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CARDTRONICS INC - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations
[October 29, 2014]

CARDTRONICS INC - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations


(Edgar Glimpses Via Acquire Media NewsEdge) Overview Cardtronics, Inc. provides convenient automated consumer financial services through its network of automated teller machines ("ATMs") and multi-function financial services kiosks. As of September 30, 2014, we were the world's largest retail ATM owner, providing services to over 85,000 devices throughout the United States ("U.S.") (including the U.S. territories of Puerto Rico and the U.S. Virgin Islands), the United Kingdom ("U.K."), Germany, Canada, and Mexico.



In the U.S., certain of our devices are multi-function financial services kiosks that, in addition to traditional ATM functions such as cash dispensing and bank account balance inquiries, perform other consumer financial services including bill payments, check cashing, remote deposit capture (which is deposit taking at ATMs using electronic imaging), and money transfers. Also included in the number of devices in our network as of September 30, 2014 were approximately 15,500 ATMs to which we provided various forms of managed services solutions.

Under a managed services arrangement, retailers and financial institutions rely on us to handle some or all of the multiple elements that are required to operate and maintain ATMs, typically in exchange for a monthly service fee or fee per service provided.


We often partner with large, nationally and regionally-known retail merchants under multi-year contracts to place our ATMs and kiosks within their store locations. In doing so, we provide our retail partners with a compelling automated financial services solution that helps attract and retain customers, and in turn, increases the likelihood that our devices will be utilized. We also partner with leading national and regional financial institutions to brand certain of our ATMs and financial services kiosks within our network. As of September 30, 2014, approximately 22,000 of our ATMs were under contract with financial institutions to place their logos on those machines and to provide convenient surcharge-free access for their banking customers. In return for the branding that we provide, we generally receive monthly fees on a per ATM basis from the branding institution, while retaining our standard surcharge fee schedule for non-customers of the financial institutions who use the branded ATMs.

Additionally, we own and operate the Allpoint network ("Allpoint"), the largest surcharge-free ATM network within the U.S. (based on the number of participating ATMs). Allpoint, which has approximately 55,000 participating ATMs globally (including a majority of our ATMs in the U.S., U.K., Canada and Mexico), provides surcharge-free ATM access to customers of participating financial institutions, many of which lack a significant ATM network. In exchange for the surcharge-free access, member financial institutions pay us either a fixed monthly fee per cardholder or a set fee per transaction. Allpoint also works with financial institutions 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 financial institutions pay Allpoint a fee per issued stored-value card or per transaction in return for allowing the users of those cards surcharge-free access to Allpoint's participating ATM network.

Finally, we own and operate an electronic funds transfer ("EFT") transaction processing platform that provides transaction processing services to our network of ATMs and financial services kiosks as well as ATMs owned and operated by third parties. For additional discussion of our operations and the manner in which we derive revenues, please refer to our 2013 Form 10-K.

Strategic Outlook Over the past several years, we have expanded our operations both domestically and internationally through acquisitions, continued to deploy ATMs in high-traffic locations under contracts with well-known retailers, expanded our relationships with leading financial institutions through growth of Allpoint and our bank branding programs, and made other strategic acquisitions and investments to expand and develop new product offerings and capabilities of our ATMs.

Since July 2011, we have completed acquisitions of the following: (1) seven domestic ATM operators, expanding our fleet in both multi-unit regional retail chains and individual merchant ATM locations in the U.S. by approximately 31,600 ATMs, (2) two Canadian ATM operators for a total of approximately 1,400 ATMs, which allowed us to enter into and expand our international presence in Canada and (3) in August 2013, Cardpoint Limited ("Cardpoint"), an ATM service provider operating in the U.K. and Germany, which further expanded our U.K. ATM operations by approximately 7,100 ATMs, and also allowed us to enter into the German market with approximately 800 ATMs.

In addition to the above ATM acquisitions, we have also made strategic acquisitions to enhance our product offerings, including: (1) LocatorSearch in August 2011, a leading domestic provider of location search technology deployed by financial institutions to help customers and members find the nearest, most appropriate and convenient ATM location based on the service they seek; (2) Complete Technical Services, Ltd. in January 2012, an ATM installation company in the U.K.; and (3) i-design group plc ("i-design") in March 2013, a Scotland-based provider and developer of marketing and advertising software and services for ATM owners.

On September 2, 2014, we announced that our U.K.-based business is entering into a seven-year, exclusive agreement to operate approximately 1,800 ATMs located in Co-operative Food ("Co-op Food") stores across the U.K. which will become effective no later than January 2016. Additionally, we announced the acquisition of Sunwin Services Group ("SSG"), a subsidiary of the Co-operative Group. SSG's primary business is providing secure cash logistics and ATM maintenance to the Co-op Food ATM estate. This acquisition is subject to the satisfaction of certain closing conditions and is expected to close in the fourth quarter of 2014.

27 -------------------------------------------------------------------------------- On October 6, 2014, we completed our previously announced acquisition of the Welch ATM ("Welch") business for cash purchase consideration of approximately $160.0 million paid at closing. This acquisition expands our U.S. ATM operations with national and regional merchants as well as with financial institutions.

While we will continue to explore potential acquisition opportunities in the future as a way to grow our business, we also expect to continue launching new products and services that will allow us to further leverage our existing ATM and financial services kiosk network. In particular, we see opportunities to expand our operations through the following: · Increase the Number of Deployed Devices with Existing and New Merchant Relationships. We believe that there are opportunities to deploy additional ATMs with our existing retail customers in locations that currently do not have ATMs. Furthermore, many of our retail customers continue to expand their number of active store locations, either through acquisitions or through new store openings, thus providing us with additional ATM deployment opportunities.

Additionally, we are actively pursuing opportunities to deploy ATMs with new retailers, including retailers that currently do not have ATMs, as well as those that have existing ATM programs but that are looking for a new ATM provider. We believe our expertise, broad geographic footprint, strong record of customer service, and significant scale position us to successfully market to, and enter into long-term contracts with, additional leading merchants. In addition, we believe our existing relationships with leading U.S.- and U.K.-based retailers position us to expand in international locations where these existing partners have operations.

· Expand our Relationships with Leading Financial Institutions. Through our merchant relationships as well as our diverse product and service offerings, we believe we can provide our existing financial institution customers with convenient solutions to fulfill their growing ATM and automated consumer financial services requirements. Further, we believe we can leverage these offerings to attract additional financial institutions as customers. Our services currently offered to financial institutions include branding our ATMs with their logos, on-screen advertising and content management, providing remote deposit capture, providing surcharge-free access to their customers through our Allpoint network, and providing managed services for their ATM portfolios. Our EFT transaction processing capabilities provide us with the ability to provide customized control over the content of the information appearing on the screens of our ATMs and ATMs we process for financial institutions, which increases the types of products and services that we are able to offer to financial institutions. We also plan to continue to grow the number of machines and financial institutions participating in our Allpoint network which drives higher transaction counts and profitability on our existing ATMs and increases our value to retailers where our ATMs are located.

· Work with Non-Traditional Financial Institutions and Card Issuers to Further Leverage our Extensive ATM and Financial Services Kiosk Network. We believe that there are opportunities to develop or expand relationships with non-traditional financial institutions and card issuers, such as reloadable prepaid card issuers and alternative payment networks, which are seeking an extensive and convenient ATM network to complement their card offerings.

Additionally, we believe that many of the prepaid debit card issuers that exist today in the U.S. can benefit by providing their cardholders with access to our ATM network on a discounted or fee-free basis. For example, through our Allpoint network, we have sold access to our ATM network to issuers of stored-value prepaid debit cards, providing the customers of these issuers with convenient and surcharge-free access to cash.

· Increase Transaction Levels at our Existing Locations. We believe that there are opportunities to increase the number of transactions that are occurring at our existing ATM locations today. On average, only a small fraction of the customers that enter our retail customers' locations utilize our ATMs and financial services kiosks. In addition to our existing initiatives that tend to drive additional transaction volumes to our ATMs, such as bank branding and our Allpoint surcharge-free network, we are working on developing new initiatives aimed at driving incremental transactions at our existing ATM locations.

Examples of this effort are our 2011 acquisition of LocatorSearch, which helps consumers find our ATMs, and our FeeAlert product, which enables financial institutions to help their customers save money by steering them toward nearby in-network ATMs and away from ATM fees. Additionally, we have existing programs and are working to develop additional and broader programs to steer the cardholders of our existing financial institution partners and members of our Allpoint network to visit our ATMs in convenient retail locations. These programs may include incentives to cardholders such as coupons, rewards, and other offers that tend to motivate customers to visit our ATMs within our existing retail footprint. Although we are still in the early stages of developing and implementing many of these programs, we believe that these programs, when properly structured, will benefit each party (i.e. the retailer, the financial institution, and the cardholder). As a result, we expect to gain additional transaction volumes through these efforts.

