Cardtronics plc (Form: 10-Q, Received: 08/02/2018 16:29:04)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

	For the quarterly period ended June 30, 2018

or

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

	For the transition period from to

Commission File Number: 001-37820

Cardtronics plc

(Exact name of registrant as specified in its charter)


England and Wales	98-1304627
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

3250 Briarpark Drive, Suite 400	77042
Houston, Texas	(Zip Code)
(Address of principal executive offices)

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

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

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

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


Large accelerated filer ☑		Accelerated filer ☐
Non-accelerated filer ☐	(Do not check if a smaller reporting company)	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Shares outstanding as of July 31, 2018: 46,089,529 Ordinary shares, nominal value $0.01 per share.

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CARDTRONICS PLC

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31

		Page

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of June 30, 2018 (unaudited) and December 31, 2017	3
	Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2018 and 2017	4
	Unaudited Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2018 and 2017	5
	Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
	Cautionary Statement Regarding Forward-Looking Statements	46
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	48
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	76
Item 4.	Controls and Procedures	79

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	81
Item 1A.	Risk Factors	81
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	81
Item 3.	Defaults Upon Senior Securities	81
Item 4.	Mine Safety Disclosures	81
Item 5.	Other Information	81
Item 6.	Exhibits	82
	Signatures	83

When we refer to “us,” “we,” “our,” “ours,” “the Company,” or “Cardtronics” we are describing Cardtronics plc and/or our subsidiaries, unless the context indicates otherwise.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CARDTRONICS PLC
CONSOLIDATED BALANCE SHEETS
(In thousands, excluding share and per share amounts)


	June 30, 2018		December 31, 2017
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	40,252	$	51,370
Accounts and notes receivable, net of allowance for doubtful accounts of $3,227 and $2,001 as of June 30, 2018 and December 31, 2017, respectively		88,355		105,245
Inventory, net		14,516		14,283
Restricted cash		72,997		48,328
Prepaid expenses, deferred costs, and other current assets		106,484		96,106
Total current assets		322,604		315,332
Property and equipment, net of accumulated depreciation of $381,519 and $404,141 as of June 30, 2018 and December 31, 2017, respectively		461,210		497,902
Intangible assets, net		177,553		209,862
Goodwill		760,780		774,939
Deferred tax asset, net		6,708		6,925
Prepaid expenses, deferred costs, and other noncurrent assets		71,481		57,756
Total assets	$	1,800,336	$	1,862,716

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of other long-term liabilities	$	22,039	$	31,370
Accounts payable		43,515		44,235
Accrued liabilities		295,943		306,945
Total current liabilities		361,497		382,550
Long-term liabilities:
Long-term debt		878,423		917,721
Asset retirement obligations		56,715		59,920
Deferred tax liability, net		42,250		37,130
Other long-term liabilities		64,480		75,002
Total liabilities		1,403,365		1,472,323

Commitments and contingencies (See Note 15 )

Shareholders' equity:
Ordinary shares, $0.01 nominal value; 45,935,415 and 45,696,338 issued and outstanding as of June 30, 2018 and December 31, 2017, respectively		459		457
Additional paid-in capital		320,383		316,940
Accumulated other comprehensive loss, net		(37,384)		(33,595)
Retained earnings		113,602		106,670
Total parent shareholders' equity		397,060		390,472
Noncontrolling interests		(89)		(79)
Total shareholders’ equity		396,971		390,393
Total liabilities and shareholders’ equity	$	1,800,336	$	1,862,716

The accompanying notes are an integral part of these consolidated financial statements.

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CARDTRONICS PLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, excluding share and per share amounts)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Revenues:
ATM operating revenues	$	329,221	$	373,260	$	648,952	$	715,048
ATM product sales and other revenues		11,766		11,852		28,219		27,636
Total revenues		340,987		385,112		677,171		742,684
Cost of revenues:
Cost of ATM operating revenues (excludes depreciation, accretion, and amortization of intangible assets reported separately below. See Note 1(c))		215,353		246,484		430,843		478,411
Cost of ATM product sales and other revenues		10,086		11,116		22,848		25,751
Total cost of revenues		225,439		257,600		453,691		504,162
Operating expenses:
Selling, general, and administrative expenses		40,928		43,470		82,668		85,419
Redomicile-related expenses		—		—		—		760
Restructuring expenses		2,063		—		4,476		8,243
Acquisition and divestiture-related expenses		913		3,993		2,633		12,449
Depreciation and accretion expense		31,764		29,755		62,806		58,876
Amortization of intangible assets		13,498		15,247		27,269		30,427
Loss on disposal and impairment of assets		9,697		669		15,117		3,863
Total operating expenses		98,863		93,134		194,969		200,037
Income from operations		16,685		34,378		28,511		38,485
Other expense:
Interest expense, net		9,159		9,460		18,333		16,017
Amortization of deferred financing costs and note discount		3,355		3,146		6,663		6,122
Other (income) expense		(2,187)		1,945		(27)		365
Total other expense		10,327		14,551		24,969		22,504
Income before income taxes		6,358		19,827		3,542		15,981
Income tax expense		2,586		4,670		2,555		1,718
Net income		3,772		15,157		987		14,263
Net income (loss) attributable to noncontrolling interests		5		(1)		(12)		6
Net income attributable to controlling interests and available to common shareholders	$	3,767	$	15,158	$	999	$	14,257

Net income per common share – basic	$	0.08	$	0.33	$	0.02	$	0.31
Net income per common share – diluted	$	0.08	$	0.33	$	0.02	$	0.31

Weighted average shares outstanding – basic		45,927,732		45,637,778		45,880,661		45,564,527
Weighted average shares outstanding – diluted		46,378,813		46,222,112		46,357,776		46,272,191

The accompanying notes are an integral part of these consolidated financial statements.

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CARDTRONICS PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Net income	$	3,772	$	15,157	$	987	$	14,263
Unrealized gain on interest rate swap contracts, net of deferred income tax expense of $833 and $535 for the three months ended June 30, 2018 and 2017, respectively, and $5,976 and $1,895 for the six months ended June 30, 2018 and 2017, respectively.		2,030		4,184		19,391		5,589
Foreign currency translation adjustments, net of deferred income tax expense (benefit) of $225 and $72 for the three months ended June 30, 2018 and 2017, respectively, and $249 and $(1,311) for the six months ended June 30, 2018 and 2017, respectively.		(30,804)		26,025		(23,180)		33,271
Other comprehensive (loss) income		(28,774)		30,209		(3,789)		38,860
Total comprehensive (loss) income		(25,002)		45,366		(2,802)		53,123
Less: Comprehensive income (loss) attributable to noncontrolling interests		10		(1)		(9)		5
Comprehensive (loss) income attributable to controlling interests	$	(25,012)	$	45,367	$	(2,793)	$	53,118

The accompanying notes are an integral part of these consolidated financial statements.

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CARDTRONICS PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended
	June 30,
	2018		2017
Cash flows from operating activities:
Net income	$	987	$	14,263
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, accretion, and amortization of intangible assets		90,075		89,303
Amortization of deferred financing costs and note discount		6,663		6,122
Share-based compensation expense		5,958		5,820
Deferred income tax (benefit)		(2,344)		(66)
Loss on disposal and impairment of assets		15,117		3,863
Other reserves and non-cash items		413		1,133
Changes in assets and liabilities:
Decrease in accounts and notes receivable, net		16,398		2,479
Increase in prepaid expenses, deferred costs, and other current assets		(6,219)		(11,814)
Increase in inventory, net		(2,055)		(1,222)
Decrease (increase) in other assets		2,704		(1,472)
Increase (decrease) in accounts payable		1,888		(25,435)
(Decrease) increase in accrued liabilities		(9,310)		21,894
Decrease in other liabilities		(10,500)		(8,539)
Net cash provided by operating activities		109,775		96,329

Cash flows from investing activities:
Additions to property and equipment		(46,682)		(69,868)
Acquisitions, net of cash acquired		—		(484,602)
Net cash used in investing activities		(46,682)		(554,470)

Cash flows from financing activities:
Proceeds from borrowings under revolving credit facility		345,510		835,505
Repayments of borrowings under revolving credit facility		(390,990)		(666,256)
Proceeds from borrowings of long-term debt		—		300,000
Debt issuance costs		—		(5,197)
Tax payments related to share-based compensation		(2,506)		(7,820)
Proceeds from exercises of stock options		—		105
Net cash (used in) provided by financing activities		(47,986)		456,337

Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(1,558)		(3,743)
Net increase (decrease) in cash, cash equivalents, and restricted cash		13,549		(5,547)

Cash, cash equivalents, and restricted cash as of beginning of period		99,817		105,747
Cash, cash equivalents, and restricted cash as of end of period	$	113,366	$	100,200

Supplemental disclosure of cash flow information:
Cash paid for interest	$	18,523	$	11,460
Cash (refund) paid for income taxes	$	(3,941)	$	3,570

The accompanying notes are an integral part of these consolidated financial statements.

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CARDTRONICS PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General and Basis of Presentation

(a) General

Cardtronics plc, together with its wholly and majority-owned subsidiaries (collectively, the “Company”), provides convenient automated financial related services to consumers through its network of automated teller machines and multi-function financial services kiosks (collectively referred to as “ATMs”). As of June 30, 2018, the Company was the world’s largest ATM owner/operator, providing services to approximately 230,000 ATMs.

During the three months ended June 30, 2018, 60% of the Company’s revenues were derived from operations in North America (including its ATM operations in the U.S., Canada, and Mexico), 31% of the Company’s revenues were derived from operations in Europe and Africa (including its ATM operations in the U.K., Ireland, Germany, Spain, and South Africa), and 9% of the Company’s revenues were derived from the Company’s operations in Australia and New Zealand. As of June 30, 2018, the Company provided processing only services or various forms of managed services solutions to approximately 138,000 ATMs. Under a managed services arrangement, retailers, financial institutions, and ATM distributors rely on Cardtronics to handle some or all of the operational aspects associated with operating and maintaining ATMs, typically in exchange for a monthly service fee, fee per transaction, or fee per service provided.

Through its network, the Company delivers financial related services to cardholders and provides ATM management and ATM equipment-related services (typically under multi-year contracts) to large retail merchants, smaller retailers, and operators of facilities such as shopping malls, airports, and train stations. In doing so, the Company provides its retail partners with a compelling automated solution that helps attract and retain customers, and in turn, increases the likelihood that the ATMs placed at their facilities will be utilized. The Company also owns and operates electronic funds transfer (“EFT”) transaction processing platforms that provide transaction processing services to its network of ATMs, as well as to other ATMs under managed services arrangements. Additionally, the Company provides processing services for issuers of debit cards.

In addition to its retail merchant relationships, the Company also partners with leading financial institutions to brand selected ATMs within its network, including BBVA Compass Bancshares, Inc. (“BBVA”), Citibank, N.A. (“Citibank”), Citizens Financial Group, Inc. (“Citizens”), Cullen/Frost Bankers, Inc. (“Cullen/Frost”), Discover Bank (“Discover”), PNC Bank, N.A. (“PNC Bank”), Santander Bank, N.A. (“Santander”), and TD Bank, N.A. (“TD Bank”) in the U.S.; BMO Bank of Montreal (“BMO”), the Bank of Nova Scotia (“Scotiabank”), Canadian Imperial Bank Commerce (“CIBC”), DirectCash Bank and TD Bank in Canada; and the Bank of Queensland Limited (“BOQ”) and HSBC Holdings plc (“HSBC”) in Australia. In Mexico, the Company partners with Scotiabank and Banco Multiva. As of June 30, 2018, approximately 20,000 of the Company’s ATMs were under contract with approximately 500 fin ancial institutions to place their logos on the ATMs, and to provide convenient surcharge-free access for their banking customers.

The Company owns and operates the Allpoint network (“Allpoint”), the largest surcharge-free ATM network (based on the number of participating ATMs). Allpoint, which has approximately 55,000 participating ATMs, provides surcharge-free ATM access to over 1,000 participating credit unions, banks, and stored-value debit card issuers. For participants, Allpoint provides scale, density, and convenience of surcharge-free ATMs that surpasses the largest banks in the U.S. Allpoint earns either a fixed monthly fee per cardholder or a fixed fee per transaction that is paid by the participants . The Allpoint network includes a majority of the Company’s ATMs in the U.S. and certain ATMs in the U.K., Canada, Mexico, Puerto Rico, and Australia. Allpoint also provides services to organizations that manage stored-value debit card programs on behalf of corporate entities and governmental agencies, including general purpose, payroll, and electronic benefits transfer (“EBT”) cards. Under these programs, the issuing organizations pay Allpoint a fee per issued stored-value debit card or per transaction in return for allowing the users of those cards surcharge-free access to Allpoint’s participating ATM network.

The Company’s revenues are generally recurring in nature, and historically have been derived largely from convenience transaction fees, which are paid by cardholders, as well as other transaction-based fees, including interchange fees, which

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are paid by the cardholder’s financial institution for the use of the ATMs serving their customers and connectivity to the applicable EFT network that transmits data between the ATM and the cardholder’s financial institution. Other revenue sources include: (i) fees from financial institutions that participate in the Allpoint surcharge-free network, (ii) fees for branding ATMs with the logos of financial institutions and providing financial institution cardholders with surcharge free access, (iii) revenues earned by providing managed services (including transaction processing services) solutions to retailers and financial institutions, (iv) fees earned from foreign currency exchange transactions at the ATM, known as dynamic currency conversion, and (v) revenues from the sale of ATMs and ATM-related equipment and other ancillary services.

(b) Basis of Presentation

This Quarterly Report on Form 10-Q (this “Form 10-Q”) has been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) applicable to interim financial information. As this is an interim period filing presented using a condensed format, it does not include all of the disclosures required by accounting principles generally accepted in the U.S. (“U.S. GAAP” or “GAAP”), although the Company believes that the disclosures are adequate to make the information not misleading. You should read this Form 10-Q along with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Form 10-K”), which includes a summary of the Company’s significant accounting policies and other disclosures.

In management’s opinion, all normal recurring adjustments necessary for a fair presentation of the Company’s interim and prior period results have been made. The results of operations for the three and six months ended June 30, 2018 and 2017 are not necessarily indicative of results of operations that may be expected for any other interim period or for the full fiscal year.

The unaudited interim financial statements include the accounts of the Company. All material intercompany accounts and transactions have been eliminated in consolidation. The Company owns a majority (95.7%) interest in, and realizes a majority of the earnings and/or losses of, Cardtronics Mexico, S.A. de C.V., thus this entity is reflected as a consolidated subsidiary in the financial statements, with the remaining ownership interests not held by the Company being reflected as noncontrolling interests.

The preparation of the unaudited interim financial statements to conform with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of this Form 10-Q and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, and these differences could be material to the financial statements.

The Company presents the Cost of ATM operating revenues in the accompanying Consolidated Statements of Operations exclusive of depreciation, accretion, and amortization of intangible assets related to ATMs and ATM-related assets.

The following table reflects the amounts excluded from the Cost of ATM operating revenues line item in the accompanying Consolidated Statements of Operations for the periods presented:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(In thousands)
Depreciation and accretion expenses related to ATMs and ATM-related assets	$	23,037	$	22,324	$	46,412	$	44,308
Amortization of intangible assets		13,498		15,247		27,269		30,427
Total depreciation, accretion, and amortization of intangible assets excluded from Cost of ATM operating revenues	$	36,535	$	37,571	$	73,681	$	74,735

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(d) Redomicile to the U.K.

On July 1, 2016, the Cardtronics group of companies changed the location of incorporation of the parent company from Delaware to the U.K. Cardtronics plc, a public limited company organized under English law (“Cardtronics plc”), became the new publicly traded corporate parent of the Cardtronics group of companies following the completion of the merger between Cardtronics, Inc., a Delaware corporation (“Cardtronics Delaware”), and one of its subsidiaries.

Any references to “the Company” (as defined above) or any similar references relating to periods before the redomicile to the U.K. (“Redomicile Transaction”), completed pursuant to the Agreement and Plan of Merger, dated April 27, 2016, the adoption of which was approved by Cardtronics Delaware’s Shareholders on June 28, 2016, shall be construed as references to Cardtronics Delaware being the previous parent company of the Cardtronics group of companies, and/or its subsidiaries depending on the context. The Redomicile Transaction was accounted for as an internal reorganization of entities under common control and, therefore, the Cardtronics Delaware assets and liabilities have been accounted for at their historical cost basis and not revalued in the transaction.

(e) Restructuring Expenses

During 2017, the Company initiated a global corporate reorganization and cost reduction initiative (the “Restructuring Plan”), intended to improve its cost structure and operating efficiency. The Restructuring Plan included workforce reductions, facilities closures, contract terminations, and other cost reduction measures. The Company incurred $8.2 million and $10.4 million of pre-tax expenses related to its Restructuring Plan during the six and twelve months ended June 30, 2017 and December 31, 2017, respectively. During 2018, the Company implemented additional workforce reductions in an effort to continue its cost reduction initiative. During the three and six months ended June 30, 2018, the Company incurred $2.1 million and $4.5 million of pre-tax expenses, largely consisting of employee severance. During the remainder of 2018, its Restructuring Plan activities may include additional workforce reductions, certain facilities closures, and other cost reduction measures.

The following tables reflect the amounts recorded in the Restructuring expenses line item in the accompanying Consolidated Statements of Operations for the periods presented:


		Three Months Ended				Six Months Ended
		June 30,				June 30,
	2018		2017		2018		2017
	(In thousands)				(In thousands)
North America	$	1,073	$	—	$	2,130	$	3,668
Europe & Africa		495		—		1,176		831
Corporate		495		—		1,170		3,744
Total Restructuring expenses		2,063		—		4,476		8,243

As of June 30, 2018, $3.3 million of unpaid employee severance and lease termination costs were presented within the Current portion of other long-term liabilities, Accrued liabilities, and Other long-term liabilities line items in the accompanying Consolidated Balance Sheets.


	As of June 30, 2018
	North America		Europe & Africa		Corporate		Total
	(In thousands)
Current portion of other long-term liabilities	$	—	$	9	$	—	$	9
Accrued liabilities		—		823		2,309		3,132
Other long-term liabilities		—		204		—		204
Total restructuring liabilities	$	—	$	1,036	$	2,309	$	3,345

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The changes in the Company’s restructuring liabilities consisted of the following:


	(In thousands)
Restructuring liabilities as of December 31, 2017	$	5,383
Restructuring expenses		4,476
Payments		(6,514)
Restructuring liabilities as of June 30, 2018	$	3,345

(f) Loss on Disposal and Impairment of Assets

During the three and six months ended June 30, 2018, the Company recognized losses of $9.7 million and $15.1 million, respectively, related to the disposal and impairment of assets. The loss on disposal and impairment of assets were due to the decision of the Company to not redeploy certain ATM models. Although many ATMs in the Company’s U.S. operations that were impaired remain deployable, a combination of many factors, including the size, functionality, estimated upgrade costs, and availability of suitable placements resulted in a change of plans relative to certain models such that the units not currently in service were deemed not likely to be deployed. These ATM assets, with a net book value of approximately $7 million, were written down to their estimated net realizable value. The remaining loss was a result of other ATM asset disposals in the ordinary course of business, and in the three months ended March 31, 2018, disposals related to the exit from a leased facility in the U.K .

(g) Cash, Cash Equivalents, and Restricted Cash

For purposes of reporting financial condition, cash and cash equivalents include cash in bank and short-term deposit sweep accounts. Additionally, the Company maintains cash on deposit with banks that is pledged for a particular use or restricted to support a potential liability. These balances are classified as Restricted cash in the Current assets or Noncurrent assets line items in the accompanying Consolidated Balance Sheets based on when the Company expects this cash to be paid. Current restricted cash largely consists of amounts collected on behalf of, but not yet remitted to, certain of the Company’s merchant customers or third-party service providers. These assets are offset by corresponding liability balances in the Accrued liabilities line item in the accompanying Consolidated Balance Sheets . For purpose of reporting cash flows, the following table provides a reconciliation of the ending cash, cash equivalents, and restricted cash balances as of June 30, 2018 and 2017.


		June 30, 2018		June 30, 2017
		(in thousands)
Cash and cash equivalents	$	40,252	$	53,177
Current and long-term restricted cash		73,114		47,023
Total cash, cash equivalents, and restricted cash shown in the Consolidated Statements of Cash Flows	$	113,366	$	100,200

(h) Inventory, net

The Company’s inventory is determined using the average cost method. The Company periodically assesses its inventory, and as necessary, adjusts the carrying values to the lower of cost or net realizable value.

The following table reflects the Company’s primary inventory components:


	June 30, 2018		December 31, 2017
	(In thousands)
ATMs	$	2,349	$	3,181
ATM spare parts and supplies		12,221		12,935
Total inventory		14,570		16,116
Less: Inventory reserves		(54)		(1,833)
Inventory, net	$	14,516	$	14,283

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(2) New Accounting Pronouncements

Adoption of New Accounting Pronouncements

Revenue from Contracts with Customers. On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, using the modified retrospective adoption method, for contracts that were not completed as of January 1, 2018. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening retained earnings. The comparative information in prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company expects the impact of the adoption of the new revenue standard to be immaterial to net income on an ongoing basis.

On January 1, 2018, the Company recorded a net credit to opening retained earnings of approximately $5.9 million, representing the cumulative impact of adopting the new revenue standard. This adjustment was entirely related to the deferral of contract acquisition costs, consisting of sales commissions and other directly related costs totaling approximately $7.5 million, net of the related tax impact of approximately $1.6 million. During the three and six months ended June 30, 2018, the Company recognized sales commission expense and other directly related costs as a result of amortizing the amounts deferred. The incremental expenses recognized during the periods were not material.

The cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet for the adoption were as follows:


		December 31, 2017 as Reported		Adjustments Due to Topic 606		January 1, 2018 Upon Adoption
		(In thousands)
Assets
Prepaid expenses, deferred costs, and other current assets	$	96,106	$	2,919	$	99,025
Prepaid expenses, deferred costs, and other noncurrent assets		57,756		4,593		62,349

Liabilities
Deferred tax liability, net	$	37,130	$	1,579	$	38,709

Equity
Retained earnings	$	106,670	$	5,933	$	112,603

Statement of Cash Flows. On January 1, 2018, the Company adopted the guidance in ASU No. 2016-18, Statement of Cash Flows pertaining to the presentation of restricted cash (Topic 230) and the classification of certain cash receipts and cash payments (the “classification guidance”). In accordance with this guidance, the Company now presents restricted cash together with cash and cash equivalents when presenting the Consolidated Statements of Cash Flows and has applied the changes retrospectively. Also related to the classification guidance, when they occur, the Company will recognize contingent consideration payments up to the amount of the acquisition date liability in financing activities and any excess payments in operating activities.

Other Guidance Adopted in 2018. Effective January 1, 2018, the Company adopted the guidance in ASU No. 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. This guidance clarifies what constitutes a modification of a share-based payments award. Upon adoption, this guidance had no impact on the Company’s consolidated financial statements.

Effective January 1, 2018, the Company adopted the guidance in ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This guidance clarifies the definition of a business applicable to the recognition and reporting of an acquisition, divestiture, or disposal. It also clarifies the definition of a business applicable when assessing goodwill for impairment and when assessing if certain entities should be consolidated. Upon adoption, this guidance had no impact on the Company’s consolidated financial statements.

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In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which was intended to eliminate the stranded tax effects within Accumulated Other Comprehensive Income (“AOCI”) resulting from the Tax Cuts and Jobs Act (“TCJA”) that was enacted on December 22, 2017. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. Cardtronics elected to early adopt this guidance effective January 1, 2018. The impact of adoption was not material.

In March 2018, the FASB issued ASU No. 2018-05, Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, to add various SEC paragraphs pursuant to the issuance of SEC Staff Accounting Bulletin No. 118, to ASC 740 “Income Taxes”. This guidance was issued by the SEC in December 2018 to provide immediate guidance for accounting implications of U.S. tax reform under the “Tax Cuts and Jobs Act” (the “Tax Act”) enacted on December 22, 2017. The Company has applied this guidance to its consolidated financial statements and related disclosures for the period ended June 30, 2018.

Accounting Pronouncements Issued But Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (the “Lease Standard”) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous U.S. GAAP. The Lease Standard requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. The Lease Standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, using a modified retrospective approach and early adoption is permitted. The FASB is currently considering an option where entities may elect to not restate their comparative periods in transition. This option would allow an entity to recognize the effects of applying the standard as a cumulative-effect adjustment to retained earnings as of the adoption date. We anticipate that this option will be finalized in the third quarter of 2018 and, if available, we may elect to use this option when we adopt the Lease Standard during the first quarter of 2019. The Company is working to evaluate the transition practical expedients available under the Lease Standard and calculate the impact that this guidance will ultimately have on its consolidated financial statements. The Company currently anticipates that its adoption of the Lease Standard will result in the recognition of significant right-to-use assets and lease liabilities related to its operating leases as well as certain of its ATM placement agreements that contain fixed payments and are deemed to contain a lease under the Lease Standard. The Company does not believe the adoption will have any material impact on its currently outstanding indebtedness or its ability to continue borrowing under its revolving credit facility.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory. This guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments eliminate the exception for an intra-entity transfer of an asset other than inventory. This guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, and early adoption is permitted. The Company is currently evaluating the impact the standard will have on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). This guidance eliminates Step 2 from the goodwill impairment test and the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. This guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those years, and early adoption is permitted. The Company is currently evaluating the standard and has not yet concluded on whether it will early adopt in 2018.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This guidance provides targeted improvements to the accounting for hedging

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activities to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. This guidance is effective for fiscal years beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the standard and anticipates adopting the standard beginning January 1, 2019 .

( 3 ) Revenue Recognition

Disaggregated Revenues

The following tables present the revenue of the Company’s reportable segments disaggregated by financial statement line item and component:


	Three Months Ended June 30, 2018
	(In thousands)
	North America		Europe & Africa		Australia & New Zealand		Eliminations		Consolidated

Surcharge revenues	$	90,687	$	30,888	$	22,679	$	–	$	144,254
Interchange revenues		35,819		72,412		1,064		–		109,295
Bank-branding and surcharge-free network revenues		43,990		–		–		–		43,990
Managed services revenues		13,540		–		4,031		–		17,571
Other revenues		13,253		2,509		1,250		(2,901)		14,111
Total ATM operating revenues	$	197,289	$	105,809	$	29,024	$	(2,901)	$	329,221

ATM product sales	$	3,726	$	20	$	23	$	–	$	3,769
Other revenues		5,902		2,021		74		–		7,997
ATM product sales and other revenues		9,628		2,041		97		–		11,766
Total revenues	$	206,917	$	107,850	$	29,121	$	(2,901)	$	340,987


	Six Months Ended June 30, 2018
	(In thousands)
		North America	Europe & Africa		Australia & New Zealand		Eliminations		Consolidated

Surcharge revenues	$	179,801	$	57,057	$	46,749	$	–	$	283,607
Interchange revenues		71,638		139,870		2,189		–		213,697
Bank-branding and surcharge-free network revenues		88,437		–		–		–		88,437
Managed services revenues		26,092		–		8,210		–		34,302
Other revenues		26,950		5,063		2,513		(5,617)		28,909
Total ATM operating revenues	$	392,918	$	201,990	$	59,661	$	(5,617)	$	648,952

ATM product sales	$	7,171	$	26	$	40	$	–	$	7,237
Other revenues		16,589		4,278		115		–		20,982
ATM product sales and other revenues		23,760		4,304		155		–		28,219
Total revenues	$	416,678	$	206,294	$	59,816	$	(5,617)	$	677,171

Revenue is recognized when obligations under the terms of a contract with a customer are satisfied. The Company currently classifies revenues under two financial statement line items: (i) ATM operating revenues and (ii) ATM product sales and other revenues.

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ATM operating revenues are recognized daily as the associated transactions are processed or monthly on a per ATM or per cardholder basis. For customer contracts that provide for up-front fees that do not pertain to a distinct performance obligation, such fees are recognized over the term of the underlying agreement on a straight-line basis. ATM product sales and other revenues are recognized when the related performance obligations are fulfilled largely via a transfer of goods or services to the customer.

ATM operating revenues. The Company presents revenues from automated consumer financial services, bank-branding and surcharge-free network offerings, managed services and other services in the ATM operating revenues line item in the accompanying Consolidated Statements of Operations. The Company’s ATM operating revenues consist of the following:

Surcharge revenue . Surcharge revenues are received in the form of a fee paid by a cardholder who has made a cash withdrawal from an ATM. Surcharge fees can vary widely based on the location of the ATM and the nature of the contracts negotiated with our merchants. In the U.S. and Canada, the Company does not receive surcharge fees from cardholders whose financial institutions participate in a surcharge-free network or have branded a location; instead, the Company receives interchange and bank-branding or surcharge-free network-branding revenues, which are discussed below. For certain ATMs, primarily those owned and operated by merchants, the Company does not receive any portion of the surcharge but rather the entire surcharge fee is earned by the merchant. In the U.K., ATM deployers operate their ATMs on either a free-to-use (surcharge-free) or a pay-to-use (surcharging) basis. On free-to-use ATMs in the U.K., the Company earns interchange revenue on withdrawal and certain other transactions. These fees are paid by the cardholder’s financial institution. On pay-to-use ATMs in the U.K., the Company only earns a surcharge fee paid by the cardholder on withdrawal transactions, and interchange is only paid by the cardholder’s financial institution on other non-withdrawal transaction types. In Germany, Australia, and Mexico the Company collects surcharge fees on withdrawal transactions but generally does not receive interchange revenue. In South Africa, the Company generally earns interchange revenues only, the amount of which varies by transaction type and customer arrangement. Surcharge revenues, as described above, are recognized daily as the associated transactions are processed.

Interchange revenue. An interchange fee is a fee paid by the cardholder’s financial institution for its customer’s use of an ATM that is owned by another operator and for the fee the EFT network charges to transmit data between the ATM and the cardholder’s financial institution. The Company typically receives a majority of the interchange fee paid by the cardholder’s financial institution, net of the amount retained by the EFT network and the Company recognizes the net amount received from the network as revenue. In some markets in which the Company operates, interchange fees are earned not only on cash withdrawal transactions but also on other ATM transactions, including balance inquiries and balance transfers. Interchange revenues are subject to variable terms and are recognized daily as the associated transactions are processed.

Bank-branding and surcharge-free network revenues. Under a bank-branding arrangement, ATMs that are Company-owned and operated are branded with the logo of the branding financial institution. In exchange for a monthly per ATM fee, the financial institution’s customers gain access to use these bank-branded ATMs without paying a surcharge. Under the Company’s surcharge-free network arrangements, financial institutions that participate pay either a fixed monthly fee per cardholder or a fixed fee per transaction so that cardholders gain surcharge-free access to our large network of ATMs. Bank-branding and surcharge-free network revenues are generally recognized monthly on a per ATM or per cardholder basis, except for transaction-based fee arrangements which are recognized daily as they occur. Any up-front fees associated with these arrangements are recognized ratably over the life of the arrangement.

