Cardtronics plc (Form: 10-Q, Received: 11/01/2018 16:31:44)

Notional Amounts
AUS $

Weighted Average
Fixed Rate

(In millions)

October 1, 2018 – February 28, 2019

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 September 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 every Interactive Data File required to be submitted 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 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 ☐		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 October 30, 2018: 46,107,312 Ordinary shares, nominal value $0.01 per share.

Table of Contents

CARDTRONICS PLC

TABLE OF CONTENTS

31

		Page

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of September 30, 2018 (unaudited) and December 31, 2017	3
	Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2018 and 2017	4
	Unaudited Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2018 and 2017	5
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
	Cautionary Statement Regarding Forward-Looking Statements	47
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	49
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	78
Item 4.	Controls and Procedures	80

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	82
Item 1A.	Risk Factors	82
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	82
Item 3.	Defaults Upon Senior Securities	82
Item 4.	Mine Safety Disclosures	82
Item 5.	Other Information	82
Item 6.	Exhibits	83
	Signatures	84

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.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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


	September 30, 2018		December 31, 2017
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	40,428	$	51,370
Accounts and notes receivable, net of allowance for doubtful accounts of $3,128 and $2,001 as of September 30, 2018 and December 31, 2017, respectively		87,150		105,245
Inventory, net		15,317		14,283
Restricted cash		73,870		48,328
Prepaid expenses, deferred costs, and other current assets		106,497		96,106
Total current assets		323,262		315,332
Property and equipment, net of accumulated depreciation of $404,549 and $404,141 as of September 30, 2018 and December 31, 2017, respectively		457,350		497,902
Intangible assets, net		164,480		209,862
Goodwill		759,191		774,939
Deferred tax asset, net		7,412		6,925
Prepaid expenses, deferred costs, and other noncurrent assets		72,386		57,756
Total assets	$	1,784,081	$	1,862,716

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of other long-term liabilities	$	19,690	$	31,370
Accounts payable		41,848		44,235
Accrued liabilities		310,754		306,945
Total current liabilities		372,292		382,550
Long-term liabilities:
Long-term debt		835,790		917,721
Asset retirement obligations		55,705		59,920
Deferred tax liability, net		48,812		37,130
Other long-term liabilities		59,744		75,002
Total liabilities		1,372,343		1,472,323

Commitments and contingencies (See Note 15 )

Shareholders' equity:
Ordinary shares, $0.01 nominal value; 46,105,014 and 45,696,338 issued and outstanding as of September 30, 2018 and December 31, 2017, respectively		461		457
Additional paid-in capital		322,323		316,940
Accumulated other comprehensive loss, net		(33,336)		(33,595)
Retained earnings		122,383		106,670
Total parent shareholders' equity		411,831		390,472
Noncontrolling interests		(93)		(79)
Total shareholders’ equity		411,738		390,393
Total liabilities and shareholders’ equity	$	1,784,081	$	1,862,716

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

Table of Contents

CARDTRONICS PLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, excluding share and per share amounts)

(Unaudited)



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Revenues:
ATM operating revenues	$	329,837	$	390,143	$	978,789	$	1,105,191
ATM product sales and other revenues		10,338		11,807		38,557		39,443
Total revenues		340,175		401,950		1,017,346		1,144,634
Cost of revenues:
Cost of ATM operating revenues (excludes depreciation, accretion, and amortization of intangible assets reported separately below. See Note 1(c) )		216,849		251,136		647,692		729,547
Cost of ATM product sales and other revenues		8,680		8,920		31,528		34,671
Total cost of revenues		225,529		260,056		679,220		764,218
Operating expenses:
Selling, general, and administrative expenses		41,896		46,132		124,564		131,551
Redomicile-related expenses		—		22		—		782
Restructuring expenses		1,058		—		5,534		8,243
Acquisition and divestiture-related expenses		—		2,889		2,633		15,338
Goodwill and intangible asset impairment		—		194,521		—		194,521
Depreciation and accretion expense		30,647		29,807		93,453		88,683
Amortization of intangible assets		12,994		14,996		40,263		45,423
Loss on disposal and impairment of assets		466		22,307		15,583		26,170
Total operating expenses		87,061		310,674		282,030		510,711
Income (loss) from operations		27,585		(168,780)		56,096		(130,295)
Other expense:
Interest expense, net		8,852		9,743		27,185		25,760
Amortization of deferred financing costs and note discount		3,397		3,195		10,060		9,317
Other income		(1,297)		(2,095)		(1,324)		(1,730)
Total other expense		10,952		10,843		35,921		33,347
Income (loss) before income taxes		16,633		(179,623)		20,175		(163,642)
Income tax expense (benefit)		7,854		(4,053)		10,409		(2,335)
Net income (loss)		8,779		(175,570)		9,766		(161,307)
Net loss attributable to noncontrolling interests		(2)		(9)		(14)		(3)
Net income (loss) attributable to controlling interests and available to common shareholders	$	8,781	$	(175,561)	$	9,780	$	(161,304)

Net income (loss) per common share – basic	$	0.19	$	(3.84)	$	0.21	$	(3.54)
Net income (loss) per common share – diluted	$	0.19	$	(3.84)	$	0.21	$	(3.54)

Weighted average shares outstanding – basic		46,073,739		45,662,543		45,945,728		45,597,558
Weighted average shares outstanding – diluted		46,476,787		45,662,543		46,386,523		45,597,558

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

Table of Contents

CARDTRONICS PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Net income (loss)	$	8,779	$	(175,570)	$	9,766	$	(161,307)
Unrealized gain on interest rate swap contracts, net of deferred income tax expense of $1,370 and $1,744 for the three months ended September 30, 2018 and 2017, respectively, and $7,346 and $3,639 for the nine months ended September 30, 2018 and 2017, respectively		5,192		5,190		24,583		10,779
Foreign currency translation adjustments, net of deferred income tax expense of $(164) and $55 for the three months ended September 30, 2018 and 2017, respectively, and $85 and ($1,256) for the nine months ended September 30, 2018 and 2017, respectively		(1,144)		17,871		(24,324)		51,142
Other comprehensive income		4,048		23,061		259		61,921
Total comprehensive income (loss)		12,827		(152,509)		10,025		(99,386)
Less: Comprehensive loss attributable to noncontrolling interests		(5)		(9)		(14)		(4)
Comprehensive income (loss) attributable to controlling interests	$	12,832	$	(152,500)	$	10,039	$	(99,382)

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

Table of Contents

CARDTRONICS PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	September 30,
	2018		2017
Cash flows from operating activities:
Net income (loss)	$	9,766	$	(161,307)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, accretion, and amortization of intangible assets		133,716		134,106
Amortization of deferred financing costs and note discount		10,060		9,317
Share-based compensation expense		10,627		9,971
Deferred income tax (benefit)		1,895		(6,198)
Loss on disposal and impairment of assets		15,583		26,170
Other reserves and non-cash items		(753)		(1,182)
Goodwill and intangible asset impairment		—		194,521
Changes in assets and liabilities:
Decrease (increase) in accounts and notes receivable, net		17,477		(122)
Increase in prepaid expenses, deferred costs, and other current assets		(5,210)		(23,567)
Increase in inventory, net		(3,321)		(3,619)
Decrease (increase) in other assets		4,987		(4,338)
Increase (decrease) in accounts payable		2,397		(20,951)
Increase in accrued liabilities		2,973		21,364
Decrease in other liabilities		(15,615)		(1,731)
Net cash provided by operating activities		184,582		172,434

Cash flows from investing activities:
Additions to property and equipment		(73,357)		(111,424)
Acquisitions, net of cash acquired		—		(484,602)
Net cash used in investing activities		(73,357)		(596,026)

Cash flows from financing activities:
Proceeds from borrowings under revolving credit facility		478,023		968,365
Repayments of borrowings under revolving credit facility		(569,017)		(827,351)
Proceeds from borrowings of long-term debt		—		300,000
Debt issuance costs		—		(5,476)
Tax payments related to share-based compensation		(5,245)		(8,359)
Proceeds from exercises of stock options		14		105
Net cash (used in) provided by financing activities		(96,225)		427,284

Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(404)		(4,178)
Net increase (decrease) in cash, cash equivalents, and restricted cash		14,596		(486)

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	$	114,413	$	105,261

Supplemental disclosure of cash flow information:
Cash paid for interest	$	25,754	$	19,284
Cash (refund) paid for income taxes	$	(1,240)	$	3,567

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

Table of Contents

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 September 30, 2018, the Company was the world’s largest ATM owner/operator, providing services to approximately 230,000 ATMs.

During the three months ended September 30, 2018, 61% of the Company’s revenues were derived from operations in North America (including its ATM operations in the U.S., Canada, and Mexico), 30% 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 September 30, 2018, the Company provided processing only services or various forms of managed services solutions to approximately 140,000 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 September 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 1,100 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

Table of Contents

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 nine months ended September 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 in the accompanying Consolidated Statements of Operations for the periods presented:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(In thousands)
Depreciation and accretion expenses related to ATMs and ATM-related assets	$	22,462	$	22,180	$	68,874	$	66,488
Amortization of intangible assets		12,994		14,996		40,263		45,423
Total depreciation, accretion, and amortization of intangible assets excluded from Cost of ATM operating revenues	$	35,456	$	37,176	$	109,137	$	111,911

Table of Contents

(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 nine and twelve months ended September 30, 2017 and December 31, 2017, respectively. During the three and nine months ended September 30, 2018, the Company implemented additional workforce reductions in an effort to continue its cost reduction initiative and incurred $1.1 million and $5.5 million of pre-tax expenses, respectively. During the remainder of 2018, its Restructuring Plan activities may include additional workforce reductions and other cost reduction measures.

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


		Three Months Ended				Nine Months Ended
		September 30,				September 30,
	2018		2017		2018		2017
	(In thousands)				(In thousands)
North America	$	942	$	—	$	3,072	$	3,668
Europe & Africa		116		—		1,292		831
Corporate		—		—		1,170		3,744
Total restructuring expenses		1,058		—		5,534		8,243

As of September 30, 2018, $2.6 million of unpaid employee severance and lease termination costs were presented within the Accrued liabilities and Other long-term liabilities lines in the accompanying Consolidated Balance Sheets.


	As of September 30, 2018
	North America		Europe & Africa		Corporate		Total
	(In thousands)
Accrued liabilities		—		806		1,663		2,469
Other long-term liabilities		—		124		—		124
Total restructuring liabilities	$	—	$	930	$	1,663	$	2,593

Table of Contents

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		5,534
Payments		(8,324)
Restructuring liabilities as of September 30, 2018	$	2,593

(f) Goodwill and Intangible Assets

Included within the Company’s assets are goodwill balances that have been recognized in conjunction with its purchase accounting for completed business combinations. Under U.S. GAAP, goodwill is not amortized but is evaluated periodically for impairment. The Company performs this evaluation annually as of December 31 or more frequently if there are indicators that suggest the fair value of a reporting unit may be below its carrying value. The Company initially assesses qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment analysis. The qualitative and quantitative evaluations are performed at a reporting unit level, which have been determined based on a number of factors, including: (i) whether or not the group has any recorded goodwill, (ii) the availability of discrete financial information, and (iii) how business unit performance is measured and reported. The Company has identified seven separate reporting units for its goodwill assessments: (i) the U.S. operations, (ii) the U.K. operations, (iii) the Australia & New Zealand operations, (iv) the Canada operations, (v) the South African operations, (vi) the German operations, and (vii) the Mexico operations. Based on a qualitative assessment, if it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, the Company performs a quantitative goodwill impairment analysis, and uses the two-step approach to test goodwill for potential impairment. Step One of the quantitative approach compares the estimated fair value of a reporting unit to its carrying value. If the carrying value exceeds the estimated fair value, then a Step Two impairment calculation is performed. Step Two compares the carrying value of the reporting unit to the fair value of all of the assets and liabilities of the reporting unit, as if the reporting unit was newly acquired in a business combination. If the carrying value of a reporting unit’s goodwill exceeds the implied fair value of its goodwill, an impairment loss is recognized. In connection with the determination of potential impairment triggering events, the long-lived assets held by the reporting units may, on the basis of a qualitative and quantitative analysis, be determined to have carrying values that are not recoverable and in excess of their associated fair values, in which case an impairment would also be recognized related to these intangible and fixed assets.

During the three and nine months ended September 30, 2017, the Company performed a qualitative and quantitative analysis on the Australia and New Zealand reporting unit in response to its impairment indicators and determined the goodwill intangible assets recognized were impaired by approximately $194.5 million. No impairment indicators were noted during the three and nine months ended September 30, 2018 based on the Company’s assessment of qualitative factors. For additional information on its Goodwill and intangible asset impairments recognized in 2017, see Note 1. Basis of Presentation and Summary of Significant Accounting Policies in its 2017 Form 10-K.

(g) Loss on Disposal and Impairment of Assets

During the three and nine months ended September 30, 2018, the Company recognized losses of $0.5 million and $15. 6 million, respectively, related to the disposal and impairment of assets. The losses on disposal and impairment of assets were largely recognized during the six months ended June 30, 2018 upon the decision of the Company to not redeploy certain ATM models. Although many ATMs in the Company’s U.S. operations that were impaired were 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 during the three months ended June 30, 2018. The remaining losses during the nine months ended September 30, 2018 resulted from other ATM asset disposals in the ordinary course of business and disposals related to the exit from a leased facility in the U.K .

During the three and nine months ended September 30, 2017, the Company recognized losses of $22.3 million and $26.2 million, respectively, related to the disposal and impairment of assets. The Company recognized approximately $19

Table of Contents

million of long-lived asset impairment losses during the three months ended September 30, 2017, responsive to the impairment indicators associated with its Australia & New Zealand reporting unit. The remaining losses were a result of other ATM asset disposals in the ordinary course of business. For additional information on the long-lived asset impairments recognized in 2017, see Note 1. Basis of Presentation and Summary of Significant Accounting Policies in its 2017 Form 10-K.

(h) 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 liability. These balances are classified as Restricted cash in the Current assets or Noncurrent assets lines 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 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 September 30, 2018 and 2017.


	September 30,
		2018		2017
		(in thousands)
Cash and cash equivalents	$	40,428	$	61,498
Current and long-term restricted cash		73,985		43,763
Total cash, cash equivalents, and restricted cash in the Consolidated Statements of Cash Flows	$	114,413	$	105,261

(i) 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:


	September 30, 2018		December 31, 2017
	(In thousands)
ATMs	$	2,245	$	3,181
ATM spare parts and supplies		13,245		12,935
Total inventory		15,490		16,116
Less: Inventory reserves		(173)		(1,833)
Inventory, net	$	15,317	$	14,283

(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.

Table of Contents

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 nine months ended September 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 January 1, 2018 Consolidated 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 Accounting Standards Updates (“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 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 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.

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 (AOCI”), which was intended to eliminate the stranded tax effects within AOCI resulting from the Tax Cuts and Jobs Act (“the “Tax Act”) 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 on the Company’s consolidated financial statements 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 to ASC 740 Income Taxes. This guidance was issued by the SEC in December 2017 to provide immediate guidance for accounting implications of U.S. tax reform under the Tax Act.

Table of Contents

The Company has applied this guidance to its consolidated financial statements and related disclosures for the period ended September 30, 2018.

Accounting Pronouncements Issued But Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) 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. In addition, in July 2018, the FASB issued ASU No. 2018-10 and ASU No. 2018-11 to correct, clarify and provide targeted improvements to Topic 842 (the “Lease Standard”). The Lease Standard requires that a lessee recognize a liability to make lease payments (the lease liability) and a right-to-use asset representing its right to use the underlying asset for the lease term on the balance sheet. This guidance 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 Company is working to complete its evaluation of 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 plans to apply the Lease Standard retrospectively at the beginning of the period of adoption and 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 an operating 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 adoption of this guidance is not expected to have a material impact on the Company’s 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. 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 this guidance and has not yet concluded whether it will early adopt in the remainder of 2018 or in 2019. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This guidance is intended 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 this guidance and has not yet concluded whether it will early adopt in the remainder of 2018 .

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework (Topic 820): Changes to the Disclosure Requirements for Fair Value Measurement which modifies the disclosure requirements on fair value measurements. This guidance is effective for fiscal years beginning after December 15, 2019, and early adoption is permitted. The Company is currently evaluating this guidance and has not concluded whether it will early adopt in the remainder of 2018 or in 2019 or determined the expected impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting

Table of Contents

arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). This guidance is effective for fiscal years beginning after December 15, 2019, and early adoption is permitted. The Company has not yet concluded whether it will early adopt in the remainder of 2018 or in 2019. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

( 3 ) Revenue Recognition

Disaggregated Revenues

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


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

Surcharge revenues	$	92,572	$	34,134	$	22,358	$	–	$	149,064
Interchange revenues		36,620		66,039		1,650		–		104,309
Bank-branding and surcharge-free network revenues		45,128		–		–		–		45,128
Managed services revenues		12,240		–		4,108		–		16,348
Other revenues		13,921		2,646		1,301		(2,880)		14,988
Total ATM operating revenues	$	200,481	$	102,819	$	29,417	$	(2,880)	$	329,837

ATM product sales	$	7,587	$	557	$	20	$	–	$	8,164
Other revenues		680		1,462		32		–		2,174
ATM product sales and other revenues		8,267		2,019		52		–		10,338
Total revenues	$	208,748	$	104,838	$	29,469	$	(2,880)	$	340,175


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

Surcharge revenues	$	272,372	$	91,191	$	69,107	$	–	$	432,670
Interchange revenues		108,259		205,910		3,839		–		318,008
Bank-branding and surcharge-free network revenues		133,565		–		–		–		133,565
Managed services revenues		38,331		–		12,318		–		50,649
Other revenues		40,873		7,708		3,814		(8,498)		43,897
Total ATM operating revenues	$	593,400	$	304,809	$	89,078	$	(8,498)	$	978,789

ATM product sales	$	30,163	$	1,741	$	85	$	–	$	31,989
Other revenues		1,863		4,582		123		–		6,568
ATM product sales and other revenues		32,026		6,323		208		–		38,557
Total revenues	$	625,426	$	311,132	$	89,286	$	(8,498)	$	1,017,346

Revenue is recognized when obligations under the terms of a contract with a customer are satisfied. Revenue is recorded in ATM operating revenues and ATM product sales and other revenues line items in the accompanying Consolidated Statements of Operations.

Table of Contents

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 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.

Table of Contents

Other revenue. Other revenues include ATM operating revenues from transaction processing for third-party ATM operators. The Company also earns ATM operating revenues related to 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 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 September 30, 2018, the Company has recognized no significant contract assets apart from accounts receivables that relate to completed performance obligations. Contract liabilities totaled $5.9 million and $5.7 million at September 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 nine months ended September 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 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 September 30, 2018, the deferred sales commissions totaled $7.2 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.