· Develop and Provide Additional Services at our Existing ATMs. The number and types of services offered at ATMs continue to evolve over time. Certain ATM models are capable of providing numerous automated consumer financial services, including bill payments, check cashing, remote deposit capture, money transfer, and stored-value card reload services, and certain of our devices are capable of, and currently provide, these types of services. We believe these additional consumer financial services offered by our devices, and other machines that we or others may develop, could provide a compelling and cost-effective solution for financial institutions and stored-value prepaid debit card issuers looking to provide convenient services to their customers at well-known retail locations. We also allow advertisers to place their messages on our ATMs equipped with advertising software in both the U.S. and the U.K. Offering additional services like advertising at our devices, allows us to create new revenue streams from assets that have already been deployed, in addition to providing value to our customers through beneficial offers and convenient services. We plan to continue to develop additional products and services that can be delivered through our existing ATM network.

28 -------------------------------------------------------------------------------- · Pursue Additional Managed Services Opportunities. Over the last several years, the number of ATMs that are operated under our managed services arrangements has significantly increased. Under this arrangement, retailers and financial institutions generally pay us a fixed management fee per cardholder or a set fee per transaction in exchange for us handling some or all of the operational aspects associated with operating and maintaining their ATM fleets. Surcharge and interchange fees are generally earned by the retailer or the financial institution. As a result, in this arrangement type, our revenues are partly protected from fluctuations in transaction levels of these machines and changes in network interchange rates. Additionally, in the U.K. where we have our own engineering, cash-in-transit (i.e., armored courier), and installation organizations. Some of these services are provided to both retailers and financial institutions. We plan to continue pursuing additional managed services opportunities with leading merchants and financial institutions in markets in which we operate.

· Pursue International Growth Opportunities. We have invested significant amounts of capital in the infrastructure of our U.K., Canada, and Mexico operations, and we plan to continue to grow our operations in these markets, as well as in the recently-entered German market, applying many of the aforementioned strategies. Additionally, we may expand our operations into other select international markets where we believe we can leverage our operational expertise, EFT transaction processing platform, and scale advantages. Our future international expansion, if any, will depend on a number of factors, including the estimated economic opportunity to us, the business and regulatory environment in the international market, our ability to identify suitable business partners in the market, and other risks associated with international expansion.

Recent Events and Trends Over the last several years, we have grown our business through a combination of organic growth through the strategies described above and with acquisitions.

Since 2010, our compounded annual revenue growth rate is 18%, which reflects a mix of growth from internal initiatives and acquisitions added. During the nine months ended September 30, 2014, our revenues grew by 21% over the prior year, reflecting approximately 13% growth from acquisitions and 8% organic growth.

Withdrawal Transaction and Revenue Trends - U.S. For the three and nine months ended September 30, 2014, total same-store cash withdrawal transactions conducted on our domestic ATMs increased by 0.4% and 0.3%, respectively, over the comparable periods in 2013. We define same-store ATMs as all ATMs that were continuously transacting for both the current period and the comparable period in the prior year to ensure the exclusion of any new growth or mid-month installations. The growth rate is impacted by a number of factors, including consumer behavior and preferences, economic factors, weather, and also company-specific initiatives, such as bank branding, growth in Allpoint (our surcharge free network), pricing and other products and services we may deploy. This growth rate has varied somewhat over recent years but has typically fallen within a range of flat to up 5%.

Over the last several years, some of the large U.S. banks serving the market for consumer banking services have begun to aggressively compete for market share, and part of their competitive strategy has been 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 customers. As a result, in certain situations, we have faced direct competition from large U.S. banks for large ATM placement opportunities. While a large owned-ATM network would be a key strategic asset for a bank, we believe it would be uneconomical for all but the largest banks to build and operate an extensive ATM network. Bank branding of our ATMs and participation in our surcharge-free network allow financial institutions to rapidly increase surcharge-free ATM access for their customers at substantially lower cost than building their own ATM networks. We also believe there is an opportunity for a large non-bank ATM and financial services kiosk 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 outsourcing arrangement could reduce a financial institution's operational 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 and financial services kiosks. These factors have led to an increase in bank branding, participation in surcharge-free networks, and managed services arrangements, and we believe that there are opportunities for continued growth under these types of arrangements.

In October of 2014, one of our larger branding partners, Chase, communicated to us that they are adjusting their strategy with regard to off-branch ATMs and will not be renewing many of their branding agreements to place their brands on our ATMs. While there could be longer-term benefits as a result of this decision, through expansion of our principal and preferred multi-financial institution branding initiative and other strategies, we currently expect some near-term negative impact on our results. The exact impact of this decision by Chase is unknown to us at this time, but we expect that it will have an insignificant impact on 2014 revenues and profits, and the net impact to 2015 revenues is anticipated to be less than 1% of total revenues and the estimated profit impact in 2015 is still being evaluated, but is expected to be less than 1.5% of gross profit.

Withdrawal Transaction and Revenue Trends - U.K. In recent periods, we have installed more free-to-use ATMs as opposed to surcharging "pay-to-use" ATMs in the U.K. As a result of this mix shift, our overall withdrawal transactions in the U.K. (excluding the effect of the Cardpoint acquisition) have increased.

Although we earn less revenue per cash withdrawal transaction on a free-to-use machine, the increase in the number of transactions conducted on free-to-use machines has generally translated into higher overall revenues.

29 -------------------------------------------------------------------------------- Financial Regulatory Reform - In the U.K. and the European Union. In March 2013, the U.K. Treasury department (the "Treasury") issued a formal recommendation to further regulate the U.K. payments industry, including LINK, the nation's formal ATM scheme. In October 2013, the U.K. government responded by establishing the new Payment Systems Regulator ("PSR") to oversee any payment system and its participants operating in the U.K., including ATMs The ultimate impact of the establishment of the PSR will not be known until it is officially formed in 2015.

In July 2013, the European Commission put forward a draft second generation of the Payment Services Directive which regulate payment service providers operating in the European Union ("PSD2"). Broadly, PSD2 seeks to harmonize rules for the licensing of payment institutions and introduces certain common rules affecting all payment service providers ("PSPs") throughout the European Union. PSD2 sets out the rights and obligations of payment service users and PSPs together with transparency and security requirements to facilitate safe, efficient payment transactions. Whereas the current Payment Services Directive exempts independent ATM deployers, PSD2 (as currently drafted) will apply to businesses of this nature. PSD2 as currently drafted is still in Committee stage in the European Parliament and has not yet been properly considered by the Council. We anticipate that the draft Directive will not be finalized until 2015 and that it will take up to an additional two years for member states to transpose it into domestic law. In parallel with PSD2, the European Commission has introduced a new Regulation ("MIF Regulation") aimed at reducing the level of interchange fees charged by card schemes for Point-of-Sale (" POS ") transactions, as well as altering certain of the business rules contained in card scheme rulebooks. The fee caps in the MIF Regulation do not apply to cash withdrawal transactions at ATMs, but certain of the other provisions in the MIF Regulation could apply to ATM operators (although their precise effects are currently uncertain). The MIF Regulation is also currently in Committee stage at the European Parliament and therefore at this time we cannot predict its final form, effective date, nor to what extent, if any, such regulation will impact ATM operators.

Europay, MasterCard, Visa ("EMV"). The EMV standard provides for the security and processing of information contained on microchips embedded in certain debit and credit cards, known as "smart cards." This standard has already been adopted in the U.K., Germany, Mexico, and Canada, and our ATMs in those markets are in compliance. In the U.S., MasterCard implemented a liability shift in April 2013 from the issuers of these cards to the party that has not made the investment in EMV equipment (the acquirer) for fraudulent counterfeit International Maestro (MasterCard) cross-border transactions. While the majority of our U.S. ATMs are not currently EMV-compliant, this liability shift has not had a significant impact on our business or results, as Maestro transactions comprise less than 0.2% of our U.S. transaction volume. In response to the Maestro liability shift date of April 2013, we implemented additional fraud monitoring methods to minimize fraud losses and to date we have seen minimal fraud losses. In February 2013, Visa announced plans for a liability shift to occur in October 2017 for all transactions types on domestic or international EMV-issued cards. MasterCard has also announced that liability shift for its domestic ATM transactions on EMV-issued cards will occur in October 2016. At this time, neither MasterCard nor Visa are requiring mandatory upgrades to ATM equipment; however, increased fraudulent activity on ATMs in the future or the shifting of liability for fraudulent activity on all ATM transactions without EMV readers, or other business or regulatory factors could cause us to upgrade or replace a significant portion of our existing U.S. ATM fleet. We continue to closely monitor the migration toward the EMV standard, and all of our recent ATM deployments have been with ATMs that are EMV-ready. At this time, through a combination of ordinary replacement of equipment, routine scheduled maintenance visits to our ATMs, and evolving technology to meet compliance, we do not expect the EMV migration to have a significant impact on our future capital investments and results from operations. However, we currently estimate that the incremental potential cost to make our entire current Company-owned U.S. ATM fleet fully compliant with the EMV standard is approximately $35 million to $40 million, a portion of which has been and will be incurred during 2014. With the increased capital investments required as a direct result of EMV, our depreciation expense may increase in the future. Additionally, there is a possibility that we could incur asset write-offs or accelerated depreciation expense on certain ATM units. Furthermore, we could experience a higher rate of unit count attrition for our merchant-owned ATMs in the future as a result of certain merchants electing to not comply with this standard.

