Cardtronics plc - FORM 10-Q - October 27, 2016

Attached files

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EX-32.1 - EX-32.1 - Cardtronics plc	catm-20160930ex3211cfa58.htm
EX-31.2 - EX-31.2 - Cardtronics plc	catm-20160930ex312dcf485.htm
EX-31.1 - EX-31.1 - Cardtronics plc	catm-20160930ex3110fdd90.htm
EX-10.4 - EX-10.4 - Cardtronics plc	catm-20160930ex104d94cd2.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

	For the quarterly period ended September 30, 2016

or

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

	For the transition period from to

Commission File Number: 001-37820

Cardtronics plc

(Exact name of registrant as specified in its charter)


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

3250 Briarpark Drive, Suite 400

77042

Houston, Texas

(Zip Code)

(Address of principal executive offices)

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

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

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


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

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

Number of Class A ordinary shares, nominal value $0.01 per share of Cardtronics plc outstanding on October 24, 2016: 45,302,025

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CARDTRONICS PLC

TABLE OF CONTENTS



		Page

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of September 30, 2016 (unaudited) and December 31, 2015	3
	Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2016 and 2015	4
	Unaudited Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2016 and 2015	5
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
	Cautionary Statement Regarding Forward-Looking Statements	42
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	67
Item 4.	Controls and Procedures	70

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	71
Item 1A.	Risk Factors	71
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	71
Item 3.	Default Upon Senior Securities	72
Item 4.	Mine Safety Disclosures	72
Item 5.	Other Information	72
Item 6.	Exhibits	72
	Signatures	73

When we refer to “us,” “we,” “our,” we are describing Cardtronics plc and/or our subsidiaries, depending on the context in which the statements are made.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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


	September 30, 2016		December 31, 2015
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	59,521	$	26,297
Accounts and notes receivable, net of allowance for doubtful accounts of $2,497 and $2,079 as of September 30, 2016 and December 31, 2015, respectively		73,140		72,009
Inventory, net		11,151		10,675
Restricted cash		35,802		31,565
Current portion of deferred tax asset, net		—		16,300
Prepaid expenses, deferred costs, and other current assets		64,039		56,678
Total current assets		243,653		213,524
Property and equipment, net of accumulated depreciation of $398,630 and $360,722 as of September 30, 2016 and December 31, 2015, respectively		374,820		375,488
Intangible assets, net		128,743		150,780
Goodwill		537,334		548,936
Deferred tax asset, net		8,612		11,950
Prepaid expenses, deferred costs, and other noncurrent assets		19,964		19,257
Total assets	$	1,313,126	$	1,319,935

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of other long-term liabilities	$	32,970	$	32,732
Accounts payable		35,329		25,850
Accrued liabilities		244,560		219,058
Total current liabilities		312,859		277,640
Long-term liabilities:
Long-term debt		485,647		568,331
Asset retirement obligations		47,196		51,685
Deferred tax liability, net		13,088		21,829
Other long-term liabilities		47,708		30,657
Total liabilities		906,498		950,142

Commitments and contingencies (See Note 13)

Stockholders’ equity:
Common stock, $0.01 par value; 45,300,164 shares issued and outstanding as of September 30, 2016. Common stock, $0.0001 par value; 125,000,000 shares authorized; 52,129,395 shares issued, and 44,953,620 shares outstanding as of December 31, 2015. (See Note 5)		453		5
Additional paid-in capital (See Note 5)		304,941		374,564
Accumulated other comprehensive loss, net		(126,383)		(88,126)
Retained earnings		227,687		185,897
Treasury stock, 7,175,775 shares at cost as of December 31, 2015 (See Note 5)		—		(102,566)
Total parent stockholders’ equity		406,698		369,774
Noncontrolling interests		(70)		19
Total stockholders’ equity		406,628		369,793
Total liabilities and stockholders’ equity	$	1,313,126	$	1,319,935

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

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CARDTRONICS PLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, excluding share and per share amounts)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Revenues:
ATM operating revenues	$	314,788	$	296,836	$	918,207	$	842,295
ATM product sales and other revenues		13,546		14,514		37,335		54,702
Total revenues		328,334		311,350		955,542		896,997
Cost of revenues:
Cost of ATM operating revenues (excludes depreciation, accretion, and amortization of intangible assets shown separately below. See Note 1(e))		195,737		185,142		580,520		537,183
Cost of ATM product sales and other revenues		12,453		13,892		33,873		50,193
Total cost of revenues		208,190		199,034		614,393		587,376
Gross profit		120,144		112,316		341,149		309,621
Operating expenses:
Selling, general, and administrative expenses		40,194		35,759		115,505		100,829
Redomicile-related expenses		951		—		12,201		—
Acquisition and divestiture-related expenses		2,680		13,289		4,938		21,207
Depreciation and accretion expense		23,308		22,127		69,085		64,142
Amortization of intangible assets		9,175		10,048		28,129		29,040
Loss (gain) on disposal of assets		469		(12,139)		(475)		(12,425)
Total operating expenses		76,777		69,084		229,383		202,793
Income from operations		43,367		43,232		111,766		106,828
Other expense:
Interest expense, net		4,269		5,033		13,227		14,496
Amortization of deferred financing costs and note discount		2,872		2,859		8,636		8,455
Other expense		360		1,067		748		2,882
Total other expense		7,501		8,959		22,611		25,833
Income before income taxes		35,866		34,273		89,155		80,995
Income tax expense		8,388		12,629		26,204		29,837
Net income		27,478		21,644		62,951		51,158
Net loss attributable to noncontrolling interests		(12)		(365)		(71)		(1,081)
Net income attributable to controlling interests and available to common stockholders	$	27,490	$	22,009	$	63,022	$	52,239

Net income per common share – basic	$	0.61	$	0.49	$	1.39	$	1.17
Net income per common share – diluted	$	0.60	$	0.48	$	1.38	$	1.15

Weighted average shares outstanding – basic		45,252,869		44,833,117		45,175,604		44,769,661
Weighted average shares outstanding – diluted		45,850,061		45,391,667		45,765,235		45,323,784

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

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CARDTRONICS PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Net income	$	27,478	$	21,644	$	62,951	$	51,158
Unrealized gain (loss) on interest rate swap contracts, net of deferred income tax expense (benefit) of $4,590 and $(4,460) for the three months ended September 30, 2016 and 2015, respectively, and $(3,522) and $(2,752) for the nine months ended September 30, 2016 and 2015, respectively		8,452		(7,117)		(11,571)		(4,273)
Foreign currency translation adjustments, net of deferred income tax (benefit) of $(564) and $(2,555) for the three and nine months ended September 30, 2016, respectively		(6,745)		(13,502)		(26,686)		(2,745)
Other comprehensive income (loss)		1,707		(20,619)		(38,257)		(7,018)
Total comprehensive income		29,185		1,025		24,694		44,140
Less: comprehensive income attributable to noncontrolling interests		198		1,570		97		965
Comprehensive income (loss) attributable to controlling interests	$	28,987	$	(545)	$	24,597	$	43,175

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

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CARDTRONICS PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	September 30,
	2016		2015
Cash flows from operating activities:
Net income	$	62,951	$	51,158
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, accretion, and amortization of intangible assets		97,214		93,182
Amortization of deferred financing costs and note discount		8,636		8,455
Stock-based compensation expense		15,780		14,263
Deferred income taxes		15,731		2,233
Gain on disposal of assets		(475)		(12,425)
Other reserves and non-cash items		686		2,680
Changes in assets and liabilities:
Increase in accounts and notes receivable, net		(4,122)		(1,621)
Increase in prepaid expenses, deferred costs, and other current assets		(7,142)		(4,373)
Increase in inventory, net		(360)		(4,915)
Increase in other assets		(6,585)		(6,832)
Increase (decrease) in accounts payable		5,126		(8,402)
Increase in accrued liabilities		24,151		10,832
Increase in other liabilities		2,340		2,877
Net cash provided by operating activities		213,931		147,112

Cash flows from investing activities:
Additions to property and equipment		(76,050)		(103,877)
Acquisitions, net of cash acquired		(19,701)		(103,874)
Proceeds from sale of assets and businesses		9,348		36,661
Net cash used in investing activities		(86,403)		(171,090)

Cash flows from financing activities:
Proceeds from borrowings under revolving credit facility		221,268		340,250
Repayments of borrowings under revolving credit facility		(311,361)		(324,216)
Proceeds from exercises of stock options		579		586
Additional tax benefit related to stock-based compensation		338		1,287
Repurchase of capital stock		(3,959)		(4,610)
Net cash (used in) provided by financing activities		(93,135)		13,297

Effect of exchange rate changes on cash		(1,169)		(2,711)
Net increase (decrease) in cash and cash equivalents		33,224		(13,392)

Cash and cash equivalents as of beginning of period		26,297		31,875
Cash and cash equivalents as of end of period	$	59,521	$	18,483

Supplemental disclosure of cash flow information:
Cash paid for interest	$	13,832	$	17,345
Cash paid for income taxes	$	9,499	$	19,411

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

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CARDTRONICS PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General and Basis of Presentation

(a) General

On July 1, 2016, the location of incorporation of the parent company of the Cardtronics group of companies was changed from Delaware to the United Kingdom (the “U.K.”), whereby Cardtronics plc, a public limited company organized under English law (“Cardtronics plc”), became the new publicly traded corporate parent of the Cardtronics group of companies following the completion of the merger between Cardtronics, Inc., a Delaware corporation (“Cardtronics Delaware”), and one of its subsidiaries (the “Merger”). The Merger was completed pursuant to the Agreement and Plan of Merger, dated April 27, 2016, the adoption of which was approved by Cardtronics Delaware’s stockholders on June 28, 2016 (collectively, the “Redomicile Transaction”).

Any references to “the Company” or any similar references relating to periods before the Redomicile Transaction shall be construed as references to Cardtronics Delaware being the previous parent company of the Cardtronics group of companies. The Redomicile Transaction has been accounted for as an internal reorganization of entities under common control and, therefore, Cardtronics Delaware’s assets and liabilities have been accounted for at their historical cost basis and not revalued in the transaction. The Redomicile Transaction is discussed in more detail in Note 3. Stock-Based Compensation, Note 5. Stockholders’ Equity, Note 8. Long-Term Debt, and Note 16. Supplemental Guarantor Financial Information.

Cardtronics plc, along with its wholly- and majority-owned subsidiaries (collectively, the “Company”), provides convenient automated consumer financial services through its network of automated teller machines (“ATMs”) and multi-function financial services kiosks. As of September 30, 2016, the Company provided services to over 200,000 ATMs across its portfolio, which included approximately 180,000 ATMs located in all 50 states of the United States (the “U.S.”) (including the U.S. territory of Puerto Rico), approximately 17,000 ATMs throughout the U.K. and Ireland, approximately 1,300 ATMs throughout Germany, Poland, and Spain, approximately 3,700 ATMs throughout Canada, and approximately 1,300 ATMs throughout Mexico. In the U.S., certain of the Company’s ATMs 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. The total count of over 200,000 ATMs also includes ATMs for which the Company provides processing only services and various forms of managed services solutions, which may include transaction processing, monitoring, maintenance, cash management, communications, and customer service.

Through its network, the Company provides ATM management and equipment-related services (typically under multi-year contracts) to large retail merchants of varying sizes, as well as smaller retailers and operators of facilities such as shopping malls, airports, and train stations. In doing so, the Company provides its retail partners with a compelling automated financial services solution that helps attract and retain customers, and in turn, increases the likelihood that the ATMs placed at their facilities will be utilized.

In addition to its retail merchant relationships, the Company also partners with leading national financial institutions to brand selected ATMs and financial services kiosks within its network, including BBVA Compass Bancshares, Inc. (“BBVA”), Citibank, N.A. (“Citibank”), Citizens Financial Group, Inc. (“Citizens”), Cullen/Frost Bankers, Inc. (“Cullen/Frost”), JPMorgan Chase & Co (“Chase”), Santander Bank, N.A. (“Santander”), TD Bank, N.A. (“TD Bank”), and PNC Bank, N.A. (“PNC Bank”) in the U.S., The Bank of Nova Scotia (“Scotiabank”) and Santander in Puerto Rico, and Scotiabank, TD Bank, and Canadian Imperial Bank of Commerce (“CIBC”) in Canada. In Mexico, the Company operates Cardtronics Mexico, S.A. de C.V. (“Cardtronics Mexico”) and partners with Grupo Financiero Banorte, S.A. de C.V. (“Banorte”) and Scotiabank to place their brands on the Company’s ATMs in exchange for certain services provided by them. As of September 30, 2016, approximately 22,000 of the Company’s ATMs were under contract with approximately 500 financial institutions to place their logos on the machines, and to provide convenient surcharge-free access for their banking customers.

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The Company owns and operates the Allpoint network (“Allpoint”), the largest surcharge-free ATM network (based on the number of participating ATMs). Allpoint, with approximately 55,000 participating ATMs, provides surcharge-free ATM access to over 1,300 participating banks, credit unions, and prepaid card providers. For participants, Allpoint provides scale and density of free ATMs. In exchange, Allpoint earns either a fixed monthly fee per cardholder or a set fee per transaction that is paid by participants. The Allpoint network includes a majority of the Company’s ATMs in the U.S. and a portion of the Company’s ATMs in the U.K., Canada, Puerto Rico, and Mexico. 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 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, the Company owns and operates an electronic funds transfer (“EFT”) transaction processing platform that provides transaction processing services to its network of ATMs and financial services kiosks, as well as other ATMs under managed services arrangements. Additionally, through its acquisition of Columbus Data Services, L.L.C. (“CDS”) in 2015, the Company provides leading-edge ATM processing solutions to ATM sales and service organizations and financial institutions.

(b) Basis of Presentation

This Quarterly Report on Form 10-Q (this “Form 10-Q”) has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial information. Because this is an interim period filing presented using a condensed format, it does not include all of the disclosures required by accounting principles generally accepted in the United States (“U.S. GAAP”), although the Company believes that the disclosures are adequate to make the information not misleading. You should read this Form 10-Q along with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (as amended, the “2015 Form 10-K”), which includes a summary of the Company’s significant accounting policies and other disclosures.

The financial statements as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 are unaudited. The Consolidated Balance Sheet as of December 31, 2015 was derived from the audited balance sheet filed in the 2015 Form 10-K with certain retroactive adjustments. The Company has adopted the provisions of the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”) and ASU No. 2015-15, Interest-Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (“ASU 2015-15”). These updates require that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset and clarify the treatment of debt issuance costs related to a line-of-credit arrangement. As retrospective application is required by these standards updates, the debt carrying balances as of December 31, 2015 have been adjusted with no material impact. In addition, the Company has adopted early ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), applying its provisions prospectively to the interim reporting periods of 2016. ASU 2015-17 eliminates the requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet and requires organizations to classify all deferred tax assets and liabilities as noncurrent.

In management’s opinion, all normal recurring adjustments necessary for a fair presentation of the Company’s interim and prior period results have been made. The results of operations for the three and nine months ended September 30, 2016 and 2015 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year.

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

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

Restricted cash consists of amounts collected on behalf of, but not yet remitted to, certain of the Company’s merchant customers or third-party service providers. The amounts include deposits held by the Company for transactions processed by its customers, as well as surcharge and interchange fees earned by the Company’s customers on transactions processed. These balances are classified as Restricted cash in the Current assets or Noncurrent assets line item on the Company’s Consolidated Balance Sheets based on when the Company expects this cash to be paid. The Company held $35.8 million and $31.6 million of Restricted cash in the Current assets line item in the accompanying Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015, respectively.

(d) Inventory

Inventory consists principally of ATMs, ATM spare parts, and ATM supplies and is stated at the lower of cost or market. Cost is determined using the average cost method.

The following table is a breakdown of the Company’s primary inventory components:


	September 30, 2016		December 31, 2015
	(In thousands)
ATMs	$	3,046	$	2,568
ATM spare parts and supplies		9,545		8,400
Total		12,591		10,968
Less: Inventory reserves		(1,440)		(293)
Inventory, net	$	11,151	$	10,675

(e) Cost of ATM Operating Revenues and Gross Profit Presentation

The Company presents Cost of ATM operating revenues and Gross profit within its Consolidated Statements of Operations exclusive of depreciation, accretion, and amortization of intangible assets related to ATMs and ATM-related assets.

The following table sets forth the amounts excluded from Cost of ATM operating revenues and Gross profit for the periods indicated:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(In thousands)
Depreciation and accretion expenses related to ATMs and ATM-related assets	$	17,933	$	17,135	$	54,290	$	48,731
Amortization of intangible assets		9,175		10,048		28,129		29,040
Total depreciation, accretion, and amortization of intangible assets excluded from Cost of ATM operating revenues and Gross profit	$	27,108	$	27,183	$	82,419	$	77,771

(2) Acquisitions and Divestitures

On July 1, 2015, the Company completed the divestiture of its retail cash-in-transit operation in the U.K. This business was primarily engaged in the collection of cash from retail locations and was originally acquired through the Sunwin

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Services Group acquisition completed in November 2014. The Company recognized divestiture proceeds at their estimated fair value of approximately $39 million in 2015. Of this amount, approximately $31 million was collected during the year ended December 31, 2015, and the remainder was collected during the six months ended June 30, 2016. The net pre-tax gain recognized on this transaction in 2015 was $16.6 million. During the six months ended June 30, 2016, the Company reached resolution of certain contingent terms in the agreement, and recorded an additional pre-tax gain of approximately $1.8 million.

On July 1, 2015, the Company completed the acquisition of CDS for a total purchase price of approximately $80.6 million. CDS is a leading independent transaction processor for ATM deployers and payment card issuers, providing solutions to ATM sales and service organizations and financial institutions.

The total purchase consideration for CDS was allocated to the assets acquired and liabilities assumed, including identifiable tangible and intangible assets, based on their respective fair values estimated at the date of acquisition. The estimated fair values of the intangible assets included the acquired customer relationships valued at $16.5 million, technology valued at $7.8 million, and other intangible assets valued at $1.7 million. Intangible values were estimated utilizing primarily a discounted cash flow approach, with the assistance of an independent appraisal firm. The tangible assets acquired included property, plant, and equipment, and were recorded at their estimated fair value of $4.6 million, utilizing the market and cost approaches. The purchase price allocation resulted in goodwill of $52.7 million. The Company completed the purchase accounting for CDS in the first quarter of 2016, recognizing no additional adjustments to the preliminary opening balance sheet. All of the goodwill and intangible asset amounts are expected to be deductible for income tax purposes.

On April 13, 2016, the Company completed the acquisition of a 2,600 location ATM portfolio in the U.S. This acquisition was affected through multiple closings taking place primarily in April 2016. The total cash purchase price of approximately $13.8 million was paid in installments corresponding to each close. As of September 30, 2016, the Company had recognized property, plant, and equipment of $8.3 million, contract intangibles and prepaid merchant commissions of $7.1 million, and asset retirement obligations of $1.6 million. As of September 30, 2016, the accounting remains preliminary, pending finalization of the related asset appraisals.

See Note 6. Intangible Assets for a discussion of the Company’s goodwill and intangible assets.

(3) Stock-Based Compensation

The Company accounts for its stock-based compensation by recognizing the grant date fair value of stock-based awards, net of estimated forfeitures, as compensation expense over the underlying requisite service periods of the related awards. The grant date fair value is based upon the Company’s stock price on the date of grant.

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(In thousands)
Cost of ATM operating revenues	$	249	$	277	$	636	$	775
Selling, general, and administrative expenses		6,393		4,876		15,144		13,488
Total stock-based compensation expense	$	6,642	$	5,153	$	15,780	$	14,263

The comparative increase in stock-based compensation expense for the three and nine months ended September 30, 2016, was attributable to the timing and amount of grants made during preceding periods and additional estimated expense related to performance-based awards in 2016.

