing and connection to electronic funds transfer networks. As of March 31, 2006, approximately 46% of our ATMs were company-owned and 54% were merchant-owned. Because our margins are significantly higher on our company-owned machines as a result of the value of the breadth of services we provide, our internal and acquisition growth strategy will focus on increasing the number of company-owned ATMs in our network.
      Since May 2001, we have acquired 13 networks of ATMs and one operator of a surcharge-free ATM network, increasing the number of ATMs we operate from approximately 4,100 to approximately 26,000 as of March 31, 2006. On June 30, 2004, we acquired the ATM business of E*TRADE Access, Inc. (which we refer to as “E*TRADE Access”) adding approximately 13,155 ATMs to our network, and on May 17, 2005, we acquired Bank Machine, which expanded our operations to the United Kingdom and added approximately 1,000 ATMs to our network. From 2001 to 2005, the total number of annual transactions processed within our network increased from approximately 19.9 million to approximately 156.9 million.
      As of May 31, 2006, the Company had approximately $246.8 million in outstanding debt, comprised primarily of approximately $198.7 million in senior subordinated notes, net of unamortized discount, and approximately $48.1 million in borrowings under our existing revolving bank credit facility.
      Our principal executive offices are located at 3110 Hayes Road, Suite 300, Houston, Texas 77082 and our telephone number is (281) 596-9988. Our website address is www.cardtronics.com. Information contained on our website is not part of this prospectus.

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Recent Transactions
      Bank Machine Acquisition. On May 17, 2005, we acquired the ATM business of Bank Machine (Acquisitions) Limited, an independent operator of ATMs in the United Kingdom, for approximately $92.0 million in cash and 35,221 shares of our Series B Convertible Preferred Stock valued by us at approximately $3.0 million. Through this transaction, we acquired approximately 1,000 ATMs and related site agreements, of which approximately 850 were company-owned and 150 were merchant-owned ATMs.
      E*TRADE Access Acquisition. On June 30, 2004, we acquired the ATM business of E*TRADE Access, Inc., an indirect wholly owned subsidiary of E*TRADE Financial Corp., for approximately $106.9 million in cash. Through this transaction we acquired 13,155 ATMs and related placement agreements, of which approximately 2,450 were company-owned and 10,705 were merchant-owned. The historical audited consolidated financial statements of E*TRADE Access for the six months ended June 30, 2004 and for the years ended 2003 and 2002, have been included elsewhere in this prospectus. In accordance with an agreement with E*TRADE with respect to name use, the consolidated financial statements for the business formerly conducted by E*TRADE Access, Inc. appear under the name “ATM Company.”
      Other Acquisitions. On March 1, 2005, we acquired a portfolio of approximately 475 ATMs and related contracts located in independent grocery stores in and around the New York metropolitan area for approximately $8.2 million in cash. On April 21, 2005, we acquired a portfolio of approximately 330 ATMs and related contracts, at BP Amoco locations throughout the Midwest, for approximately $9.0 million in cash. Such acquisitions were funded with cash on hand and borrowings under our bank credit facilities. Substantially all of the ATMs acquired in these transactions were company-owned.
      On December 21, 2005, we acquired all of the outstanding shares of ATM National, Inc., the owner and operator of the Allpoint nationwide surcharge-free ATM network. The consideration for such acquisition totaled $4.8 million, and was comprised of $2.6 million in cash, 21,111 shares of our common stock, and the assumption of approximately $0.4 million in additional liabilities.
      In February 2006, we acquired a majority stake in CCS Mexico, an independent ATM operator located in Mexico, for approximately $1.0 million in cash consideration and the assumption of approximately $0.4 million in additional liabilities. Additionally, we incurred approximately $0.3 million in transaction costs associated with this acquisition. CCS Mexico, which was renamed to Cardtronics Mexico, currently operates approximately 300 surcharging ATMs in selected retail locations throughout Mexico.
      Preferred Stock Offering. On February 10, 2005, we issued 894,568 shares of our Series B Convertible Preferred Stock to investment funds controlled by TA Associates, Inc. for gross proceeds of $75.0 million, representing a 30.6% equity interest on a fully diluted basis as of such date. The net proceeds of this offering were used to redeem all of the outstanding shares of our Series A Preferred Stock and to repurchase approximately 24% of our outstanding shares of common stock and vested options to purchase our common stock. In connection with that offering, we also appointed two designees of TA Associates, Inc. to our board of directors.
      Amended and Restated Credit Facilities. Prior to the completion of our senior subordinated notes offering in August 2005, our bank credit facilities consisted of a revolving credit facility of up to $100.0 million, a first lien term facility of up to $125.0 million and a second lien term facility of up to $75.0 million. We utilized the net proceeds from our senior subordinated notes offering, along with additional borrowings under our revolving credit facility and cash on hand to retire permanently our first and second lien term loans in August 2005. In addition, our revolving credit facility was increased to a maximum borrowing capacity of $150.0 million, subject to the financial covenants contained in the revolving credit facility. In February 2006, the Company further amended the revolving credit facility to remove and modify certain restrictive covenants contained within the facility and to reduce the maximum borrowing capacity from $150.0 million to $125.0 million. As of March 31, 2006, we had approximately $53.2 million outstanding under the facility and the ability to borrow an additional $43.8 million based on the covenants contained in such facility. Substantially all of our domestic assets and 65% of the capital stock of our United

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Kingdom subsidiaries are pledged to secure borrowings under our revolving credit facility. Furthermore, each of our domestic subsidiaries has guaranteed our obligations under the facility.
      Senior Subordinated Notes Offering. On August 12, 2005, we issued $200.0 million in senior subordinated notes pursuant to Rule 144A of the Securities Act of 1933, as amended. Such senior subordinated notes are the notes that are subject to the exchange offer described herein. Net proceeds from the offering totaled approximately $192.6 million after taking into consideration debt issuance costs.
Organizational Structure
      The chart set forth below shows the current organizational structure of Cardtronics, Inc. and its subsidiaries.
(CHART)

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The Exchange Offer
      On August 12, 2005, we completed a private offering of the outstanding notes. As part of the private offering, we entered into a registration rights agreement with the initial purchasers of the outstanding notes in which we agreed, among other things, to deliver this prospectus to you and to use our best efforts to complete the exchange offer within 330 days after the date we issued the outstanding notes. The following is a summary of the exchange offer.
Exchange Offer We are offering to exchange new notes for outstanding notes.
 
Expiration Date The exchange offer will expire at 5:00 p.m. New York City time, on                     , 2006, unless we decide to extend it.
 
Condition to the Exchange Offer The registration rights agreement does not require us to accept outstanding notes for exchange if the exchange offer or the making of any exchange by a holder of the outstanding notes would violate any applicable law or interpretation of the staff of the SEC. A minimum aggregate principal amount of outstanding notes being tendered is not a condition to the exchange offer. In addition, we will not be obligated to accept for exchange the outstanding notes of any holder that has not complied with the procedures for tendering outstanding notes. Please read “Exchange Offer — Conditions to the Exchange Offer.”
 
Procedures for Tendering Outstanding Notes To participate in the exchange offer, you must follow the procedures established by The Depository Trust Company, which we call “DTC,” for tendering notes held in book-entry form. These procedures, which we call “ATOP,” require that the exchange agent receive, prior to the expiration date of the exchange offer, a computer generated message known as an “agent’s message” that is transmitted through DTC’s automated tender offer program and that DTC confirm that:
 
• DTC has received your instructions to exchange your notes; and
 
• you agree to be bound by the terms of the letter of transmittal.
 
For more details, please refer to the sections of this prospectus entitled “Exchange Offer — Terms of the Exchange Offer” and “— Procedures for Tendering.”
 
Guaranteed Delivery Procedures None.
 
Withdrawal of Tenders You may withdraw your tender of outstanding notes at any time prior to the expiration date. To withdraw, you must submit a notice of withdrawal to exchange agent using ATOP procedures before 5:00 p.m. New York City time on the expiration date of the exchange offer. Please read “Exchange Offer — Withdrawal of Tenders.”
 
Acceptance of Outstanding Notes and Delivery of New Notes If you fulfill all conditions required for proper acceptance of outstanding notes, we will accept any and all outstanding notes

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that you properly tender in the exchange offer on or before 5:00 p.m. New York City time on the expiration date. We will return any outstanding note that we do not accept for exchange to you without expense promptly following the expiration or termination of the exchange offer. We will deliver the new notes promptly after the expiration date and acceptance of the outstanding notes for exchange. Please refer to the section in this prospectus entitled “Exchange Offer — Terms of the Exchange Offer.”
 
Fees and Expenses We will bear all expenses related to the exchange offer. Please refer to the section in this prospectus entitled “Exchange Offer — Fees and Expenses.”
 
Use of Proceeds The issuance of the new notes will not provide us with any new proceeds. We are making this exchange offer solely to satisfy our obligations under our registration rights agreement.
 
Consequences of Failure to Exchange Outstanding Notes If you do not exchange your outstanding notes in this exchange offer, you will no longer be able to require us to register the outstanding notes under the Securities Act except in the limited circumstances provided under our registration rights agreement. In addition, you will not be able to resell, offer to resell or otherwise transfer the outstanding notes unless we have registered the outstanding notes under the Securities Act, or unless you resell, offer to resell or otherwise transfer them under an exemption from the registration requirements of, or in a transaction not subject to, the Securities Act.
 
U.S. Federal Income Tax
Considerations
The exchange of new notes for outstanding notes in the exchange offer should not be a taxable event for U.S. federal income tax purposes. Please read “Federal Income Tax Considerations.”
 
Exchange Agent We have appointed Wells Fargo Bank, National Association as exchange agent for the exchange offer. You should direct questions and requests for assistance and requests for additional copies of this prospectus (including the letter of transmittal) to the exchange agent addressed as follows: Wells Fargo Bank, National Association, Attention: Corporate Trust Operations, Sixth and Marquette, MAC N9303-121, Minneapolis, MN 55479. Eligible institutions may make requests by facsimile at (612) 667-4927.

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Terms of the New Notes
      The new notes will be identical to the outstanding notes except that the new notes are registered under the Securities Act and will not have restrictions on transfer, registration rights or provisions for additional interest and will contain different administrative terms. The new notes will evidence the same debt as the outstanding notes, and the same indenture will govern the new notes and the outstanding notes.
      The following summary contains basic information about the new notes and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the new notes, please refer to the section of this prospectus entitled “Description of the New Notes.”
Issuer Cardtronics, Inc.
 
Notes Offered $200.0 million aggregate principal amount of 91/4 % Senior Subordinated Notes due 2013 (the “notes”).
 
Maturity The notes will mature on August 15, 2013.
 
Interest Interest on the notes will accrue at the rate of 91/4 % per annum. Interest on the notes will be payable semi-annually, in cash, in arrears on February 15 and August 15 of each year, commencing on February 15, 2006.
 
Guarantees All payments on the notes, including principal and interest, will be jointly and severally guaranteed on a senior subordinated basis by all of our existing domestic subsidiaries and certain of our future subsidiaries. See “Description of the New Notes — Guarantees.”
 
Ranking The notes and the guarantees will be unsecured senior subordinated obligations and will rank:
 
• junior in right of payment to all of our and our subsidiary guarantors’ existing and future senior indebtedness, including borrowings under our bank credit facilities and guarantees of those borrowings;
 
• equally in right of payment with any of our and our subsidiary guarantors’ future senior subordinated indebtedness; and
 
• senior in right of payment to any of our and our subsidiary guarantors’ future indebtedness that is expressly subordinated in right of payment to the notes.
 
As of the date of this prospectus, our subsidiary guarantors had no debt outstanding other than the guarantees of the notes and guarantees of borrowings under our bank credit facilities, which totaled approximately $53.2 million as of March 31, 2006.
 
Optional Redemption We may redeem some or all of the notes on or after August 15, 2009 at the redemption prices set forth in this prospectus. At any time prior to August 15, 2009, we may redeem the notes, in whole or in part, at a price equal to 100% of their outstanding principal amount plus the make-whole premium described under “Description of the New Notes — Optional Redemption.”

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In addition, we may redeem up to 35% of the aggregate principal amount of the notes at a redemption price of 109.250% using the proceeds of certain equity offerings completed on or before August 15, 2008. We may make this redemption only if, after the redemption, at least 65% of the aggregate principal amount of the notes originally issued remains outstanding.
 
Change of Control If we sell substantially all of our assets or experience specific kinds of changes of control, we must offer to repurchase the notes at a price in cash equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.
 
Certain Covenants The indenture governing the notes contains covenants that, among other things, limit our ability and the ability of our subsidiaries to:
 
• incur or guarantee additional indebtedness;
 
• incur senior subordinated debt;
 
• make certain restricted payments;
 
• consolidate or merge with or into other companies;
 
• conduct asset sales;
 
• restrict dividends or other payments to us;
 
• engage in transactions with affiliates or related persons;
 
• create liens;
 
• redeem or repurchase capital stock; and
 
• issue and sell preferred stock in restricted subsidiaries.
 
These limitations will be subject to a number of important qualifications and exceptions. See “Description of the New Notes — Certain Covenants.”
 
Absence of a Public Market The new notes generally will be freely transferable; however, there can be no assurance as to the development or liquidity of any market for the new notes.
      Investment in the notes involves substantial risks. See “Risk Factors” immediately following this summary for a discussion of certain risks relating to an investment in the notes.

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Ratio of Earnings to Fixed Charges
      The following table sets forth our ratio of earnings to fixed charges for the periods indicated.
                             
    Three Months                    
    Ended    
    March 31,   Years Ended December 31,
         
    2006   2005   2005   2004   2003   2002   2001
                             
Ratio of earnings to fixed charges(1)(2)
        1.5x   1.3x    
 
(1)  For purposes of determining the ratio of earnings to fixed charges, earnings are defined as our income from operations before income taxes and fixed charges (excluding the effects of any preferred stock dividends and related accretion expense). Fixed charges consist of interest expense on all indebtedness, amortization of debt issuance costs, the interest portion of lease payments, and preferred stock dividends and accretion expense. Earnings were insufficient to cover fixed charges by approximately $4.8 million for the three months ended March 31, 2006, $0.9 million for the three months ended March 31, 2005, $5.7 million for the year ended December 31, 2005, $2.7 million for the year ended December 31, 2002, and $4.1 million for the year ended December 31, 2001. The pro forma effect of the refinancing of our existing term loans with the senior subordinated notes did not change our historical ratio of earnings to fixed charges for the year ended December 31, 2005 by more than 10 percent. Accordingly, no pro forma ratio has been presented herein.
 
(2)  The ratio of earnings to fixed charges calculations exclude costs incurred with respect to our vault cash rental obligations as such costs are not considered to be fixed charges for purposes of computing such ratios. Such costs totaled approximately $4.8 million and $2.8 million for the three months ended March 31, 2006 and 2005, respectively, and approximately $15.7 million, $10.2 million, $5.5 million, $2.7 million and $1.2 million for the years ended December 31, 2005, 2004, 2003, 2002 and 2001, respectively.

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RISK FACTORS
      Before making an investment decision with respect to the exchange offer you should carefully consider the following risks, as well as the other information contained in this prospectus memorandum, including our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The risks described below are those which we believe are the material risks we face as well as risks related to the exchange offer.
Risks Related to Our Business
We operate in a changing and unpredictable regulatory environment. If we are subject to new legislation regarding the operation of our ATMs, we could be required to make substantial expenditures to comply with such legislation, which may reduce our net income and our profit margins.
      With its initial roots in the banking industry, the ATM industry has always been regulated, if not by individual states, by the rules and regulations of the federal Electronic Funds Transfer Act, which establishes the rights, liabilities and responsibilities of participants in electronic funds transfer systems. The vast majority of states have few, if any, licensing requirements. However, recent media publicity on the use of electronic devices to steal ATM card information, or skimming devices, at ATMs has resulted in several states, including California, New Jersey and New York, introducing legislation regulating the deployment and operation of ATMs. In these three states no final legislation has been passed. If additional regulatory legislation is passed in these or other states, we could be required to make substantial expenditures which would reduce our net income.
The passing of legislation banning or limiting surcharge fees would severely impact our revenue.
      As off-premise ATMs became more prevalent in the 1990s, a few states (most notably Iowa) were slow to change their existing laws that prohibited surcharge fees in connection with ATM transactions. However, by the late 1990s, 49 states permitted surcharge fees, with Iowa being the lone exception. In 2002, a federal court, relying upon the federal preemption doctrine, and citing federal banking laws, overturned Iowa’s law that prohibited ATM surcharge fees. Despite the nationwide acceptance of surcharge fees at ATMs, a few consumer activists (most notably in California) have from time to time attempted to impose local bans on surcharge fees. Even in the few instances where these efforts have passed the local governing body (such as with an ordinance adopted by the city of Santa Monica, California), federal courts have overturned these local laws on federal preemption grounds. However, such efforts may resurface and, should the federal courts abandon their adherence to the federal preemption doctrine, such efforts could receive more favorable consideration than in the past. Any successful legislation banning or limiting surcharge fees could result in a substantial loss of revenues and significantly curtail our ability to continue our operations as currently configured.
      In the United Kingdom, the Treasury Select Committee of the House of Commons published a report regarding surcharges in the ATM industry in March 2005. This committee was formed to investigate public concerns regarding the ATM industry, including adequacy of disclosure to ATM customers regarding surcharges, whether ATM providers should be required to provide free services in low-income areas and whether to limit the level of surcharges. The committee’s report included a number of recommendations, including a recommendation to Parliament that ATMs should be subject to the Banking Code, which is a voluntary code of practice adopted by all financial institutions in the United Kingdom (“U.K.”). The U.K. government has yet to signal its acceptance of the Committee’s report, and there is no certainty that such report will be accepted. Should the report be accepted, the main impact of the Banking Code will be that ATM operators will be required to provide 30 days’ notice to the public prior to converting a surcharge-free ATM to one which charges surcharges. As of March 31, 2006, we had approximately 45 surcharge-free ATMs operating throughout the U.K. If the legislature or another body with regulatory authority in the United Kingdom were to impose limits on the level of surcharges for ATM transactions, our revenue from operations in the U.K. would be negatively impacted.

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We depend on ATM transaction fees for substantially all of our revenues and our revenues would be reduced by a decline in usage of or surcharge fees at our ATMs.
      Transaction fees charged to cardholders and their financial institutions for transactions processed on our ATMs, including surcharge and interchange transaction fees, have historically accounted for most of our revenues. We expect that revenues from ATM transaction fees will continue to account for a substantial majority of our revenues for the foreseeable future. Consequently, our future operating results will depend on (1) the continued market acceptance of our services in our target markets, (2) maintaining the level of transaction fees we receive, (3) our ability to install, acquire and operate more ATMs and (4) continued usage of our ATMs by cardholders. For example, increased acceptance of credit and debit cards by merchants and service providers, or any loss of confidence by the consuming public in the safety and security of ATM transactions, could result in decreased usage of our ATMs. In addition, it is possible that alternative technologies to our ATM services will be developed and implemented. If such alternatives are successful, we will likely experience a decline in the usage of our ATMs. Moreover, surcharge fees are set by negotiation between us and our merchant partners, and could change over time. Further, growth in surcharge-free ATM networks and widespread consumer bias toward such networks could adversely affect our revenue even though we receive fees from our participation in surcharge-free networks. We cannot assure you that surcharge fees will not decline in the future. Accordingly, a decline in usage of our ATMs by ATM cardholders or in the levels of fees received by us in connection with such usage would have a negative impact on our revenues and would limit our businesses future growth.
We derive a substantial portion of our revenue from ATMs placed with a small number of merchants. If one or more of our top merchants were to cease doing business with us, or to substantially reduce its dealings with us, our revenues could decline.
      For the quarter ended March 31, 2006 and for the year ended December 31, 2005, and on a pro forma basis giving effect to our Bank Machine acquisition, we derived approximately 19% and 18%, respectfully, of our total revenues from ATMs placed at the locations of our five largest merchants. We expect to continue to depend upon a relatively small number of merchants for a significant percentage of our revenues. The loss of any of our largest merchants, or a decision by any one of them to reduce the number of our ATMs placed in their locations, would decrease our revenues. These merchants may elect not to renew their contracts when they expire. Currently, these contracts have expiration dates as follows (in order of significance): January 31, 2012; April 30, 2010; December 31, 2014; December 31, 2013; and December 31, 2013. Even if such contracts are renewed, the renewal terms may be less favorable to us than the current contracts. If any of our five largest merchants fail to renew their contracts upon expiration, or if the renewal terms with any of them are less favorable to us than under our current contracts, this could result in a decline in our revenues and gross profits.
      In February 2005, Winn-Dixie, one of our major merchant customers, filed for bankruptcy protection. For the year ended December 31, 2005, Winn-Dixie accounted for approximately 2.0% of our total ATM operating revenues and 1.2% of our total ATM operating gross profits. As part of its bankruptcy restructuring efforts, Winn-Dixie has closed or sold approximately 360 of its existing stores during the past year, 340 of which included our ATMs. Accordingly, we have deinstalled the ATMs that were operating in those locations, leaving us with approximately 500 remaining ATM operating locations as of March 31, 2006.
      If Winn-Dixie’s restructuring efforts are unsuccessful, or if our existing agreement is negatively impacted by such restructuring efforts, our future revenues and gross profits may decline and we may be required to record an impairment charge related to the tangible and intangible assets associated with the Winn-Dixie agreement. As of March 31, 2006, the carrying amount of the tangible and intangible assets associated with the Winn-Dixie contract totaled approximately $3.3 million. Additionally, we have approximately $1.0 million in future contractual operating lease payments associated with many of the ATMs that are still operating within the remaining Winn-Dixie store locations.

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The ATM industry is highly competitive and such competition may increase, which may adversely affect our profit margins.
      The ATM business is and can be expected to remain highly competitive. While our principal competition in the United States comes from national and regional financial institutions, we also compete with other independent ATM companies. Several of our competitors, namely national financial institutions, are larger, more established and have greater financial and other resources than we do. Our competitors could prevent us from obtaining or maintaining desirable locations for our ATMs, cause us to reduce the surcharge revenue generated by transactions at our ATMs or cause us to pay higher merchant fees, thereby reducing our profits. In addition to our current competitors, additional competitors may enter the market. We can offer no assurance that we will be able to compete effectively against these current and future competitors. Increased competition could result in transaction fee reductions, reduced gross margins and loss of market share.
      In the U.K., we face competition from several companies with operations larger than our own. Many of these competitors have financial and other resources substantially greater than our United Kingdom subsidiary. These companies may be able to pay more for acquisitions and may be able to better define, evaluate, and bid for available acquisition targets in the United Kingdom or elsewhere. Our ability to expand our business to other areas of the U.K. in the future will depend upon our ability to successfully conduct operations, evaluate and select suitable acquisitions, and consummate transactions in this competitive environment.
We may be unable to integrate our recent and future acquisitions in an efficient manner and inefficiencies would increase our cost of operations and reduce our profitability.
      Our acquisitions involve certain inherent risks to our business, including the following:
  •  the operations, technology and personnel of any acquired companies may be difficult to integrate;
 
  •  the allocation of management resources to consummate these transactions may disrupt our day-to-day business; and
 
  •  acquired networks may not achieve anticipated revenues, earnings or cash flow. Such a shortfall could require us to write down the carrying value of the intangible assets associated with any acquired company, which would adversely affect our reported earnings.
      Since May 2001, we have acquired 13 ATM networks and one surcharge-free ATM network. Prior to our E*TRADE Access acquisition, we had acquired only the assets of deployed ATM networks, rather than businesses and their related infrastructure. We currently anticipate that our future acquisitions will likely reflect a mix of asset acquisitions and acquisitions of businesses, with each acquisition having its own set of unique characteristics. To the extent that we elect to acquire an existing company or the operations, technology and personnel of another ATM provider, we may assume some or all of the liabilities associated with the acquired company and face new and added challenges integrating such acquisition into our operations.
      Our recent growth, particularly because of the size of our E*TRADE Access and Bank Machine acquisitions, and any future growth may strain our management systems, information systems and resources. We will need to continue to invest in and improve our financial and managerial controls, reporting systems and procedures as we continue to grow and expand our business. As we grow, we must also continue to hire, train, supervise and manage new employees. We may not be able to hire, train, supervise and manage sufficient personnel or develop management and operating systems to manage our expansion effectively.
      In addition, our Bank Machine and CCS Mexico acquisitions created, and any future acquisition of ATMs located outside the United States will create, additional risks for us to manage, including, exposure to foreign currency fluctuations, difficulties in complying with foreign laws and regulations, staffing and managing foreign operations and potentially adverse tax consequences.
      Any inability on our part to manage effectively our past or future growth could limit our ability to successfully grow the revenue and profitability of our business.

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The full impact of our recent acquisitions on our operating results is not fully reflected in our historical financial results, which as a result we believe are not necessarily indicative of our future results of operations.
      Since May 2001, we have acquired 13 ATM networks. Of the approximately 21,000 ATMs we have acquired since May 2001 and prior to December 31, 2005, approximately 2,100 were acquired after January 2005. As a result, our operating results for the year ended December 31, 2005 do not reflect a full-year’s results for a considerable portion of the ATMs we operated as of December 31, 2005, including the approximately 1,000 ATMs we acquired in our Bank Machine acquisition on May 17, 2005. Accordingly, our historical results may not be indicative of results to be expected in future periods.
Changes in interest rates could increase our operating costs by increasing interest expense under our credit facilities and our cash management costs.
      Interest expense under our credit facilities and our vault cash rental expense are sensitive to changes in interest rates, particularly because a substantial majority of our indebtedness earns interest at floating rates and our vault cash rental expense is based on market rates of interest. Vault cash is the cash we use in our machines in cases where cash is not provided by the merchant. We pay rental fees on the average amount outstanding to our vault cash providers in the United States (“U.S.”) and U.K. under a floating rate formula. Recent increases in interest rates in the U.S. have resulted in increases in our interest expense under our credit facility and our vault cash rental expense. Although we currently hedge a substantial portion of our vault cash interest rate risk over the next five years, we may not be able to enter into similar arrangements for similar amounts in the future. Furthermore, we have not currently entered into any derivative financial instruments to hedge our variable interest rate exposure in the U.K. Any significant future increases in interest rates in the U.S. or the U.K. could have a negative impact on our net income, if any, and cash flow by increasing our operating costs and expenses. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Disclosure About Market Risk.”
Our earnings may be reduced due to the risk of fluctuations in foreign currencies, specifically the British Pound and Mexican Peso.
      Fluctuations in rates between the British Pound and U.S. dollar may impact our financial results from our U.K. operations since we translate our earnings generated in British Pounds into U.S. dollars at the then current exchange rate. In addition, we financed our Bank Machine acquisition with U.S. dollar-denominated borrowings, thus exposing our net investment in the U.K. to foreign currency fluctuations. In February 2006, we acquired a majority stake in CCS Mexico, an independent ATM operator located in Mexico, for approximately $1.0 million in cash consideration. As with our U.K. operations, we will translate our earnings generated in Mexican Pesos into U.S. dollars at the exchange rates in effect at the time such amounts are earned. Additionally, our current investment was funded in U.S. dollars, thus exposing such investment to foreign currency fluctuations.
      We currently do not hedge against the risks associated with fluctuations in exchange rates. Although we may use hedging techniques in the future, we may not be able to eliminate or reduce the effects of currency fluctuations. As a result, exchange rate fluctuations could have a negative impact on our net income.
Our international operations may not be successful, which would result in a reduction of our gross profits.
      As of March 31, 2006 approximately 4% of our ATMs are located in the U.K. and contributed approximately 16% of our gross profit for the quarter ended March 31, 2006 and approximately 18% of our pro forma gross profit for the year ended December 31, 2005. We expect to continue to expand in the U.K. and potentially into other countries as opportunities arise. For example, and as noted above, we recently purchased a majority stake in CCS Mexico, an independent ATM operator with 300 ATMs located throughout Mexico.

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      Our international operations are subject to certain inherent risks, including:
  •  exposure to currency fluctuations;
 
  •  difficulties in complying with foreign laws and regulations;
 
  •  unexpected changes in regulatory requirements;
 
  •  difficulties in staffing and managing foreign operations; and
 
  •  potentially adverse tax consequences.
      Any of these factors could reduce the profitability and revenues derived from our international operations and international expansion.
If we, our transaction processors, our electric funds transfer networks or other service providers experience system failures, the ATM products and services we provide could be delayed or interrupted, which would harm our business.
      Our ability to provide reliable service largely depends on the efficient and uninterrupted operations of our transaction processors, telecommunications network systems and other service providers. Although our contracts with merchants do not include any guarantees related to network availability problems due to factors beyond our control, any significant interruptions could severely harm our business and reputation and result in a loss of revenue. Additionally, if any such interruption is caused by us, such interruption could result in the loss of the affected merchants or damage our relationships with such merchants. We have not been the cause of any such interruptions in the past. Our systems and operations and those of our transaction processors and our electric funds transfer network and other service providers could be exposed to damage or interruption from fire, natural disaster, unlawful acts, terrorist attacks, power loss, telecommunications failure, unauthorized entry and computer viruses. We cannot be certain that any measures we and our service providers have taken to prevent system failures will be successful or that we will not experience service interruptions. Further, our property and business interruption insurance may not be adequate to compensate us for all losses or failures that may occur.
We rely on third parties to provide us with the cash we require to operate many of our ATMs. If these third parties were unable or unwilling to provide us with the necessary cash to operate our ATMs, we would need to locate alternative sources of cash to operate our ATMs or we would not be able to operate our business.
      In the U.S., we rely on agreements with Bank of America, N.A. and with Palm Desert National Bank to provide us with all of the cash that we use in approximately 11,300 of our domestic ATMs where cash is not provided by the merchant. In addition, we rely on an agreement with Alliance & Leicester Commercial Bank (“ALCB”) to provide us with all of the cash that we use in approximately 750 of our U.K. ATMs where cash is not provided by the merchant. As of March 31, 2006, the balance of cash held in our domestic ATMs was approximately $306.4 million, over 98% of which was supplied by Bank of America. In the U.K., the balance of cash held in our ATMs as of March 31, 2006 was approximately $52.2 million. We pay a fee for our usage of this cash based on the total amount of vault cash that we are using at any given time. At all times during the use of this cash, it belongs to the cash providers. Under our agreements with Bank of America and ALCB, each provider has the right to demand the return of all or any portion of its cash at any time upon the occurrence of certain events beyond our control, including certain bankruptcy events of us or our subsidiaries, or a breach of the terms of our cash provider agreements. Our current agreement with Bank of America expires on August 2, 2007, subject to automatic one-year renewals. In addition, Bank of America may terminate its agreement with us and demand the return of its cash upon 360 days prior written notice. In the United Kingdom, ALCB may terminate their agreement with us and demand the return of their cash upon 180 days’ written notice.
      In Mexico our current ATM cash is provided by Bansi Bank, (“Bansi”), a regional bank in Mexico. We currently have an agreement with Bansi to supply us with cash of up to U.S. $10.0 million that expires on

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March 31, 2007. Upon expiration of this contract we will extend our current contract or negotiate a new contract with Bansi or seek alternate sources for our ATM cash.
      If our cash providers were to demand return of their cash or terminate their arrangements with us and remove their cash from our ATMs, or if they were to fail to provide us with cash as and when we need it for our ATM operations, our ability to operate these ATMs would be jeopardized, and we would need to locate alternative sources of cash in order to operate these ATMs.
Criminal activity by third parties, whether through tampering with our ATM machines or otherwise, could result in decreased consumer confidence in ATM usage and thereby reduce our profit.
      In recent years, there have been reports in the press regarding the use of ATMs to defraud cardholders and their financial institutions. Criminals have been known to attach skimming devices to ATMs in order to copy the encoded personal information on a user’s debit or credit card that the criminal then uses to create counterfeit cards that can be used at ATMs or as credit cards to make unauthorized purchases. Extensive counterfeiting activity could undermine consumer confidence in ATMs, thereby reducing ATM activity and our profit. Although, as of this date, we are not aware of any our ATMs being used for skimming, we cannot guarantee that criminals will not target one or more of our ATMs for skimming operations.
We rely on electronic funds transfer network providers, transaction processors and maintenance providers; if they fail or no longer agree to provide their services, we could suffer a temporary loss of transaction revenues or the permanent loss of any merchant contract affected by such disruption.
      We rely on electronic funds transfer network providers and have agreements with transaction processors and maintenance providers and have more than one such provider in each of these key areas. These providers enable us to provide card authorization, data capture, settlement and maintenance services to the merchants we serve. Typically, these agreements are for periods of up to two or three years each. If we improperly manage the renewal or replacement of any expiring vendor contract, or if our multiple providers in any one key area failed to provide the services for which we have contracted, and disruption of service to our merchants occurs, our relationship with those merchants could suffer. Further, if such disruption of service is significant, the affected merchants may seek to terminate their agreements with us.
Risks Related to Our Indebtedness, the New Notes and the Exchange Offer
We have a substantial amount of indebtedness, which may adversely affect our cash flow and our ability to operate our business, remain in compliance with debt covenants and make payments on our indebtedness, including the notes.
      As of March 31, 2006, we had outstanding indebtedness of approximately $251.9 million, which represented approximately 90% of our total capitalization based on a total book capitalization of $278.4 million.
      Our substantial indebtedness could have important consequences to you. For example, it could:
  •  make it more difficult for us to satisfy our obligations with respect to our indebtedness, including the notes, and any failure to comply with the obligations of any of our debt instruments, including financial and other restrictive covenants, could result in an event of default under the indenture governing the notes and the agreements governing such other indebtedness;
 
  •  require us to dedicate a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes;
 
  •  limit our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
 
  •  make us more vulnerable to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;

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  •  limit our ability to borrow additional amounts for working capital, capital expenditures, acquisitions, debt service requirements, execution of our growth strategy, research and development costs or other purposes; and
 
  •  place us at a disadvantage compared to our competitors who have less debt.
      Our interest expense could increase if interest rates increase because a portion of our indebtedness bears interest at floating rates and our vault cash rental expense is computed based on market rates of interest. See “Description of Other Indebtedness-Bank Credit Facilities.” If we do not have sufficient earnings to service our debt, we may be required to refinance all or part of our existing debt, sell assets, borrow more money or sell securities, none of which we can guarantee we will be able to do.
      We will be able to incur significant additional indebtedness in the future. Although the indenture governing the notes and our credit agreement contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of important qualifications and exceptions and the indebtedness incurred in compliance with these restrictions could be substantial. If new debt is added to our anticipated debt levels, the related risks that we now face, including those described above, could intensify.
Repayment of our debt, including the notes, is dependent on cash flow generated by our subsidiaries.
      We are a holding company with no material assets other than the equity interests of our subsidiaries. Our subsidiaries conduct substantially all of our operations and own substantially all of our assets. Therefore, repayment of our indebtedness, including the notes, is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Our subsidiaries may not be able to, or be permitted to, make distributions to enable us to make payments in respect of our indebtedness, including the notes. Each of our subsidiaries is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. While the indenture governing the notes limits the ability of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other inter-company payments to us, these limitations are subject to certain qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness, including the notes. There are currently no restrictions limiting the ability of our subsidiaries to make cash available to us, either by dividend, debt repayment or otherwise.
Your right to receive payments on the notes is junior to our existing and future senior debt, and the guarantees of the notes are junior to all of the guarantors’ existing and future senior debt.
      The notes and the guarantees rank behind all of our and the guarantors’ existing and future senior indebtedness. As of March 31, 2006, the notes and the guarantees were subordinated to $53.2 million of senior debt, all of which represented borrowings under our bank credit facility. We are permitted to incur substantial other indebtedness, including senior debt, in the future.
      As a result of this subordination, upon any distribution to creditors of our property or the property of the guarantors in a bankruptcy, liquidation or reorganization or similar proceeding, the holders of our senior debt and the holders of the senior debt of the guarantors are entitled to be paid in full in cash before any payment may be made with respect to the notes or the guarantees. In addition, all payments on the notes and the guarantees will be blocked in the event of a payment default on senior debt and may be blocked for up to 179 consecutive days in the event of specified non-payment defaults on designated senior debt. In the event of a bankruptcy, liquidation or reorganization or similar proceeding relating to us or the guarantors, the indenture relating to the notes requires that amounts otherwise payable to holders of the notes in a bankruptcy or similar proceeding be paid instead to holders of senior debt until the holders of senior debt are paid in full. As a result, holders of the notes may not receive all amounts owed to them and may receive less, ratably, than holders of trade payables and other unsubordinated indebtedness.