Capital Investments. In the next twelve to twenty-four months, we are expecting a somewhat higher rate of capital investment than our recent run-rate but do not expect that this temporary increased level of capital investment will continue past mid-2016. These expected temporary increases in capital spending levels are being driven by the upcoming EMV requirements discussed above, coupled with many other factors including: (1) our strategic initiatives to enhance the consumer experience at our ATMs and drive transaction growth; (2) increased demand from merchants and financial institutions for multi-function ATMs; (3) competition for new merchant and customer contracts and renewals of existing merchant contracts; (4) certain software and hardware enhancements required to facilitate our strategic initiatives and to continue running supported versions; and (5) other compliance related matters. As a result of the increased capital investments being planned, we are working to optimize our existing assets, but it is possible that as a result of this activity we could incur some asset write-offs or impairments and increased depreciation expense in the near term. However, we are expecting that the long-term revenue benefits of the investments will drive increased profitability in future periods and allow us to expand our position in the United States as the leading ATM operator of non-bank branch locations.

Expansion into Germany. As noted in the Strategic Outlook section above, 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 use of cash relative to other markets in which we operate, such as the U.S. and U.K. There are approximately 58,500 ATMs in Germany that are largely deployed in branch locations. This fragmented and potentially under-deployed market dynamic is attractive to us, and as a result, we believe there are a number of opportunities for growth in this market and we plan to pursue many of them.

30 -------------------------------------------------------------------------------- Mexico Operations. In September 2012, we completed a required migration of our U.S. dollar-dispensing ATMs in Mexico so that we could continue to settle our U.S. dollar-denominated transactions through Promoción y Operación S.A. de C.V. This process change, combined with the overall recent downward trend in surcharge transactions in Mexico stemming from regulatory changes in 2010, has resulted in a reduction of the revenues and profits we earn from our ATMs in Mexico. Additionally, during the fourth quarter of 2013, in response to increased physical ATM theft attempts and lower profitability on certain ATMs in Mexico, we took a number of ATMs out of service for a period of time to enhance security features. As a result of these recent events and trends, we have reduced our ATM deployments in Mexico in recent years and we continue to evaluate each ATM's revenue and profit contributions to our Mexico operations.

If the recent business performance trend was to continue and we are unable to capitalize on market opportunities in the near future, it is possible that we could incur asset write-offs, including fixed assets, goodwill and other assets, or incur accelerated depreciation expense on certain assets. However, we believe that there are several significant opportunities in this market to leverage our existing operations with both existing and new financial institution and retail customers. Despite some of the recent challenges of operating in this market, we currently believe that the aforementioned business opportunities are at advanced stages and would significantly improve profitability of our operations in this market within the next twelve months.

Convertible Senior Notes Offering. In November 2013, we completed an underwritten private placement of convertible senior notes ("Convertible Notes"), generating gross proceeds of $287.5 million. The Convertible Notes pay semi-annual interest at a rate of 1.00% per annum on the $287.5 million aggregate principal balance and mature in December 2020. We are required to settle the principal balance of the Convertible Notes in cash and/or stock upon conversion or maturity at our election.

Simultaneous with the issuance of the Convertible Notes, we entered into hedging transactions designed to offset dilution to our common stock in the event of a conversion under the Convertible Notes. The note hedge instruments ("Note Hedges") have a strike price of $52.35 which is equal to the conversion rate under the Convertible Notes, are exercisable by us upon any conversion under the Convertible Notes, and expire in December 2020. We also sold warrants ("Warrants") in our common stock with a strike price of $73.29. The net effect of the Note Hedges and Warrants was to raise the effective conversion price of the Convertible Notes to $73.29.

Senior Notes Offering. In July 2014, we completed an underwritten private placement of senior notes ("2022 Notes"), generating gross proceeds of $250.0 million. The 2022 Notes pay semi-annual interest at a fixed rate of 5.125% and mature on August 1, 2022.

Senior Subordinated Tendered Notes. During the nine months ended September 30, 2014, we repurchased $20.6 million of our $200.0 million 8.250% senior subordinated notes due 2018 ("2018 Notes") in the open market. In addition, we received tenders and consents from the holders of $64.0 million of the 2018 Notes pursuant to a cash tender offer. Pursuant to the terms of the indenture governing the 2018 Notes, we redeemed the remaining $115.4 million of the 2018 Notes outstanding on September 2, 2014 at a price of 104.125% and effectively retired all of the outstanding 2018 Notes.

Factors Impacting Comparability between Periods · Foreign Currency Exchange Rates. Our reported financial results are subject to fluctuations in exchange rates. With relatively minor fluctuations in the average rates between 2013 and 2014, our overall results have not been significantly impacted.

· Acquisitions. The results of operations for any acquired entities have been included in our consolidated results since the respective dates of acquisition.

31 -------------------------------------------------------------------------------- Results of Operations The following table sets forth line items from our Consolidated Statements of Operations 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, 2014 2013 2014 2013 Revenues: ATM operating revenues 96.6 % 97.3 % 96.9 % 97.7 % ATM product sales and other revenues 3.4 2.7 3.1 2.3 Total revenues 100.0 100.0 100.0 100.0 Cost of revenues: Cost of ATM operating revenues (excludes depreciation, accretion, and amortization of intangible assets shown separately below) (1) 62.9 67.4 63.6 65.8 Cost of ATM product sales and other revenues 3.3 2.6 3.0 2.3 Total cost of revenues 66.3 70.0 66.7 68.0 Gross profit 33.7 30.0 33.3 32.0 Operating expenses: Selling, general, and administrative expenses 10.4 9.2 10.4 9.3 Acquisition-related expenses 0.9 1.5 1.7 1.2 Depreciation and accretion expense 7.1 7.4 7.4 7.7 Amortization of intangible assets 3.0 3.5 3.2 3.1 Loss on disposal of assets 0.4 - 0.2 0.1 Total operating expenses 21.8 21.7 22.9 21.4 Income from operations 11.9 8.3 10.5 10.6 Other expense (income): Interest expense, net 2.0 2.4 2.1 2.5 Amortization of deferred financing costs and note discount 1.8 0.1 1.3 0.1 Redemption costs for early extinguishment of debt 2.9 - 1.2 - Other expense (income) 0.6 (0.2) (0.5) (0.5) Total other expense 7.4 2.3 4.2 2.1 Income before income taxes 4.5 6.0 6.3 8.5 Income tax expense 1.7 9.9 2.4 6.1 Net income (loss) 2.9 (3.9) 4.0 2.4 Net loss attributable to noncontrolling interests (0.2) (0.3) (0.1) (0.2) Net income (loss) attributable to controlling interests and available to common stockholders 3.0 % (3.7) % 4.1 % 2.6 % _______________ (1) Excludes effects of depreciation, accretion, and amortization of intangible assets of $23.9 million and $22.8 million for the three months ended September 30, 2014 and 2013, respectively, and $ 72.4 million and $62.8 million for the nine months ended September 30, 2014 and 2013, respectively. 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 9.0% and 10.0% for the three months ended September 30, 2014 and 2013, respectively and by 9.4% and 9.9% for the nine months ended September 30, 2014 and 2013.

32 -------------------------------------------------------------------------------- Key Operating Metrics We rely on certain key measures to gauge our operating performance, including total transactions, total cash withdrawal transactions, ATM operating revenues per ATM per month, and ATM operating gross profit margin. The following table sets forth information regarding certain of these key measures for the periods indicated, excluding the effect of the acquisitions during the periods presented for comparative purposes.

Three Months Ended Nine Months Ended EXCLUDING ACQUISITIONS: September 30, September 30, 2014 2013 2014 2013 Average number of transacting ATMs: United States: Company-owned 30,001 28,507 28,456 28,052 United Kingdom 9,913 9,100 6,532 6,229 Mexico 2,191 2,620 2,174 2,673 Canada 1,686 1,638 1,663 1,588 Germany 590 550 177 220 Subtotal 44,381 42,415 39,002 38,762 United States: Merchant-owned 20,380 21,449 20,539 20,843 Average number of transacting ATMs - ATM operations 64,761 63,864 59,541 59,605 United States: Managed services - Turnkey 2,155 2,164 2,121 2,198 United States: Managed services - Processing Plus 11,943 11,309 8,449 7,319 United Kingdom: Managed services 21 21 21 21 Canada: Managed services 668 329 426 317 Average number of transacting ATMs - Managed services 14,787 13,823 11,017 9,855 Total average number of transacting ATMs 79,548 77,687 70,558 69,460 Total transactions (in thousands): ATM operations 246,946 225,362 671,846 616,698 Managed services 19,397 18,410 43,711 42,472 Total transactions 266,343 243,772 715,557 659,170 Total cash withdrawal transactions (in thousands): ATM operations 145,707 137,568 395,734 379,281 Managed services 13,125 12,286 28,507 27,775 Total cash withdrawal transactions 158,832 149,854 424,241 407,056 Per ATM per month amounts (excludes managed services): Cash withdrawal transactions 750 718 738 707 ATM operating revenues $ 1,189 $ 1,128 $ 1,195 $ 1,123 Cost of ATM operating revenues (1) 775 736 787 737 ATM operating gross profit (1) (2) $ 414 $ 392 $ 408 $ 386 ATM operating gross profit margin (1) (2) 34.8 % 34.8 % 34.1 % 34.4 % ____________ (1) Amounts presented exclude the effect of depreciation, accretion, and amortization of intangible assets, which is presented separately in our consolidated statements of operations. Additionally, the three and nine months ended September 30, 2013 exclude $8.4 million of nonrecurring expense related to retroactive property taxes on certain ATM locations in the U.K.