In conjunction with the Redomicile Transaction, on July 1, 2016, Cardtronics plc executed a deed of assumption pursuant to which Cardtronics plc adopted and assumed the Third Amended and Restated 2007 Stock Incentive Plan (as

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amended, the “2007 Plan”) and assumed all outstanding awards granted under the 2007 Plan (including awards granted under the 2007 Plan prior to the completion of the Redomicile Transaction) and the 2001 Stock Incentive Plan of Cardtronics Delaware, as amended. All grants during the periods above were made under the 2007 Plan.

Restricted Stock Awards. The number of the Company’s outstanding Restricted Stock Awards (“RSAs”) as of September 30, 2016, and changes during the nine months ended September 30, 2016, are presented below:


	Number of Shares	Weighted Average Grant Date Fair Value
RSAs outstanding as of January 1, 2016	47,235	$	27.36
Vested	(33,610)	$	27.34
RSAs outstanding as of September 30, 2016	13,625	$	27.41

As of September 30, 2016, the unrecognized compensation expense associated with all outstanding RSAs was $0.2 million, which will be recognized on a straight-line basis over a remaining weighted average vesting period of approximately one year.

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

The number of the Company’s non-vested RSUs as of September 30, 2016, and changes during the nine months ended September 30, 2016, are presented below:


	Number of Shares	Weighted Average Grant Date Fair Value
Non-vested RSUs as of January 1, 2016	891,439	$	35.60
Granted	572,692	$	37.13
Vested	(450,372)	$	35.21
Forfeited	(27,599)	$	36.42
Non-vested RSUs as of September 30, 2016	986,160	$	36.65

The above table only includes earned RSUs; therefore, the Performance-RSUs granted in 2016 but not yet earned are not included. The number of Performance-RSUs granted at target in 2016, net of estimated forfeitures, was 347,416 units with a grant date fair value of $38.01 per unit. Time-RSUs are included as granted.

As of September 30, 2016, the unrecognized compensation expense associated with earned RSUs was $15.0 million, which will be recognized using a graded vesting schedule for Performance-RSUs and a straight-line vesting schedule for Time-RSUs, over a remaining weighted average vesting period of approximately 1.6 years.

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Options. The number of the Company’s outstanding stock options as of September 30, 2016, and changes during the nine months ended September 30, 2016, are presented below:


	Number of Shares	Weighted Average Exercise Price
Options outstanding as of January 1, 2016	77,901	$	10.11
Exercised	(54,051)	$	10.71
Options outstanding as of September 30, 2016	23,850	$	8.76

Options vested and exercisable as of September 30, 2016	23,850	$	8.76

As of September 30, 2016, the Company had no unrecognized compensation expense associated with outstanding options.

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(4) Earnings per Share

The Company reports its earnings per share under the two-class method. Under this method, potentially dilutive securities are excluded from the calculation of diluted earnings per share (as well as their related impact on the net income available to common stockholders) when their impact on net income available to common stockholders is anti-dilutive. Potentially dilutive securities for the three and nine months ended September 30, 2016 and 2015 included all outstanding stock options, RSAs, and RSUs, which were included in the calculation of diluted earnings per share for these periods, if dilutive. The potentially dilutive effect of outstanding warrants and the underlying shares exercisable under the Company’s $287.5 million of 1.00% Convertible Senior Notes due 2020 (the “Convertible Notes”) were excluded from diluted shares outstanding because the exercise price exceeded the average market price of the Company’s common stock. The effect of the note hedge the Company purchased to offset the underlying conversion option embedded in the Convertible Notes was also excluded, as the effect is anti-dilutive.

Additionally, the shares of restricted stock issued by the Company under RSAs have a non-forfeitable right to cash dividends, if and when declared by the Company. Accordingly, restricted shares issued under RSAs are considered to be participating securities and, as such, the Company has allocated the undistributed earnings for the three and nine months ended September 30, 2016 and 2015 among the Company’s outstanding shares of common stock and issued but unvested restricted shares, as follows:

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


	Three Months Ended					Three Months Ended
	September 30, 2016					September 30, 2015
	Income		Weighted Average Shares Outstanding	Earnings per Share		Income		Weighted Average Shares Outstanding	Earnings per Share
Basic:
Net income attributable to controlling interests and available to common stockholders	$	27,490				$	22,009
Less: Undistributed earnings allocated to unvested RSAs		(9)					(28)
Net income available to common stockholders	$	27,481	45,252,869	$	0.61	$	21,981	44,833,117	$	0.49

Diluted:
Effect of dilutive securities:
Add: Undistributed earnings allocated to restricted shares	$	9				$	28
Stock options added to the denominator under the treasury stock method			20,557					60,693
RSUs added to the denominator under the treasury stock method			576,635					497,857
Less: Undistributed earnings reallocated to RSAs		(9)					(27)
Net income available to common stockholders and assumed conversions	$	27,481	45,850,061	$	0.60	$	21,982	45,391,667	$	0.48

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	Nine Months Ended					Nine Months Ended
	September 30, 2016					September 30, 2015
	Income		Weighted Average Shares Outstanding	Earnings per Share		Income		Weighted Average Shares Outstanding	Earnings per Share
Basic:
Net income attributable to controlling interests and available to common stockholders	$	63,022				$	52,239
Less: Undistributed earnings allocated to unvested RSAs		(34)					(79)
Net income available to common stockholders	$	62,988	45,175,604	$	1.39	$	52,160	44,769,661	$	1.17

Diluted:
Effect of dilutive securities:
Add: Undistributed earnings allocated to restricted shares	$	34				$	79
Stock options added to the denominator under the treasury stock method			29,451					68,245
RSUs added to the denominator under the treasury stock method			560,180					485,878
Less: Undistributed earnings reallocated to RSAs		(33)					(78)
Net income available to common stockholders and assumed conversions	$	62,989	45,765,235	$	1.38	$	52,161	45,323,784	$	1.15

The computation of diluted earnings per share excluded potentially dilutive common shares related to restricted stock issued by the Company under RSAs of 7,217 and 12,920 shares for the three and nine months ended September 30, 2016, respectively, and 27,052 and 32,106 for the three and nine months ended September 30, 2015, respectively, because the effect of including these shares in the computation would have been anti-dilutive.

(5) Accumulated Other Comprehensive Loss, Net

(5) Stockholders’ Equity

Redomicile Transaction. Pursuant to the Redomicile Transaction, completed on July 1, 2016, each issued and outstanding share of Cardtronics Delaware common stock held immediately prior to the Merger was effectively converted into one Class A Ordinary Share, nominal value $0.01 per share, of Cardtronics plc (collectively, “Ordinary Shares”). Upon completion of the Redomicile Transaction, the Ordinary Shares were listed and began trading on The NASDAQ Stock Market LLC under the symbol “CATM,” the same symbol under which shares of Cardtronics Delaware common stock were formerly listed and traded. Likewise, the equity plans and/or awards granted thereunder were assumed by Cardtronics plc and amended to provide that those plans and/or awards will now provide for the award and issuance of Ordinary Shares. Furthermore, all shares of Cardtronics Delaware treasury stock were cancelled in the Redomicile Transaction.

The changes in common stock, treasury stock, and additional paid-in capital associated with the Redomicile Transaction are presented in the table below.

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The following table presents the changes in the Company’s stockholders’ equity for the nine months ended September 30, 2016:


	Common Stock
	Shares	Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss, Net		Retained Earnings		Treasury Stock		Noncontrolling Interests		Total
	(In thousands)
Balance as of January 1, 2016	44,954	$	5	$	374,564	$	(88,126)	$	185,897	$	(102,566)	$	19	$	369,793
Issuance of common stock for stock-based compensation, net of forfeitures	474		—		—		—		—		—		—		—
Repurchase of capital stock	(128)		—		—		—		—		(3,959)		—		(3,959)
Stock-based compensation expense	—		—		15,780		—		—		—		—		15,780
Additional tax benefit related to stock-based compensation	—		—		338		—		—		—		—		338
Unrealized loss on interest rate swap contracts, net of deferred income tax (benefit) of $(3,522)	—		—		—		(11,571)		—		—		—		(11,571)
Net income attributable to controlling interests	—		—		—		—		63,022		—		—		63,022
Net loss attributable to noncontrolling interests	—		—		—		—		—		—		(71)		(71)
Foreign currency translation adjustments, net of deferred income tax (benefit) of $(2,555)	—		—		—		(26,686)		—		—		(18)		(26,704)
Change in common stock, treasury stock, and additional paid-in capital associated with the Redomicile Transaction	—		448		(85,741)		—		(21,232)		106,525		—		—
Balance as of September 30, 2016	45,300	$	453	$	304,941	$	(126,383)	$	227,687	$	—	$	(70)	$	406,628

Change in common stock, treasury stock, and additional paid-in capital associated with the Redomicile Transaction. In the Redomicile Transaction, completed on July 1, 2016, each of the 52,529,197 issued and outstanding shares of Cardtronics Delaware common stock held immediately prior to the Merger were effectively converted into an equivalent number of Ordinary Shares of Cardtronics plc. Prior to the Redomicile Transaction, Cardtronics Delaware’s common stock had a $0.0001 par value per share and after the Redomicile Transaction, the Ordinary Shares in Cardtronics plc have a $0.01 par value per share. In addition, immediately prior to the Redomicile Transaction 7,310,022 shares of Cardtronics Delaware treasury stock with a cost basis of $106.5 million were cancelled with the offsetting impact recorded in the Additional paid-in capital and Retained earnings line items on the accompanying Consolidated Balance Sheets.

Accumulated other comprehensive income, net. Accumulated other comprehensive loss, net is displayed as a separate component of Stockholders’ equity in the accompanying Consolidated Balance Sheets. The following tables present the changes in the balances of each component of Accumulated other comprehensive loss, net for the three and nine months ended September 30, 2016:

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	Foreign Currency Translation Adjustments			Unrealized (Losses) Gains on Interest Rate Swap Contracts			Total
	(In thousands)
Total accumulated other comprehensive loss, net as of July 1, 2016	$	(65,827)	(1)	$	(62,263)	(2)	$	(128,090)
Other comprehensive (loss) income before reclassification		(6,745)	(3)		1,171	(4)		(5,574)
Amounts reclassified from accumulated other comprehensive loss, net		—			7,281	(4)		7,281
Net current period other comprehensive (loss) income		(6,745)			8,452			1,707
Total accumulated other comprehensive loss, net as of September 30, 2016	$	(72,572)	(1)	$	(53,811)	(2)	$	(126,383)

⁽¹⁾

Net of deferred income tax (benefit) of $(4,120) and $(3,556) as of September 30, 2016 and July 1, 2016, respectively.

⁽²⁾

Net of deferred income tax (benefit) of $(6,481) and $(11,071) as of September 30, 2016 and July 1, 2016, respectively.

⁽³⁾

Net of deferred income tax (benefit) of $(564).

⁽⁴⁾

Net of deferred income tax expense of $636 and $3,954 for Other comprehensive (loss) income before reclassification and Amounts reclassified from accumulated other comprehensive loss, net, respectively. See Note 11. Derivative Financial Instruments.


	Foreign Currency Translation Adjustments			Unrealized (Losses) Gains on Interest Rate Swap Contracts			Total
	(In thousands)
Total accumulated other comprehensive loss, net as of January 1, 2016	$	(45,886)	(1)	$	(42,240)	(2)	$	(88,126)
Other comprehensive loss before reclassification		(26,686)	(3)		(33,460)	(4)		(60,146)
Amounts reclassified from accumulated other comprehensive loss, net		—			21,889	(4)		21,889
Net current period other comprehensive loss		(26,686)			(11,571)			(38,257)
Total accumulated other comprehensive loss, net as of September 30, 2016	$	(72,572)	(1)	$	(53,811)	(2)	$	(126,383)

⁽¹⁾

Net of deferred income tax (benefit) of $(4,120) and $(1,565) as of September 30, 2016 and January 1, 2016, respectively.

⁽²⁾

Net of deferred income tax (benefit) of $(6,481) and $(2,959) as of September 30, 2016 and January 1, 2016, respectively.

⁽³⁾

Net of deferred income tax (benefit) of $(2,555).

⁽⁴⁾

Net of deferred income tax (benefit) expense of $(10,184) and $6,662 for Other comprehensive loss before reclassification and Amounts reclassified from accumulated other comprehensive loss, net, respectively. See Note 11. Derivative Financial Instruments.

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

The Company has elected the portfolio approach for the deferred tax asset of the unrealized gains and losses related to the interest rate swaps in the Accumulated other comprehensive loss, net line item on the accompanying Consolidated Balance Sheets. Under the portfolio approach, the disproportionate tax effect created when the valuation allowance was appropriately released as a tax benefit into continuing operations in 2010, will reverse out of the Accumulated other comprehensive loss, net line item on the accompanying Consolidated Balance Sheets and into continuing operations as a tax expense when the Company ceases to hold any interest rate swaps. As of September 30, 2016, the disproportionate tax effect is approximately $14.4 million.

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

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(6) Intangible Assets

Intangible Assets with Indefinite Lives

The following tables present the net carrying amounts of the Company’s intangible assets with indefinite lives as well as the changes in the net carrying amounts for the nine months ended September 30, 2016, by segment:


	Goodwill
	North America (1)		Europe (2)		Corporate & Other (3)		Total
	(In thousands)
Balance as of January 1, 2016
Gross balance	$	452,270	$	146,669	$	—	$	598,939
Accumulated impairment loss		—		(50,003)		—		(50,003)
	$	452,270	$	96,666	$	—	$	548,936

Intersegment allocation (4)		(6,650)		—		6,650		—
Foreign currency translation adjustments		44		(11,646)		—		(11,602)

Balance as of September 30, 2016
Gross balance	$	445,664	$	135,023	$	6,650	$	587,337
Accumulated impairment loss		—		(50,003)		—		(50,003)
	$	445,664	$	85,020	$	6,650	$	537,334

⁽¹⁾

The North America segment is comprised of the Company’s operations in the U.S., Canada, Mexico, and Puerto Rico.

⁽²⁾

The Europe segment is comprised of the Company’s operations in the U.K., Ireland, Germany, Poland, Spain, and its ATM advertising business.

⁽³⁾

The Corporate & Other segment is comprised of the Company’s transaction processing activities and the Company’s corporate general and administrative functions.

⁽⁴⁾

In the three months ended September 30, 2016, the Company allocated $6.7 million of the goodwill stemming from the 2015 acquisition of CDS to the Corporate & Other segment in conjunction with the segment reorganization discussed in Note 15. Segment Information.


	Trade Name: Indefinite-lived
	North America (1)		Europe (2)		Corporate & Other (3)		Total
	(In thousands)
Balance as of January 1, 2016	$	200	$	416	$	1,700	$	2,316
Reclassification to definite-lived trade name		—		—		(1,700)		(1,700)
Foreign currency translation adjustments		—		24		—		24
Balance as of September 30, 2016	$	200	$	440	$	—	$	640

⁽¹⁾

The North America segment is comprised of the Company’s operations in the U.S., Canada, Mexico, and Puerto Rico.

⁽²⁾

The Europe segment is comprised of the Company’s operations in the U.K., Ireland, Germany, Poland, Spain, and its ATM advertising business.

⁽³⁾

The Corporate & Other segment is comprised of the Company’s transaction processing activities and the Company’s corporate general and administrative functions.

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Intangible Assets with Definite Lives

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


	September 30, 2016						December 31, 2015
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(In thousands)
Customer and bank-branding contracts/relationships	$	353,509	$	(241,930)	$	111,579	$	350,211	$	(219,498)	$	130,713
Revolving credit facility deferred financing costs		3,625		(2,141)		1,484		2,896		(1,452)		1,444
Non-compete agreements		4,395		(4,061)		334		4,454		(3,935)		519
Technology		10,701		(4,589)		6,112		10,751		(3,750)		7,001
Trade name: definite-lived		12,139		(3,545)		8,594		11,646		(2,859)		8,787
Total	$	384,369	$	(256,266)	$	128,103	$	379,958	$	(231,494)	$	148,464

(7) Accrued Liabilities

The Company’s accrued liabilities consisted of the following:


	September 30, 2016		December 31, 2015
	(In thousands)
Accrued merchant settlement	$	73,462	$	60,218
Accrued merchant fees		49,348		43,005
Accrued taxes		31,992		29,372
Accrued compensation		14,466		15,929
Accrued maintenance		9,600		8,012
Accrued purchases		8,705		7,222
Accrued cash management fees		8,388		8,825
Accrued processing costs		7,859		7,636
Accrued armored		6,049		5,922
Accrued interest		3,701		6,094
Accrued interest on interest rate swaps		2,259		2,708
Accrued telecommunications costs		1,982		1,772
Other accrued expenses		26,749		22,343
Total	$	244,560	$	219,058

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(8) Long-Term Debt

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


	September 30, 2016		December 31, 2015
	(In thousands)
Revolving credit facility, including swingline credit facility	$	—	$	90,835
5.125% Senior Notes due 2022, net of capitalized debt issuance costs (1)		247,211		246,742
1.00% Convertible Senior Notes due 2020, net of unamortized discount and capitalized debt issuance costs (1)		238,436		230,754
Total long-term debt	$	485,647	$	568,331

⁽¹⁾

Issued by Cardtronics Delaware.

As indicated in Note 1. General and Basis of Presentation - (b) Basis of Presentation, the Company has adopted the new accounting guidance applicable to the classification of capitalized debt issuance costs and now presents these costs as a direct deduction from the carrying amount of the related debt liabilities. As a result, the 5.125% Senior Notes due 2022 (the “2022 Notes”) with a face value of $250.0 million are presented net of capitalized debt issuance costs of $2.8 million and $3.3 million as of September 30, 2016 and December 31, 2015, respectively. The Convertible Notes with a face value of $287.5 million are presented net of unamortized discount and capitalized debt issuance costs of $49.1 million and $56.7 million as of September 30, 2016 and December 31, 2015, respectively.

Revolving Credit Facility

On July 1, 2016, Cardtronics plc and certain of its subsidiaries entered into a third amendment (the “Third Amendment”) to its amended and restated credit agreement (the “Credit Agreement”). The Credit Agreement provides for a $375.0 million revolving credit facility and includes an accordion feature that will allow the borrowers under the Credit Agreement to increase the available borrowings under the revolving credit facility to $500.0 million, subject to the approval of one or more existing lenders or one or more lenders that become party to the Credit Agreement. Under the Third Amendment, (i) Cardtronics plc and certain of its subsidiaries were added as borrowers and guarantors, (ii) Cardtronics Delaware was removed as a borrower, but remained a guarantor, (iii) the maturity date of the Credit Agreement was extended to July 1, 2021, (iv) Cardtronics Europe Limited continued as a borrower and a guarantor, and (v) the total commitment under the Credit Agreement of $375.0 million (the “Commitment”) did not change, but can now be borrowed in U.S. dollars, alternative currencies, or a combination thereof. The Third Amendment provides for sub-limits under the Commitment of $50.0 million for swingline loans and $30.0 million for letters of credit.

Borrowings (not including swingline loans and alternative currency loans) accrue interest at the Company’s 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 Company’s most recent Total Net Leverage Ratio (as defined in the Credit Agreement). The margin for Alternative Base Rate loans varies between 0% and 1.25% and the margin for Adjusted LIBO Rate loans varies between 1.00% and 2.25%. Swingline loans denominated in U.S. dollars bear interest at the Alternate Base Rate plus a margin as described above and swingline loans denominated in alternative currencies bear interest at the Overnight LIBO Rate (as defined in the Credit Agreement) plus the applicable margin for the Adjusted LIBO Rate. The alternative currency loans bear interest at the Adjusted LIBO Rate for the relevant currency as described above. Upon effectiveness of the Third Amendment, substantially all of the Company’s U.S. assets, including the stock of its wholly-owned U.S. subsidiaries and 66.0% of the stock of the first-tier non-U.S. subsidiaries of Cardtronics Delaware, were pledged as collateral to secure borrowings made under the revolving credit facility. Furthermore, each of the Company’s material wholly-owned U.S. subsidiaries guaranteed the full and punctual payment of the obligations under the revolving credit facility. In addition, upon effectiveness of the Third Amendment, the obligations of the CFC Borrowers (as defined in the Credit Agreement) were secured by the assets of the CFC Guarantors (as defined in the Credit Agreement), which do not guarantee the obligations of the Company’s U.S. subsidiaries. There are currently no restrictions on the ability of the Company’s subsidiaries to declare and pay dividends to the Company.