Table of Contents

(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, the Company acquired each DCPayments common share for $19.00 Canadian Dollars in cash and repaid DCPayments outstanding third-party indebtedness. The combined aggregate of consideration totaled approximately $658 million Canadian Dollars (approximately $495 million U.S. dollars at the acquisition date foreign exchange rate). 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 up to $ 56.7 million at the September 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 2020 and 2021, respectively. The recognized acquisition date fair value of the contingent consideration was $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 also 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.

Table of Contents

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(In thousands)				(In thousands)
Cost of ATM operating revenues	$	229	$	196	$	404	$	336
Selling, general, and administrative expenses		4,440		3,955		10,223		9,635
Total share-based compensation expense	$	4,669	$	4,151	$	10,627	$	9,971

The change in total share-based compensation expense for the three and nine months ended September 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 September 30, 2018, and changes during the nine months ended September 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	722,937	$	26.96
Vested	(616,826)	$	39.19
Forfeited	(147,000)	$	37.82
Non-vested RSUs as of September 30, 2018	965,120	$	28.87

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 291,821 units with a grant date fair value of $23.14 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 September 30, 2018, the unrecognized compensation expense associated with earned RSUs was $16.9 million, which will be recognized using a graded vesting schedule for Performance-RSUs and a straight-line vesting schedule for

Table of Contents

Time-RSUs, over a remaining weighted average vesting period of approximately 1.91 weighted average remaining life years.

Options . The number of the Company’s outstanding stock options as of September 30, 2018, and changes during the nine months ended September 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
Exercised	(1,250)		9.69
Options outstanding as of September 30, 2018	234,959	$	22.31

Options vested and exercisable as of September 30, 2018	—	$	—

As of September 30, 2018, the unrecognized compensation expense associated with outstanding options was approximately $1.5 million.

Restricted Stock Awards . As of September 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 (Loss) 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 nine months ended September 30, 2018 and 2017 included all outstanding stock options, RSA, 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, described in Note 10. Long-Term Debt, 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. The undistributed losses for the three and nine months ended September 30, 2017 have not been allocated to the unvested restricted shares as they do not carry an obligation to share in losses. For the three and nine months ended September 30, 2018, there were no unvested RSAs. The allocated details are as follows:

Table of Contents

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



	Three Months Ended					Three Months Ended
	September 30, 2018					September 30, 2017
	Income		Weighted Average Shares Outstanding	Income per Share		Loss		Weighted Average Shares Outstanding	Loss per Share
Basic:
Net income (loss) attributable to controlling interests and available to common shareholders	$	8,781				$	(175,561)
Less: Undistributed earnings allocated to unvested RSAs		—					—
Net income (loss) available to common shareholders	$	8,781	46,073,739	$	0.19	$	(175,561)	45,662,543	$	(3.84)

Diluted:
Effect of dilutive securities:
Add: Undistributed earnings allocated to restricted shares	$	—				$	—
Stock options added to the denominator under the treasury stock method			9,894					—
RSUs added to the denominator under the treasury stock method			393,154					—
Less: Undistributed earnings reallocated to RSAs		—					—
Net income (loss) available to common shareholders and assumed conversions	$	8,781	46,476,787	$	0.19	$	(175,561)	45,662,543	$	(3.84)

Table of Contents


	Nine Months Ended					Nine Months Ended
	September 30, 2018					September 30, 2017
	Income		Weighted Average Shares Outstanding	Income per Share		Loss		Weighted Average Shares Outstanding	Loss per Share
Basic:
Net income (loss) attributable to controlling interests and available to common shareholders	$	9,780				$	(161,304)
Less: Undistributed earnings allocated to unvested RSAs		—					—
Net income (loss) available to common shareholders	$	9,780	45,945,728	$	0.21	$	(161,304)	45,597,558	$	(3.54)

Diluted:
Effect of dilutive securities:
Add: Undistributed earnings allocated to restricted shares	$	—				$	—
Stock options added to the denominator under the treasury stock method			664					—
RSUs added to the denominator under the treasury stock method			440,131					—
Less: Undistributed earnings reallocated to RSAs		—					—
Net income (loss) available to common shareholders and assumed conversions	$	9,780	46,386,523	$	0.21	$	(161,304)	45,597,558	$	(3.54)

Table of Contents

(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 nine months ended September 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 June 30, 2018	$	(47,554)	(1)	$	10,170	(2)	$	(37,384)

Other comprehensive (loss) income before reclassification		(1,144)	(3)		4,587	(4)		3,443
Amounts reclassified from accumulated other comprehensive loss, net		—			605	(4)		605
Net current period other comprehensive (loss) income		(1,144)			5,192			4,048
Total accumulated other comprehensive (loss) income, net as of September 30, 2018	$	(48,698)	(1)	$	15,362	(2)	$	(33,336)

⁽¹⁾

Net of deferred income tax (benefit) of $(5,254) and $(5,090) as of September 30, 2018 and June 30, 2018, respectively.

⁽²⁾

Net of deferred income tax expense of $23,663 and $22,293 as of September 30, 2018 and June 30, 2018, respectively.

⁽³⁾

Net of deferred income tax benefit of $(164).

⁽⁴⁾

Net of deferred income tax expense of $1,210 and $160 for Other comprehensive income before reclassification and Amounts reclassified from accumulated other comprehensive loss, net, respectively, as of September 30, 2018. For additional information, see Note 13. Derivative Financial Instruments.


	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		(24,324)	(3)		20,106	(4)		(4,218)
Amounts reclassified from accumulated other comprehensive loss, net		—			4,477	(4)		4,477
Net current period other comprehensive (loss) income		(24,324)			24,583			259
Total accumulated other comprehensive (loss) income, net as of September 30, 2018	$	(48,698)	(1)	$	15,362	(2)	$	(33,336)

⁽¹⁾

Net of deferred income tax (benefit) of $(5,254) and $(5,339) as of September 30, 2018 and December 31, 2017, respectively.

⁽²⁾

Net of deferred income tax expense of $23,663 and $16,317 as of September 30, 2018 and December 31, 2017, respectively.

⁽³⁾

Net of deferred income tax expense of $85.

⁽⁴⁾

Net of deferred income tax expense of $6,008 and $1,338 for Other comprehensive income before reclassification and Amounts reclassified from accumulated other comprehensive loss, net, respectively, as of September 30, 2018. For additional information, 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 in the accompanying Consolidated

Table of Contents

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 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 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 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 September 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.

(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 September 30, 2018, as well as the changes in the net carrying amounts for the nine months ended September 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		(3,159)		(11,637)		(952)		(15,748)

Goodwill, gross as of September 30, 2018	$	562,558	$	234,912	$	151,762	$	949,232
Accumulated impairment loss		—		(50,003)		(140,038)		(190,041)
Goodwill, net as of September 30, 2018	$	562,558	$	184,909	$	11,724	$	759,191


	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		—		(15)		(15)
Trade names: indefinite-lived as of September 30, 2018	$	200	$	444	$	644

Table of Contents

Intangible Assets with Definite Lives

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


	September 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	$	481,986	$	(332,097)	$	149,889	$	490,332	$	(299,801)	$	190,531
Trade names: definite-lived		17,253		(8,961)		8,292		18,480		(7,091)		11,389
Technology		10,894		(6,140)		4,754		10,901		(5,230)		5,671
Non-compete agreements		4,409		(4,401)		8		4,438		(4,308)		130
Revolving credit facility deferred financing costs		2,603		(1,710)		893		2,730		(1,248)		1,482
Total intangible assets with definite lives	$	517,145	$	(353,309)	$	163,836	$	526,881	$	(317,678)	$	209,203

(9) Accrued Liabilities

The Company’s accrued liabilities consisted of the following:


	September 30, 2018		December 31, 2017
	(In thousands)
Accrued merchant settlement	$	138,525	$	101,366
Other accrued expenses		36,767		37,889
Accrued merchant fees		36,595		57,079
Accrued taxes		29,280		35,759
Accrued compensation		23,153		24,044
Accrued interest		10,175		8,679
Accrued cash management fees		9,598		16,604
Accrued processing costs		9,579		7,830
Accrued armored		6,646		6,654
Accrued purchases		5,657		4,631
Accrued maintenance		2,953		3,927
Accrued telecommunications costs		1,624		1,413
Accrued interest on interest rate swap contracts		202		1,070
Total accrued liabilities	$	310,754	$	306,945

Table of Contents

(10) Long-Term Debt

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


	September 30, 2018		December 31, 2017
	(In thousands)
Revolving credit facility, including swingline credit facility (weighted average combined interest rate of 3.0% and 3.2% as of September 30, 2018 and December 31, 2017, respectively)	$	30,930	$	122,461
1.00% Convertible Senior Notes due 2020, net of unamortized discount and capitalized debt issuance costs		260,563		251,973
5.125% Senior Notes due 2022, net of capitalized debt issuance costs		248,562		248,038
5.50% Senior Notes due 2025, net of capitalized debt issuance costs		295,735		295,249
Total long-term debt	$	835,790	$	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 $26.9 million and $35.5 million as of September 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 $1.4 million and $2.0 million as of September 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 $4.3 million and $4.8 million as of September 30, 2018 and December 31, 2017, respectively.

Revolving Credit Facility

As of September 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 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.

Table of Contents

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 September 30, 2018, the Company had $30.9 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 $7.2 million outstanding in letters of credit. The weighted average interest rates on the Company’s outstanding borrowings under the revolving credit facility were 3.0% and 3.2% as of September 30, 2018 and December 31, 2017, respectively.

$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.

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

Table of Contents

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 September 30, 2018 and therefore, remain classified in the Long-term debt line in the accompanying Consolidated Balance Sheets at September 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				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(In thousands)				(In thousands)
Cash interest per contractual coupon rate	$	719	$	719	$	2,157	$	2,157
Amortization of note discount		2,708		2,569		8,018		7,608
Amortization of debt issuance costs		196		176		572		513
Total interest expense related to Convertible Notes	$	3,623	$	3,464	$	10,747	$	10,278

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


	September 30, 2018		December 31, 2017
	(In thousands)
Principal balance	$	287,500	$	287,500
Unamortized discount and capitalized debt issuance costs		(26,937)		(35,527)
Net carrying amount of Convertible Notes	$	260,563	$	251,973

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

Table of Contents

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.

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.

Table of Contents

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.

(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.

Table of Contents

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


Asset retirement obligations at December 31, 2017	$	69,757
Additional obligations		6,054
Accretion expense		1,407
Change in estimates		462
Payments		(12,358)
Foreign currency translation adjustments		(2,663)
Asset retirement obligations at September 30, 2018		62,659
Less: current portion of asset retirement obligations		6,954
Asset retirement obligations, excluding current portion, September 30, 2018	$	55,705

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:


	September 30, 2018		December 31, 2017
	(In thousands)
Current portion of other long-term liabilities
Interest rate swap contracts	$	407	$	7,314
Asset retirement obligations		6,954		9,837
Deferred revenue		2,966		3,590
Other		9,363		10,629
Total current portion of other long-term liabilities	$	19,690	$	31,370

Noncurrent portion of other long-term liabilities
Acquisition-related contingent consideration	$	38,369	$	42,614
Interest rate swap contracts		—		3,547
Deferred revenue		2,905		2,063
Other		18,470		26,778
Total noncurrent portion of other long-term liabilities	$	59,744	$	75,002

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

(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 $5 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

Table of Contents

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 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 income 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 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 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 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 .

Table of Contents

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	%	October 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:

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


	September 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	$	5,826	Prepaid expenses, deferred costs, and other current assets	$	1,154
Interest rate swap contracts	Prepaid expenses, deferred costs, and other noncurrent assets		31,523	Prepaid expenses, deferred costs, and other noncurrent assets		14,467
Interest rate swap contracts	Current portion of other long-term liabilities		(407)	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		$	36,942		$	4,760

Table of Contents

Statements of Operations Data



	Three Months Ended September 30,
Derivatives in Cash Flow Hedging Relationship	Amount of Gain 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	$	4,587	$	588	Cost of ATM operating revenues	$	(605)	$	(4,602)



	Nine Months Ended September 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	$	20,106	$	(3,966)	Cost of ATM operating revenues	$	(4,477)	$	(14,745)

(1)

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

As of September 30, 2018, the Company expects to reclassify $5.4 million of net derivative-related gains contained within the Accumulated other comprehensive loss, net line 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 .

( 14) Fair Value Measurements

The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis as of September 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 September 30, 2018
	Total		Level 1		Level 2		Level 3
	(In thousands)
Assets
Assets associated with interest rate swap contracts	$	37,349	$	—	$	37,349	$	—
Liabilities
Liabilities associated with interest rate swap contracts	$	(407)	$	—	$	(407)	$	—
Liabilities associated with acquisition-related contingent consideration	$	(38,369)	$	—	$	—	$	(38,369)

Table of Contents


	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 September 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 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 September 30, 2018, the estimated fair value of the Company’s acquisition-related contingent consideration liability was $ 38.4 million. During the three and nine months ended September 30, 2018, the Company recognized a gain of approximately $0 .5 million and a loss of $1.4 million, respectively, to revise the estimated fair value of the contingent consideration liability. Separately foreign exchange gains of $ 1.2 million and $ 5.6 million, were recognized to remeasure the South African Rand denominated liability in the three and nine months ended September 30, 2018, respectively. Both the revision to the estimated fair value and the foreign exchange gains are included in the Other income 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 September 30, 2018, the fair value of the Convertible Notes, the 2022 Notes, and the 2025 Notes (see Note 10. Long-Term Debt ) totaled $278.5 million, $246.9 million, and $287.8 million, respectively, based on the quoted prices in markets that are not active (Level 2) inputs for these notes as of that date.

Table of Contents

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 nine months ended September 30, 2018 and 2017 totaled $6.0 million and $16.8 million, respectively. The additions during the nine months ended September 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 September 30, 2018, the fair value of the Company’s interest rate swap contracts consisted of an asset of $37.3 million and a liability of $0.4 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 costs to deinstall the Company’s ATMs and to restore the ATM sites to their original condition. In most cases, the Company is contractually required to perform this deinstallation of its owned ATMs, and in some cases, site restoration work. As of September 30, 2018, the Company had $62.7 million accrued for these liabilities. For additional information, see Note 11. Asset Retirement Obligations .

Acquisition-related contingent consideration. As of September 30, 2018, the Company had $38.4 million accrued for the Spark acquisition-related contingent consideration. For additional information related to the Spark acquisition contingent consideration, see Note 4. Acquisitions .

(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						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
	(In thousands, excluding percentages)
Income tax expense (benefit)	$	7,854		$	(4,053)		$	10,409		$	(2,335)
Effective tax rate		47.2	%		2.3	%		51.6	%		1.4	%

The Company’s income tax expense for the three months ended September 30, 2018 totaled $7.9 million, resulting in an effective tax rate of 47.2%, compared to a benefit of $4.1 million, and an effective tax rate of 2.3%, for the same period of 2017. The Company’s income tax expense for the nine months ended September 30, 2018 totaled $10.4 million, or an effective tax rate of 51.6%, compared to a benefit of $2.3 million, or an effective tax rate of 1.4%, for the same period of 2017. The increase in the effective tax rate for the three and nine months ended September 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.

Table of Contents

as a result of U.S. Tax Reform, (ii) the additional tax expense related to share-based compensation in 2018, compared to an excess tax benefit in the same period of 2017, (iii) and the goodwill impairment recognized during the three and nine months ended September 30, 2017, resulting in a loss in earnings that was not deductible.

As of September 30, 2018, the Company had not completed its accounting for the tax effects of the U.S. Tax Reform, due to additional guidance anticipated from standard-setting bodies and the need to obtain additional information to complete calculations. During the three months ended December 31, 2017, the Company provisionally recognized an estimated one-time tax expense of $7.8 million on its accumulated undistributed foreign earnings and during the three months ended September 30, 2018, the Company decreased its estimate of the one-time tax by $1.2 million upon its completion of the earnings and profits calculations of its foreign subsidiaries. Offsetting this benefit, the Company recognized a charge of $1.0 million for deferred tax assets that will not be realized, determined after the release of IRS Notice 2018-68, clarifying deduction limitations for remunerations of covered persons. As a result, the Company realized a net benefit of $0.2 million in this period. The Company expects to complete its accounting for income tax effects of the U.S. Tax Reform in the three months ending December 31, 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 in the accompanying Consolidated Balance Sheets.

(17) Segment Information

As of September 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 nine months ended September 30, 2017. The Company’s Australia & New Zealand segment consists exclusively of its operations in 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.

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.

Table of Contents

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.

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(In thousands)
Net income (loss) attributable to controlling interests and available to common shareholders	$	8,781	$	(175,561)	$	9,780	$	(161,304)
Adjustments:
Interest expense, net		8,852		9,743		27,185		25,760
Amortization of deferred financing costs and note discount		3,397		3,195		10,060		9,317
Income tax expense (benefit)		7,854		(4,053)		10,409		(2,335)
Depreciation and accretion expense		30,647		29,807		93,453		88,683
Amortization of intangible assets		12,994		14,996		40,263		45,423
EBITDA	$	72,525	$	(121,873)	$	191,150	$	5,544
Add back:
Loss on disposal and impairment of assets		466		22,307		15,583		26,170
Other income (1)		(1,297)		(2,095)		(1,324)		(1,730)
Noncontrolling interests (2)		12		(9)		31		(19)
Share-based compensation expense		4,669		4,151		10,627		9,971
Restructuring expenses (3)		1,058		22		5,534		9,025
Acquisition and divestiture-related expenses (4)		—		2,889		2,633		15,338
Goodwill and intangible asset impairment (5)		—		194,521		—		194,521
Adjusted EBITDA	$	77,433	$	99,913	$	224,234	$	258,820
Less:
Depreciation and accretion expense (6)		30,646		29,805		93,451		88,677
Adjusted EBITA	$	46,787	$	70,108	$	130,783	$	170,143

⁽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⁾

For the three and nine months ended September 30, 2018 and 2017, expenses include employee severance and other costs incurred in conjunction with a corporate reorganization and cost reduction initiative. For the three and nine months ended September 30, 2017, expenses also include amounts associated with the Company’s redomicile of its parent company to the U.K., that occurred on July 1, 2016.

⁽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 costs and lease termination costs related to DCPayments acquisition integration in the nine months ended September 30, 2018.

⁽⁵⁾

Goodwill and intangible asset impairments related to the Company’s Australia and New Zealand segment.

⁽⁶⁾

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.