Managed services revenue . Under a managed service arrangement, the Company offers ATM-related services depending on the needs of our customers, including monitoring, maintenance, cash management, cash delivery, customer service, transaction processing, and other services. Under a managed services arrangement, all of the surcharge and interchange fees are generally earned by the customer, whereas the Company typically receives a fixed management fee per ATM and/or a fixed fee per transaction in return for providing the agreed-upon operating services. The managed services fees are recognized as the related services are provided.

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Other revenue. Other revenues include ATM operating revenues from transaction processing for third party ATM operators. The Company also earns ATM operating revenues, in exchange for advertising and other services. The Company typically recognizes these revenues as the related services are provided.

ATM product sales and services. The Company presents revenues from other product sales and services in the ATM product sales and services line item in the accompanying Consolidated Statements of Operations.

The Company earns revenues from the sale of ATMs and ATM-related equipment as well as the delivery of other non-transaction-based services. Revenues related to these activities are recognized when the equipment is delivered to the customer and the Company has completed all required installation and set-up procedures. With respect to the sale of ATMs to Value-Added-Resellers (“VARs”), the Company recognizes revenues related to such sales when the equipment is delivered to the VAR.

Contract Balances

As of June 30, 2018, the Company has recognized no significant contract assets apart from Accounts Receivables that relate to completed performance obligations. Contract liabilities totaled $5.6 million and $5.7 million at June 30, 2018 and December 31, 2017, respectively. These amounts represent deferred revenues for advance consideration received largely in relation to bank-branding and surcharge-free network arrangements. The revenue recognized during the three and six months ended June 30, 2018 on previously recognized deferred revenues was not material. The Company expects to recognize the revenue associated with its contract liabilities ratably over various periods extending over the next 12 to 36 months.

Contract Cost

The Company expects that the incremental commissions paid to sales personnel, together with other associated costs, are recoverable, and therefore, the Company capitalizes these amounts as deferred contract acquisition costs. Upon adoption of the new revenue standard on January 1, 2018, the Company recognized deferred sales commissions of $7.5 million, and as of June 30, 2018, the deferred sales commissions totaled $7.3 million. Sales commissions capitalized are generally amortized over a 4 - 5 year period corresponding with the related placement agreements. Similarly, and consistent with past practice, the costs incurred to fulfill a contract, largely consisting of prepaid merchant commissions and other consideration paid or provided to merchant partners, are capitalized and recognized over the duration of the related contract.

Practical Expedients and Other Disclosures

In order to adopt and subsequently apply the new revenue standard, the Company utilized various practical expedients. The Company elected not to re-examine contracts modified prior to its adoption using the modified retrospective adoption method and elected to utilize a portfolio approach to assess and apply the impact of the new revenue standard. Furthermore, the Company has elected not to disclose information about remaining performance obligations that have original expected durations of one year or less. Similarly, the Company does not defer the costs of obtaining a contract if the associated contract is one year or less.

The Company’s bank-branding, surcharge-free network, and managed services arrangements result in the Company providing a series of distinct services that have the same pattern of transfer to the customer. As a result, these arrangements create singular performance obligations that are satisfied over-time (generally 3 - 5 years) for which the Company has a right to consideration that corresponds directly with the value of the entity’s performance completed to date. In conjunction with these arrangements the Company recognizes revenue in the amount it has a right to receive. Variable consideration may exist in these arrangements and is recognized only to the extent a significant reversal is not probable.

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(4) Acquisitions

DirectCash Payments Inc. Acquisition

On January 6, 2017, the Company completed the acquisition of DirectCash Payments Inc. (“DCPayments”), whereby DCPayments became a wholly-owned indirect subsidiary of the Company. In connection with the closing of the acquisition, each DCPayments common share was acquired for Canadian Dollars $19.00 in cash per common share, and the Company also repaid the outstanding third-party indebtedness of DCPayments, the combined aggregate of which represented a total transaction value of approximately $658 million Canadian Dollars (approximately $495 million U.S. dollars). The total amount paid for the acquisition at closing was financed with cash-on-hand and borrowings under the Company’s revolving credit facility.

As a result of the DCPayments acquisition, the Company significantly increased the size of its Canada, Mexico, and U.K. operations and entered into the Australia and New Zealand markets. With this acquisition, the Company added approximately 25,000 ATMs to its global ATM count.

The DCPayments acquisition was accounted for as a business combination using the purchase method of accounting under the provisions of ASC Topic 805, Business Combinations. In accordance with this guidance, all assets acquired and liabilities assumed have been recorded at their estimated fair value as of the acquisition date and any excess of the purchase consideration over the fair value of the identifiable assets acquired and liabilities assumed has been recognized as goodwill. In conjunction with the transaction, the Company recognized current and other noncurrent assets of $50.4 million, property and equipment of $68.8 million, goodwill of $300.3 million, intangible assets of $182.1 million, current and other long-term liabilities of $74.0 million, Asset Retirement Obligations (“ARO”) of $8.9 million, and a deferred tax liability of $23.2 million.

Spark ATM Systems Pty Ltd Acquisition

On January 31, 2017, the Company completed the acquisition of Spark ATM Systems Pty Ltd. (“Spark”), an independent ATM operator in South Africa, with a network of approximately 2,300 ATMs. The initial purchase consideration of approximately $19. 5 million was paid in cash. In addition to the initial consideration, the total purchase price also includes potential additional contingent consideration of up to approximately $ 58.5 million at the June 30, 2018 foreign currency exchange rate. The contingent consideration will vary based upon performance relative to certain agreed upon earnings targets in 2019 and 2020 and would be payable to the previous investors in the business. The estimated acquisition date fair value of the contingent consideration was approximately $34.8 million, at the January 31, 2017 foreign currency exchange rate, as determined with the assistance of an independent appraisal firm using forecasted future financial projections and other Level 3 inputs ( for additional information related to the Company’s fair value estimates see Note 14. Fair Value Measurements ) . In conjunction with the transaction, the Company recognized property and equipment of $5.3 million, goodwill of $48.2 million, intangible assets of $2.8 million, ARO of $0.4 million, and other net liabilities of $1. 5 million.

(5) Share-based Compensation

The Company accounts for its share-based compensation by recognizing the grant date fair value of share-based awards, net of estimated forfeitures, as share-based compensation expense over the underlying requisite service periods of the related awards.

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The following table reflects the total share-based compensation expense amounts reported in the accompanying Consolidated Statements of Operations:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(In thousands)				(In thousands)
Cost of ATM operating revenues	$	90	$	183	$	174	$	140
Selling, general, and administrative expenses		3,423		3,440		5,784		5,680
Total share-based compensation expense	$	3,513	$	3,623	$	5,958	$	5,820

The change in total share-based compensation expense for the three and six months ended June 30, 2018, compared to the same periods of 2017 are attributable to the amount and timing of share-based payment awards, net of forfeitures.

Restricted Stock Units. The Company grants restricted stock units (“RSUs”) under its Long-Term Incentive Plan (“LTIP”), which is an annual equity award program under the Third Amended and Restated 2007 Stock Incentive Plan. The ultimate number of RSUs that are determined to be earned under the LTIP are approved by the Compensation Committee of the Company’s Board of Directors on an annual basis, based on the Company’s achievement of certain performance levels during the calendar year of its grant or the associated performance period, if longer than one year. The majority of these grants have both a service-based (“Time-RSUs”) and a performance-based vesting schedule (“Performance-RSUs”), and for these the Company recognizes the related compensation expense based on the estimated performance levels that management believes will ultimately be met. In addition, a portion of the awards are Time-RSUs and the associated expense is recognized ratably over four years. Finally, a limited number of RSUs have a market-based and service based vesting schedule (“Market-Based-RSUs”). For these grants, the Company recognizes the estimated grant date fair value over a 24 month period. Performance-RSUs and Time-RSUs are convertible into the Company’s common shares after the passage of the vesting periods, which are generally 24, 36, and 48 months from January 31 of the grant year, at the rate of 50%, 25%, and 25%, respectively. Performance-RSUs and Market-Based RSUs will be earned to the extent the Company achieves the associated performance-based or market-based vesting conditions. Although these RSUs are not considered to be earned and outstanding until the vesting conditions are met, the Company recognizes the related compensation expense over the requisite service period (or to an employee’s qualified retirement date, if earlier) using a graded vesting methodology. RSUs are also granted outside of LTIPs, with or without performance-based vesting requirements.

The number of the Company’s earned non-vested RSUs as of June 30, 2018, and changes during the six months ended June 30, 2018, are presented below:


	Number of Shares	Weighted Average Grant Date Fair Value
Non-vested RSUs as of December 31, 2017	1,006,009	$	37.88
Granted	714,925	$	26.91
Vested	(342,075)	$	37.90
Forfeited	(130,735)	$	38.04
Non-vested RSUs as of June 30, 2018	1,248,124	$	31.57

The above table only includes earned RSUs; therefore, the Performance-RSUs and Market-Based RSUs granted in 2018 but not yet earned are not included. The number of Performance-RSUs granted at target in 2018, net of estimated forfeitures, was 297,030 units with a grant date fair value of $23.16 per unit. The number of Market-Based RSUs granted in 2018, net of estimated forfeitures, was 134,989 units with a grant date fair value of $24.13 per unit. Time-RSUs are included as granted.

As of June 30, 2018, the unrecognized compensation expense associated with earned RSUs was $20.4 million, which will be recognized using a graded vesting schedule for Performance-RSUs and a straight-line vesting schedule for Time-RSUs, over a remaining weighted average vesting period of approximately 2.09 weighted average remaining life years.

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Options . The number of the Company’s outstanding stock options as of June 30, 2018, and changes during the six months ended June 30, 2018, are presented below:


	Number of Shares	Weighted Average Exercise Price
Options outstanding as of December 31, 2017	1,250	$	9.69
Granted	234,959		22.31
Options outstanding as of June 30, 2018	236,209	$	22.24

Options vested and exercisable as of June 30, 2018	1,250	$	9.69

As of June 30, 2018, the unrecognized compensation expense associated with outstanding options was approximately $1.7 million.

Restricted Stock Awards . As of June 30, 2018, all Restricted Stock Awards (“RSAs”) have fully vested and the Company has no unrecognized compensation expense. The Company ceased granting RSAs in 2013.

(6) Earnings Per Share

The Company reports its earnings per share under the two-class method. Under this method, potentially dilutive securities are excluded from the calculation of diluted earnings per share (as well as their related impact on the net income available to common shareholders) when their impact on net income available to common shareholders is anti-dilutive.

Potentially dilutive securities for the three and six months ended June 30, 2018 and 2017 included all outstanding stock options, RSAs, and RSUs, which were included in the calculation of diluted earnings per share for these periods. The potentially dilutive effect of outstanding warrants and the underlying shares exercisable under the Company’s $287.5 million of 1.00% Convertible Senior Notes due 2020 (the “Convertible Notes”) were excluded from diluted shares outstanding as the exercise price exceeded the average market price of the Company’s common shares. The effect of the note hedge, the Company purchased to offset the underlying conversion option embedded in the Convertible Notes, was also excluded as the effect is anti-dilutive. Additionally, the restricted shares issued by the Company under RSAs have a non-forfeitable right to cash dividends, if and when declared by the Company. Accordingly, restricted shares issued under RSAs are considered to be participating securities and, as such, the Company has allocated the undistributed earnings for the three and six months ended June 30, 2017 among its outstanding common shares and issued but unvested RSAs. For the three and six months ended June 30, 2018, there were no unvested RSAs. The allocated details are as follows:

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



	Three Months Ended					Three Months Ended
	June 30, 2018					June 30, 2017
	Income		Weighted Average Shares Outstanding	Income per Share		Income		Weighted Average Shares Outstanding	Income per Share
Basic:
Net income attributable to controlling interests and available to common shareholders	$	3,767				$	15,158
Less: Undistributed earnings allocated to unvested RSAs		—					(2)
Net income available to common shareholders	$	3,767	45,927,732	$	0.08	$	15,156	45,637,778	$	0.33

Diluted:
Effect of dilutive securities:
Add: Undistributed earnings allocated to restricted shares	$	—				$	2
Stock options added to the denominator under the treasury stock method			783					5,662
RSUs added to the denominator under the treasury stock method			450,298					578,672
Less: Undistributed earnings reallocated to RSAs		—					(1)
Net income available to common shareholders and assumed conversions	$	3,767	46,378,813	$	0.08	$	15,157	46,222,112	$	0.33


	Six Months Ended					Six Months Ended
	June 30, 2018					June 30, 2017
	Income		Weighted Average Shares Outstanding	Income per Share		Income		Weighted Average Shares Outstanding	Income per Share
Basic:
Net income attributable to controlling interests and available to common shareholders	$	999				$	14,257
Less: Undistributed earnings allocated to unvested RSAs		—					(2)
Net income available to common shareholders	$	999	45,880,661	$	0.02	$	14,255	45,564,527	$	0.31

Diluted:
Effect of dilutive securities:
Add: Undistributed earnings allocated to restricted shares	$	—				$	2
Stock options added to the denominator under the treasury stock method			764					8,290
RSUs added to the denominator under the treasury stock method			476,351					699,374
Less: Undistributed earnings reallocated to RSAs		—					(2)
Net income available to common shareholders and assumed conversions	$	999	46,357,776	$	0.02	$	14,255	46,272,191	$	0.31

The computation of diluted earnings per share excluded potentially dilutive common shares related to restricted shares

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issued by the Company under RSAs of 4,185 and 5,644 shares for the three and six months ended June 30, 2017, respectively, as the effect of including these shares in the computation would have been anti-dilutive.

(7) Accumulated Other Comprehensive Loss, net

Accumulated other comprehensive loss, net, is a separate component of the Shareholders’ equity in the accompanying Consolidated Balance Sheets. The following tables present the changes in the balances of each component of Accumulated other comprehensive loss, net, for the three and six months ended June 30, 2018:



	Foreign Currency Translation Adjustments			Unrealized Gains on Interest Rate Swap and Foreign Currency Forward Contracts			Total
	(In thousands)
Total accumulated other comprehensive (loss) income, net as of March 31, 2018	$	(16,750)	(1)	$	8,140	(2)	$	(8,610)

Other comprehensive (loss) income before reclassification		(30,804)	(3)		747	(4)		(30,057)
Amounts reclassified from accumulated other comprehensive loss, net		—			1,283	(4)		1,283
Net current period other comprehensive (loss) income		(30,804)			2,030			(28,774)
Total accumulated other comprehensive (loss) income, net as of June 30, 2018	$	(47,554)	(1)	$	10,170	(2)	$	(37,384)

⁽¹⁾

Net of deferred income tax (benefit) of $(5,090) and $(5,315) as of June 30, 2018 and March 31, 2018, respectively.

⁽²⁾

Net of deferred income tax expense of $22,293 and $21,460 as of June 30, 2018 and March 31, 2018, respectively.

⁽³⁾

Net of deferred income tax expense of $225.

⁽⁴⁾

Net of deferred income tax expense of $306 and $527 for Other comprehensive income before reclassification and Amounts reclassified from accumulated other comprehensive loss, net, respectively, as of June 30, 2018. See Note 13. Derivative Financial Instruments.

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	Foreign Currency Translation Adjustments			Unrealized (Losses) Gains on Interest Rate Swap and Foreign Currency Forward Contracts			Total
	(In thousands)
Total accumulated other comprehensive loss, net as of December 31, 2017	$	(24,374)	(1)	$	(9,221)	(2)	$	(33,595)

Other comprehensive (loss) income before reclassification		(23,180)	(3)		15,519	(4)		(7,661)
Amounts reclassified from accumulated other comprehensive loss, net		—			3,872	(4)		3,872
Net current period other comprehensive (loss) income		(23,180)			19,391			(3,789)
Total accumulated other comprehensive (loss) income, net as of June 30, 2018	$	(47,554)	(1)	$	10,170	(2)	$	(37,384)

⁽¹⁾

Net of deferred income tax (benefit) of $(5,090) and $(5,339) as of June 30, 2018 and December 31, 2017, respectively.

⁽²⁾

Net of deferred income tax expense of $22,293 and $16,317 as of June 30, 2018 and December 31, 2017, respectively.

⁽³⁾

Net of deferred income tax expense of $249.

⁽⁴⁾

Net of deferred income tax expense of $4,783 and $1,193 for Other comprehensive income before reclassification and Amounts reclassified from accumulated other comprehensive loss, net, respectively, as of June 30, 2018. See Note 13. Derivative Financial Instruments.

The Company records unrealized gains and losses related to its interest rate swap and foreign currency forward contracts net of estimated taxes in the Accumulated other comprehensive loss, net line item in the accompanying Consolidated Balance Sheets since it is more likely than not that the Company will be able to realize the benefits associated with its net deferred tax asset positions in the future. The amounts reclassified from Accumulated other comprehensive loss, net are recognized in the Cost of ATM operating revenues line item in the accompanying Consolidated Statements of Operations.

The Company has elected the portfolio approach for the deferred tax asset of the unrealized gains and losses related to the interest rate swap and foreign currency forward contracts in the Accumulated other comprehensive loss, net line item in the accompanying Consolidated Balance Sheets. Under the portfolio approach, the disproportionate tax effect created when the valuation allowance was appropriately released as a tax benefit into continuing operations in 2010, will reverse out of the Accumulated other comprehensive loss, net line item in the accompanying Consolidated Balance Sheets and into continuing operations as a tax expense when the Company ceases to hold any interest rate swap contracts . As of June 30, 2018, the disproportionate tax effect is $14.6 million.

The Company currently believes that the unremitted earnings of its foreign subsidiaries under its former U.S. parent company will be reinvested for an indefinite period of time. Accordingly, no deferred taxes have been provided for the differences between the Company’s book basis and underlying tax basis in these subsidiaries or on the foreign currency translation adjustment amounts.

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(8) Intangible Assets

Intangible Assets with Indefinite Lives

The following tables present the net carrying amounts of the Company’s intangible assets with indefinite lives as of December 31, 2017 and June 30, 2018, as well as the changes in the net carrying amounts for the six months ended June 30, 2018 by segment (for additional information related to the Company’s segments, see Note 17. Segment Information ).


	North America		Europe & Africa		Australia & New Zealand		Total
	(In thousands)
Goodwill, gross as of December 31, 2017	$	565,717	$	246,549	$	152,714	$	964,980
Accumulated impairment loss		—		(50,003)		(140,038)		(190,041)
Goodwill, net as of December 31, 2017	$	565,717	$	196,546	$	12,676	$	774,939

Foreign currency translation adjustments		(5,188)		(8,321)		(650)		(14,159)

Goodwill, gross as of June 30, 2018	$	560,529	$	238,228	$	152,064	$	950,821
Accumulated impairment loss		—		(50,003)		(140,038)		(190,041)
Goodwill, net as of June 30, 2018	$	560,529	$	188,225	$	12,026	$	760,780


	Trade Name: Indefinite-lived
	North America		Europe & Africa		Total
	(In thousands)
Trade names: indefinite-lived as of December 31, 2017	$	200	$	459	$	659
Foreign currency translation adjustments		—		(9)		(9)
Trade names: indefinite-lived as of June 30, 2018	$	200	$	450	$	650

Intangible Assets with Definite Lives

The following table presents the Company’s intangible assets that were subject to amortization:


	June 30, 2018						December 31, 2017
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(In thousands)
Merchant and bank-branding contracts/relationships	$	482,080	$	(321,268)	$	160,812	$	490,332	$	(299,801)	$	190,531
Trade names: definite-lived		17,970		(8,651)		9,319		18,480		(7,091)		11,389
Technology		10,903		(5,699)		5,204		10,901		(5,230)		5,671
Non-compete agreements		4,407		(4,021)		386		4,438		(4,308)		130
Revolving credit facility deferred financing costs		2,736		(1,554)		1,182		2,730		(1,248)		1,482
Total intangible assets with definite lives	$	518,096	$	(341,193)	$	176,903	$	526,881	$	(317,678)	$	209,203

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(9) Accrued Liabilities

The Company’s accrued liabilities consisted of the following:


	June 30, 2018		December 31, 2017
	(In thousands)
Accrued merchant settlement	$	136,088	$	101,366
Accrued merchant fees		39,463		57,079
Accrued taxes		28,146		35,759
Accrued compensation		17,356		24,044
Accrued cash management fees		8,261		16,604
Accrued interest		8,540		8,679
Accrued processing costs		7,422		7,830
Accrued maintenance		3,776		3,927
Accrued armored		7,619		6,654
Accrued purchases		3,468		4,631
Accrued telecommunications costs		1,466		1,413
Accrued interest on interest rate swap contracts		180		1,070
Other accrued expenses		34,158		37,889
Total accrued liabilities	$	295,943	$	306,945

(10) Long-Term Debt

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


	June 30, 2018		December 31, 2017
	(In thousands)
Revolving credit facility, including swingline credit facility (weighted average combined interest rate of 3.2% as of June 30, 2018 and December 31, 2017)	$	76,805	$	122,461
1.00% Convertible Senior Notes due 2020, net of unamortized discount and capitalized debt issuance costs		257,659		251,973
5.125% Senior Notes due 2022, net of capitalized debt issuance costs		248,385		248,038
5.50% Senior Notes due 2025, net of capitalized debt issuance costs		295,574		295,249
Total long-term debt	$	878,423	$	917,721

The Convertible Notes with a face value of $287.5 million are presented net of unamortized discount and capitalized debt issuance costs of $29.8 million and $35.5 million as of June 30, 2018 and December 31, 2017, respectively. The 5.125% Senior Notes due 2022 (the “2022 Notes”) with a face value of $250.0 million are presented net of capitalized debt issuance costs of $1.6 million and $2.0 million as of June 30, 2018 and December 31, 2017, respectively. The 5.50% Senior Notes due 2025 (the “2025 Notes”) with a face value of $300.0 million are presented net of capitalized debt issuance costs of $4.4 million and $4.8 million as of June 30, 2018 and December 31, 2017, respectively.

Revolving Credit Facility

As of June 30, 2018, the Company had a $400.0 million revolving credit facility, which matures on July 1, 2021, led by a syndicate of banks with JPMorgan Chase, N.A. serving as the administrative agent. The revolving credit facility provides the Company with $400.0 million in available borrowings and letters of credit (subject to the covenants contained within the amended and restated credit agreement (the “Credit Agreement”) governing the revolving credit facility) and can be increased by the exercise of an accordion feature to $500.0 million, under certain conditions.

The total commitments under the credit facility can be borrowed in U.S. dollars, alternative currencies (including Euros, U.K. pounds sterling, Canadian dollars, Australian dollars and South African Rand), or a combination thereof. The Credit Agreement provides for sub-limits under the commitment of $50.0 million for swingline loans and $30.0 million

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for letters of credit. Borrowings (not including swingline loans) accrue interest, at the Company’s option and based on the type of currency borrowed, at the Alternate Base Rate, the Canadian Prime Rate, the Adjusted LIBO Rate, the Canadian Dealer Offered Rate, the Bank Bill Swap Reference Rate or the Johannesburg Interbank Agreed Rate (each, as defined in the Credit Agreement) plus a margin depending on the Company’s most recent Total Net Leverage Ratio (as defined in the Credit Agreement). The margin for Alternative Base Rate loans and Canadian Prime Rate loans varies between 0% and 1.25%, the margin for Adjusted LIBO Rate loans, Canadian Dealer Offered Rate loans and Bank Bill Swap Reference Rate loans varies between 1.00% and 2.25% and the margin for Johannesburg Interbank Agreed Rate loans varies between 1.25% and 2.50%. Swingline loans denominated in U.S. dollars bear interest at the Alternate Base Rate plus a margin as described above, swingline loans denominated in Canadian dollars bear interest at the Canadian Prime Rate plus a margin as described above and swingline loans denominated in other alternative currencies bear interest at the Overnight Foreign Currency Rate (as defined in the Credit Agreement) plus the applicable margin for the Adjusted LIBO Rate, the Bank Bill Swap Reference Rate or the Johannesburg Interbank Agreed Rate, as applicable.

Substantially all of the Company’s U.S. assets, including the stock of certain of its subsidiaries are pledged as collateral to secure borrowings made under the revolving credit facility. Furthermore, each of the Credit Facility Guarantors (as defined in the Credit Agreement) has guaranteed the full and punctual payment of the obligations under the revolving credit facility. The obligations of the CFC Borrowers (as defined in the Credit Agreement) are secured by the assets of the CFC Guarantors (as defined in the Credit Agreement), which do not guarantee the obligations of the Credit Facility Guarantors.

The Credit Agreement contains representations, warranties, and covenants that are customary for similar credit arrangements, including, among other things, covenants relating to: (i) financial reporting and notification, (ii) payment of obligations, (iii) compliance with applicable laws, and (iv) notification of certain events. Financial covenants in the Credit Agreement require the Company to maintain: (i) as of the last day of any fiscal quarter, a Senior Secured Net Leverage Ratio (as defined in the Credit Agreement) of no more than 2.25 to 1.00, (ii) as of the last day of any fiscal quarter, a Total Net Leverage Ratio of no more than 4.00 to 1.00, and (iii) as of the last day of any fiscal quarter, a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of no less than 1.50 to 1.00. Additionally, the Company is limited on the amount of restricted payments, including dividends, which it can make pursuant to the terms of the Credit Agreement; however, the Company may generally make restricted payments so long as no event of default exists at the time of such payment and the Total Net Leverage Ratio is less than 3.00 to 1.00 at the time such restricted payment is made.

As of June 30, 2018, the Company had $76.8 million of outstanding borrowings under its $400.0 million revolving credit facility and was in compliance with all applicable covenants and ratios under the Credit Agreement. The Company also had $3.6 million outstanding in letters of credit. The weighted average interest rate on the Company’s outstanding borrowings under the revolving credit facility was 3.2% as of June 30, 2018 and December 31, 2017.

$287.5 Million 1.00% Convertible Senior Notes Due 2020 and Related Equity Instruments

On November 19, 2013, Cardtronics Delaware issued the Convertible Notes at par value. Cardtronics Delaware received $254.2 million in net proceeds from the offering after deducting underwriting fees paid to the initial purchasers and a repurchase of 665,994 of its outstanding common shares concurrent with the offering. Cardtronics Delaware used a portion of the net proceeds from the offering to fund the net cost of the convertible note hedge transaction, as described below. The convertible note hedge and warrant transactions were entered into concurrent with the pricing of the Convertible Notes. Interest on the Convertible Notes is payable semi-annually in cash in arrears on June 1st and December 1st of each year. Under U.S. GAAP, certain convertible debt instruments that may be settled in cash (or other assets) upon conversion are required to be separately accounted for as liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. The Company, with assistance from a valuation professional, determined that the fair value of the debt component was $215.8 million and the fair value of the embedded option was $71.7 million as of the issuance date. The Company recognizes effective interest expense on the debt component and that interest expense effectively accretes the debt component to the total principal amount due at maturity of $287.5 million. The effective rate of interest to accrete the debt balance is approximately 5.26%, which corresponded to the Company’s estimated conventional debt instrument borrowing rate at the date of issuance.

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On July 1, 2016, Cardtronics plc, Cardtronics Delaware, and Wells Fargo Bank, National Association, as trustee, entered into a supplemental indenture (the “Convertible Notes Supplemental Indenture”) with respect to the Convertible Notes. The Convertible Notes Supplemental Indenture provides for the unconditional and irrevocable guarantee by Cardtronics plc of the prompt payment, when due, of any amount owed to the holders of the Convertible Notes. The Convertible Notes Supplemental Indenture also provides that, from and after July 1, 2016, the Convertible Notes will be convertible into shares of Cardtronics plc in lieu of common share of Cardtronics Delaware.

The Convertible Notes currently have a conversion price of $52.35 per share, which equals a conversion rate of 19.1022 shares per $1,000 principal amount of Convertible Notes, for a total of approximately 5.5 million shares underlying the debt. The conversion rate, however, is subject to adjustment under certain circumstances. Conversion can occur: (i) any time on or after September 1, 2020, (ii) after March 31, 2014, during any calendar quarter that follows a calendar quarter in which the price of the shares exceeds 135% of the conversion price for at least 20 days during the 30 consecutive trading-day period ending on the last trading day of the quarter, (iii) during the ten consecutive trading-day period following any five consecutive trading-day period in which the trading price of the Convertible Notes is less than 98% of the closing price of the shares multiplied by the applicable conversion rate on each such trading day, (iv) upon specified distributions to Cardtronics plc’s shareholders upon recapitalizations, reclassifications, or changes in shares, and (v) upon a make-whole fundamental change. A fundamental change is defined as any one of the following: (i) any person or group that acquires 50.0% or more of the total voting power of all classes of common equity that is entitled to vote generally in the election of Cardtronics plc’s directors, (ii) Cardtronics plc engages in any recapitalization, reclassification, or changes of common shares as a result of which the shares would be converted into or exchanged for, shares, other securities, or other assets or property, (iii) Cardtronics plc engages in any share exchange, consolidation, or merger where the shares converted into cash, securities, or other property, (iv) the Company engages in certain sales, leases, or other transfers of all or substantially all of the consolidated assets, or (v) Cardtronics plc’s shares are not listed for trading on any U.S. national securities exchange.

None of the Convertible Notes were convertible as of June 30, 2018 and therefore, remain classified in the Long-term debt line item in the accompanying Consolidated Balance Sheets at June 30, 2018. In future financial reporting periods, the classification of the Convertible Notes may change depending on whether any of the above contingent criteria have been subsequently satisfied.

Upon conversion, holders of the Convertible Notes are entitled to receive cash, shares, or a combination of cash and shares, at the Company’s election. In the event of a change in control, as defined in the indenture under which the Convertible Notes have been issued, holders can require Cardtronics Delaware to purchase all or a portion of their Convertible Notes for 100% of the notes’ par value plus any accrued and unpaid interest.

The Company’s interest expense related to the Convertible Notes consisted of the following:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(In thousands)				(In thousands)
Cash interest per contractual coupon rate	$	719	$	719	$	1,438	$	1,438
Amortization of note discount		2,673		2,536		5,310		5,039
Amortization of debt issuance costs		190		171		375		337
Total interest expense related to Convertible Notes	$	3,582	$	3,426	$	7,123	$	6,814

The Company’s carrying value of the Convertible Notes consisted of the following:


	June 30, 2018		December 31, 2017
	(In thousands)
Principal balance	$	287,500	$	287,500
Unamortized discount and capitalized debt issuance costs		(29,841)		(35,527)
Net carrying amount of Convertible Notes	$	257,659	$	251,973

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In connection with the issuance of the Convertible Notes, Cardtronics Delaware entered into separate convertible note hedge and warrant transactions to reduce the potential dilutive impact upon the conversion of the Convertible Notes. The net effect of these transactions effectively raised the price at which dilution would occur from the $52.35 initial conversion price of the Convertible Notes to $73.29. Pursuant to the convertible note hedge, Cardtronics Delaware purchased call options granting Cardtronics Delaware the right to acquire up to approximately 5.5 million common shares with an initial strike price of $52.35. The call options automatically become exercisable upon conversion of the Convertible Notes, and will terminate on the second scheduled trading day immediately preceding December 1, 2020. Cardtronics Delaware also sold to the initial purchasers warrants to acquire up to approximately 5.5 million common shares with a strike price of $73.29. The warrants will expire incrementally on a series of expiration dates subsequent to the maturity date of the Convertible Notes through August 30, 2021. If the conversion price of the Convertible Notes remains between the strike prices of the call options and warrants, Cardtronics plc’s shareholders will not experience any dilution in connection with the conversion of the Convertible Notes; however, to the extent that the price of the shares exceeds the strike price of the warrants on any or all of the series of related expiration dates of the warrants, Cardtronics plc would be required to issue additional shares to the warrant holders. The amounts allocated to both the note hedge and warrants were recorded in the Shareholders’ equity section in the accompanying Consolidated Balance Sheets.