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

As of September 30, 2016, the Company had no outstanding borrowings under its $375.0 million revolving credit facility and was in compliance with all applicable covenants and ratios under the Credit Agreement. At September 30, 2016 and December 31, 2015, the Adjusted LIBO Rates applicable to the Company’s borrowings under the revolving credit facility were 2.0% and 2.2%, respectively.

$250.0 Million 5.125% Senior Notes Due 2022

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

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

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

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

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

The 2022 Notes are subject to certain automatic customary releases with respect to the Guarantors (other than Cardtronics plc), including the sale, disposition, or transfer of the capital stock or substantially all of the assets of such Guarantor, designation of such Guarantor as unrestricted in accordance with the Indenture, exercise of the legal defeasance option or the covenant defeasance option, liquidation, or dissolution of such Guarantor and, in the case of a Guarantor that is not wholly-owned by Cardtronics plc, such Guarantor ceasing to guarantee other indebtedness of Cardtronics plc,

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Cardtronics Delaware, or another Guarantor. The Guarantors, including Cardtronics plc, may not sell or otherwise dispose of all or substantially all of their properties or assets to, or consolidate with or merge into, another company if such a sale would cause a default under the Indenture and certain other specified requirements under the Indenture are not satisfied.

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

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

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

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

Effective July 1, 2016, as a result of the share exchange effecting the Redomicile Transaction, the Company’s Convertible Notes became convertible, at the option of the holders and in accordance with the terms of such notes. These notes remained convertible until the 35th trading day immediately following the consummation of the Redomicile Transaction, or August 22, 2016. None of the Convertible Notes were convertible as of September 30, 2016 and, therefore, remain classified in the Long-term debt line item on the Company’s Consolidated Balance Sheets at September 30, 2016. In future financial reporting periods, the classification of the Convertible Notes may change depending on whether any of the above contingent criteria have been subsequently satisfied.

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

Interest expense related to the Convertible Notes consisted of the following:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(In thousands)
Cash interest per contractual coupon rate	$	719	$	719	$	2,157	$	2,156
Amortization of note discount		2,439		2,313		7,219		6,850
Amortization of debt issuance costs		159		142		463		413
Total interest expense related to Convertible Notes	$	3,317	$	3,174	$	9,839	$	9,419

The carrying value of the Convertible Notes consisted of the following:


	September 30, 2016		December 31, 2015
	(In thousands)
Principal balance	$	287,500	$	287,500
Unamortized discount and capitalized debt issuance costs		(49,064)		(56,746)
Net carrying amount of Convertible Notes	$	238,436	$	230,754

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

After completion of the Redomicile Transaction, the Company commenced discussions with the counterparties under such call options and warrants to amend certain provisions thereunder to clarify certain terms (including that shares of Cardtronics plc are now the underlying security instead of Cardtronics Delaware common stock), ensure compliance with applicable law requirements, and otherwise preserve the rights and obligations of the parties. These amendments were completed in October 2016, with no material impact to the Company’s rights and obligations.

(9) Asset Retirement Obligations

Asset retirement obligations consist primarily of costs to deinstall the Company’s ATMs and restore the ATM sites to their original condition, which are estimated based on current market rates. In most cases, the Company is contractually required to perform this deinstallation and in some cases, site restoration work. For each group of similar ATM type, the Company has recognized the estimated fair value of the asset retirement obligation as a liability on its balance sheet and

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capitalized that cost as part of the cost basis of the related asset. The related assets are depreciated on a straight-line basis over five years, which is the estimated average time period that an ATM is installed in a location before being deinstalled, and the related liabilities are accreted to their full value over the same period of time.

The following table presents the changes in the Company’s asset retirement obligation liability for the nine months ended September 30, 2016 (in thousands):



Balance as of January 1, 2016	$	54,727
Additional obligations		6,020
Accretion expense		1,359
Change in estimates		(69)
Payments		(2,771)
Foreign currency translation adjustments		(3,092)
Balance as of September 30, 2016		56,174
Less: current portion		8,978
Balance as of September 30, 2016, excluding current portion	$	47,196

See Note 12. Fair Value Measurements for additional disclosures on the Company’s asset retirement obligations with respect to its fair value measurements.

(10) Other Liabilities

The Company’s other liabilities consisted of the following:


	September 30, 2016		December 31, 2015
	(In thousands)
Current portion of other long-term liabilities
Interest rate swaps	$	21,155	$	23,327
Deferred revenue		1,004		2,313
Asset retirement obligations		8,978		3,698
Other		1,833		3,394
Total	$	32,970	$	32,732

Other long-term liabilities
Interest rate swaps	$	39,494	$	21,872
Deferred revenue		1,324		1,217
Other		6,890		7,568
Total	$	47,708	$	30,657

(11) Derivative Financial Instruments

Cash Flow Hedging Strategy

The Company is exposed to certain risks relating to its ongoing business operations, including interest rate risk associated with its vault cash rental obligations and, to a lesser extent, borrowings under its revolving credit facility. The Company is also exposed to foreign currency exchange rate risk with respect to its investments in its foreign subsidiaries. While the Company does not currently utilize derivative instruments to hedge its foreign currency exchange rate risk or to manage the interest rate risk associated with its borrowings, the Company does utilize interest rate swap contracts to manage the interest rate risk associated with its vault cash rental obligations in the U.S. and the U.K.

The interest rate swap contracts entered into with respect to the Company’s vault cash rental obligations serve to mitigate the Company’s exposure to interest rate risk by converting a portion of the Company’s monthly floating rate vault

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cash rental obligations to a fixed-rate. The Company has contracts in varying notional amounts through December 31, 2020 for the Company’s U.S. and U.K. vault cash rental obligations. By converting such amounts to a fixed rate, the impact of future interest rate changes (both favorable and unfavorable) on the Company’s monthly vault cash rental expense amounts has been reduced. The interest rate swap contracts typically involve the receipt of floating rate amounts from the Company’s counterparties that match, in all material respects, the floating rate amounts required to be paid by the Company to its vault cash providers for the portions of the Company’s outstanding vault cash obligations that have been hedged. In return, the Company typically pays the interest rate swap counterparties a fixed-rate amount per month based on the same notional amounts outstanding. At no point is there an exchange of the underlying principal or notional amounts associated with the interest rate swaps. Additionally, none of the Company’s existing interest rate swap contracts contain credit-risk-related contingent features.

For each derivative instrument that is designated and qualifies as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of the Accumulated other comprehensive loss, net line item on the accompanying Consolidated Balance Sheets and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged item affects earnings. Gains and losses on the derivative instrument representing either hedge ineffectiveness or hedge components that are excluded from the assessment of effectiveness are recognized in earnings. However, because the Company generally utilizes fixed-for-floating interest rate swaps in which the underlying pricing terms agree, in all material respects, with the pricing terms of the Company’s vault cash rental obligations, the amount of ineffectiveness associated with such interest rate swap contracts has historically been immaterial. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the Consolidated Statements of Operations during the current period.

During the three months ended March 31, 2016, the Company entered into new forward-starting interest rate swap agreements with an aggregate notional amount of £550.0 million. These swap agreements begin on January 1, 2017, with £250.0 million terminating December 31, 2019 and £300.0 million terminating December 31, 2020.

Effective June 29, 2016, one of the Company’s interest rate swap counterparties exercised its right to terminate a $200.0 million notional amount, 2.40% fixed-rate, contract that was previously designated as a cash flow hedge of the Company’s 2019 and 2020 vault cash rental payments. The designated vault cash rental payments remain probable; therefore, upon termination and as of that date, the Company recognized an unrealized loss of $4.9 million in the Accumulated other comprehensive loss, net line item in the accompanying Consolidated Balance Sheets. The Company will amortize this unrealized loss into Vault cash rental expense, a component of the Cost of ATM operating revenues line item in the accompanying Consolidated Statements of Operations, over the 2019 and 2020 periods. The terminated contract was effectively novated by the previous counterparty and the Company entered into a similar $200.0 million notional amount, 2.52% fixed-rate interest rate swap with a new counterparty, which the Company designated as a cash flow hedge of its 2019 and 2020 vault cash rental payments. The modified terms resulted in ineffectiveness of $0.4 million recognized in the Other expense line item in the accompanying Consolidated Statements of Operations during the three months ended June 30, 2016. The ineffectiveness recognized during the three months ended September 30, 2016 was immaterial.

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


Notional Amounts		Weighted Average Fixed Rate		Notional Amounts		Weighted Average Fixed Rate
U.S.		U.S.		U.K.		U.K.		Term
(In millions)				(In millions)
$	1,300	2.74	%	£	—	—	%	October 1, 2016 – December 31, 2016
$	1,000	2.53	%	£	550	0.82	%	January 1, 2017 – December 31, 2017
$	750	2.54	%	£	550	0.82	%	January 1, 2018 – December 31, 2018
$	600	2.45	%	£	300	0.86	%	January 1, 2019 – December 31, 2019
$	600	2.45	%	£	—	—	%	January 1, 2020 – December 31, 2020

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Accounting Policy

The Company recognizes all of its derivative instruments as either assets or liabilities in the accompanying Consolidated Balance Sheets at fair value. The accounting for changes in the fair value (i.e., gains or losses) of those derivative instruments depends on: (i) whether these instruments have been designated (and qualify) as part of a hedging relationship and (ii) the type of hedging relationship actually designated. For derivative instruments that are designated and qualify as hedging instruments, the Company designates the hedging instrument, based upon the exposure being hedged, as a cash flow hedge, a fair value hedge, or a hedge of a net investment in a foreign operation.

The Company has designated all of its interest rate swap contracts as cash flow hedges of the Company’s forecasted vault cash rental obligations. Accordingly, changes in the fair values of the related interest rate swap contracts have been reported in the Accumulated other comprehensive loss, net line item in the accompanying Consolidated Balance Sheets.

The Company believes that it is more likely than not that it will be able to realize the benefits associated with its net deferred tax asset positions in the future. Therefore, the Company records the unrealized gains and losses related to its interest rate swaps net of estimated taxes in the Accumulated other comprehensive loss, net line item in the accompanying Consolidated Balance Sheets.

Tabular Disclosures

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

Balance Sheet Data


	September 30, 2016			December 31, 2015
Liability Derivative Instruments	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
		(In thousands)			(In thousands)
Derivatives Designated as Hedging Instruments:
Interest rate swap contracts	Current portion of other long-term liabilities	$	21,155	Current portion of other long-term liabilities	$	23,327
Interest rate swap contracts	Other long-term liabilities		39,494	Other long-term liabilities		21,872
Total Derivatives		$	60,649		$	45,199

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Statements of Operations Data


	Three Months Ended September 30,
Derivatives in Cash Flow Hedging Relationship	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivative Instruments (Effective Portion)				Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)
	2016		2015			2016		2015
	(In thousands)					(In thousands)
Interest rate swap contracts	$	1,171	$	(15,762)	Cost of ATM operating revenues	$	(7,281)	$	(8,645)


	Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationship	Amount of Loss Recognized in Accumulated Other Comprehensive Loss on Derivative Instruments (Effective Portion)				Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)
	2016		2015			2016		2015
	(In thousands)					(In thousands)
Interest rate swap contracts	$	(33,460)	$	(30,107)	Cost of ATM operating revenues	$	(21,889)	$	(25,834)

The Company does not currently have any derivative instruments that have been designated as fair value or net investment hedges. The Company does not currently anticipate terminating its existing derivative instruments prior to their expiration dates. If the Company concludes that it is no longer probable that the anticipated future vault cash rental obligations that have been hedged will occur, or if changes are made to the underlying terms and conditions of the Company’s vault cash rental agreements, thus creating some amount of ineffectiveness associated with the Company’s current interest rate swap contracts, any resulting gains or losses will be recognized in the Other expense line item of the accompanying Consolidated Statements of Operations.

As of September 30, 2016, the Company expects to reclassify $21.2 million of net derivative-related losses contained within Accumulated other comprehensive loss, net line item into earnings during the next twelve months concurrent with the recording of the related vault cash rental expense amounts.

See Note 12. Fair Value Measurements for additional disclosures on the Company’s interest rate swap contracts in respect to its fair value measurements.

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(12) Fair Value Measurements

The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2016 and December 31, 2015 using the fair value hierarchy prescribed by U.S. GAAP. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant non-observable inputs. An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.


	Fair Value Measurements at September 30, 2016
	Total		Level 1		Level 2		Level 3
	(In thousands)
Liabilities
Liabilities associated with interest rate swaps	$	60,649	$	—	$	60,649	$	—


	Fair Value Measurements at December 31, 2015
	Total		Level 1		Level 2		Level 3
	(In thousands)
Liabilities
Liabilities associated with interest rate swaps	$	45,199	$	—	$	45,199	$	—

Interest rate swaps. The fair value of the Company’s interest rate swaps liability was $60.6 million as of September 30, 2016. These financial instruments are carried at fair value, calculated as the present value of amounts estimated to be received or paid to a marketplace participant in a selling transaction. These derivatives are valued using pricing models based on significant other observable inputs (Level 2 inputs), while taking into account the creditworthiness of the party that is in the liability position with respect to each trade. See Note 11. Derivative Financial Instruments for additional disclosures on the valuation process of this liability.

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

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

Acquisition-related intangible assets. The estimated fair values of acquisition-related intangible assets are valued based on a discounted cash flows analysis using significant non-observable inputs (Level 3 inputs). Intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. An assessment of non-amortized intangible assets is performed on an annual basis, or more frequently based on the occurrence of events that might indicate a potential impairment.

Long-term debt. The carrying amount of the long-term debt balance related to borrowings under the Company’s revolving credit facility approximates fair value due to the fact that any borrowings are subject to short-term floating interest rates. As of September 30, 2016, the fair value of the 2022 Notes and the Convertible Notes (see Note 8. Long-Term Debt) totaled $256.4 million and $304.9 million, respectively, based on the quoted prices in markets that are not active (Level 2 input) for these notes as of that date.

Additions to asset retirement obligation liability. The Company estimates the fair value of additions to its asset retirement obligation liability using expected future cash outflows discounted at the Company’s credit-adjusted risk-free

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interest rate. Liabilities added to the Asset retirement obligations line item in the accompanying Consolidated Balance Sheets are measured at fair value at the time of the asset installations using Level 3 inputs, and are only reevaluated periodically based on estimated current fair value. Amounts added to the asset retirement obligation liability during the nine months ended September 30, 2016 and 2015 totaled $6.0 million and $5.7 million, respectively.

(13) Commitments and Contingencies

Legal Matters

The Company is subject to various legal proceedings and claims arising in the ordinary course of its business. The Company has provided reserves where necessary for all claims and the Company’s management does not expect the outcome in any legal proceedings, individually or collectively, to have a material adverse financial or operational impact on the Company. Additionally, the Company currently expenses all legal costs as they are incurred.

Other Commitments

Asset retirement obligations. The Company’s asset retirement obligations consist primarily of deinstallation costs of the Company’s ATMs and costs to restore the ATM sites to their original condition. In most cases, the Company is legally required to perform this deinstallation, and in some cases, the site restoration work. The Company had $56.2 million accrued for these liabilities as of September 30, 2016. For additional information, see Note 9. Asset Retirement Obligations.

(14) Income Taxes

Income tax expense based on the Company’s income before income taxes was as follows:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(In thousands, excluding percentages)
Income tax expense	$	8,388		$	12,629		$	26,204		$	29,837
Effective tax rate		23.4	%		36.8	%		29.4	%		36.8	%

The Company’s income tax provision for the three months ended September 30, 2016 totaled $8.4 million, or an effective tax rate of 23.4%, compared to the income tax expense of $12.6 million or an effective tax rate of 36.8%, for the three months ended September 30, 2015. The Company’s income tax provision for the nine months ended September 30, 2016 totaled $26.2 million, or 29.4%, compared to income tax expense of $29.8 million, or 36.8%, for the nine months ended September 30, 2015. The decrease in the effective tax rate for the three and nine months ended September 30, 2016, when compared to the same periods in 2015, is attributable to the Redomicile Transaction and the post-redomicile structuring, completed on July 1, 2016, and the mix of earnings across jurisdictions. See Note 1. General and Basis of Presentation - (a) General for a further discussion of the Redomicile Transaction.

The Company assesses the need for any deferred tax asset valuation allowances at the end of each reporting period. The determination of whether a valuation allowance for deferred tax assets is needed is subject to considerable judgment and requires an evaluation of all available positive and negative evidence. Based on the assessment at September 30, 2016, and the weight of all available evidence, the Company concluded that maintaining the deferred tax asset valuation allowance for certain entities was appropriate, as the Company currently believes that it is more likely than not that the related deferred tax assets will not be realized.

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

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As indicated in Note 1. General and Basis of Presentation - (b) Basis of Presentation, the Company adopted the new accounting guidance applicable to the balance sheet classification of deferred taxes, eliminating the requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet.

(15) Segment Information

As of September 30, 2016, the Company’s operations consisted of its North America, Europe, and Corporate & Other segments. The Company’s ATM operations in the U.S., Canada, Mexico, and Puerto Rico are included in its North America segment. The Company’s ATM operations in the U.K., Ireland, Germany, Poland, Spain, and its ATM advertising business (i- design group plc (“i-design”)) are included in its Europe segment. The Company’s transaction processing operations, which service its North American and European operations along with external customers, and the Company’s corporate general and administrative functions comprise the Corporate & Other segment. In the first quarter of 2016, the Company reorganized and created the Corporate & Other segment to separately present transaction processing operations from its primary ATM operations and present the corporate general and administrative functions separate from the North America segment. Additionally, i-design was previously included within the North America segment and due to organizational changes, is now a part of the Europe segment. While both regional reporting segments provide similar kiosk-based and/or ATM-related services, each of the regional segments is managed separately and requires different marketing and business strategies. Similarly, the transaction processing and corporate general and administrative functions are also managed separately. Segment information presented for prior periods has been revised to reflect this change in segments.

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

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

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Below is a reconciliation of Net income attributable to controlling interests and available to common stockholders to EBITDA and Adjusted EBITA:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(In thousands)
Net income attributable to controlling interests and available to common stockholders	$	27,490	$	22,009	$	63,022	$	52,239
Adjustments:
Interest expense, net		4,269		5,033		13,227		14,496
Amortization of deferred financing costs and note discount		2,872		2,859		8,636		8,455
Income tax expense		8,388		12,629		26,204		29,837
Depreciation and accretion expense		23,308		22,127		69,085		64,142
Amortization of intangible assets		9,175		10,048		28,129		29,040
EBITDA	$	75,502	$	74,705	$	208,303	$	198,209
Add back:
Loss (gain) on disposal of assets		469		(12,139)		(475)		(12,425)
Other expense (1)		360		1,067		748		2,882
Noncontrolling interests (2)		(15)		(336)		(50)		(1,047)
Stock-based compensation expense (3)		6,642		5,147		15,780		14,360
Acquisition and divestiture-related expenses (4)		2,680		13,289		4,938		21,207
Redomicile-related expenses (5)		951		—		12,201		—
Adjusted EBITDA	$	86,589	$	81,733	$	241,445	$	223,186
Less:
Depreciation and accretion expense (6)		23,301		22,014		69,063		63,767
Adjusted EBITA	$	63,288	$	59,719	$	172,382	$	159,419

⁽¹⁾

Includes foreign currency translation gains or losses and other non-operating costs.

⁽²⁾

Noncontrolling interest adjustment made such that Adjusted EBITDA includes only the Company’s ownership interest in the Adjusted EBITDA of its Mexico subsidiary. In December 2015, the Company increased its ownership interest in its Mexico subsidiary from 51.0% to 95.7%.

⁽³⁾

For the three and nine months ended September 30, 2015, amounts exclude a portion of the expenses incurred by the Company’s Mexico subsidiary to account for the amounts allocable to the noncontrolling interest stockholders. The Company’s Mexico subsidiary recognized no stock-based compensation expense for the three and nine months ended September 30, 2016.