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Your right to receive payments on the notes is effectively subordinated to the rights of existing and future creditors of our subsidiaries that are not guarantors on the notes.
      Initially none of our foreign subsidiaries is required to guarantee the notes. As a result, holders of the notes will be effectively subordinated to the indebtedness and other liabilities of these subsidiaries, including trade creditors. Therefore, in the event of the insolvency or liquidation of a foreign subsidiary, following payment by that subsidiary of its liabilities, such subsidiary may not have sufficient remaining assets to make payments to us as a shareholder or otherwise. In the event of a default by any such subsidiary under any credit arrangement or other indebtedness, its creditors could accelerate such debt, prior to such subsidiary distributing amounts to us that we could have used to make payments on the notes.
The terms of our credit agreement and the indenture governing the notes may restrict our current and future operations, particularly our ability to respond to changes in our business or to take certain actions.
      Our credit agreement and the indenture governing the notes include a number of covenants that, among other things, restrict our ability to:
  •  sell or transfer property or assets;
 
  •  pay dividends on or redeem or repurchase stock;
 
  •  merge into or consolidate with any third party;
 
  •  create, incur, assume or guarantee additional indebtedness;
 
  •  create certain liens;
 
  •  make investments;
 
  •  make certain restricted payments, including the payment of dividends;
 
  •  engage in transactions with affiliates;
 
  •  redeem or repurchase capital stock;
 
  •  issue or sell preferred stock of restricted subsidiaries; and
 
  •  enter into sale and leaseback transactions.
      In addition, we are required by our credit agreement to maintain specified financial ratios and limits, including a 2 to 1 ratio of Senior Debt to Earnings, a Fixed Charge Coverage Ratio ranging from 1.25 to 1 in 2006 to 1.4 to 1 by the end of 2007 and beyond, and limitations on the amount of Capital Expenditures we can incur in any given 12-month period, all of which as defined in the credit agreement. As a result of these ratios and limits, we are limited in the manner in which we conduct our business, and may be unable to engage in favorable business activities or finance future operations or capital needs. Accordingly, these restrictions may limit our ability to successfully operate our business and prevent us from fulfilling our obligations under the notes.
      A failure to comply with the covenants financial ratios could result in an event of default. In the event of a default under our credit agreement, the lenders could elect to declare all borrowings outstanding, together with accrued and unpaid interest and other fees, to be due and payable, to require us to apply all of our available cash to repay these borrowings or to prevent us from making debt service payments on the notes offered by this prospectus, any of which could result in an event of default under the indenture governing the notes. An acceleration of indebtedness under our credit agreement would also likely result in an event of default under the terms of any other financing arrangement we have outstanding at the time. If any or all of our debt were to be accelerated, there can be no assurance that our assets would be sufficient to repay such indebtedness in full. If we are unable to repay outstanding borrowings under our bank credit facility when due, the lenders will have the right to proceed against the collateral securing such indebtedness. See “Description of Other Indebtedness” and “Description of the New Notes.”

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The notes and the guarantees are not secured by our assets nor those of the guarantors, and the lenders under our credit agreement are entitled to remedies available to a secured lender, which gives them priority over you to collect amounts due to them.
      The notes and the guarantees will be our and the guarantors’ unsecured obligations. In contrast, our obligations outstanding under our credit agreement are secured by a perfected lien on, and a pledge of substantially all of our assets, including the stock of our subsidiaries. The notes will be effectively subordinated to this secured debt to the extent of the value of the collateral securing such debt. In addition, we may incur additional secured debt, and the notes will be effectively subordinated to any such additional secured debt we may incur to the extent of the value of the collateral securing such debt.
      Because the notes and the guarantees will be unsecured obligations, the assets that secure our secured debt will be available to pay obligations on the notes only after all such secured debt has been repaid in full. Accordingly, your right of repayment may be compromised if any of the following situations occur:
  •  we enter into bankruptcy, liquidation, reorganization, or other winding-up proceedings;
 
  •  there is a default in payment under our credit agreement; or
 
  •  there is an acceleration of any indebtedness under our credit agreement.
      If any of these events occurs, the secured lenders could sell those of our assets in which they have been granted a security interest, to your exclusion, even if an event of default exists under the indenture governing the Senior Notes at such time. As a result, upon the occurrence of any of these events, there may not be sufficient funds to pay amounts due on the notes.
We may not be able to repurchase the notes upon a change of control.
      The indenture governing the notes requires us to offer to repurchase some or all of the notes when certain change of control events occur. These events include sale of the company transactions, a change in the majority of our board of directors, an event that results in Cap Street, TA Associates or their affiliates not owning a majority of our voting stock prior to our initial public offering or an event that results in a person or group other than Cap Street, TA Associates or their affiliates owning more than 50% of our outstanding voting securities. If we experience a change of control, you will have the right to require us to repurchase your notes at a purchase price in cash equal to 101% of the principal amount of your notes plus accrued and unpaid interest, if any. Our credit agreement provides that certain change of control events (including a change of control as defined in the indenture governing the notes) constitute a default. Any future credit agreement or other agreements relating to senior indebtedness to which we become a party may contain similar provisions. If we experience a change of control that triggers a default under our credit agreement, we could seek a waiver of such default or seek to refinance our credit agreement. In the event we do not obtain such a waiver or refinance our credit agreement, such default could result in amounts outstanding under our credit agreement being declared due and payable. In the event we experience a change of control that results in us having to repurchase the notes, we may not have sufficient financial resources to satisfy all of our obligations under our credit agreement and the notes. In addition, the change of control covenant in the indenture does not cover all corporate reorganizations, mergers or similar transactions and may not provide you with protection in a highly leveraged transaction. See “Description of Notes — Certain Covenants.”
The guarantees may not be enforceable because of fraudulent conveyance laws.
      Our existing and certain of our future subsidiaries will guarantee our obligations under the notes. Our issuance of the notes and the issuance of the guarantees by the guarantors may be subject to review under state and federal laws if a bankruptcy, liquidation or reorganization case or a lawsuit, including in circumstances in which bankruptcy is not involved, were commenced at some future date by, or on behalf of, our unpaid creditors or the unpaid creditors of a guarantor. Under the federal bankruptcy laws and comparable provisions of state fraudulent transfer laws, a court may void or otherwise decline to enforce the notes or a guarantor’s guarantee, or subordinate the notes or such guarantee to our or the applicable guarantor’s existing and future indebtedness. While the relevant laws may vary from state to state, a court

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might do so if it found that when we issued the notes or when the applicable guarantor entered into its guarantee or, in some states, when payments became due under the notes or such guarantee, we or the applicable guarantor received less than reasonably equivalent value or fair consideration and either:
  •  were insolvent or rendered insolvent by reason of such incurrence; or
 
  •  were engaged in a business or transaction for which one of our or such guarantor’s remaining assets constituted unreasonably small capital; or
 
  •  intended to incur, or believed that we or such guarantor would incur, debts beyond our or such guarantor’s ability to pay such debts as they mature.
      The court might also void the notes or a guarantee, without regard to the above factors, if the court found that we issued the notes or the applicable guarantor entered into its guarantee with actual intent to hinder, delay or defraud its creditors. In addition, any payment by us or a guarantor pursuant to the notes or the guarantees could be voided and required to be returned to us, or such guarantor, or to a fund for the benefit of our or such guarantor’s creditors.
      A court would likely find that we, or a guarantor, did not receive reasonably equivalent value or fair consideration for the notes or such guarantee if we, or such guarantor, did not substantially benefit directly or indirectly from the issuance of the notes. Our anticipated use of proceeds, which includes the distribution of a substantial portion of the proceeds of the notes to our shareholders, could increase the risk of such a finding. If a court were to void the notes or a guarantee, you would no longer have a claim against us or the applicable guarantor, as the case may be. Sufficient funds to repay the notes may not be available from other sources, including the remaining guarantors, if any. In addition, the court might direct you to repay any amounts that you already received from us or any guarantor, as the case may be.
      The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, we or a guarantor, as applicable, would be considered insolvent if:
  •  the sum of our or such guarantor’s debts, including contingent liabilities, was greater than the fair saleable value of our or such guarantor’s assets; or
 
  •  if the present fair saleable value of our or such guarantor’s assets were less than the amount than would be required to pay our or such guarantor’s probable liability on our or such guarantor’s existing debts, including contingent liabilities, as they become absolute and mature; or
 
  •  we or such guarantor could not pay our or such guarantor’s debts as they become due.
      To the extent a court voids the notes or any of the guarantees as fraudulent transfers or holds the notes or any of the guarantees unenforceable for any other reason, holders of the notes would cease to have any direct claim against us or the applicable guarantor. If a court were to take this action, our or the applicable guarantor’s assets would be applied first to satisfy our or the applicable guarantor’s liabilities, if any, before any portion of its assets could be applied to the payment of the notes.
      Each guarantee will contain a provision intended to limit the guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent transfer. This provision may not be effective to protect the guarantees from being voided under fraudulent transfer law, or may reduce the guarantor’s obligation to an amount that effectively makes the guarantee worthless.

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If you do not properly tender your outstanding notes, you will continue to hold unregistered outstanding notes and your ability to transfer outstanding notes will be adversely affected.
      We will only issue new notes in exchange for outstanding notes that you timely and properly tender. Therefore, you should allow sufficient time to ensure timely delivery of the outstanding notes and you should carefully follow the instructions on how to tender your outstanding notes. Neither we nor the exchange agent is required to tell you of any defects or irregularities with respect to your tender of outstanding notes.
      If you do not exchange your outstanding notes for new notes pursuant to the exchange offer, the outstanding notes you hold will continue to be subject to the existing transfer restrictions. In general, you may not offer or sell the outstanding notes except under an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We do not plan to register outstanding notes under the Securities Act unless our registration rights agreement with the initial purchasers of the outstanding notes requires us to do so. Further, if you continue to hold any outstanding notes after the exchange offer is consummated, you may have trouble selling them because there will be fewer such notes outstanding.

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EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
      In connection with the issuance of the outstanding notes, we entered into a registration rights agreement. Under the registration rights agreement, we agreed to:
  •  within 240 days after the original issuance of the outstanding notes on August 12, 2005, file a registration statement with the SEC with respect to a registered offer to exchange each outstanding note for a new note having terms substantially identical in all material respects to such note, except that the new note will not contain terms with respect to transfer restrictions;
 
  •  use our reasonable best efforts to cause the registration statement to be declared effective under the Securities Act within 300 days after the original issuance of the outstanding notes;
 
  •  promptly following the effectiveness of the registration statement, offer the new notes in exchange for surrender of the outstanding notes; and
 
  •  keep the exchange offer open for not less than 30 days (or longer if required by applicable law) after the date notice of the exchange offer is mailed to the holders of the outstanding notes.
      We have fulfilled the agreements described in the first two of the preceding bullet points and are now offering eligible holders of the outstanding notes the opportunity to exchange their outstanding notes for new notes registered under the Securities Act. Holders are eligible if they are not prohibited by any law or policy of the SEC from participating in this exchange offer. The new notes will be substantially identical to the outstanding notes except that the new notes will not contain terms with respect to transfer restrictions, registration rights or additional interest.
      Under limited circumstances, we agreed to use our best efforts to cause the SEC to declare effective a shelf registration statement for the resale of the outstanding notes. We also agreed to use our best efforts to keep the shelf registration statement effective for up to two years after its effective date. The circumstances include if:
  •  a change in law or in applicable interpretations thereof of the staff of the SEC does not permit us to effect the exchange offer; or
 
  •  for any other reason the exchange offer is not consummated within 330 days from August 12, 2005, the date of the original issuance of the outstanding notes; or
 
  •  any of the initial purchasers notify us following consummation of the exchange offer that outstanding notes held by it are not eligible to be exchanged for new notes in the exchange offer; or
 
  •  certain holders are not eligible to participate in the exchange offer, or such holders do not receive freely tradeable securities on the date of the exchange.
      We will pay additional cash interest on the applicable outstanding notes, subject to certain exceptions:
  •  if either this registration statement or, if we are obligated to file one, a shelf registration statement is not declared effective by the Commission by the date required,
 
  •  if we fail to consummate the exchange offer prior to the date that is 330 days after August 12, 2005, or
 
  •  after this registration statement or a shelf registration statement, as the case may be, is declared effective, such registration statement thereafter ceases to be effective or usable (subject to certain exceptions) (each such event referred to in the preceding clauses being a “registration default”);
from and including the date on which any such registration default occurs to but excluding the date on which all registration defaults have been cured.

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      The rate of the additional interest will be 0.25% per year for the first 90-day period immediately following the occurrence of a registration default, and such rate will increase by an additional 0.25% per year with respect to each subsequent 90-day period until all registration defaults have been cured, up to a maximum additional interest rate of 1.0% per year. We will pay such additional interest on regular interest payment dates. Such additional interest will be in addition to any other interest payable from time to time with respect to the outstanding notes and the new notes.
      Upon the effectiveness of this registration statement, the consummation of the exchange offer, the effectiveness of a shelf registration statement, or the effectiveness of a succeeding registration statement, as the case may be, the interest rate borne by the notes from the date of such effectiveness or consummation, as the case may be, will be reduced to the original interest rate. However, if after any such reduction in interest rate, a different registration default occurs, the interest rate may again be increased pursuant to the preceding paragraph.
      To exchange your outstanding notes for transferable new notes in the exchange offer, you will be required to make the following representations:
  •  any new notes will be acquired in the ordinary course of your business;
 
  •  you have no arrangement or understanding with any person or entity to participate in the distribution of the new notes;
 
  •  you are not engaged in and do not intend to engage in the distribution of the new notes;
 
  •  if you are a broker-dealer that will receive new notes for your own account in exchange for outstanding notes, you acquired those notes as a result of market-making activities or other trading activities and you will deliver a prospectus, as required by law, in connection with any resale of such new notes; and
 
  •  you are not our “affiliate,” as defined in Rule 405 of the Securities Act.
      In addition, we may require you to provide information to be used in connection with the shelf registration statement to have your outstanding notes included in the shelf registration statement and benefit from the provisions regarding additional interest described in the preceding paragraphs. A holder who sells outstanding notes under the shelf registration statement generally will be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers. Such a holder will also be subject to the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the registration rights agreement that are applicable to such a holder, including indemnification obligations.
      The description of the registration rights agreement contained in this section is a summary only. For more information, you should review the provisions of the registration rights agreement that we filed with the SEC as an exhibit to the registration statement of which this prospectus is a part.
Resale of New Notes
      Based on no action letters of the SEC staff issued to third parties, we believe that new notes may be offered for resale, resold and otherwise transferred by you without further compliance with the registration and prospectus delivery provisions of the Securities Act if:
  •  you are not our “affiliate” within the meaning of Rule 405 under the Securities Act;
 
  •  such new notes are acquired in the ordinary course of your business; and
 
  •  you do not intend to participate in a distribution of the new notes.
      The SEC, however, has not considered the exchange offer for the new notes in the context of a no action letter, and the SEC may not make a similar determination as in the no action letters issued to these third parties.

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      If you tender in the exchange offer with the intention of participating in any manner in a distribution of the new notes, you
  •  cannot rely on such interpretations by the SEC staff; and
 
  •  must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction.
      Unless an exemption from registration is otherwise available, any security holder intending to distribute new notes should be covered by an effective registration statement under the Securities Act. This registration statement should contain the selling security holder’s information required by Item 507 of Regulation S-K under the Securities Act. This prospectus may be used for an offer to resell, resale or other retransfer of new notes only as specifically described in this prospectus. Only broker-dealers that acquired the outstanding notes as a result of market-making activities or other trading activities may participate in the exchange offer. Each broker-dealer that receives new notes for its own account in exchange for outstanding notes, where such outstanding notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge by way of the letter of transmittal that it will deliver a prospectus in connection with any resale of the new notes. Please read the section captioned “Plan of Distribution” for more details regarding the transfer of new notes.
Terms of the Exchange Offer
      Subject to the terms and conditions described in this prospectus and in the letter of transmittal, we will accept for exchange any outstanding notes properly tendered and not withdrawn prior to 5:00 p.m. New York City time on the expiration date. We will issue new notes in principal amount equal to the principal amount of outstanding notes surrendered under the exchange offer. Outstanding notes may be tendered only for new notes and only in integral multiples of $1,000.
      The exchange offer is not conditioned upon any minimum aggregate principal amount of outstanding notes being tendered for exchange.
      As of the date of this prospectus, $200,000,000 in aggregate principal amount of the outstanding notes are outstanding. This prospectus is being sent to DTC, the sole registered holder of the outstanding notes, and to all persons that we can identify as beneficial owners of the outstanding notes. There will be no fixed record date for determining registered holders of outstanding notes entitled to participate in the exchange offer.
      We intend to conduct the exchange offer in accordance with the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Securities Exchange Act of 1934 and the rules and regulations of the SEC. Outstanding notes whose holders do not tender for exchange in the exchange offer will remain outstanding and continue to accrue interest. These outstanding notes will be entitled to the rights and benefits such holders have under the indenture relating to the notes and the registration rights agreement.
      We will be deemed to have accepted for exchange properly tendered outstanding notes when we have given oral or written notice of the acceptance to the exchange agent and complied with the applicable provisions of the registration rights agreement. The exchange agent will act as agent for the tendering holders for the purposes of receiving the new notes from us.
      If you tender outstanding notes in the exchange offer, you will not be required to pay brokerage commissions or fees or, subject to the letter of transmittal, transfer taxes with respect to the exchange of outstanding notes. We will pay all charges and expenses, other than certain applicable taxes described below, in connecting with the exchange offer. It is important that you read the section labeled “— Fees and Expenses” for more details regarding fees and expenses incurred in the exchange offer.
      We will return any outstanding notes that we do not accept for exchange for any reason without expense to their tendering holder as promptly as practicable after the expiration or termination of the exchange offer.

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Expiration Date
      The exchange offer will expire at 5:00 p.m. New York City time on                     2006, unless, in our sole discretion, we extend it.
Extensions, Delays in Acceptance, Termination or Amendment
      We expressly reserve the right, at any time or various times, to extend the period of time during which the exchange offer is open. We may extend the exchange offer and delay acceptance of any outstanding notes by giving written notice of such extension to the holders of the notes. During any such extensions, all outstanding notes previously tendered will remain subject to the exchange offer, and we may accept them for exchange.
      In order to extend the exchange offer, we will notify the exchange agent orally or in writing of any extension. We will notify the registered holders of outstanding notes of the extension no later than 9:00 a.m., New York City time, by press release on the business day after the previously scheduled expiration date.
      If any of the conditions described below under “— Conditions to the Exchange Offer” have not been satisfied, we reserve the right, in our sole discretion
  •  to extend the exchange offer and delay accepting for exchange any outstanding notes or
 
  •  to terminate the exchange offer,
by giving oral or written notice of such, extension or termination to the exchange agent. Subject to the terms of the registration rights agreement, we also reserve the right to amend the terms of the exchange offer in any manner. If we amend the terms of the exchange offer in a material manner or waive any material condition, we will extend the exchange offer period if necessary to provide that at least five business days remain in the offer period following notice of such waver or material change.
      Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by written notice thereof to the registered holders of outstanding notes. If we amend the exchange offer in a manner that we determine to constitute a material change, we will promptly disclose such amendment by means of a prospectus supplement. The supplement will be distributed to the registered holders of the outstanding notes. Depending upon the significance of the amendment and the manner of disclosure to the registered holders, we will extend the exchange offer if the exchange offer would otherwise expire during such period.
Conditions to the Exchange Offer
      We will not be required to accept for exchange, or exchange any new notes for, any outstanding notes if the exchange offer, or the making of any exchange by a holder of outstanding notes, would violate applicable law or any applicable interpretation of the staff of the SEC. Similarly, we may terminate the exchange offer as provided in this prospectus the expiration of the exchange offer in the event of such a potential violation.
      In addition, we will not be obligated to accept for exchange the outstanding notes of any holder that has not made to us the representations described under “— Purpose and Effect of the Exchange Offer,” “— Procedures for Tendering” and “Plan of Distribution” and such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to allow us to use an appropriate form to register the new notes under the Securities Act.
      We expressly reserve the right to amend or terminate the exchange offer, and to reject for exchange any outstanding notes not previously accepted for exchange, upon the occurrence of any of the conditions to the exchange offer specified above. All of these conditions must be satisfied or waived at or before the expiration of the exchange offer. We will give notice of any extension, amendment, non-acceptance or termination to the holders of the outstanding notes promptly.
      These conditions are for our sole benefit, and we may assert them or waive them in whole or in part at any time or at various times in our sole discretion if we waive any conditions we will do so for all holder of

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the notes. If we fail at any time to exercise any of these rights, this failure will not mean that we have waived our rights. Each such right will be deemed an ongoing right that we may assert at any time or at various times.
      In addition, we will not accept for exchange any outstanding notes tendered, and will not issue new notes in exchange for any such outstanding notes, if at such time any stop order has been threatened or is in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the indenture relating to the notes under the Trust Indenture Act of 1939.
Procedures for Tendering
      In order to participate in the exchange offer, you must properly tender your outstanding notes to the exchange agent as described below. It is your responsibility to properly tender your notes. We have the right to waive any defects. However, we are not required to waive defects and are not required to notify you of defects in your exchange.
      If you have any questions or need help in exchanging your notes, please call the exchange agent whose address and phone number are described in the section of the prospectus entitled “Where You Can Find More Information.”
      All of the outstanding notes were issued in book-entry form, and all of the outstanding notes are currently represented by global certificates held for the account of DTC. We have confirmed with DTC that the outstanding notes may be tendered using the Automated Tender Offer Program (“ATOP”) instituted by DTC. The exchange agent will establish an account with DTC for purposes of the exchange offer promptly after the commencement of the exchange offer and DTC participants may electronically transmit their acceptance of the exchange offer by causing DTC to transfer their outstanding notes to the exchange agent using the ATOP procedures. In connection with the transfer, DTC will send an “agent’s message” to the exchange agent. The agent’s message will state that DTC has received instructions from the participant to tender outstanding notes and that the participant agrees to be bound by the terms of the letter of transmittal.
      By using the ATOP procedures to exchange outstanding notes, you will not be required to deliver a letter of transmittal to the exchange agent. However, you will be bound by its terms just as if you had signed it.
      There is no procedure for guaranteed late delivery of the notes.
Determinations Under the Exchange Offer
      We will determine in our sole discretion all questions as to the validity, form, eligibility, time of receipt, acceptance of tendered outstanding notes and withdrawal of tendered outstanding notes. Our determination will be final and binding. We reserve the absolute right to reject any outstanding notes not properly tendered or any outstanding notes our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defect, irregularities or conditions of tender as to particular outstanding notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, all defects or irregularities in connection with tenders of outstanding notes must be cured within such time as we shall determine. Although we intend to notify holders of defects or irregularities with respect to tenders of outstanding notes, neither we, the exchange agent nor any other person will incur any liability for failure to give such notification. Tenders of outstanding notes will not be deemed made until such defects or irregularities have been cured or waived. Any outstanding notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned to the tendering holder as soon as practicable following the expiration date.
When We Will Issue New Notes
      In all cases, we will issue new notes for outstanding notes that we have accepted for exchange under the exchange offer only after the exchange agent receives, prior to 5:00 p.m., New York City time, on the expiration date,

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  •  a book-entry confirmation of such outstanding notes into the exchange agent’s account at DTC; and
 
  •  a properly transmitted agent’s message.
Return of Outstanding Notes Not Accepted or Exchanged
      If we do not accept any tendered outstanding notes for exchange or if outstanding notes are submitted for a greater principal amount than the holder desires to exchange, the unaccepted or non-exchanged outstanding notes will be returned without expense to their tendering holder. Such non-exchanged outstanding notes will be credited to an account maintained with DTC. These actions will occur promptly following the expiration or termination of the exchange offer.
Your Representations to Us
      By agreeing to be bound by the letter of transmittal, you will represent to us that, among other things:
  •  any new notes that you receive will be acquired in the ordinary course of your business;
 
  •  you have no arrangement or understanding with any person or entity to participate in the distribution of the new notes;
 
  •  you are not engaged in and do not intend to engage in the distribution of the new notes;
 
  •  if you are a broker-dealer that will receive new notes for your own account in exchange for outstanding notes, you acquired those notes as a result of market-making activities or other trading activities and you will deliver a prospectus, as required by law, in connection with any resale of such new notes; and
 
  •  you are not our “affiliate,” as defined in Rule 405 of the Securities Act.
Withdrawal of Tenders
      Except as otherwise provided in this prospectus, you may withdraw your tender at any time prior to 5:00 p.m. New York City time on the expiration date. For a withdrawal to be effective you must comply with the appropriate procedures of DTC’s ATOP system. Any notice of withdrawal must specify the name and number of the account at DTC to be credited with withdrawn outstanding notes and otherwise comply with the procedures of DTC.
      We will determine all questions as to the validity, form, eligibility and time of receipt of notice of withdrawal. Our determination shall be final and binding on all parties. We will deem any outstanding notes so withdrawn not to have been validly tendered for exchange for purposes of the exchange offer.
      Any outstanding notes that have been tendered for exchange but that are not exchanged for any reason will be credited to an account maintained with DTC for the outstanding notes. This return or crediting will take place promptly after withdrawal, rejection of tender or termination of the exchange offer. You may retender properly withdrawn outstanding notes by following the procedures described under “— Procedures for Tendering” above at any time on or prior to the expiration date.
Fees and Expenses
      We will bear the expenses of soliciting tenders. The principal solicitation is being made by mail; however, we may make additional solicitation by telegraph, telephone or in person by our officers and regular employees and those of our affiliates.
      We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to broker-dealers or others soliciting acceptances of the exchange offer. We will, however, pay the exchange agent reasonable and customary fees for its services and reimburse it for its related reasonable out-of-pocket expenses.

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      We will pay the cash expenses to be incurred in connection with the exchange offer. They include:
  •  SEC registration fees;
 
  •  fees and expenses of the exchange agent and trustee;
 
  •  accounting and legal fees and printing costs; and
 
  •  related fees and expenses.
Transfer Taxes
      We will pay all transfer taxes, if any, applicable to the exchange of outstanding notes under the exchange offer. The tendering holder, however, will be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if a transfer tax is imposed for any reason other than the exchange of outstanding notes under the exchange offer.
Consequences of Failure to Exchange
      If you do not exchange new notes for your outstanding notes under the exchange offer, you will remain subject to the existing restrictions on transfer of the outstanding notes. In general, you may not offer or sell the outstanding notes unless they are registered under the Securities Act, or if the offer or sale is exempt from the registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the outstanding notes under the Securities Act.
Accounting Treatment
      We will record the new notes in our accounting records at the same carrying value as the outstanding notes. This carrying value is the aggregate principal amount of the outstanding notes less any bond discount, as reflected in our accounting records on the date of exchange. Accordingly, we will not recognize any gain or loss for accounting purposes in connection with the exchange offer.
Other
      Participation in the exchange offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your own decision on what action to take.
      We may in the future seek to acquire untendered outstanding notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. We have no present plans to acquire any outstanding notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered outstanding notes.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA OF CARDTRONICS, INC.
      The following selected historical consolidated financial and operating data should be read together with Management’s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes included elsewhere in this prospectus. The selected consolidated balance sheet data as of December 31, 2005 and 2004 and the selected consolidated statements of operations data for the years ended December 31, 2005, 2004 and 2003 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The balance sheet data as of December 31, 2003, 2002 and 2001, and the statements of operations data for the years ended December 31, 2002 and 2001 have been derived from our historical financial statements, which are not included in this prospectus. The selected consolidated balance sheet data as of March 31, 2006 and the selected consolidated statement of operations data for the three months ended March 31, 2006 and 2005, respectively, have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. Historical results are not necessarily indicative of the results to be expected in the future.
      Our consolidated financial statements as of December 31, 2004 and for the years ended December 31, 2004, 2003 and 2002, and the interim periods of 2005, have been restated to correct the accounting for the deferred financing costs associated with our credit facilities and the impact that various modifications related to those credit facilities have had on such deferred financing costs. In addition, the interim financial information for 2005 has been restated to record compensation expense associated with the repurchase of shares underlying certain employee stock options as part of our Series B preferred stock financing transaction in February 2005. See “Restatement of Financial Statements” — Management’s Discussion and Analysis of Financial Condition and Results of Operations.
                                                             
    Three Months    
    Ended March 31,   Years Ended December 31,
         
    2006   2005   2005   2004   2003   2002   2001
                             
    (in thousands)
Consolidated Statements of Operations:
                                                       
Revenues:
                                                       
 
ATM operating revenues
  $ 66,331     $ 56,072     $ 258,992     $ 182,711     $ 101,950     $ 59,183     $ 33,868  
 
ATM product sales and other revenues(1)
    2,811       2,192       9,973       10,204       8,493       9,603       11,220  
                                           
   
Total revenues
    69,142       58,264       268,965       192,915       110,443       68,786       45,088  
Cost of revenues:
                                                       
 
Cost of ATM operating revenues
    50,500       44,447       199,763       143,504       80,286       49,134       29,121  
 
Cost of ATM product sales and other revenues(1)
    2,599       1,960       9,685       8,703       7,903       8,984       12,089  
                                           
   
Total cost of revenues (exclusive of depreciation and amortization shown separately below)
    53,099       46,407       209,448       152,207       88,189       58,118       41,210  
                                           
   
Gross profit
    16,043       11,857       59,517       40,708       22,254       10,668       3,878  
                                           
Operating expenses:
                                                       
 
Selling, general and administrative expenses:
                                                       
   
Stock-based compensation
    122       1,810       2,201       956       1,585             2,221  
   
Other selling, general and administrative expenses(2)(3)
    4,716       2,954       15,664       12,615       5,644       6,142       2,704  
 
Depreciation and accretion expense
    4,217       2,244       12,951       6,785       3,632       1,650       957  
 
Amortization expense(4)
    5,016       1,558       8,980       5,508       3,842       1,641       554  
                                           
   
Total operating expenses
    14,071       8,566       39,796       25,864       14,703       9,433       6,436  
                                           
Income (loss) from operations
    1,972       3,291       19,721       14,844       7,551       1,235       (2,558 )
Other expenses:
                                                       
 
Interest expense
    5,664       1,854       13,101       4,156       1,629       729       444  
 
Amortization and write-off of financing costs and bond discount(5)
    878       333       9,325       1,079       528       310       34  
 
Minority interest in subsidiary
    (8 )     11       15       19                    
 
Other(6)
    197       203       968       209       106       58        
                                           
   
Total other expenses
    6,731       2,401       23,409       5,463       2,263       1,097       478  
                                           
Income (loss) before income taxes
    (4,759 )     890       (3,688 )     9,381       5,288       138       (3,036 )
Income tax provision (benefit)
    (1,635 )     321       (1,270 )     3,576       1,955       111       (997 )
                                           
Income (loss) before cumulative effect of a change in accounting principle
    (3,124 )     569       (2,418 )     5,805       3,333       27       (2,039 )
Cumulative effect of change in accounting principle for asset retirement obligations, net of related income tax benefit of $80(7)
                            134              
                                           
Net income (loss)
    (3,124 )     569       (2,418 )     5,805       3,199       27       (2,039 )
Preferred stock dividends and accretion expense(8)
    66       1,196       1,395       2,312       2,089       1,880       741  
                                           
Net income (loss) available to common stockholders
  $ (3,190 )   $ (627 )   $ (3,813 )   $ 3,493     $ 1,110     $ (1,853 )   $ (2,780 )
                                           

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    Three Months Ended    
    March 31,   Years Ended December 31,
         
    2006   2005   2005   2004   2003   2002   2001
                             
    (unaudited)                    
    (in thousands, except ratios and numbers of ATMs)
Other Financial Data:
                                                       
Ratio of earnings to fixed charges(9)
                      1.5 x     1.3 x            
Cash flows from operating activities
  $ (817 )   $ 9,995     $ 33,207     $ 20,466     $ 21,629     $ 4,491     $ (1,929 )
Cash flows from investing activities
    (4,118 )     (13,122 )     (139,960 )     (118,926 )     (29,663 )     (15,023 )     (7,496 )
Cash flows from financing activities
    7,233       2,069       107,234       94,318       10,404       10,741       12,066  
Operating Data:
                                                       
Total number of ATMs (at period end)
    26,207       24,661       26,208       24,581       12,021       8,298       6,707  
Total transactions
    40,827       33,415       156,851       111,577       64,605       36,212       19,865  
Total surcharge transactions
    26,174       24,293       106,613       82,087       48,778       28,978       16,027  
                                                 
        As of December 31,
    March 31,    
    2006   2005   2004   2003   2002   2001
                         
    (unaudited)                    
    (in thousands)
Consolidated Balance Sheet Data:
                                               
Cash and cash equivalents
  $ 3,971     $ 1,699     $ 1,412     $ 5,554     $ 3,184     $ 2,975  
Total assets
    342,353       343,751       197,667       65,295       34,843       25,373  
Total long-term debt, including current portion
    251,887       247,582       128,541       31,371       18,475       8,620  
Preferred stock(10)
    76,395       76,329       23,634       21,322       19,233       15,453  
Total stockholders’ equity (deficit)
    (49,898 )     (49,084 )     (340 )     (6,329 )     (9,024 )     (7,065 )
 
  (1)  ATM product sales and other revenues consist primarily of revenues from the sale of equipment to our merchant-owned customer base and our associate value added resellers as well as other miscellaneous non-transaction based revenues.
 
  (2)  Reflects a one-time bonus of $1.8 million made to our chief executive officer in 2004 related to the tax liability associated with a related restricted stock grant. See note 5 to our consolidated financial statements.
 
  (3)  Reflects the write-off in 2004 of approximately $1.8 million in costs associated with our terminated initial public offering and related costs.
 
  (4)  Includes impairment charges of $2.8 million and $1.2 million for the three months ended March 31, 2006 and the year ended December 31, 2005, respectively.
 
  (5)  Reflects the write-off of $4.9 million in financing costs in 2005 associated with the repayment of our term loans resulting from the issuance of our senior subordinated notes.
 
  (6)  Other expenses primarily consists of losses on the sale or disposal of assets.
 
  (7)  Reflects the effect of our adoption of SFAS No. 143. See note 1(n) to our consolidated financial statements.
 
  (8)  Reflects non-cash dividends on our Series A Preferred Stock, which was redeemed in February 2005. Subsequent to the redemption of the Series A Preferred Stock, the amount reflects the accretion of the Series B Preferred Stock issuance costs.
 