$250.0 Million 5.125% Senior Notes Due 2022

On July 28, 2014, in a private placement offering, Cardtronics Delaware issued $250.0 million in aggregate principal amount of the 2022 Notes pursuant to an indenture dated July 28, 2014 (the “2022 Notes Indenture”) among Cardtronics Delaware , certain subsidiary guarantors (each, a “2022 Notes Guarantor”), and Wells Fargo Bank, National Association, as trustee. Interest on the 2022 Notes is payable semi-annually in cash in arrears on February 1st and August 1st of each year.

On July 1, 2016, Cardtronics plc, Cardtronics Delaware, certain 2022 Notes Guarantors, and Wells Fargo Bank, National Association, as trustee, entered into a supplemental indenture (the “2022 Notes Supplemental Indenture”) with respect to the 2022 Notes. The 2022 Notes Supplemental Indenture provides for the unconditional and irrevocable guarantee by Cardtronics plc of the prompt payment, when due, of any amount owed to the holders of the 2022 Notes. Furthermore, certain additional subsidiary guarantors were also added as 2022 Notes Guarantors to the 2022 Notes. On April 28, 2017, additional subsidiaries of Cardtronics plc were added as 2022 Notes Guarantors pursuant to a second supplemental indenture to the 2022 Notes Indenture (the “2022 Notes Second Supplemental Indenture”).

The 2022 Notes and the related guarantees (the “2022 Notes Guarantees”) rank: (i) equally in right of payment with all of Cardtronics Delaware’s and the 2022 Notes Guarantors (including Cardtronics plc) existing and future senior indebtedness, (ii) effectively junior to secured debt to the extent of the collateral securing such debt, including borrowings under the Company’s revolving credit facility, and (iii) structurally junior to existing and future indebtedness of Cardtronics plc’s non-guarantor subsidiaries. The 2022 Notes and 2022 Notes Guarantees rank senior in right of payment to any of Cardtronics Delaware’s and the 2022 Notes Guarantors’ (including Cardtronics plc) existing and future subordinated indebtedness.

The 2022 Notes contain covenants that, among other things, limit Cardtronics plc’s ability and the ability of certain of its restricted subsidiaries (including Cardtronics Delaware) to incur or guarantee additional indebtedness, make certain investments, or pay dividends or distributions on Cardtronics plc’s common shares or repurchase common shares or make certain other restricted payments, consolidate or merge with or into other companies, conduct asset sales, restrict dividends or other payments by restricted subsidiaries, engage in transactions with affiliates or related persons, and create liens.

Obligations under its 2022 Notes are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by Cardtronics plc and certain of its subsidiaries and certain of its future subsidiaries, with the exception of Cardtronics plc’s immaterial subsidiaries and CFC Guarantors (as defined in the Credit Agreement). There are no significant restrictions on the ability of Cardtronics plc to obtain funds from Cardtronics Delaware or the other 2022 Notes Guarantors by dividend or loan. None of the 2022 Notes Guarantors’ assets represent restricted assets pursuant to Rule 4-08(e)(3) of Regulation S-X. The 2022 Notes include registration rights, and as required under the terms of the 2022 Notes, Cardtronics Delaware completed an exchange offer for these 2022 Notes in June 2015 whereby participating holders received registered notes.

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The 2022 Notes are subject to certain automatic customary releases with respect to the 2022 Notes Guarantors (other than Cardtronics plc), including the sale, disposition, or transfer of the common shares or substantially all of the assets of such 2022 Notes Guarantor, designation of such 2022 Notes Guarantor as unrestricted in accordance with the 2022 Notes Indenture, exercise of the legal defeasance option or the covenant defeasance option, liquidation, or dissolution of such 2022 Notes Guarantor and, in the case of a 2022 Notes Guarantor that is not wholly-owned by Cardtronics plc, such 2022 Notes Guarantor ceasing to guarantee other indebtedness of Cardtronics plc, Cardtronics Delaware, or another 2022 Notes Guarantor. The 2022 Notes Guarantors, including Cardtronics plc, may not sell or otherwise dispose of all or substantially all of their properties or assets to, or consolidate with or merge into, another company if such a sale would cause a default under the 2022 Notes Indenture and certain other specified requirements under the 2022 Notes Indenture are not satisfied.

$300.0 Million 5.50% Senior Notes Due 2025

On April 4, 2017, in a private placement offering, Cardtronics Delaware and Cardtronics USA, Inc. (the “2025 Notes Issuers”) issued $300.0 million in aggregate principal amount of the 2025 Notes pursuant to an indenture dated April 4, 2017 (the “2025 Notes Indenture”) among the 2025 Notes Issuers, Cardtronics plc, and certain of its subsidiaries, as guarantors (each, a “2025 Notes Guarantor”), and Wells Fargo Bank, National Association, as trustee.

Interest on the 2025 Notes accrues from April 4, 2017, the date of issuance, at the rate of 5.50% per annum. Interest on the 2025 Notes is payable semi-annually in cash in arrears on May 1st and November 1st of each year, commencing on November 1, 2017.

The 2025 Notes and the related guarantees (the “2025 Guarantees”) are the general unsecured senior obligations of each of the 2025 Notes Issuers and the 2025 Notes Guarantors, respectively, and rank: (i) equally in right of payment with all of the 2025 Notes Issuers’ and the 2025 Notes Guarantors’ existing and future senior indebtedness and (ii) senior in right of payment to all of the 2025 Notes Issuers’ and the 2025 Notes Guarantors’ future subordinated indebtedness. The 2025 Notes and the 2025 Guarantees are effectively subordinated to any of the 2025 Notes Issuers’ and the 2025 Notes Guarantors’ existing and future secured debt to the extent of the collateral securing such debt, including all borrowings under the Company’s revolving credit facility. The 2025 Notes are structurally subordinated to all liabilities of any of Cardtronics plc’s subsidiaries (excluding the 2025 Notes Issuers) that do not guarantee the 2025 Notes.

The 2025 Notes contain covenants that, among other things, limit the 2025 Notes Issuers’ ability and the ability of Cardtronics plc and certain of its restricted subsidiaries to incur or guarantee additional indebtedness, make certain investments, or pay dividends or distributions on Cardtronics plc’s common shares or repurchase common shares or make certain other restricted payments, consolidate or merge with or into other companies, conduct asset sales, restrict dividends or other payments by restricted subsidiaries, engage in transactions with affiliates or related persons, and create liens.

Obligations under the 2025 Notes are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by Cardtronics plc and certain of its subsidiaries and certain of its future subsidiaries, with the exception of Cardtronics plc’s immaterial subsidiaries and CFC Guarantors (as defined in the Credit Agreement). There are no significant restrictions on the ability of Cardtronics plc to obtain funds from Cardtronics Delaware, Cardtronics USA, Inc., or the other 2025 Notes Guarantors by dividend or loan. None of the 2025 Notes Guarantors’ assets represent restricted assets pursuant to Rule 4-08(e)(3) of Regulation S-X.

The 2025 Notes are subject to certain automatic customary releases with respect to the 2025 Notes Guarantors (other than Cardtronics plc, Cardtronics Holdings Limited, and CATM Holdings LLC), including the sale, disposition, or transfer of the common shares or substantially all of the assets of such 2025 Notes Guarantor, designation of such 2025 Notes Guarantor as unrestricted in accordance with the 2025 Notes Indenture, exercise of the legal defeasance option or the covenant defeasance option, liquidation, or dissolution of such 2025 Notes Guarantor. The 2025 Notes Guarantors, including Cardtronics plc, may not sell or otherwise dispose of all or substantially all of their properties or assets to, or consolidate with or merge into, another company if such a sale would cause a default under the 2025 Notes Indenture and certain other specified requirements under the 2025 Notes Indenture are not satisfied.

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(11) Asset Retirement Obligations

Asset retirement obligations (“ARO”) consist primarily of costs to deinstall the Company’s ATMs and restore the ATM sites to their original condition, which are estimated based on current market rates. In most cases, the Company is contractually required to perform this deinstallation of its owned ATMs and in some cases, site restoration work. For each group of similar ATM type, the Company has recognized the estimated fair value of the ARO as a liability in the accompanying Consolidated Balance Sheets and capitalized that cost as part of the cost basis of the related asset. The related assets are depreciated on a straight-line basis over five years, which is the estimated average time period that an ATM is installed in a location before being deinstalled, and the related liabilities are accreted to their full value over the same period of time.

The changes in the Company’s ARO liability consisted of the following:


	June 30, 2018

	(In thousands)
Asset retirement obligations at December 31, 2017	$	69,757
Additional obligations		3,463
Accretion expense		946
Change in estimates		462
Payments		(9,696)
Foreign currency translation adjustments		(1,235)
Asset retirement obligations at June 30, 2018		63,697
Less: current portion of asset retirement obligations		6,982
Asset retirement obligations, excluding current portion, June 30, 2018	$	56,715

For additional information related to the Company’s ARO with respect to its fair value measurements, see Note 14. Fair Value Measurements .

(12) Other Liabilities

The Company’s other liabilities consisted of the following:


	June 30, 2018		December 31, 2017
	(In thousands)
Current portion of other long-term liabilities
Interest rate swap contracts	$	1,565	$	7,314
Asset retirement obligations		6,982		9,837
Deferred revenue		3,770		3,590
Other		9,722		10,629
Total current portion of other long-term liabilities	$	22,039	$	31,370

Noncurrent portion of other long-term liabilities
Acquisition-related contingent consideration	$	40,134	$	42,614
Interest rate swap contracts		—		3,547
Deferred revenue		1,825		2,063
Other		22,521		26,778
Total noncurrent portion of other long-term liabilities	$	64,480	$	75,002

As of June 30, 2018, the Acquisition-related contingent consideration line item consisted of the estimated fair value of the contingent consideration associated with the Spark acquisition.

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(13) Derivative Financial Instruments

Risk Management Objectives of Using Derivatives

The Company is exposed to interest rate risk associated with its vault cash rental obligations and, to a lesser extent, borrowings under its revolving credit facility. The Company utilizes varying notional amount interest rate swap contracts to manage the interest rate risk associated with its vault cash rental obligations in the U.S., the U.K., and Australia. The Company does not currently utilize derivative instruments to manage the interest rate risk associated with its borrowings. The Company is also exposed to foreign currency exchange rate risk with respect to its operations outside the U.S. The Company also uses foreign currency forward contracts to hedge its foreign exchange rate risk associated with certain anticipated transactions. Currently, the Company has outstanding foreign currency forward contracts for the purchase of approximately 7 million Canadian dollars with durations that extend through June 28, 2019.

The Company’s interest rate swap contracts serve to mitigate interest rate risk exposure by converting a portion of the Company’s monthly floating-rate vault cash rental payments to monthly fixed-rate vault cash rental payments. Typically, the Company receives monthly floating-rate payments from its interest rate swap contract counterparties that correspond to, in all material respects, the monthly floating-rate payments required by the Company to make to its vault cash rental providers for the portion of the average outstanding vault cash balances that have been hedged. In return, the Company pays its counterparties a monthly fixed-rate amount based on the same notional amounts outstanding. By converting the vault cash rental obligation interest rate from a floating-rate to a fixed-rate, the impact of favorable and unfavorable changes in future interest rates on the monthly vault cash rental payments recognized in the Cost of ATM operating revenues line in the accompanying Consolidated Statements of Operations, has been reduced.

There is never an exchange of the underlying principal or notional amounts associated with the interest rate swap contracts described above. Additionally, none of the Company’s existing interest rate swap contracts contain credit-risk-related contingent features.

Accounting Policy

The interest rate swap contracts discussed above are derivative instruments used by the Company to hedge exposure to variability in expected future cash flows attributable to a particular risk; therefore, they are designated and qualify as cash flow hedging instruments. The Company does not currently hold any derivative instruments not designated as hedging instruments, fair value hedges, or hedges of a net investment in a foreign operation.

The Company reports the effective portion of a gain or loss related to the cash flow hedging instrument as a component of the Accumulated other comprehensive loss, net line item in the accompanying Consolidated Balance Sheets and reclassifies the gain or loss into earnings in the Vault cash rental expense line in the accompanying Consolidated Statements of Operations in the same period or periods during which the hedged transaction affects and has been forecasted in earnings.

Gains and losses related to the cash flow hedging instrument that represent either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in the Other expense line in the accompanying Consolidated Statements of Operations. As discussed above, the Company generally utilizes fixed-for-floating interest rate swap contracts in which the underlying pricing terms of the cash flow hedging instrument agree, in all material respects, with the pricing terms of the vault cash rental obligations to the Company’s vault cash providers. Therefore, the amount of ineffectiveness associated with the interest rate swap contracts has historically been immaterial. If the Company concludes that it is no longer probable the expected vault cash obligations that have been hedged will occur, or if changes are made to the underlying contract terms of the vault cash rental agreements, the interest rate swap contract would be deemed ineffective. The Company does not currently anticipate terminating or modifying terms of its existing derivative instruments prior to their expiration dates.

Accordingly, the Company recognizes all of its interest rate swap contracts derivative instruments as assets or liabilities in the accompanying Consolidated Balance Sheets at fair value and any changes in the fair values of the related interest rate swap contracts have been reported in the Accumulated other comprehensive loss, net line item in the accompanying Consolidated Balance Sheets. The Company believes that it is more likely than not that it will be able to realize the benefits associated with its net deferred tax asset positions in the future, therefore, the unrealized gains and

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losses to the fair value related to the interest rate swap contracts have been reported net of estimated taxes in the Accumulated other comprehensive loss, net line item in the accompanying Consolidated Balance Sheets. For additional information related to the Company’s interest rate swap contracts with respect to its fair value measurements, see Note 14. Fair Value Measurements .

Cash Flow Hedges

Summary of outstanding interest rate swaps in the U.S. and U.K.

The Company is party to varying notional amount interest rate swap contracts in the U.S. and the U.K. The notional amounts, weighted average fixed rates, and terms associated with the Company’s interest rate swap contracts accounted for as cash flow hedges that are currently in place for the U.S. and U.K. (as of the date of the issuance of this Form 10-Q) are as follows:


Notional Amounts		Weighted Average Fixed Rate		Notional Amounts		Weighted Average Fixed Rate
U.S. $		U.S.		U.K. £		U.K.		Term
(In millions)				(In millions)
$	1,450	2.11	%	£	550	0.82	%	July 1, 2018 – December 31, 2018
$	1,000	2.06	%	£	550	0.90	%	January 1, 2019 – December 31, 2019
$	1,000	2.06	%	£	500	0.94	%	January 1, 2020 – December 31, 2020
$	400	1.46	%	£	500	0.94	%	January 1, 2021 – December 31, 2021
$	400	1.46	%	£	500	0.94	%	January 1, 2022 – December 31, 2022

Summary of outstanding interest rate swaps in Australia

The notional amounts, weighted average fixed rates, and terms associated with the Company’s interest rate swap contracts accounted for as cash flow hedges that are currently in place for Australia (as of the date of the issuance of this Form 10-Q) are as follows:


Notional Amounts AUS $		Weighted Average Fixed Rate		Term
(In millions)
$	85	3.11	%	July 1, 2018 – September 28, 2018
$	35	2.98	%	September 29, 2018 – February 28, 2019

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The following tables depict the effects of the use of the Company’s derivative interest rate swap contracts in the accompanying Consolidated Balance Sheets and Consolidated Statements of Operations.

Balance Sheet Data


	June 30, 2018			December 31, 2017
Asset (Liability) Derivative Instruments	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
		(In thousands)			(In thousands)
Derivatives designated as hedging instruments:
Interest rate swap contracts	Prepaid expenses, deferred costs, and other current assets	$	4,438	Prepaid expenses, deferred costs, and other current assets	$	1,154
Interest rate swap contracts	Prepaid expenses, deferred costs, and other noncurrent assets		27,450	Prepaid expenses, deferred costs, and other noncurrent assets		14,467
Interest rate swap contracts	Current portion of other long-term liabilities		(1,565)	Current portion of other long-term liabilities		(7,314)
Interest rate swap contracts	Other long-term liabilities		—	Other long-term liabilities		(3,547)
Total derivative instruments, net		$	30,323		$	4,760

Statements of Operations Data



	Three Months Ended June 30,
Derivatives in Cash Flow Hedging Relationship	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivative Instruments (Effective Portion)				Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)
	2018		2017			2018		2017
	(In thousands)					(In thousands)
Interest rate swap contracts	$	747	$	(699)	Cost of ATM operating revenues	$	(1,283)	$	(4,883)



	Six Months Ended June 30,
Derivatives in Cash Flow Hedging Relationship	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivative Instruments (Effective Portion)				Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)
	2018 (1)		2017			2018		2017
	(In thousands)					(In thousands)
Interest rate swap contracts	$	15,519	$	(4,554)	Cost of ATM operating revenues	$	(3,872)	$	(10,143)

(1)

Also includes an insignificant loss related to foreign currency forward contracts as of the three and six months ended June 30, 2018.

As of June 30, 2018, the Company expects to reclassify $2.9 million of net derivative-related gains contained within the Accumulated other comprehensive loss, net line item in the accompanying Consolidated Balance Sheets into earnings during the next twelve months concurrent with the recording of the related vault cash rental expense amounts .

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( 14) Fair Value Measurements

The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2018 and December 31, 2017 using the fair value hierarchy prescribed by U.S. GAAP. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant non-observable inputs. An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.


	Fair Value Measurements at June 30, 2018
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Assets associated with interest rate swap contracts	$	31,888	$	—	$	31,888	$	—
Liabilities
Liabilities associated with interest rate swap contracts	$	(1,565)	$	—	$	(1,565)	$	—
Liabilities associated with acquisition-related contingent consideration	$	(40,134)	$	—	$	—	$	(40,134)


	Fair Value Measurements at December 31, 2017
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Assets associated with interest rate swap contracts	$	15,621	$	—	$	15,621	$	—
Liabilities
Liabilities associated with interest rate swap contracts	$	(10,861)	$	—	$	(10,861)	$	—
Liabilities associated with acquisition-related contingent consideration	$	(42,614)	$	—	$	—	$	(42,614)

As of June 30, 2018 and December 31, 2017, our liabilities associated with Level 2 interest rate swap contracts also include an insignificant amount related to foreign currency forward contracts .

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

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

Acquisition-related intangible assets. The estimated fair values of acquisition-related intangible assets are valued based on a discounted cash flows analysis using significant non-observable (Level 3) inputs. Intangible assets 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. An assessment of non-amortized intangible assets is performed on an annual basis, or more frequently based on the occurrence of events that might indicate a potential impairment.

Acquisition-related contingent consideration. Liabilities from acquisition-related contingent consideration are estimated using a Monte Carlo simulation and market observable, as well as internal projections, and other significant non-observable (Level 3) inputs based on the Company’s best estimate of future operational results upon which the payment of these obligations are contingent. Future changes to the estimated contingent liability either higher or lower may occur

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as the estimated internal projections and other significant non-observable inputs for the calculation become available and are updated as deemed necessary. These future changes could result in a material change in the estimated contingent liability. The estimates and significant non-observable inputs may differ from actual results. As the estimated contingent liability is based upon performance relative to certain agreed upon earnings targets in 2019 and 2020, the performance based payments would occur in 2020 and 2021, respectively. As of June 30, 2018, the preliminary estimated fair value of the Company’s acquisition-related contingent consideration liability was approximately $40.1 million. During the three and six months ended June 30, 2018, the Company recognized $0 .9 million and $1.9 million of other expense, respectively, to revise the estimated fair value of the contingent consideration arrangement and separately $6.3 million and $4.4 million, respectively, of foreign exchange gains to remeasure the South African Rand denominated liability. These amounts are included in the Other (income) expense line in the Consolidated Statements of Operations. For additional information related to the Spark acquisition contingent consideration, see Note 4. Acquisitions .

Long-term debt . The carrying amount of the long-term debt balance related to borrowings under the Company’s revolving credit facility approximates fair value due to the fact that any outstanding borrowings are subject to short-term floating interest rates. As of June 30, 2018, the fair value of the Convertible Notes, the 2022 Notes, and the 2025 Notes (see Note 10. Long-Term Debt ) totaled $268.7 million, $242.4 million, and $272.5 million, respectively, based on the quoted prices in markets that are not active (Level 2) inputs for these notes as of that date.

Additions to asset retirement obligations liability. The Company estimates the fair value of additions to its ARO liability using expected future cash outflows discounted at the Company’s credit-adjusted risk-free interest rate. Liabilities added to the ARO are measured at fair value at the time of the asset installations using significant non-observable (Level 3) inputs. These liabilities are evaluated periodically based on estimated current fair value. Amounts added to the ARO liability during the six months ended June 30, 2018 and 2017 totaled $3.5 million and $14.0 million, respectively. The additions during the six months ended June 30, 2017 largely related to the ATM placements acquired in the DCPayments and Spark acquisitions.

Interest rate swap and foreign currency forward contracts. As of June 30, 2018, the fair value of the Company’s interest rate swap contracts consisted of an asset of $31.9 million and a liability of $1.6 million (including an insignificant amount related to foreign currency forward contracts). These financial instruments are carried at fair value and calculated as the present value of amounts estimated to be received or paid to a marketplace participant in a selling transaction. These derivatives are valued using pricing models based on significant other observable (Level 2) inputs, while taking into account the creditworthiness of the party that is in the liability position with respect to each trade. For additional information related to the valuation process of this asset or liability, see Note 13. Derivative Financial Instruments .

(15) Commitments and Contingencies

Legal Matters

The Company is subject to various legal proceedings and claims arising in the ordinary course of its business. The Company has provided reserves where necessary for contingent liabilities, based on ASC 450, contingencies, when it has determined that a liability is probable and reasonably estimable. The Company’s management does not expect the outcome in any legal proceedings, individually or collectively, to have a material adverse financial or operational impact on the Company. Additionally, the Company currently expenses all legal costs as they are incurred .

Other Commitments and Contingencies

Asset retirement obligations. The Company’s ARO consist primarily of deinstallation costs of the Company’s ATMs and costs to restore the ATM sites to their original condition. In most cases, the Company is legally required to perform this deinstallation, and in some cases, the site restoration work. As of June 30, 2018, the Company had $63.7 million accrued for these liabilities. For additional information, see Note 11. Asset Retirement Obligations .

Acquisition-related contingent consideration. As of June 30, 2018, the Company had $40.1 million accrued for the Spark acquisition-related contingent consideration. For additional information related to the Spark acquisition contingent consideration, see Note 4. Acquisitions .

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(16) Income Taxes

The Company’s income tax expense based on income before income taxes for the periods presented was as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
	(In thousands, excluding percentages)
Income tax expense	$	2,586		$	4,670		$	2,555		$	1,718
Effective tax rate		40.7	%		23.6	%		72.1	%		10.8	%

The Company’s income tax expense for the three months ended June 30, 2018 totaled $2.6 million, resulting in an effective tax rate of 40.7%, compared to an expense of $4.7 million, and an effective tax rate of 23.6%, for the same period of 2017. The Company’s income tax expense for the six months ended June 30, 2018 totaled $2.6 million, or an effective tax rate of 72.1%, compared to an expense of $1.7 million, or an effective tax rate of 10.8%, for the same period of 2017. The increase in the effective tax rate for the three and six months ended June 30, 2018, compared to the same periods of 2017, was primarily attributable to (i) the limitation of interest expense the Company could deduct in the U.S. as a result of U.S. Tax Reform, ii) the limitation of deductions in Australia, and iii) the additional tax expense related to share-based compensation in 2018, compared to an excess tax benefit in the same period of 2017.

As of June 30, 2018, the Company had not completed its accounting for the tax effects of the U.S. Tax Reform, due to additional anticipated guidance from standard-setting bodies and the need to obtain additional information to complete calculations. In accordance with SEC Staff Accounting bulletin No. 118, the Company will adjust the provisional estimates previously recorded in December 31, 2017, within the measurement period when the amounts are determined. There have been no changes to the provisional estimates that were initially recorded during the year ended December 31, 2017 as of June 30, 2018.

The Company assesses the need for any deferred tax asset valuation allowances at the end of each reporting period. The determination of whether a valuation allowance for deferred tax assets is needed is subject to considerable judgment and requires an evaluation of all available positive and negative evidence. The Company’s assessment concluded that maintaining valuation allowances on deferred tax assets in Australia, Mexico, and Spain was appropriate, as the Company currently believes that it is more likely than not that the related deferred tax assets will not be realized.

The deferred tax expenses and benefits associated with the Company’s net unrealized gains and losses on derivative instruments and foreign currency translation adjustments have been recorded in the Accumulated other comprehensive loss, net line item in the accompanying Consolidated Balance Sheets.

(17) Segment Information

As of June 30, 2018, the Company’s operations consisted of its North America, Europe & Africa, and Australia & New Zealand segments. The Company’s ATM operations in the U.S., Canada, Mexico, and Puerto Rico are included in its North America segment. The North America segment also includes the Company’s transaction processing operations, which service its internal ATM operations, along with external customers. The Company’s operations in the U.K., Ireland, Germany, Spain, and South Africa are included in its Europe & Africa segment, along with i-design (the Company’s ATM advertising business based in the U.K.). The Company exited its operations in Poland at the end of 2017, which had previously been included in the Europe & Africa segment in the three and six months ended June 30, 2017. The Company’s Australia & New Zealand segment includes Australia and New Zealand. The Corporate segment solely includes the Company’s corporate general and administrative expenses. While each of the reporting segments provides similar kiosk-based and/or ATM-related services, each segment is managed separately and requires different marketing and business strategies. Segment information presented for prior periods have been revised to reflect the changes in the Company’s segments.

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Management uses Adjusted EBITDA and Adjusted EBITA, together with U.S. GAAP measures, to manage and measure the performance of its segments. Management believes Adjusted EBITDA and Adjusted EBITA are useful measures as they allow management to more effectively evaluate the performance of the business and compare its results of operations from period to period without regard to financing methods, capital structure, or non-recurring costs as defined by the Company. Adjusted EBITDA and Adjusted EBITA exclude amortization of intangible assets, share-based compensation expense, acquisition and divestiture-related expenses, certain non-operating expenses, (if applicable in a particular period) certain costs not anticipated to occur in future periods, gains or losses on disposal and impairment of assets, the Company’s obligations for the payment of income taxes, interest expense, and other obligations such as capital expenditures, and includes an adjustment for noncontrolling interests. Additionally, Adjusted EBITDA excludes depreciation and accretion expense. Depreciation and accretion expense and amortization of intangible assets are excluded as these amounts can vary substantially from company to company within the Company’s industry depending upon accounting methods and book values of assets, capital structures, and the methods by which the assets were acquired.

Adjusted EBITDA and Adjusted EBITA, as defined by the Company, are non-GAAP financial measures provided as a complement to financial results prepared in accordance with U.S. GAAP and may not be comparable to similarly-titled measures reported by other companies. In evaluating the Company’s performance as measured by Adjusted EBITDA and Adjusted EBITA, management recognizes and considers the limitations of these measurements. Accordingly, Adjusted EBITDA and Adjusted EBITA are only two of the measurements that management utilizes. Therefore, Adjusted EBITDA and Adjusted EBITA should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating, investing, or financing activities, or other income or cash flow measures prepared in accordance with U.S. GAAP.

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The following table is a reconciliation of Net income attributable to controlling interests and available to common shareholders to EBITDA, Adjusted EBITDA, and Adjusted EBITA:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(In thousands)
Net income attributable to controlling interests and available to common shareholders	$	3,767	$	15,158	$	999	$	14,257
Adjustments:
Interest expense, net		9,159		9,460		18,333		16,017
Amortization of deferred financing costs and note discount		3,355		3,146		6,663		6,122
Income tax expense		2,586		4,670		2,555		1,718
Depreciation and accretion expense		31,764		29,755		62,806		58,876
Amortization of intangible assets		13,498		15,247		27,269		30,427
EBITDA	$	64,129	$	77,436	$	118,625	$	127,417
Add back:
Loss on disposal and impairment of assets		9,697		669		15,117		3,863
Other (income) expense (1)		(2,187)		1,945		(27)		365
Noncontrolling interests (2)		18		(6)		19		(10)
Share-based compensation expense		3,513		3,623		5,958		5,820
Acquisition and divestiture-related expenses (3)		913		3,993		2,633		12,449
Restructuring expenses (4)		2,063		—		4,476		9,003
Adjusted EBITDA	$	78,146	$	87,660	$	146,801	$	158,907
Less:
Depreciation and accretion expense (5)		31,764		29,754		62,805		58,872
Adjusted EBITA	$	46,382	$	57,906	$	83,996	$	100,035

⁽¹⁾

Includes foreign currency translation gains/losses, the revaluation of the estimated acquisition-related contingent consideration, and other non-operating costs.

⁽²⁾

Noncontrolling interests adjustment made such that Adjusted EBITDA includes only the Company’s ownership interest in the Adjusted EBITDA of one of its Mexican subsidiaries.

⁽³⁾

Acquisition and divestiture-related expenses include costs incurred for professional and legal fees and certain other transition and integration-related costs. Expenses include employee severance costs and lease termination costs related to DCPayments acquisition integration in the three and six months ended June 30, 2018.

⁽⁴⁾

Includes employee severance and other costs incurred in conjunction with a corporate reorganization and cost reduction initiative, and in the six months ended June 30, 2017, expenses associated with the Company’s redomicile of its parent company to the U.K., which was completed on July 1, 2016.

⁽⁵⁾

Amounts exclude a portion of the expenses incurred by one of the Company’s Mexican subsidiaries to account for the amounts allocable to the noncontrolling interest shareholders.