Table of Contents

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



	Three Months Ended September 30, 2018
	North America		Europe & Africa		Australia & New Zealand		Corporate		Eliminations		Total
	(In thousands)
Revenue from external customers	$	206,465	$	104,241	$	29,469	$	—	$	—	$	340,175
Intersegment revenues		2,283		597		—		—		(2,880)		—
Cost of revenues		141,169		64,603		21,227		229		(1,699)		225,529
Selling, general, and administrative expenses		16,762		9,079		2,362		13,693		—		41,896
Restructuring expenses		942		116		—		—		—		1,058
Acquisition and divestiture-related expenses		—		—		285		(285)		—		—
Loss (gain) on disposal and impairment of assets		246		232		(12)		—		—		466

Adjusted EBITDA		50,825		31,157		5,880		(9,265)		(1,164)		77,433

Depreciation and accretion expense		17,405		11,788		1,265		203		(15)		30,646
Adjusted EBITA		33,412		19,369		4,615		(9,456)		(1,153)		46,787

Capital expenditures (1)	$	14,149	$	10,931	$	1,595	$	—	$	—	$	26,675



	Three Months Ended September 30, 2017
	North America		Europe & Africa		Australia & New Zealand		Corporate		Eliminations		Total
	(In thousands)
Revenue from external customers	$	257,258	$	109,259	$	35,433		—		—	$	401,950
Intersegment revenues		2,360		326		—		—		(2,686)		—
Cost of revenues		170,948		65,189		24,907		797		(1,785)		260,056
Selling, general, and administrative expenses		17,273		9,799		2,282		16,778		—		46,132
Redomicile-related expenses		—		13		—		9		—		22
Acquisition and divestiture-related expenses		95		(245)		442		2,597		—		2,889
Goodwill and intangible asset impairment		—		—		194,521		—		—		194,521
Loss on disposal and impairment of assets		479		160		21,668		—		—		22,307

Adjusted EBITDA		71,397		34,596		8,237		(13,423)		(894)		99,913

Depreciation and accretion expense		16,413		11,476		1,916		—		—		29,805
Adjusted EBITA		54,984		23,120		6,321		(13,423)		(894)		70,108

Capital expenditures (1)	$	20,658	$	19,604	$	1,294		—		—	$	41,556

Table of Contents



	Nine Months Ended September 30, 2018
	North America		Europe & Africa		Australia & New Zealand		Corporate		Eliminations		Total
	(In thousands)
Revenue from external customers	$	618,538	$	309,522	$	89,286	$	—	$	—	$	1,017,346
Intersegment revenues		6,888		1,610		—		—		(8,498)		—
Cost of revenues		426,742		191,049		66,198		404		(5,173)		679,220
Selling, general, and administrative expenses		49,239		27,682		7,409		40,248		(14)		124,564
Restructuring expenses		3,072		1,292		—		1,170		—		5,534
Acquisition and divestiture-related expenses		(348)		1,516		920		545		—		2,633
Loss on disposal and impairment of assets		10,880		4,613		90		—		—		15,583

Adjusted EBITDA		149,445		92,403		15,678		(30,024)		(3,268)		224,234

Depreciation and accretion expense		51,257		38,286		3,774		203		(69)		93,451
Adjusted EBITA		98,186		54,117		11,905		(30,227)		(3,198)		130,783

Capital expenditures (1)	$	24,672	$	29,475	$	5,017	$	14,193	$	—	$	73,357



	Nine Months Ended September 30, 2017
	North America		Europe & Africa		Australia & New Zealand		Corporate		Eliminations		Total
	(In thousands)
Revenue from external customers	$	745,801		298,857		99,976		—		—	$	1,144,634
Intersegment revenues		6,731		1,129		—		—		(7,860)		—
Cost of revenues		506,956		188,889		72,400		937		(4,964)		764,218
Selling, general, and administrative expenses		53,300		29,516		6,633		42,102		—		131,551
Redomicile-related expenses		—		36		—		746		—		782
Restructuring expenses		3,668		831		—		3,744		—		8,243
Acquisition and divestiture-related expenses		2,243		1,748		2,153		9,194		—		15,338
Goodwill and intangible asset impairment		—		—		194,521		—		—		194,521
Loss on disposal and impairment of assets		4,275		369		21,478		48		—		26,170

Adjusted EBITDA		192,273		81,581		20,924		(33,069)		(2,889)		258,820

Depreciation and accretion expense		50,967		32,093		5,617		—		—		88,677
Adjusted EBITA		141,300		49,489		15,312		(33,069)		(2,889)		170,143

Capital expenditures (1)	$	60,161		45,814		5,449		—		—	$	111,424

⁽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.

Table of Contents

Identifiable Assets


	September 30, 2018		December 31, 2017
	(In thousands)
North America	$	1,135,065	$	1,175,154
Europe & Africa		535,665		579,879
Australia & New Zealand		66,086		75,095
Corporate		47,265		32,588
Total	$	1,784,081	$	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 September 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 nine months ended September 30, 2018 and 2017, the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017, and the Condensed Consolidated Balance Sheets as of September 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.

Table of Contents

Condensed Consolidated Statements of Comprehensive (Loss) Income



	Three Months Ended September 30, 2018
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Revenues	$	—	$	—	$	232,239	$	110,961	$	(3,025)	$	340,175
Operating costs and expenses		7,739		7		202,478		104,321		(1,955)		312,590
(Loss) income from operations		(7,739)		(7)		29,761		6,640		(1,070)		27,585
Interest expense (income), net, including amortization of deferred financing costs and note discount		—		6,691		9,900		(4,411)		69		12,249
Equity in (earnings) of subsidiaries		(15,024)		(4,241)		(1,718)		—		20,983		—
Other (income) expense		(29)		(8)		2,886		2,213		(6,359)		(1,297)
Income (loss) before income taxes		7,314		(2,449)		18,693		8,838		(15,763)		16,633
Income tax (benefit) expense		(1,465)		(1,657)		8,385		2,591		—		7,854
Net income (loss)		8,779		(792)		10,308		6,247		(15,763)		8,779
Net loss attributable to noncontrolling interests		—		—		—		—		(2)		(2)
Net income (loss) attributable to controlling interests and available to common stockholders		8,779		(792)		10,308		6,247		(15,761)		8,781
Comprehensive income (loss) attributable to controlling interests	$	12,829	$	(793)	$	19,451	$	1,152	$	(19,807)	$	12,832



	Three Months Ended September 30, 2017
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Revenues	$	—	$	—	$	278,863	$	125,679	$	(2,592)	$	401,950
Operating costs and expenses		8,547		12,844		244,123		112,384		(1,689)		376,209
Goodwill and Intangible Impairment		—		—		194,521		—		—		194,521
(Loss) income from operations		(8,547)		(12,844)		(159,781)		13,295		(903)		(168,780)
Interest expense (income), net, including amortization of deferred financing costs and note discount		—		6,410		10,468		(3,940)		—		12,938
Equity in losses (earnings) of subsidiaries		166,944		(32,956)		(4,094)		—		(129,894)		—
Other expense (income)		95		(236)		5,804		(2,714)		(5,044)		(2,095)
(Loss) income before income taxes		(175,586)		13,938		(171,959)		19,949		134,035		(179,623)
Income tax (benefit) expense		(16)		(7,417)		(873)		4,253		—		(4,053)
Net (loss) income		(175,570)		21,355		(171,086)		15,696		134,035		(175,570)
Net loss attributable to noncontrolling interests		—		—		—		—		(9)		(9)
Net (loss) income attributable to controlling interests and available to common stockholders		(175,570)		21,355		(171,086)		15,696		134,044		(175,561)
Comprehensive (loss) income attributable to controlling interests	$	(152,509)	$	22,599	$	(169,367)	$	37,104	$	109,673	$	(152,500)

Table of Contents



	Nine Months Ended September 30, 2018
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Revenues	$	—	$	—	$	695,990	$	330,240	$	(8,884)	$	1,017,346
Operating costs and expenses		19,649		16		626,284		321,158		(5,857)		961,250
(Loss) income from operations		(19,649)		(16)		69,706		9,082		(3,027)		56,096
Interest expense (income), net, including amortization of deferred financing costs and note discount		—		19,850		30,782		(13,517)		130		37,245
Equity in (earnings) loss of subsidiaries		(25,667)		5,415		31,610		—		(11,358)		—
Other (income) expense		(18)		176		(1,185)		(3,484)		3,187		(1,324)
Income (loss) before income taxes		6,036		(25,457)		8,499		26,083		5,014		20,175
Income tax (benefit) expense		(3,730)		(4,965)		11,636		7,468		—		10,409
Net income (loss)		9,766		(20,492)		(3,137)		18,615		5,014		9,766
Net loss attributable to noncontrolling interests		—		—		—		—		(14)		(14)
Net income (loss) attributable to controlling interests and available to common shareholders		9,766		(20,492)		(3,137)		18,615		5,028		9,780
Comprehensive income (loss) attributable to controlling interests	$	10,025	$	(20,493)	$	26,378	$	(10,642)	$	4,771	$	10,039



	Nine Months Ended September 30, 2017
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Revenues	$	—	$	—	$	805,467	$	347,683	$	(8,516)	$	1,144,634
Operating costs and expenses		21,244		25,295		711,231		328,263		(5,625)		1,080,408
Goodwill and Intangible Impairment		—		—		194,521		—		—		194,521
(Loss) income from operations		(21,244)		(25,295)		(100,285)		19,420		(2,891)		(130,295)
Interest expense (income), net, including amortization of deferred financing costs and note discount		—		18,821		29,029		(12,773)		—		35,077
Equity in loss (earnings) of subsidiaries		140,268		(58,284)		(8,774)		—		(73,210)		—
Other (income) expense		(138)		(416)		27,064		(7,805)		(20,435)		(1,730)
(Loss) income before income taxes		(161,374)		14,584		(147,604)		39,998		90,754		(163,642)
Income tax (benefit) expense		(67)		(17,043)		10,207		4,568		—		(2,335)
Net (loss) income		(161,307)		31,627		(157,811)		35,430		90,754		(161,307)
Net loss attributable to noncontrolling interests		—		—		—		—		(3)		(3)
Net (loss) income attributable to controlling interests and available to common shareholders		(161,307)		31,627		(157,811)		35,430		90,757		(161,304)
Comprehensive (loss) income attributable to controlling interests	$	(99,384)	$	34,315	$	(154,547)	$	92,711	$	27,523	$	(99,382)

Table of Contents

Condensed Consolidated Balance Sheets


	As of September 30, 2018
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Assets
Cash and cash equivalents	$	89	$	6	$	20,598	$	19,735	$	—	$	40,428
Accounts and notes receivable, net		—		—		56,523		30,627		—		87,150
Other current assets		24		5,762		91,515		98,383		—		195,684
Total current assets		113		5,768		168,636		148,745		—		323,262
Property and equipment, net		—		—		299,744		158,011		(405)		457,350
Intangible assets, net		—		—		128,673		36,724		(917)		164,480
Goodwill		—		—		570,421		189,295		(525)		759,191
Investments in and advances to subsidiaries		408,015		754,791		337,630		—		(1,500,436)		—
Intercompany receivable		16,328		170,221		86,571		475,625		(748,745)		—
Deferred tax asset, net		598		—		(1,987)		8,801		—		7,412
Prepaid expenses, deferred costs, and other noncurrent assets		—		22,963		27,601		21,822		—		72,386
Total assets	$	425,054	$	953,743	$	1,617,289	$	1,039,023	$	(2,251,028)	$	1,784,081
Liabilities and Shareholders' Equity
Current portion of other long-term liabilities		—		250		15,307		4,145		(12)		19,690
Accounts payable and accrued liabilities		587		3,084		221,556		127,375		—		352,602
Total current liabilities		587		3,334		236,863		131,520		(12)		372,292
Long-term debt		—		509,624		321,998		4,168		—		835,790
Intercompany payable		12,729		19,449		638,808		81,042		(752,028)		—
Asset retirement obligations		—		—		25,336		30,369		—		55,705
Deferred tax liability, net		—		—		46,284		2,528		—		48,812
Other long-term liabilities		—		267		20,168		39,309		—		59,744
Total liabilities		13,316		532,674		1,289,457		288,936		(752,040)		1,372,343
Shareholders' equity		411,738		421,069		327,832		750,087		(1,498,988)		411,738
Total liabilities and shareholders' equity	$	425,054	$	953,743	$	1,617,289	$	1,039,023	$	(2,251,028)	$	1,784,081

Table of Contents


	As of December 31, 2017
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Assets
Cash and cash equivalents	$	89	$	7	$	15,807	$	35,467	$	—	$	51,370
Accounts and notes receivable, net		—		—		55,912		49,333		—		105,245
Deferred tax asset, net		—		—		(3,466)		3,466		—		—
Other current assets		400		1,585		73,847		82,885		—		158,717
Total current assets		489		1,592		142,100		171,151		—		315,332
Property and equipment, net		—		—		312,591		185,479		(168)		497,902
Intangible assets, net		—		—		159,248		51,337		(723)		209,862
Goodwill		—		—		572,275		202,664		—		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	$	1,680,124	$	1,119,110	$	(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		979		10,070		205,199		134,932		—		351,180
Total current liabilities		979		14,962		226,945		139,676		(12)		382,550
Long-term debt		—		504,912		394,596		18,213		—		917,721
Intercompany payable		5,409		4,272		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		—		3,997		25,402		45,603		—		75,002
Total liabilities		6,388		528,143		1,380,346		340,602		(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	$	1,680,124	$	1,119,110	$	(2,023,950)	$	1,862,716

Table of Contents

Condensed Consolidated Statements of Cash Flows



	Nine Months Ended September 30, 2018
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Net cash provided by operating activities	$	5,230	$	4,400	$	142,552	$	32,400	$	—	$	184,582
Additions to property and equipment		—		—		(45,335)		(28,022)		—		(73,357)
Net cash used in investing activities		—		—		(45,335)		(28,022)		—		(73,357)
Proceeds from borrowings under revolving credit facility		—		273,700		37,445		166,878		—		478,023
Repayments of borrowings under revolving credit facility		—		(278,100)		(110,333)		(180,584)		—		(569,017)
Intercompany financing		—		—		(4,241)		4,241		—		—
Tax payments related to share-based compensation		(5,245)		—		—		—		—		(5,245)
Proceeds from exercises of stock options		14		—		—		—		—		14
Net cash used in financing activities		(5,231)		(4,400)		(77,129)		(9,465)		—		(96,225)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		—		—		(227)		(177)		—		(404)
Net (decrease) increase in cash, cash equivalents, and restricted cash		(1)		—		19,861		(5,264)		—		14,596
Cash, cash equivalents, and restricted cash as of beginning of period		88		7		50,433		49,289		—		99,817
Cash, cash equivalents, and restricted cash as of end of period	$	87	$	7	$	70,294	$	44,025	$	—	$	114,413

Table of Contents



	Nine Months Ended September 30, 2017
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Net cash provided by operating activities	$	8,534	$	20,602	$	120,702	$	22,596	$	—	$	172,434
Additions to property and equipment		—		—		(66,200)		(45,224)		—		(111,424)
Acquisitions, net of cash acquired		—		—		(465,123)		(19,479)		—		(484,602)
Net cash used in investing activities		—		—		(531,323)		(64,703)		—		(596,026)
Proceeds from borrowing under revolving credit facility		—		295,400		601,672		71,293		—		968,365
Repayments of borrowings under revolving credit facility		—		(319,200)		(446,533)		(61,618)		—		(827,351)
Proceeds from borrowings of long-term debt		—		—		300,000		—		—		300,000
Debt issuance costs		—		—		(5,476)		—		—		(5,476)
Intercompany financing		—		—		(7,642)		7,642		—		—
Tax payments related to share-based compensation		(8,359)		—		—		—		—		(8,359)
Proceeds from exercise of stock options		105		—		—		—				105
Net cash (used in) provided by financing activities		(8,254)		(23,800)		442,021		17,317		—		427,284
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		—		—		(15,974)		11,796		—		(4,178)
Net increase (decrease) in cash, cash equivalents, and restricted cash		280		(3,198)		15,426		(12,994)		—		(486)
Cash, cash equivalents, and restricted cash as of beginning of period		101		3,205		34,722		67,719		—		105,747
Cash, cash equivalents, and restricted cash as of end of period	$	381	$	7	$	50,148	$	54,725	$	—	$	105,261

(19) Concentration Risk

Significant customers. For the three and nine months ended September 30, 2018, the Company derived approximately 23.3% and 23.8% 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 nine months ended September 30, 2018 were Walgreens Boots Alliance, Inc., Co-operative Food (in the U.K.), CVS Caremark Corporation, Alimentation Couche-Tard Inc.(in the U.S. and Canada) and Speedway LLC. For the nine months ended September 30, 2018, no individual customer accounted for more than 6% of the Company’s total revenue.

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.

Table of Contents

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, protect against cyber-attacks, prevent data breaches and respond to any such attacks or breaches were they to occur;

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; and

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

Table of Contents

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.

Table of Contents

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 September 30, 2018, we were the world’s largest ATM owner/operator, providing services to approximately 230,000 ATMs. During the three months ended September 30, 2018, 61% of our total revenues were derived from operations in North America (including our ATM operations in the U.S., Canada, and Mexico), 30% 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 September 30, 2018 were approximately 140,000 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 1,100 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, ATMs deployed 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

Table of Contents

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 factor for choosing and 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. 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 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

Table of Contents

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), there were approximately 71,000 ATMs 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. and we have seen both the number of ATM deployments and withdrawals slow in recent years. However, according to the Bank of England, cash is still the primary payment method preferred by consumers, representing over 50% of spontaneous payments. 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 that includes the 5% decrease that came into effect on July 1, 2018, we have removed certain ATMs from service and have taken other measures such as slowing our ATM expansion. For additional information, see Decrease in interchange rates below . We believe there are growing opportunities with 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 ATM market 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 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

Table of Contents

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. 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 approximately 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 consistent with market trends. In the future, these declines may be amplified by recent actions taken by major banks in Australia. For further information regarding these actions, see Australia market changes and asset impairment below. Responsive to recent trends we have removed certain ATMs from service and slowed expansion; however, we believe there are opportunities for longer-term growth in Australia, which would likely include expansion of services to financial institutions in this 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 3,400 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.

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 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.

Table of Contents

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 totaled approximately 2% of our annual withdrawal transactions in the U.K. For these transactions, we receive interchange revenues based on rates 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”) developed 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. However, 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 themselves. 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 increased participation in Allpoint, our surcharge-free network, and growth in bank-branding and managed services. We believe that there will be continued growth in all three areas.

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 September 30, 2018 increased approximately 6% from the same period in 2017. These same-store results were impacted by a number of factors and the discrete impact of each factor is difficult to precisely estimate. Growth in Allpoint transactions has positively impacted the same-store growth rate, driven by the expansion in the number of ATMs in the Allpoint network, growth in the number of financial institutions participating in Allpoint, and increased marketing efforts to existing Allpoint participants. We estimate that the growth rate for the three months ended September 30, 2018 was also positively impacted by increased transactions related to customers continuing to utilize our fee-free access to their cash via our Allpoint network as a result of the removal of our Allpoint enabled ATMs from 7-Eleven stores and normalizing for other program changes. We estimate that this resulted in approximately 2% growth in the period. Finally, we believe the growth rate during the three and nine months ended

Table of Contents

September 30, 2018 was positively impacted by higher ATM availability relative to the prior year as a result of the software upgrades and outages in 2017 that negatively impacted transaction volumes.