(2) ATM operating gross profit and ATM operating gross profit margin are measures of profitability that are calculated based on only the revenues and expenses that relate to operating ATMs in our portfolio. Revenues and expenses relating to managed services and ATM equipment sales and other ATM-related services are not included.

33 --------------------------------------------------------------------------------The following table sets forth information regarding certain of these key measures for the periods indicated, including the effect of the acquisitions in the periods presented for comparative purposes.

Three Months Ended Nine Months Ended INCLUDING ACQUISITIONS: September 30, September 30, 2014 2013 2014 2013 Average number of transacting ATMs: United States: Company-owned 30,338 28,507 29,895 28,052 United Kingdom 12,194 9,100 11,920 6,229 Mexico 2,191 2,620 2,174 2,673 Canada 1,686 1,638 1,663 1,588 Germany 882 550 871 220 Subtotal 47,291 42,415 46,523 38,762 United States: Merchant-owned 22,002 21,449 22,152 20,843 Average number of transacting ATMs - ATM operations 69,293 63,864 68,675 59,605 United States: Managed services - Turnkey 2,155 2,164 2,121 2,198 United States: Managed services - Processing Plus 12,298 11,309 11,794 7,319 United Kingdom: Managed services 21 21 21 21 Canada: Managed services 668 329 426 317 Average number of transacting ATMs - Managed services 15,142 13,823 14,362 9,855 Total average number of transacting ATMs 84,435 77,687 83,037 69,460 Total transactions (in thousands): ATM operations 264,494 225,362 766,860 616,698 Managed services 19,958 18,410 56,071 42,472 Total transactions 284,452 243,772 822,931 659,170 Total cash withdrawal transactions (in thousands): ATM operations 156,562 137,568 453,627 379,281 Managed services 13,551 12,286 38,119 27,775 Total cash withdrawal transactions 170,113 149,854 491,746 407,056 Per ATM per month amounts (excludes managed services): Cash withdrawal transactions 753 718 734 707 ATM operating revenues $ 1,197 $ 1,128 $ 1,174 $ 1,123 Cost of ATM operating revenues (1) 781 736 771 737 ATM operating gross profit (1) (2) $ 416 $ 392 $ 403 $ 386 ATM operating gross profit margin (1) (2) 34.8 % 34.8 % 34.3 % 34.4 % ____________ (1) Amounts presented exclude the effect of depreciation, accretion, and amortization of intangible assets, which is presented separately in our consolidated statements of operations. Additionally, the three and nine months ended September 30, 2013 exclude $8.4 million of nonrecurring expense related to retroactive property taxes on certain ATM locations in the U.K.

(2) ATM operating gross profit and ATM operating gross profit margin are measures of profitability that are calculated based on only the revenues and expenses that relate to operating ATMs in our portfolio. Revenues and expenses relating to managed services and ATM equipment sales and other ATM-related services are not included.

34 -------------------------------------------------------------------------------- Revenues Three Months Ended September 30, Nine Months Ended September 30, 2014 2013 % Change 2014 2013 % Change (In thousands) (In thousands) ATM operating revenues $ 256,779 $ 222,678 15.3 % $ 746,970 $ 619,637 20.5 % ATM product sales and other revenues 9,068 6,141 47.7 % 23,978 14,904 60.9 % Total revenues $ 265,847 $ 228,819 16.2 % $ 770,948 $ 634,541 21.5 % Three Months Ended September 30, 2014 Compared to Three Months Ended September 30, 2013 ATM operating revenues. ATM operating revenues generated during the three months ended September 30, 2014 increased $34.1 million, or 15.3%, from the three months ended September 30, 2013. Below is the detail, by segment, of the changes in the various components of ATM operating revenues: Variance: Three Months Ended September 30, 2013 to Three Months Ended September 30, 2014 U.S. Europe Other International Eliminations Total Increase (decrease) (In thousands) Surcharge revenue $ 3,403 $ 9,729 $ (208) $ - $ 12,924 Interchange revenue 4,629 11,397 (254) - 15,772 Bank branding and surcharge-free network revenues 2,612 - (62) (6) 2,544 Managed services revenues 133 4 783 - 920 Other revenues 1,371 836 (7) (259) 1,941 Total increase (decrease) in ATM operating revenues $ 12,148 $ 21,966 $ 252 $ (265) $ 34,101 United States. During the three months ended September 30, 2014, our U.S.

operations experienced a $12.1 million, or 7.5%, increase in ATM operating revenues when compared to the same period in 2013. Acquisitions completed since the beginning of 2013 accounted for approximately $2.5 million of this increase.

The results of these acquired businesses were included in the consolidated financial results for the three months ended September 30, 2014, but not in the comparable period in 2013. The remaining $9.6 million, or 5.9%, increase was due to growth achieved from a combination of revenue sources, including: (i) increased surcharge and interchange revenues primarily as a result of a higher machine count and total transaction count and (ii) an increase in bank branding and surcharge-free network revenues that resulted from the continued growth of participating banks and other financial institutions in our bank branding program and our Allpoint network.

For additional information on recent trends that have impacted, and may continue to impact, the revenues generated by our U.S. operations, see Recent Events and Trends - Withdrawal Transaction and Revenue Trends - U.S. above.

Europe. Our European operations, which include our operations in the U.K. and Germany, experienced a $22.0 million, or 42.7%, increase in ATM operating revenues during the three months ended September 30, 2014 when compared to the same period in 2013. Approximately $13.2 million, or 25.6%, of the increase, was attributable to our acquisition of Cardpoint, which was completed in August 2013. Approximately $7.2 million, or 14.0%, of the increase was primarily driven by higher interchange revenues, as a result of an increase in the number of total ATMs in our U.K. business. Foreign currency exchange rate movements accounted for approximately $3.9 million of the increase from the prior year.

For additional information on recent trends that have impacted, and may continue to impact, the revenues generated by our U.K. operations, see Recent Events and Trends - Withdrawal Transaction and Revenue Trends - U.K. above.

Other International. ATM operating revenues generated by our Other International segment, which includes our Mexico and Canadian operations, increased $0.3 million for the three months ended September 30, 2014, when compared to the same period in 2013. This increase was attributable to our Canadian operations, which generated $1.1 million more ATM operating revenues during the three months ended September 30, 2014 as compared to the same period in 2013 primarily due to an increase in machine count we operate. The Canadian increase was offset by a decrease in our Mexico operations, which generated $0.8 million in lower ATM operating revenues during the three months ended September 30, 2014 as compared to the same period in 2013, primarily due to a 16% lower average transacting machine count. The lower machine count was the result of an internal decision to remove a number of machines to improve profitability of the overall business. As a result of the lower transacting ATM count, our transactions in this market experienced a similar percentage decline, resulting 35 --------------------------------------------------------------------------------in the reduced revenues. Foreign currency exchange rate movements did not have a material effect on the reported ATM operating revenues in this segment.

ATM product sales and other revenues. ATM product sales and other revenues for the three months ended September 30, 2014 totaled $9.1 million, representing an increase of $2.9 million from the same period in 2013. This increase was primarily attributable to higher equipment and value-added reseller ("VAR") program sales to merchants and distributors during the period due to the continued replacement of certain ATMs that were not compliant with the Americans with Disabilities Act ("ADA") and the replacement of older equipment with new EMV-compliant equipment. Under our VAR program, we primarily sell ATMs to associate VARs who in turn resell the ATMs to various financial institutions throughout the U.S. in territories authorized by the equipment manufacturer.

Nine Months Ended September 30, 2014 Compared to Nine Months Ended September 30, 2013 ATM operating revenues. ATM operating revenues generated during the nine months ended September 30, 2014 increased $127.3 million, or 20.5%, from the nine months ended September 30, 2013. Below is the detail, by segment, of changes in the various components of ATM operating revenues: Variance: Nine Months Ended September 30, 2013 to Nine Months Ended September 30, 2014 U.S. Europe Other International Eliminations Total Increase (decrease) (In thousands) Surcharge revenue $ 10,290 $ 49,111 $ (3,603) $ - $ 55,798 Interchange revenue 12,556 42,483 (703) - 54,336 Bank branding and surcharge-free network revenues 8,504 - 355 (8) 8,851 Managed services revenues 1,277 13 795 - 2,085 Other revenues 3,685 3,403 (137) (688) 6,263 Total increase (decrease) in ATM operating revenues $ 36,312 $ 95,010 $ (3,293) $ (696) $ 127,333 United States. During the nine months ended September 30, 2014, our U.S.

operations experienced a $36.3 million, or 7.6%, increase in ATM operating revenues compared to the same period in 2013. Acquisitions completed since the third quarter of 2013 accounted for approximately $11.5 million, or 2.4%, of the increase. The results of these acquired businesses (or a portion thereof) were included in the consolidated financial results for the nine months ended September 30, 2014, but not in the comparable period in 2013. The remaining $24.8 million, or 5.2%, increase was primarily due to the following; (i) increased surcharge and interchange revenues primarily as a result of a higher machine count and (ii) an increase in bank branding and surcharge-free network revenues that resulted from the continued growth of participating banks and other financial institutions in our bank branding program and our Allpoint network.