⁽⁴⁾

Acquisition and divestiture-related expenses include costs incurred for professional and legal fees and certain other transition and integration-related costs.

⁽⁵⁾

Expenses associated with the Company’s redomicile of its parent company to the U.K., which was completed on July 1, 2016.

⁽⁶⁾

Amounts exclude a portion of the expenses incurred by the Company’s Mexico subsidiary to account for the amounts allocable to the noncontrolling interest stockholders. In December 2015, the Company increased its ownership interest in its Mexico subsidiary.

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The following tables reflect certain financial information for each of the Company’s reporting segments for the three and nine months ended September 30, 2016 and 2015, respectively:


	Three Months Ended September 30, 2016
	North America		Europe		Corporate & Other		Eliminations		Total
	(In thousands)
Revenue from external customers	$	226,961	$	95,185	$	6,188	$	—	$	328,334
Intersegment revenues		—		378		6,079		(6,457)		—
Cost of revenues		146,786		58,907		8,954		(6,457)		208,190
Selling, general, and administrative expenses		14,504		8,437		17,253		—		40,194
Redomicile-related expenses		—		77		874		—		951
Acquisition and divestiture-related expenses		612		378		1,690		—		2,680
Loss (gain) on disposal of assets		510		(41)		—		—		469

Adjusted EBITDA		65,661		28,219		(7,285)		(6)		86,589

Depreciation and accretion expense		12,341		9,148		1,819		—		23,308
Adjusted EBITA		53,323		19,071		(9,112)		6		63,288

Capital expenditures (1)	$	17,843	$	18,098	$	538	$	—	$	36,479


	Three Months Ended September 30, 2015
	North America		Europe		Corporate & Other		Eliminations		Total
	(In thousands)
Revenue from external customers	$	207,362	$	98,652	$	5,336	$	—	$	311,350
Intersegment revenues		—		361		6,059		(6,420)		—
Cost of revenues		132,310		65,309		7,835		(6,420)		199,034
Selling, general, and administrative expenses		14,979		8,050		12,730		—		35,759
Acquisition and divestiture-related expenses		732		12,073		484		—		13,289
Loss (gain) on disposal of assets		571		(12,709)		(1)		—		(12,139)

Adjusted EBITDA		60,055		25,647		(4,012)		43		81,733

Depreciation and accretion expense		11,837		8,824		1,466		—		22,127
Adjusted EBITA		48,218		16,822		(5,534)		213		59,719

Capital expenditures (1)	$	37,085	$	10,245	$	129	$	—	$	47,459

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	Nine Months Ended September 30, 2016
	North America		Europe		Corporate & Other		Eliminations		Total
	(In thousands)
Revenue from external customers	$	657,520	$	279,616	$	18,406	$	—	$	955,542
Intersegment revenues		—		1,042		17,663		(18,705)		—
Cost of revenues		428,557		178,556		25,985		(18,705)		614,393
Selling, general, and administrative expenses		44,753		26,542		44,210		—		115,505
Redomicile-related expenses		—		89		12,112		—		12,201
Acquisition and divestiture-related expenses		1,447		1,299		2,192		—		4,938
Loss (gain) on disposal of assets		1,266		(1,741)		—		—		(475)

Adjusted EBITDA		184,214		75,565		(18,343)		9		241,445

Depreciation and accretion expense		36,343		27,605		5,137		—		69,085
Adjusted EBITA		147,870		47,960		(23,478)		30		172,382

Capital expenditures (1)	$	37,353	$	37,532	$	1,165	$	—	$	76,050


	Nine Months Ended September 30, 2015
	North America		Europe		Corporate & Other		Eliminations		Total
	(In thousands)
Revenue from external customers	$	607,797	$	283,864	$	5,336	$	—	$	896,997
Intersegment revenues		—		1,069		16,321		(17,390)		—
Cost of revenues		389,723		198,159		16,884		(17,390)		587,376
Selling, general, and administrative expenses		44,387		23,927		32,515		—		100,829
Acquisition and divestiture-related expenses		3,860		16,802		545		—		21,207
Loss (gain) on disposal of assets		1,854		(14,278)		(1)		—		(12,425)

Adjusted EBITDA		173,719		62,846		(13,401)		22		223,186

Depreciation and accretion expense		35,239		25,759		3,144		—		64,142
Adjusted EBITA		138,480		37,086		(16,544)		397		159,419

Capital expenditures (1)	$	68,274	$	35,474	$	129	$	—	$	103,877

⁽¹⁾

Capital expenditure amounts include payments made for exclusive license agreements, site acquisition costs, and other intangible assets. Additionally, capital expenditure amounts for Mexico (included in the North America segment) are reflected gross of any noncontrolling interest amounts.

Identifiable Assets



	September 30, 2016		December 31, 2015
	(In thousands)
North America	$	876,272	$	870,445
Europe		365,201		382,920
Corporate & Other		71,653		66,570
Total	$	1,313,126	$	1,319,935

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(16) Supplemental Guarantor Financial Information

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

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

The following information sets forth the Condensed Consolidating Statements of Comprehensive Income for the three and nine months ended September 30, 2016 and 2015, the Condensed Consolidating Balance Sheets as of September 30, 2016, and the Condensed Consolidating Statement of Cash Flows for the nine months ended September 30, 2016 and 2015 of: (i) Cardtronics plc, the parent Guarantor (“Parent”), as of September 30, 2016, (ii) Cardtronics Delaware (“Issuer”), (iii) the Guarantors, and (iv) the Non-Guarantors:

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Condensed Consolidating Statements of Comprehensive Income


	Three Months Ended September 30, 2016
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Revenues	$	—	$	—	$	229,126	$	105,711	$	(6,503)	$	328,334
Operating costs and expenses		9,085		336		193,789		88,260		(6,503)		284,967
(Loss) income from operations		(9,085)		(336)		35,337		17,451		—		43,367
Interest expense (income), net, including amortization of deferred financing costs and note discount		—		6,306		14,818		(13,983)		—		7,141
Equity in earnings of subsidiaries		(35,950)		(18,890)		(10,549)		—		65,389		—
Other (income) expense		(4)		69		(598)		925		(32)		360
Income before income taxes		26,869		12,179		31,666		30,509		(65,357)		35,866
Income tax (benefit) expense		(609)		(6,686)		12,580		3,103		—		8,388
Net income		27,478		18,865		19,086		27,406		(65,357)		27,478
Net loss attributable to noncontrolling interests		—		—		—		—		(12)		(12)
Net income attributable to controlling interests and available to common stockholders		27,478		18,865		19,086		27,406		(65,345)		27,490
Other comprehensive income (loss) attributable to controlling interests		1,510		(16,012)		(16,690)		(27,645)		60,334		1,497
Comprehensive income (loss) attributable to controlling interests	$	28,988	$	2,853	$	2,396	$	(239)	$	(5,011)	$	28,987


	Three Months Ended September 30, 2015
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Revenues	$	—	$	—	$	205,150	$	109,207	$	(3,007)	$	311,350
Operating costs and expenses		—		4,862		172,564		93,699		(3,007)		268,118
(Loss) income from operations		—		(4,862)		32,586		15,508		—		43,232
Interest expense, net, including amortization of deferred financing costs and note discount		—		6,042		1,470		380		—		7,892
Equity in earnings of subsidiaries		—		(31,261)		(7,264)		—		38,525		—
Other (income) expense		—		(1,235)		(963)		3,265		—		1,067
Income before income taxes		—		21,592		39,343		11,863		(38,525)		34,273
Income tax (benefit) expense		—		(52)		9,891		2,790		—		12,629
Net income		—		21,644		29,452		9,073		(38,525)		21,644
Net loss attributable to noncontrolling interests		—		—		—		—		(365)		(365)
Net income attributable to controlling interests and available to common stockholders		—		21,644		29,452		9,073		(38,160)		22,009
Other comprehensive loss attributable to controlling interests		—		(22,555)		(7,158)		(13,680)		20,839		(22,554)
Comprehensive (loss) income attributable to controlling interests	$	—	$	(911)	$	22,294	$	(4,607)	$	(17,321)	$	(545)

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	Nine Months Ended September 30, 2016
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Revenues	$	—	$	—	$	663,998	$	310,344	$	(18,800)	$	955,542
Operating costs and expenses		9,085		14,394		572,241		266,856		(18,800)		843,776
(Loss) income from operations		(9,085)		(14,394)		91,757		43,488		—		111,766
Interest expense (income), net, including amortization of deferred financing costs and note discount		—		19,153		15,605		(12,895)		—		21,863
Equity in earnings of subsidiaries		(71,423)		(70,923)		(28,897)		—		171,243		—
Other (income) expense		(4)		(5)		(2,622)		3,426		(47)		748
Income before income taxes		62,342		37,381		107,671		52,957		(171,196)		89,155
Income tax (benefit) expense		(609)		(17,151)		36,690		7,274		—		26,204
Net income		62,951		54,532		70,981		45,683		(171,196)		62,951
Net loss attributable to noncontrolling interests		—		—		—		—		(71)		(71)
Net income attributable to controlling interests and available to common stockholders		62,951		54,532		70,981		45,683		(171,125)		63,022
Other comprehensive loss attributable to controlling interests		(38,353)		(4,744)		(9,215)		(5,834)		19,721		(38,425)
Comprehensive income attributable to controlling interests	$	24,598	$	49,788	$	61,766	$	39,849	$	(151,404)	$	24,597


	Nine Months Ended September 30, 2015
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Revenues	$	—	$	—	$	590,533	$	314,777	$	(8,313)	$	896,997
Operating costs and expenses		—		14,062		497,229		287,191		(8,313)		790,169
(Loss) income from operations		—		(14,062)		93,304		27,586		—		106,828
Interest expense, net, including amortization of deferred financing costs and note discount		—		16,327		4,863		1,761		—		22,951
Equity in earnings of subsidiaries		—		(68,831)		(10,630)		—		79,461		—
Other (income) expense		—		(313)		(2,594)		5,789		—		2,882
Income before income taxes		—		38,755		101,665		20,036		(79,461)		80,995
Income tax (benefit) expense		—		(12,403)		37,706		4,534		—		29,837
Net income		—		51,158		63,959		15,502		(79,461)		51,158
Net loss attributable to noncontrolling interests		—		—		—		—		(1,081)		(1,081)
Net income attributable to controlling interests and available to common stockholders		—		51,158		63,959		15,502		(78,380)		52,239
Other comprehensive (loss) income attributable to controlling interests		—		(9,063)		1,300		(2,425)		1,124		(9,064)
Comprehensive income attributable to controlling interests	$	—	$	42,095	$	65,259	$	13,077	$	(77,256)	$	43,175

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Condensed Consolidating Balance Sheets


	As of September 30, 2016
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Assets
Cash and cash equivalents	$	—	$	7	$	28,504	$	31,010	$	—	$	59,521
Accounts and notes receivable, net		—		—		47,540		25,600		—		73,140
Other current assets		—		440		31,540		79,012		—		110,992
Total current assets		—		447		107,584		135,622		—		243,653
Property and equipment, net		—		—		240,834		133,986		—		374,820
Intangible assets, net		—		—		92,045		36,698		—		128,743
Goodwill		—		—		449,658		87,676		—		537,334
Investments in and advances to subsidiaries		408,993		850,682		643,441		—		(1,903,116)		—
Intercompany receivable		447		171,578		122,563		64,950		(359,538)		—
Deferred tax asset, net		610		—		347		7,655		—		8,612
Prepaid expenses, deferred costs, and other noncurrent assets		—		502		7,093		12,369		—		19,964
Total assets	$	410,050	$	1,023,209	$	1,663,565	$	478,956	$	(2,262,654)	$	1,313,126
Liabilities and Stockholders' Equity
Current portion of other long-term liabilities		—		—		26,144		6,826		—		32,970
Accounts payable and accrued liabilities		—		12,451		184,379		83,059		—		279,889
Total current liabilities		—		12,451		210,523		89,885		—		312,859
Long-term debt		—		485,647		—		—		—		485,647
Intercompany payable		3,422		81,210		128,267		146,639		(359,538)		—
Asset retirement obligations		—		—		22,258		24,938		—		47,196
Deferred tax liability, net		—		—		11,538		1,550		—		13,088
Other long-term liabilities		—		502		38,321		8,885		—		47,708
Total liabilities		3,422		579,810		410,907		271,897		(359,538)		906,498
Stockholders' equity		406,628		443,399		1,252,658		207,059		(1,903,116)		406,628
Total liabilities and stockholders' equity	$	410,050	$	1,023,209	$	1,663,565	$	478,956	$	(2,262,654)	$	1,313,126

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	As of December 31, 2015
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Assets
Cash and cash equivalents	$	—	$	782	$	6,200	$	19,315	$	—	$	26,297
Accounts and notes receivable, net		—		—		36,961		35,048		—		72,009
Current portion of deferred tax asset, net		—		—		16,169		131		—		16,300
Other current assets		—		1,878		47,398		49,642		—		98,918
Total current assets		—		2,660		106,728		104,136		—		213,524
Property and equipment, net		—		—		231,970		143,518		—		375,488
Intangible assets, net		—		1,396		106,863		42,521		—		150,780
Goodwill		—		—		449,658		99,278		—		548,936
Investments in and advances to subsidiaries		—		628,651		284,153		—		(912,804)		—
Intercompany receivable		—		407,697		197,277		6,217		(611,191)		—
Deferred tax asset, net		—		—		—		11,950		—		11,950
Prepaid expenses, deferred costs, and other noncurrent assets		—		200		6,611		12,446		—		19,257
Total assets	$	—	$	1,040,604	$	1,383,260	$	420,066	$	(1,523,995)	$	1,319,935
Liabilities and Stockholders' Equity												—
Current portion of other long-term liabilities		—		—		29,965		2,767		—		32,732
Accounts payable and accrued liabilities		—		12,109		152,012		80,787		—		244,908
Total current liabilities		—		12,109		181,977		83,554		—		277,640
Long-term debt		—		548,496		—		19,835		—		568,331
Intercompany payable		—		110,006		236,283		264,902		(611,191)		—
Asset retirement obligations		—		—		25,360		26,325		—		51,685
Deferred tax liability, net		—		—		19,884		1,945		—		21,829
Other long-term liabilities		—		200		28,751		1,706		—		30,657
Total liabilities		—		670,811		492,255		398,267		(611,191)		950,142
Stockholders' equity		—		369,793		891,005		21,799		(912,804)		369,793
Total liabilities and stockholders' equity	$	—	$	1,040,604	$	1,383,260	$	420,066	$	(1,523,995)	$	1,319,935

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Condensed Consolidating Statement of Cash Flows


	Nine Months Ended September 30, 2016
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Net cash (used in) provided by operating activities	$	(1,114)	$	75,563	$	70,451	$	69,031	$	—	$	213,931
Additions to property and equipment		—		—		(33,603)		(42,447)		—		(76,050)
Acquisitions, net of cash acquired		—		—		(14,544)		(5,157)		—		(19,701)
Proceeds from sale of assets and businesses		—		—		—		9,348		—		9,348
Net cash used in investing activities		—		—		(48,147)		(38,256)		—		(86,403)
Proceeds from borrowings under revolving credit facility		—		221,268		—		—		—		221,268
Repayments of borrowings under revolving credit facility		—		(311,361)		—		—		—		(311,361)
Repayments of intercompany notes payable		—		17,911		—		(17,911)		—		—
Proceeds from exercises of stock options		433		146		—		—		—		579
Additional tax benefit (expense) related to stock-based compensation		681		(343)		—		—		—		338
Repurchase of capital stock		—		(3,959)		—		—		—		(3,959)
Net cash provided by (used in) financing activities		1,114		(76,338)		—		(17,911)		—		(93,135)
Effect of exchange rate changes on cash		—		—		—		(1,169)		—		(1,169)
Net (decrease) increase in cash and cash equivalents		—		(775)		22,304		11,695		—		33,224
Cash and cash equivalents as of beginning of period		—		782		6,200		19,315		—		26,297
Cash and cash equivalents as of end of period	$	—	$	7	$	28,504	$	31,010	$	—	$	59,521

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	Nine Months Ended September 30, 2015
	Parent		Issuer		Guarantors		Non-Guarantors		Eliminations		Total
	(In thousands)
Net cash (used in) provided by operating activities	$	—	$	(61,118)	$	138,448	$	69,782	$	—	$	147,112
Additions to property and equipment		—		—		(64,411)		(39,466)		—		(103,877)
Acquisitions, net of cash acquired		—		—		(80,504)		(23,370)		—		(103,874)
Proceeds from sale of assets and businesses		—		—		—		36,661		—		36,661
Net cash used in investing activities		—		—		(144,915)		(26,175)		—		(171,090)
Proceeds from borrowings under revolving credit facility		—		312,500		—		27,750		—		340,250
Repayments of borrowings under revolving credit facility		—		(324,186)		—		(30)		—		(324,216)
Repayments of intercompany notes payable		—		75,545		(750)		(74,795)		—		—
Proceeds from exercises of stock options		—		586		—		—		—		586
Additional tax benefit related to stock-based compensation		—		1,287		—		—		—		1,287
Repurchase of capital stock		—		(4,610)		—		—		—		(4,610)
Net cash provided by (used in) financing activities		—		61,122		(750)		(47,075)		—		13,297
Effect of exchange rate changes on cash		—		—		—		(2,711)		—		(2,711)
Net increase (decrease) in cash and cash equivalents		—		4		(7,217)		(6,179)		—		(13,392)
Cash and cash equivalents as of beginning of period		—		—		9,391		22,484		—		31,875
Cash and cash equivalents as of end of period	$	—	$	4	$	2,174	$	16,305	$	—	$	18,483

(17) Concentration Risk

Significant Customers. 7-Eleven, Inc. (“7-Eleven”) in the U.S. represents the largest merchant customer in the Company’s portfolio, and comprised approximately 18% and 17.5% of the Company’s pro forma total revenues for the years ended December 31, 2015 and 2014, respectively. In July 2015, the Company received notification from 7-Eleven that they do not intend on renewing the ATM placement agreement with the Company upon expiration. The existing agreement between the Company and 7-Eleven remains in effect until July 2017, and calls for a transition period that, at 7-Eleven’s request, could extend the Company’s contract in part for up to six months.

(18) New Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition. ASU 2014-09 was later amended by ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”), ASU No. 2016-10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”), and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”). ASU 2014-09, as amended, supersedes most industry specific guidance and intends to enhance comparability of revenue recognition practices across entities and industries by providing a principle-based, comprehensive framework for addressing revenue recognition issues. ASU 2014-09, as amended, is effective for fiscal years, and interim reporting periods within those years, beginning after December 15, 2017. Early application is permitted for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the provisions of the new revenue recognition guidance described above and is assessing the impact of this guidance on the Company’s financial statements and disclosures.

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In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 applies to inventory that is measured using either the first-in, first-out, or average cost methods and requires entities to measure their inventory at the lower of cost and net realizable value. ASU 2015-11 defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for annual periods beginning after December 15, 2016, and interim periods therein. The Company does not expect ASU 2015-11 to have a material effect on the Company’s results of operations.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted. The Company is currently evaluating the impact that the standard will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) in order to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous U.S. GAAP. ASU 2016-02 requires that a lessee should recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 and interim periods within those periods using a modified retrospective approach and early adoption is permitted. The Company is currently evaluating the impact the standard will have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contracts Novations on Existing Hedge Accounting Relationships (“ASU 2016-05”), which updates ASC Topic 815, Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. The amendments in ASU 2016-05 clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815, does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. ASU 2016-05 is effective for fiscal years beginning after December 31, 2016. The Company plans to adopt this guidance after its effective date and does not anticipate a material impact on its consolidated financial statements.

Also in March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which amends ASC Topic 718, Compensation - Stock Compensation. ASU 2016-09 is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and early adoption is permitted. The Company is currently evaluating the impact the standard will have on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 updates the following specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon or insignificant rate debt instruments; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years and early adoption is permitted. The Company is currently evaluating the impact the standard will have on its consolidated Statement of Cash Flows.