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 that was completed in February 2018. We estimate that 7-Eleven in the U.S. accounted for approximately 13% and 14% of the Company’s total revenues during the three and nine months ended September 30, 2017, respectively. 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 ATMs, higher volume of transactions conducted on free-to-use ATMs can generally translate into higher overall revenues. However, during the three months ended September 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.

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 performed qualitative and quantitative analysis and 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 nine months ended September 30, 2018, approximately 77% 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 have resulted in a significant increase in the availability of free-to-use ATMs and could, in the future, 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 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 higher rates of contactless payment use compared to other markets. Prior to our acquisition of DCPayments and since our ownership of the Australian component of the business, we have observed declines in transactions at Australian ATMs, as

Table of Contents

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. Also during 2017, we 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 a fraudulent transaction was processed. In 2017, nearly all of our U.S. Company-owned ATMs became EMV-compliant.

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 have seen a decrease in our capital spending in 2018 from what we spent in 2016 and 2017. Our capital spending in 2018 has been 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. On September 27, 2018, Visa notified its members that it will allow dynamic currency conversion (“DCC”) on international ATM transactions globally effective April 13, 2019. We expect that this rule change will allow us to expand our DCC offering with a positive impact on revenues. On March 28, 2018, the European Commission published a proposal to amend European Union regulations applicable to (“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 3% 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 nine and twelve months ended September 30, 2017 and December 31, 2017, respectively. During the three and nine months ended September 30, 2018, we implemented additional workforce reductions in an effort to continue our cost reduction initiative and incurred $1.1 million and $5.5 million of pre-tax expenses, respectively. During the remainder of 2018, our Restructuring Plan activities may include additional workforce reductions and other cost reduction measures.

Table of Contents

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, was introduced on October 18, 2018, with the new $20 note to follow on a date to be determined. The introduction of these next generation bank notes has required upgrades to software and physical ATM components on our ATMs in Australia.

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 during the three month ended December 31, 2017, 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. During the three months ended September 30, 2018, we decreased the estimated one-time tax on our accumulated undistributed foreign earnings by $1.2 million. Offsetting this benefit, we recognized a charge of $1.0 million for deferred tax assets that will not be realized that was determined after the release of IRS Notice 2018-68, clarifying the deduction limitations for remunerations of covered persons. As a result, we realized a net tax benefit of $0.2 million in the three months ended September 30, 2018 related to the income tax effects of the U.S. Tax Reform. We continue to evaluate the U.S. Tax Reform and 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 to be paid in 2020 and 2021, respectively. 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 fluctuation of the currencies in the markets in which we operate relative to the U.S. dollar caused our reported total revenues to be lower by approximately $4.9 million during the three months ended September 30, 2018 and higher by $17.5 million the nine months ended September 30, 2018.

Table of Contents

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.

Table of Contents

Results of Operations

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


	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2018				2017				2018				2017
	(In thousands, excluding percentages)
Revenues:
ATM operating revenues	$	329,837	97.0	%	$	390,143	97.1	%	$	978,789	96.2	%	$	1,105,191	96.6	%
ATM product sales and other revenues		10,338	3.0			11,807	2.9			38,557	3.8			39,443	3.4
Total revenues (1)		340,175	100.0			401,950	100.0			1,017,346	100.0			1,144,634	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)		216,849	63.7			251,136	62.5			647,692	63.7			729,547	63.7
Cost of ATM product sales and other revenues		8,680	2.6			8,920	2.2			31,528	3.1			34,671	3.0
Total cost of revenues		225,529	66.3			260,056	64.7			679,220	66.8			764,218	66.8
Operating expenses:
Selling, general, and administrative expenses (3)		41,896	12.3			46,132	11.5			124,564	12.2			131,551	11.5
Redomicile-related expenses		—	—			22	—			—	—			782	0.1
Restructuring expenses		1,058	0.3			—	—			5,534	0.5			8,243	0.7
Acquisition and divestiture-related expenses		—	—			2,889	0.7			2,633	0.3			15,338	1.3
Goodwill and intangible asset impairment		—	—			194,521	48.4			—	—			194,521	17.0
Depreciation and accretion expense		30,647	9.0			29,807	7.4			93,453	9.2			88,683	7.7
Amortization of intangible assets		12,994	3.8			14,996	3.7			40,263	4.0			45,423	4.0
Loss on disposal and impairment of assets		466	0.1			22,307	5.5			15,583	1.5			26,170	2.3
Total operating expenses		87,061	25.6			310,674	77.3			282,030	27.7			510,711	44.6
Income (loss) from operations		27,585	8.1			(168,780)	(42.0)			56,096	5.5			(130,295)	(11.4)
Other expense:
Interest expense, net		8,852	2.6			9,743	2.4			27,185	2.7			25,760	2.3
Amortization of deferred financing costs and note discount		3,397	1.0			3,195	0.8			10,060	1.0			9,317	0.8
Other income		(1,297)	(0.4)			(2,095)	(0.5)			(1,324)	(0.1)			(1,730)	(0.2)
Total other expense		10,952	3.2			10,843	2.7			35,921	3.5			33,347	2.9
Income (loss) before income taxes		16,633	4.9			(179,623)	(44.7)			20,175	2.0			(163,642)	(14.3)
Income tax expense (benefit)		7,854	2.3			(4,053)	(1.0)			10,409	1.0			(2,335)	(0.2)
Net income (loss)		8,779	2.6			(175,570)	(43.7)			9,766	1.0			(161,307)	(14.1)
Net loss attributable to noncontrolling interests		(2)	—			(9)	—			(14)	—			(3)	—
Net income (loss) attributable to controlling interests and available to common shareholders	$	8,781	2.6	%	$	(175,561)	(43.7)	%	$	9,780	1.0	%	$	(161,304)	(14.1)	%

Table of Contents

⁽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.

⁽²⁾

Excludes effects of depreciation, accretion, and amortization of intangible assets of $35.5 million and $37.2 million for the three months ended September 30, 2018 and 2017, respectively, and $109.1 and $111.9 million for the nine months ended September 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 10.4% and 9.2% for the three months ended September 30, 2018 and 2017, respectively, and 10.7% and 9.8% for the nine months ended September 30, 2018 and 2017, respectively.

⁽³⁾

Includes share-based compensation expense of $4.4 million and $4.0 million for the three months ended September 30, 2018 and 2017, and $10.2 million and $9.6 million for the nine months ended September 30, 2018 and 2017, respectively .

Table of Contents

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								Nine Months Ended
	September 30,								September 30,
	2018			% Change		2017			2018			% Change		2017

Average number of transacting ATMs:
North America		44,183		(15.5)	%		52,267			44,829		(14.4)	%		52,385
Europe & Africa		24,406		(5.8)			25,921			24,769		(2.8)			25,484
Australia & New Zealand		7,909		(9.3)			8,717			8,077		(8.7)			8,848
Total Company-owned		76,498		(12.0)			86,905			77,675		(10.4)			86,717
North America		14,064		(7.2)			15,149			14,172		(7.5)			15,324
Europe & Africa		55		(91.9)			682			175		(72.3)			632
Australia & New Zealand		103		-			103			103		-			103
Total Merchant-owned		14,222		(10.7)			15,934			14,450		(10.0)			16,059
Average number of transacting ATMs – ATM operations		90,720		(11.8)			102,839			92,125		(10.4)			102,776

Managed Services and Processing:
North America		137,789		4.0			132,487			135,406		4.2			130,003
Australia & New Zealand		1,993		(0.4)			2,000			2,005		8.7			1,844
Average number of transacting ATMs – Managed services and processing		139,782		3.9			134,487			137,411		4.2			131,847

Total average number of transacting ATMs		230,502		(2.9)			237,326			229,536		(2.2)			234,623

Total transactions (in thousands) :
ATM operations		340,870		(12.3)			388,736			1,001,737		(12.2)			1,141,144
Managed services and processing, net		290,213		3.3			281,054			851,495		7.9			788,928
Total transactions		631,083		(5.8)			669,790			1,853,232		(4.0)			1,930,072

Total cash withdrawal transactions (in thousands) :
ATM operations		222,864		(10.1)			247,903			649,674		(11.0)			730,313

Per ATM per month amounts (excludes managed services and processing):
Cash withdrawal transactions		819		1.9			804			784		(0.8)			790

ATM operating revenues (1)	$	1,119		(5.2)		$	1,180		$	1,088		(2.5)		$	1,116
Cost of ATM operating revenues (1) (2)		760		(1.8)			774			744		(0.7)			749
ATM adjusted operating gross profit (1) (2)	$	359		(11.6)	%	$	406		$	344		(6.3)	%	$	367

ATM adjusted operating gross profit margin		32.1	%				34.4	%		31.6	%				32.9	%

⁽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. For additional information, see Item 1. Financial Statements, Note 1. General and Basis of Presentation – (c) Cost of ATM Operating Revenues Presentation .

Table of Contents

Revenues


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018		2017		% Change		2018		2017		% Change
	(In thousands, excluding percentages)
North America
ATM operating revenues	$	200,481	$	249,964	(19.8)	%	$	593,400	$	719,341	(17.5)	%
ATM product sales and other revenues		8,267		9,654	(14.4)			32,026		33,191	(3.5)
North America total revenues		208,748		259,618	(19.6)			625,426		752,532	(16.9)
Europe & Africa
ATM operating revenues		102,819		107,497	(4.4)			304,809		293,827	3.7
ATM product sales and other revenues		2,019		2,088	(3.3)			6,323		6,159	2.7
Europe & Africa total revenues		104,838		109,585	(4.3)			311,132		299,986	3.7
Australia & New Zealand
ATM operating revenues		29,417		35,368	(16.8)			89,078		99,752	(10.7)
ATM product sales and other revenues		52		65	(20.0)			208		224	(7.1)
Australia & New Zealand total revenues		29,469		35,433	(16.8)			89,286		99,976	(10.7)

Eliminations		(2,880)		(2,686)	7.2			(8,498)		(7,860)	8.1

Total ATM operating revenues		329,837		390,143	(15.5)			978,789		1,105,191	(11.4)
Total ATM product sales and other revenues		10,338		11,807	(12.4)			38,557		39,443	(2.2)
Total revenues	$	340,175	$	401,950	(15.4)	%	$	1,017,346	$	1,144,634	(11.1)	%

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

ATM operating revenues. ATM operating revenues during the three months ended September 30, 2018 decreased $60.3 million, or 15.5%, 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., lower ATM counts and transaction volumes in Australia and the U.K., and the 5% decrease in the LINK interchange rate in the U.K. effective July 1, 2018.

Table of Contents

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



	Three Months Ended
	September 30,
	2018		2017		Change		% Change
	(In thousands, excluding percentages)
North America
Surcharge revenues	$	92,572	$	123,406	$	(30,834)		(25.0)	%
Interchange revenues		36,620		51,155		(14,535)		(28.4)
Bank-branding and surcharge-free network revenues		45,128		48,910		(3,782)		(7.7)
Managed services revenues		12,240		12,905		(665)		(5.2)
Other revenues		13,921		13,588		333		2.5
North America total ATM operating revenues		200,481		249,964		(49,483)		(19.8)
Europe & Africa
Surcharge revenues		34,134		33,410		724		2.2
Interchange revenues		66,039		71,858		(5,819)		(8.1)
Other revenues		2,646		2,229		417		18.7
Europe & Africa total ATM operating revenues		102,819		107,497		(4,678)		(4.4)
Australia & New Zealand
Surcharge revenues		22,358		28,579		(6,221)		(21.8)
Interchange revenues		1,650		1,246		404		32.4
Bank-branding and surcharge-free network revenues		—		6		(6)		n/m
Managed services revenues		4,108		4,191		(83)		(2.0)
Other revenues		1,301		1,346		(45)		(3.3)
Australia & New Zealand total ATM operating revenues		29,417		35,368		(5,951)		(16.8)
Eliminations		(2,880)		(2,686)		(194)		7.2
Total ATM operating revenues	$	329,837	$	390,143	$	(60,306)		(15.5)	%

North America. For the three months ended September 30, 2018, our ATM operating revenues in our North America segment decreased $49.5 million, or 19.8%, 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 22% of North America revenues in the three months ended September 30, 2017. The decrease 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 growth in same-store transactions, bank-branding, and surcharge-free network revenues.

Europe & Africa. For the three months ended September 30, 2018, our ATM operating revenues in our Europe & Africa segment decreased $4.7 million, or 4.4%, compared to the same period of 2017. Our ATM operating revenues would have been higher by approximately $0.8 million for the three months ended September 30, 2018, absent the foreign currency exchange rate movements. Adjusted for foreign currency movements, ATM operating revenues decreased 3.6% driven by the 5% decrease in the LINK interchange rate in the U.K. that became effective July 1, 2018, as well as fewer transacting ATMs, and a decline in same-store transactions in the U.K. The decline in U.K. revenue was partially offset by an increase in the number of transacting ATMs from new ATM placement agreements in South Africa, Germany, Spain, and Ireland. For additional information related to our constant-currency calculations, see Non-GAAP Financial Measures below.

Australia & New Zealand. For the three months ended September 30, 2018, our ATM operating revenues in our Australia & New Zealand segment decreased $6.0 million, or 16.8%, compared to the same period of 2017. Our ATM operating revenues would have been higher by $2.4 million for the three months ended September 30, 2018, absent the foreign currency exchange rate movements. Adjusted for foreign currency movements, ATM operating revenues decreased 10.2% primarily due to a decline in the number of transacting ATMs and fewer transactions per ATM.

Table of Contents

ATM product sales and other revenues . For the three months ended September 30, 2018, our ATM product sales and other revenues decreased $1.5 million compared to the same period of 2017. The decrease was primarily related to lower equipment sales in our North America segment.

Nine Months Ended September 30, 2018 Compared to Nine Months Ended September 30, 2017

ATM operating revenues. ATM operating revenues during the nine months ended September 30, 2018 decreased $126.4 million, or 11.4%, 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:


	Nine Months Ended
	September 30,
	2018		2017		Change		% Change
	(In thousands, excluding percentages)
North America
Surcharge revenues	$	272,372	$	343,613	$	(71,241)		(20.7)	%
Interchange revenues		108,259		155,558		(47,299)		(30.4)
Bank-branding and surcharge-free network revenues		133,565		143,169		(9,604)		(6.7)
Managed services revenues		38,331		37,224		1,107		3.0
Other revenues		40,873		39,777		1,096		2.8
North America total ATM operating revenues		593,400		719,341		(125,941)		(17.5)
Europe & Africa
Surcharge revenues		91,191		84,043		7,148		8.5
Interchange revenues		205,910		202,178		3,732		1.8
Other revenues		7,708		7,606		102		1.3
Europe & Africa total ATM operating revenues		304,809		293,827		10,982		3.7
Australia & New Zealand
Surcharge revenues		69,107		81,788		(12,681)		(15.5)
Interchange revenues		3,839		3,422		417		12.2
Bank-branding and surcharge-free network revenues		—		87		(87)		n/m
Managed services revenues		12,318		10,922		1,396		12.8
Other revenues		3,814		3,533		281		8.0
Australia & New Zealand total ATM operating revenues		89,078		99,752		(10,674)		(10.7)
Eliminations		(8,498)		(7,729)		(769)		9.9
Total ATM operating revenues	$	978,789	$	1,105,191	$	(126,402)		(11.4)	%

North America. For the nine months ended September 30, 2018, our ATM operating revenues in our North America segment decreased $125.9 million, or 17.5%, 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 22% of North America revenues in the nine months ended September 30, 2017. 7-Eleven did not contribute to the Company’s revenues in the three and six months ended September 30, 2018. The decline attributable to the loss of the 7-Eleven relationship was partially offset by the rest of the U.S. as a result of the growth in same-store transactions contributing to surcharge and interchange as well as bank-branding and surcharge-free network 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 nine months of 2018, the Company experienced high levels of availability across its U.S. ATMs.

Europe & Africa . For the nine months ended September 30, 2018, our ATM operating revenues in our Europe & Africa segment increased $11.0 million, or 3.7%, compared to the same period of 2017. Our ATM operating revenues would have been lower by $16.8 million for the nine months ended September 30, 2018, absent the foreign currency

Table of Contents

exchange rate movements. Adjusted for foreign currency movements, ATM operating revenues decreased 2% driven by a decline in same-store transactions in the U.K., fewer transacting ATMs in the U.K., and the 5% decrease in the LINK interchange rate in the U.K. that became effective July 1, 2018. The decline in U.K. revenue was partially offset by an increase in the number of transacting ATMs from new ATM placement agreements in South Africa, Germany, Spain, and Ireland. For additional information related to our constant-currency calculations, see Non-GAAP Financial Measures below.

Australia & New Zealand . For the nine months ended September 30, 2018, our ATM operating revenues in our Australia & New Zealand segment decreased $10.7 million, or 10.7%, compared to the same period of 2017. Our ATM operating revenues would have been higher by approximately $1 million for the nine months ended September 30, 2018, absent the foreign currency exchange rate movements. Adjusted for foreign currency movements, ATM operating revenues decreased 9.7% primarily due to a decline in the number of transacting ATMs and fewer transactions per ATM.

ATM product sales and other revenues. For the nine months ended September 30, 2018, our ATM product sales and other revenues decreased $0.9 million compared to the same period of 2017. The decrease was primarily related to lower equipment sales in our North America segment.