Europe. Our European operations also contributed to the higher ATM operating revenues for the nine months ended September 30, 2014, which increased by $95.0 million, or 83.8%, from the nine months ended September 30, 2013. As was the case with the three month period, approximately $69.2 million, or 61.0%, was attributable to our acquisitions of i-design and Cardpoint, which were completed in March 2013 and August 2013, respectively. Approximately $22.6 million of the increase was driven by higher interchange revenues, primarily as a result of the growth in the number of total ATMs in our U.K. business. Foreign currency exchange rate movements accounted for approximately $7.6 million of the year over year increase.

Other International. ATM operating revenues generated by our Other International segment, which includes our Mexico and Canadian operations, declined $3.3 million for the nine months ended September 30, 2014, when compared to the same period in 2013. This decline was primarily attributable to our Mexico operations, which generated $3.9 million less in ATM operating revenues during the nine months ended September 30, 2014, compared to the same period in 2013, primarily due to a 20% lower average transacting machine count. The lower machine count was the result of an internal decision to remove a number of machines to improve profitability of the overall business. As a result of the lower transacting ATM count, our transactions in this market experienced a similar percentage decline, resulting in the reduced revenues.

36 -------------------------------------------------------------------------------- ATM product sales and other revenues. ATM product sales and other revenues for the nine months ended September 30, 2014, totaled $24.0 million, representing an increase of $9.1 million from the same period in 2013. This increase was primarily attributable to higher equipment and VAR program sales to merchants and distributors during the period due to the continued replacement of certain ATMs that were not ADA-compliant and the replacement of older equipment with new EMV-compliant equipment. Under our VAR program, we primarily sell ATMs to associate VARs who in turn resell the ATMs to various financial institutions throughout the U.S. in territories authorized by the equipment manufacturer.

Cost of Revenues Three Months Ended September 30, Nine Months Ended September 30, 2014 2013 % Change 2014 2013 % Change (In thousands) (In thousands) Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) $ 167,306 $ 154,319 8.4 % $ 490,445 $ 417,361 17.5 % Cost of ATM product sales and other revenues 8,872 5,950 49.1 % 23,436 14,307 63.8 % Total cost of revenues (exclusive of depreciation, accretion, and amortization of intangible assets) $ 176,178 $ 160,269 9.9 % $ 513,881 $ 431,668 19.0 % Three Months Ended September 30, 2014 Compared to Three Months Ended September 30, 2013 Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets). The cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) for the three months ended September 30, 2014 increased $13.0 million when compared to the same period in 2013. The following is a detail, by segment, of changes in the various components of the cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets): Variance: Three Months Ended September 30, 2013 to Three Months Ended September 30, 2014 U.S. Europe Other International Eliminations Total Increase (decrease) (In thousands) Merchant commissions $ 5,231 $ 6,800 $ 24 $ - $ 12,055 Vault cash rental 2,631 785 11 - 3,427 Other costs of cash (210) 2,158 25 - 1,973 Repairs and maintenance (863) 773 133 - 43 Communications 290 461 (7) 9 753 Transaction processing (43) 488 (200) (174) 71 Stock-based compensation 98 - - - 98 Other expenses 490 (5,421) (244) (258) (5,433) Total increase (decrease) in cost of ATM operating revenues $ 7,624 $ 6,044 $ (258) $ (423) $ 12,987 United States. During the three months ended September 30, 2014, our U.S.

operations experienced a $7.6 million, or 7.4% increase in the cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) when compared to the same period in 2013, of which approximately $1.8 million was attributable to the acquisitions completed in 2013 and 2014. The remaining increase primarily resulted from higher transaction volumes and ATM unit growth driven by organic revenue growth, as well as other expenses from higher employee costs. Additionally, the increase in vault cash rental cost is attributable to higher interest rate swap expense associated with cash flow hedges that became effective on January 1, 2014.

Europe. During the three months ended September 30, 2014, our European operations experienced a $6.0 million, or 13.7% increase in the cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) when compared to the same period in 2013. Acquisitions completed in 2013 drove an increase of approximately $8.7 million from the prior year period. The overall 37 -------------------------------------------------------------------------------- increase was also the result of the increased number of transactions conducted on our machines in the European market, partially offset by higher charges recorded in 2013 to accrue for estimated retroactive business rates (property taxes) included in the Other expenses line above.

Other International. The cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) from our Other International operations decreased by $0.3 million during the three months ended September 30, 2014, when compared to the same period in 2013. This decline was primarily the result of the lower average number of transacting ATMs in Mexico, as described above, which resulted in reduced transaction levels and operating costs on our ATMs in that market.

Cost of ATM product sales and other revenues. The cost of ATM product sales and other revenues increased by $2.9 million during the three months ended September 30, 2014, when compared to the same period in 2013. This increase is consistent with the increase in related revenues, as discussed above, and is primarily related to increased equipment and VAR sales activity.

Nine Months Ended September 30, 2014 Compared to Nine Months Ended September 30, 2013 Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets). The cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) for the nine months ended September 30, 2014, increased $73.1 million when compared to the same period in 2013. Below is a detail, by segment, of changes in the various components of the cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets): Variance: Nine Months Ended September 30, 2013 to Nine Months Ended September 30, 2014 U.S. Europe Other International Eliminations Total Increase (decrease) (In thousands) Merchant commissions $ 13,325 $ 28,350 $ (1,154) $ - $ 40,521 Vault cash rental 7,681 2,236 (97) - 9,820 Other costs of cash (1,111) 8,847 (1,589) - 6,147 Repairs and maintenance 55 4,145 731 - 4,931 Communications 100 2,563 (130) 36 2,569 Transaction processing 103 3,140 (468) (48) 2,727 Stock-based compensation 253 - - - 253 Other expenses 1,836 5,899 (778) (841) 6,116 Total increase (decrease) in cost of ATM operating revenues $ 22,242 $ 55,180 $ (3,485) $ (853) $ 73,084 United States. During the nine months ended September 30, 2014, the cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) in our U.S. operations increased $22.2 million, or by 7.3% from the same period in 2013, of which approximately $7.8 million was attributable to the acquisitions completed in 2013 and 2014. The remaining increase resulted primarily from higher transaction volumes and organic revenue growth mostly as a result of ATM unit growth. Additionally, the increase in vault cash rental cost is attributable to higher interest rate swap expense associated with cash flow hedges that became effective on January 1, 2014.

Europe. During the nine months ended September 30, 2014, our European operations experienced a $55.2 million, or 59.9% increase in the cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) when compared to the same period in 2013, of which approximately $43.0 million was a result of the acquisitions completed in 2013.

The remaining increase was primarily the result of a higher ATM count in the U.K.

Other International. The cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) from our Other International operations decreased by $3.5 million during the nine months ended September 30, 2014, when compared to the same period in 2013. This decline was primarily the result of a lower average number of transacting ATMs in Mexico, as described above, which resulted in reduced transaction levels and operating costs on our ATMs in that market.

Cost of ATM product sales and other revenues. The cost of ATM product sales and other revenues increased by $9.1 million during the nine months ended September 30, 2014, when compared to the same period in 2013. This increase is consistent with the increase in related revenues, as discussed above, and is primarily related to increased equipment and VAR sales activity.

38 -------------------------------------------------------------------------------- Gross Profit Margin Three Months Ended Nine Months Ended September 30, September 30, 2014 2013 2014 2013 ATM operating gross profit margin: Exclusive of depreciation, accretion, and amortization of intangible assets. 34.8 % 30.7 % 34.3 % 32.6 % Inclusive of depreciation, accretion, and amortization of intangible assets 25.5 % 20.4 % 24.6 % 22.5 % ATM product sales and other revenues gross profit margin 2.2 % 3.1 % 2.3 % 4.0 % Total gross profit margin: Exclusive of depreciation, accretion, and amortization of intangible assets. 33.7 % 30.0 % 33.3 % 32.0 % Inclusive of depreciation, accretion, and amortization of intangible assets 24.7 % 20.0 % 23.9 % 22.1 % ATM operating gross profit margin. For the three and nine months ended September 30, 2014, our ATM operating gross profit margin exclusive of depreciation, accretion, and amortization of intangible assets increased when compared to the same periods in 2013. The increase is primarily a result of our revenue growth and an $8.4 million charge related to retroactive property taxes in the U.K.

recorded in the three months ended September 30, 2013.