See Note 1. General and Basis of Presentation - (b) Basis of Presentation for a discussion of the ASUs adopted in the nine months ended September 30, 2016.

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(19) Subsequent Event

On October 3, 2016, the Company announced that it had entered into a definitive agreement to acquire DirectCash Payments Inc. (“DCPayments”) for approximately CAD$605 million (approximately $460 million), including the amounts needed to repay the estimated outstanding indebtedness of DCPayments, excluding any associated transaction-related costs. DCPayments is a leading global ATM services provider with approximately 25,000 ATMs located in Australia, Canada, the U.K., Mexico, and New Zealand. Subject to satisfaction of certain closing conditions, including the approval of the DCPayments shareholders, and court approval, as required by applicable law, the transaction is expected to close early in the first quarter of 2017. The Company is currently assessing options for financing the acquisition and has secured commitments from financial institutions in its existing revolving credit facility to provide the borrowing capacity needed to complete the acquisition.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements and information in this Quarterly Report on Form 10-Q (this “Form 10-Q”) may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “project,” “believe,” “estimate,” “expect,” “future,” “anticipate,” “intend,” “contemplate,” “foresee,” “would,” “could,” “plan,” and similar expressions that are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that are anticipated. All comments concerning our expectations for future revenues and operating results are based on our estimates for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and present expectations or projections. Known material factors that could cause actual results to differ materially from those in the forward-looking statements include:

our financial outlook and the financial outlook of the ATM industry and the continued usage of cash by consumers at rates near historical patterns;

our ability to respond to recent and future network and regulatory changes, including requirements surrounding Europay, MasterCard, and Visa (“EMV”) security standards;

our ability to renew our existing customer relationships on comparable economic terms and add new customers;

our ability to pursue, complete, and successfully integrate acquisitions, including the acquisition of DirectCash Payments Inc.;

changes in interest rates and foreign currency rates;

our ability to successfully manage our existing international operations and to continue to expand internationally;

our ability to manage concentration risks with key customers, vendors, and service providers;

our ability to prevent thefts of cash;

our ability to manage cybersecurity risks and prevent data breaches;

our ability to respond to potential reductions in the amount of net interchange fees that we receive from global and regional debit networks for transactions conducted on our ATMs due to pricing changes implemented by those networks as well as changes in how issuers route their ATM transactions over those networks;

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

our ATM vault cash rental needs, including potential liquidity issues with our vault cash providers and our ability to continue to secure vault cash rental agreements in the future;

our ability to manage the risks associated with our third-party service providers failing to perform their contractual obligations;

our ability to successfully implement and evolve our corporate strategy;

our ability to compete successfully with new and existing competitors;

our ability to meet the service levels required by our service level agreements with our customers;

the additional risks we are exposed to in our U.K. armored transport business;

the impact of changes in U.S. or non-U.S. laws, including tax laws, that could reduce or eliminate the benefits expected to be achieved from our recent change of our parent company from the U.S. to the U.K.;

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

our ability to retain our key employees and maintain good relations with our employees.

For additional information regarding known material factors that could cause our actual results to differ from our projected results, see: (i) Part II. Other Information, Item 1A. Risk Factors in this Form 10-Q, (ii) Part I. Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2015 (as amended, the “2015 Form 10‑K”), and (iii) the information set forth under Risk Factors in our Proxy Statement, dated May 19, 2016. Readers are cautioned not to place undue reliance on forward-looking statements contained in this document, which speak only as of the date of this Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise.

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

Overview

Cardtronics plc provides convenient automated consumer financial services through its network of automated teller machines (“ATMs”) and multi-function financial services kiosks. As of September 30, 2016, we were the world’s largest ATM owner/operator, providing services to over 200,000 ATMs throughout the United States (the “U.S.”) (including the U.S. territory of Puerto Rico), the United Kingdom (the “U.K.”), Ireland, Germany, Poland, Spain, Canada, and Mexico. In the U.S., certain of our ATMs 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. Included in the number of ATMs in our network as of September 30, 2016 there are approximately 124,000 ATMs to which we provided processing only services or various forms of managed services solutions. Under a managed services arrangement, retailers, financial institutions, and ATM distributors rely on us to handle some or all of the operational aspects associated with operating and maintaining ATMs, typically in exchange for a monthly service fee, fee per transaction, or fee per service provided.

Through our network, we provide ATM management and equipment-related services (typically under multi-year contracts) to large retail merchants of varying sizes, as well as smaller retailers and operators of facilities such as shopping malls, airports, and train stations. In doing so, we provide our retail partners with a compelling automated financial services solution that helps attract and retain customers, and in turn, increases the likelihood that our ATMs will be utilized. We also 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 other ATMs under managed services arrangements.

We also own and operate the Allpoint network (“Allpoint”), the largest surcharge-free ATM network (based on the number of participating ATMs). Allpoint, with approximately 55,000 participating ATMs, provides surcharge-free ATM access to over 1,300 participating banks, credit unions, and prepaid card providers. For participants, Allpoint provides scale and density of free ATMs. In exchange, Allpoint earns either a fixed monthly fee per cardholder or a set fee per transaction that is paid by participants. The Allpoint network includes a majority of our ATMs in the U.S. and a portion of our ATMs in the U.K., Canada, Puerto Rico, and Mexico. 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 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.

On July 1, 2016, the location of incorporation of the parent company of the Cardtronics group of companies was changed from Delaware to the U.K. See the Recent Events and Trends – Redomicile to the U.K section below.

For additional discussion of our operations and the manner in which we derive revenues, refer to our 2015 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 the Allpoint surcharge-free ATM network and bank-branding programs, and made strategic acquisitions and investments to expand new product offerings and capabilities of our ATMs.

We have completed several acquisitions in the last five years, including, but not limited to: (i) eight domestic ATM operators, expanding our fleet in both multi-unit regional retail chains and individual merchant ATM locations in the U.S., (ii) two Canadian ATM operators which allowed us to enter into and expand our international presence in Canada, (iii) Cardpoint Limited in August 2013, which further expanded our U.K. ATM operations and allowed us to enter into the German market, (iv) Sunwin Services Group (“Sunwin”) in November of 2014, which further expanded our cash-in-transit

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and maintenance servicing capabilities in the U.K. and allowed us to acquire and operate ATMs located at the Co-operative Food stores, and (v) other less significant ATM asset and contract acquisitions. In addition to these ATM acquisitions, we have also made strategic acquisitions including: (i) LocatorSearch in August 2011, a domestic leading 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, (ii) i-design group plc in March 2013, a Scotland-based provider and developer of marketing and advertising software and services for ATM operators, and (iii) Columbus Data Services, L.L.C. (“CDS”) in July 2015, a leading independent transaction processor for ATM deployers and payment card issuers, providing solutions to ATM sales and service organizations and 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 expanding our ATM footprint organically, and launch new products and services that will allow us to further leverage our existing ATM and financial services kiosk network. We see opportunities to expand our operations through the following efforts:

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

expanding our relationships with leading financial institutions;

working with financial institutions and card issuers to further leverage our extensive ATM and financial services kiosk network;

increasing transaction volume at our existing locations;

developing and providing additional services at our existing ATMs;

pursuing additional managed services opportunities; and

pursuing international growth opportunities.

For additional discussion of each of the strategic points above, see Part I. Item1. Business - Our Strategy in our 2015 Form 10-K.

Recent Events and Trends

Over the last several years, we have grown our business through a combination of organic growth and acquisitions. During the first nine months of 2016, total revenues, on a constant-currency basis, grew by 9.8% over the prior year, comprised of 6.5% organic or internal growth and 3.3% growth from acquisitions.

Withdrawal Transaction and Revenue Trends - U.S. Many banks are reducing the number of branches they operate to reduce their operating costs, giving rise to a need for automated banking solutions, such as ATMs. Bank-branding of our ATMs and participation in our surcharge-free network allow financial institutions to rapidly increase and maintain surcharge-free ATM access for their customers at a substantially lower cost than building and maintaining their own ATM network. We 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 operating costs while extending its customer service. Furthermore, we believe there are opportunities to provide selected services on an outsourced basis, such as transaction processing services, to other independent owners and operators of ATMs 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 will be continued growth in such arrangements.

In 2014, we received notice from one of our largest bank-branding partners, JPMorgan Chase & Co (“Chase”), of their intention not to renew or extend a number of ATM branding contracts with us. While this action had a moderately negative impact on 2015 results, we do not believe that it will have a long-term adverse impact on our financial results or our ability to continue offering bank-branding solutions to financial institutions. We have reached agreements with several financial institutions and are in advanced discussions with multiple other financial institutions to replace the branding on a significant number of the ATMs previously branded by Chase.

Total same-store cash withdrawal transactions conducted on our U.S. ATMs, inclusive of the locations previously branded by Chase, decreased for the three months ended September 30, 2016 by approximately 1% compared to the same period in the prior year. The decline was due to a number of our ATMs having the Chase brand removed during 2015 and

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2016. This debranding activity caused a shift in consumer behavior at some of our ATMs, as ATMs that were previously free-to-use to Chase cardholders, now charge convenience fees to those cardholders. Chase may also charge its customers an out of network fee, making the ATM less attractive for Chase cardholders to use them. As we are able to partially offset the lost branding revenues from Chase with surcharge fees to their customers, our U.S. same-store revenues were up approximately 2% during the three months ended September 30, 2016.

Excluding locations that were impacted by the Chase debranding activity, the remainder of our U.S. ATM fleet produced same-store withdrawals that were up approximately 1% for the three months ended September 30, 2016. Our comparable same-store revenues for our U.S. ATMs were up approximately 3% for the three months ended September 30, 2016, driven by new branding of certain locations, incremental Allpoint related revenues, and surcharge rate increases at certain locations. Excluding ATM locations that have been recently debranded, we expect an approximately flat withdrawal transaction growth rate on a same-store basis on our domestic ATMs in the near-term.

In July 2015, we received notification from 7-Eleven Inc. (“7-Eleven”) that they do not intend on renewing their ATM placement agreement in the U.S. with us upon expiration of the agreement in July 2017. 7-Eleven announced that it has selected a related entity of 7-Eleven’s parent company as its next ATM provider. 7-Eleven in the U.S. represents the single largest merchant customer in our portfolio, and comprised approximately 18% of our pro forma total revenue for the year ended December 31, 2015. Our existing agreement with 7-Eleven remains in effect until July 2017. At this time, we do not expect a significant change in our revenues and earnings associated with this contract through July 2017 as a result of this notification; however, we do expect that our revenue and earnings growth will be lower during the latter part of 2017 as we remove our ATMs from 7-Eleven stores in the U.S. We are currently in discussions with 7-Eleven to manage the transition.

Withdrawal Transaction and Revenue Trends - U.K. In recent periods, we have installed more free-to-use ATMs as compared to surcharging pay-to-use ATMs in the U.K., which is our largest operation in Europe. This is due in part to adding major corporate customers who tend to operate primarily in high traffic locations where free-to-use ATMs are more prevalent. Although we earn less revenue per cash withdrawal transaction on a free-to-use machine, the significantly higher volume of transactions conducted on free-to-use machines have generally translated into higher overall revenues. Our same-store withdrawal transactions were up approximately 3% for the three months ended September 30, 2016. The most recent quarter was above our recent experience rate of flat to down 2% and was positively impacted by a higher uptime compared to the year ago period in which we were transitioning service on a large number of our ATMs. In the quarter ended September 30, 2016, our organic revenue growth rate in the U.K. was over 10% on a constant-currency basis, as we benefited from the same-store transaction growth rate and have been able to secure several ATM placement agreements with new and existing relationships. We also benefited from a higher interchange rate compared to 2015. Additionally, through our significant operating scale in this market, we have been able to grow our profit margins with the additional revenues from the expanded ATM estate.

Europay, MasterCard, Visa (“EMV”) Standard in the U.S. The EMV standard provides for the security and processing of information contained on microchips embedded in certain debit and credit cards, known as “chip cards.” MasterCard Inc. (“MasterCard”) announced plans for a liability shift from the issuers of these cards to the party that has not made the investment in EMV equipment (acquirer) on various dates. Similarly, Visa Inc.’s (“Visa”) liability shift will occur in October 2017 for all transaction types in the U.S. relative to U.S. or international EMV-issued cards. Under these liability shifts, transactions may still occur on a non-EMV-compliant ATM, but the operator of that ATM would be liable for any fraudulent transactions. MasterCard’s liability shift on International Maestro (“Maestro”) transactions occurred in April 2013, and as a result of this liability shift we have not experienced a significant financial or operational impact on our business or results. Maestro transactions currently comprise less than 1% of our U.S. transaction volume. However, as of the Maestro liability shift date of April 2013, we implemented additional fraud monitoring methods to minimize fraud losses and have seen minimal fraud losses from Maestro transactions in the U.S. MasterCard’s liability shift for U.S. ATM transactions on EMV-issued cards occurred on October 21, 2016. At this time, neither MasterCard nor Visa are requiring mandatory upgrades to ATM equipment; however, all of our recent ATM deployments have been ATMs that are EMV-ready. Presently, we are in the process of upgrading our U.S. ATM fleet to be EMV-compliant and our current plan will result in the majority of our Company-owned ATMs becoming EMV-compliant in early 2017. Due to the significant operational challenges of enabling EMV and hardware and software enhancements across our remaining non-EMV compliant U.S. ATM fleet, which comprises many types and models of ATMs, along with potential compatibility issues

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with various software and processing platforms, we could experience increased downtime in our U.S. ATM fleet through early 2017. As a result of this potential downtime, we could suffer lost revenues or incur penalties with certain of our contracts. Additionally, we may incur increased charges from networks associated with actual or potentially fraudulent transactions and/or incur additional administrative overhead costs to support the handling of an increased volume of disputed transactions. We may also experience a higher rate of unit count or transaction attrition for our merchant-owned ATMs and ATMs for which we process transactions, as we may elect to disable certain ATMs or certain transaction types for merchant-owned ATMs that are not EMV-enabled in the future. We are currently offering programs to make EMV upgrades attractive to merchants that own their ATMs. We continue to invest in technology and processes to prevent and detect fraudulent transactions across our network. However, no system or process can eliminate the risk of fraud and still maintain transaction volumes comparable to recent levels.

Capital Investments. We anticipate an elevated level of capital investment through early 2017 to support the EMV requirements discussed above and other factors discussed in greater detail below. The higher levels of capital spending in 2016 are being driven by the EMV requirements, coupled with other factors including: (i) our strategic initiatives to enhance the consumer experience at our ATMs and drive transaction growth, (ii) increased demand from merchants and financial institutions for multi-function ATMs, (iii) competition for new merchant and customer contracts, (iv) a significant number of long-term renewals of existing merchant contracts, (v) certain software and hardware enhancements required to facilitate our strategic initiatives, enhance security, and to continue running supported versions, and (vi) 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.

Financial Regulatory Reform in the U.K. and the European Union. In March 2013, the U.K. Treasury department 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 payment systems operating in the U.K. and its participants. The PSR went live in April 2015, and to date, there has been no significant immediate financial or operational impact.

U.K. Planned Exit from the European Union (“Brexit”). On June 23, 2016, the U.K. voted to leave the European Union. The U.K. Government has since made public its intention to commence formal exit proceedings by triggering Article 50 of the Treaty of the European Union no later than March 21, 2017. Prior to the referendum, we considered how both potential outcomes of the Brexit vote might impact our decision to redomicile to the U.K. and determined that, regardless of the Brexit result, the decision would be in the best interests of our shareholders. One impact, however, of the Brexit vote has been a substantial devaluation of the British pound relative to the U.S. dollar. As a result, our reported financial results have been adversely impacted during the quarter ended September 30, 2016. We expect this devaluation to remain and impact us at least through to the end of 2016.

Redomicile to the U.K. On July 1, 2016, the location of incorporation of the parent company of the Cardtronics group of companies was changed from Delaware to the U.K., whereby Cardtronics plc, a public limited company organized under English law (“Cardtronics plc”), became the new publicly traded corporate parent of the Cardtronics group of companies following the completion of the merger between Cardtronics, Inc., a Delaware corporation (“Cardtronics Delaware”), and one of its subsidiaries (the “Merger”). The Merger was completed pursuant to the Agreement and Plan of Merger, dated April 27, 2016, the adoption of which was approved by Cardtronics Delaware’s stockholders on June 28, 2016 (collectively, the “Redomicile Transaction”).

Pursuant to the Redomicile Transaction, each issued and outstanding share of Cardtronics Delaware common stock held immediately prior to the Merger was effectively converted into one Class A Ordinary Share, nominal value $0.01 per share, of Cardtronics plc (collectively, “Ordinary Shares”). Upon completion, the Ordinary Shares were listed and began trading on The NASDAQ Stock Market LLC under the symbol “CATM,” the same symbol under which shares of Cardtronics Delaware common stock were formerly listed and traded. Likewise, equity plans and/or awards granted thereunder were assumed by Cardtronics plc and amended to provide that those plans and/or awards will now provide for the award and issuance of Ordinary Shares. Furthermore, all shares of Cardtronics Delaware treasury stock were cancelled in the Redomicile Transaction.

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Any references to “the Company,” “us,” or “we,” or any similar references relating to periods before the Redomicile Transaction shall be construed as references to Cardtronics Delaware being the previous parent company of the Cardtronics group of companies. The Redomicile Transaction was accounted for as an internal reorganization of entities under common control, and therefore, Cardtronics Delaware’s assets and liabilities have been accounted for at their historical cost basis and not revalued in the transaction. The Redomicile Transaction is discussed in more detail in Item 1. Financial Statements, Note 3. Stock-Based Compensation, Note 5. Stockholders’ Equity, Note 8. Long-Term Debt, and Note 16. Supplemental Guarantor Financial Information.

In conjunction with the redomicile to the U.K., we realized a lower tax rate in the three months ended September 30, 2016 and expect a lower overall effective tax rate for the remaining months of 2016 compared to the prior year. Due to a number of factors including the mix of earnings across jurisdictions, post-redomicile structuring, regulations recently finalized by the U.S. Treasury, and other factors, we expect some volatility in the effective tax rate in the next few periods.

New Currency Designs in the U.K. Polymer notes were introduced by the Bank of England in 2016 and will be further circulated through 2020. The introduction of these new currency designs have required upgrades to software and physical device components on our ATMs in the U.K. Upgrades will continue into 2017 and may result in some limited downtime for the ATMs requiring upgrades. However, at this time, we have not experienced and do not anticipate any material adverse financial or operational impact as a result of the new requirements to handle these new notes.

Acquisitions. On July 1, 2015, we completed the acquisition of CDS for a total purchase price of $80.6 million. CDS is a leading independent transaction processor for ATM deployers and payment card issuers, providing solutions to ATM sales and service organizations and financial institutions.

On April 13, 2016, we completed the acquisition of a 2,600 location ATM portfolio in the U.S. whereby we acquired ATMs and operating contracts with merchants at various retail locations. This acquisition was affected through multiple closings taking place primarily in April of 2016. The total cash purchase price of approximately $13.8 million was paid in installments corresponding to each close.

On October 3, 2016, we announced that we had entered into a definitive agreement to acquire DirectCash Payments Inc. (“DCPayments”) for approximately CAD$605 million (approximately $460 million), including the amounts needed to repay the estimated outstanding indebtedness of DCPayments, excluding any associated transaction-related costs. DCPayments is a leading global ATM services provider with approximately 25,000 ATMs located in Australia, Canada, the U.K., Mexico, and New Zealand. Subject to satisfaction of certain closing conditions, including the approval of the DCPayments shareholders, and court approval, as required by applicable law, the transaction is expected to close early in the first quarter of 2017. We are currently assessing options for financing the acquisition and have secured commitments from financial institutions in our existing revolving credit facility to provide the borrowing capacity needed to complete the acquisition.