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


	Three Months Ended						Nine Months Ended
	September 30,						September 30,

	2018		2017		% Change		2018		2017		% Change
	(In thousands, excluding percentages)
North America
Cost of ATM operating revenues	$	133,496	$	163,604	(18.4)	%	$	398,479	$	478,591	(16.7)	%
Cost of ATM product sales and other revenues		7,673		7,344	4.5			28,263		28,365	(0.4)
North America total cost of revenue		141,169		170,948	(17.4)			426,742		506,956	(15.8)
Europe & Africa
Cost of ATM operating revenues		63,825		64,350	(0.8)			188,595		184,450	2.2
Cost of ATM product sales and other revenues		778		839	(7.3)			2,454		4,439	(44.7)
Europe & Africa total cost of revenues		64,603		65,189	(0.9)			191,049		188,889	1.1
Australia & New Zealand
Cost of ATM operating revenues		20,998		24,170	(13.1)			65,387		70,410	(7.1)
Cost of ATM product sales and other revenues		229		737	(68.9)			811		1,990	(59.2)
Australia & New Zealand total cost of revenues		21,227		24,907	(14.8)			66,198		72,400	(8.6)
Corporate		229		797	(71.3)			404		937	(56.9)

Eliminations		(1,699)		(1,785)	(4.8)			(5,173)		(4,964)	4.2

Cost of ATM operating revenues		216,849		251,136	(13.7)			647,692		729,547	(11.2)
Cost of ATM product sales and other revenues		8,680		8,920	(2.7)			31,528		34,671	(9.1)
Total cost of revenues	$	225,529	$	260,056	(13.3)	%	$	679,220	$	764,218	(11.1)	%

Table of Contents

Three Months Ended September 30, 2018 Compared to Three Months Ended September 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 September 30, 2018 decreased $34.3 million, or 13.7%, 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 decrease 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
	September 30,
	2018		2017		Change		% Change
	(In thousands, excluding percentages)
North America
Merchant commissions	$	67,931	$	87,828	$	(19,897)		(22.7)	%
Vault cash rental		11,567		13,513		(1,946)		(14.4)
Other costs of cash		14,540		16,813		(2,273)		(13.5)
Repairs and maintenance		11,530		15,206		(3,676)		(24.2)
Communications		3,846		5,587		(1,741)		(31.2)
Transaction processing		1,637		1,901		(264)		(13.9)
Employee costs		9,174		8,516		658		7.7
Other expenses		13,271		14,240		(969)		(6.8)
North America total cost of ATM operating revenues		133,496		163,604		(30,108)		(18.4)
Europe & Africa
Merchant commissions		25,754		28,311		(2,557)		(9.0)
Vault cash rental		3,668		3,401		267		7.9
Other costs of cash		6,192		4,041		2,151		53.2
Repairs and maintenance		3,445		3,484		(39)		(1.1)
Communications		3,020		3,168		(148)		(4.7)
Transaction processing		4,710		4,562		148		3.2
Employee costs		11,089		10,535		554		5.3
Other expenses		5,947		6,848		(901)		(13.2)
Europe & Africa total cost of ATM operating revenues		63,825		64,350		(525)		(0.8)
Australia & New Zealand
Merchant commissions		11,574		14,120		(2,546)		(18.0)
Vault cash rental		2,392		2,080		312		15.0
Other costs of cash		2,083		2,687		(604)		(22.5)
Repairs and maintenance		2,018		2,043		(25)		(1.2)
Communications		824		1,078		(254)		(23.6)
Transaction processing		520		665		(145)		(21.8)
Employee costs		1,315		1,412		(97)		(6.9)
Other expenses		272		85		187		220.0
Australia & New Zealand total cost of ATM operating revenues		20,998		24,170		(3,172)		(13.1)
Corporate		229		797		(568)		(71.3)
Eliminations		(1,699)		(1,785)		86		(4.8)
Total cost of ATM operating revenues	$	216,849	$	251,136	$	(34,287)		(13.7)	%

North America. For the three months ended September 30, 2018, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) in our North America segment decreased $30.1 million, or 18.4%, 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,

Table of Contents

(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 repair and 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 September 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) decreased less than 1%. This decrease was directionally consistent with the constant-currency decline in ATM operating revenues that resulted in lower merchant commissions, offset by higher costs to maintain cash at our ATMs 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 September 30, 2018, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) in our Australia & New Zealand segment decreased $3.2 million, or 13.1%, compared to the same period of 2017. This change is consistent with the decrease in ATM operating revenues.

Cost of ATM product sales and other revenues. For the three months ended September 30, 2018, our cost of ATM product sales and other revenues decreased by 2.7% from the same period of 2017 consistent with the decrease in revenue from ATM product sales.

Nine Months Ended September 30, 2018 Compared to Nine Months Ended September 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 nine months ended September 30, 2018 decreased $81.9 million, or 11.2%, 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 decrease in ATM operating revenue, largely due to the removal of ATMs at 7-Eleven locations in the U.S.

Table of Contents

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):


	Nine Months Ended
	September 30,
	2018		2017		Change		% Change
	(In thousands, excluding percentages)
Cost of ATM operating revenues
North America
Merchant commissions	$	200,630	$	246,406	$	(45,776)		(18.6)	%
Vault cash rental		36,083		40,556		(4,473)		(11.0)
Other costs of cash		44,610		56,137		(11,527)		(20.5)
Repairs and maintenance		33,503		47,798		(14,295)		(29.9)
Communications		12,031		16,489		(4,458)		(27.0)
Transaction processing		4,663		6,721		(2,058)		(30.6)
Employee costs		27,098		25,194		1,904		7.6
Other expenses		39,861		39,290		571		1.5
North America total cost of ATM operating revenues		398,479		478,591		(80,112)		(16.7)
Europe & Africa
Merchant commissions		78,930		80,453		(1,523)		(1.9)
Vault cash rental		10,630		9,925		705		7.1
Other costs of cash		18,897		14,990		3,907		26.1
Repairs and maintenance		10,991		10,452		539		5.2
Communications		9,671		8,826		845		9.6
Transaction processing		13,500		12,570		930		7.4
Employee costs		33,850		29,817		4,033		13.5
Other expenses		12,126		17,417		(5,291)		(30.4)
Europe & Africa total cost of ATM operating revenues		188,595		184,450		4,145		2.2
Australia & New Zealand
Merchant commissions		36,575		40,976		(4,401)		(10.7)
Vault cash rental		6,771		5,591		1,180		21.1
Other costs of cash		5,898		7,937		(2,039)		(25.7)
Repairs and maintenance		6,948		5,888		1,060		18.0
Communications		2,674		3,345		(671)		(20.1)
Transaction processing		1,796		1,763		33		1.9
Employee costs		4,004		4,260		(256)		(6.0)
Other expenses		721		650		71		10.9
Australia & New Zealand total cost of ATM operating revenues		65,387		70,410		(5,023)		(7.1)
Corporate		404		937		(533)		(56.9)
Eliminations		(5,173)		(4,841)		(332)		6.9
Total cost of ATM operating revenues	$	647,692	$	729,547	$	(81,855)		(11.2)	%

North America. For the nine months ended September 30, 2018, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) in our North America segment decreased $80.1 million, or 16.7%, 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 repair and maintenance costs in 2018 compared to 2017 related primarily to the software upgrades at certain Company-owned ATMs during 2017.

Europe & Africa. For the nine months ended September 30, 2018, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) in our Europe & Africa segment increased $4.1 million, or 2.2%, 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) decreased $6.3 million.

Table of Contents

This constant-currency decline in operating costs is primarily due to the revisions of our estimated liability for business rates (property taxes) on ATMs recognized during the six months ended June 30, 2018. This decrease was also directionally consistent with the constant-currency decline in ATM operating revenues, due to lower merchant commissions, but was partially offset by higher costs to maintain cash at our ATMs in the U.K. For additional information related to our constant-currency calculations, see Non-GAAP Financial Measures below.

Australia & New Zealand . For the nine months ended September 30, 2018, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) in our Australia & New Zealand segment decreased $5.0 million, or 7.1%, 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 nine months ended September 30, 2018, our cost of ATM product sales and other revenues decreased $3.1 million compared to the same period of 2017stent with the decline in revenues.

Selling, General, and Administrative Expenses


	Three Months Ended								Nine Months Ended
	September 30,								September 30,

	2018			2017			% Change		2018			2017			% Change
	(In thousands, excluding percentages)
Selling, general, and administrative expenses	$	37,456		$	42,177		(11.2)	%	$	114,341		$	121,916		(6.2)	%
Share-based compensation expense		4,440			3,955		12.3			10,223			9,635		6.1
Total selling, general, and administrative expenses	$	41,896		$	46,132		(9.2)	%	$	124,564		$	131,551		(5.3)	%

Percentage of total revenues:
Selling, general, and administrative expenses		11.0	%		10.5	%				11.2	%		10.7	%
Share-based compensation expense		1.3	%		1.0	%				1.0	%		0.8	%
Total selling, general, and administrative expenses		12.3	%		11.5	%				12.2	%		11.5	%

Selling, general, and administrative expenses (“SG&A expenses”), excluding share-based compensation expense. For the three and nine months ended September 30, 2018, SG&A expenses, excluding share-based compensation expense, decreased $4.7 million, or 11.2%, and $7.6 million, or 6.2%, respectively, compared to the same periods of 2017. The decrease was primarily due to our restructuring efforts, discussed further below, which commenced in 2017, partially offset by the impact of currency rate movements.

Share-based compensation expense. For the three and nine months ended September 30, 2018, our share-based compensation expense increase was attributable to the amount and timing of share-based payment awards, net of forfeitures, 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 .

Table of Contents

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 nine and twelve months ended September 30, 2017 and December 31, 2017, respectively. During the three and nine months ended September 30, 2018, we implemented additional workforce reductions in an effort to continue our cost reduction initiative and incurred $1.1 million and $5.5 million of pre-tax expenses, respectively. During the remainder of 2018, our Restructuring Plan activities may include additional workforce reductions 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								Nine Months Ended
	September 30,								September 30,

	2018			2017			% Change		2018			2017			% Change
	(In thousands, excluding percentages)
Acquisition and divestiture-related expenses	$	—		$	2,889		(100.0)	%	$	2,633		$	15,338		(82.8)	%

Percentage of total revenues		—	%		0.7	%				0.3	%		1.3	%

Acquisition and divestiture-related expenses. For the nine months ended September 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 nine months ended September 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.

Goodwill and Intangible Asset Impairment

Goodwill and intangible asset impairment. During the three months ended September 30, 2017, as a result of an unexpected market shift in Australia caused by the announcement by its four largest banks to remove direct charges to all users at their ATMs, we recognized $140.0 million and $54.5 million in impairment charges to reduce the carrying values of goodwill and intangible assets, respectively, associated with our Australia & New Zealand segment. No impairment indicators were noted during the three and nine months ended September 30, 2018 based on the Company’s assessment of qualitative factors. For additional information related to this unexpected market shift in Australia, see Item 1. Financial Statements, Note 1. General and Basis of Presentation – (f) Goodwill and Intangible Assets .

Depreciation and Accretion Expense



	Three Months Ended								Nine Months Ended
	September 30,								September 30,

	2018			2017			% Change		2018			2017			% Change
	(In thousands, excluding percentages)
Depreciation and accretion expense	$	30,647		$	29,807		2.8	%	$	93,453		$	88,683		5.4	%

Percentage of total revenues		9.0	%		7.4	%				9.2	%		7.7	%

Depreciation and accretion expense. For the three and nine months ended September 30, 2018, depreciation and accretion expense increased $0.8 million, or 2.8%, and $4.8 million, or 5.4%, respectively, compared to the same periods

Table of Contents

of 2017. This increase was primarily due to capital additions during 2017, 2018, and foreign currency exchange rate movement.

Amortization of Intangible Assets


	Three Months Ended								Nine Months Ended
	September 30,								September 30,

	2018			2017			% Change		2018			2017			% Change
	(In thousands, excluding percentages)
Amortization of intangible assets	$	12,994		$	14,996		(13.4)	%	$	40,263		$	45,423		(11.4)	%

Percentage of total revenues		3.8	%		3.7	%				4.0	%		4.0	%

Amortization of intangible assets. For the three and nine months ended September 30, 2018, amortization of intangible assets decreased by $2.0 million, or 13.4%, and $5.2 million, or 11.4%, 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 & 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								Nine Months Ended
	September 30,								September 30,

	2018			2017			% Change		2018			2017			% Change
	(In thousands, excluding percentages)
Loss on disposal and impairment of assets	$	466		$	22,307		n/m	%	$	15,583		$	26,170		n/m	%

Percentage of total revenues		0.1	%		5.5	%				1.5	%		2.3	%

Loss on disposal and impairment of assets. During the three and nine months ended September 30, 2018, we recognized losses of $0.5 million, and $15.6 million, respectively, related to the disposal and impairment of assets . The losses on disposal and impairment of assets were primarily recognized during the six months ended June 30, 2018 upon our 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 disposals related to the exit from a leased facility in the U.K. that occurred in the three months ended March 31, 2018.

During the three and nine months ended September 30, 2017, we recognized losses of $22.3 million and $26.1 million, respectively, related to the disposal and impairment of assets. We recognized approximately $19 million of long-lived asset impairment losses during the three months ended September 30, 2017, responsive to the impairment indicators associated with our Australia & New Zealand reporting unit. The remaining losses were a result of other ATM asset disposals in the ordinary course of business. For additional information on the long-lived asset impairments recognized in 2017, see Note 1. Basis of Presentation and Summary of Significant Accounting Policies in our 2017 Form 10-K.

Table of Contents

Interest Expense, net


	Three Months Ended								Nine Months Ended
	September 30,								September 30,

	2018			2017			% Change		2018			2017			% Change
	(In thousands, excluding percentages)
Interest expense, net	$	8,852		$	9,743		(9.1)	%	$	27,185		$	25,760		5.5	%

Percentage of total revenues		2.6	%		2.4	%				2.7	%		2.3	%

Interest expense, net. For the three and nine months ended September 30, 2018, interest expense, net, decreased $0.9 million, or 9.1%, and for the nine months ended September 30, 2018 increased $1.4 million, or 5.5%. The increase for the nine months ended September 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 the issuances of these notes. The decrease for the three months ended September 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								Nine Months Ended
	September 30,								September 30,

	2018			2017			% Change		2018			2017			% Change
	(In thousands, excluding percentages)
Income tax expense (benefit)	$	7,854		$	(4,053)		n/m	%	$	10,409		$	(2,335)		n/m	%

Effective tax rate		47.2	%		2.3	%				51.6	%		1.4	%

Income tax expense . Our income tax expense for the three months ended September 30, 2018 totaled $7.9 million resulting in an effective tax rate of 47.2%, compared to an income tax benefit of approximately $4.1 million, and an effective tax rate of 2.3%, for the same period of 2017. The increase in the effective tax rate for the three and nine months ended September 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 additional tax expense related to share-based compensation in 2018, compared to an excess tax benefit in the same period of 2017, (iii) and the goodwill impairment recognized during the three and nine months ended September 30, 2017, resulting in a loss in earnings that was not deductible .

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

Table of Contents

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 24.6% and 24.9% for the three and nine months ended September 30, 2018, respectively, and 26.8% and 27.4% for the three and nine months ended September 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-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:

Table of Contents

Reconciliation of Net Income (Loss) 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				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
Net income (loss) attributable to controlling interests and available to common shareholders	$	8,781	$	(175,561)	$	9,780	$	(161,304)
Adjustments:
Interest expense, net		8,852		9,743		27,185		25,760
Amortization of deferred financing costs and note discount		3,397		3,195		10,060		9,317
Income tax expense (benefit)		7,854		(4,053)		10,409		(2,335)
Depreciation and accretion expense		30,647		29,807		93,453		88,683
Amortization of intangible assets		12,994		14,996		40,263		45,423
EBITDA	$	72,525	$	(121,873)	$	191,150	$	5,544

Add back:
Loss on disposal and impairment of assets		466		22,307		15,583		26,170
Other income (1)		(1,297)		(2,095)		(1,324)		(1,730)
Noncontrolling interests (2)		12		(9)		31		(19)
Share-based compensation expense		4,669		4,151		10,627		9,971
Restructuring expenses (3)		1,058		22		5,534		9,025
Acquisition and divestiture-related expenses (4)		—		2,889		2,633		15,338
Goodwill and intangible asset impairment (5)		—		194,521		—		194,521
Adjusted EBITDA	$	77,433	$	99,913	$	224,234	$	258,820
Less:
Depreciation and accretion expense (6)		30,646		29,805		93,451		88,677
Adjusted EBITA	$	46,787	$	70,108	$	130,783	$	170,143
Less:
Interest expense, net		8,852		9,743		27,185		25,760
Adjusted pre-tax income		37,935		60,365		103,598		144,383
Income tax expense (7)		9,332		16,178		25,789		39,595
Adjusted Net Income	$	28,603	$	44,187	$	77,809	$	104,788

Adjusted Net Income per share – basic	$	0.62	$	0.97	$	1.69	$	2.30
Adjusted Net Income per share – diluted	$	0.62	$	0.96	$	1.68	$	2.27

Weighted average shares outstanding – basic		46,073,739		45,662,543		45,945,728		45,597,558
Weighted average shares outstanding – diluted		46,476,787		46,197,178		46,386,523		46,238,070

⁽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 nine months ended September 30, 2018.

⁽⁵⁾

Goodwill and intangible asset impairments related to the Company’s Australia & New Zealand segment.

⁽⁶⁾

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.

⁽⁷⁾

For the three and nine months ended September 30, 2018, the non-GAAP tax rate used to calculate Adjusted Net Income was approximately 24.6% and 24.9%, respectively, and 26.8% and 27.4%, for the three and nine months ended September 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.

Table of Contents

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

(In thousands, excluding percentages)



Consolidated revenue:	Three Months Ended
	September 30,
	2018						2017		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	329,837	$	4,836	$	334,673	$	390,143	(15.5)	%	(14.2)	%
ATM product sales and other revenues		10,338		56		10,394		11,807	(12.4)		(12.0)
Total revenues	$	340,175	$	4,892	$	345,067	$	401,950	(15.4)	%	(14.2)	%


	Nine Months Ended
	September 30,
	2018						2017		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	978,789	$	(17,120)	$	961,669	$	1,105,191	(11.4)	%	(13.0)	%
ATM product sales and other revenues		38,557		(409)		38,148		39,443	(2.2)		(3.3)
Total revenues	$	1,017,346	$	(17,529)	$	999,817	$	1,144,634	(11.1)	%	(12.7)	%

North America revenue:


	Three Months Ended
	September 30,
	2018						2017		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	200,481	$	1,687	$	202,168	$	249,964	(19.8)	%	(19.1)	%
ATM product sales and other revenues		8,267		35		8,302		9,654	(14.4)		(14.0)
Total revenues	$	208,748	$	1,722	$	210,470	$	259,618	(19.6)	%	(18.9)	%


	Nine Months Ended
	September 30,
	2018						2017		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	593,400	$	(1,293)	$	592,107	$	719,341	(17.5)	%	(17.7)	%
ATM product sales and other revenues		32,026		(68)		31,958		33,191	(3.5)		(3.7)
Total revenues	$	625,426	$	(1,361)	$	624,065	$	752,532	(16.9)	%	(17.1)	%



Europe & Africa revenue:	Three Months Ended
	September 30,
	2018						2017		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	102,819	$	797	$	103,616	$	107,497	(4.4)	%	(3.6)	%
ATM product sales and other revenues		2,019		17		2,036		2,088	(3.3)		(2.5)
Total revenues	$	104,838	$	814	$	105,652	$	109,585	(4.3)	%	(3.6)	%

Table of Contents


	Nine Months Ended
	September 30,
	2018						2017		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	304,809	$	(16,817)	$	287,992	$	293,827	3.7	%	(2.0)	%
ATM product sales and other revenues		6,323		(343)		5,980		6,159	2.7		(2.9)
Total revenues	$	311,132	$	(17,160)	$	293,972	$	299,986	3.7	%	(2.0)	%



Australia & New Zealand revenue:	Three Months Ended
	September 30,
	2018						2017		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	29,417	$	2,352	$	31,769	$	35,368	(16.8)	%	(10.2)	%
ATM product sales and other revenues		52		5		57		65	(20.0)		(12.3)
Total revenues	$	29,469	$	2,357	$	31,826	$	35,433	(16.8)	%	(10.2)	%


	Nine Months Ended
	September 30,
	2018						2017		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	89,078	$	990	$	90,068	$	99,752	(10.7)	%	(9.7)	%
ATM product sales and other revenues		208		2		210		224	(7.1)		(6.3)
Total revenues	$	89,286	$	992	$	90,278	$	99,976	(10.7)	%	(9.7)	%

Table of Contents

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
	September 30,
	2018						2017		% Change
	Non - GAAP (1)		Foreign Currency Impact		Constant - Currency		Non - GAAP (1)		Non - GAAP (1)		Constant - Currency
Adjusted EBITDA	$	77,433	$	994	$	78,427	$	99,913	(22.5)	%	(21.5)	%

Adjusted Net Income	$	28,603	$	429	$	29,032	$	44,187	(35.3)	%	(34.3)	%

Adjusted Net Income per share – diluted (2)	$	0.62	$	—	$	0.62	$	0.96	(35.4)	%	(35.4)	%


	Nine Months Ended
	September 30,
	2018						2017		% Change
	Non - GAAP (1)		Foreign Currency Impact		Constant - Currency		Non - GAAP (1)		Non - GAAP (1)		Constant - Currency
Adjusted EBITDA	$	224,234	$	(5,059)	$	219,175	$	258,820	(13.4)	%	(15.3)	%

Adjusted Net Income	$	77,809	$	(2,042)	$	75,767	$	104,788	(25.7)	%	(27.7)	%

Adjusted Net Income per share – diluted (2)	$	1.68	$	(0.05)	$	1.63	$	2.27	(26.0)	%	(28.2)	%

(1) As reported on the Reconciliation of Net Income (Loss) 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 46,476,787 and 46,197,178 for the three months ended September 30, 2018 and 2017, respectively, and 46,386,523 and 46,238,070 for the nine months ended September 30, 2018 and 2017 respectively.