  (9)  For purposes of determining the ratio of earnings to fixed charges, earnings are defined as our income from operations before income taxes and fixed charges (excluding the effects of any preferred stock dividends and related accretion expense). Fixed charges consist of interest expense on all indebtedness, amortization of debt issuance costs, the interest portion of lease payments, and preferred stock dividends and accretion expense. Earnings were insufficient to cover fixed charges by approximately $4.8 million for the three months ended March 31, 2006, $0.9 million for the three months ended March 31, 2005, $5.7 million for the year ended December 31, 2005, $2.7 million for the year ended December 31, 2002, and $4.1 million for the year ended December 31, 2001. The pro forma effect of the refinancing of our existing term loans with the senior subordinated notes did not change our historical ratio of earnings to fixed charges for the year ended December 31, 2005 by more than 10 percent. Accordingly, no pro forma ratio has been presented herein.
  The ratio of earnings to fixed charges calculations exclude costs incurred with respect to our vault cash rental obligations as such costs are not considered to be fixed charges for purposes of computing such ratios. Such costs totaled approximately $4.8 million and $2.8 million for the three months ended March 31, 2006 and 2005, respectively, and $15.7 million, $10.2 million, $5.5 million, $2.7 million and $1.2 million for the years ended December 31, 2005, 2004, 2003, 2002 and 2001, respectively.
(10)  The amount reflected on our balance sheet is shown net of issuance costs of $1.6 million and $1.7 million as of March 31, 2006 and December 31, 2005, respectively. The aggregate redemption price for the preferred stock was approximately $78.0 million as of March 31, 2006 and December 31, 2005.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
      You should read the following discussion together with the financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that are based on management’s current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors, including those we discuss under “Risk Factors” and elsewhere in this prospectus.
Restatement of Financial Statements
      Our consolidated financial statements as of December 31, 2004 and for the years ended December 31, 2004 and 2003, and the nine months ended September 30, 2005, have been restated to correct the accounting for the deferred financing costs associated with our credit facilities and the impact that various modifications related to those credit facilities have had on such deferred financing costs.
      During the years ended December 31, 2004 and 2003, and the nine months ended September 30, 2005, as a result of multiple modifications to our credit facilities, we had previously expensed approximately $2.5 million, $1.4 million, and $3.4 million, respectively, in financing costs paid in connection with those and prior modifications. Upon further review of the guidance contained in Emerging Issues Task Force (“EITF”) Issue No. 96-19, Debtor’s Accounting for a Modification or Exchange of Debt Instruments, and EITF Issue No. 98-14, Debtor’s Accounting for Changes in Line-of-Credit or Revolving-Debt Arrangements, we determined that we had expensed too much of the aforementioned costs in 2004 and 2003, and too little of the aforementioned costs in 2005. Further, we determined that we should have recorded an additional expense amount in September 2002 in connection with a modification to our credit facility as of such date. The impact of the reversal of a portion of the amounts expensed in 2004 and 2003 was partially offset by the subsequent amortization of those costs over the terms of the related loans. In August 2005, all of the term loans associated with our credit facilities were repaid in full; therefore, all unamortized deferred financing costs associated with such term loans were expensed in full as part of such extinguishment.
      As a result of the correction of the aforementioned items, we have recorded adjustments to increase (decrease) our income before income taxes by the following amounts for the periods shown below (in thousands):
           
Year ended December 31, 2002
  $ (157 )
Year ended December 31, 2003
    1,189  
Year ended December 31, 2004
    1,815  
Nine months ended September 30, 2005
    (2,369 )
       
 
Total
  $ 478  
       
      In addition to the above adjustments, our unaudited interim financial statements for the nine months ended September 30, 2005 have been restated to record approximately $1.8 million in compensation expense associated with the repurchase of the shares underlying certain employee stock options as part of our Series B preferred stock financing transaction in February 2005. Approximately $1.6 million of such amount has been reflected in selling, general and administrative expenses and approximately $0.2 million has been reflected in cost of ATM operating revenues in the accompanying consolidated statement of operations.
      The effects of the aforementioned restatements have been fully reflected in the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section. Additionally, reference is made to Note 2 in the accompanying consolidated financial statements for the year ended December 31, 2005 for additional details on the restatement process and the impact such restatements had on our previously issued annual and interim financial statements.

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Overview
      We operate a network of approximately 26,000 ATMs operating in all 50 states and within the United Kingdom and Mexico. Our extensive ATM network is strengthened by multi-year contractual relationships with a wide variety of nationally and internationally known merchants pursuant to which we operate ATMs in their locations.
ATM Management Programs
      We deploy ATMs under two distinct arrangements with our merchant partners:
  •  Company-owned. Under a company-owned arrangement, we own or lease the ATM and are responsible for controlling substantially all aspects of its operation. These responsibilities include what we refer to as first line maintenance, such as replacing paper, clearing paper or bill jams, resetting the ATM and any telecommunications and power issues or other maintenance activities that do not require a trained service technician. We are also responsible for what we refer to as second line maintenance, or more complex maintenance procedures that require trained service technicians and often involve replacing component parts. In addition to first and second line maintenance, we are responsible for arranging for cash, cash loading, supplies, telecommunications service and all other services required for the operation of the ATM, other than electricity. We typically pay a fee, either periodically, on a per-transaction basis or a combination of both, to the merchant on whose premises the ATM is physically located. We operate a limited number of our company-owned ATMs on a merchant-assisted basis. In these arrangements, we own or lease the ATM and provide all transaction processing services, but the merchant generally is responsible for providing and loading cash for the ATM and first line maintenance. Typically, we deploy ATMs under company-owned arrangements for our national and regional merchant customers, such as Amerada Hess, BP Amoco, Chevron, Costco, CVS Pharmacy, Duane Reade, ExxonMobil, Mills Malls, Sunoco, Target and Walgreens in the United States, and Alfred Jones, Co-Op, Mitchells & Butlers, the U.K. Post Office, Tates, Tesco and TM Retail in the United Kingdom. Because company-owned locations are controlled by us, are usually located in major national chains, and are thus more likely candidates for additional sources of revenue such as bank branding, company-owned locations generally offer higher transaction volumes and greater profitability, which we consider necessary to justify the upfront capital cost of installing such machines. As of March 31, 2006, we operated approximately 11,800 ATMs under company-owned arrangements.
 
  •  Merchant-owned. Under a merchant-owned arrangement, the merchant owns the ATM and is responsible for its maintenance and most of the operating costs. We typically provide all transaction processing services and, in some cases, retain responsibility for providing and loading cash. We typically operate ATMs with our independent merchant customers under merchant-owned arrangements. A merchant who purchases an ATM from us is typically responsible for providing cash for the ATM and all maintenance. The merchant is also responsible for cash loading, supplies, telecommunication and electrical services. Under these arrangements, we sometimes retain responsibility for second line maintenance for an additional fee, and we provide all transaction processing services. Because the merchant bears more of the costs associated with operating ATMs under this arrangement, the merchant typically receives a higher fee on a per-transaction basis than is the case under a company-owned arrangement. In a limited number of our merchant-owned arrangements, we have assumed responsibility for providing and loading cash. Accordingly, under these arrangements, the merchant receives a smaller fee on a per-transaction basis than in the typical merchant-owned arrangement. As of March 31, 2006, we operated approximately 14,100 ATMs under merchant-owned arrangements.
      In the future, we expect the percentage of our company-owned and merchant-owned arrangements to continue to fluctuate in response to the mix of ATMs we add through internal growth and acquisitions. While we may continue to add merchant-owned ATMs to our network as a result of acquisitions and internal sales efforts, our focus for internal growth will remain on expanding the number of company-owned ATMs in our network.

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      The table below reflects the split of our revenues and gross profit amounts between company-owned and merchant-owned ATMs for the periods presented.
                                           
    For the Three    
    Months Ended   Years Ended
    March 31,   December 31,
         
    2006   2005   2005   2004   2003
                     
    (unaudited)            
Company-owned:
                                       
 
Revenues
    58%       48%       54%       55%       61%  
 
Gross profit
    69%       60%       67%       68%       73%  
Merchant-owned:
                                       
 
Revenues
    42%       52%       46%       45%       39%  
 
Gross profit
    31%       40%       33%       32%       27%  
      As noted in the table above, the percentage of our total revenues and gross margin attributable to merchant-owned arrangements increased in 2004 (with a corresponding decrease in the percentage of our total revenues and gross margin attributable to company-owned arrangements) due to the large number of merchant-owned ATMs we acquired in the E*TRADE Access acquisition. The slight decline in the percentage of our total revenues and gross margin attributable to company-owned arrangements during 2005 was due to the fact that the results for 2004 only reflect the effects of the E*TRADE Access acquisition for the last six months of that year, thus diluting the impact of the acquired merchant-owned ATMs on the entire year’s results. However, such trend began to reverse during the three months ended March 31, 2006, as indicated in the table above. Such reversal is primarily due to our Bank Machine acquisition and the two acquisitions consummated in March and April of 2005, which were primarily comprised of company-owned ATMs, and the continued growth in our existing company-owned merchant portfolio base.
      We have generally experienced very little turnover among our customers with whom we typically enter into company-owned arrangements and have been very successful in negotiating contract renewals with such customers. Additionally, we have experienced some turnover among our smaller merchant customers operating under merchant-owned arrangements. However, these losses have historically been partially offset by the addition of other similar customers, with the level of ATMs operated under these arrangements trending downward slightly (excluding the effects of acquisitions). In each year prior to 2003, we experienced an increase in the number of ATMs operated under merchant-owned arrangements. However, in 2003, excluding the effect of acquisitions, we experienced a net loss of approximately 3.5% of our ATMs operated under merchant-owned arrangements. This net loss primarily reflected the loss of ATMs with monthly transaction volumes lower than the average for all ATMs operated under similar arrangements, a situation that often indicates an ATM is no longer economically feasible for the owner to operate. In addition, this net loss also reflects our reduction in sales and marketing efforts directed at placing ATMs under these types of arrangements in favor of increasing our focus on company-owned accounts and acquisitions of existing portfolios of ATMs. For the year ended December 31, 2004, and without giving effect to our E*TRADE Access acquisition, we experienced a net loss of less than 2.5% of our ATMs operated under merchant-owned arrangements, generally due to circumstances similar to those described for prior periods. However, for the year ended December 31, 2005, the net loss increased to 8.7%, primarily due to a recent internal initiative launched by us to aggressively identify, restructure or eliminate certain underperforming merchant-owned accounts. We are also working to identify the more profitable merchant-owned accounts and are working closely with those merchants to renew or extend their current ATM operating agreements with us. Because this initiative was just implemented, we cannot accurately predict the results of such efforts and whether we will be successful in reducing the aforementioned downward trend. Furthermore, because of our efforts to eliminate certain underperforming accounts, this downward trend may increase in the near term before leveling off at some point in the future.

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Components of Revenues, Cost of Revenues and Expenses
      Revenues. We derive our revenues primarily from providing ATM services and, to a lesser extent, from our branding arrangements and our sales of ATM equipment. Our revenues from ATM services have increased rapidly in recent years due to the acquisitions we completed since 2001, as well as through internal expansion of our existing and acquired ATM networks.
      In our consolidated statements of operations, we present revenues from ATM services and branding arrangements as “ATM operating revenues.” These revenues include the fees we earn per transaction completed on our network as well as fees we generate from network and bank branding arrangements and from providing certain maintenance services. We present revenues from the sale of ATMs and other non-transaction based revenues as “ATM product sales and other revenues.” These revenues consist primarily of sales of ATMs and related equipment to merchants operating under merchant-owned arrangements, as well as sales under our value added reseller program with NCR.
      Our ATM operating revenues primarily consist of the three following components: surcharge revenue, interchange revenue and branding revenue. The following table sets forth information on our surcharge, interchange and branding revenues per surcharge-bearing transaction and on our interchange revenues per total transaction. The following table also includes pro forma information that gives effect to our Bank Machine acquisition as if it had occurred on January 1, 2005. Total transactions represents all transactions made at our ATMs, including transactions on which we do not earn surcharge revenue but do earn varying amounts of interchange revenue, such as balance inquiries, fund transfers, transactions on ATMs included in surcharge-free networks and branded ATMs, and some denials.
                                                   
    Three Months       Pro Forma
    Ended   Years Ended   Year Ended
    March 31,   December 31,   December 31,
             
    2006   2005   2005   2004   2003   2005
                         
Per surcharge-bearing transaction:
                                               
 
Surcharge revenue
  $ 1.74     $ 1.59     $ 1.70     $ 1.53     $ 1.43     $ 1.72  
 
Interchange revenue
    0.63       0.64       0.62       0.63       0.60       0.62  
 
Branding revenue
    0.10       0.05       0.06       0.03       0.02       0.06  
Per transaction:
                                               
 
Interchange revenue
  $ 0.40     $ 0.46     $ 0.42     $ 0.46     $ 0.45     $ 0.42  
  •  Surcharge revenue. A surcharge fee represents a convenience fee paid by the cardholder for making a cash withdrawal from an ATM. Surcharge fees are most typically associated with cash withdrawal transactions and generally are not generated by balance inquiries, fund transfers and, in some cases, cash withdrawals from ATMs from which we earn branding revenues. Surcharge fees often vary by the type of arrangement under which we place our ATMs. Our transaction surcharges averaged approximately $1.74 per surcharge-bearing transaction for the three months ended March 31, 2006, $1.70 per surcharge-bearing transaction for the year ended December 31, 2005 ($1.72 on a pro forma basis for the Bank Machine acquisition), and approximately $1.53 per surcharge-bearing transaction for the year ended December 31, 2004. Surcharge fees can vary widely based on the location of the ATM and the nature of the contracts negotiated with our merchants. Furthermore, surcharge fees in the United Kingdom are typically higher than the surcharge fees received in the United States, thus explaining the increases reflected in the table above for 2006 and 2005. In the future, we expect that surcharge fees per surcharge-bearing transaction will vary depending upon negotiated surcharge fees at newly deployed ATMs and future negotiations with existing merchant partners, and our ongoing efforts to improve profitability through improved pricing. For those ATMs that we own or operate on surcharge-free networks, we generally receive interchange revenue as described in the following paragraph.

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  •  Interchange revenue. An interchange fee is a fee paid by the cardholder’s financial institution for the use of the applicable electronic funds transfer network that transmits data between the ATM and the cardholder’s financial institution in connection with any ATM transaction, including balance inquiries, transfers and surcharge-free transactions, including those under branding arrangements. We receive a portion of the interchange fee paid to the electronic funds transfer network. In the United States, interchange fees are earned not only on cash withdrawal transactions, but also on other ATM transactions such as balance inquiries and fund transfers. In the United Kingdom, interchange fees are earned on all ATM transactions other than surcharge-bearing cash withdrawals. Interchange fees are set by the electronic funds transfer networks and vary according to electronic funds transfer network arrangements with financial institutions, as well as the type of transaction. Interchange fees are typically lower for balance inquiries and fund transfers and higher for withdrawals. For the three months ended March 31, 2006, we received approximately $0.63 in interchange fees per surcharge-bearing transaction. For the year ended December 31, 2005, we received approximately $0.62 in interchange fees per surcharge-bearing transaction on both a historical and pro forma basis (for the Bank Machine acquisition). For the year ended December 31, 2004, we received $0.63 in interchange fees per surcharge-bearing transaction compared to $0.60 for the year ended December 31, 2003. Interchange fees per surcharge-bearing transaction increased in 2004 due to the increase in the number of transactions on ATMs included in surcharge-free networks and branded ATMs, which generate interchange fees, but do not generate surcharge fees and, as a result, are not included in the number of surcharge-bearing transactions. We believe that our future interchange fees per surcharge-bearing transaction will be consistent with the pro forma amount reflected above.
 
  •  Branding revenue. We generate branding revenue in a variety of ways. We allow financial institutions to place signage on, or brand, our ATMs. Under this arrangement, we allow the branding financial institution’s customers to use branded ATMs without paying a surcharge fee. In exchange, the branding financial institution pays us a fixed monthly fee per branded ATM. We believe that this type of branding arrangement will typically result in an increase in transaction levels at the branded ATMs as existing customers continue to use the ATMs and new customers of the branding financial institution are attracted by the surcharge-free service. We also believe that having a major bank brand on an ATM leads to increased surchargable transactions from customers other than those of the branding bank. Fees paid for branding an ATM vary widely within our industry, as well as within our own operations. We expect that this variance in branding fees will continue in the future. However, because our strategy is to set branding fees at levels sufficient to offset lost surcharge revenue, we do not expect any such variance to cause a decrease in our total revenues.
  We also generate branding revenue from the ATMs we include in a nationwide surcharge-free ATM network of which we are the largest member and owner (effective December 21, 2005). Substantially all of our domestic ATMs participate in this network. Under this arrangement, cardholders of the institutions that participate in the network use our ATMs included in the network free of surcharge fees in exchange for a payment to us of a fixed monthly fee per cardholder, which is paid by such cardholder’s financial institution.
      The profitability of any particular ATM location, and of our entire ATM services operation, is driven by a combination of surcharge, interchange and branding revenues, as well as the level of our related costs. Accordingly, material changes in our average surcharge fee or average interchange fee may be offset by branding or other ancillary revenues, or by changes in our cost structure. Because a variance in our average surcharge fee or our average interchange fee is not necessarily indicative of a commensurate change in our profitability, you should consider these measures only in the context of our overall financial results.

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      The following table depicts the breakdown of our total ATM operating revenues by its various components for the periods indicated.
                                         
    For the Three            
    Months Ended    
    March 31,   Years Ended December 31,
         
    2006   2005   2005   2004   2003
                     
Surcharge revenues
    68.6%       68.9%       69.9%       68.9%       68.6%  
Interchange revenues
    24.7%       27.7%       25.7%       28.3%       28.5%  
Branding revenues
    4.5%       2.0%       2.6%       1.3%       1.0%  
Other revenues
    2.2%       1.4%       1.8%       1.5%       1.9%  
                               
Total ATM operating revenues
    100.0%       100.0%       100.0%       100.0%       100.0%  
                               
      Our ATM product sales and other revenues are primarily comprised of revenues from the sale of ATMs and related equipment to merchant customers operating under merchant-owned arrangements and associate value added resellers, and other non transaction-based revenues. While we expect to continue to derive a portion of our revenues from direct sales of ATMs in the future, we expect that this source of revenue will continue to decrease slightly as a percentage of our total revenues in future periods.
      Cost of revenues. Our cost of revenues associated with ATM transactions completed on our ATM network includes:
  •  Merchant fees. We pay our merchants a fee that depends on a variety of factors, including the type of arrangement under which the ATM is placed and the number of transactions at that ATM.
 
  •  Processing fees. We pay fees to third-party vendors for processing transactions originated at our ATMs. These vendors, which include Star Systems, Fiserv, Inc. and Genpass, communicate with the cardholder’s financial institution through electronic funds transfer networks to gain transaction authorization and to settle transactions.
 
  •  Cost of cash. Cost of cash includes all costs associated with the provision of cash by us for our ATMs, including fees for the use of cash, armored courier services, insurance, cash reconciliation and associated wire fees. Changes in interest rates could affect our cost of cash, although we have entered into a number of interest rate swap transactions to hedge our exposure through 2010 on varying amounts of our current and anticipated outstanding domestic ATM cash balances.
 
  •  Communications. Under our company-owned arrangements, we are responsible for expenses associated with providing telecommunications capabilities to the ATMs, allowing the ATMs to connect with the applicable electronic funds transfer network.
 
  •  Repairs and maintenance. Depending on the type of arrangement with the merchant, we may be responsible for first and/or second line maintenance for the ATM. We typically manage the provision of these services by third parties with national operations. Our primary maintenance vendors are Diebold, NCR and EFMARK.
 
  •  Direct operations. These expenses consist of costs associated with managing our ATM network, including expenses for monitoring the ATMs, program managers, technicians and customer service representatives.
 
  •  Cost of equipment revenue. In connection with the sale of equipment to merchants and value added resellers, we incur costs associated with purchasing equipment from manufacturers, as well as delivery and installation expenses.
      We define variable costs as those incurred on a per transaction basis. Processing fees and the majority of merchant fees fall under this category. Processing fees and merchant fees accounted for approximately 61% of our cost of ATM operating revenues in 2005. Therefore, we estimate that approximately 39% of our cost of ATM operating revenues is generally fixed in nature, meaning that any significant decrease in transaction

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volumes would lead to a decrease in the profitability of our ATM service operations, unless there were an offsetting increase in per-transaction revenues. See “Results of Operations” below for additional information.
      Our indirect operating expenses include general and administrative expenses related to administration, salaries, benefits, advertising and marketing, depreciation of the ATMs we own, amortization of our acquired merchant contracts, and interest expense related to borrowings under our bank credit facility and our senior subordinated notes. We depreciate our capital equipment on a straight-line basis over the estimated life of such equipment and amortize the value of acquired merchant contracts over the estimated lives of such assets. Because we repaid certain of our lower interest rate bank credit facilities with the net proceeds received under the higher interest rate senior subordinated notes offering in August 2005, our overall level of interest expense will increase in the future. See “— Liquidity and Capital Resources.”
Acquisitions
      Since May 2001, we have acquired 13 ATM networks and one operator of a surcharge-free ATM network. Prior to our E*TRADE Access acquisition, we acquired only assets consisting of ATMs and, in certain cases, contractual rights to place and operate ATMs in certain locations. In our E*TRADE Access acquisition, we acquired substantially all of the assets and operations of the company, including 13,155 ATMs and related placement agreements, vendor agreements, operating software relating to the E*TRADE Access ATMs and E*TRADE Access’s interest in a joint venture. We also assumed responsibility for certain contingent liabilities associated with the operations of E*TRADE Access. In addition, we hired certain employees from E*TRADE Access and agreed to maintain the E*TRADE Access brand on approximately 8,900 of the acquired ATMs until June 30, 2006.
      With respect to the Bank Machine acquisition, we acquired the entire company, including the related ATMs and underlying placement agreements as well as the entire infrastructure associated with the business. Additionally, as part of this acquisition, we retained Bank Machine’s existing employee base of approximately 50 employees, including Bank Machine’s existing senior management team, who became shareholders in Cardtronics.
      In addition to the above, we acquired two domestic ATM networks in March and April of 2005, totaling approximately 805 ATMs and related placement agreements, for an aggregate cost of approximately $17.2 million in cash. Furthermore, in December 2005, we acquired all of the outstanding shares of ATM National, Inc., the owner and operator of the Allpoint nationwide surcharge-free ATM network. The consideration for such acquisition totaled $4.8 million, and was comprised of $2.6 million in cash, 21,111 shares of our common stock, and the assumption of approximately $0.4 million in additional liabilities.
      In February 2006, the Company acquired a majority ownership stake in CCS Mexico, an independent ATM operator located in Mexico, for approximately $1.0 million in cash consideration and the assumption of approximately $0.4 million in additional liabilities. Additionally, the Company incurred approximately $0.3 million in transaction costs associated with this acquisition. CCS Mexico, which was renamed Cardtronics Mexico upon the completion of the Company’s investment, currently operates approximately 300 surcharging ATMs in selected retail locations throughout Mexico. With Mexico having just recently approved surcharging for off-premise ATMs, the Company anticipates placing additional surcharging ATMs in other retail establishments throughout Mexico as those opportunities arise.
      We have historically funded our acquisitions through a combination of borrowings under our credit facilities, capital contributions from our equity investors, the sale of bonds, and cash generated from operations. Other than our Bank Machine, E*TRADE Access, ATM National, Inc. and CCS Mexico acquisitions, we have not acquired any legal entities and generally do not assume employees, physical facilities, sales forces or trade names. As of the date of this prospectus, excluding the Bank Machine acquisition, all supporting activities, including supply of cash, communications, network processing services, maintenance services, customer service, sales and administration, have been changed to our operating platform and service providers subsequent to the closing of the transaction. With respect to the Bank Machine

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acquisition, Bank Machine’s existing operating platform is expected to remain intact and serve as a platform for future growth within the United Kingdom and possibly Europe.
      Once we purchase a portfolio of ATMs and merchant contracts and integrate them into our operating platform, operating expenses are typically reduced, thus enhancing the profitability of the portfolio. Our ability to reduce operating expenses and improve ATM profitability is largely the result of the better pricing terms we enjoy from our service providers. For example, in connection with an acquisition in 2003, we were able to reduce the cost of communications service for the acquired ATMs by approximately 83% when we transitioned the ATMs to a different communications configuration with our existing communications service provider. Additionally, in connection with our acquisitions in 2003, we were able to reduce our processing costs at the time of closing by amounts ranging from 3.6% to 42.5%.
      Similarly, in connection with our E*TRADE Access acquisition in 2004, we have been able to reduce operating expenses associated with the acquired operations in a number of areas, including:
  •  The transfer of cash management and vault cash services for approximately 2,500 ATMs to our preferred cash management and vault cash providers;
 
  •  The transfer of maintenance services for approximately 10,000 E*TRADE Access ATMs from the existing provider to our preferred maintenance service provider;
 
  •  The transfer of processing services for approximately 1,600 ATMs to our preferred service provider; and
 
  •  The transfer of armored car service used in the transportation of cash for approximately 1,000 ATMs to our preferred service provider.
      The majority of the resulting cost savings initiatives were implemented during 2004, and finalized throughout 2005 and the first two months of 2006.
      As discussed above, the existing operating platform associated with the Bank Machine acquisition has remained largely intact subsequent to the acquisition due to the geographic disparities between the acquired platform and our existing domestic platform. Accordingly, the opportunities to reduce operating expenses by converting the acquired platform to our operating platform are expected to be more limited than what we have experienced historically with our domestic acquisitions.
      In addition to changes in operating expenses as discussed above, the revenues produced by the acquired ATM portfolios may also change as we alter the mix between surcharge and branding arrangements with our merchant clients and financial sponsors. For example, if we are successful in negotiating branding arrangements for our ATMs, there may be a shift in the revenue mix between surcharge revenue and branding revenue. Under a branding arrangement, we do not charge surcharge fees to the branding financial institution’s customers. On the other hand, total withdrawal transactions at the branded ATMs typically increase, as existing customers continue to use the ATMs and new customers of the branding financial institution are attracted by the surcharge-free service. Accordingly, we typically expect interchange revenue to increase since we receive interchange fees on all withdrawal transactions. In addition, we would also receive a negotiated branding fee.
      Our acquisitions have significantly increased the size of our operations over the periods discussed in “Results of Operations” below and, accordingly, fundamentally affect the comparability of our results of operations for the periods discussed in this discussion and analysis. For example, revenues increased from $26.0 million in 2000 to $269.0 million in 2005, while our gross profit increased from $3.9 million to $59.5 million over the same period. Moreover, because we completed the E*TRADE Access acquisition on June 30, 2004 and the Bank Machine acquisition on May 17, 2005, the impact of these acquisitions is not fully reflected in our historical operating results. The addition of 13,155 ATMs from the E*TRADE Access acquisition has had a significant effect on our results of operations, and we expect the Bank Machine acquisition of approximately 1,000 ATMs in the United Kingdom will have a significant effect going forward. Information with respect to the pro forma impact of the Bank Machine acquisition on our prior financial periods can be evaluated by reviewing the pro forma condensed consolidated financial information and the

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historical consolidated financial information of the Bank Machine ATM business included elsewhere in this prospectus. These and any future acquisitions will continue to affect our results of operations.
      Consistent with our business strategy, we engage from time to time in discussions with potential sellers regarding the possible purchase by us of their ATM portfolios. Such acquisition efforts may involve participation by us in processes that have been made public, involve a number of potential buyers and are commonly referred to as “auction” processes, as well as situations where we believe we are the only party or one of a limited number of potential buyers in negotiations with the potential seller. These acquisition efforts could involve assets which, if acquired, would have a material effect on our financial condition and results of operations. We can give no assurance that our current or future acquisition efforts will be successful or that any such acquisition will be completed on terms considered favorable to us.
      We have set forth below a summary of our acquisition activity from May 2001 through December 2003. After acquiring a network of ATMs, we track its growth and operating performance on a stand-alone basis, as well as on a consolidated basis with our results as a whole. We believe this information is helpful in understanding the effect of these acquisitions on our growth, as well as the growth experienced through increased deployment of ATMs with the acquired merchant base in each of these ATM networks following its acquisition and integration.
                           
    Number of ATMs
     
        As of    
        March 31,   Net
    At Closing   2006   Increase
             
2001 Acquisitions
    878       1,197       319  
2002 Acquisitions
    1,195       1,210       15  
2003 Acquisitions
    3,689       4,787       1,098  
                   
 
Total
    5,762       7,194       1,432  
                   
      The following table reflects the results of the E*TRADE Access portfolio that was acquired in June 2004.
                         
    Number of ATMs
     
        As of    
        March 31,   Net
    At Closing   2006   Decrease
             
Total
    13,155       11,298       (1,857 )
                   
      As noted above, the number of ATMs we acquired as part of the E*TRADE Access acquisition has decreased by 1,857 machines. This decrease was due primarily to the loss of relatively low-margin merchant-owned accounts primarily as a result of our efforts to eliminate certain underperforming contracts and locations from the acquired portfolio, as previously discussed. Additionally, a number of merchant-owned contracts expired during the first six months after the acquisition, and were not renewed at the discretion of one or both parties. Because the portfolio acquired from E*TRADE Access was primarily comprised of merchant-owned accounts, we believe such contract attrition rates are unique to this portfolio (relative to our past acquisitions).
Acquisition Valuation
      We value acquisitions based on historical and expected cash flows and the remaining terms of merchant contracts rather than the number of ATMs or a benchmark value per ATM. ATMs at different locations vary significantly in terms of transaction volume and cash flow. The equipment is in some cases owned by the merchant and in others by the seller. As a result, the purchase price per ATM we pay and the allocation of consideration between equipment and intangibles varies from acquisition to acquisition.

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Industry Trends
      During the first half of 2005, total domestic transaction revenues (including surcharge, interchange and branding fees) declined by approximately 2.5% (versus prior year levels) for those ATMs that were transacting throughout the same periods in both years. We attributed such decline to a number of factors, including (i) the increased use of debit cards as a means of payment in certain types of retail establishments, (ii) an increase in free “cash back” point-of-sale transactions, and (iii) increased competition associated with the increased number of off-premise, surcharging ATMs within the United States. However, during the second half of 2005, total domestic transaction revenues for ATMs that were transacting throughout the same periods in both years increased slightly when compared to the prior year. Furthermore, the positive trend seen during the second half of 2005 carried over into the first quarter of 2006, with comparable transaction revenues increasing by approximately 3.5% year-over-year. We attribute this recent positive trend to increased revenues associated with our bank and network branding initiatives as well as increased surcharge rates in selected merchant retail locations.
      As discussed above, we believe that the decline in our transaction revenues experienced during the first half of 2005 was due to a number of factors, including the increased use of debit cards as a means of payment. The increased use of debit cards appears to reflect a general payment trend within the United States, with the growth in debit card transactions over the past three years outpacing the growth in all other forms of payment, including checks, cash and credit cards. At this point, it is unclear if this trend will continue and, if so, whether it will have a continuing impact on our operations, as outlined above.
Recent Events
Financing Transactions
      In connection with the acquisition of Bank Machine in May 2005, we replaced our then existing bank credit facility with new facilities provided by BNP Paribas and Bank of America, N.A. Such facilities were comprised of (i) a revolving credit facility of up to $100.0 million, (ii) a first lien term facility of up to $125.0 million, and (iii) and a second lien term facility of up to $75.0 million. Borrowings under the facilities were utilized to repay our existing bank credit facility in full and to fund the acquisition of Bank Machine. As of December 31, 2005, the first and second lien term facilities were fully repaid, as discussed below.
      On August 12, 2005, we sold $200.0 million in senior subordinated notes pursuant to Rule 144A of the Securities Act of 1933, and utilized the net proceeds from such offering, along with approximately $7.1 million in borrowings under our new revolving credit facility and existing cash on hand, to repay all of the outstanding borrowings under our recently executed first and second lien term loan facilities, including all accrued and unpaid interest related thereto. Additionally, the revolving credit facility was increased to a maximum borrowing capacity of $150.0 million immediately following this transaction. In February 2006, we amended the revolving credit facility to reduce the maximum borrowing capacity to $125.0 million and to remove or amend certain restrictive covenants contained in such facility. See “Liquidity and Capital Resources” included elsewhere in this prospectus.
Winn-Dixie Bankruptcy
      In February 2005, Winn-Dixie, one of our major merchant customers, filed for bankruptcy protection. For the year ended December 31, 2005, Winn-Dixie accounted for approximately 2.0% of our total ATM operating revenues and 1.2% of our total ATM operating gross profits. As part of its bankruptcy restructuring efforts, Winn-Dixie has closed or sold approximately 360 of its existing stores during the past year, 340 of which included our ATMs. Accordingly, we have deinstalled the ATMs that were operating in those locations, leaving us with approximately 500 remaining ATM operating locations as of March 31, 2006. At this point, we do not believe that the loss of the aforementioned ATMs will have a material impact on our results of operations, financial condition, or liquidity.

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      We are contractually obligated to pay certain lease payments for 300 of the ATMs that have been deinstalled to date, with such leases expiring at varying dates between April 30, 2006 and December 31, 2007. The estimated undiscounted amount of the remaining lease payments for the deinstalled ATMs as of March 31, 2006 was approximately $1.1 million.
      Pursuant to the ATM management agreement that we assumed in connection with acquisition of the Winn-Dixie ATM portfolio in 2003, Winn-Dixie was required to provide us with a rebate for most ATMs that were removed due to its store closures. Additionally, as part of our acquisition agreement with the former owner of the Winn-Dixie ATM portfolio, we were designated as the beneficiary of a letter of credit under which we could make draws in the event Winn-Dixie refused to pay such rebates. As of the date of this filing, we have fully drawn $3.6 million under such letter of credit, the proceeds of which have been and will continue to be utilized to help defray a portion of the ongoing lease costs mentioned above, as well as the costs associated with removing the aforementioned ATMs from the closed store locations.
      If Winn-Dixie’s restructuring efforts are unsuccessful, or if our existing agreement is negatively impacted by such restructuring efforts, our future revenues and gross profits may decline and we may be required to record an impairment charge related to the tangible and intangible assets associated with the Winn-Dixie agreement. As of March 31, 2006, we believe that no impairment was warranted based upon the anticipated operating performance of the remaining installed ATMs. As of March 31, 2006, the carrying amount of the tangible and intangible assets associated with the Winn-Dixie contract totaled approximately $3.3 million. Additionally, we have approximately $1.0 million in future contractual operating lease payments associated with many of the ATMs that are still operating within the remaining Winn-Dixie store locations.
Customer Contract Cancellations
      In March and April 2006, we received notice from two of our customers that such customers would not be renewing their contracts with us. Such contracts are currently scheduled to expire in August 2006 and April 2007. On a combined basis, the two customers accounted for approximately 3.1% of our total revenues and 4.3% of our total gross profits for the year ended December 31, 2005. Additionally, we received a $1.1 million early termination payment from one of the customers in May 2006 related to a portion of the installed ATM base that was deinstalled prior to the scheduled contract termination date. We do not believe that the cancellation of these contracts will have a material adverse impact on our results of operations, financial condition or liquidity.
Impact of Hurricanes
      In August and September 2005, Hurricanes Katrina and Rita struck the Gulf Coast of the United States, and in the process, temporarily disrupted our ATM operations in portions of Alabama, Florida, Louisiana, Mississippi and Texas. Approximately 500 ATMs were initially impacted by the storms.
      While we saw a noticeable decline in transactions in the impacted areas immediately after the storms, we also saw a corresponding increase in transactions in areas adjacent to the impacted locations, including an increase in transactions associated with ATMs located in neighboring cities and states. Accordingly, the lost transactions associated with the impacted ATMs did not have a material impact on our ongoing operations. However, we did record an approximately $0.1 million pre-tax charge during 2005 related to the costs incurred under our insurance policies to replace the ATMs (and in some cases the related cash balances) that were lost or damaged as a result of the storms.
      On October 24, 2005, Hurricane Wilma struck the Gulf Coast of the United States, and in the process, temporarily disrupted our ATM operations in portions of South Florida. Immediately following the storm, approximately 300 ATMs were not transacting primarily due to power outages and communication issues resulting from the storm. However, unlike Hurricanes Katrina and Rita, many of the impacted ATMs suffered no physical damage and were back up and transacting within a very short period of time following the storm. Accordingly, Hurricane Wilma did not have a material impact on our results of operations or financial condition.

