UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2004
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 no
GLOBAL CASH ACCESS, INC.
(Exact name of Registrant as specified in its charter)
| DELAWARE | 94-3309549 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer I.D. No.) |
| 3525 E. POST ROAD SUITE 120 LAS VEGAS, NEVADA |
89120 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code:
(800) 833-7110
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 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 x
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of November 15, 2004, there were 1,000 shares of the Registrant’s common stock, $0.001 par value per share, issued and outstanding.
2
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
GLOBAL CASH ACCESS, INC. AND SUBSIDIARIES
(FORMERLY GLOBAL CASH ACCESS, L.L.C.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except par value and shares)
(unaudited)
| September 30, 2004 |
December 31, 2003 | ||||||
| ASSETS |
|||||||
| Cash and cash equivalents |
$ | 31,872 | $ | 23,423 | |||
| Settlement receivables |
9,570 | 15,937 | |||||
| Receivables, other |
3,331 | 6,510 | |||||
| Prepaid and other assets |
14,248 | 954 | |||||
| Property, equipment and leasehold improvements, net |
10,712 | 15,129 | |||||
| Goodwill, net |
156,697 | 156,685 | |||||
| Other intangibles, net |
17,640 | 20,619 | |||||
| Deferred income taxes, net |
203,992 | — | |||||
| Total assets |
$ | 448,062 | $ | 239,257 | |||
| LIABILITIES AND STOCKHOLDER’S DEFICIT AND MEMBER’S CAPITAL |
|||||||
| LIABILITIES: |
|||||||
| Settlement liabilities |
$ | 9,511 | $ | 17,624 | |||
| Accounts payable |
18,076 | 18,016 | |||||
| Accrued expenses |
8,759 | 4,370 | |||||
| Borrowings |
488,500 | — | |||||
| Total liabilities |
524,846 | 40,010 | |||||
| COMMITMENTS AND CONTINGENCIES |
|||||||
| MINORITY INTEREST |
142 | — | |||||
| STOCKHOLDER’S DEFICIT AND MEMBER’S CAPITAL |
|||||||
| Common stock, $0.001 par value, 1,000 shares authorized and outstanding at September 30, 2004 |
— | — | |||||
| Accumulated deficit |
(78,708 | ) | — | ||||
| Accumulated other comprehensive income |
1,782 | 1,741 | |||||
| Members’ capital |
— | 197,506 | |||||
| Total stockholder’s deficit and member’s capital |
(76,926 | ) | 199,247 | ||||
| Total liabilities and stockholder’s deficit and member’s capital |
$ | 448,062 | $ | 239,257 | |||
See notes to unaudited condensed consolidated financial statements.
4
GLOBAL CASH ACCESS, INC. AND SUBSIDIARIES
(FORMERLY GLOBAL CASH ACCESS, L.L.C.)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(amounts in thousands)
(unaudited)
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| REVENUES: |
||||||||||||||||
| Cash advance |
$ | 55,798 | $ | 47,797 | $ | 156,605 | $ | 140,173 | ||||||||
| ATM |
41,218 | 35,612 | 118,600 | 98,272 | ||||||||||||
| Check cashing |
6,478 | 6,351 | 17,997 | 20,562 | ||||||||||||
| Central Credit and other revenues |
2,962 | 2,762 | 8,890 | 8,256 | ||||||||||||
| Total revenues |
106,456 | 92,522 | 302,092 | 267,263 | ||||||||||||
| COST OF REVENUES: |
||||||||||||||||
| Commissions |
47,539 | 41,375 | 135,972 | 115,695 | ||||||||||||
| Interchange and processing |
21,152 | 17,500 | 58,373 | 51,646 | ||||||||||||
| Check cashing warranties |
3,042 | 2,715 | 8,171 | 7,617 | ||||||||||||
| Central Credit and other costs of revenues |