Reconciliation of Adjusted Free Cash Flow


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(In thousands)
Net cash provided by operating activities	$	74,807	$	76,105	$	184,582	$	172,434
Restricted cash settlement activity (1)		(361)		3,598		(25,709)		(8,151)
Adjusted cash provided by operating activities		74,446		79,703		158,873		164,283
Cash used in investing activities, excluding acquisitions and divestitures (2)		(26,675)		(41,556)		(73,357)		(111,424)
Adjusted free cash flow	$	47,771	$	38,147	$	85,516	$	52,859

⁽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.

Table of Contents

Liquidity and Capital Resources

Overview

As of September 30, 2018, we had $40.4 million in cash and cash equivalents, and $835.8 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.

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 $184.6 million during the nine months ended September 30, 2018, compared to $172.4 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 nine months is primarily attributable to an increase in restricted cash and year-over-year improvements in working capital.

Investing Activities

Net cash used in investing activities totaled $73.4 million during the nine months ended September 30, 2018, compared to $596.0 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 nine months ended September 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 September 30, 2018, our capital expenditures were $73.4 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 $96.2 million during the nine months ended September 30, 2018, compared to cash provided by financing activities of $427.3 million during the same period of 2017. During 2018, we have used excess available cash to pay down borrowings under our revolving credit facility; whereas in 2017, we entered into new long-term debt and borrowed under our revolving credit facility to fund the DCPayments and Spark acquisitions.

Table of Contents

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.

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 September 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	%	October 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:

Table of Contents

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 September 30, 2018 and assuming a 100 basis point increase in interest rates (in millions):


North America
Average outstanding vault cash balance	$	1,702
Interest rate swap contracts fixed notional amount		(1,450)
Residual unhedged outstanding vault cash balance	$	252

Additional annual interest incurred on 100 basis point increase	$	2.52

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 September 30, 2018 and assuming a 100 basis point increase in interest rates (in millions):


Europe & Africa
Average outstanding vault cash balance	$	1,182
Interest rate swap contracts fixed notional amount		(716)
Residual unhedged outstanding vault cash balance	$	466

Additional annual interest incurred on 100 basis point increase	$	4.66

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 September 30, 2018 and assuming a 100 basis point increase in interest rates (in millions):


Australia
Average outstanding vault cash balance	$	151
Interest rate swap contracts fixed notional amount		(25)
Residual unhedged outstanding vault cash balance	$	126

Additional annual interest incurred on 100 basis point increase	$	1.26

As of September 30, 2018, we had an asset of $37.3 million and a liability of $0.4 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

Table of Contents

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 in the accompanying Consolidated Balance Sheets. The effective portion is reclassified 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 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 September 30, 2018, our outstanding borrowings under our revolving credit facility, which carries a floating interest rate, were $30.9 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 in the accompanying Consolidated Balance Sheets. As of September 30, 2018, this accumulated translation loss totaled $48.7 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 nine months ended September 30, 2018 compared to the same periods of 2017. Our total revenues during the three and the nine months ended September 30, 2018 would have been higher by $4.9 million and lower by $17.5 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 $2.0 million and $4.5 million, respectively, for the three and nine months ended September 30, 2018. We have entered into foreign currency forward contracts to mitigate a portion 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

Table of Contents

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 executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of September 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 September 30, 2018 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The disclosure responsive to this Item related to our material pending legal and regulatory proceedings and settlements , is incorporated by reference herein from Part I. Financial Information, Item 1. Financial Statements, Note 15. Commitments and Contingencies – Legal Matters.

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.

Table of Contents

Item 6. Exhibits


Exhibit Number		Description

10.1*		Employment agreement by and between Cardtronics USA, Inc and Dan Antilley, dated effective as of October 9, 2018.
10.2*		Employment agreement by and between Cardtronics USA, Inc and Brian Bailey, dated effective as of October 10, 2018.
10.3*		Employment agreement by and between Cardtronics USA, Inc and Stuart Mackinnon, dated effective as of October 9, 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 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 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.

Table of Contents

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

November 1, 2018		/s/ Gary W. Ferrera
		Gary W. Ferrera
		Chief Financial Officer
		(Duly Authorized Officer and
		Principal Financial Officer)

November 1, 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 ” ), dated October 9, 2018 (the “ Effective Date ”) is made by and between Cardtronics USA, Inc., a Delaware corporation (together with any successor thereof, the “ Company ”), and Dan P. Antilley ( “ Executive ” ).

WITNESSETH:

WHEREAS , the Company desires to employ Executive on the terms and conditions, and for the consideration hereinafter set forth, and Executive desires to be employed by the Company on such terms and conditions and for such consideration.

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and obligations contained herein, the sufficiency of which is hereby acknowledged by the parties, the Company and Executive agree as follows:

ARTICLE I

DEFINITIONS

In addition to the terms otherwise defined herein, for purposes of this Agreement the following capitalized words shall have the following meanings:

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

1.2 “ Average Annual Bonus ” shall mean the Executive’s Annual Bonus paid (or payable) at target.

1.3 “ Beneficial Owner ” shall have the meaning set forth in Rule 13d-3 under the U.S. Securities Exchange Act of 1934, as amended from time to time (the “ Exchange Act ”).

1.4 “ Board ” shall mean the Board of Directors of the Parent Company.

1.5 “ 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 the Executive and the Company or any of its Affiliates, (f) committed an act of theft, fraud, 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.

1.6 “ Change in Control ” shall mean and shall be deemed to have occurred if any event set forth in any one of the following paragraphs shall have occurred:

(a) the consummation of a merger of, or other business combination by, the Parent Company with or involving another entity; a reorganization, reincorporation, amalgamation, scheme of arrangement or consolidation involving the Parent Company; or the sale of all or substantially all of the Parent Company’s or the Company’s Assets to another entity (any of which, a “ Corporate Transaction ”); unless, following such Corporate Transaction, (a) the holders of equity securities of the Parent Company immediately prior to such transaction beneficially own, directly or indirectly, immediately after such transaction, equity securities of the resulting or surviving parent entity, the transferee entity or any new direct or indirect parent entity of the Parent Company resulting from or surviving any such transaction (such entity, the “ Successor Entity ”) entitled to 70% or more of the votes then eligible to be cast in the election of directors generally (or

comparable governing body) of the Successor Entity in substantially the same proportion that they owned the equity securities of the Parent Company immediately prior to such transaction or (b) at least a majority of the members of the board of directors (or comparable governing body) of the Successor Entity immediately following the Corporate Transaction were Incumbent Directors (defined below) at the time of the execution of the initial agreement providing for such Corporate Transaction;

(b) upon the dissolution or liquidation of the Parent Company, other than a liquidation or dissolution into any entity in which the holders of equity securities of the Parent Company immediately prior to such liquidation or dissolution beneficially own, directly or indirectly, immediately after such liquidation or dissolution equity securities of the entity into which the Parent Company was liquidated or dissolved entitled to 70% or more of the votes then eligible to be cast in the election of directors generally (or comparable governing body) of such entity, in substantially the same proportion that they owned the equity securities of the Parent Company immediately prior to such liquidation or dissolution;

(c) when any person or entity, including a “group” as contemplated by Section 13(d)(3) of the Exchange Act, but excluding any employee benefit plan sponsored by the Parent Company (or any related trust thereto), acquires or gains ownership or control (including, without limitation, power to vote) of more than 30% of the combined voting power of the outstanding equity securities of the Parent Company, other than any entity in which the holders of equity securities of the Parent Company immediately prior to such acquisition beneficially own, directly or indirectly, immediately after such acquisition, equity securities of the acquiring entity entitled to 70% or more of the votes then eligible to be cast in the election of directors generally (or comparable governing body) of the acquiring entity, in substantially the same proportion that they owned the equity securities of the Parent Company immediately prior to such acquisition or any employee benefit plan sponsored by any such entity (or any related trust thereto); or

(d) during any period of twelve consecutive months the following individuals (the “ Incumbent Directors ”) cease for any reason to constitute a majority of the number of directors then serving on the Board: individuals who, on the Effective Date, constitute the Board and any new director whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least a majority of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended (other than such new director whose initial assumption of office is in connection with an actual or threatened election contest, including, but not limited to, a consent or proxy solicitation, relating to the election of directors of the Company by or on behalf of a Person other than the Board).

1.7 “ Code ” shall mean the Internal Revenue Code of 1986, as amended.

1.8 “ Company’s Assets ” shall mean the assets (of any kind) owned by the Parent Company, including, without limitation, the securities of the Parent Company’s Subsidiaries and any of the assets owned by the Parent Company’s Subsidiaries.

1.9 “ Date of Termination ” shall mean the date of Executive’s Separation From Service set forth in the Notice of Termination or the date of death, as applicable.

1.10 “ Entity ” shall mean any corporation, partnership, association, joint-stock company, limited liability company, trust, unincorporated organization or other business entity.

1.11 “ Good Reason ” shall mean the occurrence of any of the following events:

(a) a diminution in Executive’s Base Salary of 5% 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 (including, in connection with a Change in Control or other Corporate Transaction, Executive being assigned to any position (including offices and reporting requirements), authority, duties or responsibilities that are not at or with the Parent Company, engaged in the business of the successor to the Parent Company or the corporation or other Entity surviving or resulting from such Corporate Transaction), including, without limitation, Executive’s ceasing to be an officer of a publicly traded company;

(c) in connection with a Change in Control or other Corporate Transaction, the involuntary relocation of the geographic location of Executive’s principal place of employment by more than 50 miles from its then current location;

(d) 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 1.11 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 1.11(a ), ( b ), ( c ), or ( d ) 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 10.1 within 90 days of the initial existence of the condition specified in the Notice of Breach; 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 1.11 within 30 days of the receipt of the Notice of Breach.

1.12 “ Impaired ” or “ Impairment ” means:

(a) the Executive being eligible for the Company’s (or its Affiliate’s) long-term disability benefits, if any are available to Executive; or

(b) the 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 the Executive having the right to approve such selection (however, if the 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).

1.13 “ Notice of Breach ” shall mean a written notice delivered to the other party within the time period required under the definition of “Cause” or “Good Reason,” as applicable, that (a) indicates, as applicable, the specific provision in this Agreement that the party contends the other party has breached or the specific clause of the definition of “Cause” or “Good Reason” that the party alleges to exist, and (b) to the extent applicable, sets forth in reasonable detail the facts and circumstances Executive or the Company, as applicable, claims provide the basis for such breach or other condition.

1.14 “ Notice of Termination ” shall mean a written notice delivered to the other party indicating the specific termination provision in this Agreement relied upon for termination of Executive’s employment and the Date of Termination and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and shall include a Notice of Breach, but only at the time and to the extent such Notice of Breach becomes a Notice of Termination under Section 3.3 .

1.15 “ Parent Company ” shall mean Cardtronics plc, a public limited company organized under English law, or any successor thereof, including any Entity into which Cardtronics plc is merged, consolidated or amalgamated, including, without limitation, any Entity otherwise resulting from a Corporate Transaction.

1.16 “ Person ” shall mean (a) an individual or Entity and (b) for purposes of the definition of “Change in Control” and related provisions shall have the meaning provided in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Parent Company or any of its Subsidiaries, (ii) a trustee or other fiduciary holding securities under a Benefit Plan of the Parent Company or any of its Affiliated companies, (iii) an underwriter temporarily holding securities pursuant to an offering by the Parent Company of such securities, or (iv) an Entity owned, directly or indirectly, by the shareholders of the Parent Company in substantially the same proportion as their ownership of shares of the Parent Company.

1.17 “ Section 409A Payment Date ” shall have the meaning set forth in Section 7.2(b) .

1.18 “ Subsidiary ” shall mean any direct or indirect majority-owned subsidiary of the Parent Company or any majority-owned subsidiary thereof, or any other Entity in which the Parent Company owns, directly or indirectly, a significant financial interest provided that the Chief Executive Officer of the Parent Company designates such Entity to be a Subsidiary for the purposes of this Agreement.

ARTICLE II

EMPLOYMENT AND DUTIES

2.1 Employment; Commencement Date . Executive commenced employment with the Company on May 30, 2017 (the “ Commencement Date ”). From and after such date, the Company agrees to employ Executive, and Executive agrees to be employed by the Company. With effect from the Effective Date, Executive agrees to be employed by the Company pursuant the terms of this Agreement and continuing for the period of time set forth in Article III , subject to the terms and conditions of this Agreement.

2.2 Positions . From and after the Commencement Date, the Company shall employ Executive in the position of Chief Information Security Officer (“CISO”) of the Company or in such other position or positions as the parties mutually may agree, and Executive shall report to the Chief Executive Officer (“CEO”) of the Company.

2.3 Duties and Services . Executive agrees to serve in the position(s) referred to in Section 2.2 and to perform diligently and to the best of Executive’s abilities the duties and services appertaining to such position(s) as well as such additional duties and services appropriate to such position(s) as may be assigned, from time to time, by the Company. Executive’s employment shall also be subject to the policies maintained and established by the Company and its Affiliates that are of general applicability to the Company’s executive employees, as such policies may be amended from time to time.

2.4 Other Interests . Executive agrees, during the period of Executive’s employment by the Company, to devote substantially all of Executive’s business time, energy and best efforts to the business and affairs of the Company and its Affiliates. Notwithstanding the foregoing, the parties acknowledge and agree that Executive may (a) engage in and manage Executive’s passive personal investments, (b) engage in charitable and civic activities, (c) at the sole discretion of the Board, serve on the boards of other for- and non-profit Entities, and (d) engage in de minimis other activities such as non-commercial speeches; provided, however , that such activities shall be permitted solely if such activities do not conflict with the business and affairs of the Company or interfere with Executive’s performance of Executive’s duties hereunder or any restrictive covenant in favor of the Company or its Affiliate, in each case, as determined by the Company.

2.5 Duty of Loyalty . Executive acknowledges and agrees that Executive owes a fiduciary duty of loyalty, fidelity and allegiance to act in the best interests of the Company and to do no act that would materially injure the business, interests or reputation of the Company or any of its Affiliates. In keeping with these duties, Executive shall make full disclosure to the Company of all business opportunities pertaining to the Company’s business and shall not appropriate for Executive’s own benefit business opportunities concerning the subject matter of the fiduciary relationship.

ARTICLE III

TERM AND TERMINATION OF EMPLOYMENT

3.1 Term . Subject to the remaining terms of this Article III , this Agreement shall be for an initial term that begins on the Commencement Date and continues in effect through the fourth anniversary of the Commencement Date (the “ Initial Term ” ) and, unless terminated sooner as herein provided, shall continue on a year ‑ to ‑ year basis (each a “ Renewal Term ” and, together with the Initial Term, the “ Term ”). If the Company or Executive elects not to renew the Term under this Agreement for a Renewal Term, the Company or Executive must provide a Notice of Termination to the other party at least 90 days before the expiration of the then-current Initial Term or Renewal Term, as applicable. In the event that one party provides the other party with a Notice of Termination pursuant to this Section 3.1 , no further automatic extensions will occur and this Agreement and Executive’s employment with the Company shall terminate at the end of the then-existing Initial Term or Renewal Term, as applicable.

3.2 Company’s Right to Terminate . Notwithstanding the provisions of Section 3.1 , the Company may terminate Executive’s employment and this Agreement during the Term immediately and at any time for any of the following reasons by providing Executive with a Notice of Termination:

(a) Impairment: if the Executive is Impaired, the Company may, at its sole discretion, elect not to immediately terminate the Executive but rather to 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 onset of any Impairment until Executive’s employment with the Company is terminated or the Executive otherwise returns to full duties. 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, provided further that, if Executive recovers from the Impairment prior to the date Executive would qualify for long term disability benefits and the Company does not return Executive to Executive’s position, Executive shall have the right to resign for Good Reason in accordance with the terms

of this agreement;

(b) Death: automatically upon Executive’s death;

(d) Discretion of the Company: for any other reason whatsoever (other than as set forth in Sections 3.2(a) , (b) or (c) or for no reason at all, in the sole discretion of the Board.

3.3 Executive’s Right to Terminate . Notwithstanding the provisions of Section 3.1 , Executive shall have the right to terminate Executive’s employment and this Agreement during the Term for Good Reason or for any other reason whatsoever or for no reason at all, in the sole discretion of Executive, by providing the Company with a Notice of Termination. In the case of a termination of employment by Executive without Good Reason, the Date of Termination specified in the Notice of Termination shall not be less than 90 days from the date such Notice of Termination is provided, and the Company may require a Date of Termination earlier than that specified in the Notice of Termination (and, if such earlier Date of Termination is so required by the Company, that shall be the “Date of Termination” as defined in Section 1.1 , and it shall not otherwise change the basis for Executive’s termination nor be construed or interpreted as a termination of employment pursuant to Section 3.1 or Section 3.2 ). In the event Executive intends to terminate employment with the Company for Good Reason because the Company failed to cure the event described in the Notice of Breach within 30 days of receipt of the Notice of Breach, the Notice of Breach shall automatically be deemed a Notice of Termination, effective immediately upon the expiration of the cure period described in Section 1.11 . If Executive fails to provide the Company with the requisite Notice of Termination under this Section 3.3 , Executive forfeits the right to any contingent future payments under this Agreement.

3.4 Deemed Resignations . Unless otherwise agreed to in writing by the Company and Executive prior to the termination of Executive’s employment, any termination of Executive’s employment shall constitute an automatic resignation of Executive as an officer of the Company and each Affiliate of the Company (including the Parent Company), and an automatic resignation of Executive from the Board (if applicable) and from the board of directors of the Company and any Affiliate of the Company and from the board of directors or similar governing body of any Entity in which the Company or any Affiliate holds an equity interest and with respect to which board or similar governing body Executive serves as the Company’s or such Affiliate’s designee or other representative.