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United Kingdom Transaction Declines
      During the six months ended December 31, 2005, our United Kingdom ATM portfolio experienced a slight year-over-year decline in withdrawal transactions. After additional research, we determined that such decline was essentially limited to those ATMs in which new, non-motorized card readers had recently been installed to bring such ATMs into compliance with recently enacted security upgrade requirements in the United Kingdom. We believe that the design of the new card reader installed on such ATMs makes it difficult for ATM users to fully insert their ATM cards, thus resulting in an increased number of declined and aborted transactions.
      We are currently working with the ATM manufacturer to test various card reader systems to determine if there is a manufacturing solution to this issue. In the meantime, we are modifying the signage and screen messages on the impacted ATMs to provide additional information to the ATM users on how to properly insert their cards in the new card readers. At this point, we are unable to accurately predict whether these actions will fully resolve this issue, and if so, when such resolution will occur.
Critical Accounting Policies and Estimates
      Our consolidated financial statements included elsewhere in this prospectus have been prepared in accordance with accounting principles generally accepted in the United States, which require that management make numerous estimates and assumptions. Actual results could differ from those estimates and assumptions, thus impacting our reported results of operations and financial position. We describe our significant accounting policies more fully in note 1 to our consolidated financial statements included elsewhere in this prospectus. The significant accounting policies and estimates described here are those that are most important to the depiction of our financial condition and results of operations and the application of which requires management’s most subjective judgments in making estimates about the effect of matters that are inherently uncertain.
      Goodwill and intangible assets. We have accounted for the E*TRADE Access, Bank Machine and ATM National, Inc. acquisitions as business combinations pursuant to Statements of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations. Additionally, we have applied the concepts of SFAS No. 141 to our purchase of a majority interest in CCS Mexico. Accordingly, the amounts paid for such acquisitions have been allocated to the assets acquired and liabilities assumed based on their respective fair values as of each acquisition date. As part of the purchase price allocation process for such acquisitions, we engaged outside appraisal firms to help determine the fair values of the tangible and intangible assets acquired, excluding goodwill. Intangible assets that met the criteria established by SFAS No. 141 for recognition apart from goodwill included the acquired ATM operating agreements and related customer relationships and the Bank Machine and Allpoint (via the ATM National, Inc. acquisition) trade names. The outside appraisal firms utilized commonly accepted valuation methodologies to determine the fair values of the aforementioned intangible assets, including the discounted cash flow approach for the acquired customer-related intangible assets and the relief from royalty approach for the acquired trade names.
      The excess of the cost of the aforementioned acquisitions over the net of the amounts assigned to the tangible and intangible assets acquired and liabilities assumed has been reflected as goodwill in our consolidated financial statements. The purchase price allocations for the ATM National, Inc. and CCS Mexico acquisitions are still considered to be preliminary pending the completion of our appraisal efforts.
      As of March 31, 2006, our goodwill balance totaled $162.7 million, $85.1 million of which related to our acquisition of E*TRADE Access, and $72.8 million of which related to our acquisition of Bank Machine. The remaining balance is comprised of goodwill related to our acquisition of ATM National Inc. and our purchase of a majority interest in CCS Mexico. Intangible assets, net, totaled $72.1 million as of March 31, 2006, and included the intangible assets described above, as well as deferred financing costs and exclusive license agreements.
      SFAS No. 142, Goodwill and Other Intangible Assets, provides that goodwill and other intangible assets that have indefinite useful lives will not be amortized, but instead must be tested at least annually for

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impairment, and intangible assets that have finite useful lives should be amortized over their estimated useful lives. SFAS 142 also provides specific guidance for testing goodwill and other non-amortized intangible assets for impairment. SFAS 142 requires management to make certain estimates and assumptions in order to allocate goodwill to reporting units and to determine the fair value of a reporting unit’s net assets and liabilities, including, among other things, an assessment of market condition, projected cash flows, interest rates and growth rates, which could significantly impact the reported value of goodwill and other intangible assets. Furthermore, SFAS 142 exposes us to the possibility that changes in market conditions could result in potentially significant impairment charges in the future.
      We evaluate the recoverability of our goodwill and non-amortized intangible assets by estimating the future discounted cash flows of the reporting units to which the goodwill and non-amortized intangible assets relate. We use discount rates corresponding to our cost of capital, risk adjusted as appropriate, to determine such discounted cash flows, and consider current and anticipated business trends, prospects and other market and economic conditions when performing our evaluations. Such evaluations are performed at minimum on an annual basis, or more frequently based on the occurrence of events that might indicate a potential impairment. Such events include, but are not limited to, items such as the loss of a significant contract or a material change in the terms or conditions of a significant contract.
      Valuation of long-lived assets. We place significant value on the installed ATMs that we own and manage in merchant locations and the related acquired merchant contracts/relationships. In accordance with SFAS No. 144, Accounting for Impairment or Disposal of Long-Lived Assets, long-lived assets, such as property and equipment, and purchased contract intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. We test our acquired merchant contract/relationship intangible assets for impairment, along with the related ATMs, on an individual contract/relationship basis for our significant acquired contracts/relationships, and on a pooled or portfolio basis (by acquisition) for all other acquired contracts/relationships. In determining whether a particular merchant contract/relationship is significant enough to warrant a separate identifiable intangible asset, we analyze a number of relevant factors, including (i) estimates of the historical cash flows generated by such contract/relationship prior to its acquisition, (ii) estimates regarding our ability to increase the contract/relationship’s cash flows subsequent to the acquisition through a combination of lower operating costs, the deployment of additional ATMs, and the generation of incremental revenues from increased surcharges and/or new branding arrangements, and (iii) estimates regarding our ability to renew such contract/relationship beyond its originally scheduled termination date. An individual contract/relationship, and the related ATMs, could be impaired if the contract/relationship is terminated sooner than originally anticipated, or if there is a decline in the number of transactions related to such contract/relationship without a corresponding increase in the amount of revenue collected per transaction. A portfolio of purchased contract intangibles, including the related ATMs, could be impaired if the contract attrition rate is materially more than the rate used to estimate the portfolio’s initial value, or if there is a decline in the number of transactions associated with such portfolio without a corresponding increase in the revenue collected per transaction. Whenever events or changes in circumstances indicate that a merchant contract/relationship intangible asset may be impaired, we evaluate the recoverability of the intangible asset, and the related ATMs, by measuring the related carrying amounts against the estimated undiscounted future cash flows associated with the related contract or portfolio of contracts. Should the sum of the expected future net cash flows be less than the carrying values of the tangible and intangible assets being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying values of the ATMs and intangible assets exceeded the calculated fair value. We recorded approximately $2.8 million and $1.2 million in additional amortization expense for the three months ended March 31, 2006 and for the year ended December 31, 2005, respectively, related to the impairment of certain previously acquired merchant contract/relationship intangible assets associated with our domestic reporting segment.
      Income taxes. Income tax provisions are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and income before income taxes and between the tax basis of assets and liabilities and their reported amounts in our financial

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statements. We include deferred tax assets and liabilities in our financial statements at currently enacted income tax rates. As changes in tax laws or rates are enacted, we adjust our deferred tax assets and liabilities through income tax provisions.
      In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, we believe it is more likely than not that we will realize the benefits of these deductible differences. If we do not generate future taxable income, we will not realize these tax assets and the write-off of those assets will adversely affect our results.
      Share-Based Compensation. We are also now required to make certain estimates and judgments with respect to our share-based compensation programs as a result of our adoption of SFAS No. 123R, Share-Based Payment, effective January 1, 2006. Such standard requires that we record compensation expense for all share-based awards based on the grant-date fair value of those awards. In determining the fair value of our share-based awards, we are required to make certain assumptions and estimates, including (i) the number of awards that may ultimately be forfeited by the recipients, (ii) the expected term of the underlying awards, and (iii) the future volatility associated with the price of our common stock. Such estimates, and the basis for our conclusions regarding such estimates, are outlined in detail in Note 3 to our condensed consolidated financial statements for the three months ended March 31, 2006 included elsewhere in the prospectus.

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Results of Operations
      The following table sets forth our statement of operations information as a percentage of total revenues for the period indicated.
                                             
    Three Months    
    Ended   Years Ended
    March 31,   December 31,
         
    2006   2005   2005   2004   2003
                     
Revenues:
                                       
ATM operating revenues
    95.9 %     96.2 %     96.3 %     94.7 %     92.3 %
ATM product sales and other revenues
    4.1       3.8       3.7       5.3       7.7  
                               
   
Total revenues
    100.0       100.0       100.0       100.0       100.0  
Cost of revenues:
                                       
 
Cost of ATM operating revenues
    73.0       76.3       74.3       74.4       72.7  
 
Cost of ATM product sales and other revenues
    3.8       3.3       3.6       4.5       7.2  
                               
   
Total cost of revenues
    76.8       79.6       77.9       78.9       79.9  
                               
   
Gross profit (exclusive of depreciation shown separately below)
    23.2       20.4       22.1       21.1       20.1  
Operating expenses:
                                       
 
Selling, general and administrative expenses
    7.0       8.2       6.6       7.0       6.5  
 
Depreciation and accretion expense
    6.1       3.9       4.8       3.5       3.3  
 
Amortization expense
    7.2       2.7       3.3       2.9       3.5  
                               
   
Total operating expenses
    20.3       14.8       14.7       13.4       13.3  
                               
Income from operations
    2.9       5.6       7.4       7.7       6.8  
Other expenses:
                                       
 
Interest expense, net
    9.5       3.8       8.4       2.7       1.9  
 
Minority interest in subsidiary
    0.0       0.0       0.0       0.0       0.0  
 
Other
    0.3       0.3       0.4       0.1       0.1  
                               
   
Total other expenses
    9.8       4.1       8.8       2.8       2.0  
                               
Income (loss) before income taxes and cumulative effect of change in accounting principle
    (6.9)       1.5       (1.4)       4.9       4.8  
Income tax provision (benefit)
    (2.4)       0.6       0.5       1.9       1.8  
                               
Income (loss) before cumulative effect of change in accounting principle
    (4.5)       0.9       (0.9)       3.0       3.0  
Cumulative effect of change in accounting principle for asset retirement obligations, net of related income tax benefit
                            0.1  
                               
Net income (loss) before preferred dividends and accretion expense
    (4.5) %     0.9 %     (0.9) %     3.0 %     2.9 %
                               

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Key Operating Metrics
      The following table sets forth information, for the periods presented, regarding key measures we rely on to gauge our operating performance, including total surcharge-bearing transactions, surcharge-bearing transactions per ATM, and gross profit and gross profit margin per surcharge-bearing transaction.
                                           
    Three Months            
    Ended    
    March 31,   Years Ended December 31,
         
    2006   2005   2005   2004   2003
                     
Average number of ATMs
    26,207       24,661       26,175       17,936       10,480  
Total transactions (in thousands)
    40,827       33,415       156,851       111,577       64,605  
Monthly total transactions per ATM
    519       452       499       518       514  
Total surcharge-bearing transactions (in thousands)
    26,174       24,293       106,613       82,087       48,778  
Monthly surcharge-bearing transactions per ATM(1)
    333       328       339       381       388  
Per surcharge-bearing transaction:
                                       
 
Surcharge revenues
  $ 1.74     $ 1.59     $ 1.70     $ 1.53     $ 1.43  
 
Interchange revenues
    0.63       0.64       0.62       0.63       0.60  
 
Other transaction revenues(2)
    0.16       0.08       0.11       0.07       0.06  
                               
 
Total transaction revenues
  $ 2.53     $ 2.31     $ 2.43     $ 2.23     $ 2.09  
 
Cost of transaction revenues
    1.93       1.83       1.87       1.75       1.65  
                               
 
Transaction gross profit(3)
  $ 0.60     $ 0.48     $ 0.56     $ 0.48     $ 0.44  
 
Transaction gross profit margin(4)
    23.7 %     20.8 %     22.9 %     21.5 %     21.2 %
 
(1)  Monthly surcharge-bearing transactions per ATM for the year ended December 31, 2005 were lower than in the year ended December 31, 2004 largely because the ATMs acquired from E*TRADE Access, Inc. on June 30, 2004 were primarily merchant-owned machines with lower average transactions per ATM.
 
(2)  Other transaction revenues consist primarily of bank and network branding fees and other ATM operating fees.
 
(3)  Transaction gross profit is a measure of profitability that uses revenue and expenses that are transaction based. The revenue and expenses from ATM equipment sales and other ATM-related services are not included.
 
(4)  The increase in transaction gross profit margins in 2006 when compared to 2005 is due to the increases in revenues associated with the Company’s bank and network branding initiatives, increased surcharge rates in selected merchant retail locations, and higher gross profit margins associated with our U.K. portfolio of ATMs (which was acquired in May 2005).
For the Three Months Ended March 31, 2006 and 2005
Revenues
                           
    Three Months Ended March 31,
     
    2006   2005   % Change
             
    (in thousands)    
ATM operating revenues
  $ 66,331     $ 56,072       18.3 %
ATM product sales and other revenues
    2,811       2,192       28.2 %
                   
 
Total revenues
  $ 69,142     $ 58,264       18.7 %
                   
      As indicated in the table above, total revenues increased by 18.7% for the three months ended March 31, 2006 when compared to the same period in 2005. This increase was driven primarily by an increase in ATM operating revenues resulting from the Bank Machine acquisition in May 2005, and to a lesser extent, the BAS Communications, Inc. and Neo Concepts, Inc. ATM portfolio acquisitions, which occurred in March and April 2005, respectively. Additionally, higher overall network and bank branding revenues contributed to the year-over-year increase.

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      ATM product sales and other revenues increased approximately 28.2% for the three months ended March 31, 2006, when compared to the same period in 2005. This increase for the three months ended March 31, 2006, was primarily due to increased service work resulting from Triple DES security upgrades that were performed on behalf of our merchant-owned customers, and higher overall merchant-owned equipment sales to those merchants whose ATMs were not able to receive the mandated Triple DES security upgrades. Additionally, certain non-transaction based revenues associated with the recently acquired ATM National, Inc. operations contributed to the year-over-year increase.
Cost of Revenues and Gross Margins
                           
    Three Months Ended March 31,
     
    2006   2005   % Change
             
    (in thousands)    
Cost of ATM operating revenues
  $ 50,500     $ 44,447       13.6 %
Cost of ATM product sales and other revenues
    2,599       1,960       32.6 %
                   
 
Total cost of revenues
  $ 53,099     $ 46,407       14.4 %
                   
ATM operating revenues gross margin
    23.9%       20.7%          
ATM product sales and other revenues gross margin
    7.5%       10.6%          
Total gross margin
    23.2%       20.4%          
      As indicated in the table above, total cost of revenues increased by 14.4% for the three months ended March 31, 2006 when compared to the same period in 2005. The increase for the three months ended March 31, 2006, was primarily due to higher overall cost of ATM operating revenues resulting from the three acquisitions consummated in 2005, as previously discussed. The primary components of cost of ATM operating revenues — merchant fees, maintenance fees, cost of cash, and armored courier fees — increased by $4.0 million, or 10.4% for the three months ended March 31, 2006, when compared to the prior year, with such increase being driven primarily by the acquired Bank Machine operations (which were not reflected in the 2005 results).
      Cost of ATM product sales and other revenues increased by 32.6% for the three months ended March 31, 2006, when compared to the same period in 2005. Such increase was primarily due to the increase in ATM product sales and other revenues, as previously discussed.
      Our total gross margin for the three months ended March 31, 2006, totaled 23.2%, up from the 20.4% level achieved during the three months ended March 31, 2005. Such increase was primarily attributable to the increase in revenues associated with the Company’s bank and network branding initiatives, increased surcharge rates in selected merchant retail locations, and higher gross profit margins associated with our UK ATM portfolio, which was acquired in May 2005.
      The lower ATM product sales and other revenues gross margin during the three months ended March 31, 2006 (when compared to the same period in 2005) was primarily due to lower overall margins earned on the sale of ATMs to our merchant-owned customers.

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Selling, General and Administrative Expense
                         
    Three Months Ended March 31,
     
    2006   2005   % Change
             
    (in thousands)    
Stock-based compensation
  $ 122     $ 1,810       (93.3 )%
Other selling, general and administrative expenses
    4,716       2,954       59.6 %
                   
Total selling, general and administrative expense
  $ 4,838     $ 4,764       1.6 %
                   
Percentage of revenues:
                       
Stock-based compensation
    0.2 %     3.1 %        
Other selling, general and administrative expenses
    6.8 %     5.1 %        
                   
Total selling, general and administrative expense
    7.0 %     8.2 %        
                   
      As indicated in the table above, our selling, general and administrative expense, excluding stock-based compensation, increased by 59.6% for the three months ended March 31, 2006 when compared to the same period in 2005. Such increase was primarily attributable to the hiring of additional employees and higher accounting, legal and professional fees resulting from the acquisitions that we consummated during 2004 and 2005. Stock-based compensation for the three months ended March 31, 2006, declined by 93.3% when compared to the same period in 2005. Such decline was primarily due to an additional $1.7 million in stock-based compensation recognized during the 2005 period related to the repurchase of shares underlying certain employee stock options in connection with our Series B preferred stock financing transaction.
      We expect that our selling, general and administrative expense will increase slightly in the future due to higher accounting, legal and professional fees resulting from our becoming subject to the reporting requirements of the SEC, including those under the Sarbanes-Oxley Act of 2002, following the registration of our senior subordinated notes.
Depreciation and Accretion Expense
                         
    Three Months Ended March 31,
     
    2006   2005   % Change
             
    (in thousands)    
Depreciation and accretion expense
  $ 4,217     $ 2,244       87.9 %
Percentage of revenues
    6.1 %     3.9 %        
      As indicated in the table above, depreciation and accretion expense increased by 87.9% for the three months ended March 31, 2006 when compared to the same period in 2005. This increase was primarily due to the incremental ATMs acquired as part of our 2005 acquisitions, as previously discussed, as well as the deployment of additional ATMs throughout our company-owned portfolio. Reference is made to the “Liquidity and Capital Resources” section for additional information on our capital expenditures program.
      In the future, we expect that our depreciation and accretion expense will grow in proportion to the increase in the number of ATMs we own and deploy throughout our company-owned portfolio.
Amortization Expense
                         
    Three Months Ended March 31,
     
    2006   2005   % Change
             
    (in thousands)    
Amortization expense
  $ 5,016     $ 1,558       221.9 %
Percentage of revenues
    7.2 %     2.7 %        

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      As indicated in the table above, amortization expense, which is primarily comprised of amortization of intangible merchant contracts and relationships associated with our past acquisitions, increased by 221.9% for the three months ended March 31, 2006 when compared to the same period in 2005. This increase was primarily due to a $2.8 million impairment charge that was recorded during 2006. Such impairment relates to the acquired BAS Communications, Inc. portfolio, and reflects a reduction in anticipated future cash flows resulting primarily from a higher than anticipated attrition rate associated with this acquired portfolio. Excluding the effects of such impairment charge, amortization expense increased by approximately $0.6 million, or 40.3%, in 2006 as a result of the incremental amortization associated with the merchant contracts and relationships acquired in 2005, including the contracts acquired as part of our Bank Machine acquisition.
Interest Expense
                         
    Three Months Ended March 31,
     
    2006   2005   % Change
             
    (in thousands)    
Interest expense, net
  $ 5,665     $ 1,854       205.6 %
Amortization and write-off of financing costs and bond discount
    877       333       163.4 %
                   
Total interest expense, net
  $ 6,542     $ 2,187       199.1 %
Percentage of revenues
    9.5 %     3.8 %        
      As indicated in the table above, interest expense increased by 199.1% for the three months ended March 31, 2006 when compared to the same period in 2005. This increase was primarily attributable to the additional borrowings under our bank credit facilities in May 2005 to finance the Bank Machine acquisition and the incremental interest expense associated with our senior subordinated notes offering in August 2005. Additionally, the 2006 figure included the pre-tax write-off of approximately $0.5 million in deferred financing costs associated with an amendment to our existing bank credit facility in February 2006 (see “Liquidity and Capital Resources”).
      We expect our future interest expense levels to increase slightly, when compared to the three months ended March 31, 2006, as a result of our inability to register our senior subordinated notes with the SEC within the time period outlined in the indenture governing such notes. Because of a delay experienced in issuing our 2005 audited financial statements, we were unable to meet the registration deadline of June 8, 2006, as reflected in the indenture, and thus are not currently in compliance with such registration provisions. Accordingly, effective June 8, 2006, the annual interest rate on the notes increased from 91/4% to 91/2%. Such rate will be in effect for the first 90-day period immediately following the June 8th deadline. Furthermore, such rate will continue to increase by an additional one-quarter of one percent (0.25%) per annum for each additional 90-day period that the notes are not registered, up to a maximum amount of 1.0% per annum. Each 0.25% rate increase will result in an additional $125,000 in interest costs for us per 90-day period. Once the notes have been successfully registered with the SEC, the interest rate will immediately return to the 91/4 % stated rate.
Income Tax Provision (Benefit)
                         
    Three Months Ended March 31,
     
    2006   2005   % Change
             
    (in thousands)    
Income tax provision (benefit)
  $ (1,635 )   $ 321       609.3 %
Effective tax rate
    34.4 %     36.1 %        
      As indicated in the table above, our income tax provision (benefit) decreased by 609.3% for the three months ended March 31, 2006 when compared to the same period in 2005. On an absolute basis, the year-over-year change was driven by corresponding decreases in our pre-tax income levels for the period. While

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we expect that our effective tax rate will remain relatively consistent in future periods, such rate could vary from quarter to quarter depending on the mix of pre-tax income and loss amounts generated in our domestic and foreign tax jurisdictions.
Years Ended December 31, 2005 (2005) and December 31, 2004 (2004)
     Revenues
                         
    Years Ended    
    December 31,    
         
    2005   2004   % Change
             
    (in thousands)    
ATM operating revenues
  $ 258,992     $ 182,711       41.7 %
ATM product sales and other revenues
    9,973       10,204       (2.3 )%
                   
Total revenues
  $ 268,965     $ 192,915       39.4 %
                   
      As indicated in the table above, total revenues increased by 39.4% for the year ended December 31, 2005 when compared to 2004. Such increase was primarily due to higher ATM operating revenues resulting from the acquisition of the E*TRADE Access ATM portfolio in June 2004, as well as the Bank Machine, BAS Communications, Inc. and Neo Concepts, Inc. ATM acquisitions consummated in 2005. Additionally, higher overall network and bank branding revenues contributed to the year-over-year increase.
      ATM product sales and other revenues decreased approximately 2.3% during the year ended December 31, 2005 when compared to 2004. Such decrease was primarily due to lower overall sales of equipment under our NCR value added reseller program as a result of a large sale in 2004 that did not repeat in 2005. However, such decrease was partially offset by slightly higher ATM product sales to our merchant-owned customers and slightly higher ATM service revenues.
      Surcharge-bearing transactions increased approximately 29.8% to 106.6 million transactions for the year ended December 31, 2005 from 82.1 million transactions during the same period in 2004. This growth in transaction volume was driven largely by the E*TRADE Access ATM portfolio acquisition, which was only included in the 2004 results for the last six months of that year, as well as the three acquisitions consummated in 2005, including the Bank Machine acquisition. Surcharge-bearing transactions per ATM decreased from 381 in 2004 to 339 in 2005, primarily due to the E*TRADE Access ATM portfolio acquisition, which, as previously discussed, included primarily merchant-owned ATMs with lower average surcharge-bearing transactions per ATM. While interchange revenue per transaction remained relatively unchanged from 2004 to 2005, surcharge revenue per transaction increased approximately 11.1% from $1.53 in 2004 to $1.70 in 2005. Such increase was primarily due to a concerted effort on our part to increase the surcharge rates for selected merchants whose rates have historically been below market, and the impact of the higher surcharge rates associated with the acquired Bank Machine operations (which, on a U.S. Dollar converted basis, averaged $2.77 per transaction in 2005). Additionally, such increase was also driven in part by the full year impact of the E*TRADE Access merchant-owned ATMs, which typically have higher surcharge rates per transaction.

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      Cost of Revenues and Gross Margins
                           
    Years Ended    
    December 31,    
         
    2005   2004   % Change
             
    (in thousands)    
Cost of ATM operating revenues
  $ 199,763     $ 143,504       39.2 %
Cost of ATM product sales and other revenues
    9,685       8,703       11.3 %
                   
 
Total cost of revenues
  $ 209,448     $ 152,207       37.6 %
                   
ATM operating revenues gross margin
    22.9 %     21.5 %        
ATM product sales and other revenues gross margin
    2.9 %     14.7 %        
Total gross margin
    22.1 %     21.1 %        
      As indicated in the table above, total cost of revenues increased by 37.6% for the year ended December 31, 2005 when compared to 2004. Such increase was primarily due to the higher overall cost of ATM operating revenues as a result of the E*TRADE Access ATM portfolio acquisition in June 2004 and, to a lesser extent, the three acquisitions consummated in 2005. Because the majority of the ATMs acquired in the E*TRADE Access ATM portfolio acquisition were merchant-owned machines, the related merchant fees are higher than those paid under company-owned arrangements. Overall, merchant fees increased by approximately $31.8 million, or 39.3%, during 2005 when compared to 2004.
      The other primary components of cost of ATM operating revenues — maintenance fees, cost of cash, and armored courier fees — also contributed to the domestic cost increases for the year-to-date periods. Such costs increased by $19.1 million, or 48.1% in 2005 when compared to 2004, with such increase being driven primarily by an increase in our overall number of ATMs, as a result of the aforementioned acquisitions, and higher cash rental fees due to higher domestic interest rates.
      Our total gross margin for the year ended December 31, 2005, totaled 22.1%, up slightly from the 21.1% level achieved during 2004. Such increase was primarily attributable to higher than normal operating costs incurred during the last six months of 2004 as we worked to transition the acquired E*TRADE Access ATM portfolio on to our existing operating platform. Additionally, the 2005 results benefited from the impact of the Bank Machine acquisition, as our United Kingdom operations generate, on average, higher overall gross margins than our operations in the United States.
      The ATM product sales and other revenues gross margin declined from approximately 14.7% in 2004 to 2.9% in 2005, primarily due to lower overall ATM product sales margins and lower service call maintenance margins on certain of our merchant-owned accounts.
      While our recent acquisitions of predominantly company-owned ATM portfolios, including Bank Machine, should have a positive long-term impact on our overall gross margin percentage, we currently expect that our near term gross margin percentage will remain relatively consistent with the level achieved for the year ended December 31, 2005. This is primarily due to the deployment of approximately 1,400 company-owned ATMs in certain Walgreens and CVS locations throughout the United States during the second half of 2005. We currently expect that many of these ATMs will generate negative gross margins during the first 6-12 months following their initial deployment. However, despite the initial negative returns associated with these deployments, we expect that such locations will become profitable as the transaction levels increase over time and the underlying ATMs become subject to anticipated future bank branding arrangements.

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      Selling, General and Administrative Expense
                         
    Years Ended    
    December 31,    
         
    2005   2004   % Change
             
    (in thousands)    
Selling, general and administrative expense
  $ 17,865     $ 13,571       31.6 %
Percentage of revenues
    6.6 %     7.0 %        
      As indicated in the table above, selling, general and administrative expense increased by 31.6% for the year ended December 31, 2005 when compared to 2004. Such increase was primarily due to the hiring of additional employees over the past year and higher overall professional fees, both of which were the result of our recent acquisitions and the additional ATM deployments made in 2005. Additionally, the 2005 results include an additional $1.2 million in stock-based compensation expense, primarily as a result of the repurchase of the shares underlying certain employee stock options in connection with the Company’s Series B preferred stock financing in February 2005.
      We expect that our selling, general and administrative expense will increase slightly in the future due to higher accounting, legal and professional fees resulting from our becoming subject to the reporting requirements of the Securities and Exchange Commission, including those under the Sarbanes-Oxley Act of 2002, following the registration of our senior subordinated notes.
      Depreciation and Accretion Expense
                         
    Years Ended    
    December 31,    
         
    2005   2004   % Change
             
    (in thousands)    
Depreciation and accretion expense
  $ 12,951     $ 6,785       90.9 %
Percentage of revenues
    4.8 %     3.5 %        
      As indicated in the table above, depreciation and accretion expense increased by 90.9% for the year ended December 31, 2005 when compared to 2004. Such increase was primarily due to the incremental ATMs acquired through the E*TRADE Access transaction in June 2004, and, to a lesser extent, the incremental ATMs associated with the acquisitions consummated in 2005 and the current year company-owned ATM roll outs. Additionally, higher overall accretion expense amounts associated with the increase in our installed ATM base contributed to the year-over-year change.
      In the future, we expect that our depreciation and accretion expense will grow in proportion to the increase in the number of ATMs we own and deploy throughout our company-owned portfolio. Since we expect that our future growth will be largely driven by additional ATM roll outs in our company-owned accounts, we expect our depreciation and accretion expense to continue to increase for the foreseeable future.
      Amortization Expense
                         
    Years Ended    
    December 31,    
         
    2005   2004   % Change
             
    (in thousands)    
Amortization expense
  $ 8,980     $ 5,508       63.0 %
Percentage of revenues
    3.3 %     2.9 %        
      As indicated in the table above, amortization expense, which is primarily comprised of amortization of intangible merchant contracts and relationships associated with our past acquisitions, increased by 63.0% for

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the year ended December 31, 2005 when compared to 2004. Such increase was primarily due to the incremental amortization expense associated with the merchant contracts and relationships acquired in the E*TRADE Access transaction in June 2004, and, to a lesser extent, the incremental merchant contracts and relationships acquired in 2005. Additionally, the 2005 amount includes approximately $1.2 million in accelerated amortization expense related to the impairment of certain previously acquired merchant contract/relationship intangible assets. We expect that our amortization expense will increase slightly in 2006 as we reflect a full year’s worth of amortization associated with our 2005 acquisitions. Beyond 2006, our amortization expense amounts should begin to level off as our growth will be driven more by internal initiatives as opposed to acquisitions.
      Interest Expense, net
                         
    Years Ended    
    December 31,    
         
    2005   2004   % Change
             
    (in thousands)    
Interest expense, net
  $ 22,426     $ 5,235       328.4 %
Percentage of revenues
    8.4 %     2.7 %        
      As indicated in the table above, interest expense increased by 328.4% for the year ended December 31, 2005 when compared to 2004. Such increase was primarily attributable to the additional borrowings under our bank credit facilities in June 2004 and May 2005 to finance the E*TRADE Access ATM portfolio acquisition and the Bank Machine acquisition, respectively, and the incremental interest expense associated with our senior subordinated notes offering in August 2005. Additionally, higher overall short-term interest rates contributed to the year-over-year increase. Furthermore, the interest expense amount for 2005 includes the pre-tax write-off of approximately $5.1 million in unamortized deferred financing costs and fees incurred with respect to the repayment of, and amendments to, our existing bank credit facilities. In 2004 we expensed approximately $0.1 million related to certain fees paid in connection with the amendment of our then existing bank credit facility.
      We expect that our future interest expense levels will increase slightly as a result of the issuance of the senior subordinated notes in August 2005. Such notes, which carry an effective fixed interest rate of approximately 93/8 %, were utilized to retire our outstanding first and second lien term loans, which carried a weighted-average interest rate of approximately 7.2% at the time. Additionally, we expect higher overall short-term market interest rates to contribute to the anticipated increased future interest expense levels.
      Income Tax Provision
                         
    Years Ended    
    December 31,    
         
    2005   2004   % Change
             
    (in thousands)    
Income tax provision (benefit)
  $ (1,270 )   $ 3,576       (135.5 )%
Effective tax rate
    34.4 %     38.1 %        
      As indicated in the table above, our income tax provision decreased by 135.5% for the year ended December 31, 2005 when compared to 2004. On an absolute basis, the year-over-year change was driven by a corresponding decrease in our pre-tax income. Our effective tax rate was lower in 2005 when compared to 2004 primarily due to a change in our effective state income tax rate in 2005 and the results of our United Kingdom operations, which are taxed at a lower statutory rate. Additionally, we expect that our future effective tax rate may fluctuate from period to period depending on the mix of pre-tax income and loss amounts generated in our domestic and foreign tax jurisdictions.

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Years Ended December 31, 2004 (2004) and December 31, 2003 (2003)
      Revenues
                           
    Years Ended    
    December 31,    
         
    2004   2003   % Change
             
    (in thousands)    
ATM operating revenues
  $ 182,711     $ 101,950       79.2 %
ATM product sales and other revenues
    10,204       8,493       20.1 %
                   
 
Total revenues
  $ 192,915     $ 110,443       74.7 %
                   
      As indicated in the table above, total revenues increased by 74.7% for the year ended December 31, 2004, when compared to 2003. ATM operating revenues, the largest component of total revenues, increased 79.2% in 2004 and accounted for approximately 94.7% of our total revenues in 2004 versus approximately 92.3% in 2003. The significant year-over-year increase in ATM operating revenues was primarily driven by an increase in the number of ATMs and related transactions resulting from the E*TRADE Access ATM portfolio acquisition in June 2004, and to a lesser extent, several other ATM portfolio acquisitions consummated during 2003, including XtraCash (February 2003), National Bank Equipment (May 2003), and American Express (August 2003). Additionally, the award of a new contract by ExxonMobil also helped contribute to the year-over-year increase. Surcharge fees and interchange fees were consistent on a percentage basis in both periods, representing approximately 97.2% of ATM operating revenues for both 2004 and 2003. The remaining portion of ATM operating revenues was comprised of bank and network branding revenues, which accounted for approximately 1.3% of our ATM operating revenues in 2004 and 1.0% in 2003, and revenues from a variety of individually insignificant sources that together accounted for approximately 1.5% of our ATM operating revenues in 2004 and 1.9% of our ATM operating revenues in 2003.
      ATM product sales and other revenues increased approximately 20.1% for the year ended December 31, 2004, when compared to 2003, and represented approximately 5.3% of our total revenues in 2004 versus approximately 7.7% in 2003. The year-over-year increase in ATM product sales and other revenues was primarily driven by higher overall equipment sales associated with the acquired E*TRADE Access ATM portfolio acquisition, offset somewhat by lower value added reseller sales as a result of a decrease in the number of associate value added resellers to whom we sold products to in 2004. The reduction in the number of associate value added resellers resulted from several factors, including the promotion by NCR of several associate value added resellers to master value added reseller status, meaning those entities no longer needed to buy products through us because they could buy directly from NCR, the increased sales efforts of these new master value added resellers directed at some of our existing associate value added resellers, and our decision to cease doing business with some of our associate value added resellers due to credit concerns.
      Surcharge-bearing transactions increased approximately 68.2% to 82.1 million transactions in 2004, from 48.8 million transactions in 2003. This growth in transaction volume was driven largely by an approximately 105% increase in the number of ATMs that we owned or operated at year end 2004 when compared to year end 2003. While interchange revenue per transaction remained relatively unchanged from 2003 to 2004, surcharge revenues per transaction of $1.53 in 2004 increased approximately 7.0% from the surcharge revenues per transaction of $1.43 in 2003. Such increase was primarily due to a concerted effort on our part to increase the surcharge rates for selected merchants whose rates have historically been below market. However, despite the above increases, surcharge-bearing transactions per ATM decreased from 388 in 2003 to 381 in 2004. Such decrease was primarily due to the E*TRADE Access ATM portfolio acquisition, which, as previously discussed, included primarily merchant-owned portfolio of ATMs with lower average surcharge-bearing transactions per ATM.

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      Cost of Revenues and Gross Margins
                           
    Year Ended    
    December 31,    
         
    2004   2003   % Change
             
    (in thousands)    
Cost of ATM operating revenues
  $ 143,504     $ 80,286       78.7 %
Cost of ATM product sales and other revenues
    8,703       7,903       10.1 %
                   
 
Total cost of revenues
  $ 152,207     $ 88,189       72.6 %
                   
ATM operating revenues gross margin
    21.5 %     21.2 %        
ATM product sales and other revenues gross margin
    14.7 %     6.9 %        
Total gross margin
    21.1 %     20.1 %        
      As indicated in the table above, total cost of revenues increased by approximately 72.6% in 2004 when compared to 2003. The primary driver of this increase was a 78.7% year-over-year increase in the cost of ATM operating revenues. In 2004, the largest component of cost of ATM operating revenues, merchant fees, increased $42.8 million, or approximately 112.6%, to $80.8 million, from $38.0 million for 2003, and accounted for approximately 56.3% of total cost of ATM operating revenues. This increase was the result of the increased merchant fees paid with respect to the aforementioned ATM contracts that were acquired during 2003 and 2004. The three other primary components of the cost of ATM operating revenues, maintenance contracts, cost of cash, and armored courier fees, increased $13.2 million, or approximately 67.3%, to $32.8 million for 2004, from $19.6 million for the same period in 2003, and accounted for 22.9% of total cost of ATM operating revenues. On an absolute basis, this increase was due to the increase in the number of ATMs operated by us, primarily as a result of the aforementioned acquisitions. Of the $64.0 million increase in total costs of revenues, $48.8 million was attributable to such acquisitions and the new ExxonMobil contract, $16.0 million was attributable to other internal growth efforts and the effects of a full year’s worth of results from the prior year acquisitions, and $(0.8) million was attributable to lower costs as a result of the previously mentioned reduced value added reseller sales.
      On a per surcharge-bearing transaction basis, merchant fees increased approximately 25.6%, from $0.78 in 2003 to $0.98 in 2004. This was primarily the result of a shift in the mix of ATMs we operate to more merchant-owned arrangements as a result of the E*Trade Access ATM portfolio acquisition, as previously discussed. The other components of cost of ATM operating revenues increased on a per surcharge-bearing transaction basis largely as a result of the increase in the proportion of our ATMs operated under company-owned arrangements, where we retain almost total operational responsibility of the ATMs. However, such increases were partially offset by more favorable pricing from our vendors as a result of our increased size.
      Gross profit represented approximately 21.1% of total revenues for 2004, compared to approximately 20.1% for 2003. Gross profit as a percentage of total revenues increased slightly due to reductions in certain operating costs as a result of our increased size and scope and our move towards higher-margin company-owned ATM arrangements. Additionally, the reduction in value added reseller sales as a percentage of total revenues in 2004, which operate with lower gross margins, also contributed to the year-over-year increase.
      Selling, General and Administrative Expense
                         
    Years Ended    
    December 31,    
         
    2004   2003   % Change
             
    (in thousands)    
Selling, general and administrative expense
  $ 13,571     $ 7,229       87.7 %
Percentage of revenues
    7.0 %     6.5 %        

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      As indicated in the table above, selling, general and administrative expense increased 87.7% in 2004 when compared to 2003. Such increase was attributable to a number of items, including (i) approximately $1.8 million in costs associated with our terminated initial public offering in 2004, (ii) approximately $2.8 million in compensation related costs associated with a restricted stock grant made to our chief executive officer in 2004, including a related bonus to cover the tax liability associated with such grant, and (iii) incremental headcount costs associated with the increased size and scope of our operations.
      Depreciation and Accretion Expense
                         
    Years Ended    
    December 31,    
         
    2004   2003   % Change
             
    (in thousands)    
Depreciation and accretion expense
  $ 6,785     $ 3,632       86.8 %
Percentage of revenues
    3.5 %     3.3 %        
      As indicated in the table above, depreciation of property and equipment increased approximately 86.8% in 2004 when compared to 2003. Such increase was primarily due to capital expenditures associated with the aforementioned acquisitions, increases in ATMs deployed through internal growth initiatives, and the replacement of ATMs under expired operating leases.
      Amortization Expense
                         
    Years Ended    
    December 31,    
         
    2004   2003   % Change
             
    (in thousands)    
Amortization expense
  $ 5,508     $ 3,842       43.4 %
Percentage of revenues
    2.9 %     3.5 %        
      As indicated in the table above, amortization of intangible assets increased by approximately 43.4% in 2004 when compared to 2003. Such increase was almost entirely due to an increase in overall intangible assets (primarily merchant contracts) as a result of our aforementioned acquisitions.
      Interest Expense, net
                         
    Years Ended    
    December 31,    
         
    2004   2003   % Change
             
    (in thousands)    
Interest expense, net
  $ 5,235     $ 2,157       142.7 %
Percentage of revenues
    2.7 %     1.9 %        
      As indicated in the table above, interest expense increased 142.7% in 2004 when compared to 2003. Such increase was primarily attributable to the additional borrowings under our bank credit facilities as a result of the E*TRADE Access ATM portfolio acquisition in June 2004. Additionally, the 2004 interest expense amount includes approximately $1.0 million related to the amortization of deferred financing costs which compares to approximately $0.4 million in 2003.