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The following tables reflect certain financial information for each of the Company’s reporting segments for the periods presented:



	Three Months Ended June 30, 2018
	North America		Europe & Africa		Australia & New Zealand		Corporate		Eliminations		Total
	(In thousands)
Revenue from external customers	$	204,540	$	107,326	$	29,121	$	—	$	—	$	340,987
Intersegment revenues		2,377		524		—		—		(2,901)		—
Cost of revenues		140,189		64,912		22,030		91		(1,783)		225,439
Selling, general, and administrative expenses		15,846		9,361		2,510		13,211		—		40,928
Restructuring expenses		1,073		495		—		495		—		2,063
Acquisition and divestiture-related expenses		(311)		167		433		624		—		913
Loss on disposal and impairment of assets		8,612		972		113		—		—		9,697

Adjusted EBITDA		50,888		33,578		4,580		(9,800)		(1,100)		78,146

Depreciation and accretion expense		17,309		13,262		1,247		—		(54)		31,764
Adjusted EBITA		33,578		20,317		3,333		(9,800)		(1,046)		46,382

Capital expenditures (1)	$	4,991	$	9,144	$	1,555	$	10,253	$	—	$	25,943



	Three Months Ended June 30, 2017
	North America		Europe & Africa		Australia & New Zealand		Corporate		Eliminations		Total
	(In thousands)
Revenue from external customers	$	249,477	$	102,670	$	32,965	$	—	$	—	$	385,112
Intersegment revenues		2,379		484		—		—		(2,863)		—
Cost of revenues		170,144		65,062		24,115		183		(1,904)		257,600
Selling, general, and administrative expenses		17,774		10,084		2,501		13,111		—		43,470
Acquisition and divestiture-related expenses		578		1,518		692		1,205		—		3,993
Loss (gain) on disposal and impairment of assets		624		194		(149)		—		—		669

Adjusted EBITDA		63,914		28,010		6,341		(9,646)		(959)		87,660

Depreciation and accretion expense		17,404		10,782		1,569		—		—		29,755
Adjusted EBITA		46,511		17,228		4,772		(9,646)		(959)		57,906

Capital expenditures (1)	$	13,822	$	15,495	$	1,990	$	—	$	—	$	31,307

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	Six Months Ended
	June 30, 2018
	North America		Europe & Africa		Australia & New Zealand		Corporate		Eliminations		Total
	(In thousands)
Revenue from external customers	$	412,073	$	205,282	$	59,816	$	—	$	—	$	677,171
Intersegment revenues		4,605		1,012		—		—		(5,617)		—
Cost of revenues		285,573		126,446		44,971		175		(3,474)		453,691
Selling, general, and administrative expenses		32,477		18,603		5,048		26,554		(14)		82,668
Restructuring expenses		2,130		1,176		—		1,170		—		4,476
Acquisition and divestiture-related expenses		(348)		1,516		635		830		—		2,633
Loss on disposal and impairment of assets		10,634		4,382		101		—		—		15,117

Adjusted EBITDA		98,627		61,246		9,798		(20,771)		(2,099)		146,801

Depreciation and accretion expense		33,852		26,498		2,509		—		(53)		62,806
Adjusted EBITA		64,774		34,748		7,289		(20,771)		(2,044)		83,996

Capital expenditures (1)	$	10,523	$	18,544	$	3,422	$	14,193	$	—	$	46,682


	Six Months Ended
	June 30, 2017
	North America		Europe & Africa		Australia & New Zealand		Corporate		Eliminations		Total
	(In thousands)
Revenue from external customers	$	488,543	$	189,598	$	64,543	$	—	$	—	$	742,684
Intersegment revenues		4,370		803		—		—		(5,173)		—
Cost of revenues		336,007		123,700		47,493		140		(3,178)		504,162
Selling, general, and administrative expenses		36,026		19,717		4,351		25,325		—		85,419
Redomicile-related expenses		—		23		—		737		—		760
Restructuring expenses		3,668		831		—		3,744		—		8,243
Acquisition and divestiture-related expenses		2,148		1,993		1,711		6,597		—		12,449
Loss (gain) on disposal and impairment of assets		3,796		209		(190)		48		—		3,863

Adjusted EBITDA		120,876		46,985		12,687		(19,646)		(1,995)		158,907

Depreciation and accretion expense		34,559		20,617		3,700		—		—		58,876
Adjusted EBITA		86,321		26,368		8,987		(19,646)		(1,995)		100,035

Capital expenditures (1)	$	39,503	$	26,210	$	4,155	$	—	$	—	$	69,868

⁽¹⁾

Capital expenditures include payments made for plant, property, and equipment, exclusive license agreements, and site acquisition costs. Additionally, capital expenditure amounts for one of the Company’s Mexican subsidiaries, included in the North America segment, are reflected gross of any noncontrolling interest amounts.

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Identifiable Assets


	June 30, 2018		December 31, 2017
	(In thousands)
North America	$	1,170,659	$	1,175,154
Europe & Africa		534,960		579,879
Australia & New Zealand		66,612		75,095
Corporate		28,105		32,588
Total	$	1,800,336	$	1,862,716

(18) Supplemental Guarantor Financial Information

Prior to the Redomicile Transaction, the 2022 Notes were fully and unconditionally guaranteed, subject to certain customary release provisions, on a joint and several basis by certain wholly-owned subsidiaries of Cardtronics Delaware. On July 1, 2016, Cardtronics plc and certain of its subsidiaries became 2022 Notes Guarantors pursuant to the 2022 Notes Supplemental Indenture entered into in conjunction with the Redomicile Transaction. As of June 30, 2018, the 2022 Notes were fully and unconditionally guaranteed, subject to certain customary release provisions, on a joint and several basis by Cardtronics plc and these subsidiaries (including the original Cardtronics Delaware subsidiary 2022 Notes Guarantors). Cardtronics Delaware, the subsidiary issuer of the 2022 Notes is 100% owned by Cardtronics plc, the parent 2022 Notes Guarantor. In addition, on April 28, 2017, additional subsidiaries of Cardtronics plc were added as 2022 Notes Guarantors pursuant to the 2022 Notes Second Supplemental Indenture.

The guarantees of the 2022 Notes by any 2022 Notes Guarantor (other than Cardtronics plc) are subject to automatic and customary releases upon: (i) the sale or disposition of all or substantially all of the assets of the 2022 Notes Guarantor, (ii) the disposition of sufficient common shares of the 2022 Notes Guarantor so that it no longer qualifies under the 2022 Notes Indenture as a restricted subsidiary of Cardtronics plc, (iii) the designation of the 2022 Notes Guarantor as unrestricted in accordance with the 2022 Notes Indenture, (iv) the legal or covenant defeasance of the 2022 Notes or the satisfaction and discharge of the 2022 Notes Indenture, (v) the liquidation or dissolution of the 2022 Notes Guarantor, or (vi) provided the 2022 Notes Guarantor is not wholly-owned by Cardtronics plc, its ceasing to guarantee other indebtedness the Cardtronics plc, Cardtronics Delaware, or another 2022 Notes Guarantor. A 2022 Notes Guarantor (other than Cardtronics plc) may not sell or otherwise dispose of all or substantially all of its properties or assets to, or consolidate with or merge with or into, another company (other than Cardtronics plc, Cardtronics Delaware, or another 2022 Notes Guarantor), unless no default under the 2022 Notes Indenture exists and either the successor to the 2022 Notes Guarantor assumes its guarantee of the 2022 Notes or the disposition, consolidation, or merger complies with the “Asset Sales” covenant in the 2022 Notes Indenture. In addition, Cardtronics plc may not sell or otherwise dispose of all or substantially all of its properties or assets to, or consolidate with or merge with or into, another company (other than Cardtronics Delaware or another 2022 Notes Guarantor), unless, among other things, no default under the 2022 Notes Indenture exists, the successor to Cardtronics plc is a domestic entity and assumes Cardtronics plc’s guarantee of the 2022 Notes and transaction (on a pro forma basis) satisfies certain criteria related to the Fixed Charge Coverage Ratio (as defined in the 2022 Notes Indenture).

The following tables reflect the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2018 and 2017, the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2018 and 2017, and the Condensed Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017 for: (i) Cardtronics plc, the parent 2022 Notes Guarantor (“Parent”), (ii) Cardtronics Delaware (“Issuer”), (iii) the 2022 Notes Guarantors (including those 2022 Notes Guarantors added pursuant to the 2022 Notes Second Supplemental Indenture) (the “Guarantors”), and (iv) the 2022 Notes Non-Guarantors.

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Condensed Consolidated Statements of Comprehensive (Loss) Income



	Three Months Ended June 30, 2018
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Revenues	$	—	$	—	$	229,978	$	114,086	$	(3,077)	$	340,987
Operating costs and expenses		6,374		12		211,812		108,208		(2,104)		324,302
(Loss) income from operations		(6,374)		(12)		18,166		5,878		(973)		16,685
Interest expense (income), net, including amortization of deferred financing costs and note discount		—		6,619		10,388		(4,554)		61		12,514
Equity in (earnings) of subsidiaries		(8,859)		(13,071)		(3,183)		—		25,113		—
Other (income) expense		(93)		51		(414)		660		(2,391)		(2,187)
Income before income taxes		2,578		6,389		11,375		9,772		(23,756)		6,358
Income tax (benefit) expense		(1,194)		(1,655)		3,236		2,199		—		2,586
Net income		3,772		8,044		8,139		7,573		(23,756)		3,772
Net income attributable to noncontrolling interests		—		—		—		—		5		5
Net income attributable to controlling interests and available to common stockholders		3,772		8,044		8,139		7,573		(23,761)		3,767
Comprehensive (loss) income attributable to controlling interests	$	(25,007)	$	8,044	$	22,072	$	(35,135)	$	5,014	$	(25,012)



	Three Months Ended June 30, 2017
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Revenues	$	—	$	—	$	269,435	$	119,011	$	(3,334)	$	385,112
Operating costs and expenses		6,798		2,733		231,036		112,574		(2,407)		350,734
(Loss) income from operations		(6,798)		(2,733)		38,399		6,437		(927)		34,378
Interest expense (income), net, including amortization of deferred financing costs and note discount		—		6,319		10,660		(4,373)		—		12,606
Equity in (earnings) losses of subsidiaries		(21,933)		31,987		(5,944)		—		(4,110)		—
Other (income) expense		(297)		(125)		5,562		576		(3,771)		1,945
(Loss) income before income taxes		15,432		(40,914)		28,121		10,234		6,954		19,827
Income tax expense (benefit)		275		(3,482)		9,004		(1,127)		—		4,670
Net income (loss)		15,157		(37,432)		19,117		11,361		6,954		15,157
Net loss attributable to noncontrolling interests		—		—		—		—		(1)		(1)
Net income (loss) attributable to controlling interests and available to common stockholders		15,157		(37,432)		19,117		11,361		6,955		15,158
Comprehensive income (loss) attributable to controlling interests	$	45,367	$	(37,433)	$	19,117	$	11,361	$	6,955	$	45,367

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	Six Months Ended
	June 30, 2018
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Revenues	$	—	$	—	$	463,787	$	219,280	$	(5,896)	$	677,171
Operating costs and expenses		11,910		9		423,842		216,838		(3,939)		648,660
(Loss) income from operations		(11,910)		(9)		39,945		2,442		(1,957)		28,511
Interest expense (income), net, including amortization of deferred financing costs and note discount		—		13,159		20,882		(9,106)		61		24,996
Equity in (earnings) loss of subsidiaries		(10,643)		(5,257)		11,123		—		4,777		—
Other expense (income)		10		186		(4,073)		(5,697)		9,547		(27)
(Loss) income before income taxes		(1,277)		(8,097)		12,013		17,245		(16,342)		3,542
Income tax (benefit) expense		(2,264)		(3,308)		3,250		4,877		—		2,555
Net income (loss)		987		(4,789)		8,763		12,368		(16,342)		987
Net loss attributable to noncontrolling interests		—		—		—		—		(12)		(12)
Net income (loss) attributable to controlling interests and available to common shareholders		987		(4,789)		8,763		12,368		(16,330)		999
Comprehensive (loss) income attributable to controlling interests	$	(2,808)	$	(4,788)	$	29,134	$	(11,794)	$	(12,537)	$	(2,793)


	Six Months Ended
	June 30, 2017
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Revenues	$	—	$	—	$	526,603	$	221,953	$	(5,872)	$	742,684
Operating costs and expenses		12,696		12,452		467,045		215,945		(3,939)		704,199
(Loss) income from operations		(12,696)		(12,452)		59,558		6,008		(1,933)		38,485
Interest expense (income), net, including amortization of deferred financing costs and note discount		—		12,410		18,562		(8,832)		(1)		22,139
Equity in earnings of subsidiaries		(26,676)		(21,776)		(5,566)		—		54,018		—
Other (income) expense		(232)		(180)		21,259		(5,093)		(15,389)		365
Income (loss) before income taxes		14,212		(2,906)		25,303		19,933		(40,561)		15,981
Income tax (benefit) expense		(51)		(9,626)		12,029		(634)		—		1,718
Net income		14,263		6,720		13,274		20,567		(40,561)		14,263
Net income attributable to noncontrolling interests		—		—		—		—		6		6
Net income attributable to controlling interests and available to common shareholders		14,263		6,720		13,274		20,567		(40,567)		14,257
Comprehensive income attributable to controlling interests	$	53,125	$	6,719	$	13,274	$	20,566	$	(40,566)	$	53,118

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Condensed Consolidated Balance Sheets


	As of June 30, 2018
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Assets
Cash and cash equivalents	$	89	$	6	$	19,120	$	21,037	$	—	$	40,252
Accounts and notes receivable, net		—		—		56,213		32,142		—		88,355
Other current assets		95		4,354		103,150		86,398		—		193,997
Total current assets		184		4,360		178,483		139,577		—		322,604
Property and equipment, net		—		—		301,618		160,036		(444)		461,210
Intangible assets, net		—		—		137,125		41,078		(650)		177,553
Goodwill		—		—		568,832		192,480		(532)		760,780
Investments in and advances to subsidiaries		393,454		687,812		339,790		—		(1,421,056)		—
Intercompany receivable		11,857		180,209		77,169		475,314		(744,549)		—
Deferred tax asset, net		86		—		(2,011)		8,633		—		6,708
Prepaid expenses, deferred costs, and other noncurrent assets		—		21,337		29,555		20,589		—		71,481
Total assets	$	405,581	$	893,718	$	1,630,561	$	1,037,707	$	(2,167,231)	$	1,800,336
Liabilities and Shareholders' Equity
Current portion of other long-term liabilities		—		763		16,493		4,795		(12)		22,039
Accounts payable and accrued liabilities		295		5,739		223,313		110,111		—		339,458
Total current liabilities		295		6,502		239,806		114,906		(12)		361,497
Long-term debt		—		511,044		338,332		29,047		—		878,423
Intercompany payable		8,315		12,280		643,592		83,606		(747,793)		—
Asset retirement obligations		—		—		25,574		31,141		—		56,715
Deferred tax liability, net		—		—		39,564		2,686		—		42,250
Other long-term liabilities		—		261		22,961		41,258		—		64,480
Total liabilities		8,610		530,087		1,309,829		302,644		(747,805)		1,403,365
Shareholders' equity		396,971		363,631		320,732		735,063		(1,419,426)		396,971
Total liabilities and shareholders' equity	$	405,581	$	893,718	$	1,630,561	$	1,037,707	$	(2,167,231)	$	1,800,336

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	As of December 31, 2017
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Assets
Cash and cash equivalents	$	89	$	7	$	15,805	$	35,469	$	—	$	51,370
Accounts and notes receivable, net		—		—		55,912		49,333		—		105,245
Deferred tax asset, net		—		—		(3,467)		3,467		—		—
Other current assets		399		1,585		73,848		82,885		—		158,717
Total current assets		488		1,592		142,098		171,154		—		315,332
Property and equipment, net		1		—		312,592		185,477		(168)		497,902
Intangible assets, net		—		—		159,248		51,337		(723)		209,862
Goodwill		—		—		572,274		202,665		—		774,939
Investments in and advances to subsidiaries		385,729		465,347		392,327		—		(1,243,403)		—
Intercompany receivable		10,231		211,540		71,477		486,408		(779,656)		—
Deferred tax asset, net		332		—		1,343		5,250		—		6,925
Prepaid expenses, deferred costs, and other noncurrent assets		—		12,172		28,763		16,821		—		57,756
Total assets	$	396,781	$	690,651	$	1,680,122	$	1,119,112	$	(2,023,950)	$	1,862,716
Liabilities and Shareholders' Equity
Current portion of other long-term liabilities		—		4,892		21,746		4,744		(12)		31,370
Accounts payable and accrued liabilities		978		10,070		205,200		134,932		—		351,180
Total current liabilities		978		14,962		226,946		139,676		(12)		382,550
Long-term debt		—		504,912		394,596		18,213		—		917,721
Intercompany payable		5,410		4,271		673,053		100,410		(783,144)		—
Asset retirement obligations		—		—		25,424		34,496		—		59,920
Deferred tax liability, net		—		—		34,926		2,204		—		37,130
Other long-term liabilities		—		3,998		25,399		45,605		—		75,002
Total liabilities		6,388		528,143		1,380,344		340,604		(783,156)		1,472,323
Shareholders' equity		390,393		162,508		299,778		778,508		(1,240,794)		390,393
Total liabilities and shareholders' equity	$	396,781	$	690,651	$	1,680,122	$	1,119,112	$	(2,023,950)	$	1,862,716

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Condensed Consolidated Statements of Cash Flows


	Six Months Ended
	June 30, 2018
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Net cash provided by (used in) operating activities	$	2,507	$	(100)	$	116,744	$	(9,376)	$	—	$	109,775
Additions to property and equipment		—		—		(28,996)		(17,686)		—		(46,682)
Net cash used in investing activities		—		—		(28,996)		(17,686)		—		(46,682)
Proceeds from borrowings under revolving credit facility		—		192,000		24,603		128,907		—		345,510
Repayments of borrowings under revolving credit facility		—		(191,900)		(81,028)		(118,062)		—		(390,990)
Intercompany financing		—		—		(1,203)		1,203		—		—
Tax payments related to share-based compensation		(2,506)		—		—		—		—		(2,506)
Net cash (used in) provided by financing activities		(2,506)		100		(57,628)		12,048		—		(47,986)
Effect of exchange rate changes on cash		—		—		(1,460)		(98)		—		(1,558)
Net increase (decrease) in cash, cash equivalents, and restricted cash		1		—		28,660		(15,112)		—		13,549
Cash, cash equivalents, and restricted cash as of beginning of period		88		7		49,612		50,110		—		99,817
Cash, cash equivalents, and restricted cash as of end of period	$	89	$	7	$	78,272	$	34,998	$	—	$	113,366

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	Six Months Ended
	June 30, 2017
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Net cash provided by (used in) operating activities	$	8,017	$	14,323	$	91,765	$	(17,776)	$	—	$	96,329
Additions to property and equipment		—		—		(43,767)		(26,101)		—		(69,868)
Acquisitions, net of cash acquired		—		—		(465,123)		(19,479)		—		(484,602)
Net cash used in investing activities		—		—		(508,890)		(45,580)		—		(554,470)
Proceeds from borrowings under revolving credit facility		—		218,000		586,778		30,727		—		835,505
Repayments of borrowings under revolving credit facility		—		(232,100)		(417,279)		(16,877)		—		(666,256)
Proceeds from exercises of stock options		105		—		—		—		—		105
Additional tax (expense) related to share-based compensation		(7,820)		—		—		—		—		(7,820)
Proceeds from borrowings of long-term debt		—		—		300,000		—		—		300,000
Debt issuance costs		—		—		(5,197)		—		—		(5,197)
Net cash (used in) provided by financing activities		(7,715)		(14,100)		464,302		13,850		—		456,337
Effect of exchange rate changes on cash		—		—		(1,801)		(1,942)		—		(3,743)
Net increase (decrease) in cash, cash equivalents, and restricted cash		302		223		45,376		(51,448)		—		(5,547)
Cash, cash equivalents, and restricted cash as of beginning of period		101		7		32,799		72,840		—		105,747
Cash, cash equivalents, and restricted cash as of end of period	$	403	$	230	$	78,175	$	21,392	$	—	$	100,200

(19) Concentration Risk

Significant customers. For the three and six months ended June 30, 2018, the Company derived approximately 21.9% and 21.6% of its total revenues from ATMs placed at the locations of its top five merchant customers, respectively. The Company’s top five merchant customers for the three and six months ended June 30, 2018 were Walgreens Boots Alliance, Inc., Co-operative Food (in the U.K.), CVS Caremark Corporation, Speedway LLC, and Corner Store.

Accordingly, a significant percentage of the Company’s future revenues and operating income will be dependent upon the successful continuation of its relationships with these merchants.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended and are intended to be covered by the safe harbor provisions thereof. These forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effect on the Company and there can be no assurance that future developments affecting the Company could be anticipated. All comments concerning the Company’s expectations for future revenues and operating results are based on its estimates for its existing operations and do not include the potential impact of any future acquisitions. The Company’s forward-looking statements involve significant risks and uncertainties (some of which are beyond its control) and assumptions that could cause actual results to differ materially from its historical experience and present expectations or projections. Known material factors that could cause actual results to differ materially from those in the forward-looking statements include:

the Company’s financial outlook and the financial outlook of the automated teller machines and multi-function financial services kiosks (collectively, “ATMs”) industry and the continued usage of cash by consumers at rates near historical patterns;

the Company’s ability to respond to recent and future network and regulatory changes;

the Company’s ability to renew its existing merchant relationships on comparable economic terms and add new merchants;

changes in interest rates and foreign currency rates;

the Company’s ability to successfully manage its existing international operations and to continue to expand internationally;

the Company’s ability to manage concentration risks with key customers, merchants, vendors, and service providers;

the Company’s ability to prevent thefts of cash and maintain adequate insurance;

the Company’s ability to manage cybersecurity risks and protect against cyber-attacks and manage and prevent data breaches;

the Company’s ability to respond to potential and planned reductions in the amount of net interchange fees that it receives from global and regional debit networks for transactions conducted on its ATMs due to pricing changes implemented by those networks as well as changes in how issuers route their ATM transactions over those networks, including recently enacted changes to the LINK interchange rate in the United Kingdom (“U.K.”);

the Company’s ability to provide new ATM solutions to retailers and financial institutions including placing additional banks’ brands on ATMs currently deployed;

the Company’s ATM vault cash rental needs, including potential liquidity issues with its vault cash providers and its ability to continue to secure vault cash rental agreements in the future on reasonable economic terms;

the Company’s ability to manage the risks associated with its third-party service providers failing to perform their contractual obligations;

the Company’s ability to renew its existing third-party service provider relationships on comparable economic terms;

the Company’s ability to successfully implement and evolve its corporate strategy;

the Company’s ability to compete successfully with new and existing competitors;

the Company’s ability to meet the service levels required by its service level agreements with its customers;

the additional risks the Company is exposed to in its U.K. armored transport business;

the impact of changes in laws, including tax laws, that could adversely affect the Company’s business and profitability;

the Company’s ability to successfully integrate acquisitions;

the impact of, or uncertainty related to, the U.K.’s planned exit from the European Union, including any material adverse effect on the tax, tax treaty, currency, operational, legal, and regulatory regime and macro-economic environment to which it will be subject to as a U.K. company;

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the Company’s ability to react to recent market changes in Australia as a result of recent actions by major banks that may result in lower transaction volumes at the Company’s ATMs; and

the Company’s ability to retain its key employees and maintain good relations with its employees.

For additional information regarding known material factors that could cause the Company’s actual results to differ from its projected results, see: Part I. Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Readers are cautioned not to place undue reliance on forward-looking statements contained in this document, which speak only as of the date of this Form 10-Q. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Cardtronics plc provides convenient automated consumer financial services through its network of automated teller machines and multi-function financial services kiosks (collectively referred to as “ATMs”). As of June 30, 2018, we were the world’s largest ATM owner/operator, providing services to approximately 230,000 ATMs. During the three months ended June 30, 2018, 60% of our total revenues were derived from operations in North America (including our ATM operations in the U.S., Canada, and Mexico), 31% of our total revenues were derived from operations in Europe and Africa (including our ATM operations in the U.K., Ireland, Germany, Spain, and South Africa), and 9% of our total revenues were derived from operations in Australia and New Zealand. Included in our network as of June 30, 2018 were approximately 138,000 ATMs to which we provided processing only services or various forms of managed services solutions. Under a managed services arrangement, retailers, financial institutions, and ATM distributors rely on us to handle some or all of the operational aspects associated with operating and maintaining ATMs, typically in exchange for a monthly service fee, fee per transaction, or fee per service provided.

Through our network, we deliver financial related services to cardholders and provide ATM management and ATM equipment-related services (typically under multi-year contracts) to large retail merchants, smaller retailers, and operators of facilities such as shopping malls, airports, and train stations. In doing so, we provide our retail partners with a compelling automated solution that helps attract and retain customers, and in turn, increases the likelihood that our ATMs will be utilized. We also own and operate electronic funds transfer (“EFT”) transaction processing platforms that provide transaction processing services to our network of ATMs, as well as to other ATMs under managed services arrangements. Additionally, we also provide processing services for issuers of debit cards.

We also own and operate the Allpoint network (“Allpoint”), the largest surcharge-free ATM network (based on the number of participating ATMs). Allpoint, with approximately 55,000 participating ATMs, provides surcharge-free ATM access to over 1,000 participating credit unions, banks, and stored-value debit card issuers. For participants, Allpoint provides scale, density, and convenience of surcharge-free ATMs that surpasses the largest banks in the U.S. Allpoint earns either a fixed monthly fee per cardholder or a fixed fee per transaction that is paid by the participants. The Allpoint network includes a majority of our Company-owned ATMs in the U.S. and certain ATMs in the U.K., Canada, Mexico, Puerto Rico, and Australia. Allpoint also provides services to organizations that manage stored-value debit card programs on behalf of corporate entities and governmental agencies, including general purpose, payroll, and electronic benefits transfer (“EBT”) cards. Under these programs, the issuing organizations pay Allpoint a fee per issued stored-value debit card or per transaction in return for allowing the users of those cards surcharge-free access to Allpoint’s participating ATM network.

For additional information related to our operations and the manner in which we derive revenues, see our Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Form 10-K”).

Strategic Outlook

Over the past several years, we have expanded our operations and the capabilities and service offerings of our ATMs through strategic acquisitions and investments, continued to deploy ATMs in high-traffic locations under contracts with well-known retailers, and expanded our relationships with leading financial institutions through the growth of Allpoint, our surcharge-free ATM network, and our bank-branding programs. More recently, we have increasingly focused our growth efforts to providing ATM-related service offerings to financial institutions, as we are seeing increasing interest from financial institutions for outsourcing of ATM-related services due to our cost efficiency advantages and higher service levels, as well as the role that our ATMs can play in maintaining financial institutions physical presence for their customers as they reduce their physical branches.

We have completed several acquisitions in the last six years, including, but not limited to: (i) eight U.S. and Canada based ATM operators, expanding our ATMs in both multi-unit regional retail chains and individual merchant ATM locations in the North America, (ii) Cardpoint Limited (“Cardpoint”) in August 2013, which further expanded our U.K. ATM operations and allowed us to enter into the German market, (iii) Sunwin Services Group in November 2014, which

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further expanded our cash-in-transit and maintenance servicing capabilities in the U.K. and allowed us to acquire and operate ATMs located at Co-op Food stores, (iv) DirectCash Payments Inc. (“DCPayments”) in January 2017, a leading ATM operator with operations in Australia, New Zealand, Canada, the U.K., and Mexico , (v) Spark ATM Systems Pty Ltd. (“Spark”) in January 2017, an independent ATM operator in South Africa, and (vi) various other smaller ATM asset and contract acquisitions. In addition to these ATM acquisitions, we have made strategic acquisitions including: (i) i-design in March 2013, a Scotland-based provider and developer of marketing and advertising software and services for ATM operators, and (ii) CDS in July 2015, a leading independent transaction processor for ATM deployers and payment card issuers in the U.S., providing solutions to ATM sales and service organizations and financial institutions.

While we may continue to explore potential acquisition opportunities in the future as a way to grow our business, we expect to continue expanding our ATM footprint organically, and launching new products and services that will allow us to further leverage our existing ATM network. We see opportunities to expand our operations through the following efforts:

increasing the number of deployed ATMs with existing and new merchant relationships;

expanding our relationships with leading financial institutions;

working with non-traditional financial institutions and card issuers to further leverage our extensive ATM network;

increasing transaction levels at our existing locations;

developing and providing additional services at our existing ATMs;

pursuing additional managed services opportunities; and

pursuing opportunities to expand into new international markets over time.

For additional information related to each of our strategic points above, see Item1. Business – Our Strategy in our 2017 Form 10-K.

Developing Trends and Recent Events

Reduction of physical branches by financial institutions in the U.S., the U.K., and other geographies . Due primarily to the expansion of services available through digital channels, such as online and mobile, and financial institution customers’ preferences towards these digital channels, many financial institutions have been de-emphasizing traditional physical branches. This trend of shifting more customer transactions online and to ATMs has helped financial institutions lower their operating costs. As a result, many banks have been reducing the number of physical branches they operate. However, financial institution customers still consider convenient access to ATMs to be an important criteria for maintaining an account with a particular financial institution. The closing of physical branches generally results in a removal of the ATMs that were at the closed branch locations and may create a void in physical presence for that financial institution. This creates an opportunity for us to provide the financial institution’s customers with convenient access to ATMs and to work with the financial institutions to preserve branded or unbranded physical points of presence through our ATM network.

Increase in surcharge-free offerings in the U.S. Many U.S. national and regional financial institutions aggressively compete for market share, and part of their competitive strategy is to increase their number of customer touch points, including the establishment of an ATM network to provide convenient, surcharge-free access to cash for their cardholders. While owning and operating a large ATM network would be a key strategic asset for a financial institution, we believe it would be uneconomical for all but the largest financial institutions to own and operate an extensive ATM network. Bank-branding of ATMs and participation in surcharge-free networks allow financial institutions to rapidly increase surcharge-free ATM access for their customers at a lower cost than owning and operating ATM networks. These factors have led to an increase in bank-branding and participation in surcharge-free ATM networks, and we believe that there will be continued growth in such arrangements.

Managed services . While many financial institutions (and some retailers) own and operate significant ATM networks that serve as extensions of their physical branch and increase the level of service offered to their customers, large ATM networks are costly to own and operate and typically do not provide significant revenue for financial institutions or retailers. Owning and operating an ATM network is not a core competency for the majority of financial institutions and retailers; therefore, we believe there is an opportunity for a large non-bank ATM owner/operator, such as ourselves, with

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lower costs and an established operating history, to contract with financial institutions and retailers to manage their ATM networks. Such an arrangement could reduce a financial institution or retailer’s operating costs while extending their customer service. Additionally, we believe there are opportunities to provide selected ATM-related services on an outsourced basis, such as transaction processing services, to other independent owners and operators of ATMs.

Growth in other automated consumer financial services . The majority of all ATM transactions in our geographies are cash withdrawals, with the remainder representing other banking functions such as balance inquiries and balance transfers. We believe that there are opportunities for a large non-bank ATM owner/operator, such as ourselves, to provide additional financial services to customers, such as bill payments, deposit taking, money transfers, and stored-value debit card reload services. These additional automated consumer financial services could result in additional revenue streams for us and could ultimately result in increased profitability. However, they would require additional capital expenditures on our part to offer these services more broadly and would increase regulatory compliance activities.