Divestitures. On July 1, 2015, we completed the divestiture of our retail cash-in-transit operation in the U.K. This business was primarily engaged in the collection of cash from retail locations and was originally acquired through the Sunwin acquisition completed in November 2014. We recognized divestiture proceeds of approximately $39 million in 2015. Approximately $31 million was collected during the year ended December 31, 2015, and the remainder was collected during the six months ended June 30, 2016. The net pre-tax gain recognized on this transaction in 2015 was $16.6 million. During the six months ended June 30, 2016, we reached resolution of certain contingent terms in the agreement and recorded an additional pre-tax gain of approximately $1.8 million.

For additional discussion related to the acquisition and divestiture discussions above, see Item 1. Financial Statements, Note 2. Acquisitions and Divestitures.

Factors Impacting Comparability Between Periods

Foreign currency exchange rates. Our reported financial results are subject to fluctuations in foreign currency exchange rates. We estimate that the year-over-year strengthening in the U.S. dollar relative to the currencies

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in the foreign markets in which we operate caused our reported revenues to be lower by approximately $29.1 million, or 3.3%, for the nine months ended September 30, 2016. As the U.S. dollar has continued to generally gain strength relative to the foreign currencies where we operate our international businesses, and in particular against the British pound after the vote for the U.K. to leave the European Union, we expect that the remainder of our 2016 financial results will also be adversely impacted.

Acquisitions and divestitures. The results of operations for any acquired entities during a particular year have been included in our consolidated results for that year since the respective dates of acquisition. Similarly, the results of operations for any divested operations have been excluded from our consolidated results since the dates of divestiture. We do not believe these effects are material in the periods presented.

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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,
	2016		2015		2016		2015
Revenues:
ATM operating revenues	95.9	%	95.3	%	96.1	%	93.9	%
ATM product sales and other revenues	4.1		4.7		3.9		6.1
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)	59.6		59.5		60.8		59.9
Cost of ATM product sales and other revenues	3.8		4.5		3.5		5.6
Total cost of revenues	63.4		63.9		64.3		65.5
Gross profit	36.6		36.1		35.7		34.5
Operating expenses:
Selling, general, and administrative expenses (2)	12.2		11.5		12.1		11.2
Redomicile-related expenses (3)	0.3		—		1.3		—
Acquisition and divestiture-related expenses	0.8		4.3		0.5		2.4
Depreciation and accretion expense	7.1		7.1		7.2		7.2
Amortization of intangible assets	2.8		3.2		2.9		3.2
Loss (gain) on disposal of assets	0.1		(3.9)		—		(1.4)
Total operating expenses	23.4		22.2		24.0		22.6
Income from operations	13.2		13.9		11.7		11.9
Other expense:
Interest expense, net	1.3		1.6		1.4		1.6
Amortization of deferred financing costs and note discount	0.9		0.9		0.9		0.9
Other expense	0.1		0.3		0.1		0.3
Total other expense	2.3		2.9		2.4		2.9
Income before income taxes	10.9		11.0		9.3		9.0
Income tax expense	2.6		4.1		2.7		3.3
Net income	8.4		7.0		6.6		5.7
Net loss attributable to noncontrolling interests	—		(0.1)		—		(0.1)
Net income attributable to controlling interests and available to common stockholders	8.4	%	7.1	%	6.6	%	5.8	%

⁽¹⁾

Excludes effects of depreciation, accretion, and amortization of intangible assets of $27.1 million and $27.2 million for the three months ended September 30, 2016 and 2015, respectively, and $82.4 million and $77.8 million for the nine months ended September 30, 2016 and 2015, respectively. See Item 1. Financial Statements, Note 1. General and Basis of Presentation – (e) Cost of ATM Operating Revenues and Gross Profit Presentation. The inclusion of this depreciation, accretion, and amortization of intangible assets in Cost of ATM operating revenues would have increased our Cost of ATM operating revenues as a percentage of total revenues by 8.3% and 8.7% for the three months ended September 30, 2016 and 2015, respectively, and 8.6% and 8.7% for the nine months ended September 30, 2016 and 2015, respectively.

⁽²⁾

Includes stock-based compensation expense of $6.4 million and $4.9 million for the three months ended September 30, 2016 and 2015, respectively, and $15.1 million and $13.5 million for the nine months ended September 30, 2016 and 2015, respectively.

⁽³⁾

For the three and nine months ended September 30, 2016, we incurred $1.0 million and $12.2 million, respectively, in expenses associated with the Redomicile Transaction.

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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, including the effect of the acquisitions.


	Three Months Ended							Nine Months Ended
	September 30,							September 30,
	2016				2015			2016				2015
Average number of transacting ATMs:
United States: Company-owned		43,216				38,510			41,366				38,310
United Kingdom and Ireland		16,540				15,582			16,151				14,762
Mexico		1,329				1,432			1,366				1,558
Canada		1,825				1,915			1,846				1,757
Germany and Poland		1,242				1,048			1,177				987
Subtotal		64,152				58,487			61,906				57,374
United States: Merchant-owned (1)		14,970				19,609			16,297				20,301
Average number of transacting ATMs – ATM operations		79,122				78,096			78,203				77,675

Managed Services and Processing:
United States: Managed services – Turnkey		1,911				2,201			2,078				2,185
United States: Managed services – Processing Plus and Processing operations		118,862				107,326			115,029				61,421
Canada: Managed services		1,761				1,120			1,659				1,011
Average number of transacting ATMs – Managed services and processing		122,534				110,647			118,766				64,617

Total average number of transacting ATMs		201,656				188,743			196,969				142,292

Total transactions (in thousands):
ATM operations		359,731				327,269			1,014,803				926,921
Managed services and processing, net		179,072				170,896			526,949				239,701
Total transactions		538,803				498,165			1,541,752				1,166,622

Cash withdrawal transactions (in thousands):
ATM operations		225,178				197,365			633,461				564,072

Per ATM per month amounts (excludes managed services and processing):				% Change							% Change
Cash withdrawal transactions		949		12.7%		842			900		11.5%		807

ATM operating revenues	$	1,258		4.9%	$	1,199		$	1,235		7.1%	$	1,153
Cost of ATM operating revenues (2)		784		4.1%		753			784		6.1%		739
ATM operating gross profit (2) (3)	$	474		6.3%	$	446		$	451		8.9%	$	414

ATM operating gross profit margin (2) (3)		37.7	%			37.2	%		36.5	%			35.9	%

⁽¹⁾

Certain ATMs previously reported in this category are now included in the United States: Managed services - Processing Plus and Processing operations and United States: Company-owned categories.

⁽²⁾

Amounts presented exclude the effect of depreciation, accretion, and amortization of intangible assets, which is presented separately in our Consolidated Statements of Operations. See Item 1. Financial Statements, Note 1. General and Basis of Presentation - (e) Cost of ATM Operating Revenues and Gross Profit Presentation.

⁽³⁾

Revenues and expenses relating to managed services, processing, ATM equipment sales, and other ATM-related services are not included in this calculation.

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Revenues


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016		2015		% Change		2016		2015		% Change
	(In thousands)						(In thousands)
North America
ATM operating revenues	$	214,960	$	197,733	8.7	%	$	625,716	$	580,569	7.8	%
ATM product sales and other revenues		12,001		9,629	24.6			31,804		27,228	16.8
North America total revenues		226,961		207,362	9.5			657,520		607,797	8.2
Europe
ATM operating revenues		94,154		94,218	(0.1)			276,452		257,549	7.3
ATM product sales and other revenues		1,409		4,795	(70.6)			4,206		27,384	(84.6)
Europe total revenues		95,563		99,013	(3.5)			280,658		284,933	(1.5)
Corporate & Other
ATM operating revenues		12,131		11,305	7.3			34,744		21,567	61.1
ATM product sales and other revenues		136		90	51.1			1,325		90	1,372.2
Corporate & Other total revenues		12,267		11,395	7.7			36,069		21,657	66.5

Eliminations		(6,457)		(6,420)	0.6			(18,705)		(17,390)	7.6

Total ATM operating revenues		314,788		296,836	6.0			918,207		842,295	9.0
Total ATM product sales and other revenues		13,546		14,514	(6.7)			37,335		54,702	(31.7)
Total revenues	$	328,334	$	311,350	5.5	%	$	955,542	$	896,997	6.5	%

Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015

ATM operating revenues. ATM operating revenues during the three months ended September 30, 2016 increased $18.0 million, or 6.0%, from the three months ended September 30, 2015. The following table details, by segment, the changes in the various components of ATM operating revenues:


	Three Months Ended
	September 30,
	2016		2015		Change		% Change
	(In thousands)
North America
Surcharge revenues	$	98,737	$	91,314	$	7,423		8.1	%
Interchange revenues		53,818		48,349		5,469		11.3
Bank-branding and surcharge-free network revenues		48,292		43,236		5,056		11.7
Managed services revenues		8,522		8,778		(256)		(2.9)
Other revenues		5,591		6,056		(465)		(7.7)
Total ATM operating revenues		214,960		197,733		17,227		8.7
Europe
Surcharge revenues		27,753		29,009		(1,256)		(4.3)
Interchange revenues		64,368		62,897		1,471		2.3
Other revenues		2,033		2,312		(279)		(12.1)
Total ATM operating revenues		94,154		94,218		(64)		(0.1)
Corporate & Other
Other revenues		12,131		11,305		826		7.3
Total ATM operating revenues		12,131		11,305		826		7.3
Eliminations		(6,457)		(6,420)		(37)		0.6
Total ATM operating revenues	$	314,788	$	296,836	$	17,952		6.0	%

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North America. For the three months ended September 30, 2016, ATM operating revenues in our North American operations, which include our operations in the U.S., Canada, Mexico, and Puerto Rico, increased $17.2 million, or 8.7%, compared to the same period in 2015. This increase was primarily driven by the U.S. and (i) increased surcharge and interchange revenues primarily as a result of the recently completed acquisition, see the Recent Events and Trends - Acquisitions section above, (ii) an increase in bank-branding and surcharge-free network revenues resulting primarily from the continued growth of participating banks and other financial institutions in our Allpoint network, and (iii) slightly higher per transaction surcharge rates. Our Canada and Mexico operations did not contribute appreciably to our revenue growth in the three months ended September 30, 2016.

Europe. For the three months ended September 30, 2016, ATM operating revenues in our European operations, which include our operations in the U.K., Ireland, Germany, Poland, Spain, and our ATM advertising business, decreased $0.1 million, or 0.1%, compared to the same period in 2015. The ATM operating revenues for the three months ended September 30, 2016 of $94.2 million would have been higher by $15.6 million, or an additional 16.6%, absent foreign currency exchange rate movements from the prior year. The increase (excluding effects of foreign currency exchange rate changes) is attributable to organic ATM operating revenue growth, driven by an increase in the number of transacting ATMs related to recent ATM placement agreements with new merchants, a higher same-store transaction rate, and higher interchange rates in the U.K. For additional information relating to our constant-currency calculations, see the Non-GAAP Financial Measures section that follows.

Corporate & Other. For the three months ended September 30, 2016, ATM operating revenues in our Corporate & Other segment, which include our transaction processing businesses and corporate functions, increased 7.3%. The increase was driven by an increase in the number of ATMs for which we provide transaction processing and the resulting processing volume.

ATM product sales and other revenues. For the three months ended September 30, 2016, ATM product sales and other revenues decreased $1.0 million compared to the same period in 2015. This decrease was primarily attributable to our July 1, 2015 divestiture of the retail cash-in-transit component of the previously acquired Sunwin business in the U.K., which contributed to our 2015 results while the business was being transferred.

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Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2015

ATM operating revenues. ATM operating revenues during the nine months ended September 30, 2016 increased $75.9 million, or 9.0%, from the nine months ended September 30, 2015. The following table details, by segment, the changes in the various components of ATM operating revenues:


	Nine Months Ended
	September 30,
	2016		2015		Change		% Change
	(In thousands)
North America
Surcharge revenues	$	290,483	$	268,542	$	21,941		8.2	%
Interchange revenues		152,331		141,655		10,676		7.5
Bank-branding and surcharge-free network revenues		141,699		128,205		13,494		10.5
Managed services revenues		26,246		25,693		553		2.2
Other revenues		14,957		16,474		(1,517)		(9.2)
Total ATM operating revenues		625,716		580,569		45,147		7.8
Europe
Surcharge revenues		79,175		79,713		(538)		(0.7)
Interchange revenues		190,790		171,308		19,482		11.4
Other revenues		6,487		6,528		(41)		(0.6)
Total ATM operating revenues		276,452		257,549		18,903		7.3
Corporate & Other
Other revenues		34,744		21,567		13,177		61.1
Total ATM operating revenues		34,744		21,567		13,177		61.1
Eliminations		(18,705)		(17,390)		(1,315)		7.6
Total ATM operating revenues	$	918,207	$	842,295	$	75,912		9.0	%

North America. For the nine months ended September 30, 2016, ATM operating revenues in our North American operations increased $45.1 million, or 7.8%, compared to the same period in 2015. This increase was primarily driven by the U.S. and (i) increased surcharge and interchange revenues primarily as a result of the recently completed acquisition, see the Recent Events and Trends - Acquisitions section above, (ii) an increase in bank-branding and surcharge-free network revenues resulting primarily from continued growth of participating banks and other financial institutions in our Allpoint network, and (iii) slightly higher per transaction surcharge rates. Our Canada and Mexico operations did not contribute appreciably to our revenue growth during the nine months ended September 30, 2016.

Europe. For the nine months ended September 30, 2016, ATM operating revenues in our European operations increased $18.9 million, or 7.3%, compared to the same period in 2015. The ATM operating revenues for the nine months ended September 30, 2016 of $276.5 million would have been higher by $26.2 million, or an additional 10.2%, absent foreign currency exchange rate movements from the prior year. The increase (excluding effects of foreign currency exchange rate changes) is attributable to organic ATM operating revenue growth, driven by an increase in the number of transacting ATMs related to recent ATM placement agreements with new merchants, and higher interchange rates in the U.K. For additional information relating to our constant-currency calculations, see the Non-GAAP Financial Measures section that follows.

Corporate & Other. For the nine months ended September 30, 2016, ATM operating revenues in our Corporate & Other segment increased $13.2 million compared to the same period in 2015. The CDS acquisition completed during the third quarter of 2015 accounted for the majority of the increase.

ATM product sales and other revenues. For the nine months ended September 30, 2016, ATM product sales and other revenues decreased $17.4 million compared to the same period in 2015. This decrease was primarily attributable to our 2015 divestiture of the retail cash-in-transit component of the previously acquired Sunwin business in the U.K., which was included in our 2015 results.

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Cost of Revenues


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016		2015		% Change		2016		2015		% Change
	(In thousands)						(In thousands)
North America
Cost of ATM operating revenues (1)	$	134,596	$	122,547	9.8	%	$	397,175	$	362,662	9.5	%
Cost of ATM product sales and other revenues		12,190		9,763	24.9			31,382		27,061	16.0
North America total cost of revenue (1)		146,786		132,310	10.9			428,557		389,723	10.0
Europe
Cost of ATM operating revenues (1)		58,759		61,262	(4.1)			177,329		175,109	1.3
Cost of ATM product sales and other revenues		148		4,047	(96.3)			1,227		23,050	(94.7)
Europe total cost of revenues (1)		58,907		65,309	(9.8)			178,556		198,159	(9.9)
Corporate & Other
Cost of ATM operating revenues (1)		8,839		7,753	14.0			24,721		16,802	47.1
Cost of ATM product sales and other revenues		115		82	40.2			1,264		82	1,441.5
Corporate & Other total cost of revenues (1)		8,954		7,835	14.3			25,985		16,884	53.9

Eliminations		(6,457)		(6,420)	0.6			(18,705)		(17,390)	7.6

Cost of ATM operating revenues (1)		195,737		185,142	5.7			580,520		537,183	8.1
Cost of ATM product sales and other revenues		12,453		13,892	(10.4)			33,873		50,193	(32.5)
Total cost of revenues (1)	$	208,190	$	199,034	4.6	%	$	614,393	$	587,376	4.6	%

⁽¹⁾

Exclusive of depreciation, accretion, and amortization of intangible assets.

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Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015

Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets). Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) for the three months ended September 30, 2016 increased $10.6 million, or 5.7%, from the three months ended September 30, 2015. The following table details, by segment, the changes in the various components of Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets):


	Three Months Ended
	September 30,
	2016		2015		Change		% Change
	(In thousands)
Cost of ATM operating revenues
North America
Merchant commissions	$	68,463	$	62,140	$	6,323		10.2	%
Vault cash rental		15,604		14,152		1,452		10.3
Other costs of cash		15,199		14,688		511		3.5
Repairs and maintenance		14,915		12,204		2,711		22.2
Communications		5,215		5,005		210		4.2
Transaction processing		5,345		4,993		352		7.0
Employee costs		4,896		4,470		426		9.5
Other expenses		4,959		4,895		64		1.3
Total cost of ATM operating revenues		134,596		122,547		12,049		9.8
Europe
Merchant commissions		25,673		27,206		(1,533)		(5.6)
Vault cash rental		2,300		3,401		(1,101)		(32.4)
Other costs of cash		3,222		2,863		359		12.5
Repairs and maintenance		4,931		5,147		(216)		(4.2)
Communications		2,512		3,058		(546)		(17.9)
Transaction processing		4,571		4,729		(158)		(3.3)
Employee costs		9,120		9,317		(197)		(2.1)
Other expenses		6,430		5,541		889		16.0
Total cost of ATM operating revenues		58,759		61,262		(2,503)		(4.1)
Corporate & Other
Stock-based compensation		249		277		(28)		(10.1)
Employee costs		2,509		2,445		64		2.6
Other expenses		6,081		5,031		1,050		20.9
Total cost of ATM operating revenues		8,839		7,753		1,086		14.0
Eliminations		(6,457)		(6,420)		(37)		0.6
Total cost of ATM operating revenues	$	195,737	$	185,142	$	10,595		5.7	%

North America. For the three months ended September 30, 2016, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) increased $12.0 million, or 9.8%, compared to the same period in 2015. The increase was primarily driven by revenue growth, including the recently completed acquisition and maintenance costs, which are higher primarily due to recent software upgrades at a number of our Company-owned locations.

Europe. For the three months ended September 30, 2016, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) decreased $2.5 million, or 4.1%, compared to the same period in 2015. The decrease was largely due to changes in foreign currency exchange rates. Adjusted for changes in foreign currency exchange rates, cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) were up $7.4 million, or 12.0%, which was lower than our constant-currency revenue growth rate as we also realized cost savings through rationalization of our servicing operations, including the number of cash replenishment depots we operate to service our ATMs.

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Corporate & Other. For the three months ended September 30, 2016, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) increased $1.1 million compared to the same period in 2015. This increase was driven by the corresponding revenue growth.

Cost of ATM product sales and other revenues. For the three months ended September 30, 2016, our cost of ATM product sales and other revenues decreased $1.4 million compared to the same period in 2015. This decrease is consistent with the decrease in related revenues as discussed above.

Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2015

Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets). Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) for the nine months ended September 30, 2016 increased $43.3 million, or 8.1%, from the nine months ended September 30, 2015. The following table details, by segment, the changes in the various components of Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets):


	Nine Months Ended
	September 30,
	2016		2015		Change		% Change
	(In thousands)
Cost of ATM operating revenues
North America
Merchant commissions	$	202,092	$	182,231	$	19,861		10.9	%
Vault cash rental		45,479		42,472		3,007		7.1
Other costs of cash		45,583		43,176		2,407		5.6
Repairs and maintenance		42,820		36,600		6,220		17.0
Communications		15,621		14,626		995		6.8
Transaction processing		15,431		14,689		742		5.1
Employee costs		14,545		13,146		1,399		10.6
Other expenses		15,604		15,722		(118)		(0.8)
Total cost of ATM operating revenues		397,175		362,662		34,513		9.5
Europe
Merchant commissions		74,996		74,130		866		1.2
Vault cash rental		8,285		9,150		(865)		(9.5)
Other costs of cash		13,738		11,145		2,593		23.3
Repairs and maintenance		13,277		15,653		(2,376)		(15.2)
Communications		7,786		8,468		(682)		(8.1)
Transaction processing		13,521		12,774		747		5.8
Employee costs		28,491		25,840		2,651		10.3
Other expenses		17,235		17,949		(714)		(4.0)
Total cost of ATM operating revenues		177,329		175,109		2,220		1.3
Corporate & Other
Stock-based compensation		636		775		(139)		(17.9)
Employee costs		7,630		5,322		2,308		43.4
Other expenses		16,455		10,705		5,750		53.7
Total cost of ATM operating revenues		24,721		16,802		7,919		47.1
Eliminations		(18,705)		(17,390)		(1,315)		7.6
Total cost of ATM operating revenues	$	580,520	$	537,183	$	43,337		8.1	%

North America. For the nine months ended September 30, 2016, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) increased $34.5 million, or 9.5%, compared to the same period in 2015. The increase was driven by revenue growth, including the recently completed acquisition, higher merchant

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commissions expense associated with recent contract renewals, and higher maintenance costs. The higher maintenance costs related primarily to recent software upgrades at a number of our Company-owned locations.