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      Income Tax Provision
                         
    Years Ended    
    December 31,    
         
    2004   2003   % Change
             
    (in thousands)    
Income tax provision
  $ 3,576     $ 1,955       82.9 %
Effective tax rate
    38.1 %     37.0 %        
      As indicated in the table above, our income tax provision increased by approximately 82.9% in 2004 when compared to 2003. Such increase was essentially due to a corresponding increase in our pre-tax income over the same period. The increase in our effective tax rate from 37.0% in 2003 to 38.1% in 2004 was due primarily to higher estimated state tax rates.
Cumulative Effect of Change in Accounting Principle (Net)
      For 2004, our cumulative effect of change in accounting principle was $0, compared to $0.1 million in 2003. There were no new accounting pronouncements adopted during 2004 that would require a cumulative effect change computation. In 2003, the adoption of SFAS 143 resulted in the aforementioned charge.
Liquidity and Capital Resources
Overview
      As of March 31, 2006, we had approximately $4.0 million in cash and cash equivalents on hand and approximately $252.0 million in outstanding long-term debt, notes payable and capital lease obligations.
      We have historically funded our operations primarily through cash flows from operations, borrowings under our credit facilities, private placements of equity securities, and the sale of bonds. We have historically used cash to invest in additional operating ATMs, either through the acquisition of ATM networks or through organically generated growth. We have also used cash to fund increases in working capital and to pay interest and principal amounts outstanding under our borrowings. Because we typically collect our cash on a daily basis and are not required to pay our vendors until 30 days after the end of each calendar month, we are able to utilize the excess upfront cash flow to pay down borrowings made under our revolving credit facility and to fund our ongoing capital expenditure program. Accordingly, we will typically reflect a working capital deficit position and carry a very small cash balance on our books.
Operating Activities
     For the Three Months Ended March 31, 2006 and 2005
      Net cash used in operating activities totaled $0.8 million for the three months ended March 31, 2006, down from the $10.0 million provided by operating activities during the same period in 2005. Such decrease was primarily attributable to the payment of approximately $9.4 million in interest costs in 2006 related to our senior subordinated notes, which were issued in August 2005.
     For the Years Ended December 31, 2005, 2004 and 2003
      Net cash provided by operating activities was $33.2 million, $20.5 million and $21.6 million for the years ended December 31, 2005, 2004, and 2003, respectively. The increase in 2005 was primarily attributable to the full-year effect of the E*TRADE Access ATM portfolio acquisition and, to a lesser extent, the acquisitions consummated in 2005. The slight decline in 2004, when compared to 2003, was primarily attributable to incremental costs associated with the integration of the E*TRADE Access ATM portfolio and costs associated with our planned initial public offering during 2004.

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Investing Activities
     For the Three Months Ended March 31, 2006 and 2005
      Net cash used in investing activities totaled $4.1 million for the three months ended March 31, 2006, compared to $13.1 million for the same period in 2005. Included in such amounts were payments made for capital expenditures totaling $2.3 million and $4.8 million, respectively. Additionally, a $1.8 million exclusive license payment was made in 2006 to one of our merchant customers in connection with the renewal and extension of the ATM operating agreement with such customer. The 2005 results included the use of approximately $8.2 million in cash to fund the purchase of the BAS Communications, Inc. ATM portfolio.
      We currently anticipate that the majority of our capital expenditures for the foreseeable future will be driven by organic growth projects as opposed to acquisitions, including the purchasing of ATMs for existing as well as new ATM management agreements. However, we continually evaluate opportunities to acquire additional ATM networks and may make such acquisitions in the future if we believe it is in the Company’s best interest to do so. We currently expect that our capital expenditures for the remainder of 2006 will be in the range of approximately $30.0 to $34.0 million, the majority of which will be utilized to purchase additional ATMs for our company-owned accounts. We expect such expenditures to be funded with cash generated from our operations, supplemented by borrowings under our revolving credit facility when needed.
      In addition to the above, we expect to make capital expenditures to upgrade our ATMs to be both Encrypting PIN Pad (“EPP”) and Triple DES compliant over the next two years. We have currently budgeted approximately $12.8 million to accomplish these upgrades on all of our ATMs by the end of 2007. Of this total, we anticipate spending $2.6 million during the remainder of 2006 and $10.2 million in 2007. The $2.6 million in estimated expenditures for 2006 has been reflected in the capital expenditure estimate described above. We believe this time frame will be acceptable to the major processing networks. However, if such networks required us to accelerate our upgrade schedule, we would also be required to significantly accelerate our capital expenditures with respect to these upgrades.
      Finally, we may be required to make additional capital expenditures in future periods to comply with anticipated new regulations resulting from the Americans with Disabilities Act (“ADA”). Furthermore, in connection with our E*TRADE Access acquisition, we assumed responsibility for the outcome of a lawsuit instituted in Massachusetts Federal District Court by the National Federation of the Blind and the Commonwealth of Massachusetts. In this lawsuit, the plaintiffs initially sought to require E*TRADE Access to make all of the ATMs in its network “voice-enabled,” or capable of providing audible instructions to a visually-impaired person upon that person inserting a headset plug into an outlet at the ATM. We acknowledge that recently proposed accessibility guidelines under the ADA would require “voice-enabling” technology for newly installed ATMs and for ATMs that are otherwise retrofitted or substantially modified. However, these new rules have not yet been adopted by the Department of Justice. Assuming the proposed guidelines will be adopted in substantially their current form, we currently estimate that we would incur approximately $1.5 million in capital expenditures over the next three years to retrofit all of our company-owned ATMs that are not already “voice-enabled.”
     For the Three Years Ended December 31, 2005, 2004 and 2003
      Net cash used in investing activities totaled $140.0 million, $118.9 million and $29.7 million for the years ended December 31, 2005, 2004 and 2003, respectively. During these periods, a majority of the cash used in investing activities was utilized to fund the acquisition of a number of ATM portfolios and businesses, including the E*TRADE Access ATM portfolio in 2004 and the Bank Machine acquisition in 2005. Additionally, such cash was utilized to make capital expenditures related to such acquisitions, to install additional ATMs in connection with acquired merchant relationships, and to deploy ATMs in additional locations of merchants with which we had existing relationships. Total capital expenditures were $31.9 million, $19.7 million, and $7.3 million for the years ended December 31, 2005, 2004 and 2003, respectively.

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Financing Activities
     For the Three Months Ended March 31, 2006 and 2005
      Net cash provided by financing activities totaled $7.2 million for the three months ended March 31, 2006, compared to $2.1 million for the same period in 2005. The higher amount in 2006 was due to incremental borrowings made under our revolving credit facility to help fund certain working capital items. In 2005 we issued $75.0 million worth of Series B preferred stock to a new investor, TA Associates. The net proceeds from such offering were utilized to redeem our existing Series A preferred stock, including all accrued and unpaid dividends related thereto, and to redeem approximately 24% of our outstanding common stock and vested options.
      As of March 31, 2006, we had approximately $252.0 million in outstanding long-term debt, notes payable, and capital lease obligations, which was comprised of (i) approximately $198.7 million (net of discount of $1.3 million) of senior subordinated notes due August 2013, (ii) approximately $53.2 million in borrowings under our existing revolving and swing line credit facilities, and (iii) approximately $0.1 million in notes payable and capital lease obligations. The notes payable and capital lease obligations are expected to be repaid in full during 2006. Interest payments associated with the senior subordinated notes total $18.5 million on an annual basis, and are due in semi-annual installments of $9.25 million in February and August of each year. However, as previously discussed, such interest payments are expected to be higher during the second and third quarters of 2006 as we work to register such notes with the SEC. Amounts outstanding under the revolving credit facility are not due until the facility’s maturity date in May 2010. Interest payments associated with such borrowings are due monthly, quarterly or annually, depending on the types of borrowings made under the facility.
      In February 2006, we amended our revolving credit facility to remove or modify certain restrictive covenants contained within the facility and to reduce the maximum borrowing capacity from $150.0 million to $125.0 million. We recorded a pre-tax charge of approximately $0.5 million associated with the write-off of previously deferred financing costs related to the facility as a result of this amendment. Although the maximum borrowing capacity was reduced, the overall effect of the amendment was to increase our liquidity and financial flexibility through the removal and modification of certain restrictive covenants, as contained in the facility. As of March 31, 2006, we had the ability to borrow an additional $43.8 million under the facility based on the covenants contained in such facility.
      In addition to the above domestic credit facility, Bank Machine has a £2.0 million unsecured overdraft and borrowing facility that expires in July 2006. Such facility, which bears interest at 1.75% over the bank’s base rate (currently 4.50%), is utilized for general corporate purposes for our United Kingdom operations. No borrowings were outstanding under such facility as of March 31, 2006. However, Bank Machine has posted a £275,000 bond under such facility, which reduces the amount available for future borrowings under the facility to £1.725 million. We currently anticipate refinancing the existing facility for an additional one-year term upon its expiration in July 2006, with substantially the same terms and conditions.
     For the Years Ended December 31, 2005, 2004 and 2003
      Net cash provided by financing activities was $107.2 million, $94.3 million and $10.4 million for the years ended December 31, 2005, 2004 and 2003, respectively. For all periods presented, the majority of our cash provided by financing activities resulted from issuances of additional long-term debt, offset somewhat in each period by our repayments of other long-term debt and capital leases. Such borrowings were primarily made in connection with the previously discussed ATM portfolio acquisitions, including the Bank Machine acquisition in 2005 and the E*TRADE Access acquisition in 2004. Additionally, in 2005 we issued $75.0 million worth of Series B preferred stock to a new investor, TA Associates. The net proceeds from such offering were utilized to redeem our existing Series A preferred stock, including all accrued and unpaid dividends related thereto, and to redeem approximately 24% of our outstanding common stock and vested options.
      We believe that our cash on hand and our current bank credit facilities will be sufficient to meet our working capital requirements and contractual commitments for the next 12 months. We expect to fund our

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working capital needs from revenues generated from our operations and borrowings under our revolving credit facility, to the extent needed. However, although we believe that we have sufficient flexibility under our current revolving credit facility to pursue and finance our expansion plans, such facility does contain certain covenants, including a covenant that limits the ratio of outstanding senior debt to EBITDA (as defined in the facility), that could preclude us from drawing down the full amount currently available for borrowing under such facility. Accordingly, if we expand faster than planned, need to respond to competitive pressures, or acquire additional ATM networks, we may be required to seek additional sources of financing. Such sources may come through the sale of equity or debt securities. We cannot assure you that we will be able to raise additional funds on terms favorable to us or at all. If future financing sources are not available or are not available on acceptable terms, we may not be able to fund our future needs. This may prevent us from increasing our market share, capitalizing on new business opportunities, or remaining competitive in our industry.
Our Bank Credit Facilities and Senior Subordinated Notes
      On May 17, 2005, in connection with the acquisition of Bank Machine, we replaced our then existing bank credit facility with new facilities provided by BNP Paribas and Bank of America, N.A. Such facilities were comprised of (i) a revolving credit facility of up to $100.0 million, (ii) a first lien term facility of up to $125.0 million, and (iii) and a second lien term facility of up to $75.0 million. Borrowings under the facilities were utilized to repay our existing bank credit facility in full and to fund the acquisition of Bank Machine. As of December 31, 2005, the first and second lien term facilities were fully repaid and retired, as discussed below, and approximately $45.8 million was outstanding under the new revolving credit facility.
      On August 12, 2005, we sold $200.0 million in senior subordinated notes pursuant to Rule 144A of the Securities Act of 1933, and utilized the net proceeds from such offering, along with approximately $7.1 million in borrowings under our new revolving credit facility and cash on hand, to repay all of the outstanding borrowings under our recently executed first and second lien term loan facilities, including all accrued and unpaid interest related thereto. Additionally, the revolving credit facility was increased to a maximum borrowing capacity of $150.0 million immediately following this transaction. However, in February 2006, we amended the revolving credit facility to remove and modify certain restrictive covenants contained within the facility and to reduce the maximum borrowing capacity from $150.0 million to $125.0 million. Although the maximum borrowing capacity was reduced, the overall effect of the amendment was to increase our liquidity and financial flexibility through the removal and modification of certain restrictive covenants contained in the previous revolving credit facility. Such covenants, which were originally structured to accommodate an acquisitive growth strategy, have either been eliminated or modified to reflect a greater reliance on our internal growth initiatives, as previously discussed. As a result of this amendment, we had approximately $43.8 million in borrowing capacity under the revolving credit facility as of March 31, 2006. Additionally, we recorded a pre-tax charge of approximately $0.5 million associated with the write-off of previously deferred financing costs related to the facility in connection with this amendment. Any amounts drawn under the revolving credit facility are not due until the facility’s final maturity date in May 2010.
      As noted above, we are required to comply with certain restrictive covenants that are contained in our amended revolving credit facility, including (i) limitations on the amount of senior debt that we can have outstanding at any given point in time, (ii) the maintenance of a set ratio of earnings to fixed charges, as computed on a rolling 12-month basis, and (iii) limitations on the amount of capital expenditures that we can incur on a rolling 12-month basis.
      Borrowings under our revolving credit facility bear interest at a variable rate based upon the London Interbank Offered Rate (“LIBOR”) or prime rate, at our option. At March 31, 2006, the weighted average interest rate on our outstanding facility borrowings was approximately 7.8%. Borrowings are secured by a lien on substantially all of our domestic subsidiaries’ assets (excluding equity interests in foreign subsidiaries). The borrowings are also secured by the equity interests in our direct foreign subsidiaries and the direct subsidiaries of our domestic subsidiaries (limited to 66% of the voting interests in the direct foreign subsidiaries and 100% of the non-voting interests in such direct foreign subsidiaries), and contain customary covenants and events of default.

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      In addition to the above domestic credit facility, Bank Machine has a £2.0 million unsecured overdraft and borrowing facility that expires in July 2006. Such facility, which bears interest at 1.75% over the bank’s base rate (currently 4.50%), is utilized for general corporate purposes for our United Kingdom operations. No borrowings were outstanding under such facility as of March 31, 2006. However, Bank Machine has posted a £275,000 bond under such facility, which reduces the amount available for future borrowings under the facility to £1.725 million. We currently anticipate refinancing the existing facility for an additional one-year term upon its expiration in July 2006, with substantially the same terms and conditions.
Tabular Disclosure of Contractual Obligations
      The following table and discussion reflect our significant contractual obligations and other commercial commitments as of March 31, 2006:
                                                                 
        Nine Months                        
        Ending        
        December 31,   For the Year Ending December 31,    
                 
Contractual Obligations   Total   2006   2007   2008   2009   2010   2011   Thereafter
                                 
    (in thousands)    
Long-term debt(a)(b)
  $ 409,184     $ 12,428     $ 22,658     $ 22,658     $ 22,658     $ 73,282       18,500     $ 237,000  
Notes payable(c)
    132       132                                      
Capital lease obligations
    24       24                                      
Operating lease obligations
    5,196       2,108       1,151       631       557       306       177       266  
Merchant space lease obligations
    15,017       3,686       4,522       4,471       2,040       147       76       75  
                                                 
Total contractual obligations
  $ 429,553     $ 18,378     $ 28,331     $ 27,760     $ 25,255     $ 73,735       18,753     $ 237,341  
                                                 
 
(a)  Includes the face value of our senior subordinated notes of $200.0 million, which have been reflected net of unamortized discount of approximately $1.3 million in our consolidated financial statements, and the $45.8 million outstanding under our revolving credit facility.
 
(b) Amount includes the estimated interest payments associated with such borrowings.
 
(c)  Amount represents fully-funded notes issued in connection with the Bank Machine acquisition.
     The Company is subject to various legal proceedings and claims arising in the ordinary course of business, including certain proceedings which were previously associated with the acquired E*TRADE Access ATM business. The Company’s management does not expect that the outcome in any of these legal proceedings, individually or collectively, will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
Effects of Inflation
      Our monetary assets, consisting primarily of cash and receivables, are not significantly affected by inflation. Our non-monetary assets, consisting primarily of tangible and intangible assets, are not affected by inflation. We believe that replacement costs of equipment, furniture and leasehold improvements will not materially affect our operations. However, the rate of inflation affects our expenses, such as those for employee compensation and telecommunications, which may not be readily recoverable in the price of services offered by us.
Disclosure About Market Risk
Interest Rate Risk
      Our interest expense and our cash rental expense are sensitive to changes in the general level of interest rates in the United States and the United Kingdom, particularly because a substantial portion of our indebtedness accrues interest at floating rates and our ATM cash rental expense is based on market rates of

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interest. Our outstanding vault cash, which represents the cash we rent and place in our ATMs in cases where the merchant does not provide the cash, totaled approximately $306.4 million in the United States and approximately $52.2 million in the United Kingdom as of March 31, 2006. We pay a monthly fee on the average amount outstanding to our primary vault cash providers in the United States and the United Kingdom under a formula based on the London Interbank Offered Rate, or LIBOR. In Mexico, our vault cash rental fees are not currently subject to changes in the general level of interest rates.
      We have entered into a number of interest rate swaps to fix the rate of interest we pay on $300.0 million of our current and anticipated outstanding domestic vault cash balances through December 31, 2008, $200.0 million through December 31, 2009, and $100.0 million through December 31, 2010. We have not currently entered into any derivative financial instruments to hedge our variable interest rate exposure in the United Kingdom. The effect of the domestic swaps mentioned above was to fix the interest rate paid on the following notional amounts for the periods identified (in thousands):
                 
    Weighted Average Fixed    
Notional Amount   Rate   Period
         
$300,000
    3.65 %     April 1, 2006 — December 31, 2006  
$300,000
    3.86 %     January 1, 2007 — December 31, 2007  
$300,000
    4.35 %     January 1, 2008 — December 31, 2008  
$200,000
    4.36 %     January 1, 2009 — December 31, 2009  
$100,000
    4.34 %     January 1, 2010 — December 31, 2010  
      Net amounts paid or received under such swaps are recorded as adjustments to our cost of ATM operating revenues in the accompanying condensed consolidated statements of operations. During the three months ended March 31, 2006, there were no gains or losses recorded in the condensed consolidated statement of operations as a result of ineffectiveness associated with our existing interest rate swaps.
      Our existing interest rate swaps have been classified as cash flow hedges pursuant to SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended. Accordingly, changes in the fair values of such swaps have been reported in accumulated other comprehensive income in the accompanying condensed consolidated balance sheet. As of March 31, 2006, the accumulated unrealized gain on such swaps totaled approximately $7.3 million, net of tax.
      Based on the $306.4 million in vault cash outstanding in the United States as of March 31, 2006, and assuming no benefits from the existing interest rate hedges that are currently in place, for every interest rate increase of 100 basis points, we would incur an additional $3.1 million of vault cash rental expense on an annualized basis. Factoring in the $300.0 million in interest rate swaps discussed above, for every interest rate increase of 100 basis points, we would incur an additional $64,000 of vault cash rental expense on an annualized basis. Based on the $52.2 million in vault cash outstanding in the United Kingdom as of March 31, 2006, for every interest rate increase of 100 basis points, we would incur an additional $0.5 million of vault cash rental expense on an annualized basis.
      In addition to the above, we are exposed to variable interest rate risk on borrowings under our domestic revolving credit facility. Based on the $53.2 million in floating rate debt outstanding under such facility as of March 31, 2006, for every interest rate increase of 100 basis points, we would incur an additional $0.5 million of interest expense. Recent upward pressure on short-term interest rates in the United States has resulted in slight increases in our interest expense under our bank credit facilities and our vault cash rental expense. Although we currently hedge a substantial portion of our vault cash interest rate risk through 2010, as noted above, we may not be able to enter into similar arrangements for similar amounts in the future. Any significant increase in interest rates in the future could have an adverse impact on our business, financial condition and results of operations by increasing our operating costs and expenses.
Foreign Currency Exchange Risk
      Due to our acquisition of Bank Machine in 2005, and our recent acquisition of a majority interest in Cardtronics Mexico, we are exposed to market risk from changes in foreign currency exchange rates,

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specifically with changes in the U.S. Dollar relative to the British Pound and Mexican Peso. Our United Kingdom and Mexico subsidiaries are consolidated into our financial results and are subject to risks typical of international businesses including, but not limited to, differing economic conditions, changes in political climate, differing tax structures, other regulations and restrictions, and foreign exchange rate volatility. Furthermore, we are required to translate the financial condition and results of operations of Bank Machine and Cardtronics Mexico into U.S. Dollars, with any corresponding translation gains or losses being recorded in other comprehensive income or loss in our consolidated financial statements. As of March 31, 2006, such translation losses totaled approximately $5.4 million.
      Our future results could be materially impacted by changes in the value of the British Pound relative to the U.S. Dollar. Additionally, as our Mexico operations expand, our future results could be materially impacted by changes in the value of the Mexican Peso relative to the U.S. Dollar. At this time, we have not deemed it to be cost effective to engage in a program of hedging the effect of foreign currency fluctuations on our operating results using derivative financial instruments. A sensitivity analysis indicates that, if the U.S. dollar uniformly strengthened or weakened 10% against the British Pound, the effect upon Bank Machine’s operating income for the three months ended March 31, 2006 would have been an unfavorable or favorable adjustment, respectively, of approximately $0.3 million. Given the limited size and scope of Cardtronics Mexico’s current operations, a similar sensitivity analysis would have resulted in a negligible adjustment to Cardtronics Mexico’s financial results for the period from the acquisition date through March 31, 2006.
      We do not hold derivative commodity instruments and all of our cash and cash equivalents are held in money market and checking funds.
Adoption of New Accounting Standard
      In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment, a revision of SFAS No. 123. SFAS No. 123R eliminates the intrinsic value method of accounting for stock-based compensation, as currently allowed under APB Opinion No. 25, and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments based on the fair value of such awards on their grant date (with limited exceptions). We adopted the provisions of SFAS No. 123R effective January 1, 2006, using the prospective application method of adoption. Reference is made to Note 3 in the accompanying condensed consolidated financial statements for additional information with respect to the adoption of SFAS No. 123R, and the impact such adoption had on our financial results for the three months ended March 31, 2006.

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THE ATM INDUSTRY
History of the ATM Industry
      The first ATMs in the United States were installed in the early 1970s and by 1980 approximately 18,500 ATMs were in use throughout the nation. These ATMs initially were located at financial institution branches. As of December 2005, there were estimated to be approximately 396,000 ATMs in the United States, the majority of which were located at non-bank locations according to ATM&Debit News. A non-bank is a company that is not a federal or state chartered bank, savings and loan, credit union or other financial institution.
      Early in the development of the ATM industry, regional and national electronic authorization data networks, or electronic funds transfer networks, connected ATMs to financial institutions that were members of a particular electronic funds transfer network. Regional electronic funds transfer networks in different parts of the United States were not electronically connected to each other. For example, customers of a bank in New York could not travel to Los Angeles and access their cash at an ATM because the networks serving New York and Los Angeles were not connected. During the 1990s, many regional electronic funds transfer networks merged or entered into reciprocal processing agreements with other networks, which helped to increase ATM usage and spur consumer demand for ATM services.
      Although ATMs were originally located only at financial institution branches, they soon began to appear in a variety of off-premise locations, such as convenience stores, supermarkets, drug stores, shopping malls, hotels and airports. Deployment of off-premise ATMs, however, was impeded by the prevailing strategy among financial institutions not to charge their cardholders surcharge fees for the convenience of accessing their financial institution accounts at non-financial institution locations. Until 1996, most electronic funds transfer networks did not allow surcharge fees for ATM transactions that were routed over their networks. However, beginning in that year, the two largest electronic funds transfer networks, Cirrus and Plus, began to allow surcharge fees and other networks followed. Surcharging revenue made the deployment of off-premise ATMs economically feasible and attractive for non-financial institutions. Following this shift, the number of off-premise ATMs in the United States grew at a rapid pace.
A Typical ATM Transaction
      A typical ATM transaction involves the withdrawal of cash from an ATM. The cardholder presents an ATM card, issued by his or her financial institution, at an ATM that may or may not be owned by the same financial institution. The cardholder then enters a personal identification number, or PIN, to verify identity, the cardholder’s account is checked for adequate funds and, if everything is satisfactory, cash is dispensed. All of these communications are routed across one or more electronic funds transfer networks that electronically connect ATMs and financial institutions and allow transactions to appear seamless and nearly instantaneous.
      When a cardholder withdraws cash from an ATM that is not owned by the cardholder’s financial institution, there are two charges applied. The first charge is the surcharge fee paid by the cardholder for using the ATM. The second charge is an interchange fee that the electronic funds transfer network charges the cardholder’s financial institution for routing a transaction over its network. This fee is divided between the electronic funds transfer network routing the transaction and the ATM operator. Often, the cardholder’s financial institution also charges the cardholder a fee called a foreign fee for using an ATM not owned by that financial institution. This charge helps the financial institution defray the cost of the interchange fee it pays.
Developing Trends in the ATM Industry
      International Opportunities. In many regions of the world, ATMs are less common than in the U.S. We believe the ATM industry will grow faster in international markets than in the U.S., as the number of ATMs per capita in those markets approaches the U.S. levels. We believe some of these markets (such as the United Kingdom and Mexico) provide attractive expansion opportunities for us.

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      The United Kingdom is the third largest ATM market in Europe, after Germany and Spain. Until the late 1990s, most U.K. ATMs were installed at bank and building society branches. Non-bank operators began to deploy ATMs in the United Kingdom in December 1998 when LINK (which connects together the ATM networks of all U.K. ATM operators) allowed them entry into its network via arrangements between non-bank operators and U.K. financial institutions. We believe that non-bank ATM operators have benefited in recent years from customer demand for more conveniently located cash machines, the emergence of internet banking with no established point of presence and the closure of bank branches due to consolidation. According to APACS, a total of approximately 58,000 ATMs were deployed in the United Kingdom as of December 2005, of which approximately 25,700 were operated by non-banks. This has grown from approximately 36,700 in 2001, with less than 7,000 operated by non-banks.
      Mexico currently has approximately 23,500 ATMs operating throughout the country, most of which are owned by national and regional banks. Until recently, surcharge fees were not allowed pursuant to existing Mexican law. However, in July 2005, the Mexican government approved a measure that now allows ATM operators to charge a fee to individuals withdrawing cash from their ATMs. Given the relatively low level of penetration of ATMs in Mexico, we believe that this recent legislation provides a unique opportunity for us to capitalize on the expected growth in off-premise ATMs in Mexico.
      Bank and Network Branding Opportunities. Our primary assets are our contracts with merchants that allow us to operate ATMs in approximately 26,000 retail locations, many of which are on prime, high-traffic real estate. Many U.S. banks serving the market for consumer banking services are aggressively competing for market share, and part of their competitive strategy is to increase their number of customer touch points and to make themselves more convenient to their customers. We believe that a large owned-ATM network would be a key strategic asset for a bank, but we also believe it would be uneconomical for all but the very largest banks to build and operate an extensive ATM network, and even the largest banks do not operate nationwide ATM networks. We believe that these factors, when combined, create significant revenue and profit opportunities for us.
  •  Bank branding is a scenario in which ATMs owned and operated by us are branded, signed, and operated as if they were owned by the branding bank, and customers of the branding bank can use those machines without paying a surcharge. The bank pays us a monthly per-machine fee for such branding. Although we forego the surcharge fee on ATM transactions by the branding banks’ customers, we continue to earn interchange fees on those transactions and the monthly branding fee, and typically enjoy an increase in surchargable transactions from users who are not customers of the branding bank. We believe that a branding arrangement can substantially increase the profitability of an ATM versus operating the same machine in an unbranded mode.
 
  •  Network branding is an arrangement where a bank’s customers are allowed to use our nationwide ATM network on a surcharge-free basis. Each bank pays us a fixed fee per cardholder to participate in the network. Although we forego surcharge revenue on those transactions, we do earn interchange revenues in addition to network branding revenues, and believe that many of these transactions are incremental. Consequently, we believe that branding arrangements can enable us to profitably operate in the significant portion of the ATM transaction market that does not involve a surcharge.
      Bank and Other Financial Institution Outsourcing Opportunities. Our industry experience, vendor relationships and economy of scale advantages provide us with the opportunity to offer outsourced ATM services to banks and other financial institutions. Today, many banks and other financial institutions own significant networks of ATMs that serve as extensions of their branch networks and increase the level of service offered to their customers. Large ATM networks, however, are costly to operate and typically do not provide significant revenue for banks and other financial institutions. Large banks and other financial institutions typically incur a monthly operating expense of approximately $1,500 per off-premise ATM. On average, large non-bank ATM operators are able to operate off-premise ATMs at an approximate cost of $1,000 per month. We believe there is an opportunity for large non-bank ATM operators with low costs and an established operating history to contract with financial institutions to manage their ATM networks. Such an outsourcing arrangement could reduce a financial institution’s operational costs while extending their customer service.

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BUSINESS
Company Overview
      We operate the largest network of ATMs in the United States and are a leading independent ATM operator in the United Kingdom based on number of ATMs operated. We also recently expanded our operations into Mexico with the purchase of a majority ownership stake in CCS Mexico, an independent operator of approximately 300 ATMs located throughout the country. As of March 31, 2006, our network included approximately 26,000 ATMs. For the year ended December 31, 2005, and pro forma for our Bank Machine acquisition, our ATMs dispensed over $9.2 billion in cash and processed more than 163.2 million transactions. We deploy and operate ATMs under two distinct arrangements with our merchant partners: company-owned and merchant-owned. Under company-owned arrangements, we provide the ATM and are typically responsible for all aspects of its operation, including procuring cash, supplies and telecommunications as well as routine and technical maintenance. Under merchant-owned arrangements, the merchant owns the ATM and is responsible for providing cash and performing simple maintenance tasks, while we provide more complex maintenance services, transaction processing and connection to electronic funds transfer networks. As of March 31, 2006, approximately 46% of our ATMs were company-owned and 54% were merchant-owned. Because our margins are significantly higher on our company-owned machines as a result of the value of the breadth of services we provide, our internal and acquisition growth strategy will focus on increasing the number of company-owned ATMs in our network.
      Our domestic ATM network is strengthened by contractual relationships with leading retail merchants in a variety of businesses. Amerada Hess, BP Amoco, Chevron, Costco, CVS Pharmacy, Duane Reade, ExxonMobil, Mills Malls, Sunoco, Target and Walgreens are among our largest domestic merchants in terms of our revenues. Alfred Jones, Co-Op, Mitchells & Butlers, the U.K. Post Office, Tates, Tesco, and TM Retail are among our largest United Kingdom merchants in terms of our revenues. Our merchant customers operate high consumer traffic locations, such as convenience stores, supermarkets, membership warehouses, drug stores, shopping malls and airports. Our merchant relationships are typically governed by multi-year contracts with initial terms of five years or more.
      Our revenue is recurring in nature and is primarily derived from ATM surcharge fees paid by cardholders and interchange fees paid by their banks and other financial institutions. We generate additional revenue by branding our ATMs with signage from banks and other financial institutions, resulting in added convenience for their customers and increased usage of our ATMs. We typically provide our merchant customers with all of the services required to operate an ATM, which include transaction processing, cash management, maintenance and monitoring. We believe that we are among the low-cost providers in our industry due primarily to our substantial network of ATMs, which provides us significant scale advantages. Our focus on customer service, together with our experience and scale, has contributed to strong relationships with leading national and regional merchants in the United States and we expect to develop the same strong relationships in the United Kingdom.
      Since May 2001, we have acquired 13 networks of ATMs and one operator of a surcharge-free network, increasing the number of ATMs we operate from approximately 4,100 to approximately 26,000 as of March 31, 2006. On June 30, 2004, we acquired the ATM business of E*TRADE Access, adding approximately 13,155 ATMs to our network, and on May 17, 2005, we acquired Bank Machine, which expanded our operations to the United Kingdom and added approximately 1,000 ATMs to our network. From 2001 to 2005, the total number of annual transactions processed within our network increased from approximately 19.9 million to approximately 156.9 million.
Our Market Opportunity
      The ATM industry has undergone significant expansion in recent years, largely from growth in the number of ATMs installed as off-premise ATMs. The number of off-premise ATMs in the United States outnumbered banking branches by nearly three to one as of December 2004. Off-premise ATMs are found at locations such as convenience stores, supermarkets, membership warehouses, drug stores, shopping malls,

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hotels and airports. These locations offer a convenient alternative to obtaining cash from bank tellers or drive-through facilities. Both merchants and their customers benefit from the presence of an ATM in a store. Merchants benefit from increased consumer traffic, reduced check-writing and credit card processing fees and merchant fees received from us, while cardholders benefit from increased access to their cash.
      We believe significant growth opportunities exist for the leaders in the ATM industry for the following reasons:
      Continued industry growth. We expect that the number of transactions at off-premise ATMs will continue to grow as cardholders take advantage of the convenience and added functionality of ATMs. Approximately 78% of all ATM transactions are cash withdrawals, with the remainder representing other basic banking functions, such as balance inquiries, transfers and deposits. We believe significant opportunities exist for ATM owners and operators to provide advanced functionality, such as check cashing, off-premise deposits, withdrawals of cash from payroll cards, pre-paid cell phone replenishment and bill payment, all of which should result in increased ATM usage. We believe that these services will be attractive to that section of the U.S. population that does not have a bank account. We anticipate that we will participate in this growth as our key merchants permit us to deploy and operate ATMs in more of their existing stores and in new store locations, and as we offer more advanced functions at our ATMs.
      Bank branding and outsourcing opportunities. We believe that our large ATM network is attractive to banks and other financial institutions seeking to extend their brand and provide convenient ATM access to their customers at a lower cost. By branding our ATMs with their logos, banks and other financial institutions can interact with their customers more frequently, increase brand awareness and provide their customers increased service. A branding arrangement typically involves our receiving a monthly branding fee and results in higher profitability for us from the branded ATMs. In addition, while banks and other financial institutions have historically owned and operated most of their ATMs, some banks and other financial institutions have outsourced certain ATM management functions in order to simplify operations and lower costs. We believe that increased off-premise branding and the outsourcing of ATM management functions for banks and other financial institutions should provide substantial opportunities for additional long-term growth.
      Surcharge-free network opportunities. We believe that a majority of ATM transactions in the U.S. occur without the customer paying a surcharge, indicating that our primary surcharge-based business model addresses only a minority of the total ATM market. We believe this creates an opportunity for companies to become actively involved in surcharge-free ATM networks, in which financial institutions pay ATM operators to provide surcharge-free access to their ATM customers. This provides ATM operators with a profitable means of addressing that portion of customers who generally avoid paying surcharges.
      Industry consolidation. The ownership and operation of ATMs is a fragmented industry with the top ten operators accounting for approximately 26% of ATMs in the United States. Some ATM operators may lack the operational scale and financial resources required to compete effectively with us and other operators of large ATM networks for business and growth opportunities, which may result in sales of smaller networks by ATM operators. We believe that the existing fragmented ownership and the potential for divestitures will provide continuing acquisition opportunities for ATM operators with significant economies of scale.
      International opportunities. Many international markets are beginning to experience an increase in off-premise ATMs as surcharging becomes more prevalent and accepted in markets outside of the United States. We believe that significant growth opportunities exist in selected international markets as merchants and non-bank ATM operators seek to capitalize on growth opportunities for off-premise ATMs. For example, our recent acquisition of Bank Machine has positioned us for future growth in the United Kingdom, where off-premise ATMs have accounted for approximately 75% of the total ATM growth since 2000. Additionally, the recent acquisition of a majority interest in CCS Mexico positions us as the first ISO able to take advantage of deploying ATMs into off-premise locations in Mexico. As of March 31, 2006 the Central Bank of Mexico reports there are approximately 23,500 ATMs in Mexico and with a population of approximately 104.5 million people we believe there is significant opportunity to profitably deploy additional off-premise ATMs.