Increase in usage of stored-value debit cards. In the U.S., we have seen a proliferation in the issuance and acceptance of stored-value debit cards as a means for consumers to access their cash and make routine retail purchases over the past ten years. Based on published studies, the value loaded on stored-value debit cards such as open loop network-branded money and financial services cards, payroll and benefit cards, and social security cards is expected to continue to increase in the next few years.

We believe that our ATM network, located in well-known retail establishments throughout the U.S., provides a convenient and cost-effective way for stored-value debit card cardholders to access their cash and potentially conduct other financial services transactions. Furthermore, through our Allpoint network, we partner with organizations that manage stored-value debit card programs on behalf of corporate entities and governmental agencies, and we are able to provide the users of those cards convenient, surcharge-free access to their cash. We believe that the number of stored-value debit cards being issued and in circulation has increased significantly over the last several years and represents a growing portion of our total withdrawal transactions at our U.S. ATMs.

Growth in other markets. In most regions of the world, ATMs are less common than in the U.S. and the U.K. (our two largest markets). We believe the ATM industry will grow faster in certain international markets, as the number of ATMs per capita in those markets increases and begins to approach the levels in the U.S. and the U.K. We believe there is further growth potential for non-branch ATMs in the other geographic markets in which we operate.

• United Kingdom. The U.K. is the largest ATM market in Europe. According to LINK (which connects the ATM networks of all the U.K. ATM operators), approximately 71,000 ATMs were deployed in the U.K. as of December 2017, of which approximately 40,000 were operated by non-banks (inclusive of our approximately 20,000 ATMs). Electronic payment alternatives have gained popularity in the U.K. in recent years. However, according to the Bank of England, cash is still the primary payment method preferred by consumers, representing over 50% or spontaneous payments. Due to the maturing of the ATM market, we have seen both the number of ATM deployments and withdrawals slow in recent years. During 2013 and 2014 we significantly expanded in the U.K. through the acquisition of Cardpoint, Sunwin, and through an ATM placement agreement with Co-op Food. In January 2017, we further expanded our operations in the U.K. through our acquisition of DCPayments. In light of recent changes to the LINK interchange rate and the 5% decrease that came into effect on July 1 2018, we have recently removed certain ATMs from service, slowed expansion and taken other measures. For additional information, see Decrease in interchange rates below . We are, however, seeing increased interest from financial institutions in this market to outsource certain components of their ATM operations, and we are actively working to grow our offerings for such services.

• Germany. We entered the German market in August 2013 through our acquisition of Cardpoint. The German ATM market is highly fragmented and may be under-deployed, based on its population’s high use of cash relative to other markets in which we operate, such as the U.S. and the U.K. There are approximately 58,000 ATMs in Germany that are largely deployed in bank branch locations. This fragmented and potentially under-deployed market dynamic is attractive to us, and as a result, we believe there are a number of opportunities for growth in this market.

• Canada. We entered the Canadian market in October 2011 through a small acquisition, and further expanded our presence in the country through another small acquisition in December 2012. In January 2017, we significantly

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expanded our operations in Canada through our acquisition of DCPayments. We expect to continue to grow our number of ATM locations in this market. We currently operate approximately 12,000 ATMs in this market and estimate that there are currently approximately 62,000 ATMs in total in the Canadian market. Our recent organic growth in this market has been primarily through a combination of new merchant and financial institution partners. As we continue to expand our footprint in Canada, we plan to seek additional partnerships with financial institutions to implement bank-branding and other financial services, similar to our bank-branding and surcharge-free strategy in the U.S.

• Mexico . There are approximately 48,000 ATMs operating in Mexico, most of which are owned by national and regional financial institutions. Due to a series of governmental and network regulations that have been mostly detrimental to us, together with increased theft attempts on our ATMs in this market, we slowed our expansion in this market in recent years. However, we increased our operations in Mexico through the DCPayments acquisition in January 2017 and remain poised and able to selectively pursue opportunities with retailers and financial institutions in the region, and believe there are currently opportunities to grow this business profitability.

• Ireland and Spain. In April 2016, we entered the Ireland market, and in October 2016, we launched our business in Spain, joining a top Spain ATM network and signing agreements to provide ATMs at multiple retail chains. On a combined basis these markets have approximately 55,000 ATMs, of which we currently operate a very small portion. We plan to continue to grow in these markets through additional merchant and financial institution relationships.

• Australia and New Zealand. In January 2017, in connection with our acquisition of DCPayments, we obtained operations in Australia and New Zealand, and now are the largest independent ATM operator in Australia. We currently operate over 10,000 ATMs in Australia and New Zealand and estimate the total market is comprised of approximately 36,000 ATMs. Recently, we have seen same-store transaction declines in this market, which may in the near term be amplified by recent actions taken by major banks in Australia. For further information regarding this action, see Australia market changes and asset impairment below. However, we believe there are opportunities for longer-term growth in Australia, which would likely include expansion of services to financial institutions in that market.

• South Africa. In January 2017, in connection with our acquisition of Spark, we obtained operations in South Africa. Spark is a leading independent ATM operator in South Africa and we expect to expand in this market with retailers and financial institutions. We operate over 3,300 ATMs in South Africa and estimate that this market has approximately 32,000 ATMs.

Increase in surcharge rates. As financial institutions increase the surcharge rates charged to non-customers for the use of their ATMs, it enables us to increase the surcharge rates charged on our ATMs in selected markets and with certain merchant customers as well. We also believe that higher surcharge rates in the market make our surcharge-free offerings more attractive to consumers and other financial institutions. We expect to see generally modest increases in surcharge rates in the near future.

Decrease in interchange rates. The interchange rates paid to independent ATM deployers, such as ourselves, are in some cases set by the various EFT networks and major interbank networks through which the transactions conducted on our ATMs are routed. In past years, certain networks have reduced the net interchange rates paid to ATM deployers for ATM transactions in the U.S. by reducing the transaction rates charged to financial institutions and increasing per transaction fees charged by the networks to ATM operators. In addition to the impact of the net interchange rate decrease, we saw certain financial institutions migrate their volume away from some networks to take advantage of the lower pricing offered by other networks, resulting in lower net interchange rates per transaction realized by us. If financial institutions move to take further advantage of lower interchange rates, or if networks reduce the interchange rates they currently pay to ATM deployers or increase their network fees, our future revenues and gross profits could be negatively impacted. We have taken measures to mitigate our exposure to interchange rate reductions by networks, including, but not limited to: (i) where possible, routing transactions through a preferred network such as the Allpoint network, where we have influence over the per transaction rate, (ii) negotiating directly with our financial institution partners for contractual interchange rates on transactions involving their customers, (iii) developing contractual protection from such rate changes in our agreements with merchants and financial institution partners, and (iv) negotiating pricing directly with certain networks. As of

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December 31, 2017, approximately 4% of our total ATM operating revenues were subject to pricing changes by U.S. networks over which we currently have limited influence or where we have no ability to offset pricing changes through lower payments to merchants.

Interchange rates in the U.K. are primarily set by LINK, the U.K.’s major interbank network. LINK has historically set these rates annually using a cost-based methodology that incorporates ATM service costs from two years prior (i.e., operating costs from 2016 are considered for determining the 2018 interchange rate). In addition to LINK transactions, certain card issuers in the U.K. have issued cards that are not affiliated with the LINK network, and instead carry the Visa or MasterCard network brands. In recent years transactions conducted on our ATMs from these cards, have represented approximately 2% of our annual withdrawal transactions in the U.K. For these transactions we receive interchange fees that are set by Visa or MasterCard, respectively. The interchange rates set by Visa and MasterCard have historically been less than the rates that have been established by LINK. Throughout 2016 and 2017, some of the major financial institutions that participate in LINK expressed concern about the LINK interchange rate and commenced efforts to significantly lower the interchange rate. During 2017, a group of LINK members (the “Working Group”) worked to develop a new interchange rate setting mechanism. After several months of analysis and discussion, the Working Group was unable to reach a recommended amended approach that was satisfactory to its participants, and as a result of this outcome, along with governance recommendations by the Bank of England, in October 2017, it was decided that an independent board of LINK (“LINK Board”) would recommend interchange rates going forward. On November 1, 2017, the LINK Board announced that it had reached some tentative recommendations, subject to further comment by the LINK members. The LINK Board proposal sought to reduce interchange rates by approximately 5% per year, and in the aggregate, by approximately 20% over a four year period. Accordingly, on January 31, 2018, the LINK Board, formalized a new process for setting interchange rates and confirmed its plans for the annual 5% phased rate reductions, with the first rate decrease commencing on July 1, 2018 and the second scheduled interchange rate decrease set for January 1, 2019. On July 1, 2018, the first reduction came into effect. On July 16, 2018, the LINK Board announced that it canceled the planned third interchange rate decrease, previously scheduled to occur in January 2020, and suspended the fourth interchange rate decrease, pending further review in 2019. We continue to evaluate and assess the impact of interchange rate decreases on our U.K. business and have taken certain actions and may continue to take additional actions to mitigate the impact of the current and potential future price reductions. Mitigating measures include or in the future may include removal of lower profitability sites, contract renegotiations with certain merchants, conversion of certain ATMs to a direct-charge to the consumer model, and other strategies. On an unmitigated basis, we expect the first 5% rate reduction to adversely impact our U.K. profits by approximately $6-$7 million in 2018, compared to 2017, all of which will occur in the second half of 2018.

Withdrawal transaction and revenue trends – U.S. Many financial institutions are shifting traditional teller based transactions to online activities and ATMs to reduce their operating costs. Additionally, many financial institutions are reducing the number of branches they own and operate in order to lower their operating costs. As a result of these current trends, we believe there has been increasing demand for automated banking solutions, such as ATMs. Bank-branding of our ATMs and participation in our surcharge-free ATM network allow financial institutions to rapidly increase and maintain surcharge-free ATM access for their customers at a substantially lower cost than owning and operating an ATM network. We believe there is continued opportunity for a large non-bank ATM owner/operator, such as ourselves, with lower costs and an established operating history, to contract with financial institutions and retailers to manage their ATM networks. Such an arrangement could reduce a financial institution’s operating costs while extending its customer service. Furthermore, we believe there are opportunities to provide selected services on an outsourced basis, such as transaction processing services, to other independent owners and operators of ATMs. Over the last several years, we have seen growth in bank-branding, increased participation in Allpoint, our surcharge-free network, and managed services arrangements, and we believe that there will be continued growth in such arrangements.

Excluding 7-Eleven locations (For additional information, see 7-Eleven U.S. relationship below), total U.S. same-store cash withdrawal transactions during the three months ended June 30, 2018 increased approximately 8% from the same period in 2017. The same-store results were impacted by a number of factors, and the discrete impact of each factor is difficult to precisely estimate. Allpoint transactions increased as a result of expansion of the number of ATMs in Allpoint and growth in the number of financial institutions participating in Allpoint. This positively impacted the growth rate during the three months ended June 30, 2018. We estimate that the growth rate for the three months ended June 30, 2018 was positively impacted by increased transactions related to customers continuing to utilize our fee-free access to their cash via our Allpoint network notwithstanding the termination of our relationship by 7-Eleven and the subsequent removal of

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our Allpoint enabled ATMs from 7-Eleven stores. We estimate that this migration of traffic resulted in approximately 3 - 4% growth in the period. Finally, we believe the growth rate during the three months ended June 30, 2018 was positively impacted by higher ATM availability during the three months ended June 30, 2018 due to the software upgrades and outages during the same period in 2017, which had a negative impact on transaction volume in that quarter.

7-Eleven U.S. relationship. The Company had a long standing relationship with 7-Eleven in the U.S. that ended during the quarter ended March 31, 2018. In previous periods, this relationship accounted for a material portion of the Company’s consolidated revenues and profits. The Company began a transition to 7-Eleven’s new service provider during the third quarter of 2017 and that transition was completed in February 2018. We estimate that 7-Eleven in the U.S. accounted for approximately 14% of the Company’s total revenues during both the three and six months ended June 30, 2017. 7-Eleven in the U.S. accounted for approximately 12.5% of the Company’s total revenues for the year ended 2017 and had an incremental gross margin of approximately 40%. The Company expects that 7-Eleven in the U.S. will account for less than 1% of total revenues in 2018, all of which was in the first quarter of 2018.

Withdrawal transaction and revenue trends – U.K. The majority of our ATMs in the U.K. are free-to-use ATMs, meaning the transaction is free to the consumer and we earn an interchange rate paid by the customer’s bank. We also operate surcharging or pay-to-use ATMs. Although we earn less revenue per cash withdrawal transaction on a free-to-use ATM, the significantly higher volume of transactions conducted on free-to-use ATMs have generally translated into higher overall revenues. During the three months ended June 30, 2018, same-store cash withdrawal transactions in the U.K decreased approximately 4% compared to the same period in 2017. We believe the growth rate was adversely impacted by changes in consumer payments behavior, where consumers are conducting more tap and pay transactions for small payments at retailers. While difficult to precisely quantify, we believe the same-store transactions in the three months ended June 30, 2018 were positively impacted by generally good weather.

Australia market changes and asset impairment . In late September 2017, Australia’s four largest banks, Commonwealth Bank of Australia (“CBA”), Australia and New Zealand Banking Group Limited (“ANZ”), Westpac Banking Corporation (“Westpac”), and National Australia Bank (“NAB”), each separately announced decisions to remove all direct charges to all users on domestic ATM transactions completed at their respective ATM networks, effectively creating a free-to-use network of ATMs that did not exist previously. Collectively these four banks account for approximately one third of the total ATMs in Australia. CBA removed the direct charges in late September 2017, and Westpac, ANZ, and NAB removed the direct charges during the first part of October 2017. During the three months ended September 30, 2017, we recognized an impairment of our Australia and New Zealand reporting unit in response to expected revenue and profit declines in this market following the banks’ removal of the direct charges.

Australia has historically been a direct charge ATM market, where cardholders have paid a fee (or “direct charge”) to the operator of an ATM for each transaction, unless the ATM where the transaction was completed was part of the cardholder’s issuing bank ATM network. There is no broad interchange arrangement in Australia between card issuers and ATM operators to compensate the ATM operator for its service to a financial institution’s cardholder in absence of the direct charge being levied to the cardholders. During the three and six months ended June 30, 2018, approximately 78% of the Company’s revenues in Australia were sourced from direct charges paid by cardholders. Consequently, the actions taken by the largest banks in Australia in 2017 resulted in a significant increase in the availability of free-to-use ATMs and could result in a significant decrease in our revenues. We are developing strategies to react to this market shift. While the direct impact we have experienced has been somewhat limited to date, the ultimate impact of this action could increase over time as consumers’ behavior patterns change as a result of the introduction of a free-to-use network in Australia that did not previously exist.

Poland operations. During the fourth quarter of 2017, we ceased operating in Poland and recognized costs to close the operations, largely consisting of contract termination costs related to our merchant, bank sponsorship, lease and other agreements, as well as employee severance costs and charges for asset disposals. During the year ended December 31, 2017, Poland contributed less than 1% of our consolidated ATM operating revenues.

Alternative payment options. We face indirect competition from alternative payment options, including card-based and mobile phone-based contactless payment technology in all of our markets. Australia and the U.K. have reported increasing rates of contactless payment use. Prior to our acquisition of DCPayments and since our ownership of the

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Australian component of the business, we have observed declines in transactions at Australian ATMs, as cash-based payments have declined as a percentage of total payments in recent years. Contactless payments appear to be a significant driver of the decline.

Europay, MasterCard, Visa (“EMV”) security standard and software upgrades in the U.S. The EMV security standard provides for the security and processing of information contained on microchips embedded in certain debit and credit cards, known as “chip cards.” In October 2016, MasterCard commenced a liability shift for U.S. ATM transactions on EMV-issued cards used at non-EMV compliant ATMs in the U.S. Similarly, in October 2017, Visa commenced a liability shift for all transaction types on all EMV issued cards in the U.S. In order to comply with the EMV standard, in the U.S., we upgraded or replaced nearly all of our U.S. Company-owned ATMs to deploy additional software to enable additional functionality, enhance security features, and enable the EMV security standard. Due to the significant operational challenges of enabling EMV and other hardware and software enhancements across the majority of our U.S. ATMs, which comprises many types and models of ATMs, together with potential compatibility issues with various processing platforms, we experienced increased downtime at our U.S. ATMs during the first half of 2017. As a result of this downtime, we suffered lost revenues and incurred penalties with certain of our contracts during the first half of 2017. During 2017, we also incurred increased charges from networks associated with actual or potentially fraudulent transactions, as we are liable for fraudulent transactions on the MasterCard network and other networks that have adopted the EMV security standard if our ATM was not EMV compliant at the time of the transaction, and any fraudulent transactions were processed. As a result of converting our ATMs, nearly all of our U.S. Company-owned ATMs became EMV-compliant in 2017.

Capital investments. Our capital spending in 2017 and 2016 included significant expenditures to achieve our EMV upgrade requirements and replace units at certain locations. Therefore, we expect a decrease in our capital spending in 2018 from what we spent in 2016 and 2017. Our capital spending in 2018 will be driven by the following: (i) our strategic initiatives to enhance the consumer experience at our ATMs and drive transaction growth, (ii) long-term renewals of existing merchant contracts, (iii) certain software and hardware enhancements required to facilitate our strategic initiatives, enhance security, and maintain the necessary support, (iv) other compliance related matters including polymer note introductions, (v) growth opportunities across our enterprise, and (vi) investments in the infrastructure of our business, including the implementation of an enterprise resource planning (“ERP”) system.

U.K. planned exit from the European Union (“Brexit”). On March 29, 2017, the U.K. government officially triggered Article 50 of the Treaty on the European Union, which commenced the process for the U.K. to exit the European Union. Although the ultimate impact of Brexit on our business is unknown, we continue to monitor the negotiation of a withdrawal agreement and of a future relationship between the European Union and the U.K. The U.K. is scheduled to exit the European Union on March 29, 2019 subject to a transition period presently extending through December 2020.

Dynamic Currency conversion in the European Union. On March 28, 2018, the European Commission published a proposal to amend European Union regulations applicable to dynamic currency conversion (“DCC”) charges. The European Commission has proposed additional transparency and price comparability requirements on DCC transactions that, if enacted by the European Parliament, would be developed by the European Banking Authority. Our DCC revenues currently account for approximately 2% of our consolidated revenues, the majority of which relate to our U.K. operations. With the timing of Brexit scheduled to precede the proposed effective date of regulation, we are uncertain, at this time, if this new proposed regulation will have any significant impact on our results. Regardless of the outcome and whether the U.K. adopts the European Unions proposed regulations, we do not believe this regulation will have a material impact on our revenues based on our current operations and the intended purpose of the proposed regulations.

Restructuring expenses . During 2017, we initiated a global corporate reorganization and cost reduction initiative (the “Restructuring Plan”), intended to improve our cost structure and operating efficiency. The Restructuring Plan included workforce reductions, facilities closures, contract terminations, and other cost reduction measures. We incurred $8.2 million and $10.4 million of pre-tax expenses related to our Restructuring Plan during the six and twelve months ended June 30, 2017 and December 31, 2017, respectively. During 2018 we implemented additional workforce reductions in an effort to continue our cost reduction initiative. During the three and six months ended June 30, 2018, we incurred $2.1 million and $4.5 million of pre-tax expenses, largely consisting of employee severance. During the remainder of 2018, our Restructuring Plan activities may include additional workforce reductions, certain facilities closures, and other cost reduction measures.

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New currency designs in the U.K. Polymer notes were introduced by the Bank of England in 2016 and will be further circulated through 2020. The introduction of these new currency designs has required upgrades to software and physical ATM components on our ATMs in the U.K., which caused some limited downtime for the affected ATMs during 2017. We are now substantially complete with this effort.

Next generation bank note upgrade in Australia. Next generation bank notes are in the process of being introduced by the Reserve Bank of Australia. The new $5 note was introduced on September 1, 2016, and the new $50 note, the most widely disseminated note in Australia, is scheduled to take place on September 1, 2018, with the new $20 note to follow on a date to be determined. The introduction of these next generation bank notes requires upgrades to software and physical ATM components on our ATMs in Australia, which were evaluated in the impairment analysis discussed above and which we expect will likely cause some limited downtime for the affected ATMs during the latter part of 2018.

U.S. Tax Reform. On December 22, 2017, House of Representatives 1 (“H.R. 1”), originally known as the Tax Cuts and Jobs Act (“U.S. Tax Reform”) was enacted and signed into legislation. In accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP” or “GAAP”), the effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. As a result of this legislation, during the three months ended December 31, 2017, we provisionally recognized one-time net tax benefits totaling $11.6 million. This amount included an estimated one-time tax benefit of $19.4 million due to the re-measurement of our net deferred tax liabilities, primarily related to the change in the U.S. federal corporate income tax rate from 35% to 21%. Partially offsetting this non-cash book tax benefit, we recognized an estimated one-time tax expense of $7.8 million on our accumulated undistributed foreign earnings pertaining to foreign operations under our U.S. business, which we will elect to pay over an eight-year period. We continue to evaluate the impact of the U.S. Tax Reform on our business. There are many elements of the U.S. Tax Reform that will impact our business. In the near term, due primarily to limitations on the amount of interest expense a U.S. company can deduct, we expect the net impact of this reform to increase our consolidated reported effective tax rate as compared to previous recent periods.

Acquisitions. On January 6, 2017, we completed the acquisition of DCPayments, a leading operator of approximately 25,000 ATMs with operations in Australia, New Zealand, Canada, the U.K., and Mexico and on January 31, 2017, we completed the acquisition of Spark, an independent ATM operator in South Africa, with a growing network of approximately 2,300 ATMs. The agreed purchase consideration for Spark included initial cash consideration, paid at closing, and potential additional contingent consideration. The additional purchase consideration is contingent upon Spark achieving certain agreed upon earnings targets in 2019 and 2020. For additional information related to the acquisitions above, see Item 1. Financial Statements, Note 4. Acquisitions .

Cybersecurity trends . We electronically process and transmit cardholder information as part of our transaction processing services. Companies that process and transmit cardholder information, such as ours, have been specifically and increasingly targeted in recent years by sophisticated criminal organizations in an effort to obtain information and utilize it for fraudulent transactions. Additionally, the risk of unauthorized circumvention of system controls has been heightened by advances in computer capabilities and increasing sophistication of hackers. We take a risk-based approach to cybersecurity, and in recognition of the growing threat within our industry and the general marketplace, we proactively make strategic investments in our security infrastructure, technical and procedural controls, and regulatory compliance activities. We also apply the knowledge gained through industry and government organizations to continuously improve our technology, processes and services to detect, mitigate and protect our information. Cybersecurity and the effectiveness of our cybersecurity strategy are regular topics of discussion at Board meetings. We expect to continue to focus attention and resources on our security protection protocols, including repairing any system damage and deploying additional personnel, as well as protecting against any potential reputational harm. The cost to remediate any damages to our information technology systems suffered as a result of a cyber-attack could be significant. For further discussion of the risks we face in connection with growing cybersecurity trends, see Part 1. Item 1A. Risk Factors in our 2017 Form 10-K.

Factors Impacting Comparability Between Periods

Foreign currency exchange rates . Our reported financial results are subject to fluctuations in foreign currency exchange rates. We estimate that the year-over-year strengthening of the currencies in the markets in which we

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operate relative to the U.S. dollar caused our reported total revenues to be higher by approximately $8 million and $22 million for the three and six months ended June 30, 2018, respectively.

Acquisitions and divestitures . The results of operations for any acquired entities during a particular period have been included in our consolidated financial statements for the periods since the respective dates of acquisition. Similarly, the results of operations for any divested operations have been excluded from our consolidated financial statements since the dates of divestiture.

7-Eleven ATM removal . As discussed above, the 7-Eleven ATM placement agreement in the U.S. expired in July 2017, and all ATM operations in the U.S. were transitioned to the new service provider by March 31, 2018. We estimate that 7-Eleven in the U.S. accounted for approximately 12.5% of consolidated total revenues for the year ended 2017. We expect that 7-Eleven in the U.S will account for less than 1% of consolidated total revenues in 2018, all of which was in the first quarter of 2018.

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Results of Operations

The following Consolidated Statements of Operations reflects each line item as a percentage of total revenues for the periods indicated. Percentages may not add due to rounding .


	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2018				2017				2018				2017
	(In thousands, excluding percentages)
Revenues:
ATM operating revenues	$	329,221	96.5	%	$	373,260	96.9	%	$	648,952	95.8	%	$	715,048	96.3	%
ATM product sales and other revenues		11,766	3.5			11,852	3.1			28,219	4.2			27,636	3.7
Total revenues (1)		340,987	100.0			385,112	100.0			677,171	100.0			742,684	100.0
Cost of revenues:
Cost of ATM operating revenues (excludes depreciation, accretion, and amortization of intangible assets reported separately below. See Note 1(c)) (2)		215,353	63.2			246,484	64.0			430,843	63.6			478,411	64.4
Cost of ATM product sales and other revenues		10,086	3.0			11,116	2.9			22,848	3.4			25,751	3.5
Total cost of revenues		225,439	66.1			257,600	66.9			453,691	67.0			504,162	67.9
Operating expenses:
Selling, general, and administrative expenses (3)		40,928	12.0			43,470	11.3			82,668	12.2			85,419	11.5
Redomicile-related expenses		—	—			—	—			—	—			760	0.1
Restructuring expenses		2,063	0.6			—	—			4,476	0.7			8,243	1.1
Acquisition and divestiture-related expenses		913	0.3			3,993	1.0			2,633	0.4			12,449	1.7
Depreciation and accretion expense		31,764	9.3			29,755	7.7			62,806	9.3			58,876	7.9
Amortization of intangible assets		13,498	4.0			15,247	4.0			27,269	4.0			30,427	4.1
Loss on disposal and impairment of assets		9,697	2.8			669	0.2			15,117	2.2			3,863	0.5
Total operating expenses		98,863	29.0			93,134	24.2			194,969	28.8			200,037	26.9
Income from operations		16,685	4.9			34,378	8.9			28,511	4.2			38,485	5.2
Other expense:
Interest expense, net		9,159	2.7			9,460	2.5			18,333	2.7			16,017	2.2
Amortization of deferred financing costs and note discount		3,355	1.0			3,146	0.8			6,663	1.0			6,122	0.8
Other (income) expense		(2,187)	(0.6)			1,945	0.5			(27)	—			365	—
Total other expense		10,327	3.0			14,551	3.8			24,969	3.7			22,504	3.0
Income before income taxes		6,358	1.9			19,827	5.1			3,542	0.5			15,981	2.2
Income tax expense		2,586	0.8			4,670	1.2			2,555	0.4			1,718	0.2
Net income		3,772	1.1			15,157	3.9			987	0.1			14,263	1.9
Net income (loss) attributable to noncontrolling interests		5	—			(1)	—			(12)	—			6	—
Net income attributable to controlling interests and available to common shareholders	$	3,767	1.1	%	$	15,158	3.9	%	$	999	0.1	%	$	14,257	1.9	%

⁽¹⁾

Effective January 1, 2018, we adopted ASC 606 using the modified retrospective approach. Historical revenue reflects amounts previously reported and have not been restated here and the tables that follow.

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⁽²⁾

Excludes effects of depreciation, accretion, and amortization of intangible assets of $36.5 million and $37.6 million for the three months ended June 30, 2018 and 2017, respectively, and $73.7 and $74.7 million for the six months ended June 30, 2018 and 2017, respectively. See Item 1. Financial Statements, Note 1. General and Basis of Presentation – (c) Cost of ATM Operating Revenues Presentation . The inclusion of this depreciation, accretion, and amortization of intangible assets in Cost of ATM operating revenues would have increased our Cost of ATM operating revenues as a percentage of total revenues by 10.7% and 9.8% for the three months ended June 30, 2018 and 2017, respectively, and 10.9% and 10.1% for the six months ended June 30, 2018 and 2017, respectively.

⁽³⁾

Includes share-based compensation expense of $3.4 million for both of the three months ended June 30, 2018 and 2017, and $5.8 million and $5.7 million for the six months ended June 30, 2018 and 2017, respectively .

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Key Operating Metrics

The following table reflects certain key measures that gauge our operating performance for the periods indicated, including the effect of the acquisitions.


	Three Months Ended								Six Months Ended
	June 30,								June 30,
	2018			% Change		2017			2018			% Change		2017

Average number of transacting ATMs:
North America		44,364		(15.0)	%		52,217			45,136		(13.9)	%		52,439
Europe & Africa		24,464		(4.0)			25,477			24,919		(1.3)			25,246
Australia & New Zealand		8,091		(8.2)			8,816			8,163		(8.4)			8,913
Total Company-owned		76,919		(11.1)			86,510			78,218		(9.7)			86,598
North America		14,220		(7.3)			15,337			14,235		(7.7)			15,418
Europe & Africa		179		(71.8)			635			250		(59.4)			616
Australia & New Zealand		103		—			103			103		—			103
Total Merchant-owned		14,502		(9.8)			16,075			14,588		(9.6)			16,137
Average number of transacting ATMs – ATM operations		91,421		(10.9)			102,585			92,806		(9.7)			102,735

Managed Services and Processing:
North America		136,071		4.0			130,846			134,406		4.3			128,878
Australia & New Zealand		2,008		8.1			1,857			2,010		13.2			1,776
Average number of transacting ATMs – Managed services and processing		138,079		4.1			132,703			136,416		4.4			130,654

Total average number of transacting ATMs		229,500		(2.5)			235,288			229,222		(1.8)			233,389

Total transactions (in thousands) :
ATM operations		339,911		(12.9)			390,094			660,866		(12.2)			752,408
Managed services and processing, net		288,812		10.5			261,293			561,282		10.5			507,874
Total transactions		628,723		(3.5)			651,387			1,222,148		(3.0)			1,260,282

Total cash withdrawal transactions (in thousands) :
ATM operations		220,977		(11.0)			248,166			426,809		(11.5)			482,411

Per ATM per month amounts (excludes managed services and processing):
Cash withdrawal transactions		806		—			806			766		(2.2)			783

ATM operating revenues (1)	$	1,105		(2.7)		$	1,136		$	1,073		(1.0)		$	1,084
Cost of ATM operating revenues (1) (2)		749		(2.3)			767			736		(0.1)			737
ATM adjusted operating gross profit (1) (2)	$	356		(3.5)	%	$	369		$	337		(2.9)	%	$	347

ATM adjusted operating gross profit margin		32.2	%				32.5	%		31.4	%				32.0	%

⁽¹⁾

ATM operating revenues and Cost of ATM operating revenues relating to managed services, processing, ATM equipment sales, and other ATM-related services are not included in this calculation.

⁽²⁾

Amounts presented exclude the effect of depreciation, accretion, and amortization of intangible assets, which is reported separately in the accompanying Consolidated Statements of Operations. See Item 1. Financial Statements, Note 1. General and Basis of Presentation – (c) Cost of ATM Operating Revenues Presentation .