105 | 125 | 260 | 338 | ||||||||||||
| Total cost of revenues |
71,838 | 61,715 | 202,776 | 175,296 | ||||||||||||
| GROSS PROFIT |
34,618 | 30,807 | 99,316 | 91,967 | ||||||||||||
| Operating expenses |
(9,565 | ) | (9,317 | ) | (34,437 | ) | (35,082 | ) | ||||||||
| Amortization |
(1,427 | ) | (1,672 | ) | (4,276 | ) | (4,951 | ) | ||||||||
| Depreciation |
(1,981 | ) | (1,894 | ) | (5,945 | ) | (5,614 | ) | ||||||||
| Other operating expenses |
— | (114 | ) | — | (679 | ) | ||||||||||
| OPERATING INCOME |
21,645 | 17,810 | 54,658 | 45,641 | ||||||||||||
| OTHER INCOME (EXPENSE) |
||||||||||||||||
| Interest income |
384 | 319 | 973 | 1,039 | ||||||||||||
| Interest expense |
(9,608 | ) | (1,775 | ) | (22,849 | ) | (4,936 | ) | ||||||||
| Total other expense |
(9,224 | ) | (1,456 | ) | (21,876 | ) | (3,897 | ) | ||||||||
| INCOME BEFORE INCOME TAX (PROVISION) BENEFIT AND MINORITY OWNERSHIP LOSS |
12,421 | 16,354 | 32,782 | 41,744 | ||||||||||||
| INCOME TAX (PROVISION) BENEFIT |
(5,763 | ) | (122 | ) | 202,319 | (355 | ) | |||||||||
| INCOME BEFORE MINORITY OWNERSHIP LOSS |
6,658 | 16,232 | 235,101 | 41,389 | ||||||||||||
| MINORITY OWNERSHIP LOSS |
36 | — | 158 | 400 | ||||||||||||
| NET INCOME |
$ | 6,694 | $ | 16,232 | $ | 235,259 | $ | 41,789 | ||||||||
| Foreign currency translation |
381 | 44 | 57 | 1,406 | ||||||||||||
| COMPREHENSIVE INCOME |
$ | 7,075 | $ | 16,276 | $ | 235,316 | $ | 43,195 | ||||||||
| (Continued | ) | |||||||||||||||
5
GLOBAL CASH ACCESS, INC. AND SUBSIDIARIES
(FORMERLY GLOBAL CASH ACCESS, L.L.C.)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(amounts in thousands)
(unaudited)
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| PRO FORMA COMPUTATION RELATED TO CONVERSION TO C CORPORATION FOR INCOME TAX PURPOSES |
||||||||||||||||
| INCOME BEFORE INCOME TAX (PROVISION) BENEFIT AND MINORITY OWNERSHIP LOSS - HISTORICAL |
12,421 | 16,354 | 32,782 | 41,744 | ||||||||||||
| INCOME TAX PROVISION - HISTORICAL, EXCLUSIVE OF TAX BENEFIT, NET |
(4,471 | ) | (122 | ) | (7,014 | ) | (355 | ) | ||||||||
| PRO FORMA INCOME TAX PROVISION |
— | (5,785 | ) | (4,788 | ) | (14,723 | ) | |||||||||
| MINORITY OWNERSHIP LOSS - HISTORICAL |
36 | — | 158 | 400 | ||||||||||||
| PRO FORMA NET INCOME |
$ | 7,986 | $ | 10,447 | $ | 21,138 | $ | 27,066 | ||||||||
See notes to unaudited condensed consolidated financial statements.
6
GLOBAL CASH ACCESS, INC. AND SUBSIDIARIES
(FORMERLY GLOBAL CASH ACCESS, L.L.C.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
| Nine months ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net income |
$ | 235,259 | $ | 41,789 | ||||
| Adjustments to reconcile net income to cash provided by operating activities: |
||||||||
| Amortization of financing costs |
1,124 | — | ||||||
| Amortization of intangibles |
4,276 | 4,951 | ||||||
| Depreciation |
5,945 | 5,614 | ||||||
| Loss on sale or disposal of assets |
179 | 458 | ||||||
| Deferred income taxes |
(203,982 | ) | — | |||||
| Minority ownership loss |
(158 | ) | (400 | ) | ||||
| Changes in operating assets and liabilities: |
||||||||
| Settlement receivables |
6,342 | 8,882 | ||||||
| Receivables, other |
154 | (985 | ) | |||||
| Prepaid and other assets |
(653 | ) | (587 | ) | ||||
| Settlement liabilities |
(8,095 | ) | (47,830 | ) | ||||
| Accounts payable |
56 | 2,499 | ||||||
| Accrued expenses |
5,296 | (829 | ) | |||||