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Our Strengths
      Leading market position. The following table sets forth our leading position in the U.S. ATM market:
                         
Rank   U.S. ATM Network   ATMs   % of Total
             
   1     Cardtronics     25,116       6.3%  
   2     Bank of America     16,714       4.2%  
   3     TRM     16,329       4.1%  
   4     NetBank     9,649       2.4%  
   5     JPMorgan Chase     6,900       1.7%  
   6     Wells Fargo     6,363       1.6%  
   7     International Merchant Services     5,900       1.5%  
   8     7-Eleven Stores     5,341       1.3%  
   9     Wachovia     5,119       1.3%  
  10     U.S. Bancorp     5,003       1.3%  
                   
        (Top 10)     102,434       25.9%  
        U.S. Market     396,000       100.0%  
 
Source: ATM&Debit News, public filings and company websites, as of December 2005
     Nationwide network of leading retail merchants under multi-year contracts. Our focus on customer service, together with our experience and size, has enabled us to develop and expand relationships with national and regional merchants, such as Amerada Hess, BP Amoco, Chevron, Costco, CVS Pharmacy, Duane Reade, ExxonMobil, Mills Malls, Sunoco, Target and Walgreens, among others. Through our Bank Machine acquisition, we have recently established relationships in the United Kingdom with Alfred Jones, Co-Op, Mitchells & Butlers, the U.K. Post Office, Tates, Tesco, and TM Retail, among others. These merchants typically operate high traffic locations, which we have found to result in increased ATM activity and profitability. In addition, these relationships can provide opportunities to deploy additional ATMs in new locations. No single customer accounted for more than 6% of our total pro forma revenues for the year ended December 31, 2005, with our ten largest merchant customers cumulatively representing less than 27% of our total pro forma revenues for the year ended December 31, 2005. We believe our merchant customers value our high level of service, our 24 hour per day accessibility and our average 99% up time availability in the U.S. Due to these and other factors, we have not renewed only two of our 50 most significant merchant contracts over the last five years.
      Recurring and stable revenue and operating cash flow. We generally operate our large base of ATMs under multi-year contracts that provide us with a recurring and stable source of transaction-based revenue and typically have an initial term of five to seven years. As of March 31, 2006, our top 10 merchants had an average of approximately 4.5 years remaining on their contracts. Our recurring revenue base, relatively low and predictable maintenance capital expenditure requirements and minimal working capital requirements allow us to maintain predictable and consistent operating cash flows. On a pro forma basis, these sources of revenue accounted for approximately 96% of our total revenues for the years ended December 31, 2005 and 2004.
      Low-cost provider. We believe the size of our network combined with our operating infrastructure allows us to be among the low-cost providers in our industry. In addition, we believe our operating costs per ATM are approximately half of the operating costs incurred by bank ATM operators. We outsource some functions, such as on-site maintenance and cash management, and can take advantage of our size and market position to obtain favorable pricing from our service vendors and for the purchase of new ATMs. We believe our success to date is largely attributable to our exclusive focus on the ATM industry and our ability to provide reliable customer service in a cost-effective manner.
      Experienced and committed management team. We have a strong senior management team with a combined average of over 20 years of financial services and payment processing-related experience. Our senior management team has developed extensive relationships and a leadership position in the industry, including directorships on several industry association boards. We believe this leadership role helps us to

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attract new merchant customers and provides us with increased acquisition and bank branding opportunities. Our management team owns approximately 24% of our outstanding common stock on a fully diluted basis.
Our Strategy
      Our strategy is to enhance our position as the leading owner and operator of ATMs in the United States and to expand our network further into select foreign markets. In order to execute this strategy we will endeavor to:
      Increase penetration and ATM count with leading merchants. We have two principal opportunities to increase the number of ATM sites with our existing merchants: first, by deploying ATMs in our merchants’ existing locations that currently do not have, but where traffic volumes justify installing, an ATM; and second, as our merchants open new locations, by installing ATMs in those locations. From the beginning of 2001 through 2005, we increased the number of ATMs operated by us in the United States through organic growth by approximately 2,050. We believe our expertise, national footprint, strong record of customer service with leading merchants and our significant scale position us to successfully market to, and enter into long-term contracts with, other leading national and regional merchants.
      Capitalize on bank branding and outsourcing opportunities. We believe we are strongly positioned to work with financial institutions to fulfill their ATM requirements. Our ATM services offered to financial institutions include branding our ATMs with their logos, managing their off-premise ATM networks on an outsourced basis or buying their off-premise networks in combination with branding arrangements. We currently have branding arrangements in place with domestic financial institutions involving upwards of 2,300 ATMs.
      Capitalize on surcharge-free network opportunities. We plan to continue to pursue opportunities with respect to our surcharge-free network, where financial institutions pay us to allow surcharge-free access to our ATM network. We believe this arrangement will enable us to increase transaction counts and profitability on our existing machines.
      Pursue selected acquisition opportunities. We plan to continue to pursue selected acquisitions that complement our existing ATM network using our proven, disciplined acquisition and integration methodology. Determination of attractive acquisition targets is based on many factors, including existing merchant contract terms, potential operating efficiencies and cost savings, the quality of associated merchant relationships and our anticipated return on investment. We believe that significant expansion opportunities continue to exist in the United Kingdom and other international markets, and we are actively considering several such opportunities at the present time.
      Explore new geographic markets. In conjunction with our entry into the United Kingdom ATM market, we plan to take advantage of opportunities to reach under-penetrated markets worldwide where we can leverage the significant economies of scale, operating expertise and superior customer service capabilities we have developed domestically. Our decision to purchase a majority ownership interest in CCS Mexico in February 2006 is an example of the types of opportunities we may evaluate and pursue.
Recent Transactions
      Bank Machine Acquisition. On May 17, 2005, we acquired the ATM business of Bank Machine Limited, an independent operator of ATMs in the United Kingdom, for approximately $92.0 million in cash and 35,221 shares of our Series B Convertible Preferred Stock valued by us at approximately $3.0 million. Through this transaction, we acquired approximately 1,000 ATMs and related site agreements, of which approximately 850 were company-owned and 150 were merchant-owned ATMs. On average, these ATMs process more than twice the number of surcharge-bearing transactions and have approximately 21% higher revenue per surcharge-bearing transaction than our domestic ATMs. This acquisition also allowed us to expand our business to the United Kingdom and positions us for further expansion to other European markets.

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      E*TRADE Access Acquisition. On June 30, 2004, we acquired the ATM business of E*TRADE Access, Inc., an indirect wholly owned subsidiary of E*TRADE Financial Corp., for approximately $106.9 million in cash. Through this transaction we acquired 13,155 ATMs and related placement agreements, of which approximately 2,450 were company-owned and 10,705 were merchant-owned. As a result of this acquisition, we increased the number of ATM machines that we own or manage from approximately 12,000 to over 25,000 ATMs. This acquisition also allowed us to expand our relationships with national merchants, including Albertsons, Chevron, CVS Pharmacy and Target, through the placement agreements that we acquired.
      Other Acquisitions. On March 1, 2005, we acquired a portfolio of approximately 475 ATMs and related contracts located in independent grocery stores in and around the New York metropolitan area for approximately $8.2 million in cash. On April 21, 2005, we acquired a portfolio of approximately 330 ATMs and related contracts, at BP Amoco locations throughout the Midwest, for approximately $9.0 million in cash. Such acquisitions were funded with cash on hand and borrowings under our bank credit facilities. Substantially all of the ATMs acquired in these transactions were company-owned.
      On December 21, 2005, we acquired all of the outstanding shares of ATM National, Inc., the owner and operator of the Allpoint nationwide surcharge-free ATM network. The consideration for such acquisition totaled $4.8 million, and was comprised of $2.6 million in cash, 21,111 shares of our common stock, and the assumption of approximately $0.4 million in additional liabilities.
      In February 2006, the Company acquired a majority ownership stake in CCS Mexico, an independent ATM operator located in Mexico, for approximately $1.0 million in cash consideration and the assumption of approximately $0.4 million in additional liabilities. Additionally, the Company incurred approximately $0.3 million in transaction costs associated with this acquisition. CCS Mexico, which was renamed Cardtronics Mexico upon the completion of the Company’s investment, currently operates approximately 300 surcharging ATMs in selected retail locations throughout Mexico. With Mexico having just recently approved surcharging for off-premise ATMs, the Company anticipates placing additional surcharging ATMs in other retail establishments throughout Mexico as those opportunities arise.
      Preferred Stock Offering. On February 10, 2005, we issued 894,568 shares of our Series B Convertible Preferred Stock to investment funds controlled by TA Associates, Inc. for gross proceeds of $75.0 million, representing a 30.6% equity interest on a fully diluted basis as of such date. The net proceeds of this offering were used to redeem all of the outstanding shares of our Series A Preferred Stock and to repurchase approximately 24% of our outstanding shares of common stock and vested options to purchase our common stock. In connection with that offering, we also appointed two designees of TA Associates, Inc. to our board of directors.
      Amended and Restated Credit Facilities and Senior Subordinated Notes Offering. On May 17, 2005, in connection with our Bank Machine acquisition, we amended and restated our bank credit facilities with BNP Paribas and Bank of America, N.A. We used borrowings from these secured facilities to finance our Bank Machine acquisition and repay amounts under our prior facilities. Our bank credit facilities, as amended and restated, consisted of a revolving credit facility of up to $100.0 million, a first lien term facility of up to $125.0 million and a second lien term facility of up to $75.0 million. Substantially all of our domestic assets and 65% of the capital stock of our United Kingdom subsidiaries are pledged to secure borrowings under our bank credit facilities. Furthermore, each of our domestic subsidiaries has guaranteed our obligations under the bank credit facilities.
      On August 12, 2005, we sold $200.0 million in senior subordinated notes pursuant to Rule 144A of the Securities Act of 1933, and utilized the net proceeds from such offering, along with approximately $7.1 million in borrowings under our new revolving credit facility and cash on hand, to repay all of the outstanding borrowings under our recently executed first and second lien term loan facilities, including all accrued and unpaid interested related thereto. Additionally, the revolving credit facility was increased to a maximum borrowing capacity of $150.0 million immediately following this transaction. However, in February 2006, we amended the revolving credit facility to reduce the maximum borrowing capacity to $125.0 million

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and to remove or amend certain restrictive covenants contained in such facility. As of March 31, 2006, we had approximately $53.2 million outstanding under the facility, and the ability to borrow an additional $43.8 million based on the covenants contained in such facility. Any amounts drawn under such facility are not due until the facility’s maturity date in May 2010.
Our Products and Services
      We typically provide our leading merchant customers with all of the services required to operate an ATM, which include transaction processing, cash management, maintenance and monitoring. In connection with the operations of our or our customers’ ATMs, we generate revenue on a per-transaction basis from the surcharge fees charged to cardholders for the convenience of using ATMs and from interchange fees charged to such cardholders’ financial institutions for processing the ATM transactions. We also take advantage of the preferential pricing we receive from NCR due to our master value added reseller status and resell equipment to smaller equipment resellers and others.
      The following table provides detail relating to the number of ATMs we owned and operated under our various arrangements as of March 31, 2006.
                         
    Company-Owned   Merchant-Owned    
    ATMs   ATMs   Total
             
Number of ATMs
    11,800       14,100       25,900  
Percent of total ATMs
    46 %     54 %     100 %
Average monthly surcharge transactions per ATM
    420       261       333  
      Recently, we have entered into arrangements with financial institutions and others to brand certain of our company-owned ATMs. A branding arrangement allows a bank to expand its geographic presence for a fraction of the cost of building a branch location, and typically for less than the cost of placing one of its own ATMs at that location, allowing a bank to rapidly increase its number of branded ATM sites and, defensively, prevent other financial institutions from entering into these locations. Under these arrangements, the branding bank’s customers are typically allowed to use the branded ATM without paying a surcharge fee to us. In return, we receive monthly fees on a per-ATM basis from the branding bank, while retaining our standard fee schedule for other cardholders using the branded ATM. In addition, we typically receive increased interchange revenue as a result of increased usage of our ATMs by the branding bank’s customers. We intend to pursue additional opportunities to enter into bank branding arrangements as part of our growth strategy. As of May 31, 2006 we had branding arrangements in place with nine domestic financial institutions involving upwards of 2,300 ATMs.
      Another branding arrangement is our participation in the Allpoint nationwide surcharge-free ATM network. Cardholders of the financial institutions that are members of the network can use our ATMs free of surcharges in exchange for a payment of a fixed monthly fee per cardholder included in the network. We acquired all of the outstanding shares of ATM National, Inc., the owner and operator of this network, in December 2005. Finally, we have also allowed electronic funds transfer networks to place signage on our ATMs for which we receive a fixed fee per ATM.
      We have found that the primary factor affecting transaction volume at a given ATM is its location. Our strategy in deploying our ATMs, particularly those placed under company-owned arrangements, is to identify and deploy ATMs at locations that provide high visibility and high transaction volume. Our experience has demonstrated that the following locations often meet these criteria: convenience stores and combination convenience stores and gas stations, grocery stores, airports and major regional and national retail outlets. We have entered into multi-year agreements with a number of merchants with these types of locations, including A&P, Albertsons, Amerada Hess, Chevron, Costco, CVS Pharmacy, Duane Reade, ExxonMobil, Giant, Kroger, Mills Malls, Rite Aid, Sunoco, Target and Walgreens in the United States, and Alfred Jones, Co-Op, Mitchells & Butlers, the U.K. Post Office, Tates, Tesco, and TM Retail in the United Kingdom. We believe

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that once a cardholder establishes a pattern of using a particular ATM, the cardholder will generally continue to use that ATM.
Sales and Marketing
      Our sales and marketing team focuses on developing new relationships with national and regional merchants and on building and maintaining relationships with our existing merchants. The team is organized into groups that specialize in marketing to specific merchant industry segments, which allows us to tailor our offering to the specific requirements of each merchant customer. Our sales and marketing team is composed of 20 employees, who receive a combination of incentive-based compensation and a base salary.
      In addition to targeting new business opportunities, our sales and marketing team supports our acquisition initiatives by building and maintaining relationships with newly acquired merchants. We seek to identify growth opportunities within each merchant account by analyzing the merchant’s sales at each of its locations, foot traffic and various demographic data to determine the best opportunities for new ATM placements. We also pursue branding and outsourcing opportunities with financial institutions to manage and operate their ATM networks.
Primary Vendor Relationships
      To maintain an efficient and flexible operating structure, we outsource certain aspects of our operations, including transaction processing, cash management and maintenance. Due to the number of ATMs we operate, we believe we have obtained favorable pricing terms from most of our major vendors. We contract for the provision of the services described below in connection with our operations.
      Transaction processing. We contract with and pay fees to third parties who process transactions originating from our ATMs. These processors communicate with the cardholder’s financial institution through an electronic funds transfer network to obtain transaction authorization and settle transactions. These transaction processors include Star Systems, Fiserv and Genpass in the United States and LINK in the United Kingdom, with a majority of transactions being handled by Star Systems under a newly extended agreement that runs until August 31, 2007 and features pricing that provides discounts for higher transaction volumes. In Mexico, we utilize Prosa to process transactions originating from our ATMs
      Electronic funds transfer network services. Our transactions are routed over various electronic funds transfer networks to obtain authorization for cash disbursements and to provide account balances. Such networks include Star, Pulse, NYCE, Cirrus and Plus in the United States, LINK in the United Kingdom, and Prosa (Promocion y Operacion S.A.) in Mexico. Electronic funds transfer networks set the interchange fees that they charge to the financial institutions, as well as the amount paid to us. We attempt to maximize the utility of our ATMs to cardholders by participating in as many electronic funds transfer networks as practical.
      ATM equipment. We purchase substantially all of our ATMs from national manufacturers, including NCR, Diebold, Tidel Technologies Inc., Triton Systems, Inc. and Wincor/ Nixdorf. The large quantity of ATMs that we purchase from these manufacturers enables us to receive favorable pricing and payment terms. In addition, we maintain close working relationships with these manufacturers in the course of our business, allowing us to stay informed regarding product updates and to minimize technical problems with purchased equipment. Under our company-owned arrangements, we deploy high quality, multi-function ATMs, typically purchased from NCR, Diebold and Wincor/ Nixdorf. Under our merchant-owned arrangements, we deploy ATMs that are cost-effective and appropriate for the merchant. These are purchased from a variety of ATM vendors. Although we currently purchase a substantial majority of our ATMs from NCR, we believe our relationships with our other ATM suppliers are good and that we would be able to purchase the ATMs we require for our company-owned operations from other ATM manufacturers if we were no longer able to purchase ATMs from NCR.
      ATM maintenance. In the United States, we typically contract with third-party service providers for the provision of on-site maintenance services. We have multi-year maintenance agreements with Diebold, NCR and EFMARK in the United States. In the United Kingdom, maintenance services are provided by in-house

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technicians. In Mexico, such maintenance is currently provided by in-house technicians or local third-party contractors. However, given our expected growth in the region we are currently in negotiations with seasoned maintenance providers such as Diebold and Microformas.
      Cash management. We obtain cash to fill our company-owned, and in some cases merchant-owned, ATMs under arrangements with our cash providers, Bank of America, N.A. and Palm Desert National Bank in the United States and Alliance and Leicester Commercial Bank in the United Kingdom. We pay a LIBOR based fee on the daily outstanding cash balances. As of March 31, 2006, we had $306.4 million in cash in our domestic ATMs under these arrangements, with over 98% of this cash provided by Bank of America, N.A. under a newly extended vault cash agreement that runs until August 2, 2007. In the United Kingdom, the balance of cash held in our ATMs at December 31, 2005, was approximately $52.2 million.
      Bank of America also contracts with third parties to provide us with cash management services, which include reporting, armored courier coordination, cash ordering, cash insurance, reconciliation of ATM cash balances, ATM cash level monitoring and claims processing with armored couriers, financial institutions and processors.
      In Mexico, the cash utilized to fill our ATMs is currently provided by Bansi Bank, and totaled approximately $18.9 million pesos ($1.7 million U.S.) as of March 31, 2006. The fees for such cash are currently based on the level of transactions conducted on the underlying ATMs. However, we are currently exploring other vault cash arrangements with other financial institutions, the pricing of which may be tied to prevailing interest rates.
      Cash replenishment. We contract with armored courier services to transport and transfer cash to our ATMs. We use leading armored couriers such as Brink’s Incorporated, Loomis, Fargo & Co., EFMARK, Premium Armored Services, Inc. and Bantek West, Inc. in the United States and Brink’s and Securicor in the United Kingdom. In Mexico, such services are provided by Serbico Pan American (25% owned by Brink’s). Under these arrangements, the armored couriers pick up the cash in bulk and, using instructions received from our cash providers, prepare the cash for delivery to each ATM on the designated fill day. Following a predetermined schedule, the armored couriers visit each location on the designated fill day, load cash into each ATM by either adding additional cash into a cassette, or by swapping out the remaining cash for a new fully loaded cassette, and then balance the machine and provide cash reporting to the applicable cash provider.
Technology
      Our technology and operations platform consists of ATM equipment, ATM and internal network infrastructure, cash management and customer service. This platform is designed to provide our merchant customers with what we believe is a high quality suite of services.
      ATM equipment. In the United States and Mexico we use ATMs from national manufacturers, including NCR, Diebold, Tidel Technologies and Triton Systems. The wide range of advanced technology available from these ATM manufacturers provides our merchant customers with advanced features and reliability through sophisticated diagnostics and self-testing routines. The different machine types can perform basic functions, such as dispensing cash and displaying account information. Some of our ATMs are modular and upgradeable so they can be adapted to provide additional services in response to changing technology and consumer demand. For example, a portion of our ATMs can be upgraded to accept deposits through the installation of additional hardware and software components.
      We operate three basic types of ATMs in the United Kingdom: (1) “convenience,” which are internal to a merchant’s premises, (2) “through the wall,” which are external to a merchant’s premises, and (3) “pods,” a free-standing kiosk style ATM, also located external to a merchant’s premises. The ATMs are principally manufactured by NCR.
      Transaction processing. We place significant emphasis on providing quality service with a high level of security and minimal interruption. We have carefully selected support vendors to optimize the performance of

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our ATM network. In addition, our transaction processors provide sophisticated security analysis and monitoring 24 hours a day.
      Internal systems. Our internal systems include multiple layers of security to help protect them from unauthorized access. Protection from external sources is provided by the use of hardware and software-based security features that isolate our sensitive systems. We also use the most effective commercially available encryption technology to protect communications. On our internal network, we employ user authentication and anti-virus tools at multiple levels. These systems are protected by detailed security rules to limit access to all critical systems and, to our knowledge, our security systems have never been breached. Our systems components are directly accessible by a limited number of employees on a need- only basis. Our gateway connections to our electronic funds transfer network service providers provide us with real-time access to transaction details, such as cardholder verification, authorization and funds transfer. We have installed these communications circuits with backup connectivity to help protect us from telecommunications problems in any particular circuit.
      We use custom software that continuously monitors the performance of the ATMs in our network, including details of transactions at each ATM and expenses relating to that ATM, including fees payable to the merchant. This software permits us to generate detailed financial information for each ATM location, allowing us to monitor each location’s profitability. We analyze transaction volume and profitability data to determine whether to continue operating at a given site, how to price various operating arrangements with merchants and branding arrangements, and to create a profile of successful ATM locations so as to assist us in deciding the best locations for additional ATM deployments.
      Cash management. We have our own internal cash management department that utilizes data generated by our cash providers, internally generated data and a proprietary methodology to confirm daily orders, audit delivery of cash to armored couriers and ATMs, monitor cash balances for cash shortages, coordinate and manage emergency cash orders and audit costs from both armored couriers and cash providers.
      Our cash management department uses proprietary analytical models to determine the necessary fill frequency and load amount for each ATM. Based on location, day of the week, upcoming holidays and events and other factors, we project cash requirements for each ATM on a daily basis. After receiving a cash order from us, the cash provider transfers the requested amount of cash to a bank near the ATM where the designated armored courier can access the cash and subsequently transport it to the ATM.
      Customer service. We believe one of the factors that differentiates us from our competitors is our customer service responsiveness and proactive approach to managing any ATM downtime. We use proprietary software that continuously monitors the performance of our ATMs for service interruptions and notifies our maintenance vendors for prompt dispatch of necessary service calls.
      We also offer our merchant customers customized ATM activity reporting that includes daily, weekly or monthly transaction and uptime reporting. Our standard reporting to our merchants includes summary transaction reports that are made available in the first week of every month. In addition, in the U.S. we have developed an interactive website that allows our merchant customers to access real-time information.
      We maintain a proprietary database of transactions made on and performance metrics for all of our ATM locations. This data is aggregated into individual merchant customer profiles that are readily accessible by our customer service representatives and managers. We believe our proprietary database enables us to provide superior quality and accessible and reliable customer support.
Merchant Customers
      In the United States, we have contracts with approximately 50 major national and regional merchants, including convenience stores, supermarkets, drug stores and other high traffic retail chains, and approximately 13,700 independent merchants. Most of our merchant customers are non-exclusive partners with us. For the three months ended March 31, 2006 and for the years ended December 31, 2005 and 2004, both on an actual and pro forma basis, no single merchant customer accounted for 10% or more of our total revenues.

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      The terms of our merchant contracts vary as a result of negotiations at the time of execution. In the case of company-owned arrangements, which are typically employed with our major national and regional merchants, the contact terms vary, but typically include the following:
  •  an initial term of five to seven years;
 
  •  ATM exclusivity at locations where we install an ATM;
 
  •  protection for us against underperforming locations by permitting us to increase the surcharge fee or remove ATMs;
 
  •  in the United States, provisions permitting us to terminate or remove ATMs or renegotiate the fees paid to the merchant if surcharge fees are generally reduced or eliminated by law; and
 
  •  provisions making the merchant’s fee dependent on the number of ATM transactions.
      Our contracts under merchant-owned arrangements typically include similar terms, as well as the following additional terms:
  •  in the United States, provisions prohibiting in-store check cashing by the merchant and, in the United States and United Kingdom, the operation of any other cash-back devices;
 
  •  provisions imposing an obligation on the merchant to operate the ATM at any time his or her store is open to the public; and
 
  •  provisions, when possible, that require a merchant to have a purchaser of the merchant’s store assume our contract.
Seasonality
      Our overall business is somewhat seasonal in nature with generally fewer transactions occurring in the first quarter. We typically experience increased transaction levels during the holiday buying season at our ATMs located in shopping malls and lower volumes in the months following the holiday season. Similarly, we have seen increases in transaction volumes in the spring at our ATMs located near popular spring-break destinations. Conversely, transaction volumes at our ATMs located in regions affected by strong winter weather patterns typically decline as a result of decreases in the amount of consumer traffic through the locations in which we operate our ATMs. These declines, however, have been offset somewhat by increases in the number of our ATMs located in shopping malls and other retail locations that benefit from increased consumer traffic during the holiday buying season. We expect these location-specific and regional fluctuations in transaction volumes to continue in the future.
      In the United Kingdom, seasonality in transaction patterns tends to be similar to the seasonal patterns in the general retail market. Generally, the highest transaction volumes occur on weekend days and, thus, monthly transaction volumes will fluctuate based on the number of weekends in a given month. However, we, like other independent ATM operators, experience a drop in the number of transactions we process during the Christmas season due to consumers’ greater tendency to shop in the vicinity of free ATMs and our closure of some of our ATM sites over the Christmas break. We expect these location-specific and regional fluctuations in transaction volumes to continue in the future.
Competition
      We compete with financial institutions and other independent ATM companies for additional ATM placements, new merchant accounts and acquisitions. Several of our competitors, namely national financial institutions, are larger, more established and while these entities may have fewer ATMs than we do, they have greater financial and other resources than us. For example, our major domestic competitors include banks such as Bank of America, US Bancorp and PNC Corp., as well as non-banks such as TRM. In the United Kingdom, we compete with several large non-bank ATM operators, including Cardpoint, TRM, Scott Tod and Hanco, as well as banks such as the Royal Bank of Scotland and Lloyds, among others. In Mexico, we compete primarily with national and regional financial institutions. However, many of our competitors do not

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have a singular focus on ATM management, and we believe this focus gives us a significant competitive advantage. In addition, we believe the scale of our extensive ATM network and our focus on customer service also provide significant competitive advantages.
U.S. Government and Industry Regulation
      Our principal business, ATM network ownership and operation, is not subject to significant government regulation. However, various aspects of our business are subject to state regulation. Our failure to comply with applicable laws and regulations could result in restrictions on our ability to provide our products and services in such states, as well as the imposition of civil fines.
      Americans with Disabilities Act. The ADA currently prescribes provisions that ATMs be made accessible to and independently usable by persons with vision impairments. The Department of Justice may adopt new accessibility guidelines under the ADA that will include provisions addressing ATMs and how to make them more accessible to the disabled. Under the proposed guidelines that have been published for comment, but not yet adopted, ATM height and reach requirements would be shortened, keypads would be required to be laid out in the manner of telephone keypads, and ATMs would be required to possess speech capabilities, among other modifications. If adopted, these new guidelines would affect the manufacture of ATM equipment going forward, and could require us to retrofit ATMs in our network as those ATMs are refurbished or updated for other purposes. We are committed to ensuring that all of our ATMs comply with all applicable ADA laws. Therefore, we have been developing plans which would bring all of our ATMs into compliance with the new guidelines within the allocated time period. In connection with our E*TRADE Access acquisition, we assumed obligations related to litigation instituted by the National Federation of the Blind relating to these matters. See “Legal Proceedings.” It is possible that through either a settlement or judgment entered in this lawsuit, our obligations to implement the new accessibility guidelines may be accelerated, but we do not believe such acceleration will result in significant additional costs over our current ADA upgrade effort.
      EPP and Triple DES. Data encryption makes ATMs more tamper-resistant. Two of the more recently developed advanced data encryption methods are commonly referred to as EPP and Triple DES. We have adopted a policy that any new ATMs that we acquire from a manufacturer must be EPP and Triple DES compliant. We have budgeted $12.8 million to accomplish this encryption upgrade all of our ATMs by the end of 2007. We believe this time frame will be acceptable to the major processing networks. However, if we must accelerate our upgrade schedule, we would also be required to significantly accelerate our capital expenditures with respect to these upgrades.
      Surcharge regulation. The imposition of surcharges is not currently subject to federal regulation. There have been, however, various state and local efforts to ban or limit surcharges, generally as a result of activities of consumer advocacy groups that believe that surcharges are unfair to cardholders. Generally, United States federal courts have ruled against these efforts. We are not aware of any existing surcharging bans or limits applicable to us in any of the jurisdictions in which we currently do business. Nevertheless, there can be no assurance that surcharges will not be banned or limited in the cities and states where we operate. Such a ban or limit would have a material adverse effect on us and other ATM operators.
      Electronic funds transfer network regulations. Electronic funds transfer regional networks have adopted extensive regulations that are applicable to various aspects of our operations and the operations of other ATM network operators. The Electronic Fund Transfer Act, commonly known as Regulation E, is the major source of electronic funds transfer network regulations. The regulations promulgated under Regulation E establish the basic rights, liabilities, and responsibilities of consumers who use electronic fund transfer services and of financial institutions that offer these services. The services covered include, among other services, ATM transactions. Generally, Regulation E requires us to provide notice of the fee to be charged the consumer, establish limits on the consumer’s liability for unauthorized use of his card, provide receipts to the consumer, and establish protest procedures for the consumer. We believe that we are in material compliance with these regulations and, if any deficiencies were discovered, that we would be able to correct them before they had a material adverse impact on our business.

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U.K. Government and Industry Regulation
      In the United Kingdom, the Treasury Select Committee of the House of Commons heard evidence in 2005 from interested parties with respect to surcharges in the ATM industry. This committee was formed to investigate public concerns regarding the ATM industry. We understand that the areas of focus included adequacy of disclosure to ATM customers regarding surcharges, whether ATM providers should be required to provide free services in low-income areas and whether to limit the level of surcharges. The Committee recommended to Parliament that ATMs should be subject to the Banking Code, which is a voluntary code of practice adopted by all financial institutions in the United Kingdom. The U.K. government has yet to signal its acceptance of the Committee’s report. There is no certainty the report will be accepted. Should the report be accepted, the main impact of the Banking Code will be that ATM operators will be required to provide 30 days’ notice to the public prior to converting a surcharge-free ATM to one which charges surcharges. In practice, this notice will be achieved through the posting of signage beside the ATM for the 30 days prior to the change.
Mexico Government and Industry
      The regulation of ATMs in Mexico is controlled by the Central Bank and is similar to that of the U.S. or the U.K. in that you must have a sponsoring bank, specific signage that is required to be displayed on the exterior of the ATM and certain information regarding surcharging is required to be displayed on the screen of the ATM. Other issues like EPP and triple DES compliant upgrades are driven by global industry standards.
Legal Proceedings
      In connection with our E*TRADE Access acquisition, we assumed responsibility for a lawsuit instituted in Massachusetts Federal District Court (the “Court”) by the National Federation of the Blind (“NFB”) and the Commonwealth of Massachusetts. In this lawsuit, the plaintiffs initially sought to require E*TRADE Access to make all of the ATMs in its network “voice-enabled,” or capable of providing audible instructions to a visually-impaired person upon that person inserting a headset plug into an outlet at the ATM. In response to a motion filed by us, on February 22, 2005, the Court ruled that the plaintiffs were not entitled to this relief. Following the Court’s order, the plaintiffs filed an amended petition stating that we had failed to make ATM banking services fully accessible and independently usable by individuals who are blind. Believing that the plaintiffs’s amended petition was fatally defective in that it failed to precisely define the remedy sought by the plaintiffs, we filed a motion for summary judgment on this point. Likewise, the plaintiff’s filed a motion for summary judgment requesting the Court to issue an injunction requiring us to make our ATMs independently usable by the visually impaired. In February 2006, the Court agreed, in part, with our position and gave the NFB 90 days to specify a non-voice enabled remedy or face possible dismissal of some of their claims. In May 2006, NFB filed its response to the Court’s directive and has once again suggested to the Court that a “voice enabled” remedy is within the Court’s purview. At this date, we have not filed a response to this most recent filing by the NFB, but may do so in the near future. However, since the Court’s February 2006 order, we have filed two motions with the Court. The first motion seeks clarification of the Court’s February 2006 order on two issues, including: (i) whether the Court should dismiss that portion of the NFB’s claims against Cardtronics that are wrongly predicated on Cardtronics being deemed a banking institution; and (ii) whether the NFB must prove, with respect to certain of its claims, the date of construction on each building in which a Cardtronics ATM is installed. Our second motion challenges the NFB’s standing to bring the lawsuit. As a result of that later motion, all discovery in the case has been stayed pending the Court’s ruling on such motion. Hearings on these motions are expected in the third quarter of 2006.
      Pursuant to the ATM management agreement that we assumed in connection with the acquisition of the Winn-Dixie portfolio in 2003, Winn-Dixie was required to provide us with a rebate for most ATMs that were removed due to its store closures. Additionally, as part of that acquisition, we were designated as the beneficiary of a letter of credit under which we could make draws in the event Winn-Dixie refused to pay such rebates. Subsequent to drawing down the full $3.6 million available under such letter of credit, the former owner of the Winn-Dixie ATM portfolio initiated an arbitration action against us for restitution of a

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portion of such funds drawn by us. However, such arbitration action was settled in January 2006, the result of which had no material impact on our financial condition or results of operations.
      In the ordinary course of our business, we are subject to periodic lawsuits, investigations and claims. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, we do not believe that any currently pending legal proceeding to which we are a party, other than the litigation discussed above, will have a material adverse effect on our business, results of operations, cash flows or financial condition.
Employees
      As of March 31, 2006, we had approximately 248 employees, including approximately 12 employees that were acquired as part of the CCS Mexico acquisition in February 2006. None of our employees is represented by a union or covered by a collective bargaining agreement. We believe that our relations with our employees are good.
Facilities
      Our principal executive offices are located at 3110 Hayes Road, Suite 300, Houston, Texas 77082, and our telephone number is (281) 596-9988. We lease approximately 26,000 square feet of space under our Houston office lease and approximately 11,000 square feet in warehouse space in Houston, Texas and our satellite office in Temple, Texas. In addition we lease approximately 6,000 square feet of office space in Hatfield, Hertfordshire, England and approximately 2,400 square feet of office space in Mexico City, Mexico. Our facilities are leased pursuant to operating leases for various terms. We believe that our leases are at competitive or market rates and do not anticipate any difficulty in leasing suitable additional space upon expiration of our current lease terms.

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MANAGEMENT
Executive Officers and Directors
      The following table sets forth the names, ages and positions of our executive officers and directors.
             