ATM product sales and other revenues gross profit margin. For the three and nine months ended September 30, 2014, our gross profit margin on ATM product sales and other revenues declined by 0.9 and 1.7 percentage points, respectively, primarily as a result of increased expenses related to higher service revenues which are lower margin than our other ATM product sales.

Selling, General, and Administrative Expenses Three Months Ended September 30, Nine Months Ended September 30, 2014 2013 % Change 2014 2013 % Change (In thousands) (In thousands) Selling, general, and administrative expenses $ 23,452 $ 18,141 29.3 % $ 69,555 $ 50,730 37.1 % Stock-based compensation 4,231 2,932 44.3 % 10,581 8,264 28.0 % Acquisition-related expenses 2,299 3,536 (35.0) % 13,028 7,542 72.7 % Total selling, general, and administrative expenses $ 29,982 $ 24,609 21.8 % $ 93,164 $ 66,536 40.0 % Percentage of total revenues: Selling, general, and administrative expenses 8.8 % 7.9 % 9.0 % 8.0 % Stock-based compensation 1.6 % 1.3 % 1.4 % 1.3 % Acquisition-related expenses 0.9 % 1.5 % 1.7 % 1.2 % Total selling, general, and administrative expenses 11.3 % 10.8 % 12.1 % 10.5 % Selling, general, and administrative expenses ("SG&A expenses"), excluding stock-based compensation and acquisition-related expenses. SG&A expenses, excluding stock-based compensation and acquisition-related expenses, increased $5.3 million, or 29.3% and $18.8 million, or 37.1% for the three and nine months ended September 30, 2014 when compared to the same periods in 2013. These increases were due to the following: (i) higher payroll-related costs compared to the same periods in 2013 due to increased headcount, including employees added from our acquisitions completed during 2013; (ii) increased incentive-based compensation; (iii) increased office and facilities costs, a portion of which is attributable to our acquisitions completed during 2013; (iv) higher marketing and professional expenses; and (v) increased costs related to strengthening our information technology and product development organizations.

Stock-based compensation. Stock-based compensation increased $1.3 million, or 44.3% and $2.3 million, or 28% for the three and nine months ended September 30, 2014 when compared to the same periods in 2013. These increases were primarily attributable to an increase in employee headcount. For additional details on equity awards, see Item 1. Financial Information, Note 3, Stock-Based Compensation.

39 -------------------------------------------------------------------------------- Acquisition-related expenses. Acquisition-related expenses decreased $1.2 million, or 35.0% for the three months ended September 30, 2014 as compared to the same period in 2013. Acquisition-related expenses increased $5.5 million, or 72.7% for the nine months ended September 30, 2014 as compared to the same period in 2013. The increase in year-to-date expense is primarily attributable to certain nonrecurring integration and transition-related costs associated with our 2013 acquisitions.

Depreciation and Accretion Expense Three Months Ended September 30, Nine Months Ended September 30, 2014 2013 % Change 2014 2013 % Change (In thousands) (In thousands) Depreciation expense $ 18,133 $ 16,188 12.0 % $ 54,382 $ 47,084 15.5 % Accretion expense 816 702 16.2 % 2,510 1,972 27.3 % Depreciation and accretion expense $ 18,949 $ 16,890 12.2 % $ 56,892 $ 49,056 16.0 % Percentage of total revenues: Depreciation expense 6.8 % 7.1 % 7.1 % 7.4 % Accretion expense 0.3 % 0.3 % 0.3 % 0.3 % Depreciation and accretion expense 7.1 % 7.4 % 7.4 % 7.7 % Depreciation expense. For the three and nine months ended September 30, 2014, depreciation expense increased $1.9 million, or 12.0% and $7.3 million, or 15.5% when compared to the same periods in 2013 primarily as a result of the deployment of additional Company-owned ATMs over the past year as a result of our organic ATM unit growth and the ATMs acquired through various acquisitions in 2013 and 2014.

Accretion expense. For the three and nine months ended September 30, 2014, accretion expense increased $0.1 million, or 16.2% and $0.5 million, or 27.3% when compared to the same periods in 2013. The year-to-date increase is due to our continued revenue growth and establishing additional asset retirement obligations in connection with newly deployed ATMs and acquired ATMs. When we install our ATMs we estimate the fair value of future retirement obligations associated with those ATMs, including the anticipated costs to deinstall and in some cases restore the ATM site, at certain merchant locations. Accretion expense represents the increase of this liability from the original discounted net present value to the amount we ultimately expect to incur.

Amortization of Intangible Assets Three Months Ended September 30, Nine Months Ended September 30, 2014 2013 % Change 2014 2013 % Change (In thousands) (In thousands) Amortization of intangible assets $ 7,965 $ 7,998 (0.4) % $ 24,647 $ 19,827 24.3 % Percentage of total revenues 3.0 % 3.5 % 3.2 % 3.1 % Amortization of intangible assets relates primarily to merchant contracts and relationships recorded in connection with purchase price accounting valuations for completed acquisitions. The increase in amortization of intangible assets of $4.8 million for the nine months ended September 30, 2014 when compared to the same period in 2013 was primarily due to the addition of intangible assets from the acquisitions completed since the second quarter of 2013.

Interest Expense, Net Three Months Ended September 30, Nine Months Ended September 30, 2014 2013 % Change 2014 2013 % Change (In thousands) (In thousands) Interest expense, net $ 5,423 $ 5,445 (0.4) % $ 16,167 $ 15,570 3.8 % Amortization of deferred financing costs and note discount 4,895 275 1,680.0 % 10,342 735 1,307.1 % Total interest expense, net $ 10,318 $ 5,720 80.4 % $ 26,509 $ 16,305 62.6 % Percentage of total revenues 3.9 % 2.5 % 3.4 % 2.6 % 40 -------------------------------------------------------------------------------- Interest expense, net. There was a slight decrease in interest expense, net during the three months ended September 30, 2014 when compared to the same period in 2013. Interest expense, net increased $0.6 million, or 3.8% during the nine months ended September 30, 2014 when compared to the same period in 2013.

This increase was primarily as a result of higher debt outstanding due to the Cardpoint acquisition completed in August 2013. For additional details, see Item 1. Financial Information, Note 8, Long-Term Debt.

Amortization of deferred financing costs and note discount. Amortization of deferred financing costs and note discount increased $4.6 million and $9.6 million during the three and nine months ended September 30, 2014, compared to the same periods in 2013, primarily as a result of our issuance of $287.5 million of Convertible Notes in November 2013. As the Convertible Notes contain an embedded option feature, we attributed $71.7 million of the proceeds to additional paid-in capital at the time of funding. This resulted in an effective note discount, which is being accreted over the term of the Convertible Notes and drove the majority of the year-over-year increase in this expense. We also incurred $4.9 million in fees in conjunction with the issuance of the Convertible Notes, which are being amortized over the life of the Convertible Notes. In April 2014, we also amended and restated our existing credit agreement and incurred approximately $1.0 million in fees which are being amortized over the term of the revolving credit facility, which runs through April 2019.

Additionally, in July 2014 we incurred additional financing costs of approximately $4.1 million associated with the issuance of the 2022 Notes. We also recorded a $3.9 million pre-tax charge during the nine months ended September 30, 2014 to write off the unamortized deferred financing costs associated with the 2018 Notes.

Income Tax Expense Three Months Ended September 30, Nine Months Ended September 30, 2014 2013 % Change 2014 2013 % Change (In thousands) (In thousands) Income tax expense $ 4,397 $ 22,765 (80.7) % $ 18,185 $ 38,779 (53.1) % Effective tax rate 36.7 % 165.2 % 37.4 % 72.2 % The decrease in income tax expense is primarily related to a $13.6 million charge recorded during the three months ended September 30, 2013 related to deferred tax assets that were no longer realizable as a result of an internal restructuring in that period.

We assess our 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. Based on the assessment at September 30, 2014, and the weight of all available evidence, we concluded that maintaining the deferred tax asset valuation allowance for certain of our entities in the U.K. and Mexico was appropriate, as we currently believe that it is more likely than not that these tax assets will not be realized. However, with increased recent profitability and increasing visibility into projected profitability in the U.K. along with plans to consolidate certain U.K. entities for operational purposes, we believe it is possible that the valuation allowance associated with certain U.K. entities could be reduced or removed in future periods.

Non-GAAP Financial Measures Included below are certain non-GAAP financial measures that we use to evaluate the performance of our business. We believe that the presentation of these measures and the identification of unusual or certain non-recurring adjustments and non-cash items enhance an investor's understanding of the underlying trends in our business and provide for better comparability between periods in different years. EBITDA, Adjusted EBITDA, Adjusted Gross Profit Margin, Adjusted Net Income, and Free Cash Flow are non-GAAP financial measures provided as a complement to results prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP) and may not be comparable to similarly-titled measures reported by other companies. The Company uses these non-GAAP financial measures in managing and measuring the performance of its business, including setting and measuring incentive based compensation for management.