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Revenues


	Three Months Ended						Six Months Ended
	June 30,						June 30,

	2018		2017		% Change		2018		2017		% Change
	(In thousands, excluding percentages)
North America
ATM operating revenues	$	197,289	$	242,189	(18.5)	%	$	392,918	$	469,377	(16.3)	%
ATM product sales and other revenues		9,628		9,667	(0.4)			23,760		23,536	1.0
North America total revenues		206,917		251,856	(17.8)			416,678		492,913	(15.5)
Europe & Africa
ATM operating revenues		105,809		100,946	4.8			201,990		186,330	8.4
ATM product sales and other revenues		2,041		2,208	(7.6)			4,304		4,071	5.7
Europe & Africa total revenues		107,850		103,154	4.6			206,294		190,401	8.3
Australia & New Zealand
ATM operating revenues		29,024		32,891	(11.8)			59,661		64,384	(7.3)
ATM product sales and other revenues		97		74	31.1			155		159	(2.5)
Australia & New Zealand total revenues		29,121		32,965	(11.7)			59,816		64,543	(7.3)

Eliminations		(2,901)		(2,863)	1.3			(5,617)		(5,173)	8.6

Total ATM operating revenues		329,221		373,260	(11.8)			648,952		715,048	(9.2)
Total ATM product sales and other revenues		11,766		11,852	(0.7)			28,219		27,636	2.1
Total revenues	$	340,987	$	385,112	(11.5)	%	$	677,171	$	742,684	(8.8)	%

Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017

ATM operating revenues. ATM operating revenues during the three months ended June 30, 2018 decreased $44.0 million, or 11.8%, compared to the same period of 2017. The decrease in ATM operating revenues was primarily attributable to the removal of ATMs at 7-Eleven locations in the U.S. and lower transaction volumes in Australia. The decrease was partially offset by higher reported revenues from our Europe & Africa segment, driven mostly by exchange rates.

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The following table details, by segment, the changes in the various components of ATM operating revenues:



	Three Months Ended
	June 30,
	2018		2017		Change		% Change
	(In thousands, excluding percentages)
North America
Surcharge revenues	$	90,687	$	114,359	$	(23,672)		(20.7)	%
Interchange revenues		35,819		53,226		(17,407)		(32.7)
Bank-branding and surcharge-free network revenues		43,990		47,910		(3,920)		(8.2)
Managed services revenues		13,540		11,995		1,545		12.9
Other revenues		13,253		14,699		(1,446)		(9.8)
North America total ATM operating revenues		197,289		242,189		(44,900)		(18.5)
Europe & Africa
Surcharge revenues		30,888		28,310		2,578		9.1
Interchange revenues		72,412		69,874		2,538		3.6
Other revenues		2,509		2,762		(253)		(9.2)
Europe & Africa total ATM operating revenues		105,809		100,946		4,863		4.8
Australia & New Zealand
Surcharge revenues		22,679		27,125		(4,446)		(16.4)
Interchange revenues		1,064		148		916		618.9
Bank-branding and surcharge-free network revenues		—		23		(23)		n/m
Managed services revenues		4,031		3,439		592		17.2
Other revenues		1,250		2,156		(906)		(42.0)
Australia & New Zealand total ATM operating revenues		29,024		32,891		(3,867)		(11.8)
Eliminations		(2,901)		(2,766)		(135)		4.9
Total ATM operating revenues	$	329,221	$	373,260	$	(44,039)		(11.8)	%

North America. For the three months ended June 30, 2018, our ATM operating revenues in our North America segment decreased $44.9 million, or 18.5%, compared to the same period of 2017. The decrease was primarily attributable to the termination of the 7-Eleven contract in the U.S. and the removal of ATMs at 7-Eleven locations during the second half of 2017 and the first two months of 2018. 7-Eleven locations in the U.S. accounted for approximately 23% of North America revenues in the second quarter of 2017. The decline attributable to the loss of the 7-Eleven relationship was partially offset by revenue growth in the rest of the U.S. as a result of the growth in same-store transactions and in bank and network branding revenues. In addition, during the second quarter of 2017, we experienced software related issues in conjunction with our ATM upgrades and EMV compliance effort, which caused some downtime at a significant number of our ATMs.

Europe & Africa. For the three months ended June 30, 2018, our ATM operating revenues in our Europe & Africa segment increased $4.9 million, or 4.8%, compared to the same period of 2017. Our ATM operating revenues would have been lower by approximately $6.4 million for the three months ended June 30, 2018, absent the beneficial foreign currency exchange rate movements. Adjusted for foreign currency movements, ATM operating revenues were down 1.6%, driven in part by declines in same-store transactions and fewer transacting ATMs in the U.K., in response to the impending changes in LINK interchange rates. The decline in U.K revenues was mostly offset by an increase in the number of transacting ATMs from new ATM placement agreements in South Africa, Spain, and Germany. For additional information related to our constant-currency calculations, see Non-GAAP Financial Measures below.

Australia & New Zealand. For the three months ended June 30, 2018, our ATM operating revenues in our Australia & New Zealand segment decreased $3.9 million, or 11.8%, compared to the same period of 2017. ATM operating revenues were down primarily due to a decline in the number of transacting ATMs and fewer transactions per ATM.

ATM product sales and other revenues . For the three months ended June 30, 2018, our ATM product sales and other revenues remained consistent compared to the same period of 2017.

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Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2017

ATM operating revenues. ATM operating revenues during the six months ended June 30, 2018 decreased $66.1 million, or 9.2%, compared to the same period of 2017. The decrease in ATM operating revenues was primarily attributable to the removal of ATMs at 7-Eleven locations in the U.S.

The following table details, by segment, the changes in the various components of ATM operating revenues:


	Six Months Ended
	June 30,
	2018		2017		Change		% Change
	(In thousands, excluding percentages)
North America
Surcharge revenues	$	179,801	$	220,207	$	(40,406)		(18.3)	%
Interchange revenues		71,638		104,403		(32,765)		(31.4)
Bank-branding and surcharge-free network revenues		88,437		94,259		(5,822)		(6.2)
Managed services revenues		26,092		24,319		1,773		7.3
Other revenues		26,950		26,189		761		2.9
North America total ATM operating revenues		392,918		469,377		(76,459)		(16.3)
Europe & Africa
Surcharge revenues		57,057		50,633		6,424		12.7
Interchange revenues		139,870		130,320		9,550		7.3
Other revenues		5,063		5,377		(314)		(5.8)
Europe & Africa total ATM operating revenues		201,990		186,330		15,660		8.4
Australia & New Zealand
Surcharge revenues		46,749		53,209		(6,460)		(12.1)
Interchange revenues		2,189		2,176		13		0.6
Bank-branding and surcharge-free network revenues		—		81		(81)		n/m
Managed services revenues		8,210		6,731		1,479		22.0
Other revenues		2,513		2,187		326		14.9
Australia & New Zealand total ATM operating revenues		59,661		64,384		(4,723)		(7.3)
Eliminations		(5,617)		(5,043)		(574)		11.4
Total ATM operating revenues	$	648,952	$	715,048	$	(66,096)		(9.2)	%

North America. For the six months ended June 30, 2018, our ATM operating revenues in our North America segment decreased $76.5 million, or 16.3%, compared to the same period of 2017. The decrease was primarily attributable to lower revenue in the U.S. attributable to the removal of ATMs at 7-Eleven locations during the second half of 2017 and the first two months of 2018. Revenues attributable to 7-Eleven locations in the U.S. were approximately 23% of North America revenues in the six months ended June 30, 2017. 7-Eleven did not contribute to the Company’s revenues in the three months ended June 30, 2018. The decline attributable to the loss of the 7-Eleven relationship was partially offset by revenue growth in the rest of the U.S. as a result of the growth in same-store transactions and in bank and network branding revenues. In addition, during the first half of 2017, we experienced software related issues in conjunction with our ATM upgrades and EMV compliance effort, as well as a service disruption at a number of ATMs caused by a third-party software issue, which caused some downtime at a significant number of our ATMs. During the first six months of 2018, the Company experienced high levels of availability across its U.S. ATM fleet.

Europe & Africa . For the six months ended June 30, 2018, our ATM operating revenues in our Europe & Africa segment increased $15.7 million, or 8.4%, compared to the same period of 2017. Our ATM operating revenues would have been lower by approximately $17.4 million for the six months ended June 30, 2018, absent the beneficial foreign currency exchange rate movements. Adjusted for foreign currency movements, ATM operating revenue decreased approximately 1%, partially due to fewer transacting ATMs in the U.K., related to the impending changes in LINK interchange rates, and declines in same-store transactions. The decrease in revenues in the U.K. were mostly offset by an increase in the number of transacting ATMs from new ATM placement agreements in South Africa, Spain, and Germany. For additional

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information related to our constant-currency calculations, see Non-GAAP Financial Measures below.

Australia & New Zealand . For the six months ended June 30, 2018, our ATM operating revenues in the Australia & New Zealand segment were down $4.7 million, or 7.3%, compared to the same period of 2017. ATM operating revenues were down primarily due to a decline in the number of transacting ATMs and fewer transactions per ATM.

ATM product sales and other revenues. For the six months ended June 30, 2018, our ATM product sales and other revenues increased $0.6 million compared to the same period of 2017. The increase was primarily related to additional equipment sales in our North America and Europe & Africa segments.

Cost of Revenues (exclusive of depreciation, accretion, and amortization of intangible assets)


	Three Months Ended						Six Months Ended
	June 30,						June 30,

	2018		2017		% Change		2018		2017		% Change
	(In thousands, excluding percentages)
North America
Cost of ATM operating revenues	$	131,121	$	160,326	(18.2)	%	$	264,983	$	314,987	(15.9)	%
Cost of ATM product sales and other revenues		9,068		9,818	(7.6)			20,590		21,020	(2.0)
North America total cost of revenue		140,189		170,144	(17.6)			285,573		336,007	(15.0)
Europe & Africa
Cost of ATM operating revenues		64,132		64,102	—			124,770		120,100	3.9
Cost of ATM product sales and other revenues		780		960	(18.8)			1,676		3,600	(53.4)
Europe & Africa total cost of revenues		64,912		65,062	(0.2)			126,446		123,700	2.2
Australia & New Zealand
Cost of ATM operating revenues		21,792		23,687	(8.0)			44,389		46,240	(4.0)
Cost of ATM product sales and other revenues		238		428	(44.4)			582		1,253	(53.6)
Australia & New Zealand total cost of revenues		22,030		24,115	(8.6)			44,971		47,493	(5.3)
Corporate		91		183	(50.3)			175		140	25.0

Eliminations		(1,783)		(1,904)	(6.4)			(3,474)		(3,178)	9.3

Cost of ATM operating revenues		215,353		246,484	(12.6)			430,843		478,411	(9.9)
Cost of ATM product sales and other revenues		10,086		11,116	(9.3)			22,848		25,751	(11.3)
Total cost of revenues	$	225,439	$	257,600	(12.5)	%	$	453,691	$	504,162	(10.0)	%

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Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017

Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets). Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) during the three months ended June 30, 2018 decreased $31.1 million, or 12.6%, compared to the same period of 2017. The decrease in the Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) was primarily attributable to the decline in ATM operating revenue, largely due to the removal of ATMs at 7-Eleven locations in the U.S.

The following table details, by segment, the changes in the various components of Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets):



	Three Months Ended
	June 30,
	2018		2017		Change		% Change
	(In thousands, excluding percentages)
North America
Merchant commissions	$	66,118	$	82,019	$	(15,901)		(19.4)	%
Vault cash rental		12,034		13,802		(1,768)		(12.8)
Other costs of cash		13,973		18,835		(4,862)		(25.8)
Repairs and maintenance		11,214		16,720		(5,506)		(32.9)
Communications		4,027		5,760		(1,733)		(30.1)
Transaction processing		1,429		2,284		(855)		(37.4)
Employee costs		9,054		8,638		416		4.8
Other expenses		13,272		12,268		1,004		8.2
North America total cost of ATM operating revenues		131,121		160,326		(29,205)		(18.2)
Europe & Africa
Merchant commissions		27,410		27,812		(402)		(1.4)
Vault cash rental		3,544		3,280		264		8.0
Other costs of cash		6,092		5,947		145		2.4
Repairs and maintenance		3,525		3,499		26		0.7
Communications		3,254		2,952		302		10.2
Transaction processing		4,659		4,337		322		7.4
Employee costs		11,630		9,754		1,876		19.2
Other expenses		4,018		6,521		(2,503)		(38.4)
Europe & Africa total cost of ATM operating revenues		64,132		64,102		30		—
Australia & New Zealand
Merchant commissions		12,369		13,640		(1,271)		(9.3)
Vault cash rental		2,115		1,344		771		57.4
Other costs of cash		1,875		2,169		(294)		(13.6)
Repairs and maintenance		2,430		1,877		553		29.5
Communications		852		969		(117)		(12.1)
Transaction processing		599		501		98		19.6
Employee costs		1,357		1,466		(109)		(7.4)
Other expenses		195		1,721		(1,526)		(88.7)
Australia & New Zealand total cost of ATM operating revenues		21,792		23,687		(1,895)		(8.0)
Corporate		91		183		(92)		(50.3)
Eliminations		(1,783)		(1,814)		31		(1.7)
Total cost of ATM operating revenues	$	215,353	$	246,484	$	(31,131)		(12.6)	%

North America. For the three months ended June 30, 2018, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) in our North America segment decreased $29.2 million, or 18.2%, compared to the same period of 2017. The decrease was attributable to the following: (i) the decline in costs across most categories as a result of the removal of ATMs at 7-Eleven locations in the U.S., (ii) improved operational efficiency,

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(iii) lower other cost of cash in 2018 primarily due to lower charges from networks for suspected fraudulent transactions following the EMV liability shift on the MasterCard network, and (iv) lower maintenance costs in 2018 compared to 2017 related primarily to the software upgrades at certain Company-owned ATMs during 2017.

Europe & Africa. For the three months ended June 30, 2018, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) in our Europe & Africa segment remained constant compared to the same period of 2017. Excluding foreign currency exchange rate movements, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) were down approximately $4.0 million, or 6.2%. Approximately half of this decrease was due to a revision of our estimated liability for business rates (property taxes) on ATMs. The remaining decrease was consistent with the constant-currency decline in ATM operating revenues and our efforts to reduce operating costs in the U.K. For additional information related to our constant-currency calculations, see Non-GAAP Financial Measures below.

Australia & New Zealand. For the three months ended June 30, 2018, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) in our Australia & New Zealand segment decreased $1.9 million, or 8.0%, compared to the same period of 2017. This change is consistent with the decline in ATM operating revenues.

Cost of ATM product sales and other revenues. For the three months ended June 30, 2018, our cost of ATM product sales and other revenues decreased $1.0 million compared to the same period of 2017 as we expanded margins on our equipment sales.

Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2017

Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets). Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) during the six months ended June 30, 2018 decreased $47.6 million, or 9.9%, compared to the same period in 2017. The decrease in the Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) was primarily attributable to the decline in operating costs following the removal of ATMs at 7-Eleven locations in the U.S.

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The following table details, by segment, the changes in the various components of Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets):


	Six Months Ended
	June 30,
	2018		2017		Change		% Change
	(In thousands, excluding percentages)
Cost of ATM operating revenues
North America
Merchant commissions	$	132,700	$	158,579	$	(25,879)		(16.3)	%
Vault cash rental		24,516		27,041		(2,525)		(9.3)
Other costs of cash		30,070		39,324		(9,254)		(23.5)
Repairs and maintenance		21,973		32,593		(10,620)		(32.6)
Communications		8,185		10,900		(2,715)		(24.9)
Transaction processing		3,025		4,820		(1,795)		(37.2)
Employee costs		17,923		16,675		1,248		7.5
Other expenses		26,591		25,055		1,536		6.1
North America total cost of ATM operating revenues		264,983		314,987		(50,004)		(15.9)
Europe & Africa
Merchant commissions		53,176		52,141		1,035		2.0
Vault cash rental		6,962		6,525		437		6.7
Other costs of cash		12,705		10,948		1,757		16.0
Repairs and maintenance		7,546		6,968		578		8.3
Communications		6,651		5,658		993		17.6
Transaction processing		8,790		8,008		782		9.8
Employee costs		22,761		19,282		3,479		18.0
Other expenses		6,179		10,570		(4,391)		(41.5)
Europe & Africa total cost of ATM operating revenues		124,770		120,100		4,670		3.9
Australia & New Zealand
Merchant commissions		24,998		26,858		(1,860)		(6.9)
Vault cash rental		4,381		3,512		869		24.7
Other costs of cash		3,816		5,250		(1,434)		(27.3)
Repairs and maintenance		4,930		3,844		1,086		28.3
Communications		1,850		2,267		(417)		(18.4)
Transaction processing		1,276		1,097		179		16.3
Employee costs		2,689		2,848		(159)		(5.6)
Other expenses		449		564		(115)		(20.4)
Australia & New Zealand total cost of ATM operating revenues		44,389		46,240		(1,851)		(4.0)
Corporate		175		140		35		25.0
Eliminations		(3,474)		(3,056)		(418)		13.7
Total cost of ATM operating revenues	$	430,843	$	478,411	$	(47,568)		(9.9)	%

North America. For the six months ended June 30, 2018, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) in our North America segment decreased $50.0 million, or 15.9%, compared to the same period of 2017. The decrease was attributable to the following: (i) the decline in costs across most categories as a result of the removal of ATMs at 7-Eleven locations in the U.S., (ii) improved operational efficiency, (iii) lower other cost of cash in 2018 primarily due to lower charges from networks for suspected fraudulent transactions following the EMV liability shift on the MasterCard network, and (iv) lower maintenance costs in 2018 compared to 2017 related primarily to the software upgrades at certain Company-owned ATMs during 2017.

Europe & Africa. For the six months ended June 30, 2018, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) in our Europe & Africa segment increased $4.7 million, or 3.9%, compared to the same period of 2017. Excluding foreign currency exchange rate movements, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) were down approximately

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$6.1 million. This constant-currency decline in operating costs is primarily due to a revision to our estimated liability for business rates (property taxes) on ATMs. Otherwise, consistent with approximately flat ATM operating revenues growth on a constant-currency basis and our efforts to reduce operating costs in the U.K., our cost of ATM operating revenues were approximately flat. For additional information related to our constant-currency calculations, see Non-GAAP Financial Measures below.

Australia & New Zealand . For the six months ended June 30, 2018, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) in our Australia & New Zealand segment decreased $1.9 million, or 4.0%, compared to the same period of 2017. This change is consistent with the decline in ATM operating revenues.

Cost of ATM product sales and other revenues. For the six months ended June 30, 2018, our cost of ATM product sales and other revenues decreased $2.9 million compared to the same period of 2017.

Selling, General, and Administrative Expenses


	Three Months Ended								Six Months Ended
	June 30,								June 30,

	2018			2017			% Change		2018			2017			% Change
	(In thousands, excluding percentages)
Selling, general, and administrative expenses	$	37,505		$	40,030		(6.3)	%	$	76,885		$	79,739		(3.6)	%
Share-based compensation expense		3,423			3,440		(0.5)			5,783			5,680		1.8
Total selling, general, and administrative expenses	$	40,928		$	43,470		(5.8)	%	$	82,668		$	85,419		(3.2)	%

Percentage of total revenues:
Selling, general, and administrative expenses		11.0	%		10.4	%				11.4	%		10.7	%
Share-based compensation expense		1.0	%		0.9	%				0.9	%		0.8	%
Total selling, general, and administrative expenses		12.0	%		11.3	%				12.2	%		11.5	%

Selling, general, and administrative expenses (“SG&A expenses”), excluding share-based compensation expense. For the three and six months ended June 30, 2018, SG&A expenses, excluding share-based compensation expense, decreased $2.5 million, or 6.3%, and $2.9 million, or 3.6%, respectively, compared to the same periods of 2017. The decrease was primarily due to our restructuring efforts, discussed further below, which commenced in early 2017, partially offset by the impact of currency rate movements.

Share-based compensation expense. For the three and six months ended June 30, 2018, share-based compensation expense remained constant compared to the same periods of 2017. For additional information related to share-based compensation expense, see Item 1. Financial Statements, Note 5. Share-based Compensation .

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Restructuring Expenses

During 2017, we initiated a global corporate reorganization and cost reduction initiative (the “Restructuring Plan”), intended to improve our cost structure and operating efficiency. The Restructuring Plan included workforce reductions, facilities closures, contract terminations, and other cost reduction measures. We incurred $8.2 million and $10.4 million of pre-tax expenses related to our Restructuring Plan during the six and twelve months ended June 30, 2017 and December 31, 2017, respectively. During 2018, we implemented additional workforce reductions in an effort to continue our cost reduction initiative. During the three and six months ended June 30, 2018, we incurred $2.1 million and $4.5 million of pre-tax expenses, largely consisting of employee severance. During the remainder of 2018, our Restructuring Plan activities may include additional workforce reductions, certain facilities closures, and other cost reduction measures.

For additional information, see Item 1. Financial Statements, Note 1. General and Basis of Presentation – (e) Restructuring Expenses.

Acquisition and Divestiture-related Expenses


	Three Months Ended								Six Months Ended
	June 30,								June 30,

	2018			2017			% Change		2018			2017			% Change
	(In thousands, excluding percentages)
Acquisition and divestiture-related expenses	$	913		$	3,993		(77.1)	%	$	2,633		$	12,449		(78.8)	%

Percentage of total revenues		0.3	%		1.0	%				0.4	%		1.7	%

Acquisition and divestiture-related expenses. For the three and six months ended June 30, 2018, acquisition and divestiture-related expenses included acquisition related professional fees, employee severance, and lease termination costs related to certain DCPayments operations. For the three and six months ended June 30, 2017, acquisition and divestiture-related expenses include professional services and other costs associated with the completion and integration of the DCPayments and Spark acquisitions in January 2017.

Depreciation and Accretion Expense


	Three Months Ended								Six Months Ended
	June 30,								June 30,

	2018			2017			% Change		2018			2017			% Change
	(In thousands, excluding percentages)
Depreciation and accretion expense	$	31,764		$	29,755		6.8	%	$	62,806		$	58,876		6.7	%

Percentage of total revenues		9.3	%		7.7	%				9.3	%		7.9	%

Depreciation and accretion expense. For the three and six months ended June 30, 2018, depreciation and accretion expense increased $2.0 million, or 6.8%, and $3.9 million, or 6.7%, respectively, compared to the same periods of 2017. This increase was primarily due to capital additions during 2017 and changes in currency exchange rates.

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Amortization of Intangible Assets


	Three Months Ended								Six Months Ended
	June 30,								June 30,

	2018			2017			% Change		2018			2017			% Change
	(In thousands, excluding percentages)
Amortization of intangible assets	$	13,498		$	15,247		(11.5)	%	$	27,269		$	30,427		(10.4)	%

Percentage of total revenues		4.0	%		4.0	%				4.0	%		4.1	%

Amortization of intangible assets. For the three and six months ended June 30, 2018, amortization of intangible assets decreased by $1.7 million, or 11.5%, and $3.2 million, or 10.4%, respectively, compared to the same periods of 2017. This decrease was primarily due to the $54.5 million intangible asset impairment charge taken in the third quarter of 2017 related to our Australia and New Zealand segment, which reduced the overall value of our intangible assets subject to amortization.

Loss on Disposal and Impairment of Assets


	Three Months Ended								Six Months Ended
	June 30,								June 30,

	2018			2017			% Change		2018			2017			% Change
	(In thousands, excluding percentages)
Loss on disposal and impairment of assets	$	9,697		$	669		n/m	%	$	15,117		$	3,863		n/m	%

Percentage of total revenues		2.8	%		0.2	%				2.2	%		0.5	%

Loss on disposal and impairment of assets. During the three and six months ended June 30, 2018, we recognized losses of $9.7 million, and $15.1 million, respectively, related to the disposal and impairment of assets. The increase relative to prior periods was a result of the decision to not redeploy certain ATM models . Although many ATMs in our U.S. operations that were impaired remain deployable, a combination of many factors including the size, functionality, estimated upgrade costs, and availability of suitable placements resulted in a change of plans relative to certain models such that the units not currently in service were deemed not likely to be deployed. These ATM assets, with a net book value of approximately $7 million, were written down to their estimated net realizable value. The remaining loss was a result of other ATM asset disposals in the ordinary course of business and, in the three months ended March 31, 2018, disposals related to the exit from a leased facility in the U.K.

Interest Expense, net


	Three Months Ended								Six Months Ended
	June 30,								June 30,

	2018			2017			% Change		2018			2017			% Change
	(In thousands, excluding percentages)
Interest expense, net	$	9,159		$	9,460		(3.2)	%	$	18,333		$	16,017		14.5	%

Percentage of total revenues		2.7	%		2.5	%				2.7	%		2.2	%

Interest expense, net. For the three months ended June 30, 2018, interest expense, net, decreased $0.3 million, or 3.2%, and for the six months ended June 30, 2018 increased $2.3 million, or 14.5%. The increase for the six months ended June 30, 2018 was attributable to the issuance of our 5.5% senior notes due 2025 during the second quarter of 2017, which had a higher interest rate than the rate under our revolving credit facility, which was partially repaid with the proceeds from

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the issuances of these notes. The slight decrease in expense during the three months ended June 30, 2018 was attributable to lower outstanding balances on the Company’s revolving credit facility. For additional information related to our outstanding borrowings, see Item 1. Financial Statements, Note 10. Long-Term Debt.

Income Tax Expense


	Three Months Ended								Six Months Ended
	June 30,								June 30,

	2018			2017			% Change		2018			2017			% Change
	(In thousands, excluding percentages)
Income tax expense	$	2,586		$	4,670		(44.6)	%	$	2,555		$	1,718		48.7	%

Effective tax rate		40.7	%		23.6	%				72.1	%		10.8	%

Income tax expense . The Company’s income tax expense for the three months ended June 30, 2018 totaled $2.6 million resulting in an effective tax rate of 40.7%, compared to an expense of approximately $4.7 million, and an effective tax rate of 23.6%, for the same period of 2017. The increase in the effective tax rate for the three and six months ended June 30, 2018, was largely attributable to (i) the limitation of interest expense the Company could deduct in the U.S. as a result of U.S. Tax Reform, ii) the limitation of deductions in Australia, and iii) the additional tax expense related to share-based compensation in 2018, compared to an excess tax benefit in the same period of 2017 .

Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA, Adjusted EBITA, Adjusted Net Income, Adjusted Net Income per diluted share, Adjusted Free Cash Flow, and certain results prepared in accordance U.S. GAAP, as well as non-GAAP measures on a constant-currency basis represent non-GAAP financial measures provided as a complement to financial results prepared in accordance with U.S. GAAP and may not be comparable to similarly-titled measures reported by other companies. We use these non-GAAP financial measures in managing and measuring the performance of our business, including setting and measuring incentive based compensation for management. We believe that the presentation of these measures and the identification of notable, non-cash, and/or (if applicable in a particular period) certain costs not anticipated to occur in future periods enhance an investor’s understanding of the underlying trends in our business and provide for better comparability between periods in different years. Adjusted EBITDA and Adjusted EBITA exclude amortization of intangible assets, share-based compensation expense, acquisition and divestiture-related expenses, certain non-operating expenses, (if applicable in a particular period) certain costs not anticipated to occur in future periods, gains or losses on disposal and impairment of assets, our obligation for the payment of income taxes, interest expense, and other obligations such as capital expenditures, and includes an adjustment for noncontrolling interests. Additionally, Adjusted EBITDA excludes depreciation and accretion expense. Depreciation and accretion expense and amortization of intangible assets are excluded as these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures, and the methods by which the assets were acquired. Adjusted Net Income represents net income computed in accordance with U.S. GAAP, before amortization of intangible assets, gains or losses on disposal and impairment of assets, share-based compensation expense, certain other expense amounts, acquisition and divestiture-related expenses, certain non-operating expenses, and (if applicable in a particular period) certain costs not anticipated to occur in future periods (together, the “Adjustments”). The non-GAAP tax rate used to calculate Adjusted Net Income was approximately 24.5% and 25.1% for the three and six months ended June 30, 2018, respectively, and 27.7% and 27.9% for the three and six months ended June 30, 2017, respectively. Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by weighted average diluted shares outstanding. Adjusted Free Cash Flow is defined as cash provided by operating activities less the impact of changes in restricted cash due to the timing of settlements, and less payments for capital expenditures, including those financed through direct debt, but excluding acquisitions. The Adjusted Free Cash Flow measure does not take into consideration certain other non-discretionary cash requirements such as mandatory principal payments on portions of our long-term debt. Management calculates certain U.S. GAAP as well as non-GAAP measures on a constant-currency basis using the average foreign currency exchange rates applicable in the corresponding period of the previous year and applying these rates to the measures in the current reporting period. Management uses U.S. GAAP as well as non-GAAP measures on a constant-

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currency basis to assess performance and eliminate the effect foreign currency exchange rates have on comparability between periods.

The non-GAAP financial measures presented herein should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating, investing, or financing activities, or other income or cash flow measures prepared in accordance with U.S. GAAP . Reconciliations of the non-GAAP financial measures used herein to the most directly comparable U.S. GAAP financial measures are presented as follows:

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Reconciliation of Net Income Attributable to Controlling Interests and Available to Common Shareholders to EBITDA, Adjusted EBITDA, Adjusted EBITA, and Adjusted Net Income (in thousands, excluding share and per share amounts)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
Net income attributable to controlling interests and available to common shareholders	$	3,767	$	15,158	$	999	$	14,257
Adjustments:
Interest expense, net		9,159		9,460		18,333		16,017
Amortization of deferred financing costs and note discount		3,355		3,146		6,663		6,122
Income tax expense		2,586		4,670		2,555		1,718
Depreciation and accretion expense		31,764		29,755		62,806		58,876
Amortization of intangible assets		13,498		15,247		27,269		30,427
EBITDA	$	64,129	$	77,436	$	118,625	$	127,417

Add back:
Loss on disposal and impairment of assets		9,697		669		15,117		3,863
Other (income) expense (1)		(2,187)		1,945		(27)		365
Noncontrolling interests (2)		18		(6)		19		(10)
Share-based compensation expense		3,513		3,623		5,958		5,820
Restructuring expenses (3)		2,063		—		4,476		9,003
Acquisition and divestiture-related expenses (4)		913		3,993		2,633		12,449
Adjusted EBITDA	$	78,146	$	87,660	$	146,801	$	158,907
Less:
Depreciation and accretion expense (5)		31,764		29,754		62,805		58,872
Adjusted EBITA	$	46,382	$	57,906	$	83,996	$	100,035
Less:
Interest expense, net		9,159		9,460		18,333		16,017
Adjusted pre-tax income		37,223		48,446		65,663		84,018
Income tax expense (6)		9,120		13,418		16,481		23,449
Adjusted Net Income	$	28,103	$	35,028	$	49,182	$	60,569

Adjusted Net Income per share – basic	$	0.61	$	0.77	$	1.07	$	1.33
Adjusted Net Income per share – diluted	$	0.61	$	0.76	$	1.06	$	1.31

Weighted average shares outstanding – basic		45,927,732		45,637,778		45,880,661		45,564,527
Weighted average shares outstanding – diluted		46,378,813		46,222,112		46,357,776		46,272,191

⁽¹⁾

Includes foreign currency translation gains/losses, the revaluation of the estimated acquisition-related contingent consideration payable, and other non-operating costs.