Name   Age   Position
         
Jack Antonini
    53     Chief Executive Officer, President and Director
J. Chris Brewster
    57     Chief Financial Officer
Michael H. Clinard
    39     Chief Operating Officer
Thomas E. Upton
    49     Chief Administrative Officer
Drew Soinski
    47     Chief Marketing Officer
Fred R. Lummis
    53     Director and Chairman of the Board of Directors
Robert P. Barone
    68     Director
Frederick W. Brazelton
    35     Director
Ralph H. Clinard
    72     Director
Ron Coben
    48     Director
Jorge M. Diaz
    41     Director
Roger B. Kafker
    44     Director
Michael A. R. Wilson
    38     Director
Ronald Delnevo
    51     Director and Chief Executive of Bank Machine Limited
      The following biographies describe the business experience of our executive officers and directors.
      Jack Antonini has served as our President and Chief Executive Officer and as a director since January 2003. From November 2000 to December 2002, Mr. Antonini served as a consultant for JMA Consulting, providing consulting services to the financial industry. During 2000, Mr. Antonini served as chief executive officer and president of Globeset, Inc., an electronic payment products and services company. From August 1997 to February 2000, Mr. Antonini served as executive vice president of consumer banking at First Union Corporation of Charlotte, N.C. From September 1995 to July 1997, he served as vice chairman and chief financial officer of First USA Corporation, which was acquired by Bank One in June 1997. Mr. Antonini held various positions from March 1985 to August 1995 at San Antonio-based USAA Federal Savings Bank, serving as vice chairman, president and chief executive officer from August 1991 to August 1995. He is a certified public accountant and holds a bachelor of science degree in business and accounting from Ferris State University in Michigan. Mr. Antonini also serves as a director of the Electronic Funds Transfer Association.
      J. Chris Brewster has served as our Chief Financial Officer since joining us in February 2004. From September 2002 until February 2004, Mr. Brewster provided consulting services to various businesses. From October 2001 until September 2002, Mr. Brewster served as executive vice president and chief financial officer of Imperial Sugar Company, a Nasdaq-quoted refiner and marketer of sugar and related products. From March 2000 to September 2001, Mr. Brewster served as chief executive officer and chief financial officer of WorldOil.com, a privately-held Internet, trade magazine, book and catalog publishing business. From January 1997 to February 2000, Mr. Brewster served as a partner of Bellmeade Capital Partners, LLC, a merchant banking firm specializing in the consolidation of fragmented industries. From March 1992 to September 1996, he served as Chief Financial Officer of Sanifill, Inc., a New York Stock Exchange-listed environmental services company. From May 1984 to March 1992, he served as Chief Financial Officer of National Convenience Stores, Inc., a New York Stock Exchange-listed operator of 1,100 convenience stores. He holds a bachelor of science degree in industrial management from the Massachusetts Institute of Technology and a master of business administration from Harvard Business School.
      Michael H. Clinard has served as our Chief Operating Officer since he joined the company in August 1997. He holds a bachelor of science degree in business management from Howard Payne University. Mr. Clinard also serves as a director and treasurer of the ATM Industry Association.

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      Thomas E. Upton has served as our Chief Administrative Officer since February 2004. From June 2001 to February 2004, Mr. Upton served as our Chief Financial Officer and Treasurer. From February 1998 to May 2001, Mr. Upton was the chief financial officer of Alegis Group LLC, a national collections firm. Prior to joining Alegis, Mr. Upton served as a financial executive for several companies. He is a certified public accountant with membership in the Texas Society of Certified Public Accountants, and holds a bachelor of business administration degree from the University of Houston.
      Drew Soinski has served as our Chief Marketing Officer since August 2005. From October 2002 to August 2005, Mr. Soinski served as the Senior Vice President and General Manager of National Sales for First Horizon Merchant Services, a leading provider of transaction processing and bankcard acquiring services. From August 1997 through October 2002, Mr. Soinski served as the Senior Vice President and General Manager of National Sales for National Processing, Inc. Mr. Soinski holds a bachelor of science degree in business administration from the University of Central Florida.
      Fred R. Lummis has served as a director and our Chairman of the board since June 2001. Mr. Lummis is a co-founder and managing partner of The CapStreet Group, LLC, CapStreet II, L.P. and CapStreet Parallel II, L.P. From June 1998 to May 2000, Mr. Lummis served as chairman and chief executive officer of Advantage Outdoor Company, an outdoor advertising company. From September 1994 to June 1998, Mr. Lummis served as chairman and chief executive officer of American Tower Corporation, a nationwide communication tower owner and operator. Mr. Lummis now serves as a director of American Tower Corporation, Amegy Bancorporation Inc. and several private companies. Mr. Lummis holds a bachelor of arts degree in economics from Vanderbilt University and a master of business administration degree from the University of Texas at Austin.
      Robert P. Barone has served as a director since September 2001. Mr. Barone has more than 40 years of sales, marketing and executive leadership experience in various positions at Diebold, NCR, Xerox and the Electronic Funds Transfer Association. Since December 1999, Mr. Barone has served as a consultant for SmartNet Associates, Inc., a private financing service. Additionally, from May 1997 to November 1999, Mr. Barone served as Chairman of the Board of PetsHealth Insurance, Inc., a pet health insurance provider. From September 1988 to September 1994, he served as board vice-chairman, president and chief operating officer at Diebold. He holds a bachelor of business administration degree from Western Michigan University and a master of business administration degree from Indiana University. A founder and past chairman of the Electronic Funds Transfer Association, Mr. Barone is now chairman emeritus of the Electronic Funds Transfer Association.
      Frederick W. Brazelton has served as a director since June 2001. Mr. Brazelton is a partner of The CapStreet Group, which he joined in August 2000. From July 1996 to July 1998, Mr. Brazelton worked for Hicks, Muse, Tate & Furst, a private equity firm in Dallas, and from June 1994 to June 1995, he worked for Willis, Stein & Partners, a private equity firm in Chicago. He holds a bachelor of business administration from the Business Honors Program at the University of Texas at Austin and a master of business administration degree from Stanford Graduate School of Business. Mr. Brazelton also serves as the chairman of the board of directors of River Oaks Imaging and Diagnostic Group, Inc., a provider of diagnostic imaging services.
      Ralph H. Clinard has served as a director since June 2001. Mr. Clinard founded the predecessor to our company in 1989 and was with us until he retired as president and chief executive officer in January 2003. Prior to founding our predecessor, Mr. Clinard served with Exxon Corporation, an integrated oil company, working in various positions for almost 30 years. Mr. Clinard holds a bachelor of science degree in mathematics from Muskingum College and a bachelor of science degree in mechanical engineering from Pennsylvania State University. Mr. Clinard is currently retired.
      Ron Coben has served as a director since July 2002. Mr. Coben is currently the president of Think So, LLC, a marketing and business process consulting firm serving financial institutions and non-banking entities. Mr. Coben also served as the President and CEO of MessagePro, Inc. from November 2001 to May 2005. From October 1989 to June 1996, Mr. Coben was senior vice president, and from June 1996 to November 2001, Mr. Coben was executive vice president of consumer and business banking for Bank United Corp.,

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which was acquired by Washington Mutual, Inc. in February 2001. Mr. Coben also served as executive vice president at Washington Mutual, Inc. from February 2001 to November 2001. Mr. Coben holds a bachelor of business administration degree from the University of Texas at Austin.
      Jorge M. Diaz has served as a director since December 2004. Mr. Diaz has served as President and Chief Executive Officer of Personix, a division of Fiserv, since April 1994. In January 1985, Mr. Diaz co-founded National Embossing Company, a predecessor company to Personix. Mr. Diaz sold National Embossing Company to Fiserv in April 1994.
      Roger B. Kafker has served as a director since February 2005. Mr. Kafker is a Managing Director at TA Associates and concentrates on management-led buyouts and recapitalizations in growth service businesses in the financial, consumer and healthcare services industries. He serves as a Director of Clayton Holdings, CompBenefits Corporation, Florida Career College and Preferred Freezer Services. Mr. Kafker has served on the Boards of Affiliated Managers Group, Allegis Realty Investors (now UBS Realty Investors), And 1, ANSYS, Boron, LePore & Associates, Cupertino Electric, EYP Mission Critical Facilities, HVL, Monarch Dental Corporation and Thomson Advisory Group (now PIMCO Advisors). Prior to joining TA in 1989, he was employed by Bankers Trust Company of New York, where he worked on leveraged acquisitions. Mr. Kafker received a BA degree, magna cum laude, Phi Beta Kappa, in History from Haverford College and an MBA degree, with Honors, from the Harvard Business School.
      Michael A. R. Wilson has served as a director since February 2005. Mr. Wilson is a Managing Director at TA Associates where he focuses on growth investments and leveraged buyouts of financial services, business services and consumer products companies. He also serves on the Boards of Advisory Research, Inc., EYP Mission Critical Facilities and Numeric Investors. He formerly served on the Boards of United Pet Group and Chartered Marketing Services. Prior to joining TA in 1992, Mr. Wilson was a Financial Analyst in Morgan Stanley’s Telecommunications Group. In 1994, he joined Affiliated Managers Group, a TA-backed financial services start-up, as Vice President and a member of the founding management team. Mr. Wilson received a BA degree, with Honors, in Business Administration from the University of Western Ontario and an MBA degree, with Distinction, from the Harvard Business School.
      Ronald Delnevo has served as Managing Director of Bank Machine for four years and has been with Bank Machine (formerly the ATM division of Euronet) since 1998. Prior to joining Bank Machine, Mr. Delnevo served in various consulting roles in the retail sector, served as a board director of Tie Rack PLC for five years and spent seven years with British Airports Authority in various commercial roles. Mr. Delnevo was educated at Heriot Watt University in Edinburgh, and currently holds a degree in business organization and a diploma in personnel management.
Our Board of Directors and Executive Officers
      Our board of directors consists of ten persons. Members of our board are elected at our annual meeting of stockholders for terms expiring upon their resignation or until their successor is duly elected.
      Our executive officers are appointed by the board on an annual basis and serve until removed by the board or their successors have been duly appointed.
Committees of the Board
      Our board of directors has appointed an audit committee, a compensation committee and a nominating committee. The audit committee currently consists of Messrs. Barone, Coben and Clinard with Mr. Barone serving as the committee’s chairman and designated financial expert. The compensation committee currently consists of Messrs. Lummis, Wilson and Diaz and the nominating committee currently consists of Messrs. Lummis, Brazelton, Wilson and Kafker.
      On an annual basis, the audit committee selects, on behalf of our board of directors, an independent public accounting firm to be engaged to audit our financial statements, discuss with the independent auditors their independence, review and discuss the audited financial statements with the independent auditors and management and, once subject to the SEC rules and regulations, will recommend to our board of directors

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whether such audited financials should be included in our Annual Reports on Form 10-K to be filed with the SEC.
      The compensation committee reviews and either approves, on behalf of our board of directors, or recommends to the board of directors for approval (1) the annual salaries and other compensation of our executive officers and (2) individual stock and stock option grants. The compensation committee also provides assistance and recommendations with respect to our compensation policies and practices and assists with the administration of our compensation plans.
      The nominating committee assists our board of directors in fulfilling its responsibilities by identifying and approving individuals qualified to serve as members of our board of directors, selecting director nominees for our annual meetings of stockholders, subject to the nominating requirements contained in our investor’s agreement.
      We do not have a corporate governance committee. The independent directors of our board fulfill the responsibilities of a corporate governance committee by developing and recommending to our board of directors corporate governance guidelines and oversight with respect to corporate governance and ethical conduct.
Director Compensation
      We pay each of our non-employee directors $1,000 per board meeting attended. Directors who are also are employed by us do not receive fees for attending board or committee meetings. All of our directors are reimbursed for their reasonable expenses in attending board and committee meetings. In addition, we are in the process of establishing a plan which would permit each director to receive compensation for board service in the form of common shares and to defer receipt of this compensation for a period of time selected by the director that terminates no later than the date he ceases to be a director.
Executive Compensation
      The table below sets forth summary information concerning the compensation awarded to our chief executive officer and our four other most highly paid executive officers in the year ended December 31, 2005. The individuals listed below are referred to in this prospectus as our named “executive officers”.
Summary Compensation Table
                   
    Annual Compensation
     
Name and Principal Position   Salary   Bonus
         
Jack Antonini
  $ 330,750     $ 125,000 (1)
 
Chief Executive Officer, President and Director
               
J. Chris Brewster
    236,250       100,000 (1)
 
Chief Financial Officer
               
Michael H. Clinard
    220,500       100,000 (1)
 
Chief Operating Officer
               
Thomas E. Upton
    210,000       50,000 (1)
 
Chief Administrative Officer
               
Drew Soinski(2)
    128,869       158,675 (1)(3)
 
Chief Marketing Officer
               
 
(1) Reflects bonuses earned for the year ended December 31, 2005 and paid in 2006.
 
(2) Mr. Soinski joined us in August 2005.
 
(3)  Includes a relocation bonus of $33,675.

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Option Grants in Last Fiscal Year
      The following table sets forth information with respect to all stock options granted by the Company in 2005 to the named executive officers:
                                         
    Number of   % of Total            
    Securities   Options            
    Underlying   Granted to   Exercise or       Grant Date
    Options   Employees in   Base Price   Expiration   Present
    Granted(1)   Fiscal Year   ($/Share)   Date   Value $(2)
                     
Drew Soinski
    50,000       23.8%     $ 83.84       8/1/2015     $ 422,783  
 
(1)  The ten-year options granted in 2005 vest ratably over four years beginning one year following the date of grant.
 
(2)  The Black-Scholes option pricing model was utilized to determine the grant date present value of the stock options granted in 2005. Under the Black-Scholes option pricing model, the grant date present value of the stock options referred to in the table above was calculated to be $8.46 per share. The following facts and assumptions were utilized in making such calculation: (a) an unadjusted exercise price $83.84 per share; (b) a fair market value of $83.84 per share on the date of grant; (c) no dividend yield; (d) a term of five years; (e) no volatility; and (f) an assumed risk-free interest rate of 4.16%, which approximated the yield on the five year treasury note on the date of grant. No other discounts or restrictions related to the vesting or the likelihood of vesting of the stock options were applied. The resulting grant date present value per share amount was multiplied by the total number of stock options granted to determine the total grant date present value figure above.
Option Exercises in Last Fiscal Year and Year-End Option Values
      The following table presents information concerning the stock options exercised during the last fiscal year by each of our named executive officers and the fiscal year-end value of unexercised options held by each of our named officers as of December 31, 2005.
                                                 
            Number of Shares   Value of Unexercised
            Underlying Unexercised   In-the-Money
    Shares       Options at Year-End   Options at Year-End(1)
    Acquired   Value        
    on Exercise   Realized   Exercisable   Unexercisable   Exercisable   Unexercisable
                         
Jack Antonini(2)
                          $     $  
J. Chris Brewster
                15,000       30,000     $ 477,591     $ 955,182  
Michael H. Clinard
                18,683           $ 1,419,859     $  
Thomas E. Upton
                22,354       1,250     $ 1,728,278     $ 90,137  
Drew Soinski
                      50,000     $     $  
 
(1)  There was no public market for our common stock on December 31, 2005. Accordingly, we calculated these values based on an estimated price per share of $83.84, as determined by management, less the applicable exercise prices.
 
(2)  Mr. Antonini only owns restricted shares in the Company and has not been granted any options to purchase the Company’s common stock.
Employment-Related Agreements of Named Executive Officers
      Employment Agreement with Jack Antonini. In January 2003, we entered into an employment agreement with Jack Antonini. Mr. Antonini’s January 2003 employment agreement was last amended in January 2005. Under his employment agreement, Mr. Antonini receives a monthly salary of $27,562 and his term of employment runs through January 31, 2008. In addition, subject to our achieving certain performance standards set by our compensation committee, Mr. Antonini may be entitled to an annual bonus of up to 40% of his base salary. This bonus will be determined in the sole discretion of our compensation committee. Further, should we terminate Mr. Antonini without cause, he will be entitled to receive severance pay equal to his base salary for the lesser of twelve months or the number of months remaining under his employment contract.
      Employment Agreement with Michael H. Clinard. In June 2001, we entered into an employment agreement with Michael H. Clinard. Mr. Clinard’s June 2001 employment agreement was amended in January 2005. Under his employment agreement, Mr. Clinard receives a monthly salary of $18,375 and his term of employment runs through January 31, 2008. On each anniversary of the agreement, Mr. Clinard’s annual compensation is subject to increases as determined by our compensation committee in its sole discretion, with such increases being targeted to be 5% of the previous year’s base salary. In addition, subject to our

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achieving certain performance standards set by our compensation committee, Mr. Clinard may be entitled to an annual bonus of up to 15% of his base salary. This bonus will be determined in the sole discretion of our compensation committee. Further, (a) if he terminates his employment for good reason, as defined in the employment agreement, then he is entitled to continue to receive payments of base salary from us for the lesser of twelve months or the number of months remaining under his employment contract following his termination, and (b) if he dies or becomes totally disabled, as defined in the employment agreement, then he is entitled to receive the difference between his base salary and any disability benefits received by him under our disability benefit plans for the lesser of twelve months or the number of months remaining under his employment contract following his death or disability, as applicable.
      Employment Agreement with Thomas E. Upton. In June 2001, we entered into an employment agreement with Thomas E. Upton. Mr. Upton’s June 2001 employment agreement was amended in January 2005. Under his employment agreement, Mr. Upton receives a monthly salary of $17,500 and his term of employment runs through January 31, 2008. In addition, subject to our achieving certain performance standards set by our compensation committee, Mr. Upton may be entitled to an annual bonus of up to 15% of his base salary. This bonus will be determined in the sole discretion of our compensation committee. Further, should we terminate Mr. Upton without cause, or should Mr. Upton terminate his employment with us for good reason, as defined in the employment agreement, he will be entitled to receive severance pay equal to his base salary for twelve months.
      Employment Agreement with J. Chris Brewster. In March 2004, we entered into an employment agreement with J. Chris Brewster which was amended on February 10, 2005. The amended agreement provides for an initial term ending January 31, 2008. Under the amended employment agreement, Mr. Brewster is entitled to receive a current monthly base salary of $19,687, subject, on each anniversary of the agreement, to increases as determined by our board of directors in its sole discretion, with such increases being targeted to be 5% of the previous year’s base salary. In addition, subject to our achieving certain performance standards set by our compensation committee, Mr. Brewster may be entitled to an annual bonus of up to 40% of his base salary. This bonus will be determined in the sole discretion of our compensation committee. Further, should we terminate Mr. Brewster without cause, or should Mr. Brewster terminate his employment with us for good reason, as defined in the employment agreement, he will be entitled to receive severance pay equal to his base salary for twelve months.
      Employment Agreement with Drew Soinski. In July 2005, we entered into an employment agreement with Drew Soinski. Such agreement provides for an initial term ending August 1, 2008. Under the agreement, Mr. Soinski is entitled to receive a current monthly base salary of $20,833, subject, on each anniversary of the agreement, to increases as determined by our board of directors in its sole discretion, with such increases being targeted at 5% of the previous year’s base salary. In addition, subject to the achievement of certain performance standards as set by our compensation committee, Mr. Soinski may be entitled to an annual bonus of up to 50% of his base salary. The bonus will be determined in the sole discretion of our compensation committee. Further, should we terminate Mr. Soinski without cause, or should Mr. Soinski terminate his employment with us for good reason, as defined in the employment agreement, he will be entitled to receive severance pay equal to his base salary for twelve months.
      Common Provisions of Employment-Related Agreements of Named Executive Officers. Several provisions are common to the employment agreements of our named executive officers. For example:
  •  Each employment agreement requires the employee to protect the confidentiality of our proprietary and confidential information.
 
  •  Each employment agreement requires that the employee not compete with us or solicit our employees or customers for a period of 24 months following the term of his employment.
 
  •  Each employment agreement provides that the employee may be paid an annual bonus based on certain factors and objectives set by our compensation committee, with the ultimate amount of any bonus paid determined at the direction of our compensation committee.
Compensation Committee Interlocks and Insider Participation
      None of our executive officers has served as a director or member of the compensation committee of any other entity whose executive officers served as a director or member of our compensation committee.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Preferred Stock Private Placement
      In February 2005, we issued 894,568 shares of our Series B Convertible Preferred Stock to investment funds controlled by TA Associates, Inc. for aggregate gross proceeds of $75.0 million. In connection with this offering, we also appointed Michael Wilson and Roger Kafker, who are designees of TA Associates, Inc. to our board of directors. Approximately $24.8 million of the net proceeds of this offering were used to redeem all of the outstanding shares of our Series A Preferred Stock from affiliates of The CapStreet Group, LLC. The remaining net proceeds were used to repurchase approximately 24% of our outstanding shares of common stock, and vested options to purchase our common stock, at a price per share of $83.8394, pursuant to an offer to purchase such shares of stock from all of our stockholders on a pro rata basis. As part of this transaction, we repurchased 353,878 shares of our common stock from affiliates of The CapStreet Group for $29.7 million. We also repurchased shares of common stock from our executive officers and directors as described below under “— Transactions with Our Directors and Officers.”
      After the maturity of the notes offered hereby, or February 10, 2012 in the event the notes are no longer outstanding, holders of a majority of the outstanding shares of our Series B Convertible Preferred Stock may cause us to redeem all of the outstanding shares of preferred stock at the original issuance price less any dividends or distributions previously paid on such shares. In the event that we do not have sufficient funds legally available to redeem all outstanding shares of preferred stock upon an election of redemption, we would be required to pay interest on such unpaid amounts of 10% per annum, increasing 0.5% each quarter. If we are unable to redeem all shares of preferred within 180 days of an election of redemption, the holders of our preferred stock would be entitled to appoint a majority of our board of directors.
Investors Agreement
      On June 4, 2001, we entered into an investors agreement with CapStreet II, L.P., CapStreet Parallel II, L.P., Ralph H. Clinard, a current director and our then president and chief executive officer, Michael H. Clinard, our chief operating officer, Brian R. Archer, our executive vice president of marketing, and the other stockholders of the company. We amended and restated our investors agreement in connection with our February 2005 preferred stock offering and further amended our investors agreement in connection with our acquisition of Bank Machine in April 2005. All of our stockholders are parties to the investors agreement.
      The following description of the investors agreement, as amended, may be helpful to your understanding of the relationships among our stockholders. You should be aware that the investors agreement, other than the provisions relating to registration rights, will be terminated in connection with an initial public offering of our common stock.
      Board Composition. Our board of directors consists of ten individuals designated in accordance with our investors agreement. Our stockholders agreed to vote their shares to elect to the board of directors two nominees designated by CapStreet; two nominees designated by TA Associates; Ralph Clinard, for so long as he owns 10% or more of our stock; our Chief Executive Officer; Ronald Delnevo, the Chief Executive Officer of our United Kingdom operations; and up to three additional independent directors nominated by our nominating committee. CapStreet designated Fred R. Lummis and Frederick W. Brazelton as its board nominees and TA Associates designated Michael Wilson and Roger Kafker as its board nominees. Our investors agreement also requires our board of directors to maintain a nominating committee comprised of the CapStreet and TA Associates board nominees and a compensation committee comprised of one CapStreet board nominee, one TA Associate nominee and one independent director.
      Preemptive Rights and Transfer Provisions. Under our investors agreement, if we propose to issue shares of our common stock, other than in connection with a public offering, issuances to employees and directors and certain corporate transactions, we must provide each of our stockholders who is an accredited investor the opportunity to purchase a pro rata amount of such securities. In addition, in the event a stockholder proposes to transfer any of our shares of common stock, each of our other stockholders has the

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right to purchase such shares. We have a right of first refusal to purchase any such shares that are not purchased by our stockholders.
      Repurchase Option. Under the investors agreement, if any employee who is employed pursuant to a written employment agreement is terminated from employment with us for cause (as defined in their respective employment agreements with us), then we, at our option, may purchase all of the securities held by such person for a purchase price equal to the fair market value of such securities.
      Business Opportunities. CapStreet and TA Associates are private equity funds, and they invest in, have representatives who serve on the board of directors and other governing boards of, serve as officers of, provide services to and have minority and controlling ownership interests in existing and future portfolio companies. We have agreed that, except for opportunities that come to the attention of any of the board designees of CapStreet or TA Associates, in his or her capacity as a director of the company, the relationship between us and CapStreet and TA Associates will not prohibit any of them from engaging in activities related to their operations as private equity fund for their own account, or require any of them to make any business opportunities available to us, even if any of their activities or business opportunities competes with the our business.
      Registration Rights. The investors agreement grants each of CapStreet and TA Associates the right to demand that we file a registration statement with the SEC to register the sale of all or a portion of their shares of common stock. Subject to certain limitations, we will be obligated to register these shares upon the demand of CapStreet or TA Associates, for which we will be required to pay the registration expenses. In connection with any such demand registration, the other stockholders who are parties to the investors agreement may be entitled to include their shares in that registration under certain piggyback registration rights granted under the investors agreement to these other stockholders. In addition, if we propose to register equity securities for our own account, the stockholders who are parties to the investors agreement may be entitled to include their shares in that registration as well. In connection with any registration, we will pay the expenses of any such selling stockholders and indemnify each holder of registrable securities covered by a registration statement against liabilities arising out of or related to such registration statement or the preliminary registration statement or registration statement included as part of such registration statement.
Transactions with our Directors and Officers
      Fred R. Lummis, the chairman of our board of directors, is also a managing director of The CapStreet Group, LLC, the ultimate general partner of CapStreet II, L.P. and CapStreet Parallel II, L.P., our shareholders. Frederick W. Brazelton, one of our directors, is also a partner of The CapStreet Group, LLC. CapStreet II, L.P. and CapStreet Parallel II, L.P. together own a majority interest in MessagePro, Inc., and Fred R. Lummis and Frederick W. Brazelton are each members of the board of directors of MessagePro, Inc. Michael Wilson and Roger Kafker, our directors, are each managing directors of TA Associates, affiliates of which are our shareholders and own a majority of our outstanding shares of Series B Preferred Stock.
      Prior to the completion of this exchange offer, we had loans outstanding to the following executive officers: Mr. Antonini, who borrowed $940,800 from us during 2003 to purchase 80,000 of our restricted shares, of which $884,466 is currently outstanding, including accrued interest; Mr. Michael Clinard, who borrowed $292,342 from us during 2003 to exercise stock options and purchase 43,484 shares of our common stock, of which $226,666 is currently outstanding, including accrued interest; and Mr. Upton, who borrowed $131,205 from us during 2003 to exercise stock options and purchase 21,104 shares of our common stock, of which $101,731 is currently outstanding, including accrued interest. Additionally, Mr. Ralph Clinard borrowed $442,319 from us during 2003 to exercise stock options and purchase 64,938 shares of our common stock. Mr. Ralph Clinard repaid his loan in full on January 15, 2004. The rate of interest on each of these loans is 5% per annum. Additionally, during 2003 we made loans in an aggregate amount of approximately $500,000 to some of our non-executive officers sufficient for those non-executive officers to exercise stock options, of which approximately $323,790 is currently outstanding. The interest rate on these loans is 5% per annum. It is currently anticipated that the above-referenced loans with our executive officers will be repaid in full, including any accrued but unpaid interest related thereto, prior to the effective date of this prospectus. Such

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repayments shall be made either in cash or by the tendering of shares of our common stock, as currently held by such executive officers, at fair market value as determined by an independent third-party appraisal firm.
      In 2003, our board of directors approved the issuance of 80,000 shares of restricted stock to Jack Antonini in exchange for a promissory note in the amount of $940,800, or $11.76 per share. The terms of his restricted stock award are set forth in a restricted stock agreement between us and Mr. Antonini. Beginning on the date of grant, Mr. Antonini, as the owner of the shares, has the right to vote his shares. Under the restricted stock agreement, we may repurchase a portion of Mr. Antonini’s shares prior to January 20, 2007 in some circumstances such as the termination of his employment for cause. The agreement also contained a provision allowing Mr. Antonini to “put” to us an amount of his restricted shares sufficient to retire the entire unpaid principal balance of the promissory note plus accrued interest. On February 4, 2004, we and Mr. Antonini amended the restricted stock agreement to remove Mr. Antonini’s “put” right. Mr. Antonini is a signatory to our investors agreement and has tag-along rights thereunder with respect to the restricted shares, meaning that if any securityholder that is a party to the investors agreement proposes to transfer greater than 5% of our outstanding securities, Mr. Antonini will have the right to transfer a pro rata portion of his restricted shares.
      Pursuant to our offer to repurchase shares of our common stock using a portion of the net proceeds from our February 2005 preferred stock offering, we purchased shares of our common stock from each of our executive officers and directors at a price per share of $83.8394. We purchased 9,492 shares from Jack Antonini, 23,453 shares from Michael Clinard, 7,956 shares from Thomas Upton, and 130,737 shares from Ralph Clinard.

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PRINCIPAL STOCKHOLDERS
      The following table sets forth information regarding the beneficial ownership of our common stock as of May 31, 2006:
  •  each person known to us to beneficially own more than 5% of the outstanding shares of our common stock;
 
  •  each of the executive officers identified in the summary compensation table;
 
  •  each of our directors; and
 
  •  all directors and named executive officers as a group.
      Footnote 1 below provides a brief explanation of what is meant by the term “beneficial ownership.” Except as indicated in the footnotes to this table and subject to applicable community property laws, the persons named in this table have the sole voting power with respect to all shares of common stock listed as beneficially owned by them. The address for each executive officer and director set forth below, unless otherwise indicated, is c/o Cardtronics, Inc., 3110 Hayes Road, Suite 300, Houston, Texas 77082. The address of each of CapStreet II, L.P., CapStreet Parallel II, L.P., and Messrs. Lummis and Brazelton is c/o The CapStreet Group, LLC, 600 Travis Street, Suite 6110, Houston, Texas 77002. The address of TA Associates, Inc. and Messrs. Wilson and Kafker is c/o TA Associates, High Street Tower, 125 High Street, Suite 2500, Boston, Massachusetts 02110.
                 
    Number of Shares   Percent of
    of Common Stock   Common Stock
Name of Beneficial Owner(1)   Beneficially Owned   Beneficially Owned
         
5% Stockholders:
               
CapStreet II, L.P. 
    1,017,958       34.5 %
CapStreet Parallel II, L.P. 
    119,501       4.0 %
TA Associates, Inc.(2)
    894,568       30.3 %
Ralph H. Clinard(3)
    420,225       14.2 %
Directors and Executive Officers:
               
Fred R. Lummis(4)
    1,137,459       38.5 %
Michael Wilson(5)
    894,568       30.3 %
Roger Kafker(6)
    894,568       30.3 %
Jack Antonini
    70,508       2.4 %
Michael H. Clinard(7)
    75,382       2.6 %
Thomas E. Upton(8)
    36,752       1.2 %
J. Chris Brewster(9)
    30,000       1.0 %
Ronald Delnevo(10)
    23,209       *  
Robert P. Barone(11)
    4,316       *  
Frederick W. Brazelton
           
Ron Coben(12)
    4,316       *  
Jorge M. Diaz(13)
    1,250       *  
All executive officers and directors as a group (13 persons)
    2,697,985       91.3 %
 
 *   
Less than 1% of the outstanding common stock.

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 (1)
“Beneficial ownership” is a term broadly defined by the SEC in Rule 13d-3 under the Exchange Act, and includes more than the typical forms of stock ownership, that is, stock held in the person’s name. The term also includes what is referred to as “indirect ownership,” meaning ownership of shares as to which a person has or shares investment or voting power. For the purpose of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares as of February 28, 2006 that such person or group has the right to acquire within 60 days after such date.
 
 (2)
The shares owned by TA Associates, Inc. through certain of its affiliated funds, including TA IX L.P., TA/ Atlantic and Pacific IV L.P., TA/ Atlantic and Pacific V L.P., TA Strategic Partners Fund A L.P., TA Strategic Partners Fund B L.P., TA Investors II, L.P., which we collectively refer to as the TA Funds, are Series B Preferred shares which are convertible into our common stock on a share for share basis.
 
 (3)
Mr. Clinard is a member of our board of directors.
 
 (4)
The shares indicated as being beneficially owned by Mr. Lummis are owned directly by CapStreet II, L.P. and CapStreet Parallel II, L.P. Mr. Lummis serves as a Managing Director of The CapStreet Group, the ultimate general partner of both CapStreet II, L.P. and CapStreet Parallel II, L.P. As such, Mr. Lummis may be deemed to have a beneficial ownership of the shares owned by CapStreet II, L.P. and CapStreet Parallel II, L.P. Mr. Lummis disclaims beneficial ownership of such shares.
 
 (5)
Mr. Wilson serves as a Managing Director of TA Associates, Inc., the ultimate general partner of the TA Funds. As such, Mr. Wilson may be deemed to have a beneficial ownership of the shares owned by the TA Funds. Mr. Wilson disclaims beneficial ownership of such shares.
 
 (6)
Mr. Kafker serves as a Managing Director of TA Associates, Inc., the ultimate general partner of the TA Funds. As such, Mr. Kafker may be deemed to have a beneficial ownership of the shares owned by the TA Funds. Mr. Kafker disclaims beneficial ownership of such shares.
 
 (7)
Includes options to purchase 18,683 shares of common stock exercisable by Michael H. Clinard.
 
 (8)
Includes options to purchase 23,604 shares of common stock exercisable by Thomas E. Upton.
 
 (9)
Represents options to purchase 30,000 shares of common stock exercisable by J. Chris Brewster.
 
(10)
Represents 13,209 shares of our Series B Preferred stock which are convertible into our common stock on a share for share basis and options to purchase 10,000 shares of common stock exercisable by Ronald Delnevo.
 
(11)
Represents options to purchase 4,316 shares of common stock exercisable by Robert P. Barone.
 
(12)
Represents options to purchase 3,937 shares of common stock exercisable by Ron Coben.
 
(13)
Represents options to purchase 1,250 shares of common stock exercisable by Jorge Diaz.

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DESCRIPTION OF OTHER INDEBTEDNESS
Bank Credit Facilities
      On May 17, 2005, in connection with the acquisition of Bank Machine, we replaced our then existing bank credit facility with new facilities provided by BNP Paribas and Bank of America, N.A. Such facilities were comprised of (i) a revolving credit facility of up to $100.0 million, (ii) a first lien term facility of up to $125.0 million, and (iii) and a second lien term facility of up to $75.0 million. Borrowings under the facilities were utilized to repay our existing bank credit facility in full and to fund the acquisition of Bank Machine. As of December 31, 2005, the first and second lien term facilities were fully repaid and retired, as discussed below, and approximately $45.8 million was outstanding under the new revolving credit facility.
      On August 12, 2005, we sold $200.0 million in senior subordinated notes pursuant to Rule 144A of the Securities Act of 1933, and utilized the net proceeds from such offering, along with approximately $7.1 million in borrowings under our new revolving credit facility and cash on hand, to repay all of the outstanding borrowings under our recently executed first and second lien term loan facilities, including all accrued and unpaid interest related thereto. Additionally, the revolving credit facility was increased to a maximum borrowing capacity of $150.0 million immediately following this transaction. However, in February 2006, we amended the revolving credit facility to remove and modify certain restrictive covenants contained within the facility and to reduce the maximum borrowing capacity from $150.0 million to $125.0 million. Although the maximum borrowing capacity was reduced, the overall effect of the amendment was to increase our liquidity and financial flexibility through the removal and modification of certain restrictive covenants, as contained in the previous revolving credit facility. Such covenants, which were originally structured to accommodate an acquisitive growth strategy, have either been eliminated or modified to reflect a greater reliance on our internal growth initiatives, as previously discussed. As a result of this amendment, we had approximately $43.8 million in borrowing capacity under the revolving credit facility as of March 31, 2006. Additionally, we recorded a pre-tax charge of approximately $0.5 million associated with the write-off of previously deferred financing costs related to the facility in connection with this amendment. Any amounts drawn under the revolving credit facility are not due until the facility’s final maturity date in May 2010.
      As noted above, we are required to comply with certain restrictive covenants that are contained in our amended revolving credit facility, including (i) limitations on the amount of senior debt that we can have outstanding at any given point in time, (ii) the maintenance of a set ratio of earnings to fixed charges, as computed on a rolling 12-month basis, and (iii) limitations on the amount of capital expenditures that we can incur on a rolling 12-month basis.
      Borrowings under our revolving credit facility bear interest at a variable rate based upon the London Interbank Offered Rate (“LIBOR”) or prime rate, at our option. At March 31, 2006, the weighted average interest rate on our outstanding facility borrowings was approximately 7.8%. Borrowings are secured by a lien on substantially all of our domestic subsidiaries’ assets (excluding equity interests in foreign subsidiaries). The borrowings are also secured by the equity interests in our direct foreign subsidiaries and the direct subsidiaries of our domestic subsidiaries (limited to 66% of the voting interests in the direct foreign subsidiaries and 100% of the non-voting interests in such direct foreign subsidiaries), and contain customary covenants and events of default.
      In addition to the above domestic credit facility, Bank Machine has a £2.0 million unsecured overdraft and borrowing facility that expires in July 2006. Such facility, which bears interest at 1.75% over the bank’s base rate (currently 4.50%), is utilized for general corporate purposes for our United Kingdom operations. No borrowings were outstanding under such facility as of March 31, 2006. However, Bank Machine has posted a £275,000 bond under such facility, which reduces the amount available for future borrowings under the facility to £1.725 million. We currently anticipate refinancing the existing facility for an additional one-year term upon its expiration in July 2006, with substantially the same terms and conditions.