Europe. For the nine months ended September 30, 2016, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) increased $2.2 million, or 1.3%, compared to the same period in 2015. Adjusting for changes in foreign currency exchange rates, cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) were up $19.1 million, or 10.9%. Excluding the foreign currency exchange rate movements, the increase is fairly consistent with the increase in revenues during the period. Additionally, we continued to realize operational efficiencies across our maintenance and cash replenishment functions.

Corporate & Other. For the nine months ended September 30, 2016, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) increased $7.9 million compared to the same period in 2015. This increase was driven by the CDS acquisition, which was completed on July 1, 2015.

Cost of ATM product sales and other revenues. For the nine months ended September 30, 2016, our cost of ATM product sales and other revenues decreased $16.3 million compared to the same period in 2015. This decrease is consistent with the decrease in related revenues as discussed above.

Gross Profit Margin


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
ATM operating gross profit margin:
Exclusive of depreciation, accretion, and amortization of intangible assets	37.8	%	37.6	%	36.8	%	36.2	%
Inclusive of depreciation, accretion, and amortization of intangible assets	29.2	%	28.5	%	27.8	%	27.0	%
ATM product sales and other revenues gross profit margin	8.1	%	4.3	%	9.3	%	8.2	%
Total gross profit margin:
Exclusive of depreciation, accretion, and amortization of intangible assets.	36.6	%	36.1	%	35.7	%	34.5	%
Inclusive of depreciation, accretion, and amortization of intangible assets	28.3	%	27.3	%	27.1	%	25.8	%

ATM operating gross profit margin. For the three and nine months ended September 30, 2016, our ATM operating gross profit margin exclusive of depreciation, accretion, and amortization of intangible assets slightly increased.

ATM product sales and other revenues gross profit margin. For the three and nine months ended September 30, 2016, our gross profit margin on ATM product sales and other revenues increased by 380 and 110 basis points, respectively, compared to the same periods in 2015. The increases are primarily the result of the mix of products and services sold compared to prior year.

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Selling, General, and Administrative Expenses


	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2016			2015			% Change		2016			2015			% Change
	(In thousands)								(In thousands)
Selling, general, and administrative expenses	$	33,801		$	30,883		9.4	%	$	100,361		$	87,341		14.9	%
Stock-based compensation		6,393			4,876		31.1			15,144			13,488		12.3
Total selling, general, and administrative expenses	$	40,194		$	35,759		12.4	%	$	115,505		$	100,829		14.6	%

Percentage of total revenues:
Selling, general, and administrative expenses		10.3	%		9.9	%				10.5	%		9.7	%
Stock-based compensation		1.9	%		1.6	%				1.6	%		1.5	%
Total selling, general, and administrative expenses		12.2	%		11.5	%				12.1	%		11.2	%

Selling, general, and administrative expenses (“SG&A expenses”), excluding stock-based compensation. For the three and nine months ended September 30, 2016, SG&A expenses, excluding stock-based compensation, increased $2.9 million, or 9.4%, and $13.0 million, or 14.9%, respectively, compared to the same periods in 2015. These increases were due to the following: (i) higher payroll-related costs compared to the same period in 2015 due to increased headcount, (ii) higher professional expenses mostly related to our business growth initiatives, and (iii) increased costs related to strengthening our information technology and product development organizations.

Stock-based compensation. For the three and nine months ended September 30, 2016, stock-based compensation increased $1.5 million, or 31.1%, and $1.7 million, or 12.3%, respectively, compared to the same periods in 2015. These increases were attributable to the timing and amount of grants made during the applicable periods and higher anticipated company performance relative to targets for performance-based awards in 2016. For additional details on equity awards, see Item 1. Financial Statements, Note 3. Stock-Based Compensation.

Selling, General, and Administrative - Redomicile-related Expenses


	Three Months Ended							Nine Months Ended
	September 30,							September 30,
	2016			2015			% Change	2016			2015			% Change
	(In thousands)							(In thousands)
Redomicile-related expenses	$	951		$	—		n/m	$	12,201		$	—		n/m

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

Redomicile-related expenses. These costs consist of professional services associated with the Redomicile Transaction described in Item 1. Financial Statements, Note 1. General and Basis of Presentation - (a) General.

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Selling, General, and Administrative - Acquisition and Divestiture-related Expenses


	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2016			2015			% Change		2016			2015			% Change
	(In thousands)								(In thousands)
Acquisition and divestiture-related expenses	$	2,680		$	13,289		(79.8)	%	$	4,938		$	21,207		(76.7)	%

Percentage of total revenues		0.8	%		4.3	%				0.5	%		2.4	%

Acquisition and divestiture-related expenses. Acquisition and divestiture-related expenses consist of professional and legal costs incurred to complete acquisitions and certain other transition and integration-related costs. For the three and nine months ended September 30, 2016, acquisition and divestiture-related expenses decreased $10.6 million, or 79.8%, and $16.3 million, or 76.7%, respectively, compared to the same periods in 2015. These decreases were driven by the 2015 transactions, including the retail cash-in-transit divestiture and the CDS acquisition. Specifically, the transaction, integration, transition, and severance costs associated with these transactions occurred mostly during 2015. The current year amounts relate to professional fees associated with our recently completed and announced acquisitions and employee severance costs associated with our divestiture discussed above.

Depreciation and Accretion Expense


	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2016			2015			% Change		2016			2015			% Change
	(In thousands)								(In thousands)
Depreciation expense	$	22,894		$	21,504		6.5	%	$	67,726		$	62,417		8.5	%
Accretion expense		414			623		(33.5)			1,359			1,725		(21.2)
Depreciation and accretion expense	$	23,308		$	22,127		5.3	%	$	69,085		$	64,142		7.7	%

Percentage of total revenues:
Depreciation expense		7.0	%		6.9	%				7.1	%		7.0	%
Accretion expense		0.1	%		0.2	%				0.1	%		0.2	%
Depreciation and accretion expense		7.1	%		7.1	%				7.2	%		7.2	%

Depreciation expense. For the three and nine months ended September 30, 2016, depreciation expense increased $1.4 million, or 6.5%, and $5.3 million, or 8.5%, respectively, compared to the same periods in 2015. These increases were primarily driven by increased depreciation expense associated with the deployment of new and replacement Company-owned ATMs and acquisitions in recent periods.

Amortization of Intangible Assets


	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2016			2015			% Change		2016			2015			% Change
	(In thousands)								(In thousands)
Amortization of intangible assets	$	9,175		$	10,048		(8.7)	%	$	28,129		$	29,040		(3.1)	%

Percentage of total revenues		2.8	%		3.2	%				2.9	%		3.2	%

Amortization of intangible assets. For the three and nine months ended September 30, 2016, amortization of intangible assets decreased by $0.9 million, compared to the same periods in 2015. The slight decrease is attributable to certain assets becoming fully amortized during 2015.

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Interest Expense, Net


	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2016			2015			% Change		2016			2015			% Change
	(In thousands)								(In thousands)
Interest expense, net	$	4,269		$	5,033		(15.2)	%	$	13,227		$	14,496		(8.8)	%
Amortization of deferred financing costs and note discount		2,872			2,859		0.5			8,636			8,455		2.1
Total interest expense, net	$	7,141		$	7,892		(9.5)	%	$	21,863		$	22,951		(4.7)	%

Percentage of total revenues		2.2	%		2.5	%				2.3	%		2.6	%

Interest expense, net. For the three and nine months ended September 30, 2016, interest expense, net, decreased $0.8 million, or 15.2%, and $1.3 million, or 8.8%, respectively, compared to the same periods in 2015. These decreases were primarily attributable to a decrease in the average outstanding balance under our revolving credit facility. For additional details, see Item 1. Financial Statements, Note 8. Long-Term Debt.

Amortization of deferred financing costs and note discount. For the three and nine months ended September 30, 2016, amortization of deferred financing costs and note discount were generally consistent with the same periods in 2015.

Income Tax Expense


	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2016			2015			% Change		2016			2015			% Change
	(In thousands)								(In thousands)
Income tax expense	$	8,388		$	12,629		(33.6)	%	$	26,204		$	29,837		(12.2)	%

Effective tax rate		23.4	%		36.8	%				29.4	%		36.8	%

Income tax expense. The decrease in the effective tax rate during the three and nine months ended September 30, 2016, compared to the same periods in 2015 is attributable to the Redomicile Transaction and the post-redomicile structuring, completed on July 1, 2016, and the mix of earnings across jurisdictions. See the Recent Events and Trends - Redomicile to the U.K. section above for additional details related to the expected tax impact as a result of our redomicile to the U.K.

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Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA, Adjusted EBITA, Adjusted Net Income, Adjusted Net Income per diluted share, Free Cash Flow, and certain results prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”), as well as non-GAAP measures on a constant-currency basis represent non-GAAP financial measures provided as a complement to results prepared in accordance with U.S. GAAP and may not be comparable to similarly-titled measures reported by other companies. We use these non-GAAP financial measures in managing and measuring the performance of our business, including setting and measuring incentive based compensation for management. We believe that the presentation of these measures and the identification of notable, non-cash, and/or (if applicable in a particular period) certain costs not anticipated to occur in future periods enhance an investor’s understanding of the underlying trends in our business and provide for better comparability between periods in different years. Adjusted EBITDA and Adjusted EBITA excludes amortization of intangible assets, stock-based compensation expense, acquisition and divestiture-related expenses, certain non-operating expenses, certain costs not anticipated to occur in future periods (if applicable in a particular period), gains or losses on disposal of assets, our obligation for the payment of income taxes, interest expense, and other obligations such as capital expenditures, and includes an adjustment for noncontrolling interests. Additionally, Adjusted EBITDA excludes depreciation and accretion expense. Depreciation and accretion expense and amortization of intangible assets are excluded as these amounts can vary substantially from company to company within our industry depending upon accounting methods and book values of assets, capital structures, and the methods by which the assets were acquired. Adjusted Net Income represents net income computed in accordance with U.S. GAAP, before amortization of intangible assets, gains or losses on disposal of assets, stock-based compensation expense, certain other expense amounts, acquisition and divestiture-related expenses, certain non-operating expenses, and (if applicable in a particular period) certain costs not anticipated to occur in future periods (together, the “Adjustments”). Prior to June 30, 2016, Adjusted Net Income was calculated using an estimated long-term cross-jurisdictional effective cash tax rate of 32.0%. Subsequent to the redomicile of our parent company to the U.K., we have revised the process for determining our non-GAAP tax rate and now utilizes a non-GAAP tax rate derived from the U.S. GAAP tax rate adjusted for the net tax effects of the identified Adjustments, based on the nature and geography of the Adjustments. For the three month period ended September 30, 2016, the non-GAAP tax rate used to calculate Adjusted Net Income was approximately 24.2%. For the nine months ended September 30, 2016, we used 24.2% for the quarter ended September 30, 2016 and for the six months ended June 30, 2016, our previous estimated long-term cross-jurisdictional tax rate of 32.0%. For the three and nine months ended September 30, 2015, we used our previous estimated long-term cross-jurisdictional tax rate of 32.0%. 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 mandatory principal payments on portions of our long-term debt. Management calculates certain U.S. GAAP as well as non-GAAP measures on a constant-currency basis using the average foreign currency exchange rates applicable in the corresponding period of the previous year and applying these rates to the measures. Management uses U.S. GAAP as well as non-GAAP measures on a constant-currency basis to assess performance and eliminate the effect foreign currency exchange rates have on comparability between periods.

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

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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Net income attributable to controlling interests and available to common stockholders	$	27,490	$	22,009	$	63,022	$	52,239
Adjustments:
Interest expense, net		4,269		5,033		13,227		14,496
Amortization of deferred financing costs and note discount		2,872		2,859		8,636		8,455
Income tax expense		8,388		12,629		26,204		29,837
Depreciation and accretion expense		23,308		22,127		69,085		64,142
Amortization of intangible assets		9,175		10,048		28,129		29,040
EBITDA	$	75,502	$	74,705	$	208,303	$	198,209

Add back:
Loss (gain) on disposal of assets		469		(12,139)		(475)		(12,425)
Other expense (1)		360		1,067		748		2,882
Noncontrolling interests (2)		(15)		(336)		(50)		(1,047)
Stock-based compensation expense (3)		6,642		5,147		15,780		14,360
Acquisition and divestiture-related expenses (4)		2,680		13,289		4,938		21,207
Redomicile-related expenses (5)		951		—		12,201		—
Adjusted EBITDA	$	86,589	$	81,733	$	241,445	$	223,186
Less:
Depreciation and accretion expense (6)		23,301		22,014		69,063		63,767
Adjusted EBITA	$	63,288	$	59,719	$	172,382	$	159,419
Less:
Interest expense, net (3)		4,269		5,033		13,227		14,493
Adjusted pre-tax income		59,019		54,686		159,155		144,926
Income tax expense (7)		14,271		17,500		46,314		46,376
Adjusted Net Income	$	44,748	$	37,186	$	112,841	$	98,550

Adjusted Net Income per share	$	0.99	$	0.83	$	2.50	$	2.20
Adjusted Net Income per diluted share	$	0.98	$	0.82	$	2.47	$	2.17

Weighted average shares outstanding – basic		45,252,869		44,833,117		45,175,604		44,769,661
Weighted average shares outstanding – diluted		45,850,061		45,391,667		45,765,235		45,323,784

⁽¹⁾

Includes foreign currency translation gains or losses and other non-operating costs.

⁽²⁾

Noncontrolling interest adjustment made such that Adjusted EBITDA includes only our ownership interest in the Adjusted EBITDA of our Mexico subsidiary. In December 2015, we increased our ownership interest in our Mexico subsidiary from 51.0% to 95.7%.

⁽³⁾

For the three and nine months ended September 30, 2015, amounts exclude a portion of the expenses incurred by our Mexico subsidiary to account for the amounts allocable to the noncontrolling interest stockholders. Our Mexico subsidiary recognized no stock-based compensation expense or interest expense, net in the three and nine months ended September 30, 2016.

⁽⁴⁾

Acquisition and divestiture-related expenses include costs incurred for professional and legal fees and certain other transition and integration-related costs.

⁽⁵⁾

Expenses associated with the redomicile of our parent company to the U.K., which was completed on July 1, 2016.

⁽⁶⁾

Amounts exclude a portion of the expenses incurred by our Mexico subsidiary to account for the amounts allocable to the noncontrolling interest stockholders. In December 2015, we increased our ownership interest in our Mexico subsidiary.

⁽⁷⁾

Calculated using an effective tax rate of approximately 24.2% for the three months ended September 30, 2016, which represents our U.S. GAAP tax rate as adjusted for the tax effects related to the items excluded from Adjusted Net Income. For the nine months ended September 30, 2016, we used 24.2% for the quarter ended September 30, 2016 and for the six months ended June 30, 2016, our previous estimated long-term cross-jurisdictional tax rate of 32.0%. For the three and nine months ended September 30, 2015, we used our previous estimated long-term cross-jurisdictional tax rate of 32.0%. See the Non-GAAP Financial Measures section above for further discussion.

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


Europe revenue	Three Months Ended
	September 30,
	2016						2015		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
	(In thousands)
ATM operating revenues	$	94,154	$	15,561	$	109,715	$	94,218	(0.1)	%	16.4	%
ATM product sales and other revenues		1,409		220		1,629		4,795	(70.6)		(66.0)
Total revenues	$	95,563	$	15,781	$	111,344	$	99,013	(3.5)	%	12.5	%


	Nine Months Ended
	September 30,
	2016						2015		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
	(In thousands)
ATM operating revenues	$	276,452	$	26,161	$	302,613	$	257,549	7.3	%	17.5	%
ATM product sales and other revenues		4,206		393		4,599		27,384	(84.6)		(83.2)
Total revenues	$	280,658	$	26,554	$	307,212	$	284,933	(1.5)	%	7.8	%


Consolidated revenue	Three Months Ended
	September 30,
	2016						2015		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
	(In thousands)
ATM operating revenues	$	314,788	$	15,926	$	330,714	$	296,836	6.0	%	11.4	%
ATM product sales and other revenues		13,546		222		13,768		14,514	(6.7)		(5.1)
Total revenues	$	328,334	$	16,148	$	344,482	$	311,350	5.5	%	10.6	%


	Nine Months Ended
	September 30,
	2016						2015		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
	(In thousands)
ATM operating revenues	$	918,207	$	28,612	$	946,819	$	842,295	9.0	%	12.4	%
ATM product sales and other revenues		37,335		442		37,777		54,702	(31.7)		(30.9)
Total revenues	$	955,542	$	29,054	$	984,596	$	896,997	6.5	%	9.8	%

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


	Three Months Ended
	September 30,
	2016						2015		% Change
	Non-GAAP (1)		Foreign Currency Impact		Constant - Currency		Non-GAAP (1)		Non-GAAP (1)		Constant - Currency
	(In thousands)
Adjusted EBITDA	$	86,589	$	4,621	$	91,210	$	81,733	5.9	%	11.6	%

Adjusted Net Income	$	44,748	$	2,478	$	47,226	$	37,186	20.3	%	27.0	%

Adjusted Net Income per diluted share (2)	$	0.98	$	0.05	$	1.03	$	0.82	19.5	%	25.6	%

⁽¹⁾

As reported on the Reconciliation of Net Income Attributable to Controlling Interests and Available to Common Stockholders to EBITDA, Adjusted EBITDA, Adjusted EBITA, and Adjusted Net Income above for further discussion.

⁽²⁾

Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by the weighted average diluted shares outstanding of 45,850,061 and 45,391,667 for the three months ended September 30, 2016 and 2015, respectively.


	Nine Months Ended
	September 30,
	2016						2015		% Change
	Non-GAAP (1)		Foreign Currency Impact		Constant - Currency		Non-GAAP (1)		Non-GAAP (1)		Constant - Currency
	(In thousands)
Adjusted EBITDA	$	241,445	$	7,425	$	248,870	$	223,186	8.2	%	11.5	%

Adjusted Net Income	$	112,841	$	3,403	$	116,244	$	98,550	14.5	%	18.0	%

Adjusted Net Income per diluted share (2)	$	2.47	$	0.07	$	2.54	$	2.17	13.8	%	17.1	%

⁽¹⁾

⁽²⁾

Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by the weighted average diluted shares outstanding of 45,765,235 and 45,323,784 for the nine months ended September 30, 2016 and 2015, respectively.

Reconciliation of Free Cash Flow


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(In thousands)
Cash provided by operating activities	$	89,346	$	60,525	$	213,931	$	147,112
Payments for capital expenditures:
Cash used in investing activities, excluding acquisitions and divestitures		(36,479)		(47,459)		(76,050)		(103,877)
Free cash flow	$	52,867	$	13,066	$	137,881	$	43,235

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Liquidity and Capital Resources

Overview

As of September 30, 2016, we had $59.5 million in cash and cash equivalents and $485.6 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. We have historically used a portion of our cash flows to invest in additional ATMs, either through the acquisition of ATM networks or through organic growth. We have also used cash 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 capital expenditures. Accordingly, it is not uncommon for us to reflect a working capital deficit position on our Consolidated Balance Sheets.