3.5 Meaning of Termination of Employment . For all purposes of this Agreement, Executive shall be considered to have terminated employment with the Company only when Executive incurs a “separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code and applicable administrative guidance issued thereunder (“ Separation From Service ”). For purposes of any such provision of this Agreement relating to any such payments or benefits, references to a “termination,” “termination of employment” or like terms shall mean “separation from service”.

ARTICLE IV

COMPENSATION AND BENEFITS

4.1 Base Salary . During the Term of this Agreement, Executive shall receive a minimum, annualized gross base salary of $425,000 (the “ Base Salary ” ). Executive’s Base Salary shall be paid in substantially equal installments in accordance with the Company’s standard policy regarding payment of compensation to executives but no less frequently than monthly.

4.2 Cash Incentive Plan Awards . Executive shall be eligible to receive an annual bonus in respect of each calendar year during the Term ( “ Annual Bonus ” ) based on criteria determined in the sole discretion of the Board (or a committee thereof) as part of the Cardtronics, Inc. Annual Executive Cash Incentive Plan (and/or other then-current or similar or successor plan, the “ AECIP ”) and subject to the terms and conditions of the AECIP, it being understood that (a) the target Annual Bonus at planned or targeted levels of performance shall equal 100% of Executive’s Base Salary and (b) the actual amount of each Annual Bonus to be paid to the Executive shall be determined in the sole discretion of the Board (or a committee thereof) and may range between 0% and 200% of the target Annual Bonus. The Company shall pay each Annual Bonus with respect to a calendar year no later than March 15 of the calendar year following the year to which the Annual Bonus relates, provided that (except as otherwise provided in Section 7.1(b) ) Executive is employed by the Company on such date of payment. If Executive has not been employed by the Company since January 1 of the year that includes the Effective Date, then the Annual Bonus for such year shall be prorated based on the ratio of the number of days during such calendar year that Executive was employed by the Company to the number of days in such calendar year.

4.3 Stock Incentive Plan Awards. Executive shall be eligible to receive an annual equity award each calendar year during the Term (“ Annual Equity Award ”) with a grant date value at target equal to 125% of Base Salary, based on criteria determined in the sole discretion of the Board (or a committee thereof) as part of the Cardtronics, Inc. Third Amended and Restated 2007 Stock Incentive Plan (and/or other then-current or similar or successor plan, “ Stock Incentive Plan ”).

4.4 Other Perquisites . During the Term, the Company shall provide Executive with substantially the same perquisite benefits made available to similarly situated executive officers of the Company generally, from time to time.

4.5 Expenses . The Company shall reimburse Executive for all reasonable business expenses incurred by Executive in performing services during the Term, including all expenses of travel and living expenses while away from home on business or at the request of and in the service of the Company; provided , in each case, that such expenses are incurred and accounted for in accordance with the policies and procedures established by the Company from time to time. Any reimbursement of expenses pursuant to this Section 4.6 shall be made by the Company upon or as soon as practicable following receipt of supporting documentation reasonably satisfactory to the Company (but in any event not later than the close of Executive’s taxable year following the taxable year in which the expense is incurred by Executive).

4.6 Vacation and Sick Leave . During the Term, Executive shall be entitled to (a) sick leave in accordance with the Company’s policies applicable to similarly situated executive officers of the Company from time to time and (b) 4 weeks paid vacation each calendar year (up to 40 hours of which may be carried forward to a succeeding year).

4.7 Offices . Subject to Articles II , III and IV , Executive agrees to serve without additional compensation, if elected or appointed thereto, as an officer (in addition to the position specified in Section 2.2 ) or director of the Company or any of the Company’s Affiliates and as a member of any committees of the board of directors of any such Entities and in one or more executive positions of any of the Company’s Affiliates.

ARTICLE V

PROTECTION OF INFORMATION

5.1 Work Product. For purposes of this Article V , the term “the Company” shall include the Company and any of its Affiliates (including the Parent Company), and any 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.

5.2 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.

5.3 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 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 Article V . 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 5.3 . 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 Article V 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 5.3 are referred to herein as “Protected Activities.”

5.4 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 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.

5.5 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.

5.6 Remedies . Executive acknowledges that money damages would not be a sufficient remedy for any breach of

this Article V by Executive, and the Company or its Affiliates shall be entitled to enforce the provisions of this Article V by immediately terminating payments then owing to, or the rights of, Executive under Section 7.1(b)(i ) through ( v ) 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 Article V 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 Article V , 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.

5.7 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 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 5.7 will govern to the extent it may conflict with any other provision of this Agreement.

ARTICLE VI

STATEMENTS CONCERNING THE COMPANY

6.1 Statements by Executive. 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 6.1 shall not be applied to limit or interfere with Executive’s right to engage in Protected Activities as defined in Section 5.3. 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.

ARTICLE VII

EFFECT OF TERMINATION OF EMPLOYMENT ON COMPENSATION

7.1 Effect of Termination of Employment on Compensation – Impairment and Death, Cause, Resignation without Good Reason and election by Executive not to renew the Initial Term or any Renewal Term

(a) If Executive’s employment hereunder shall terminate for any reason described in Section 3.2(a) ( Impairment ) , 3.2(b) ( Death ) , 3.2(c) ( Cause ) , pursuant to Executive’s resignation other than for Good Reason, or by Executive’s election not to renew the Initial Term or any Renewal Term in accordance with Section 3.1 , then all compensation and all benefits to Executive hereunder shall terminate contemporaneously with such termination of employment, except that Executive shall be entitled to:

(i) payment of all accrued and unpaid Base Salary to the Date of Termination;

(ii) except in the case of a termination under Section 3.2(c) (Cause), any unpaid Annual Bonus for the calendar year ending prior to the Date of Termination, which amount shall be payable in a lump-sum on the date such annual bonuses are paid to executives who have continued employment with the Company (but in no event later than March 15th of the calendar year following the calendar year to which such Annual Bonus relates);

(iii) reimbursement for all incurred but unreimbursed expenses for which Executive is entitled to reimbursement in accordance with Section 4.5; and

(iv) benefits to which Executive is entitled under the terms of any applicable benefit plan or program (other than any severance plan or program).

(b) In addition, if Executive’s employment hereunder is terminated pursuant to Section 3.2(a) ( Impairment ) or

3.2(b) ( Death ) , subject to the Executive’s or Executive’s representative’s or estate’s, as applicable, delivery, within 30 days (or 45 days if the Company determines necessary and set forth in the Release (defined below)) after the date of such termination of employment, of an executed release substantially in the form of the release attached as Appendix A (the “ Release ”) and subject to Executive’s or Executive’s representative’s or estate’s, as applicable, compliance with all of the surviving provisions of this Agreement and non-revocation of the Release, the Executive’s outstanding equity awards shall be treated as follows, unless the applicable award agreement provides for more favorable treatment:

(i) any sign-on or one-time special equity awards that were not awarded to the Executive as part of the Company’s annual LTIP, shall fully vest as of the Date of Termination,

(ii) any equity awards granted as part of the annual LTIP that vest solely based on continued employment or service that would have, but for the termination of the Executive’s employment, vested in the 12 months immediately following the Date of Termination, shall vest as of the Date of Termination,

(iii) awards that vest solely or in part based on performance goals:

(A) for a termination of employment during the performance period, such awards shall be deemed earned at the target level of performance and a pro-rata number of awards shall vest based on the number of full and partial months the Executive was employed within the performance period over the number of total months in the performance period; and

(B) for a termination of employment following the end of a performance period applicable to an award, any awards earned during the performance period shall fully vest.

7.2 Effect of Termination of Employment on Compensation – Resignation for Good Reason or Discretion of the Company without Cause other than within 24 Months Following a Change in Control

(a) If Executive’s employment hereunder shall terminate pursuant to Executive’s resignation for Good Reason or by action of the Company pursuant to Section 3.2(d) ( Discretion of the Company ) (which includes the Company’s election not to renew the Initial Term or any Renewal Term in accordance with Section 3.1 ), then all compensation and all benefits to Executive hereunder shall terminate contemporaneously with such termination of employment, except that Executive shall be entitled to all payments set forth in Section 7.1(a) , and subject to Executive’s delivery, within 30 days (or 45 days if the Company determines necessary and set forth in the Release) after the date of Executive’s termination of employment, of an executed release substantially in the form of the Release and subject to Executive’s compliance with all of the surviving provisions of this Agreement and non-revocation of the Release, Executive shall receive the following additional compensation and benefits from the Company (but no other compensation or benefits after such termination):

(i) the Company shall pay to Executive a bonus for the calendar year in which the Date of Termination occurs in an amount equal to the Annual Bonus for such year as determined in good faith by the Board in accordance with the criteria established pursuant to Section 4.2 and based on the Company’s performance for such year, which amount shall be prorated through and including the Date of Termination (based on the ratio of the number of days Executive was employed by the Company during such year to the number of days in such year), payable in a lump-sum on the date such annual bonuses are paid to executives who have continued employment with the Company (but in no event later than March 15th of the calendar year following the calendar year to which such Annual Bonus relates);

(ii) the Company shall pay to Executive an amount equal to one (1) times the sum of Executive’s Base Salary as of the Date of Termination and the Average Annual Bonus, which amount shall be paid in substantially equal installments in accordance with the Company’s standard payroll practices over the 12 month period following the Date of Termination; provided that the first payment shall commence on the first payroll date that falls on or immediately following the 60th day after Executive’s Date of Termination and shall include any amounts otherwise due prior thereto;

(iii) a lump sum payment on the first payroll date that falls on or immediately following the 60th day after Executive’s Date of Termination equal to the product of (i) the monthly cost of the premium for coverage under the Company’s group health plans under the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (“ COBRA ”), as determined by the Company on the Date of Termination and (ii) eighteen (18); and

(iv) notwithstanding anything to the contrary in the applicable award agreement, unless the applicable award agreement provides for more favorable treatment:

(A) any sign-on or one-time special equity awards that were not awarded to the Executive as part of the Company’s annual LTIP, shall fully vest as of the Date of Termination,

(B) any equity awards granted as part of the annual LTIP that vest solely based on continued employment or service that would have, but for the termination of the Executive’s employment, vested in the 12 months immediately following the Date of Termination, shall vest as of the Date of Termination,

(I) for a termination of employment during the first 12 calendar months of a performance period applicable to an award, such awards shall be forfeited;

(II) for a termination of employment following the end of the first 12 calendar months of a performance period, but prior to end of that performance period, such awards shall be earned at the actual level of performance and a pro-rata number of awards based on the number of full and partial months the Executive was employed within the performance period over the number of total months in the performance period shall vest in accordance with the terms of the relevant award; and

(III) for a termination of employment following the end of the performance period applicable to an award, any awards earned during that performance period shall fully vest as of the Date of Termination.

7.3 Effect of Termination of Employment on Compensation – Resignation for Good Reason or Discretion of the Company without Cause within 24 Months Following a Change in Control.

(a) If Executive’s employment hereunder shall terminate pursuant to Executive’s resignation for Good Reason or by action of the Company pursuant to Section 3.2(d) ( Discretion of the Company ) (which includes the Company’s election not to renew the Initial Term or any Renewal Term in accordance with Section 3.1 ), in each case, within twenty-four (24) months following a Change in Control, then all compensation and all benefits to Executive hereunder shall terminate contemporaneously with such termination of employment, except that Executive shall be entitled to all payments set forth in Section 7.1(a) , and subject to Executive’s delivery, within 30 days (or 45 days if the Company determines necessary and set forth in the Release) after the date of Executive’s termination of employment, of an executed release substantially in the form of the Release and subject to Executive’s compliance with all of the surviving provisions of this Agreement and non-revocation of the Release, Executive shall receive the following additional compensation and benefits from the Company (but no other compensation or benefits after such termination):

(i) the Company shall pay to Executive a bonus for the calendar year in which the Date of Termination occurs in an amount equal to the Annual Bonus for such year at target, which amount shall be prorated through and including the Date of Termination (based on the ratio of the number of days Executive was employed by the Company during such year to the number of days in such year), payable in a lump-sum on the first payroll date that falls on or immediately following the 60 th day after Executive’s Date of Termination;

(ii) the Company shall pay to Executive an amount equal to two times the sum of Executive’s Base Salary as of the Date of Termination and the Average Annual Bonus, in a lump sum on the first payroll date that falls on or immediately following the 60th days after Executive’s Date of Termination;

(iii) a lump sum payment on the first payroll date that falls on or immediately following the 60th day after Executive’s Date of Termination equal to the product of (i) the monthly cost of the premium for coverage under the Company’s group health plans under COBRA, as determined by the Company on the Date of Termination and (ii) eighteen (18); and

(iv) notwithstanding anything to the contrary in the applicable award agreement, unless the applicable award agreement provides for more favorable treatment and provided the applicable stock incentive plan allows: (A) any sign-on or one-time special equity awards that were not awarded to the Executive as part of the Company’s annual LTIP, shall fully vest as of the Date of Termination, (B) any equity awards granted as part of the annual LTIP that vest solely based on continued employment or service that would have, but for the termination of the Executive’s employment, vested following the Date of Termination, shall fully vest as of the Date of Termination, (C) equity awards granted as part of the annual LTIP that vest solely or in part based on performance goals, (1) for a termination of employment during the performance period applicable to an award, such awards shall be deemed earned at the greater of actual or target level of performance and any time-vesting condition shall be satisfied as of the Date of Termination and (2) for a termination of employment following the end of the performance period applicable to an

award, any awards earned during the performance period, and that would have, but for the termination of the Executive’s employment, vested following the Date of Termination, shall fully vest as of the Date of Termination. In the event the applicable stock incentive plan does not allow for vesting of any award as outlined herein, Executive shall be entitled to the most favorable treatment for vesting of that award available under the applicable stock incentive plan.

The payments and benefits set forth in this Section 7.1, 7.2 and 7.3, as applicable, shall be the Executive’s sole right to severance or termination pay.

7.4 Section 409A of the Code .

(a) It is the intention of the parties that this Agreement comply with the requirements of Section 409A of the Code and applicable administrative guidance issued thereunder. Accordingly, to the extent there is any ambiguity as to whether one or more provisions of this Agreement would otherwise contravene the applicable requirements or limitations of Section 409A of the Code, then those provisions shall be interpreted and applied in a manner that does not result in an imposition of a tax or penalty under Section 409A of the Code. In no event may Executive, directly or indirectly, designate the calendar year of a payment. Nothing contained in this Agreement shall constitute any representation or warranty by the Company regarding compliance with Section 409A of the Code. Neither the Company nor its directors, officers, employees or advisers shall be liable to Executive (or any individual claiming a benefit through Executive) for any tax, interest or penalties Executive may owe as a result of compensation or benefits paid under this Agreement, and the Company shall have no obligation to indemnify or otherwise protect Executive from the obligation to pay any taxes pursuant to Section 409A of the Code.

(b) Notwithstanding any provision to the contrary in this Agreement, no payments or benefits to which Executive becomes entitled under this Article VII and which constitute deferred compensation within the meaning of Section 409A of the Code shall be made or paid to Executive prior to the earlier of (i) the first business day of the seventh month following the date of Executive’s termination of employment or (ii) the date of Executive’s death ((i) or (ii), as applicable, the “ Section 409A Payment Date ”), if (x) Executive is deemed on termination of employment a “specified employee” within the meaning of that term under Section 409A of the Code, (y) the stock of the Parent Company or any successor Entity is publicly traded on an established market and (z) such delayed commencement is otherwise required in order to avoid a prohibited distribution under Section 409A(a)(2) of the Code. Upon the expiration of the applicable delay period, all payments or benefits delayed pursuant to this provision shall be paid in a lump sum to Executive, and any remaining payments or benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

(c) For purposes of Section 409A of the Code, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. 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 days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.

(d) The following provisions shall apply to such reimbursements and any other reimbursements or in-kind benefits provided pursuant to this Agreement in order to assure that such reimbursements do not create a deferred compensation arrangement subject to Section 409A of the Code: (i) the amount of reimbursements or in-kind benefits to which Executive may become entitled in any one calendar year shall not affect the amount of expenses eligible for reimbursement or in-kind benefits provided hereunder in any other calendar year, (ii) each reimbursement to which Executive becomes entitled shall be made no later than the close of business of the calendar year following the calendar year in which the reimbursable expense is incurred; and (iii) executive’s right to reimbursement or in-kind benefits cannot be liquidated or exchanged for any other benefit or payment.

ARTICLE VIII

NON-COMPETITION AGREEMENT

8.1 Definitions . As used in this Article VIII , the following terms shall have the following meanings:

“ 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.

“ 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.

“ Governmental Authority ” means any governmental, quasi-governmental, state, county, city or other political subdivision of the United States or any other country, or any agency, court or instrumentality, foreign or domestic, or statutory or regulatory body thereof.

“ 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 Governmental Authority.

“ Prohibited Period ” means the period during which Executive is employed by the Company hereunder and a period of two (2) years following the termination of Executive’s employment with the Company.

“ 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.

8.2 Non-Competition; Non-Solicitation. Executive and the Company agree to the non-competition and non-solicitation provisions of this Article VIII: (i) in consideration for the Confidential Information provided by the Company to Executive pursuant to Article V; (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 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 8.2 are ancillary or a part of as contemplated by TEX. BUS. & COM. CODE ANN. Section 15.50-15.52.

(a) Subject to the exceptions set forth in Section 8.2(b) , 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.

(b) Notwithstanding the restrictions contained in Section 8.2(a) , 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 8.2(a) , 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 8.2(a) 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.

(c) 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 8.2(c) 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).

(d) Executive may seek the written consent of the Company, which may be withheld for any reason whatsoever or for no reason at all, to waive the provisions of this Article VIII on a case-by-case basis.

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 Article VIII 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 Article VIII , 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.

8.4 Reasonableness; Enforcement . Executive hereby represents to the Company that Executive has read and understands, and agrees to be bound by, the terms of this Article VIII . Executive and the Company understand and agree that the purpose of the provisions of this Article VIII 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 Article VIII 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 Article VIII 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 Article VIII invalid or unenforceable.

8.5 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 Article VIII 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 Article VIII in lieu of severing such unenforceable provision in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Article VIII , 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 Article VIII , 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.

ARTICLE IX

DISPUTE RESOLUTION

9.1 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; provided, however , that any party to this Agreement may seek provisional relief, including temporary restraining orders, temporary protective orders, and preliminary injunctive relief, pending arbitration or in aid of arbitration, or both, against the other parties hereto in federal and state courts of competent jurisdiction and provided, further , that any party to this Agreement may seek to enforce, confirm, modify, or vacate an arbitration award in any federal and state court of competent jurisdiction.

(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 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.