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ATM Cash Management Agreements
      In the U.S., we rely on agreements with Bank of America, N.A. and with Palm Desert National Bank to provide use with all of the cash that we use in approximately 10,750 of our domestic ATMs where cash is not provided by the merchant. In addition, we rely on agreements with Alliance & Leicester Commercial Bank to provide us with all of the cash that we use in approximately 750 of our United Kingdom. ATMs where cash is not provided by the merchant. In Mexico, we currently relay on Bansi Bank to provide us with the cash we need for ATMs where cash is not provided by the merchant. As of March 31, 2006, the balance of cash held in our domestic ATMs was approximately $306.4 million, over 98% of which was supplied by Bank of America. In the United Kingdom, the balance of cash held in our ATMs as of March 31, 2006 was approximately $52.2 million. In Mexico, the balance of cash in our ATMs as of March 31, 2006 was approximately $18.9 million pesos ($1.7 million U.S.). We pay a fee for our usage of this cash on the total amount of vault cash that we are using at any given time. At all times during the use of this cash, it belongs to the cash providers, and we are unable and prohibited from obtaining access to such cash. Based on the foregoing, such cash, and the related obligations, are not reflected in our consolidated financial statements.

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DESCRIPTION OF THE NEW NOTES
      The New Notes will be issued, and the outstanding notes were issued, under an Indenture dated as of August 12, 2005 (the “Indenture”) among the Company, the Initial Guarantors and Wells Fargo Bank, National Association, as trustee (the “Trustee”), in a private transaction that is not subject to the registration requirements of the Securities Act. See “Notice to Investors.” The terms of the New Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).
      The following description is a summary of the material provisions of the Indenture. It does not restate that agreement in its entirety. We urge you to read the Indenture because it, and not this description, defines your rights as holders of the New Notes. The Company has filed the Indenture for an exhibit to the registration statement of which this prospectus is a part.
      You can find the definitions of certain terms used in this description below under the caption “— Certain Definitions.” Certain defined terms used in this description but not defined below under the caption “— Certain Definitions” have the meanings assigned to them in the Indenture. In this description, the word “Company” refers only to Cardtronics, Inc. and not to any of its subsidiaries and the “Notes” refer to the New Notes and the outstanding notes.
      If the exchange offer contemplated by this prospectus (the “Exchange Offer”) is consummated, Holders of outstanding notes who do not exchange those notes for new notes in the Exchange Offer will vote together with Holders of new notes for all relevant purposes under the Indenture. In that regard, the Indenture requires that certain actions by the Holders thereunder (including acceleration following an Event of Default) must be taken, and certain rights must be exercised, by specified minimum percentages of the aggregate principal amount of the outstanding securities issued under the Indenture. In determining whether Holders of the requisite percentage in principal amount have given any notice, consent or waiver or taken any other action permitted under the Indenture, any outstanding notes that remain outstanding after the Exchange Offer will be aggregated with the new notes, and the Holders of such outstanding notes and the new notes will vote together as a single series for all such purposes. Accordingly, all references herein to specified percentages in aggregate principal amount of the notes outstanding shall be deemed to mean, at any time after the Exchange Offer is consummated, such percentages in aggregate principal amount of the outstanding notes and the new notes then outstanding.
Brief Description of the Notes
      The Notes:
  •  are general unsecured obligations of the Company;
 
  •  are subordinated in right of payment to all existing and future Senior Debt of the Company, including the Indebtedness of the Company under the Credit Agreement;
 
  •  are pari passu in right of payment with all existing and any future senior subordinated Indebtedness of the Company;
 
  •  are senior in right of payment to all existing and any future subordinated Indebtedness of the Company;
 
  •  are guaranteed by the Guarantors as described under “— Note Guarantees”; and
 
  •  are effectively subordinated to all existing and any future Indebtedness and other liabilities of the Company’s Subsidiaries that are not Guarantors.
      As of May 31, 2006, the Company and Initial Guarantors had outstanding Indebtedness of approximately $48.1 million, all of which was Senior Debt, and the Company’s subsidiaries that are not guaranteeing the Notes had approximately $9.4 million of indebtedness and other liabilities, not including intercompany liabilities. All of the Senior Debt outstanding as of the date of this filing represents borrowings

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under our existing bank credit facility, none of which is held by the Initial Guarantors. However, the Initial Guarantors have been designated as guarantors of such Senior Debt.
      As of the date of this prospectus, all of our subsidiaries are “Restricted Subsidiaries.” However, under the circumstances described below under the caption “— Certain Covenants — Designation of Restricted and Unrestricted Subsidiaries,” we will be permitted to designate certain of our subsidiaries as “Unrestricted Subsidiaries.” Any Unrestricted Subsidiaries will not be subject to any of the restrictive covenants in the Indenture and will not guarantee the Notes.
      Any outstanding notes that remain outstanding after the completion of the Exchange Offer, together with the new notes issued in connection with the Exchange Offer and any other notes issued under the indenture then outstanding, will be treated as a single class of securities under the Indenture.
Principal, Maturity and Interest
      The Indenture provides for the issuance by the Company of Notes with an unlimited principal amount, of which $200.0 million were issued on August 12, 2005. The Company may issue additional notes (the “Additional Notes”) from time to time. Any offering of Additional Notes is subject to all of the covenants of the Indenture, including the covenant described below under the caption “— Certain Covenants — Incurrence of Indebtedness”. The Notes and any Additional Notes subsequently issued under the Indenture would be treated as a single class for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. The Company will issue Notes in denominations of $1,000 and integral multiples of $1,000. The Notes will mature on August 15, 2013.
      Interest on the Notes will accrue at the rate of 9.250% per annum and will be payable semi-annually in arrears on February 15 and August 15, commencing on February 15, 2006. The Company will make each interest payment to the Holders of record on the immediately preceding February 1 and August 1. Any Additional Interest due will be paid on the same dates as interest on the Notes. See “— Registration Rights; Additional Interest.”
      Interest on the New Notes will accrue from August 12, 2005 or, if interest has already been paid, on the Notes, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
Methods of Receiving Payments on the Notes
      If a Holder has given wire transfer instructions to the Company, the Company will pay all principal, interest and premium and Additional Interest, if any, on that Holder’s Notes in accordance with those instructions. All other payments on Notes will be made at the office or agency of the Paying Agent and Registrar within The City and State of New York unless the Company elects to make interest payments by check mailed to the Holders at their addresses set forth in the register of Holders.
Paying Agent and Registrar for the Notes
      The Trustee will initially act as Paying Agent and Registrar. The Company may change the Paying Agent or Registrar without prior notice to the Holders, and the Company or any of its Subsidiaries may act as Paying Agent or Registrar.
Transfer and Exchange
      A Holder may transfer or exchange Notes in accordance with the Indenture and the procedures described in “Notice to Investors.” The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed.

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      The registered Holder of a Note will be treated as the owner of it for all purposes.
Note Guarantees
      The Notes are guaranteed, jointly and severally, by the Initial Guarantors. Each Note Guarantee:
  •  is a general unsecured obligation of that Guarantor;
 
  •  is subordinated in right of payment to all existing and future Senior Debt of that Guarantor, including the Guarantee by that Guarantor of Indebtedness under the Credit Agreement;
 
  •  is pari passu in right of payment with all existing and any future senior subordinated Indebtedness of that Guarantor; and
 
  •  is senior in right of payment to all existing and any future subordinated Indebtedness of that Guarantor.
      Each Note Guarantee will be subordinated to the prior payment in full of all Senior Debt of that Guarantor. The obligations of each Guarantor under its Note Guarantee will be limited as necessary to prevent that Note Guarantee from constituting a fraudulent conveyance under applicable law. See “Risk Factors — The guarantees may not be enforceable because of fraudulent conveyance laws.” As of March 31, 2006, the Initial Guarantors had outstanding Indebtedness of approximately $53.2 million, all of which was Guarantees of Indebtedness under the Credit Agreement, and the Company’s subsidiaries that are not guaranteeing the Notes had approximately $12.0 million of indebtedness and other liabilities, not including intercompany liabilities. See “— Certain Covenants — Guarantees.”
Subordination
      The payment of principal, interest and premium and Additional Interest, if any, on the Notes is subordinated to the prior payment in full in cash or Cash Equivalents of all Senior Debt of the Company, including Senior Debt of the Company Incurred after the Issue Date.
      The holders of Senior Debt of the Company are entitled to receive payment in full in cash or Cash Equivalents of all Obligations due in respect of Senior Debt of the Company (including interest after the commencement of any bankruptcy proceeding at the rate specified in the documentation for the applicable Senior Debt of the Company) before the Holders of Notes are entitled to receive any payment with respect to the Notes (except that Holders of Notes may receive and retain Permitted Junior Securities and payments made from the trusts described below under the captions “— Legal Defeasance and Covenant Defeasance” or “— Satisfaction and Discharge”), in the event of any distribution to creditors of the Company in connection with:
        (1) any liquidation or dissolution of the Company;
 
        (2) any bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property;
 
        (3) any assignment for the benefit of creditors; or
 
        (4) any marshaling of the Company’s assets and liabilities.
      The Company also may not make any payment in respect of the Notes (except in Permitted Junior Securities or from the trusts described under the captions “— Legal Defeasance and Covenant Defeasance”) if:
        (1) a default (a “payment default”) in the payment of principal, premium or interest on Designated Senior Debt of the Company occurs and is continuing; or
 
        (2) any other default (a “nonpayment default”) occurs and is continuing on any series of Designated Senior Debt of the Company that permits holders of that series of Designated Senior Debt of

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  the Company to accelerate its maturity, and the Trustee receives a notice of such default (a “Payment Blockage Notice”) from a representative of the holders of such Designated Senior Debt.
      Payments on the Notes may and will be resumed:
        (1) in the case of a payment default on Designated Senior Debt of the Company, upon the date on which such default is cured or waived; and
 
        (2) in case of a nonpayment default on Designated Senior Debt of the Company, the earlier of (x) the date on which such default is cured or waived, (y) 179 days after the date on which the applicable Payment Blockage Notice is received and (z) the date the Trustee receives notice from the representative for such Designated Senior Debt rescinding the Payment Blockage Notice, unless, in each case, the maturity of such Designated Senior Debt of the Company has been accelerated.
      No new Payment Blockage Notice may be delivered unless and until:
        (1) 360 days have elapsed since the delivery of the immediately prior Payment Blockage Notice; and
 
        (2) all scheduled payments of principal, interest and premium and Additional Interest, if any, on the Notes that have come due have been paid in full in cash or Cash Equivalents.
      No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee will be, or be made, the basis for a subsequent Payment Blockage Notice unless such default has been cured or waived for a period of not less than 90 days.
      If the Trustee or any Holder of the Notes receives a payment in respect of the Notes (except in Permitted Junior Securities or from the trusts described below under the captions “— Legal Defeasance and Covenant Defeasance”) when:
        (1) the payment is prohibited by these subordination provisions; and
 
        (2) the Trustee or the Holder has actual knowledge that the payment is prohibited (provided that such actual knowledge will not be required in the case of any payment default on Designated Senior Debt),
the Trustee or the Holder, as the case may be, will hold such payment in trust for the benefit of the holders of Senior Debt of the Company. Upon the proper written request of the holders of Senior Debt of the Company or, if there is any payment default on any Designated Senior Debt, the Trustee or the Holder, as the case may be, will deliver the amounts in trust to the holders of Senior Debt of the Company or their proper representative.
      The Company must promptly notify holders of its Senior Debt if payment of the Notes is accelerated because of an Event of Default.
      As a result of the subordination provisions described above, in the event of a bankruptcy, liquidation or reorganization of the Company, Holders of Notes may recover less ratably than other creditors of the Company.
      Payments under the Note Guarantee of each Guarantor are subordinated to the prior payment in full of all Senior Debt of such Guarantor, including Senior Debt of such Guarantor Incurred after the Issue Date, on the same basis as provided above with respect to the subordination of payments on the Notes by the Company to the prior payment in full of Senior Debt of the Company. See “Risk Factors — Your right to receive payments on the notes will be junior to our existing and future senior debt, and the guarantees of the notes are junior to all of the guarantors’ existing and future senior debt.”

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      “Designated Senior Debt” means:
        (1) any Indebtedness outstanding under the Credit Agreement; and
 
        (2) to the extent permitted under the Credit Agreement, any other Senior Debt permitted under the Indenture the amount of which is $25.0 million or more and that has been designated by the Company as “Designated Senior Debt.”
      “Permitted Junior Securities” means:
        (1) Equity Interests in the Company or any Guarantor or any other business entity provided for by a plan or reorganization; and
 
        (2) debt securities of the Company or any Guarantor or any other business entity provided for by a plan of reorganization that are subordinated to all Senior Debt and any debt securities issued in exchange for Senior Debt to the same extent as, or to a greater extent than, the Notes and the Note Guarantees are subordinated to Senior Debt under the Indenture.
      “Senior Debt” of any Person means:
        (1) all Indebtedness of such Person outstanding under the Credit Agreement and all Hedging Obligations with respect thereto, whether outstanding on the Issue Date or Incurred thereafter;
 
        (2) any other Indebtedness of such Person permitted to be Incurred under the terms of the Indenture, unless the instrument under which such Indebtedness is Incurred expressly provides that it is on a parity with or is subordinated in right of payment to the Notes or any Note Guarantee; and
 
        (3) all Obligations with respect to the items listed in the preceding clauses (1) and (2) (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law).
      Notwithstanding anything to the contrary in the preceding paragraph, Senior Debt will not include:
        (1) any liability for federal, state, local or other taxes owed or owing by the Company or any Guarantor;
 
        (2) any Indebtedness of the Company or any Guarantor to any of their Subsidiaries or other Affiliates;
 
        (3) any trade payables;
 
        (4) the portion of any Indebtedness that is Incurred in violation of the Indenture, provided that a good faith determination by the Board of Directors of the Company evidenced by a Board Resolution, or a good faith determination by the Chief Financial Officer of the Company evidenced by an officer’s certificate, that any Indebtedness being incurred under the Credit Agreement is permitted by the Indenture will be conclusive;
 
        (5) any Indebtedness of the Company or any Guarantor that, when Incurred, was without recourse to the Company or such Guarantor;
 
        (6) any repurchase, redemption or other obligation in respect of Disqualified Stock or Preferred Stock; or
 
        (7) any Indebtedness owed to any employee of the Company or any of its Subsidiaries.
Optional Redemption
      At any time prior to August 15, 2008, the Company may redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture (including any Additional Notes) at a redemption price of

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109.250% of the principal amount thereof, plus accrued and unpaid interest and Additional Interest, if any, thereon to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that:
        (1) at least 65% of the aggregate principal amount of Notes issued under the Indenture (including any Additional Notes) remains outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company or its Affiliates); and
 
        (2) the redemption must occur within 45 days of the date of the closing of such Equity Offering.
      At any time prior to August 15, 2009, the Company may redeem all or part of the Notes upon not less than 30 nor more than 60 days’ prior notice at a redemption price equal to the sum of (1) 100% of the principal amount thereof, plus (2) the Applicable Premium as of the date of redemption, plus accrued and unpaid interest, if any, to the date of redemption.
      Except pursuant to the preceding paragraphs, the Notes will not be redeemable at the Company’s option prior to August 15, 2009.
      On or after August 15, 2009, at any time or from time to time, the Company may redeem all or a part of the Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Additional Interest, if any, thereon, to the applicable redemption date, if redeemed during the twelve-month period beginning on August 15 of the years indicated below:
         
Year   Percentage
     
2009
    104.625 %
2010
    102.313 %
2011 and thereafter
    100.000 %
      If less than all of the Notes are to be redeemed at any time, the Trustee will select Notes for redemption as follows:
        (1) if the Notes are listed on any national securities exchange, in compliance with the requirements of such principal national securities exchange; or
 
        (2) if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee will deem fair and appropriate.
      No Notes of $1,000 or less will be redeemed in part. Notices of redemption will be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at its registered address. Notices of redemption may not be conditional.
      If any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the Holder thereof upon cancellation of the original Note. Notes called for redemption will become due on the date fixed for redemption. On and after the redemption date, interest will cease to accrue on Notes or portions of them called for redemption.
Mandatory Redemption
      The Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes.
Repurchase at the Option of Holders
Change of Control
      If a Change of Control occurs, each Holder of Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of that Holder’s Notes pursuant to an offer (a “Change of Control Offer”) on the terms set forth in the Indenture. In the Change of Control

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Offer, the Company will offer a payment (a “Change of Control Payment”) in cash equal to not less than 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest and Additional Interest, if any, thereon, to the date of repurchase (the “Change of Control Payment Date,” which date will be no earlier than the date of such Change of Control). No later than 30 days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the Change of Control Payment Date specified in such notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is mailed, pursuant to the procedures required by the Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the Indenture by virtue of such compliance.
      On the Change of Control Payment Date, the Company will, to the extent lawful:
        (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer;
 
        (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered; and
 
        (3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company.
      The Paying Agent will promptly mail or wire transfer to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof.
      Prior to complying with the provisions of this covenant, but in any event no later than 30 days following a Change of Control, the Company will either repay all outstanding Senior Debt or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt to permit the repurchase of Notes required by this covenant. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.
      The Credit Agreement currently prohibits the Company from purchasing any Notes, and also provides that certain change of control events with respect to the Company would constitute a default under the Credit Agreement. Any future credit agreements or other agreements relating to Senior Debt to which the Company becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Company is prohibited from purchasing Notes, the Company could seek the consent of its senior lenders to the purchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing Notes. In such case, the Company’s failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under such Senior Debt. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes.
      The provisions described above that require the Company to make a Change of Control Offer following a Change of Control will be applicable regardless of whether any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the Notes to require that the Company repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction.

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      The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.
      The definition of Change of Control includes a phrase relating to the direct or indirect sale, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of Notes to require the Company to repurchase such Notes as a result of a sale, transfer, conveyance or other disposition of less than all of the assets of the Company and its Restricted Subsidiaries taken as a whole to another Person or group may be uncertain.
Asset Sales
      The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:
        (1) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and
 
        (2) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash, Cash Equivalents or Replacement Assets or a combination of both. For purposes of this provision, each of the following will be deemed to be cash:
        (a) any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet) of the Company or any Restricted Subsidiary (other than contingent liabilities, Indebtedness that is by its terms subordinated to the Notes or any Note Guarantee and liabilities to the extent owed to the Company or any Affiliate of the Company) that are assumed by the transferee of any such assets or Equity Interests pursuant to a written novation agreement that releases the Company or such Restricted Subsidiary from further liability therefor;
 
        (b) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are contemporaneously (subject to ordinary settlement periods) converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received in that conversion); and
 
        (c) any Designated Non-Cash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Sale having an aggregated Fair Market Value, taken together with all other Designated Non-Cash consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed the greater of (x) 5.0% of the Company’s Consolidated Net Assets as of the date or receipt of such Designated Non-Cash Consideration and (y) $15.0 million (with the Fair Market Value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value).
      Within 540 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply such Net Proceeds at its option:
        (1) to repay Senior Debt and, if the Senior Debt repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; or
 
        (2) to purchase Replacement Assets (or enter into a binding agreement to purchase such Replacement Assets; provided that (x) such purchase is consummated within 90 days after the date of such binding agreement and (y) if such purchase is not consummated, within the period set forth in subclause (x), the Net Proceeds not so applied will be deemed to be Excess Proceeds (as defined below)).

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Pending the final application of any such Net Proceeds, the Company may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture.
      On the 541st day after an Asset Sale or such earlier date, if any, as the Company determines not to apply the Net Proceeds relating to such Asset Sale as set forth in the preceding paragraph (each such date being referred to as an “Excess Proceeds Trigger Date”), such aggregate amount of Net Proceeds that has not been applied on or before the Excess Proceeds Trigger Date as permitted in the preceding paragraph (“Excess Proceeds”) will be applied by the Company to make an offer (an “Asset Sale Offer”) to all Holders of Notes and all holders of other Indebtedness that ranks pari passu in right of payment with the Notes or any Note Guarantee containing provisions similar to those set forth in the Indenture with respect to offers to purchase with the proceeds of sales of assets, to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased using the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount of the Notes and such other pari passu Indebtedness plus accrued and unpaid interest and Additional Interest, if any, to the date of purchase, and will be payable in cash.
      The Company may defer the Asset Sale Offer until there are aggregate unutilized Excess Proceeds equal to or in excess of $10.0 million resulting from one or more Asset Sales, at which time the entire unutilized amount of Excess Proceeds (not only the amount in excess of $10.0 million) will be applied as provided in the preceding paragraph. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and such other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Notes and such other pari passu Indebtedness will be purchased on a pro rata basis based on the principal amount of Notes and such other pari passu Indebtedness tendered. Upon completion of each Asset Sale Offer, Excess Proceeds subject to such Asset Sale and still held by the Company will no longer be deemed to be Excess Proceeds.
      The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sales provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the Indenture by virtue of such compliance.
      The Credit Agreement currently prohibits the Company from purchasing any Notes, and also provides that certain asset sale events with respect to the Company would constitute a default under the Credit Agreement. Any future credit agreements or other agreements relating to Senior Debt to which the Company becomes a party may contain similar restrictions and provisions. In the event an Asset Sale occurs at a time when the Company is prohibited from purchasing Notes, the Company could seek the consent of its senior lenders to the purchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing Notes. In such case, the Company’s failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under such Senior Debt. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes.
Certain Covenants
Restricted Payments
      (A) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:
        (1) declare or pay (without duplication) any dividend or make any other payment or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of

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  its Restricted Subsidiaries) or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends, payments or distributions (x) payable in Equity Interests (other than Disqualified Stock) of the Company or (y) to the Company or a Restricted Subsidiary of the Company);
 
        (2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) any Equity Interests of the Company, or any Restricted Subsidiary thereof held by Persons other than the Company or any of its Restricted Subsidiaries;
 
        (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes or any Note Guarantees, except (a) a payment of interest or principal at the Stated Maturity thereof or (b) the purchase, repurchase or other acquisition of any such Indebtedness in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such purchase, repurchase or other acquisition; or
 
        (4) make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”),
unless, at the time of and after giving effect to such Restricted Payment:
        (1) no Default or Event of Default will have occurred and be continuing or would occur as a consequence thereof; and
 
        (2) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption “— Incurrence of Indebtedness”; and
 
        (3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issue Date (excluding Restricted Payments permitted by clauses (3), (4), (5), (6) and (10) of the next succeeding paragraph (B)), is less than the sum, without duplication, of:
        (a) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the Issue Date to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus
 
        (b) 100% of the aggregate net cash proceeds and the Fair Market Value of assets other than cash received by the Company since the Issue Date as a contribution to its common equity capital or from the issue or sale of Equity Interests (other than Disqualified Stock) of the Company or from the Incurrence of Indebtedness of the Company that has been converted into or exchanged for such Equity Interests (other than Equity Interests sold to, or Indebtedness held by, a Subsidiary of the Company), plus
 
        (c) with respect to Restricted Investments made by the Company and its Restricted Subsidiaries after the Issue Date, an amount equal to the net reduction in such Restricted Investments in any Person resulting from repayments of loans or advances, or other transfers of assets, in each case to the Company or any Restricted Subsidiary or from the net cash proceeds from the sale of any such Restricted Investment (except, in each case, to the extent any such payment or proceeds are included in the calculation of Consolidated Net Income), from the release of any Guarantee (except to the extent any amounts are paid under such Guarantee) or from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries, not to exceed, in each case, the amount of Restricted

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  Investments previously made by the Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary after the Issue Date; plus
 
        (d) the amount by which Indebtedness of the Company is reduced on the Company’s most recent quarterly balance sheet upon the conversion or exchange subsequent to the Issue Date of any Indebtedness of the Company convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash or the Fair Market Value of any other property distributed by the Company upon such conversion or exchange) plus the amount of any cash received by the Company upon such conversion or exchange; provided, however, that such amount may not exceed the net proceeds received by the Company or any of its Restricted Subsidiaries from the conversion or exchange of such Indebtedness (excluding net proceeds from conversion or exchange by a Subsidiary of the Company or by an employee ownership plan or by a trust established by the Company or any of its Subsidiaries for the benefit of their employees).
      (B) The preceding provisions will not prohibit, so long as, in the case of clauses (7) and (12) below, no Default has occurred and is continuing or would be caused thereby:
        (1) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture;
 
        (2) the payment of any dividend by a Restricted Subsidiary of the Company to the holders of its Common Stock on a pro rata basis;
 
        (3) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness or Disqualified Stock of the Company or any Guarantor or of any Equity Interests of the Company or any Restricted Subsidiary in exchange for, or out of the net cash proceeds of a contribution to the Equity Interests (other than Disqualified Stock) of the Company or a substantially concurrent sale (other than to a Subsidiary of the Company) of, Equity Interests (other than Disqualified Stock) of the Company; provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition will be excluded from clause (3) (b) of the preceding paragraph (A);
 
        (4) the defeasance, redemption, repurchase or other acquisition of Indebtedness subordinated to the Notes or the Note Guarantees with the net cash proceeds from an Incurrence of Permitted Refinancing Indebtedness;
 
        (5) Investments acquired as a capital contribution to, or in exchange for, or out of the net cash proceeds of a substantially concurrent offering of, Equity Interests (other than Disqualified Stock) of the Company; provided that the amount of any such net cash proceeds that are utilized for any such acquisition or exchange will be excluded from clause (3) (b) of the preceding paragraph (A);
 
        (6) the repurchase of Capital Stock deemed to occur upon the exercise of options or warrants to the extent that such Capital Stock represents all or a portion of the exercise price thereof;
 
        (7) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company held by any current or former employee or director of the Company (or any of its Restricted Subsidiaries) pursuant to the terms of any employee equity subscription agreement, stock option agreement or similar agreement entered into in the ordinary course of business; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests in a calendar year does not exceed $2.0 million (with unused amounts in any calendar year being carried over to succeeding calendar years (without giving effect to the following proviso)) and does not exceed $6.0 million in aggregate; provided further that such amount in any calendar year may be increased by an amount not to exceed (A) the net cash proceeds received by the Company from the sale of Equity Interests (other than Disqualified Stock) of the Company to members of management or directors of the Company and its Restricted Subsidiaries that occurs after the Issue Date (to the extent such cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments) plus (B) the net cash proceeds of key man life insurance policies received by the

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  Company and its Restricted Subsidiaries after the Issue Date, less (C) the amount of any Restricted Payments made pursuant to clauses (A) and (B) of this clause (7);
 
        (8) payments in respect of management fees to any of the Principals pursuant to agreements in effect on the Issue Date as described in this prospectus in an amount not to exceed an aggregate amount of $500,000 in any calendar year;
 
        (9) payments of dividends on Disqualified Stock otherwise permitted under Indenture;
 
        (10) cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock of the Company;
 
        (11) payments of dividends on the Company’s common stock following the first bona fide underwritten public offering of common stock of the Company after the Closing Date, of up to 6% per annum of the net cash proceeds received by the Company from such public offering; provided however, that (A) at the time of payment of any such dividend, no Default will have occurred and be continuing (or result therefrom), and (B) the aggregate amount of all dividends paid under this clause (11) will not exceed the aggregate amount of net proceeds received by the Company from such public offering; and
 
        (12) other Restricted Payments in an aggregate amount not to exceed $10.0 million.
      The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued to or by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. Not later than the date of making any Restricted Payment, the Company will deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this “Restricted Payments” covenant were computed, together with a copy of any opinion or appraisal required by the Indenture.
Incurrence of Indebtedness
      The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness; provided, however, that the Company or any Guarantor may Incur Indebtedness or Disqualified Stock if the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness or Disqualified Stock is Incurred would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness or Disqualified Stock had been Incurred at the beginning of such four-quarter period.
      The first paragraph of this covenant will not prohibit the Incurrence of the following items of Indebtedness (collectively, “Permitted Debt”):
        (1) the Incurrence by the Company or any Guarantor of Indebtedness under Credit Facilities (including, without limitation, the Incurrence by the Company and the Guarantors of Guarantees thereof) in an aggregate amount at any one time outstanding pursuant to this clause (1) not to exceed $200.0 million, less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any Restricted Subsidiary thereof to permanently repay any such Indebtedness pursuant to the covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales”; provided that a Restricted Subsidiary that is not a Domestic Subsidiary or a Guarantor of Indebtedness under the Credit Facilities may incur Indebtedness pursuant to this clause (1), together with Indebtedness Incurred pursuant to clause (9) of this “Incurrence of Indebtedness” covenant, in an aggregate amount, after giving effect to such Incurrence, at any time outstanding not to exceed the greater of (a) $25.0 million or (b) 40% of the aggregate Consolidated Net Assets of such Restricted Subsidiaries;
 
        (2) the Incurrence of Existing Indebtedness;
 
        (3) the Incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the Issue Date;

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        (4) the Incurrence by the Company or any Guarantor of Indebtedness represented by Capital Lease Obligations, mortgage financings, construction loans or purchase money obligations for property acquired in the ordinary course of business, in each case Incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used by the Company or any such Guarantor, in an aggregate amount, including all Permitted Refinancing Indebtedness Incurred to refund, refinance or replace any Indebtedness Incurred pursuant to this clause (4), not to exceed 7.5% of the Company’s Consolidated Net Assets at any time outstanding;
 
        (5) the Incurrence by the Company or any Restricted Subsidiary of the Company of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be Incurred under the first paragraph of this covenant or clause (2), (3), (4), (5), or (10) of this paragraph;
 
        (6) the Incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness owing to and held by the Company or any of its Restricted Subsidiaries; provided, however, that:
        (a) if the Company or any Guarantor is the obligor on such Indebtedness, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor;
 
        (b) Indebtedness owed to the Company or any Guarantor must be evidenced by an unsubordinated promissory note, unless the obligor under such Indebtedness is the Company or a Guarantor; and
 
        (c) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof, will be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);
        (7) the Guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be Incurred by another provision of this covenant; or
 
        (8) the Incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations that are Incurred for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder;
 
        (9) the Incurrence by any Restricted Subsidiary other than a Domestic Subsidiary of Indebtedness in an aggregate amount at any time outstanding, after giving effect to such Incurrence and together with any Indebtedness Incurred under the proviso in clause (1) of this “Incurrence of Indebtedness” covenant, not to exceed the greater of (a) $25 million or (b) 40% of the Consolidated Net Assets of any such Restricted Subsidiaries; or
 
        (10) the Incurrence by the Company or any Guarantor of additional Indebtedness in an aggregate amount at any time outstanding, including all Permitted Refinancing Indebtedness Incurred to refund, refinance or replace any Indebtedness Incurred pursuant to this clause (10), not to exceed the greater of (a) $15.0 million or (b) 5% of the Consolidated Net Assets of the Company.
      For purposes of determining compliance with this covenant, in the event that any proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (10) above, or is entitled to be Incurred pursuant to the first paragraph of this covenant, the Company will be

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permitted to classify such item of Indebtedness at the time of its Incurrence in any manner that complies with this covenant. In addition, any Indebtedness originally classified as Incurred pursuant to clauses (1) through (10) above may later be reclassified by the Company such that it will be deemed as having been Incurred pursuant to another of such clauses to the extent that such reclassified Indebtedness could be incurred pursuant to such new clause at the time of such reclassification. Notwithstanding the foregoing, Indebtedness under the Credit Agreement outstanding on the Issue Date will be deemed to have been Incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt.
      Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that may be Incurred pursuant to this covenant will not be deemed to be exceeded with respect to any outstanding Indebtedness due solely to the result of fluctuations in the exchange rates of currencies.
Limitation on Senior Subordinated Debt
      The Company will not Incur any Indebtedness that is subordinate in right of payment to any Senior Debt of the Company unless it ranks pari passu or subordinate in right of payment to the Notes. No Guarantor will Incur any Indebtedness that is subordinate or junior in right of payment to the Senior Debt of such Guarantor unless it ranks pari passu or subordinate in right of payment to such Guarantor’s Note Guarantee. For purposes of the foregoing, no Indebtedness will be deemed to be subordinated in right of payment to any other Indebtedness of the Company or any Guarantor, as applicable, solely by reason of Liens or Guarantees arising or created in respect of such other Indebtedness of the Company or any Guarantor or by virtue of the fact that the holders of any secured Indebtedness have entered into intercreditor agreements giving one or more of such holders priority over the other holders in the collateral held by them.
Liens
      The Company will not, and will not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing Indebtedness (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under the Indenture and the Notes are secured on an equal and ratable basis with the obligations so secured (or, in the case of Indebtedness subordinated to the Notes or the Note Guarantees, prior or senior thereto, with the same relative priority as the Notes will have with respect to such subordinated Indebtedness) until such time as such obligations are no longer secured by a Lien.
Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
      The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:
        (1) pay dividends or make any other distributions on its Capital Stock (or with respect to any other interest or participation in, or measured by, its profits) to the Company or any of its Restricted Subsidiaries or pay any liabilities owed to the Company or any of its Restricted Subsidiaries;
 
        (2) make loans or advances to the Company or any of its Restricted Subsidiaries; or
 
        (3) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries.
      However, the preceding restrictions will not apply to encumbrances or restrictions:
        (1) existing under, by reason of or with respect to the Credit Agreement, Existing Indebtedness or any other agreements in effect on the Issue Date and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof, provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, than those contained in the Credit Agreement, Existing Indebtedness or such other agreements, as the case may be, as in effect on the Issue Date;

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        (2) set forth in the Indenture, the Notes and the Note Guarantees;
 
        (3) existing under, by reason of or with respect to applicable law;
 
        (4) with respect to any Person or the property or assets of a Person acquired by the Company or any of its Restricted Subsidiaries existing at the time of such acquisition and not incurred in connection with or in contemplation of such acquisition, which encumbrance or restriction is not applicable to any Person or the properties or assets of any Person, other than the Person, or the property or assets of the Person so acquired and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof; provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, than those in effect on the date of the acquisition;
 
        (5) in the case of clause (3) of the first paragraph of this covenant:
        (A) that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is a lease, license, conveyance or contract or similar property or asset,
 
        (B) existing by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Restricted Subsidiary thereof not otherwise prohibited by the Indenture;
 
        (C) any encumbrance or restriction arising or existing by reason of construction loans or purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations, in each case to the extent permitted under the Indenture;
 
        (D) customary restrictions imposed on the transfer of intellectual property in connection with licenses of such intellectual property in the ordinary course of business;
 
        (E) encumbrances or restrictions existing under or by reason of provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements, in each case to the extent permitted under the Indenture, so long as any such encumbrances or restrictions are not applicable to any Person (to its property or assets) other than such joint venture or a Subsidiary thereof; or
 
        (F) arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of the Company or any Restricted Subsidiary thereof in any manner material to the Company or any Restricted Subsidiary thereof;
        (6) existing under, by reason of or with respect to any agreement for the sale or other disposition of all or substantially all of the Capital Stock of, or property and assets of, a Restricted Subsidiary that restrict distributions by that Restricted Subsidiary pending such sale or other disposition; and
 
        (7) on cash or other deposits or net worth imposed by customers or required by insurance, surety or bonding companies, in each case, under contracts entered into in the ordinary course of business.
Merger, Consolidation or Sale of Assets
      The Company will not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not the Company is the surviving Person) or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties and assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless:
        (1) either: (a) the Company is the surviving Person; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition will have been made (i) is a Person organized or existing under the laws of the United States, any state thereof or the District of Columbia and (ii) assumes all the obligations of

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  the Company under the Notes, the Indenture and, to the extent applicable, the Registration Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee;
 
        (2) immediately after giving effect to such transaction no Default or Event of Default exists;
 
        (3) immediately after giving effect to such transaction on a pro forma basis, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition will have been made, will be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “— Incurrence of Indebtedness.”
 
        (4) each Guarantor, unless such Guarantor is the Person with which the Company has entered into a transaction under this covenant, will have by amendment to its Note Guarantee confirmed that its Note Guarantee will apply to the obligations of the Company or the surviving Person in accordance with the Notes and the Indenture.
 
        (5)&