Adjusted EBITDA excludes depreciation, accretion, and amortization of intangible assets 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 method by which the assets were acquired. Adjusted EBITDA also excludes acquisition-related expenses, certain other non-operating and nonrecurring costs, loss on disposal of assets, our obligations for the payment of income taxes, interest expense and other obligations such as capital expenditures, and an adjustment for noncontrolling interest. Adjusted Gross Profit Margin is calculated excluding certain nonrecurring costs from the cost of ATM operating revenues. Adjusted Net Income represents net income computed in accordance with GAAP, before amortization of intangible assets, loss on disposal of assets, stock-based compensation expense, certain other expense (income) amounts, nonrecurring expenses, and acquisition-related expenses, and using an assumed tax rate of 32% for the three and nine months ended September 30, 2014, 33.5% for the three months ended September 30, 2013 and 35% for the six months ended June 30, 2013, with certain adjustments for noncontrolling interests. Adjusted EBITDA %, Adjusted Pre-tax Income %, and Adjusted Net Income % are calculated by taking the respective non-GAAP financial measures over GAAP total revenues. Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by weighted average diluted shares outstanding. Free Cash Flow is defined as cash provided by operating activities less payments for capital expenditures, including those financed through direct debt but excluding acquisitions. The Free Cash Flow measure does not take into consideration certain other non-discretionary cash requirements such as, for example, mandatory principal payments on portions of our long-term debt.

41 -------------------------------------------------------------------------------- The non-GAAP financial measures presented herein should not be considered in isolation or as a substitute for operating income, gross profit, net income, cash flows from operating, investing, or financing activities, or other income or cash flow measures prepared in accordance with U.S. GAAP.

A reconciliation of EBITDA, Adjusted EBITDA, Adjusted Gross Profit Margin, and Adjusted Net Income to Net Income Attributable to Controlling Interests, their most comparable U.S. GAAP financial measure, and a reconciliation of Free Cash Flow to cash provided by operating activities, the most comparable U.S. GAAP financial measure, are presented as follows: Reconciliation of Net Income Attributable to Controlling Interests to EBITDA, Adjusted EBITDA, and Adjusted Net Income Three Months Ended Nine Months Ended September 30, September 30, 2014 2013 2014 2013 (In thousands, except share and per share amounts) Net income (loss) attributable to controlling interests and available to common stockholders $ 8,064 $ (8,408) $ 31,618 $ 16,349 Adjustments: Interest expense, net 5,423 5,445 16,167 15,570 Amortization of deferred financing costs and note discount 4,895 275 10,342 735 Redemption costs for early extinguishment of debt 7,722 - 9,075 - Income tax expense 4,397 22,765 18,185 38,779 Depreciation and accretion expense 18,949 16,890 56,892 49,056 Amortization of intangible assets 7,965 7,998 24,647 19,827 EBITDA $ 57,415 $ 44,965 $ 166,926 $ 140,316 Add back: Loss on disposal of assets 1,078 109 1,662 469 Other expense (income) (1) 1,665 (559) (3,565) (3,030) Noncontrolling interests (2) (428) (474) (1,192) (1,429) Stock-based compensation expense (3) 4,561 3,163 11,464 8,888 Acquisition-related expenses (4) 2,299 3,536 13,028 7,542 Other adjustments to cost of ATM operating revenues (5) - 8,359 - 8,359 Other adjustments to selling, general, and administrative expenses (6) - - - 446 Adjusted EBITDA $ 66,590 $ 59,099 $ 188,323 $ 161,561 Less: Interest expense, net (3) 5,416 5,421 16,139 15,490 Depreciation and accretion expense (3) 18,622 16,478 55,869 47,806 Adjusted pre-tax income 42,552 37,200 116,315 98,265 Income tax expense (7) 13,609 12,462 37,216 33,835 Adjusted Net Income $ 28,943 $ 24,738 $ 79,099 $ 64,430 Adjusted Net Income per share $ 0.65 $ 0.56 $ 1.79 $ 1.45 Adjusted Net Income per diluted share $ 0.64 $ 0.55 $ 1.76 $ 1.44 Weighted average shares outstanding - basic 44,370,460 44,477,023 44,304,092 44,373,627 Weighted average shares outstanding - diluted 44,903,657 44,679,235 44,830,780 44,593,624 _______________ (1) 2014 amounts include non-recurring settlement gain of $4.8 million.

(2) Noncontrolling interests adjustment made such that Adjusted EBITDA includes only the Company's 51% ownership interest in the Adjusted EBITDA of its Mexico subsidiary.

(3) Amounts exclude 49% of the expenses incurred by the Company's Mexico subsidiary as such amounts are allocable to the noncontrolling interest stockholders.

(4) Acquisition-related expenses include nonrecurring costs incurred for professional and legal fees and certain transition and integration-related costs, including contract termination costs, related to acquisitions.

(5) Adjustment to cost of ATM operating revenues for the three and nine months ended September 30, 2013 is related to the nonrecurring charge related to retroactive property taxes on certain ATM locations in the U.K.

(6) Adjustment to selling, general, and administrative expenses represents nonrecurring severance related costs associated with management of the Company's U.K. operations.

(7) Calculated using the Company's estimated long-term, cross-jurisdictional effective cash tax rate of 32% for the three and nine months ended September 30, 2014, 33.5% for the three months ended September, 30, 2013 and 35% for the six months ended June 30, 2013. The change in the estimated non-GAAP tax rate is attributable to an increased portion of the Company's consolidated earnings occurring in lower tax rate jurisdictions.

42 --------------------------------------------------------------------------------Reconciliation of Gross Profit Margin to Adjusted Gross Profit Margin Three Months Ended September 30, 2014 ThreeMonths Ended September 30, 2013 As reported Adjusted As reported Adjusted (GAAP) Adjustments (Non-GAAP) (GAAP) Adjustments (Non-GAAP) (In thousands) Total revenues $ 265,847 $ - $ 265,847 $ 228,819 $ - $ 228,819 Total cost of revenues (1) 176,178 - 176,178 160,269 (8,359) 151,910 Gross profit $ 89,669 $ - $ 89,669 $ 68,550 $ 8,359 $ 76,909 Gross profit margin 33.7% 33.7% 30.0% 33.6% Nine Months Ended September 30, 2014 NineMonths Ended September 30, 2013 As reported Adjusted As reported Adjusted (GAAP) Adjustments (Non-GAAP) (GAAP) Adjustments (Non-GAAP) (In thousands) Total revenues $ 770,948 $ - $ 770,948 $ 634,541 $ - $ 634,541 Total cost of revenues (1) 513,881 - 513,881 431,668 (8,359) 423,309 Gross profit $ 257,067 $ - $ 257,067 $ 202,873 $ 8,359 $ 211,232 Gross profit margin 33.3% 33.3% 32.0% 33.3% _______________ (1) Adjustment to cost of ATM operating revenues for the three and nine months ended September 30, 2013 is related to a nonrecurring charge related to retroactive property taxes on certain ATM locations in the U.K.

Calculation of Free Cash Flow Three Months Ended Nine Months Ended September 30, September 30, 2014 2013 2014 2013 (In thousands) Cash provided by operating activities $ 46,189 $ 42,121 $ 103,060 $ 122,475 Payments for capital expenditures: Cash used in investing activities, excluding acquisitions (23,325) (15,747) (65,078) (45,602) Free cash flow (1) $ 22,864 $ 26,374 $ 37,982 $ 76,873 _______________ (1) Free Cash flow for the nine months ended September 30, 2013 included the collection of a $13.4 million insurance receivable.

Liquidity and Capital Resources Overview As of September 30, 2014, we had $140.9 million in cash and cash equivalents on hand and $541.7 million in outstanding long-term debt.

We have historically funded our operations primarily through cash flows from operations, borrowings under our revolving credit facilities, and the issuance of debt and equity securities. Furthermore, we have historically used cash to invest in additional ATMs, either through the acquisition of ATM networks or through organically-generated growth. We have also used cash to fund increases in working capital and to pay interest and principal amounts outstanding under our borrowings. Because we 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 our ongoing capital expenditure program. Accordingly, it is not uncommon for us to reflect a working capital deficit position on our Consolidated Balance Sheet.

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 12 months. We expect to fund our working capital needs from cash flows generated from our operations and borrowings under our revolving credit facility, to the extent needed. As we expect to continue to generate positive free cash flow in 2014 and beyond, we expect to repay the amounts outstanding under our revolving credit facility absent any acquisitions. See additional discussion under Financing Facilities below.

43 -------------------------------------------------------------------------------- Operating Activities Net cash provided by operating activities totaled $103.1 million for the nine months ended September 30, 2014 as compared to $122.5 million during the same period in 2013. The year over year decrease in net cash provided by operating activities is attributable to the collection of a $13.4 million insurance receivable in the first quarter of 2013 and certain working capital increases that are not expected to continue.

Investing Activities Net cash used in investing activities totaled $73.9 million for the nine months ended September 30, 2014, compared to $232.6 million during the same period in 2013. The decrease in net cash used in investing activities is primarily the result of increased capital additions due to organic growth projects, offset with a decrease in acquisition expenditures in 2014.