⁽²⁾

Noncontrolling interests adjustment made such that Adjusted EBITDA includes only our ownership interest in the Adjusted EBITDA of one of our Mexican subsidiaries.

⁽³⁾

⁽⁴⁾

Acquisition and divestiture-related expenses include costs incurred for professional and legal fees and certain other transition and integration-related costs. Expenses include employee severance and lease termination costs related to DCPayments acquisition integration in the six months ended June 30, 2018.

⁽⁵⁾

Amounts exclude a portion of the expenses incurred by one of our Mexican subsidiaries to account for the amounts allocable to the noncontrolling interest shareholders.

⁽⁶⁾

For the three and six months ended June 30, 2018, the non-GAAP tax rate used to calculate Adjusted Net Income was approximately 24.5% and 25.1%, respectively, and 27.7% and 27.9%, for the three and six months ended June 30, 2017, which represents the Company’s GAAP tax rate as adjusted for the net tax effects related to the items excluded from Adjusted Net Income.

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Reconciliation of U.S. GAAP Revenue to Constant-Currency Revenue

(In thousands, excluding percentages)



Consolidated revenue:	Three Months Ended
	June 30,
	2018						2017		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	329,221	$	(7,977)	$	321,244	$	373,260	(11.8)	%	(13.9)	%
ATM product sales and other revenues		11,766		(175)		11,591		11,852	(0.7)		(2.2)
Total revenues	$	340,987	$	(8,152)	$	332,835	$	385,112	(11.5)	%	(13.6)	%


	Six Months Ended
	June 30,
	2018						2017		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	648,952	$	(21,527)	$	627,425	$	715,048	(9.2)	%	(12.3)	%
ATM product sales and other revenues		28,219		(498)		27,721		27,636	2.1		0.3
Total revenues	$	677,171	$	(22,025)	$	655,146	$	742,684	(8.8)	%	(11.8)	%



Europe & Africa revenue:	Three Months Ended
	June 30,
	2018						2017		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	105,809	$	(6,444)	$	99,365	$	100,946	4.8	%	(1.6)	%
ATM product sales and other revenues		2,041		(116)		1,925		2,208	(7.6)		(12.8)
Total revenues	$	107,850	$	(6,560)	$	101,290	$	103,154	4.6	%	(1.8)	%


	Six Months Ended
	June 30,
	2018						2017		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	201,990	$	(17,354)	$	184,636	$	186,330	8.4	%	(0.9)	%
ATM product sales and other revenues		4,304		(359)		3,945		4,071	5.7		(3.1)
Total revenues	$	206,294	$	(17,713)	$	188,581	$	190,401	8.3	%	(1.0)	%

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Australia & New Zealand revenue:	Three Months Ended
	June 30,
	2018						2017		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	29,024	$	(235)	$	28,789	$	32,891	(11.8)	%	(12.5)	%
ATM product sales and other revenues		97		(1)		96		74	31.1		29.7
Total revenues	$	29,121	$	(236)	$	28,885	$	32,965	(11.7)	%	(12.4)	%


	Six Months Ended
	June 30,
	2018						2017		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	59,661	$	(1,325)	$	58,336	$	64,384	(7.3)	%	(9.4)	%
ATM product sales and other revenues		155		(3)		152		159	(2.5)		(4.4)
Total revenues	$	59,816	$	(1,328)	$	58,488	$	64,543	(7.3)	%	(9.4)	%

Reconciliation of Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per diluted share on a Non-GAAP basis to Constant-Currency



	Three Months Ended
	June 30,
	2018						2017		% Change
	Non - GAAP (1)		Foreign Currency Impact		Constant - Currency		Non - GAAP (1)		Non - GAAP (1)		Constant - Currency
Adjusted EBITDA	$	78,146	$	(2,263)	$	75,883	$	87,660	(10.9)	%	(13.4)	%

Adjusted Net Income	$	28,103	$	(944)	$	27,159	$	35,028	(19.8)	%	(22.5)	%

Adjusted Net Income per share – diluted (2)	$	0.61	$	(0.02)	$	0.59	$	0.76	(19.7)	%	(22.4)	%

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	Six Months Ended
	June 30,
	2018						2017		% Change
	Non - GAAP (1)		Foreign Currency Impact		Constant - Currency		Non - GAAP (1)		Non - GAAP (1)		Constant - Currency
Adjusted EBITDA	$	146,801	$	(5,895)	$	140,906	$	158,907	(7.6)	%	(11.3)	%

Adjusted Net Income	$	49,182	$	(2,333)	$	46,849	$	60,569	(18.8)	%	(22.7)	%

Adjusted Net Income per share – diluted (2)	$	1.06	$	(0.05)	$	1.01	$	1.31	(19.1)	%	(22.9)	%

(1) As reported on the Reconciliation of Net Income Attributable to Controlling Interests and Available to Common Shareholders to EBITDA, Adjusted EBITDA, Adjusted EBITA, and Adjusted Net Income above.

(2) Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by the weighted average diluted shares outstanding of 46,378,813 and 46,222,112 for the three months ended June 30, 2018 and 2017, respectively, and 46,357,776 and 46,272,191 for the six months ended June 30, 2018 and 2017 respectively.

Reconciliation of Adjusted Free Cash Flow


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2018		2017		2018		2017
	(In thousands)
Net cash provided by operating activities	$	60,342	$	73,621	$	109,775	$	96,329
Restricted cash settlement activity (1)		(1,111)		510		(25,349)		(11,749)
Adjusted cash provided by operating activities		59,231		74,131		84,426		84,580
Cash used in investing activities, excluding acquisitions and divestitures (2)		(25,943)		(31,307)		(46,682)		(69,868)
Adjusted free cash flow	$	33,288	$	42,824	$	37,744	$	14,712

⁽¹⁾

Restricted cash settlement activity represents the change in the Company’s restricted cash excluding the portion of the change that is attributable to foreign exchange and disclosed as part of the effect of exchange rate changes on cash, cash equivalents, and restricted cash in the accompanying Consolidated Statements of Cash Flows .

⁽²⁾

Capital expenditure amounts include payments made for exclusive license agreements, site acquisition costs, and other assets. Additionally, capital expenditure amounts for one of our Mexican subsidiaries are reflected gross of any noncontrolling interest amounts.

Liquidity and Capital Resources

Overview

As of June 30, 2018, we had $40.3 million in cash and cash equivalents, and $878.4 million in outstanding long-term debt.

We have historically funded our operations primarily through cash flows from operations, borrowings under our revolving credit facility, and the issuance of debt and equity securities. We have generally used a portion of our cash flows to invest in additional ATMs, either through acquisitions or through organic growth. We have also used cash to pay interest and principal amounts outstanding under our borrowings. As we collect a sizable portion of our cash from sales on a daily basis but generally pay our vendors on 30 day terms and are not required to pay certain of our merchants until 20 days after the end of each calendar month, we are able to utilize the excess available cash flow to reduce borrowings made under our revolving credit facility and to fund capital expenditures. Accordingly, it is not uncommon for us to reflect a working capital deficit position in the accompanying Consolidated Balance Sheets.

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We believe that our cash on hand and our current revolving credit facility will be sufficient to meet our working capital requirements and contractual commitments for the next twelve months. We expect to fund our working capital needs from cash flows from our operations and borrowings under our revolving credit facility, to the extent needed.

Operating Activities

Net cash provided by operating activities totaled $109.8 million during the six months ended June 30, 2018, compared to $96.3 million during the same period of 2017. On January 1, 2018, we adopted the guidance in ASU 2016-18, Statement of Cash Flows Restricted Cash (Topic 230). In accordance with guidance, we have included the balance of restricted cash together with cash and cash equivalents in presenting the Consolidated Statements of Cash Flows and have applied the changes retrospectively. Also as a result of the new cash flow guidance, we will recognize contingent consideration payments up to the amount of the liability recognized at the acquisition date in financing activities, and any excess in operating activities. We do not anticipate that the classification guidance will result in any other significant changes to the operating, investing, or financing cash flows that would otherwise be reported. The increase in net cash provided by operating activities during the first six months is primarily attributable to the timing of restricted cash settlement activity and other year-over-year improvements in working capital changes.

Investing Activities

Net cash used in investing activities totaled $46.7 million during the six months ended June 30, 2018, compared to $554.5 million during the same period of 2017. The decrease in net cash used in investing activities is primarily attributable to the DCPayments and Spark acquisitions completed during January 2017. Additionally, our capital expenditures were lower during the six months ended June 30, 2018, compared to the same period in 2017 primarily due to fewer ATM upgrades.

Anticipated future capital expenditures. We currently anticipate that the majority of our capital expenditures for the foreseeable future will be attributable to the following: i) organic growth projects, including the purchase of ATMs for both new and existing ATM management agreements; ii) various compliance requirements as discussed in Recent Events and Trends – Capital investments above; and iii) investments in our infrastructure. Through June 30, 2018, our capital expenditures were $46.7 million. We expect that our capital expenditures for the twelve months ended December 31, 2018 will total approximately $115 million and be funded primarily through our cash flows from operations.

Financing Activities and Facilities

Net cash used in financing activities totaled $48.0 million during the six months ended June 30, 2018, compared to cash provided by financing activities of $456.3 million during the same period of 2017. The cash provided by financing activities in 2017 is primarily attributable to proceeds from borrowings under our revolving credit facility and new debt offering used to fund the DCPayments and Spark acquisitions. During the six months ended June 30, 2018, we repaid a portion of our borrowings outstanding under our revolving credit facility from our cash flow from operations less amounts spent for capital expenditures.

For information related to our financing facilities, s ee Item 1. Financial Statements, Note 10. Long-term Debt.

New Accounting Pronouncements

For information related to recent accounting pronouncements not yet adopted during 2018, s ee Item 1. Financial Statements, Note 2. New Accounting Pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The following market risk disclosures should be read in conjunction with the quantitative and qualitative disclosures about market risk contained in our 2017 Form 10-K.

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We are exposed to certain risks related to our ongoing business operations, including interest rate risk associated with our vault cash rental obligations and, to a lesser extent, borrowings under our revolving credit facility. The following quantitative and qualitative information is provided about financial instruments to which we were a party at June 30, 2018, and from which we may incur future gains or losses from changes in market interest rates or foreign currency exchange rates. We do not enter into derivative or other financial instruments for speculative or trading purposes.

Hypothetical changes in interest rates and foreign currency exchange rates chosen for the following estimated sensitivity analysis are considered to be reasonably possible near-term changes generally based on consideration of past fluctuations for each risk category. However, since it is not possible to accurately predict future changes in interest rates and foreign currency exchange rates, these hypothetical changes may not necessarily be an indicator of probable future fluctuations.

Interest Rate Risk

Vault cash rental expense. As our ATM vault cash rental expense is based on market rates of interest, it is sensitive to changes in the general level of interest rates in the respective countries in which we operate. We pay a monthly fee on the average outstanding vault cash balances in our ATMs under floating rate formulas based on a spread above various interbank offered rates in the U.S., the U.K., Germany, and Spain. In Australia, the formula is based on the Bank Bill Swap Rates (“BBSY”), in South Africa, the rate is based on the South African Prime Lending rate, in Canada, the rate is based on the Bank of Canada’s Bankers Acceptance Rate and the Canadian Prime Rate, and in Mexico, the rate is based on the Interbank Equilibrium Interest Rate (commonly referred to as the “TIIE”).

As a result of the significant sensitivity surrounding our vault cash rental expense, we have entered into a number of interest rate swap contracts with varying notional amounts and fixed interest rates in the U.S., the U.K., and Australia to effectively fix the rate we pay on the amounts of our current and anticipated outstanding vault cash balances.

The notional amounts, weighted average fixed rates, and terms associated with our interest rate swap contracts that are currently in place in the U.S. and the U.K. (as of the date of the issuance of this Form 10-Q) are as follows:


Notional Amounts		Weighted Average Fixed Rate		Notional Amounts		Weighted Average Fixed Rate
U.S. $		U.S.		U.K. £		U.K.		Term
(In millions)				(In millions)
$	1,450	2.11	%	£	550	0.82	%	July 1, 2018 – December 31, 2018
$	1,000	2.06	%	£	550	0.90	%	January 1, 2019 – December 31, 2019
$	1,000	2.06	%	£	500	0.94	%	January 1, 2020 – December 31, 2020
$	400	1.46	%	£	500	0.94	%	January 1, 2021 – December 31, 2021
$	400	1.46	%	£	500	0.94	%	January 1, 2022 – December 31, 2022

The notional amounts, weighted average fixed rates, and terms associated with our interest rate swap contracts that are currently in place in Australia (as of the date of the issuance of this Form 10-Q) are as follows:


Notional Amounts AUS $		Weighted Average Fixed Rate		Term
(In millions)
$	85	3.11	%	July 1, 2018 – September 28, 2018
$	35	2.98	%	September 29, 2018 – February 28, 2019

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Summary of Interest Rate Exposure on Average Outstanding Vault Cash Balances

The following table presents a hypothetical sensitivity analysis of our annual vault cash rental expense in North America based on our average outstanding vault cash balance for the quarter ended June 30, 2018 and assuming a 100 basis point increase in interest rates (in millions):


North America
Average outstanding vault cash balance	$	1,825
Interest rate swap contracts fixed notional amount		(1,450)
Residual unhedged outstanding vault cash balance	$	375

Additional annual interest incurred on 100 basis point increase	$	3.75

We also have terms in certain of our North America contracts with merchants and financial institution partners where we can decrease fees paid to merchants or effectively increase the fees paid to us by financial institutions if vault cash rental costs increase. Such protection will serve to reduce but not eliminate the exposure calculated above. Furthermore, we have the ability in North America to partially mitigate our interest rate exposure through our operations. We believe we can reduce the average outstanding vault cash balances as interest rates rise by visiting ATMs more frequently with lower cash amounts. This ability to reduce the average outstanding vault cash balances is partially constrained by the incremental cost of more frequent ATM visits. Our contractual protections with merchants and financial institution partners and our ability to reduce the average outstanding vault cash balances will serve to reduce but not eliminate interest rate exposure.

The following table presents a hypothetical sensitivity analysis of our annual vault cash rental expense in Europe & Africa based on our average outstanding vault cash balance for the quarter ended June 30, 2018 and assuming a 100 basis point increase in interest rates (in millions):


Europe & Africa
Average outstanding vault cash balance	$	1,223
Interest rate swap contracts fixed notional amount		(731)
Residual unhedged outstanding vault cash balance	$	492

Additional annual interest incurred on 100 basis point increase	$	4.92

The following table presents a hypothetical sensitivity analysis of our annual vault cash rental expense in Australia based on our average outstanding vault cash balance for the quarter ended June 30, 2018 and assuming a 100 basis point increase in interest rates (in millions):


Australia
Average outstanding vault cash balance	$	215
Interest rate swap contracts fixed notional amount		(90)
Residual unhedged outstanding vault cash balance	$	125

Additional annual interest incurred on 100 basis point increase	$	1.25

As of June 30, 2018, we had an asset of $31.9 million and a liability of $1.6 million recorded in the accompanying Consolidated Balance Sheets related to our interest rate swap and foreign currency forward contracts, which represented the fair value asset or liability of the interest rate swap and foreign currency forward contracts, as derivative instruments are required to be carried at fair value. The fair value estimate was calculated as the present value of amounts estimated to be received or paid to a marketplace participant in a selling transaction. These interest rate swap and foreign currency forward contracts are valued using pricing models based on significant other observable inputs (Level 2 inputs under the fair value hierarchy prescribed by U.S. GAAP). The effective portion of the gain or loss on the derivative instrument is reported as a component of the Accumulated other comprehensive loss, net line item in the accompanying Consolidated Balance Sheets. The effective portion is reclassified into earnings in the Vault cash rental expense line item in the

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accompanying Consolidated Statements of Operations in the same period or periods during which the hedged transaction affects earnings and has been forecasted into earnings.

Interest expense. Our interest expense is also sensitive to changes in interest rates as borrowings under our revolving credit facility accrue interest at floating rates. As of June 30, 2018, our outstanding borrowings under our revolving credit facility, which carries a floating interest rate, were $76.8 million.

Outlook. Although we currently hedge a substantial portion of our vault cash interest rate risk in the U.S., the U.K., and Australia, we may not be able to enter into similar arrangements for similar amounts in the future, and 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 expenses. However, we expect that the impact on our consolidated financial statements from a significant increase in interest rates would be partially mitigated by the interest rate swap contracts that we currently have in place associated with our vault cash balances in the U.S., the U.K., and Australia and other protective measures we have put in place to mitigate such risk.

Foreign Currency Exchange Rate Risk

As a result of our operations in the U.K., Ireland, Germany, Spain, Mexico, Canada, Australia, New Zealand, and South Africa, we are exposed to market risk from changes in foreign currency exchange rates. The functional currencies of our international subsidiaries are their respective local currencies. The r esults of operations of our international subsidiaries are translated into U.S. dollars using average foreign currency exchange rates in effect during the periods in which those results are recorded and the assets and liabilities are translated using the foreign currency exchange rate in effect as of each balance sheet reporting date. These resulting translation adjustments to assets and liabilities have been reported in the Accumulated other comprehensive loss, net line item in the accompanying Consolidated Balance Sheets. As of June 30, 2018, this accumulated translation loss totaled $47.6 million compared to $24.4 million as of December 31, 2017.

Our consolidated financial results were significantly impacted by changes in foreign currency exchange rates during the six months ended June 30, 2018 compared to the same periods of 2017. Our total revenues during the three and the six months ended June 30, 2018 would have been lower by approximately $8 million and $22 million, respectively, had the foreign currency exchange rates from the same periods of 2017, remained unchanged. A sensitivity analysis indicates that if the U.S. dollar uniformly strengthened or weakened 10.0% against the British pound, Euro, Mexican peso, Australian dollar, South African Rand, or Canadian dollar, the effect upon our operating income would have been approximately $1.8 million and $2.6 million, respectively, for the three and six months ended June 30, 2018. We have entered into foreign currency forward swaps to mitigate our exposure to changes in foreign currency exchange rates related to expected cash flows generated in currencies other than the U.S. dollar that are expected to be converted in U.S dollars within the next twelve months.

Certain intercompany balances are designated as short-term in nature. The changes in these balances related to foreign currency exchange rates have been recorded in the accompanying Consolidated Statements of Operations and we are exposed to foreign currency exchange rate risk as it relates to these intercompany balances.

Item 4. Controls and Procedures

Management’s Quarterly Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we have evaluated, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission. Based upon that evaluation, our principal

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executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of June 30, 2018 at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

In conjunction with the evaluation described above, there have been no changes in our system of internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For additional information related to our material pending legal and regulatory proceedings and settlements , see Part I. Financial Information, Item 1. Financial Statements, Note 15. Commitments and Contingencies.

Item 1A. Risk Factors

You should carefully consider the risks discussed in Part I. Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2017 (“2017 Form 10-K”) and other information included and incorporated by reference in this report. These risks could materially affect our business, financial condition, or future results. There have been no material changes in our assessment of our risk factors from those set forth in our 2017 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits


Exhibit Number		Description

10.1*		Employment Agreement by and between Cardtronics USA, Inc. and Paul Gullo, dated effective as of May 14, 2018.
31.1*		Certification of the Chief Executive Officer of Cardtronics plc pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Chief Financial Officer and Chief Operations Officer of Cardtronics plc pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of the Chief Executive Officer and Chief Financial Officer and Chief Operations Officer of Cardtronics plc pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

* Filed herewith.

** Furnished herewith.

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S IGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		CARDTRONICS PLC

August 2, 2018		/s/ Gary W. Ferrera
		Gary W. Ferrera
		Chief Financial Officer
		(Duly Authorized Officer and
		Principal Financial Officer)

August 2, 2018		/s/ Paul A. Gullo
		Paul A. Gullo
		Chief Accounting Officer
		(Duly Authorized Officer and
		Principal Accounting Officer)

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “ Agreement ”) is entered into as of May 14, 2018, by and between Paul Gullo (“ Executive ”) and Cardtronics USA, Inc. (the “ Company ”).

WHEREAS , the Company desires to employ Executive and Executive desires to be employed by the Company, on the terms set forth in this Agreement.

NOW , THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Employment Term . The Company hereby agrees to employ Executive, and Executive hereby agrees to be employed by the Company, upon the terms and conditions contained in this Agreement. Executive’s employment with the Company pursuant to this Agreement shall commence on May 21, 2018 (the “ Effective Date ”) and shall continue until the first anniversary of the Effective Date (the “ Initial Term ”) unless earlier terminated pursuant to Section 8 ; provided , that the term of this Agreement shall automatically be extended for one (1) additional year commencing on the first anniversary of the Effective Date and on each anniversary thereafter (each, a “ Renewal Term ”) unless, not less than ninety (90) days prior to the commencement of any such Renewal Term, either party shall have given written notice to the other that it does not wish to extend this Agreement (a “ Non-Renewal Notice ”), in which case, Executive’s employment under this Agreement shall terminate upon the close of business on the last day of the Initial Term or the then-current Renewal Term, as applicable. The period during which Executive is employed by the Company pursuant to this Agreement is hereinafter referred to as the " Term ."

2. Employment Duties . Executive shall have the title of Chief Accounting Officer of the Company and shall have such duties, authorities and responsibilities as are consistent with such position and as the Chief Financial Officer may designate from time to time. Executive shall report to the Chief Financial Officer. Executive shall devote Executive’s full working time and attention and Executive’s best efforts to Executive’s employment and service with the Company and shall perform Executive’s services in a capacity and in a manner consistent with Executive’s position for the Company; provided , that this Section 2 shall not be interpreted as prohibiting Executive from (i) managing Executive’s personal investments (so long as such investment activities are of a passive nature), (ii) engaging in charitable or civic activities, (iii) participating on boards of directors or similar bodies of non-profit organizations, or (iv) subject to approval by the Board of Directors (the “ Board ”) of Cardtronics plc (“ Parent ”) in its sole and absolute discretion, participating on boards of directors or similar bodies of for-profit organizations, in each case of (i) – (iv), so long as such activities do not, individually or in the aggregate, (a) materially interfere with the performance of Executive’s duties and responsibilities hereunder, (b) create a fiduciary conflict, or (c) result in a violation of Section 14, 15 and 16 of this Agreement.

3. Base Salary . During the Term, the Company shall pay Executive a base salary at an annual rate of $310,000, payable in accordance with the Company’s normal payroll practices for employees as in effect from time to time (Executive’s annual base salary, as in effect from time to time, is hereinafter referred to as the “ Base Salary ”).

4. Annual Bonus; Equity Plan Participation .

(a) Annual Bonus . With respect to each calendar year during the Term, Executive shall be eligible to earn an annual cash bonus award (the “ Annual Bonus ”) pursuant to the Annual Executive Cash Incentive Plan (“ AECIP ”), with a target Annual Bonus of sixty percent (60%) of Base Salary (“ Target Bonus ”) up to a maximum Annual Bonus of one hundred and fifty percent (150%) of Base Salary, based upon the achievement of annual performance targets established by the Board at the beginning of each such calendar year. The Annual Bonus, if any, for each calendar year during the Term shall be paid to Executive pursuant to the terms of the AECIP. If the Effective Date is on or prior to June 1, 2018, Executive shall be eligible to receive the Annual Bonus without pro-ration for calendar year 2018.

(b) Equity Plan Participation . Executive shall be eligible to participate in the Cardtronics, Inc. Third Amended and Restated 2007 Stock Incentive Plan (or its successor) (the “ Plan ”), with a target annual incentive of 60% of Base Salary, subject to approval by the Board of Cardtronics, Inc.

5. Benefits . During the Term, Executive shall be eligible to participate in any benefit plans (other than any severance plan or policy), including medical, disability and life insurance offered by the Company as in effect from time to time (collectively, “ Benefit Plans ”), on the same basis as those generally made available to other senior executives of the Company, to the extent consistent with applicable law and the terms of the applicable Benefit Plan. The Company does not promise the adoption or continuance of any particular Benefit Plan and reserves the right to amend or cancel any Benefit Plan at any time in its sole discretion (subject to the terms of such Benefit Plan and applicable law).

6. Sign-On Bonus and One-Time RSU Award .

(a) Executive shall be entitled to receive a lump sum payment of $20,000 (“ Sign-On Bonus ”) on the first payroll date following the sixtieth (60th) day following the Effective Date. If Executive’s employment is terminated pursuant to Sections 9(c) or 9(f) prior to the second (2nd) anniversary of the Effective Date, Executive shall forfeit and return the Sign-On Bonus to the Company.

(b) As soon as reasonably practicable following the Effective Date, Executive shall be granted restricted stock units with fair market value equal $100,000 as of the Effective Date (the “ RSUs ”). The RSUs shall be eligible to vest at a rate of 25% on each of the first four anniversaries of the Effective Date. The RSUs shall be subject to the terms and conditions of the Plan and the award agreement executed between Executive and Cardtronics, Inc a form of which is attached hereto as Annexure A.

7. Vacation . Executive shall be entitled to four (4) weeks of annual paid vacation days, which shall accrue and be useable by Executive in accordance with Company policy, as may be in effect from time to time.


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8. Expense Reimbursement . Executive shall be entitled to reimbursement for all reasonable and necessary out-of-pocket business, entertainment and travel expenses incurred by Executive in connection with the performance of Executive's duties hereunder in accordance with the Company's expense reimbursement policies and procedures.

9. Termination of Employment . The Term and Executive’s employment hereunder may be terminated as follows:

(a) Death: Automatically in the event of the death of Executive;

(b) Disability: At the option of the Company, by written notice to Executive or Executive’s personal representative in the event of the Disability of Executive. As used herein, the term “ Disability ” shall mean Executive being eligible for the Company’s (or its Affiliate’s) long-term disability benefits, if any are available to employees of the Company or upon Executive being unable to perform Executive’s duties or fulfill Executive’s obligations under this Agreement by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 180 days as determined by the Company and certified in writing by a competent medical physician selected solely by the Company in the event of any alleged mental impairment and in the event of any alleged physical impairment by the Company, with Executive having the right to approve such selection (however, if Executive fails to approve the Company’s first two selections within ten days of being notified of each such selection, the Company will have the right thereafter to designate any licensed medical physician on staff with either the Baylor College of Medicine or Methodist Hospital, each located in Houston, Texas) (an “ Impairment ”); provided that, in either case, the Company may employ someone to undertake Executive’s authorities, duties and responsibilities with respect to the Company and its Affiliates, including with Executive’s title and reporting lines, during the period from the earlier of (i) the date Executive is eligible for the Company’s (or its Affiliate’s) long-term disability benefits or (ii) the onset of the Impairment until Executive’s employment with the Company is terminated, and, notwithstanding anything to the contrary, any such action by the Company will not constitute Good Reason, constructive termination or breach of this Agreement or otherwise;

(d) Without Cause by the Company: At the option of the Company at any time without Cause, by delivering written notice of its determination to terminate to Executive;

(e) Good Reason: At the option of Executive for Good Reason;

(f) By Executive without Good Reason: At the option of Executive without Good Reason, upon sixty (60) days prior written notice to the Company (which the Company may, in its sole discretion, make effective earlier than the termination date provided in such notice),


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(g) Company Non-Renewal Notice: Upon the close of business on the last day of the Initial Term or the then-current Renewal Term, as applicable, as a result of a Non-Renewal Notice by the Company; or

(h) Executive Non-Renewal Notice: Upon the close of business on the last day of the Initial Term or the then-current Renewal Term, as applicable, as a result of a Non-Renewal Notice by the Executive.

10. Payments by Virtue of Termination of Employment .

(a) If Executive’s employment is terminated at any time during the Term by the Company pursuant to Section 9(d) (Without Cause by the Company) or Section 9(g) (Company Non-Renewal Notice) , or by Executive pursuant to Section 9(e) (Good Reason) , subject to Section 10(c) of this Agreement, Executive shall be entitled to:

(i) (A) within thirty (30) days following such termination, (1) payment of Executive’s accrued and unpaid Base Salary (2) payment of any earned but unpaid Annual Bonus for the fiscal year prior to the year of termination, payable at the same time annual bonuses are paid to other similarly situated employees of the Company and (3) reimbursement of expenses under Section 8 of this Agreement, in each case of (1) and (2), accrued through the date of termination and (B) all other accrued amounts or accrued benefits due to Executive in accordance with the Company’s benefit plans, programs or policies (other than severance); and

(ii) (A) an amount equal to one (1) times the sum of (i) Executive’s Base Salary as in effect immediately prior to Executive’s date of termination and (ii) Executive’s Target Bonus, which amount shall be payable during the twelve (12) months commencing on the date of termination (the “ Severance Period ”) in substantially equal installments in accordance with the Company’s regular payroll practices as in effect from time to time; provided , that the first payment pursuant to this Section 10(a)(ii)(A) shall be made on the next regularly scheduled payroll date following the sixtieth (60th) day after Executive’s termination and shall include payment of any amounts that would otherwise be due prior thereto and (B) a lump sum taxable cash payment equal to the aggregate monthly employer contribution to the Company’s group health coverage premium for an active employee with the same level of coverage as Employee had on the date of termination for the Severance Period, payable on the first payroll date following the sixtieth (60th) day after Executive’s termination. In the event of Executive’s death during the Severance Period, any payments to be made pursuant to this Section 10(a)(ii) shall be paid to Executive’s legal representative.

(iii) notwithstanding anything to the contrary in an applicable incentive equity award agreement, any outstanding equity award that was granted subject solely to time-based vesting shall fully vest on the Executive’s date of termination.

(b) If, during the Term, (i) Executive’s employment terminates pursuant to Section 9(a) (Death) or Section 9(b) (Disability) , (ii) the Company terminates the Executive’s employment pursuant to Section 9(c) (Cause) , or (iii) Executive terminates Executive’s employment pursuant to Section 9(f) (By Executive without Good Reason) or Section 9(h)


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(Executive Non-Renewal Notice) , Executive or Executive’s legal representatives, as applicable, shall be entitled to receive the payments and benefits described under Section 10(a)(i) of this Agreement; provided that, if during the Term, the Company terminates Executive’s employment pursuant to Section 9(c) Cause or Executive terminates Executive’s employment pursuant to Section 9(f) (By Executive without Good Reason) or by Executive pursuant to Section 9(h) (Executive Non-Renewal Notice) , Executive shall not be entitled to the payment described under Section 10(a)(i)(A)(2) . If Executive’s employment terminates pursuant to Section 9(a) (Death) or Section 9(b) (Disability) , notwithstanding anything to the contrary in an applicable incentive equity award agreement, the portion of any outstanding equity award that was granted subject solely to time-based vesting and would have vested within the following twelve (12) months had no termination occurred, shall vest on the Executive’s date of termination.