We believe that our cash on hand and our 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 from our operations and borrowings under our revolving credit facility, to the extent needed. See additional discussion under the Investing Activities – Acquisitions and Financing Facilities section below.

Operating Activities

Net cash provided by operating activities totaled $213.9 million during the nine months ended September 30, 2016 compared to $147.1 million during the same period in 2015. The increase in net cash provided by operating activities is primarily attributable to our profitable operations before non-cash expenses and changes in working capital.

Investing Activities

Net cash used in investing activities totaled $86.4 million during the nine months ended September 30, 2016, compared to $171.1 million during the same period in 2015. The change in net cash used in investing activities is primarily related to a lower level of capital expenditures and acquisitions compared to the same period in 2015.

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 the Recent Events and Trends - Capital Investments section above. We expect that our capital expenditures for 2016 will total approximately $120 million to $130 million, the majority of which is expected to be utilized to support new business growth, along with technology and compliance upgrades to enhance our existing ATM equipment with additional functionalities. We expect such expenditures to be funded primarily through cash from our operations and should be able to fund all capital expenditures internally.

Acquisitions. We continually evaluate acquisition opportunities that complement our existing business. We believe that expansion opportunities 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 borrowing under our revolving credit facility or other financial sources that may be available to us.

As discussed in the Recent Events and Trends - Acquisitions section above, on October 3, 2016, we announced that we had entered into a definitive agreement to acquire DCPayments for approximately CAD$605 million (approximately $460 million). The acquisition is expected to close early in the first quarter of 2017. We are currently assessing options for financing the acquisition and have secured commitments from financial institutions in our existing revolving credit facility to provide the borrowing capacity needed to complete the acquisition.

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Financing Activities

Net cash (used in) provided by financing activities totaled $(93.1) million during the nine months ended September 30, 2016 compared to $13.3 million for the same period in 2015. The cash used in financing activities during the nine months ended September 30, 2016 was primarily attributable to repayments of borrowings on our revolving credit facility.

Financing Facilities

As of September 30, 2016, we had $485.6 million in outstanding long-term debt, which was comprised of: (i) $287.5 million of the 1.00% Convertible Senior Notes due 2020 (the “Convertible Notes”) of Cardtronics Delaware, of which $238.4 million was recorded on our Consolidated Balance Sheets, net of the unamortized discount and capitalized debt issuance costs and (ii) $250.0 million of the 5.125% Senior Notes due 2022 (the “2022 Notes”) of Cardtronics Delaware, of which $247.2 million was recorded on our Consolidated Balance Sheets, net of capitalized debt issuance costs.

Revolving Credit Facility. As of September 30, 2016, 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 up to $500.0 million under certain conditions and subject to additional commitments from the lender group. On July 1, 2016, we entered into a Third Amendment (the “Third Amendment”) to our amended and restated credit agreement (the “Credit Agreement”). Under the Third Amendment, (i) Cardtronics plc and certain of its subsidiaries were added as borrowers and guarantors, (ii) Cardtronics Delaware was removed as a borrower, but remained a guarantor, (iii) the maturity date of the Credit Agreement was extended to July 1, 2021, (iv) Cardtronics Europe Limited continued as a borrower and a guarantor, and (v) the total commitment under the Credit Agreement of $375.0 million (the “Commitment”) did not change, but can now be borrowed in U.S. dollars, alternative currencies, or a combination thereof. The Third Amendment provides for sub-limits under the Commitment of $50.0 million for swingline loans and $30.0 million for letters of credit.

Borrowings (not including swingline loans and alternative currency loans) 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% and 1.25% and the margin for Adjusted LIBO Rate loans varies between 1.00% and 2.25%. Swingline loans denominated in U.S. dollars bear interest at the Alternate Base Rate plus a margin as described above and swingline loans denominated in alternative currencies bear interest at the Overnight LIBO Rate (as defined in the Credit Agreement) plus the applicable margin for the Adjusted LIBO Rate. Substantially all of our U.S. assets, including the stock of our wholly-owned U.S. subsidiaries and 66.0% of the stock of the first-tier non-U.S. subsidiaries of Cardtronics Delaware, are pledged as collateral to secure borrowings made under the revolving credit facility. Furthermore, each of our material wholly-owned U.S. subsidiaries has guaranteed the full and punctual payment of the obligations under the revolving credit facility. The obligations of the CFC Borrowers (as defined in the Credit Agreement) are secured by the assets of the CFC Guarantors (as defined in the Credit Agreement), which do not guarantee the obligations of our U.S. subsidiaries. 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 Credit Agreement 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 less than 1.50 to 1.0. Additionally, we are limited on the amount of restricted payments, including dividends, which we can make pursuant to the terms of the Credit Agreement; however, we

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may generally make restricted payments so long as no event of default exists at the time of such payment 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, 2016, we had no outstanding borrowings under our $375.0 million revolving credit facility and were in compliance with all applicable covenants and ratios under the revolving credit facility.

$250.0 Million 5.125% Senior Notes due 2022. On July 28, 2014, Cardtronics Delaware issued the 2022 Notes pursuant to an indenture dated July 28, 2014 (the “Indenture”) among Cardtronics Delaware, certain 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 1st and August 1st of each year.

As of September 30, 2016, we were in compliance with all applicable covenants required under the 2022 Notes.

$287.5 Million 1.00% Convertible Senior Notes due 2020. In November 2013, Cardtronics Delaware completed a private placement of the 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. Cardtronics Delaware is required to pay interest semi-annually on June 1st and December 1st of each year.

Cardtronics Delaware is permitted to settle any conversion obligation under the Convertible Notes, in excess of the principal balance, in cash, shares, or a combination of cash and shares, at its election. We intend to satisfy any conversion premium by issuing shares. For additional details, see Item 1. Financial Statements, Note 8. Long-Term Debt.

New Accounting Standards

See Item 1. Financial Statements, Note 18. New Accounting Pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The following market risk disclosures should be read in conjunction with the quantitative and qualitative disclosures about market risk contained in our 2015 Form 10-K.

We are exposed to a variety of market risks, including interest rate risk and foreign currency exchange rate risk. The following quantitative and qualitative information is provided about financial instruments to which we were a party at September 30, 2016, and from which we may incur future gains or losses from changes in market interest rates or foreign currency exchange prices. We do not enter into derivative or other financial instruments for speculative or trading purposes.

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

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Interest Rate Risk

Vault cash rental expense. Because our ATM vault cash rental expense is based on market rates of interest, it is sensitive to changes in the general level of interest rates in the respective countries in which we operate. In the U.S., the U.K., Ireland, and Germany we pay a monthly fee to our vault cash providers on the average amount of vault cash outstanding under a formula based on the respective market’s London Interbank Offered Rates. In Mexico we pay a monthly fee to our vault cash provider under a formula based on the Interbank Equilibrium Interest Rate (commonly referred to as the “TIIE”). In Canada we pay interest to our vault cash providers based on the average amount of vault cash outstanding under a formula based on the Bank of Canada’s bankers’ acceptance rate.

As a result of the significant sensitivity surrounding our vault cash rental expense, we have entered into a number of interest rate swaps to effectively fix the rate we pay on the amounts of our current and anticipated outstanding vault cash balances. During the three months ended March 31, 2016, we entered into new forward-starting interest rate swap agreements with an aggregate notional amount of £550.0 million. These swap agreements begin on January 1, 2017, with £250.0 million terminating December 31, 2019 and £300.0 million terminating December 31, 2020.

Effective June 29, 2016, one of our interest rate swap counterparties exercised its right to terminate a $200.0 million notional amount, 2.40% fixed-rate, contract that was previously designated as a cash flow hedge of our 2019 and 2020 vault cash rental payments. The designated vault cash rental payments remain probable; therefore, upon termination and as of that date, we recognized an unrealized loss of $4.9 million in the Accumulated other comprehensive loss, net line item in the accompanying Consolidated Balance Sheets. The terminated contract was effectively novated by the previous counterparty and we entered into a similar $200.0 million notional amount, 2.52% fixed-rate interest rate swap, with a new counterparty, which we designated as a cash flow hedge of our 2019 and 2020 vault cash rental payments. The modified terms resulted in ineffectiveness of $0.4 million recognized in the Other expense line item in the accompanying Consolidated Statements of Operations during the three months ended June 30, 2016. The ineffectiveness recognized during the three months ended September 30, 2016 was immaterial.

The notional amounts, weighted average fixed rates, and terms associated with our interest rate swap contracts that are currently in place (as of the date of the issuance of these financial statements) are as follows:


Notional Amounts		Weighted Average Fixed Rate		Notional Amounts		Weighted Average Fixed Rate
U.S.		U.S.		U.K.		U.K.		Term
(In millions)				(In millions)
$	1,300	2.74	%	£	—	—	%	October 1, 2016 – December 31, 2016
$	1,000	2.53	%	£	550	0.82	%	January 1, 2017 – December 31, 2017
$	750	2.54	%	£	550	0.82	%	January 1, 2018 – December 31, 2018
$	600	2.45	%	£	300	0.86	%	January 1, 2019 – December 31, 2019
$	600	2.45	%	£	—	—	%	January 1, 2020 – December 31, 2020

Summary of Interest Rate Exposure on Average Vault Cash Outstanding

The following table presents a hypothetical sensitivity analysis of our annual vault cash rental expense in North America based on our average outstanding vault cash balances for the nine months ended September 30, 2016 and assuming a 100 basis point increase in interest rates (in millions):


Average vault cash balance	$	2,290
Interest rate swap fixed notional amount		(1,300)
Residual unhedged vault cash balance	$	990

Additional annual interest incurred on 100 basis point increase	$	9.90

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

Our sensitivity to changes in interest rates in Europe is partially mitigated by the interchange rate setting methodology that impacts our U.K. interchange revenue. Under this methodology, expected interest rate costs are utilized to determine the interchange rate that is set on an annual basis. As a result of this structure, should interest rates rise in the U.K., causing our operating expenses to rise, we would expect to see a rise in interchange rates (and our revenues), albeit with some time lag. As discussed above, to further mitigate our risk, we entered into new forward-starting interest rate swaps that commence on January 1, 2017. As a result, our exposure to floating interest payments in Europe has been fixed to the extent of the £550.0 million notional amount.

As of September 30, 2016, we had a total liability of $60.6 million recorded on our Consolidated Balance Sheets related to our interest rate swaps, which represented the fair value liability of the agreements, as derivative instruments are required to be carried at fair value. The fair value estimate was calculated as the present value of amounts estimated to be received or paid to a marketplace participant in a selling transaction. These swaps are valued using pricing models based on significant other observable inputs (Level 2 inputs under the fair value hierarchy prescribed by U.S. GAAP), the effective portion of the gain or loss on the derivative instrument is reported as a component of the Accumulated other comprehensive loss, net line item on the accompanying Consolidated Balance Sheets and reclassified into earnings in the same line item associated with the forecasted transaction and in the same period or periods during which the hedged item affects earnings.

Interest expense. Our interest expense is also sensitive to changes in interest rates as borrowings under our revolving credit facility accrue interest at floating rates. We have had relatively low amounts outstanding under our revolving credit facility in recent periods, and as a result, our recent exposure to floating interest rates has been low on our outstanding indebtedness. We may, however, borrow additional amounts under our revolving credit facility in the future, and, in the event we borrow amounts and interest rates significantly increase, the interest that we would be required to pay would be more significant. We have not entered into interest rate hedging arrangements in the past to hedge our interest rate risk for our borrowings, and have no plans to do so. Due to fluctuating balances in the amount outstanding under our revolving credit facility, we do not believe such arrangements to be cost effective.

Outlook. If we continue to experience low short-term interest rates in the countries in which we operate, it will be beneficial to the amount of interest expense we incur under our revolving credit facility and our vault cash rental expense. Although we currently hedge a substantial portion of our vault cash interest rate risk in the U.S. and future vault cash interest rate risk in the U.K., we may not be able to enter into similar arrangements for similar amounts in the future, and any significant increase in interest rates in the future could have an adverse impact on our business, financial condition, and results of operations by increasing our operating costs and expenses. However, we expect that the impact on our financial statements from a significant increase in interest rates would be partially mitigated by the interest rate swaps that we currently have in place associated with our vault cash balances in the U.S. and the U.K. and other protective measures we have put in place.

Foreign Currency Exchange Rate Risk

As a result of our operations in the U.K., Ireland, Germany, Poland, Spain, Mexico, and Canada, we are exposed to market risk from changes in foreign currency exchange rates, specifically with respect to changes in the U.S. dollar relative to the British pound, Euro, Polish zloty, Mexican peso, and the Canadian dollar. All of our international subsidiaries are consolidated into our financial results and are subject to risks typical of international businesses including, but not limited to, differing economic conditions, changes in political climate, differing and changing tax regimes, other regulations and restrictions, and foreign currency exchange rate volatility. Furthermore, we are required to translate our foreign functional balance sheets and results of our international operations into U.S. dollars, with any corresponding translation gains or

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losses being recorded in the Accumulated other comprehensive loss, net line item in our Consolidated Balance Sheets. As of September 30, 2016, this accumulated translation loss totaled $72.6 million compared to $45.9 million as of December 31, 2015.

Our consolidated financial results were significantly impacted by changes in foreign currency exchange rates during the three and nine months ended September 30, 2016 compared to the same periods in 2015. Our total revenues during the three and nine months ended September 30, 2016 would have been higher by approximately $16.1 million and $29.1 million, respectively, had the foreign currency exchange rates from the three and nine months ended September 30, 2015, remained unchanged. A sensitivity analysis indicates that, if the U.S. dollar uniformly strengthened or weakened 10.0% against the British pound, Euro, Polish zloty, Mexican peso, or Canadian dollar the effect upon our consolidated operating income would have been approximately $2 million and $4 million, respectively, for the three and nine months ended September 30, 2016.

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

We do not hold derivative commodity instruments, and all of our cash and cash equivalents are held in money market and checking funds.

Item 4. Controls and Procedures

Management’s Quarterly Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2016 at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our system of internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the nine months ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For a description of our material pending legal and regulatory proceedings and settlements, see Part I. Financial Information, Item 1. Financial Statements, Note 13. Commitments and Contingencies.

Item 1A. Risk Factors

You should carefully consider the risks discussed in our Annual Report on Form 10-K for the year ended December 31, 2015 (as amended, the “2015 Form 10-K”) under Part I. Item 1A. Risk Factors, in our Proxy Statement, dated May 19, 2016 (the “Proxy Statement”), under Risk Factors, in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016 (the “Q2 2016 Form 10-Q”) under Part II. Item 1A. Risk Factors, the risk factors described below and other information included and incorporated by reference in this report. The risk factors set forth in the Proxy Statement and the Q2 2016 Form 10-Q update certain of the risk factors affecting our business since those presented in our 2015 Form 10-K and provide additional risk factors related to the Redomicile Transaction. Except as noted below, there have been no material changes in our assessment of our risk factors from those set forth in our 2015 Form 10-K, the Proxy Statement, and the Q2 2016 Form 10-Q. These risks could materially affect our business, financial condition, or future results.

Completion of the acquisition of DirectCash Payments Inc. (“DCPayments”) is subject to a number of conditions, and if these conditions are not satisfied or waived (if permissible under applicable law), the acquisition will not be completed.

Consummation of our acquisition of DCPayments pursuant to a plan of arrangement is subject to certain closing conditions provided in the arrangement agreement, including, among others, (i) the approval and adoption of the plan of arrangement by (A) not less than 66 ⅔% of the votes cast by DCPayments’ shareholders present in person or represented by proxy at the shareholders meeting; and (B) not less than a majority of the votes cast by DCPayments’ shareholders present in person or represented by proxy at the shareholders meeting (after excluding the votes cast by persons whose votes may not be included in determining minority approval pursuant to Canadian Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions); (ii) obtaining a final order from the Court of Queen’s Bench of Alberta approving the plan of arrangement; (iii) issuance of a Certificate of Arrangement by the Alberta Registrar of Corporations; and (iv) dissent rights for more than 5% of DCPayments’ issued and outstanding common shares cannot have been exercised (and not withdrawn). There can be no assurance that the conditions to the completion of the acquisition will be satisfied or waived (if permissible under applicable law) or that the acquisition will be completed.

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

Not applicable.

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Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

The exhibits required to be filed or furnished pursuant to the requirements of Item 601 of Regulation S-K are set forth in the Index to Exhibits accompanying this Form 10-Q, and such Index to Exhibits is incorporated herein by reference.

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SIGNATURES

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

		CARDTRONICS PLC

October 27, 2016		/s/ Edward H. West
		Edward H. West
		Chief Financial Officer and Chief Operations Officer
		(Duly Authorized Officer and
		Principal Financial Officer)

October 27, 2016		/s/ E. Brad Conrad
		E. Brad Conrad
		Chief Accounting Officer
		(Duly Authorized Officer and
		Principal Accounting Officer)

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INDEX TO EXHIBITS

Each exhibit identified below is part of this Form 10-Q.


Exhibit Number		Description

2.1		Arrangement Agreement, dated October 3, 2016, by and between Cardtronics Holdings Limited and DirectCash Payments Inc. (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed by Cardtronics plc on October 7, 2016, File No. 001-37820).
3.1		Articles of Association of Cardtronics plc (incorporated herein by reference to Exhibit 3.1 of the Current Report on Form 8-K filed by Cardtronics plc on July 1, 2016, File No. 001-37820).
4.1		First Supplemental Indenture, dated as of July 1, 2016, by and among Cardtronics, Inc., Cardtronics plc, and Wells Fargo Bank, National Association, as trustee, related to Cardtronics, Inc.’s 1.00% Convertible Senior Notes due 2020 (incorporated herein by reference to Exhibit 4.1 of the Current Report on Form 8-K filed by Cardtronics plc on July 1, 2016, File No. 001-37820).
4.2		First Supplemental Indenture, dated as of July 1, 2016, by and among Cardtronics, Inc., Cardtronics plc, the subsidiary guarantors named therein, and Wells Fargo Bank, National Association, as trustee, related to Cardtronics, Inc.’s 5.125% Senior Notes due 2022 (incorporated herein by reference to Exhibit 4.2 of the Current Report on Form 8-K filed by Cardtronics plc on July 1, 2016, File No. 001-37820).
4.3		Form of Class A ordinary share certificate for Cardtronics plc (incorporated herein by reference to Exhibit 4.3 of the Current Report on Form 8-K filed by Cardtronics plc on July 1, 2016, File No. 001-37820).
10.1		Third Amendment to Amended and Restated Credit Agreement, dated July 1, 2016, by and between Cardtronics, Inc., Cardtronics plc, the other Borrowers, and Guarantors party thereto, the Lenders party thereto and JPMorgan Chase Bank N.A., as Administrative Agent (incorporated herein by reference to Exhibit 10.1 of the Current Report on Form 8-K filed by Cardtronics plc on July 1, 2016, File No. 001-37820).
10.2†		Deed of Assumption, dated July 1, 2016, executed by Cardtronics plc (incorporated herein by reference to Exhibit 10.2 of the Current Report on Form 8-K filed by Cardtronics plc on July 1, 2016, File No. 001-37820).
10.3†		Third Amended and Restated 2007 Stock Incentive Plan (as assumed and adopted by Cardtronics plc, effective July 1, 2016) (incorporated herein by reference to Exhibit 10.3 of the Current Report on Form 8-K filed by Cardtronics plc on July 1, 2016, File No. 001-37820).
10.4*†		First Amendment to Employment Agreement by and between Cardtronics USA Inc. and David Dove, dated effective as of August 22, 2016.
31.1*		Certification of the Chief Executive Officer of Cardtronics plc pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Chief Financial Officer and Chief Operations Officer of Cardtronics plc pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of the Chief Executive Officer and Chief Financial Officer and Chief Operations Officer of Cardtronics plc pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

* Filed herewith.

** Furnished herewith.

† Management contract or compensatory plan or arrangement.

Cardtronics plc - FORM 10-Q - October 27, 2016

Attached files

Cardtronics plc Reports