9.2 Arbitration shall proceed solely on an individual basis without the right for any claims to be arbitrated on a class action basis or on bases involving claims brought in a purported representative capacity on behalf of others. The arbitrator’s authority to resolve and make written awards is limited to claims between the Executive and the Company alone. Claims may not be joined or consolidated unless agreed to in writing by all parties. No arbitration award or decision will have any preclusive effect as to issues or claims in any dispute with anyone who is not a named party to the arbitration. Notwithstanding any other provision in this Agreement, and without waiving either party’s right of appeal, if any portion of this class action waiver provision is deemed invalid or unenforceable, then the entire arbitration clause in this Agreement (other than this sentence) shall be void.

ARTICLE X

MISCELLANEOUS

10.1 Notices . For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given (a) when received if delivered personally, (b) on the date receipt is acknowledged if delivered by certified mail, postage prepaid, return receipt requested, (c) when received if delivered by overnight courier, or (d) one day after transmission if sent by e-mail, with confirmation of transmission, as follows:


If to Executive, addressed to:	Dan Antilley
	102 Doby Creek Ct
	Fort Mill, SC 29715
	antilley@gmail.com

if to the Company, addressed to:	Cardtronics USA, Inc.
	3250 Briarpark Drive, Suite 400
	Houston, Texas 77042
	Attention: General Counsel
	Email: CATM_Legal@cardtronics.com

or to such other address as either party may furnish to the other in writing in accordance herewith, except that notices or changes of address shall be effective only upon receipt. If either party provides notice by e-mail, the party must also send notice by one of the other delivery methods listed in this Section 10.1 , but failure to do so shall not invalidate the e-mail transmission.

10.2 Applicable Law; Submission to Jurisdiction .

(a) This Agreement is entered into under, and shall be governed for all purposes by, the laws of the State of Texas, without regard to conflicts of laws principles thereof.

(b) With respect to any claim or dispute related to or arising under this Agreement not otherwise subject to arbitration under the terms of this Agreement, the parties hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in the State of Texas.

10.3 Indemnification .

(a) Save and except for any Proceeding (as herein defined) brought by (i) Executive’s former employer, including any Affiliate thereof (collectively “ Former Employer ”), alleging that Executive’s employment hereunder violates any agreement between Executive and such Former Employer, or (ii) Executive or his estate, if Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”), by reason of the fact that he is or was a director, officer or employee of the Company or is or was serving at the request of the Company as a director, officer, member, employee or agent of another corporation, partnership, joint venture,

trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is Executive’s alleged action in an official capacity while serving as a director, officer, member, employee or agent, Executive shall be indemnified and held harmless by the Company to the fullest extent legally permitted or authorized by the Company’s certificate of incorporation or bylaws or resolutions of the board of directors of the Company and by the laws of the State of Delaware against all cost, expense, liability and loss (including, without limitation, attorney’s fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by Executive in connection therewith, and such indemnification shall continue as to Executive even if he has ceased to be a director, member, employee or agent of the Company or other Entity and shall inure to the benefit of Executive’s heirs, executors and administrators; provided, however, that Executive shall not be indemnified and held harmless by the Company for any cost, expense, liability, or loss relating to a Proceeding concerning any action of the Executive in which a court of competent jurisdiction determines that such action constitutes fraud, embezzlement, gross negligence, or any criminal act. In order to be entitled to the above described indemnification Executive must provide prompt written notice to the Company of such Proceeding and the Company (and its insurers) shall be entitled to defend such Proceeding and to enter into such settlement agreements that the Company and its insurers believe is reasonable and necessary so long as Executive is not required to admit any misconduct or liability, nor required to pay any portion of such settlement. To the extent that the Company fails to provide a defense for all claims raised in any Proceeding after receiving notice thereof, the Company to the fullest extent permitted by applicable law shall advance to Executive all reasonable costs and expenses incurred by him in connection with a Proceeding within 20 days after receipt by the Company of a written request for such advance. Such request shall include an undertaking by Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such costs and expenses. Notwithstanding anything in this Section 10.3 to the contrary, unless an earlier payment date is specified above, Executive shall be paid (or paid on Executive’s behalf), in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv), all amounts to which Executive is entitled under this Section 10.3 promptly but no later than the end of the calendar year following the calendar year in which the indemnifiable expense is incurred.

(b) Neither the failure of the Company (including their boards of directors, independent legal counsel or stockholders) to have made a determination prior to the commencement of any Proceeding concerning payment of amounts claimed by Executive under Section 10.3(a ) that indemnification of Executive is proper because he has met the applicable standard of conduct, nor determination by the Company (including its boards of directors, independent legal counsel or stockholders) that Executive has not met such applicable standard of conduct, shall create a presumption that Executive has not met the applicable standard of conduct.

(c) The Company will continue and maintain a directors and officers’ liability insurance policy covering Executive to the extent the Company provides such coverage for its directors and other executive officers during the term of Executive’s employment with the Company and thereafter until the expiration of all applicable statutes of limitations.

(d) If the Company enters into an indemnification agreement with any of its directors or executive officers, the Company to the fullest extent permitted by applicable law will enter into an indemnification agreement with Executive on terms and conditions no less favorable than those set forth in any such indemnification agreement.

(e) No Conflict With Prior Agreements . Executive represents and warrants that Executive’s performance of all the terms of this Agreement does not and shall not breach any fiduciary or other duty or any covenant, agreement or understanding (including, without limitation, any agreement relating to any proprietary information, knowledge or data acquired in confidence, trust or otherwise) to which Executive is a party or by the terms of which Executive may be bound. Executive further covenants and agrees not to enter into any agreement or understanding, either written or oral, in conflict with the provisions of this Agreement

10.4 No Waiver . No failure by either party hereto at any time to provide notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

10.5 Severability . If a court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then the invalidity or unenforceability of that provision shall not affect the validity or enforceability of any other provision of this Agreement, and all other provisions shall remain in full force and effect.

10.6 Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

10.7 Withholding of Taxes and Other Employee Deductions . The Company may withhold from any benefits and payments made pursuant to this Agreement all federal, foreign, state, city and other taxes and withholdings as may be required pursuant to any law or governmental regulation or ruling.

10.8 Headings . The Section headings have been inserted for purposes of convenience and shall not be used for interpretive purposes.

10.9 Gender and Plurals. Wherever the context so requires, the masculine gender includes the feminine or neuter, and the singular number includes the plural and conversely.

10.10 Successors .

(a) This Agreement is personal to Executive and shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. The rights, benefits and obligations of Executive hereunder shall not be subject to voluntary or involuntary assignment, alienation or transfer, whether by operation of law or otherwise, without the prior written consent of the Company. In addition, any payment owed to Executive hereunder after the date of Executive’s death shall be paid to Executive’s estate.

(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. This Agreement may be assigned to any successor (whether direct or indirect, by purchase, merger, consolidation, amalgamation, scheme of arrangement, exchange offer, operation of law or otherwise (including any purchase, merger, amalgamation, Change in Control or other Corporate Transaction involving the Company or any Subsidiary or Affiliate of the Company)) by operation of law or expressly in connection with a disposition of substantially all of the assets of the Company. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as provided above.

10.11 Term . Termination of Executive’s employment under this Agreement shall not affect any right or obligation of any party which is accrued or vested prior to such termination. Without limiting the scope of the preceding sentence, the provisions of Articles I , V , VI , VII , VIII , IX and X shall survive any termination of the employment relationship and/or of this Agreement.

10.12 Entire Agreement . Except as provided in any signed written agreement contemporaneously or hereafter executed by the Company and Executive, this Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof, and contains all the covenants, promises, representations, warranties and agreements between the parties with respect to employment of Executive by the Company. Without limiting the scope of the preceding sentence, all understandings and agreements preceding the date of execution of this Agreement and relating to the subject matter hereof (including without limitation the employment agreement between the Executive and the Company dated May 19, 2017) are hereby null and void and of no further force and effect.

10.13 Modification; Waiver . Any modification to or waiver of this Agreement will be effective only if it is in writing and signed by the parties.

10.14 Actions by the Board . Any and all determinations or other actions required of the Board hereunder that relate specifically to Executive’s employment by the Company or the terms and conditions of such employment shall be made by the members of the Board other than Executive if Executive is a member of the Board, and Executive shall not have any right to vote, participate or decide upon any such matter.

10.15 Changes Due to Compliance with Applicable Law . Executive understands that certain laws, as well as rules and regulations promulgated by the Securities and Exchange Commission (including without limitation under the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Sarbanes-Oxley Act of 2002) and/or by securities exchanges, do and will require the Company to recoup, and Executive to repay, incentive compensation payable hereunder under the circumstances set forth under such laws, rules and regulations. Such requirements will be set forth from time to time in policies adopted by the Company (so-called “clawback” policies) and Executive acknowledges receipt of the Company’s current clawback policy. Executive acknowledges that amounts paid or payable pursuant to this Agreement as incentive compensation or otherwise by the Company shall be subject to clawback to the extent necessary to comply with such laws, rules, regulations and/or policy, which clawback may include forfeiture, repurchase and/or recoupment of amounts paid or payable hereunder, and Executive agrees to repay such amounts (whether or not still employed by the Company or any of its Affiliates), as required by such laws, rules, regulations or policy. Executive shall repay the Company in cash in immediately available funds within 60 days of demand for payment by the Company or as otherwise agreed by the Company in its sole discretion.

Any such clawback shall not provide Executive any termination rights or other rights to payment under this Agreement (including no right to terminate for Good Reason), nor constitute a breach or violation of this Agreement by the Company. The Executive hereby consents to any changes to the current policy that are adopted to comply with applicable law, rules or regulations (including by securities exchanges). Further, if determined necessary or appropriate by the Board, Executive agrees to enter into an amendment to this Agreement or a separate written agreement with the Company to comply with such laws,

rules and regulations thereunder if required thereby or determined appropriate by the Board in its reasonable discretion.

10.16 Cooperation with Litigation. Notwithstanding this Agreement, Executive agrees to reasonably cooperate with Company by making Executive reasonably available, at the Company’s reasonable request, to testify on behalf of the Company or any of its Affiliates in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and to assist the Company or any of its Affiliates in any such action, suit, or proceeding by providing information to and meeting and consulting with Company any of its Affiliates or any of their counsel or representatives upon reasonable request, provided that such cooperation and assistance shall not materially interfere with Executive's then current activities (to the extent the Executive is no longer employed by the Company) and shall be done in a manner to limit any interference with other activities and any required travel and that the Company agrees to reimburse Executive for all reasonable out of pocket expenses reasonably incurred in connection with such cooperation by Executive. This Section 10.16 shall not be applied to limit or interfere with Executive’s right to engage in Protected Activities as defined in Section 5.3.

(Signature page follows)

IN WITNESS WHEREOF , the parties have executed this Agreement as of the Effective Date.


	COMPANY:

	CARDTRONICS USA, INC.


	By:	/s/ Edward H. West
	Name:	Edward H. West
	Title:	CEO


	EXECUTIVE:

		/s/ Dan Antilley
	Name:	Dan Antilley

[Signature Page to Employment Agreement]

APPENDIX A

RELEASE AGREEMENT

This Release Agreement (this “ Agreement ” ) constitutes the release referred to in the Employment Agreement (the “ Employment Agreement ” ) dated as of ____________, by and between Dan P. Antilley ( “ Executive ” ) and Cardtronics USA, Inc., a Delaware corporation (the “ Company ” ).

(a) For good and valuable consideration, including the Company’s provision of certain payments and benefits to Executive in accordance with Section 7.1(b) of the Employment Agreement, Executive hereby releases, discharges and forever acquits the Company, Cardtronics plc, their Affiliates and subsidiaries and the past, present and future stockholders, members, partners, directors, managers, employees, agents, attorneys, heirs, legal representatives, successors and assigns of the foregoing, in their personal and representative capacities (collectively, the “ Company Parties ” ), from any and all liability for, and hereby waives, any and all claims, damages, or causes of action of any kind relating to Executive’s employment with any Company Party, the termination of such employment, and any other acts or omissions on or prior to the date of this Agreement including, without limitation, any alleged violation through the date of this Agreement of: (i) the Age Discrimination in Employment Act of 1967, as amended; (ii) Title VII of the Civil Rights Act of 1964, as amended; (iii) the Civil Rights Act of 1991; (iv) Section 1981 through 1988 of Title 42 of the United States Code, as amended; (v) the Employee Retirement Income Security Act of 1974, as amended; (vi) the Immigration Reform Control Act, as amended; (vii) the Americans with Disabilities Act of 1990, as amended; (viii) the Occupational Safety and Health Act, as amended; (ix) the Family and Medical Leave Act of 1993; (x) Chapter 21 of the Texas Labor Code; (xi) the Texas Whistleblower Act; (xii) the Delaware Discrimination in Employment Act; (xiii) the Delaware Persons with Disabilities Employment Protections Act; (xiv) the Delaware Whistleblowers’ Protection Act; (xv) the Delaware Fair Employment Practices Act; (xvi) the South Carolina Human Affairs Law; (xvii) any state anti-discrimination law; (xviii) any state wage and hour law; (xix) any other local, state or federal law, regulation or ordinance; (xx) any public policy, contract, tort, or common law claim; (xxi) any allegation for costs, fees, or other expenses including attorneys’ fees incurred in these matters; (xxii) any and all rights, benefits or claims Executive may have under any employment contract, incentive compensation plan or stock option plan with any Company Party or to any ownership interest in any Company Party except as expressly provided in the Employment Agreement and any stock option or other equity compensation agreement between Executive and the Company; and (xxiii) any claim for compensation or benefits of any kind not expressly set forth in the Employment Agreement or any such stock option or other equity compensation agreement (collectively, the “ Released Claims ” ).

(b) The release of claims set forth in this Agreement shall not be applied to modify or affect: (i) Executive’s right to enforce the terms of this Agreement or the Employment Agreement; (ii) Executive’s right to receive an award from a “Government Agency” (as defined in Section 5.3 of the Employment Agreement) under its whistleblower program for reporting in good faith a possible violation of law to such “Government Agency”; (iii) any vested rights and benefits that Executive may have under any applicable Company benefit or compensation plan; (iv) any recovery to which Executive may be entitled pursuant to workers’ compensation and unemployment insurance laws; (v) Executive’s right to challenge the validity of this release under the ADEA; (vi) any rights that arise after the date Executive executes this Agreement; or (vii) any right where a waiver is expressly prohibited by law.

(c) The Executive relinquishes any right, and agrees not to seek future employment or re-employment with any of the Company Parties, and acknowledges that the Company Parties shall have the right to refuse to re-employ the Executive, in each case without liability of the Company Parties.

(d) The Executive acknowledges and agrees that even though claims and facts in addition to those now known or believed by the Executive to exist may subsequently be discovered, it is the intention of the Executive in executing this Agreement that the general release in subsection (a) shall be effective as a full and final accord and satisfaction, and release of and from all liabilities, disputes, claims, and matters covered under the general release in subsection (a), known or unknown, suspected or unsuspected.

(e) The furnishing of certain payments and benefits to Executive in accordance with Section 7.1(b) of the Employment Agreement will not be deemed an admission of liability or wrongdoing by the Company Parties. This Agreement is not intended to indicate that any Released Claims actually exist or that, if they do exist, they are meritorious. Rather, Executive is simply agreeing that, in exchange for the consideration recited in subsection (a), any and all potential claims of this nature that Executive may have against the Company Parties as of the date of this Agreement, regardless of whether they actually exist, are expressly settled, compromised and waived. By signing this Agreement, Executive is bound by it. Anyone who succeeds to Executive’s rights and responsibilities, such as heirs or the executor of Executive’s estate, is also bound by this Agreement. This release also applies to any claims brought by any person or agency or class action under which Executive may have a right or benefit. THIS RELEASE INCLUDES MATTERS ATTRIBUTABLE TO THE SOLE OR PARTIAL NEGLIGENCE (WHETHER GROSS OR SIMPLE) OR OTHER FAULT, INCLUDING STRICT LIABILITY, OF ANY OF THE COMPANY PARTIES.

(f) By executing and delivering this Agreement, Executive acknowledges that:

(i) the consideration given for the release in this Agreement is in addition to anything of value to which the Executive was already entitled;

(ii) Executive has carefully read this Agreement;

(iii) Executive has had at least [21 days/45 days] to consider this Agreement before the execution and delivery hereof to the Company;

(iv) Executive has been and hereby is advised in writing that Executive may, at Executive’s option, discuss this Agreement with an attorney of Executive’s choice and that Executive has had adequate opportunity to do so; and

(v) Executive fully understands the final and binding effect of this Agreement; the only promises made to Executive to sign this Agreement are those stated in the Employment Agreement and herein; and Executive is signing this Agreement voluntarily and of Executive’s own free will, and that Executive understands and agrees to each of the terms of this Agreement.

Notwithstanding the initial effectiveness of this Agreement, Executive may revoke the delivery (and therefore the effectiveness) of this Agreement within the seven day period beginning on the date Executive delivers this Agreement to the Company (such seven day period being referred to herein as the “ Release Revocation Period ” ). To be effective, such revocation must be in writing signed by Executive and must be delivered to the address of the Chief Executive Officer of the Company before 11:59 p.m., Houston, Texas time, on the last day of the Release Revocation Period. If an effective revocation is delivered in the foregoing manner and timeframe, this Agreement shall be of no force or effect and shall be null and void ab initio . No consideration shall be paid if this Agreement is revoked by Executive in the foregoing manner.

Executed on this _______day of _____________, _______.

STATE OF		§
		§
COUNTY OF		§

BEFORE ME, the undersigned authority personally appeared ___________________________, by me known or who produced valid identification as described below, who executed the foregoing instrument and acknowledged before me that he subscribed to such instrument on this ___________ day of ______________, ________.


	NOTARY PUBLIC in and for the
	State of ____________
	My Commission Expires: ____________
	Identification produced:

Older Worker Benefit Protection Act Disclosure for a Group Termination

1. This Employment Termination Program covers selected employees in the Company’s [INSERT DECISIONAL UNIT] .

2. Employees eligible to participate in the Program are those employees in the Company’s [INSERT DECISIONAL UNIT] whose employment with the Company is being terminated by the Company.

3 Employees selected for the program have forty-five (45) days from the date of their receipt of this proposed agreement to participate by signing and returning the Release Agreement. Employees who choose to sign the Release Agreement shall have seven (7) days after signing and returning it to the Company to revoke it by delivering a signed revocation notice to the Company as provided in the Release Agreement.

4. The job titles and ages of all individuals selected for the program from the Company’s [INSERT DECISIONAL UNIT] and all individuals in the same job titles not selected for the program from the Company’s [INSERT DECISIONAL UNIT] are as follows:

Job Title	Age	No. Selected	No. Not Selected

If you have any questions about this information, please contact [insert contact name] at [insert phone number].

Exhibit 10.2

EMPLOYMENT AGREEMENT

This Employment Agreement (this “ Agreement ” ), dated October 10, 2018 (the “ Effective Date ”) is made by and between Cardtronics USA, Inc., a Delaware corporation (together with any successor thereof, the “ Company ”), and Brian Bailey ( “ Executive ” ).