(c) Conditions to Payment . Notwithstanding anything herein to the contrary, all payments and benefits due to Executive under this Section 10 which are not otherwise required by applicable law shall be payable only if Executive executes and delivers to the Company a general release of claims in a form provided by the Company and such release is no longer subject to revocation (to the extent applicable) within sixty (60) days following termination of employment. Failure to timely execute and return such release or the revocation of such release shall be a waiver by Executive of Executive’s right to the payments and benefits under this Section 10 (which, for the avoidance of doubt, shall not include any amounts described in Section 10(a)(i) of this Agreement). In addition, the payments and benefits under this Section 10 shall be conditioned on Executive’s compliance with Sections 14, 15 and 16 of this Agreement.

(d) No Other Severance . Executive hereby acknowledges and agrees that, other than the payments and benefits described in this Section 10 , upon the effective date of the termination of Executive’s employment, Executive shall not be entitled to any other payments or benefits of any kind under any Company benefit plan, severance policy generally available to the Company’s employees or otherwise and a ll other rights of Executive to compensation under this Agreement shall end as of such date.

11. Definitions . For purposes of this Agreement,

(a) “ Affiliate ” shall mean any other individual or entity that owns or controls, is owned or controlled by, or is under common ownership or control with, such particular individual or entity. Without limiting the scope of the preceding sentence, the Parent shall be deemed to be an Affiliate of the Company for all purposes of this Agreement.

(b) “ Cause ” shall mean a reasonable and good faith determination by the Board that Executive has (a) engaged in gross negligence, gross incompetence or willful misconduct in the performance of Executive’s duties with respect to the Company or any of its Affiliates, (b) refused without proper legal reason to perform Executive’s duties and responsibilities to the Company or any of its Affiliates, (c) materially breached any material provision of this Agreement or any written agreement or corporate policy or code of conduct established by the Company or any of its Affiliates, (d) willfully engaged in conduct that is materially injurious to the Company or any of its Affiliates, (e) breached restrictive covenants in this Agreement or any other agreement between Executive and the Company or any of its Affiliate, (f) committed an act of theft, fraud,


	5

embezzlement, misappropriation or willful breach of a fiduciary duty to the Company or any of its Affiliates, or (g) been convicted of (or pleaded no contest to) a crime involving fraud, dishonesty or moral turpitude or any felony (or a crime of similar import in a foreign jurisdiction); provided that any assertion by the Company of a termination of employment for “Cause” shall not be effective unless the Company has provided written Notice of Breach to Executive within 90 days of the Company’s actual knowledge that Cause exists.

(c) “ Good Reason ” shall mean the occurrence of any of the following events: (a) a diminution in Executive’s Base Salary of 10% or more, unless such reduction is part of an initiative that applies to and affects all similarly situated executive officers of the Company substantially the same and proportionately; (b) a material diminution in Executive’s authority, duties, or responsibilities, or (c) a material breach by the Company of this Agreement, other than an isolated, insubstantial and inadvertent failure to comply with this Agreement not occurring in bad faith. Notwithstanding the foregoing provisions of this Section 11(c) or any other provision in this Agreement to the contrary, any assertion by Executive of a termination of employment for “Good Reason” shall not be effective unless all of the following conditions are satisfied: (i) the condition described in Section 11(c) giving rise to Executive’s termination of employment must have arisen without Executive’s written consent; (ii) Executive must provide written notice of breach to the Company of such condition in accordance with Section 19 within 45 days of the initial existence of the condition; and (iii) the condition specified in the notice of breach must remain uncorrected for 30 days after receipt of the notice of breach by the Company. Any notice of breach shall be deemed void if the Company cures the matter giving rise to Good Reason under this Section 11(c) within 30 days of the receipt of the notice of breach.

12. Return of Company Property . Within ten (10) days following the effective date of Executive’s termination for any reason, Executive, or Executive’s personal representative shall return all property of the Company or any of its Affiliates in Executive’s possession, including, but not limited to, all Company-owned computer equipment (hardware and software), telephones, facsimile machines, tablet computers and other communication devices, credit cards, office keys, security access cards, badges, identification cards and all copies (including drafts) of any documentation or information (however stored) relating to the business of the Company or any of its Affiliates, the Company’s or any of its Affiliates’ customers and clients or their respective prospective customers or clients.

13. Resignation as Officer or Director . Upon the effective date of any Executive’s termination, Executive shall be deemed to have resigned from Executive’s position and, to the extent applicable, as an officer of the Company, as a member of the board of directors or similar governing body of the Company or any of its Affiliates, and as a fiduciary of any Company benefit plan. On or immediately following the effective date of any such termination of Executive’s employment, Executive shall confirm the foregoing by submitting to the Company in writing a confirmation of Executive’s resignation(s).

14. Protection of Information .

(a) Work Product . For purposes of this Section 14 , the term “the Company” shall include the Company and any of its Affiliates (including the Parent Company), and any


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reference to “employment” or similar terms shall include an officer, director and/or consulting relationship. Executive agrees that all information, inventions, patents, trade secrets, formulas, processes, designs, ideas, concepts, improvements, diagrams, drawings, flow charts, programs, methods, apparatus, software, hardware, ideas, improvements, product developments, discoveries, systems, techniques, devices, models, prototypes, copyrightable works, mask works, trademarks, service marks, trade dress, business slogans, written materials and other things of value conceived, reduced to practice, made or learned by Executive, either alone or with others, while employed with the Company (whether during business hours or otherwise and whether on Company’s premises or otherwise) that relate to the Company’s business and/or the business of Affiliates of the Company using the Company’s time, data, facilities and/or materials (hereinafter collectively referred to as the “Work Product”) belong to and shall remain the sole and exclusive property of the Company (or its Affiliates) forever. Executive hereby assigns to the Company all of Executive’s right, title, and interest to all such Work Product. Executive agrees to promptly and fully disclose all Work Product in writing to the Company. Executive agrees to cooperate and do all lawful things requested by the Company to protect Company ownership rights in all Work Product. Executive warrants that no Work Product has been conceived, reduced to practice, made or learned by Executive prior to Executive’s employment with the Company.

(b) Confidential Information . During Executive’s employment with the Company, the Company agrees to and shall provide to Executive confidential, proprietary, non-public and/or trade secret information regarding the Company that Executive has not previously had access to or knowledge of before the execution of this Agreement including, without limitation, Work Product, technical information, corporate opportunities, product specification, compositions, manufacturing and distribution methods and processes, research, financial and sales data, business and marketing plans, strategies, financing, plans, business policies and practices of the Company, and/or Affiliates of the Company, know-how, specialized training, mailing lists, acquisition prospects, identity of customers or their requirements, the identity of key contacts within the customer’s organizations or within the organization of acquisition prospects, potential client lists, employee records, pricing information, evaluations, opinions, interpretations, production, marketing and merchandising techniques, prospective names and marks or other forms of information considered by the Company to be confidential, proprietary, non-public or in the nature of trade secrets (hereafter collectively referred to as “ Confidential Information ”) that the Company and its Affiliates desire to protect.

(c) No Unauthorized Use or Disclosure . Executive agrees to preserve and protect the confidentiality of all Confidential Information and Work Product of the Company and its Affiliates. Executive agrees that Executive will not, at any time during or after Executive’s employment with the Company, make any unauthorized disclosure of, and Executive shall not remove from the Company premises, Confidential Information or Work Product of the Company or its Affiliates, or make any use thereof, except, in each case, in the carrying out of Executive’s responsibilities hereunder. Executive shall use all reasonable efforts to cause all Persons to whom any Confidential Information shall be disclosed by Executive hereunder to preserve and protect the confidentiality of such Confidential Information. At the request of the Company at any time, Executive agrees to deliver to the Company all Confidential Information that Executive may possess or control. Executive agrees that all Confidential Information of the Company (whether


	7

now or hereafter existing) conceived, discovered or made by Executive during the period of Executive’s employment by the Company exclusively belongs to the Company (and not to Executive), and upon request by the Company for specified Confidential Information, Executive will promptly disclose such Confidential Information to the Company and perform all actions reasonably requested by the Company to establish and confirm such exclusive ownership. Affiliates of the Company shall be third party beneficiaries of Executive’s obligations under this Section 14 . As a result of Executive’s employment by the Company, Executive may also from time to time have access to, or knowledge of, Confidential Information or Work Product of third parties, such as customers, suppliers, partners, joint venturers, and the like, of the Company and its Affiliates. Executive also agrees to preserve and protect the confidentiality of such third party Confidential Information and Work Product. Notwithstanding anything contained in this Agreement to the contrary, Executive may disclose Confidential Information: (a) as such disclosure or use may be required or appropriate in connection with his work as an employee of the Company; (b) when required to do so by a court of law, by any governmental agency having apparent supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with apparent jurisdiction to order him to divulge, disclose or make accessible such information; provided, however, that in the event disclosure is so required, Executive shall provide the Company with prompt notice of such requirement prior to making any such disclosure, so that the Company may seek an appropriate protective order; or (c) as to such Confidential Information that becomes generally known to the public or trade without his violation of this Section 14(c) . Upon termination of Executive’s employment by the Company for any reason, Executive promptly shall deliver such Confidential Information and Work Product, and all copies thereof (in whatever form, tangible or intangible), to the Company. Executive’s non-disclosure obligations in this Section 14 shall not be applied to limit or interfere with Executive’s right, without notice to or authorization of the Company, to communicate and cooperate in good faith with a Government Agency for the purpose of (i) reporting a possible violation of any U.S. federal, state, or local law or regulation, (ii) participating in any investigation or proceeding that may be conducted or managed by any Government Agency, including by providing documents or other information, or (iii) filing a charge or complaint with a Government Agency. For purposes of this Agreement, “Government Agency” means the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, or any other self-regulatory organization or any other federal, state, or local governmental agency or commission. The disclosures and actions protected in this Section 14(c) are referred to herein as “Protected Activities.”

(d) Ownership by the Company . If, during Executive’s employment by the Company, Executive creates any work of authorship fixed in any tangible medium of expression that is the subject matter of copyright (such as videotapes, written presentations, or acquisitions, computer programs, electronic mail, voice mail, electronic databases, drawings, maps, architectural renditions, models, manuals, brochures, or the like) relating to the Company’s business, products, or services, whether such work is created solely by Executive or jointly with others (whether during business hours or otherwise and whether on the Company’s premises or otherwise), including any Work Product, the Company shall be deemed the author of such work if the work is prepared by Executive in the scope of Executive’s employment; or, if the work relating


	8

to the Company’s business, products or services is not prepared by Executive within the scope of Executive’s employment but is specially ordered by the Company as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, or as an instructional text, then the work shall be considered to be work made for hire and the Company shall be the author of the work. If the work relating to the Company’s business, products, or services is neither prepared by Executive within the scope of Executive’s employment nor a work specially ordered that is deemed to be a work made for hire during Executive’s employment by the Company, then Executive hereby agrees to assign, and by these presents does assign, to the Company all of Executive’s worldwide right, title, and interest in and to such work and all rights of copyright therein.

(e) Assistance by Executive . During the period of Executive’s employment by the Company, Executive shall assist the Company and its nominee, at any time, in the protection of the Company’s or its Affiliates’ worldwide right, title and interest in and to Confidential Information and Work Product and the execution of all formal assignment documents requested by the Company or its nominee and the execution of all lawful oaths and applications for patents and registration of copyright in the United States and foreign countries. After Executive’s employment with the Company terminates, at the request from time to time and expense of the Company or its Affiliates, Executive shall reasonably assist the Company and its nominee, at reasonable times and for reasonable periods and for reasonable compensation, in the protection of the Company’s or its Affiliates’ worldwide right, title and interest in and to Confidential Information and Work Product and the execution of all formal assignment documents requested by the Company or its nominee and the execution of all lawful oaths and applications for patents and registration of copyright in the United States and foreign countries.

(f) Remedies . Executive acknowledges that money damages would not be a sufficient remedy for any breach of this Section 14 by Executive, and the Company or its Affiliates shall be entitled to enforce the provisions of this Section 14 by immediately terminating payments then owing to, or the rights of, Executive under Section 10(a)(ii) or otherwise upon its determination of any such breach and to obtain specific performance and injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Section 14 but shall be in addition to all remedies available at law or in equity, including the recovery of damages from Executive and Executive’s agents. However, if it is determined that Executive has not committed a breach of this Section 14 , then the Company shall resume the payments and benefits due under this Agreement and pay to Executive and Executive’s spouse, if applicable, all payments and benefits that had been suspended pending such determination.

(g) Immunity from Liability for Confidential Disclosure of Trade Secrets . Executive shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made in confidence either directly or indirectly to a Federal, State or local government official, or to an attorney, solely for the purpose of reporting or investigating, a violation of law. Executive shall also not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. If Executive files a lawsuit alleging retaliation by the Company for reporting a suspected violation


	9

of the law, Executive may disclose the trade secret to Executive’s attorney and use the trade secret in the court proceeding, so long as any document containing the trade secret is filed under seal and does not disclose the trade secret, except pursuant to court order. However, Executive is not authorized to make any disclosures as to which the Company may assert protections from disclosure under the attorney-client privilege or the attorney work product doctrine without prior written consent of the Company’s General Counsel or another authorized officer designated by the Company. This Section 14(g) will govern to the extent it may conflict with any other provision of this Agreement

15. Non-Competition; Non-Solicitation .

(a) Definitions. As used in this Section 15 , the following terms shall have the following meanings:

(i) “ Business ” means (a) during the period of Executive’s employment by the Company, the core products and services provided by the Company and its Affiliates during such period and other products and services that are functionally equivalent to the foregoing, and (b) during the portion of the Prohibited Period that begins on the termination of Executive’s employment with the Company, the products and services provided by the Company and its Affiliates at the time of such termination of employment and other products and services that are functionally equivalent to the foregoing.

(ii) “ Competing Business ” means any business or Person that wholly or in any significant part engages in any business competing with the Business in the Restricted Area. In no event will the Company or any of its Affiliates be deemed a Competing Business.

(iii) “ Legal Requirement ” means any law, statute, code, ordinance, order, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization, or other directional requirement (including, without limitation, any of the foregoing that relates to environmental standards or controls, energy regulations and occupational, safety and health standards or controls including those arising under environmental laws) of any Government Agency.

(iv) “ Prohibited Period ” means the period during which Executive is employed by the Company hereunder and a period of one (1) year following the termination of Executive’s employment with the Company.

(v) “ Restricted Area ” means the geographic area in which the Company or its Affiliates have operations at the time of Executive’s termination of employment with the Company.

(b) Non-Competition; Non-Solicitation . Executive and the Company agree to the non-competition and non-solicitation provisions of this Section 15 : (i) in consideration for the Confidential Information provided by the Company to Executive pursuant to Section 14 ; (ii) as part of the consideration for the compensation and benefits to be paid to Executive hereunder; (iii) to protect the trade secrets and Confidential Information of the Company or its Affiliates disclosed


	10

or entrusted to Executive by the Company or its Affiliates or created or developed by Executive for the Company or its Affiliates, the business goodwill of the Company or its Affiliates developed through the efforts of Executive and/or the business opportunities disclosed or entrusted to Executive by the Company or its Affiliates; and (iv) as an additional incentive for the Company to enter into this Agreement. Executive further agrees that the terms and provisions of this Agreement are reasonable and constitute an otherwise enforceable agreement to which the terms and provisions of this Section 15 are ancillary or a part of as contemplated by TEX. BUS. & COM. CODE ANN. Section 15.50-15.52.

(i) Subject to the exceptions set forth in Section 15(b)(ii) , Executive expressly covenants and agrees that during the Prohibited Period (i) Executive will refrain from carrying on or engaging in, directly or indirectly, any Competing Business in the Restricted Area, and (ii) Executive will not, directly or indirectly, own, manage, operate, join, become an employee, partner, owner or member of (or an independent contractor to), control or participate in or be associated in any way with or loan money to, sell or lease equipment to, or sell or lease real property to any business or Person that engages in a Competing Business in the Restricted Area.

(ii) Notwithstanding the restrictions contained in Section 15(b)(i) , Executive may own an aggregate of not more than 2% of the outstanding stock of any class of any corporation engaged in a Competing Business, if such stock is listed on a national securities exchange or regularly traded in the over-the-counter market by a member of a national securities exchange, without violating the provisions of Section 15(b)(i) , provided that Executive does not have the power, directly or indirectly, to control or direct the management or affairs of any such corporation and is not involved in the management of such corporation. In addition, the restrictions contained in Section 15(b)(i) shall not preclude Executive from being employed by a financial institution so long as Executive’s principal duties at such institution are not directly and primarily related to the Business.

(iii) Executive further expressly covenants and agrees that during the Prohibited Period, Executive will not (i) directly or indirectly, solicit, entice, persuade or induce any Person who is an officer, employee, consultant, agent, or independent contractor of the Company or any of its Affiliates, or was, during the one-year period prior to the Date of Termination, an officer, employee, consultant, agent, or independent contractor of the Company or any of its Affiliates, to terminate his or her employment, engagement, or associations with the Company or such Affiliate, and/or to become employed by any business or Person other than the Company or such Affiliate, and (ii) directly or indirectly, solicit, entice, persuade or induce any business or Person who or which is a customer of the Company or any of its Affiliates during the one-year period prior to the Date of Termination, to terminate, diminish, reduce, or otherwise alter the nature and/or magnitude of that customer relationship. Notwithstanding the foregoing, the restrictions of clause (i) of this Section 15(b)(iii) shall not apply with respect to an officer, employee, consultant, agent, or independent contractor whose employment or engagement has been involuntarily terminated by the Company or any of its Affiliates (other than for cause), nor shall they apply with respect to an officer, employee, consultant, agent, or independent contractor with whom Executive did not have contact during Executive’s employment with the Company. Additionally, the restrictions of clause (ii) of this Section 15(b)(iii) shall not apply with respect to


	11

any business or Person as to whom or which Executive did not have contact during Executive’s employment with the Company.

(c) Relief . Executive acknowledges that money damages would not be a sufficient remedy for any breach of this Section 15 by Executive, and that the Company and/or its Affiliates shall be entitled to enforce the provisions of this Section 15 by immediately terminating payments then owing to Executive under Section 10(a)(ii) or otherwise upon its determination of any such breach and to obtain specific performance and injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Section 15 but shall be in addition to all remedies available at law or in equity, including the recovery of damages from Executive. However, if it is determined that Executive has not committed a breach of this Section 15 , then the Company shall resume the payments and benefits due under this Agreement and pay to Executive all payments and benefits that had been suspended pending such determination.

(d) Reasonableness; Enforcement . Executive hereby represents to the Company that Executive has read and understands, and agrees to be bound by, the terms of this Section 15 . Executive and the Company understand and agree that the purpose of the provisions of this Section 15 is to protect the legitimate business interests and goodwill of the Company. Executive acknowledges that the limitations as to time, geographical area and scope of activity to be restrained as contained in this Section 15 are the result of arm’s-length bargaining and are fair and reasonable and do not impose any greater restraint than is necessary to protect the legitimate business interests of the Company in light of (a) the nature and wide geographic scope of the operations of the Business, (b) Executive’s level of control over and contact with the Business in all jurisdictions in which it is conducted, (c) the fact that the Business is conducted throughout the Restricted Area and (d) the amount of compensation and Confidential Information that Executive is receiving in connection with the performance of Executive’s duties hereunder. It is the desire and intent of the parties that the provisions of this Section 15 be enforced to the fullest extent permitted under applicable Legal Requirements, whether now or hereafter in effect and therefore, to the extent permitted by applicable Legal Requirements, Executive and the Company hereby waive any provision of applicable Legal Requirements that would render any provision of this Section 15 invalid or unenforceable.

(e) Reformation . The Company and Executive agree that the foregoing restrictions are reasonable under the circumstances and that any breach of the covenants contained in this Section 15 would cause irreparable injury to the Company and its Affiliates. Executive understands that the foregoing restrictions may limit Executive’s ability to engage in certain businesses anywhere in the Restricted Area during the Prohibited Period, but acknowledges that Executive will receive sufficiently high remuneration and other benefits from the Company to justify such restriction. Further, Executive acknowledges that Executive’s skills are such that Executive can be gainfully employed in non-competitive employment, and that the agreement not to compete will not prevent Executive from earning a living. Nevertheless, if any of the aforesaid restrictions are found by a court of competent jurisdiction to be unreasonable, or overly broad as to geographic area or time, or otherwise unenforceable, the parties agree that any such court is expressly authorized to modify any such unenforceable provision of this Section 15 in lieu of severing such unenforceable provision in its entirety, whether by rewriting the offending provision,


	12

deleting any or all of the offending provision, adding additional language to this Section 15 , or by making such other modifications as it deems warranted to carry out the intent and agreement of the parties as embodied herein to the maximum extent permitted by law. The parties expressly agree that this Section 15 , as so modified by the court, shall be binding upon and enforceable against each of them. By agreeing to this contractual modification prospectively at this time, the Company and Executive intend to make this provision enforceable under the law or laws of all applicable States, Provinces and other jurisdictions so that the entire agreement not to compete and this Agreement as prospectively modified shall remain in full force and effect and shall not be rendered void or illegal. Such modification shall not affect the payments made to Executive under this Agreement.

16. Non-Disparagement . Executive shall not, at any time, publicly or privately, verbally or in writing, directly or indirectly, make or cause to be made any defaming and/or disparaging, derogatory, misleading, or false statement about the Company or its Affiliates, their products, or any current or former directors, officers, employees, or agents of the Company or its Affiliates, or the business strategy, plans, policies, practices, or operations of the Company or its Affiliates, to any person or entity, including without limitation, members of the investment community, press, customers, competitors, employees, and advisors of the Company or its Affiliates. This Section 16 shall not be applied to limit or interfere with Executive’s right to engage in Protected Activities as defined in Section 14(c) . A violation or threatened violation of this prohibition may be enjoined by the courts and would be considered a material breach of this Agreement. The rights afforded the Company and its Affiliates under this provision are in addition to any and all rights and remedies otherwise afforded by law.

17. Cooperation . From and after an Executive’s termination of employment, Executive shall provide Executive’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during Executive’s employment hereunder, provided , that the Company shall reimburse Executive for Executive’s reasonable costs and expenses (including legal counsel selected by Executive and reasonably acceptable to the Company) and such cooperation shall not unreasonably burden Executive or unreasonably interfere with any subsequent employment that Executive may undertake.

18. Dispute Resolution . If any dispute arises out of this Agreement or out of or in connection with any equity compensation award made to Executive by the Company or any of its Affiliates, the complaining party shall provide the other party written notice of such dispute. The other party shall have 10 business days to resolve the dispute to the complaining party’s satisfaction. If the dispute is not resolved by the end of such period, either disputing party may require the other to submit to non-binding mediation with the assistance of a neutral, unaffiliated mediator. If the parties encounter difficulty in agreeing upon a neutral unaffiliated mediator, they shall seek the assistance of the American Arbitration Association (“ AAA ”) in the selection process. If mediation is unsuccessful, or if mediation is not requested by a party, either party may by written notice demand arbitration of the dispute as set out below, and each party hereto expressly agrees to submit to, and be bound by, such arbitration.

(a) Unless the parties agree on the appointment of a single arbitrator, the dispute shall be referred to one arbitrator appointed by the AAA. The arbitrator will set


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the rules and timing of the arbitration, but will generally follow the commercial rules of the AAA and this Agreement where same are applicable and shall provide for a reasoned opinion.

(b) The arbitration hearing will in no event take place more than 180 days after the appointment of the arbitrator.

(d) The results of the arbitration and the decision of the arbitrator will be final and binding on the parties and each party agrees and acknowledges that these results shall be enforceable in a court of law.

(e) All costs and expenses of the mediation and arbitration shall be borne equally by the Company and Executive; provided that each party shall be responsible for his or its own attorney fees.

Executive and the Company explicitly recognize that no provision of this Section 18 shall prevent the Company from taking any action to enforce its rights or to resolve any dispute relating to Sections 14, 15 or 16 in a court of law.

19. Miscellaneous .

(a) All notices hereunder, to be effective, shall be in writing and shall be deemed effective when delivered by hand or mailed by (i) certified mail, postage and fees prepaid, or (ii) nationally recognized overnight express mail service, as follows:

If to the Company:

Cardtronics USA, Inc.

3250 Briarpark Drive, Suite 400

Houston, Texas 77042

Attention: General Counsel

Email: CATM_Legal@cardtronics.com

If to Executive:

At Executive’s home address as then shown in the Company’s personnel records,

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

(b) This Agreement is personal to Executive and shall not be assigned by Executive. Any purported assignment by Executive shall be null and void from the initial date of the purported assignment. The Company may assign this Agreement to any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially


	14

all of the business or assets of the Company. This Agreement shall inure to the benefit of the Company and its successors and assigns.

(c) This Agreement contains the entire agreement between the parties with respect to the subject matter hereof supersedes all other agreements, term sheets, offer letters, and drafts thereof, oral or written, between the parties hereto with respect to the subject matter hereof. No promises, statements, understandings, representations or warranties of any kind, whether oral or in writing, express or implied, have been made to Executive by any person or entity to induce Executive to enter into this Agreement other than the express terms set forth herein, and Executive is not relying upon any promises, statements, understandings, representations, or warranties other than those expressly set forth in this Agreement.

(d) No change or modification of this Agreement shall be valid unless the same shall be in writing and signed by all of the parties hereto. No waiver of any provisions of this Agreement shall be valid unless in writing and signed by the party charged with waiver. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver, unless so provided in the waiver.

(e) If any provisions of this Agreement (or portions thereof) shall, for any reason, be held invalid or unenforceable, such provisions (or portions thereof) shall be ineffective only to the extent of such invalidity or unenforceability, and the remaining provisions of this Agreement (or portions thereof) shall nevertheless be valid, enforceable and of full force and effect. If any court of competent jurisdiction finds that any restriction contained in this Agreement is invalid or unenforceable, then the parties hereto agree that such invalid or unenforceable restriction shall be deemed modified so that it shall be valid and enforceable to the greatest extent permissible under law, and if such restriction cannot be modified so as to make it enforceable or valid, such finding shall not affect the enforceability or validity of any of the other restrictions contained herein.

(f) This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.

(g) The section or paragraph headings or titles herein are for convenience of reference only and shall not be deemed a part of this Agreement. The parties have jointly participated in the drafting of this Agreement, and the rule of construction that a contract shall be construed against the drafter shall not be applied. The terms “ including ,” “ includes ,” “ include ” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “ herein ,” “ hereunder ,” “ hereof ” and words of like import refer to this entire Agreement instead of just the provision in which they are found.


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(h) Notwithstanding anything to the contrary in this Agreement:

(i) The parties agree that this Agreement shall be interpreted to comply with or be exempt from Section 409A of the Code and the regulations and authoritative guidance promulgated thereunder to the extent applicable (collectively “ Section 409A ”), and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. In no event whatsoever will the Company, any of its affiliates, or any of their respective directors, officers, agents, attorneys, employees, executives, shareholders, investors, members, managers, trustees, fiduciaries, representatives, principals, accountants, insurers, successors or assigns be liable for any additional tax, interest or penalties that may be imposed on Executive under Section 409A or any damages for failing to comply with Section 409A.

(ii) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits considered “nonqualified deferred compensation” under Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Section 409A, and for purposes of any such provision of this Agreement, references to a “resignation,” “termination,” “terminate,” “termination of employment” or like terms shall mean separation from service. If any payment, compensation or other benefit provided to Executive in connection with the termination of Executive’s employment is determined, in whole or in part, to constitute “nonqualified deferred compensation” within the meaning of Section 409A and Executive is a specified employee as defined in Section 409A(2)(B)(i) of the Code, no part of such payments shall be paid before the day that is six (6) months plus one (1) day after the date of termination or, if earlier, ten business days following Executive’s death (the “ New Payment Date ”). The aggregate of any payments that otherwise would have been paid to Executive during the period between the date of termination and the New Payment Date shall be paid to Executive in a lump sum on such New Payment Date. Thereafter, any payments that remain outstanding as of the day immediately following the New Payment Date shall be paid without delay over the time period originally scheduled, in accordance with the terms of this Agreement.

(iii) All reimbursements for costs and expenses under this Agreement shall be paid in no event later than the end of the calendar year following the calendar year in which Executive incurs such expense. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (ii) the amount of expenses eligible for reimbursements or in-kind, benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year.

(iv) I f under this Agreement, an amount is paid in two or more installments, for purposes of Section 409A, each installment shall be treated as a separate payment. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.


	16

(i) All questions concerning the construction, validity and interpretation of this Agreement and the exhibits to this Agreement will be governed by and construed in accordance with the domestic laws of the State of Texas, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Texas or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Texas. The parties hereby irrevocably and unconditionally submit in any legal action or proceeding arising out of or relating to this Agreement to the exclusive jurisdiction of either a state court located in the County of Harris, Texas, with subject matter jurisdiction over the action or the United States District Court, Southern District of Texas, U.S.A. and, in any such action or proceeding, consent to jurisdiction in such courts and waive any objection to the venue in any such court. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS AGREEMENT (EACH PARTY HAVING HAD OPPORTUNITY TO CONSULT COUNSEL), EACH PARTY EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT.

(j) Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Executive is a party or by which he/she is bound, (ii) Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Executive on and after the Effective Date, enforceable in accordance with its terms. Executive hereby acknowledges and represents that he has had the opportunity to consult with independent legal counsel or other advisor of Executive’s choice and has done so regarding Executive’s rights and obligations under this Agreement, that he is entering into this Agreement knowingly, voluntarily, and of Executive’s own free will, that he is relying on Executive’s own judgment in doing so, and that he fully understands the terms and conditions contained herein.

(k) The Company shall have the right to withhold from any amount payable hereunder any Federal, state and local taxes in order for the Company to satisfy any withholding tax obligation it may have under any applicable law or regulation.

(l) The covenants and obligations of the Company under Sections 10, 17 and 19 hereof, and the covenants and obligations of Executive under Sections 10, 12, 13, 14, 15, 16, 17 and 19 hereof, shall continue and survive any expiration of the Term, termination of Executive’s employment or any termination of this Agreement.

[ signature page follows ]


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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

CARDTRONICS USA, INC.

By: /s/ Gary W. Ferrera

By: Gary W. Ferrera

Title: Executive Vice President & Chief Financial Officer

EXECUTIVE

/s/ Paul A. Gullo

Name: Paul A. Gullo

ANNEX A

FORM SIGN ON STOCK AWARD

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER OF CARDTRONICS PLC

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Edward H. West, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q (this “report”) of Cardtronics plc;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 2, 2018		/s/ Edward H. West
		Edward H. West
		Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER OF CARDTRONICS PLC

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Gary W. Ferrera, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q (this “report”) of Cardtronics plc;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 2, 2018		/s/ Gary W. Ferrera
		Gary W. Ferrera
		Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Cardtronics plc (“Cardtronics”) for the period ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned each hereby certifies, pursuant to 18 U.S.C. §1350 as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Cardtronics.


Date: August 2, 2018		/s/ Edward H. West
		Edward H. West
		Chief Executive Officer


Date: August 2, 2018		/s/ Gary W. Ferrera
		Gary W. Ferrera
		Chief Financial Officer