Anticipated Future Capital Expenditures. We currently anticipate that the majority of our capital expenditures for the foreseeable future will be driven by organic growth projects, including the purchase of ATMs for existing as well as new ATM management agreements and various compliance requirements as discussed in Recent Events and Trends - Capital Investments. We currently expect that our capital expenditures for the remainder of 2014 will total approximately $35.0 million to $45.0 million, the majority of which will be utilized to purchase additional ATMs for our Company-owned accounts, to deploy ATMs at new merchant locations, for technology upgrades and compliance purposes and to enhance our existing devices with additional functionalities. We expect such expenditures to be funded primarily through cash generated from our operations. In addition, we will continue to evaluate selected acquisition opportunities that complement our existing ATM network. We believe that significant expansion opportunities continue to exist in all of our current markets, as well as in other international markets, and we will continue to pursue those opportunities as they arise. Such acquisition opportunities, individually or in the aggregate, could be material and may be funded by additional borrowings under our revolving credit facility or other financing sources that may be available to us.

Sunwin Services Group Acquisition. On September 2, 2014, we announced the acquisition of SSG, a subsidiary of the Co-operative Group. SSG's primary business is providing secure cash logistics and ATM maintenance to the Co-op Food ATM estate. This acquisition is subject to the satisfaction of certain closing conditions and is expected to close in the fourth quarter of 2014.

Welch ATM Acquisition. On October 6, 2014, we acquired all the assets of Welch, an Illinois-based provider of ATM services to approximately 26,000 ATMs. We will include results from Welch from the date of acquisition.

Financing Activities Net cash provided by financing activities totaled $25.6 million and $113.6 million for the nine months ended September 30, 2014 and 2013, respectively.

During the nine months ended September 30, 2014, we repurchased the 2018 Notes and $6.7 million in capital stock associated with the surrender of shares by employees to satisfy their personal income tax obligations. These cash outflows were offset by the net cash proceeds received from the 2022 Notes.

Financing Facilities As of September 30, 2014, we had approximately $541.7 million in outstanding long-term debt, which was primarily comprised of: (1) $287.5 million of the Convertible Notes of which $223.2 million was recorded on our balance sheet net of the unamortized note discount, (2) $250.0 million of the 2022 Notes, (3) $68.2 million in borrowings under our revolving credit facility, and (4) $0.3 million in notes payable outstanding under equipment financing lines of Cardtronics Mexico.

Revolving Credit Facility. As of September 30, 2014, we had a $375.0 million revolving credit facility that was led by a syndicate of banks including JPMorgan Chase, N.A. and Bank of America, N.A. This revolving credit facility provides us with $375.0 million in available borrowings and letters of credit (subject to the covenants contained within the Credit Agreement governing the revolving credit facility) and can be increased to up to $500.0 million under certain conditions and subject to additional commitments from the lender group. In addition, the revolving credit facility includes a sub-limit of up to $30.0 million for letters of credit, a sub-limit of up to $25.0 million for swingline loans and a sub-limit of up to the equivalent amount of $125.0 million for loans in currencies other than U.S. Dollars. The revolving credit facility has a termination date of April 2019.

Borrowings (not including swingline loans and alternative currency loans) under the revolving credit facility accrue interest at our option at either the Alternate Base Rate (as defined in the Credit Agreement) or the Adjusted LIBO Rate (as defined in the Credit Agreement) plus a margin depending on the our most recent Total Net Leverage Ratio (as defined in the Credit Agreement). The margin for Alternative Base Rate loans varies between 0% to 1.25% and the margin for Adjusted LIBO Rate loans varies between 1.00% to 2.25%. Swingline loans bear interest at the Alternate Base Rate plus a margin as described above. The alternative currency loans bear interest at the Adjusted LIBO Rate as described above. Substantially all of our domestic assets, including the stock of our wholly-owned domestic subsidiaries and 66% of the stock of our first-tier foreign subsidiaries, are pledged as collateral to secure borrowings made under the revolving credit facility. Furthermore, each of our material wholly-owned domestic subsidiaries has guaranteed the full and punctual payment of the obligations under 44 -------------------------------------------------------------------------------- the revolving credit facility. Additionally, no more than 40% of our Consolidated Adjusted EBITDA (as defined in the Credit Agreement) or the book value of the aggregate consolidated assets may be attributable to restricted subsidiaries that are not guarantors under the Credit Agreement. There are currently no restrictions on the ability of our subsidiaries to declare and pay dividends to us.

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 revolving credit facility require us 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 more than 1.50 to 1. Additionally, we are limited on the amount of restricted payments, including dividends, which it can make pursuant to the terms of the Credit Agreement; however, we may generally make restricted payments so long as no event of default has occurred and is continuing and our total net leverage ratio is less than 3.0 to 1.0 at the time such restricted payment is made.

As of September 30, 2014, the weighted-average interest rate on our outstanding revolving credit facility borrowings was approximately 2.1%. Additionally, as of September 30, 2014, we were in compliance with all the covenants contained within the facility and would continue to be in compliance even in the event of substantially higher borrowings or substantially lower earnings.

As of September 30, 2014, we had approximately $304.7 million in available borrowing capacity under the $375.0 million revolving credit facility.

$200.0 Million 8.25% Senior Subordinated Notes due 2018. During the nine months ended September 30, 2014, the Company repurchased $20.6 million of the 2018 Notes in the open market. In addition, the Company received tenders and consents from the holders of $64.0 million 2018 Notes pursuant to a cash tender offer. Pursuant to the terms of these notes, the Company redeemed the remaining $115.4 million of notes outstanding on September 2, 2014 at a price of 104.125% and effectively retired all of these outstanding notes.

In connection with the retirement of the 2018 Notes, we recorded a $3.9 million pre-tax charge during the nine months ended September 30, 2014 to write off the unamortized deferred financing costs associated with the 2018 Notes, which are included in the Amortization of deferred financing costs and note discount line item in the accompanying Consolidated Statements of Operations. Additionally, the Company recorded a $9.1 million pre-tax charge related to the premium paid for the redemption, which is included in the Redemption costs for early extinguishment of debt line item in the accompanying Consolidated Statements of Operations in the nine months ended September 30, 2014.

$287.5 Million 1.00% Convertible Senior Notes due 2020. In November 2013, we completed a private placement of $287.5 million in Convertible Notes that pay interest semi-annually at a rate of 1.00% per annum and mature on December 1, 2020. There are no restrictive covenants associated with these Convertible Notes. In connection with the Convertible Notes, we also entered into Note Hedges at a purchase price of $72.6 million, and sold Warrants for proceeds of $40.5 million, the net effect of which was to raise the effective conversion price of the Convertible Notes to $73.29. We are required to pay interest semi-annually on June 1st and December 1st, and to make principal payments on the Convertible Notes at maturity or upon conversion. We are permitted to settle any conversion obligation under the Convertible Notes, in excess of the principal balance, in cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. We intend to satisfy any conversion premium by issuing shares of our common stock. For additional details, see Part I. Financial Information, Item 1. Notes to Consolidated Financial Statements, Note 8. Long-Term Debt.

$250.0 Million 5.125% Senior Notes due 2022. On July 28, 2014, we issued the 2022 Notes pursuant an indenture dated July 28, 2014 among us, our subsidiary guarantors and Wells Fargo Bank, National Association, as trustee. Interest on the 2022 Notes is payable semi-annually in cash in arrears on February 1 and August 1 of each year, commencing on February 1, 2015. As of September 30, 2014, we were in compliance with all applicable covenants required under the 2022 Notes.

Other Borrowing Facilities Cardtronics Mexico Equipment Financing Agreements. Between 2007 and 2010, Cardtronics Mexico entered into several separate five-year equipment financing agreements with a single lender, of which two agreements have remaining balances as of September 30, 2014. These agreements, which are denominated in pesos and bear interest at an average fixed rate of 9.74%, were utilized for the purchase of ATMs to support the growth in our Mexico operations. As of September 30, 2014, approximately $4.1 million pesos ($0.3 million U.S.) were outstanding under the agreements, with any future borrowings to be individually negotiated between the lender and Cardtronics Mexico. Pursuant to the terms of the loan agreements, we have issued guarantees for 51.0% of the obligations under these agreements (consistent with our ownership percentage in Cardtronics Mexico). As of September 30, 2014, the total amount of these guarantees was $2.1 million pesos ($0.2 million U.S.).

Cardtronics U.K. Overdraft Facility. Cardtronics U.K. has a £1.0 million overdraft facility. This overdraft facility, which bears interest at 1.0% over the Bank of England's base rate (0.5% as of September 30, 2014) and is secured by a letter of credit posted under our revolving credit facility, is utilized for general corporate purposes for our U.K. operations. The letter of credit we have posted that is associated with 45 --------------------------------------------------------------------------------this overdraft facility reduces the available borrowing capacity under our corporate revolving credit facility discussed above. As of September 30, 2014, there was $0.1 million outstanding under the overdraft facility.

New Accounting Standards See Part I Financial Information, Item 1. Notes to Consolidated Financial Statements, Note 16 New Accounting Pronouncements.

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