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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, 2019

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.)



2050 West Sam Houston Parkway South, Suite 1300		77042
Houston	Texas	(Zip Code)
(Address of principal executive offices)

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



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, nominal value $0.01 per share	CATM	NASDAQ Stock Market

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

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

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



Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

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

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

Shares outstanding as of October 29, 2019: 44,603,873 Ordinary shares, nominal value $0.01 per share.

Table of Contents

CARDTRONICS PLC

TABLE OF CONTENTS



		Page

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of September 30, 2019 (unaudited) and December 31, 2018	3
	Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018	4
	Unaudited Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2019 and 2018	5
	Unaudited Consolidated Statements of Shareholders' Equity for the Three and Nine Months Ended September 30, 2019 and 2018	6
	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2019 and 2018	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
	Cautionary Statement Regarding Forward-Looking Statements	50
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	52
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	77
Item 4.	Controls and Procedures	80

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

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

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CARDTRONICS PLC

CONSOLIDATED BALANCE SHEETS

(In thousands, excluding share and per share amounts)



	September 30, 2019			December 31, 2018
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	26,534		$	39,940
Accounts and notes receivable, net of allowance for doubtful accounts of $4,004 and $3,005 as of September 30, 2019 and December 31, 2018, respectively	95,116			75,643
Inventory, net	13,405			11,392
Restricted cash	178,748			155,470
Prepaid expenses, deferred costs, and other current assets	71,962			84,386
Total current assets	385,765			366,831
Property and equipment, net of accumulated depreciation of $485,474 and $417,151 as of September 30, 2019 and December 31, 2018, respectively	445,857			460,187
Intangible assets, net	123,420			150,847
Goodwill	744,898			749,144
Operating lease assets	82,222			—
Deferred tax asset, net	13,410			8,658
Prepaid expenses, deferred costs, and other noncurrent assets	33,521			51,677
Total assets	$	1,829,093		$	1,787,344

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of other long-term liabilities	$	46,726		$	20,266
Accounts payable	44,144			39,310
Accrued liabilities	421,696			369,160
Total current liabilities	512,566			428,736

Long-term debt	752,920			818,485
Asset retirement obligations	52,949			54,413
Noncurrent operating lease liabilities	74,064			—
Deferred tax liability, net	39,160			41,198
Other long-term liabilities	49,213			67,740
Total liabilities	1,480,872			1,410,572

Commitments and contingencies (See Note 15)

Shareholders' equity:
Ordinary shares, $0.01 nominal value; 44,603,425 and 46,134,381 issued and outstanding as of September 30, 2019 and December 31, 2018, respectively	446			461
Additional paid-in capital	328,340			327,009
Accumulated other comprehensive loss, net	(93,606		)	(66,877		)
Retained earnings	113,141			116,276
Total parent shareholders' equity	348,321			376,869
Noncontrolling interests	(100		)	(97		)
Total shareholders’ equity	348,221			376,772
Total liabilities and shareholders’ equity	$	1,829,093		$	1,787,344

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 September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenues:
ATM operating revenues	$	333,384		$	329,837		$	959,067		$	978,789
ATM product sales and other revenues	18,123			10,338			51,531			38,557
Total revenues	351,507			340,175			1,010,598			1,017,346
Cost of revenues:
Cost of ATM operating revenues (excludes depreciation, accretion, and amortization of intangible assets reported separately below. See Note 1(c))	208,860			216,849			623,099			647,692
Cost of ATM product sales and other revenues	14,922			8,680			41,148			31,528
Total cost of revenues	223,782			225,529			664,247			679,220
Operating expenses:
Selling, general, and administrative expenses	46,257			41,896			131,912			124,564
Restructuring expenses	3,583			1,058			7,046			5,534
Acquisition related expenses	—			—			—			2,633
Depreciation and accretion expense	33,466			30,647			99,644			93,453
Amortization of intangible assets	12,404			12,994			37,407			40,263
Loss on disposal and impairment of assets	637			466			3,101			15,583
Total operating expenses	96,347			87,061			279,110			282,030
Income from operations	31,378			27,585			67,241			56,096
Other expenses:
Interest expense, net	6,751			8,852			20,265			27,185
Amortization of deferred financing costs and note discount	3,377			3,397			9,999			10,060
Other income	(3,703		)	(1,297		)	(9,454		)	(1,324		)
Total other expenses	6,425			10,952			20,810			35,921
Income before income taxes	24,953			16,633			46,431			20,175
Income tax expense	4,086			7,854			10,780			10,409
Net income	20,867			8,779			35,651			9,766
Net income (loss) attributable to noncontrolling interests	3			(2		)	(3		)	(14		)
Net income attributable to controlling interests and available to common shareholders	$	20,864		$	8,781		$	35,654		$	9,780

Net income per common share – basic	$	0.46		$	0.19		$	0.77		$	0.21
Net income per common share – diluted	$	0.46		$	0.19		$	0.77		$	0.21

Weighted average shares outstanding – basic	45,058,226			46,073,739			46,040,027			45,945,728
Weighted average shares outstanding – diluted	45,504,165			46,476,787			46,475,353			46,386,523

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

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CARDTRONICS PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income	$	20,867		$	8,779		$	35,651		$	9,766
Unrealized (loss) gain on interest rate swap contracts, net of deferred income tax (benefit) expense of ($583) and $1,370 for the three months ended September 30, 2019 and 2018, respectively, and ($7,860) and $7,346 for the nine months ended September 30, 2019 and 2018, respectively.	(2,798		)	5,192			(29,107		)	24,583
Foreign currency translation adjustments, net of deferred income tax (benefit) expense of $0 and $(164) for the three months ended September 30, 2019 and 2018, respectively, and ($242) and $85 for the nine months ended September 30, 2019 and 2018, respectively.	(6,998		)	(1,144		)	2,378			(24,324		)
Other comprehensive (loss) income	(9,796		)	4,048			(26,729		)	259
Total comprehensive income	11,071			12,827			8,922			10,025
Less: Comprehensive income (loss) attributable to noncontrolling interests	2			(5		)	(3		)	(14		)
Comprehensive income attributable to controlling interests	$	11,069		$	12,832		$	8,925		$	10,039

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

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CARDTRONICS PLC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)



	Three Months Ended September 30, 2019
	Common Shares					Additional Paid-In Capital			Accumulated Other Comprehensive Loss, Net			Retained Earnings			Noncontrolling Interests
	Shares		Amount			Additional Paid-In Capital			Accumulated Other Comprehensive Loss, Net			Retained Earnings			Noncontrolling Interests			Total
Balance as of June 30, 2019	45,645		$	456		$	330,131		$	(83,810	)	$	115,197		$	(101	)	$	361,873
Issuance of common shares for share-based compensation, net of forfeitures	12		—			—			—			—			—			—
Share-based compensation expense	—		—			5,633			—			—			—			5,633
Tax payments related to share-based compensation	—		—			(202		)	—			—			—			(202		)
Repurchase of common shares	(1,054	)	(10		)	(7,222		)	—			(22,920		)	—			(30,152		)
Unrealized loss on interest rate swap and foreign currency forward contracts, net of deferred income tax benefit of $(583)	—		—			—			(2,798		)	—			—			(2,798		)
Net income attributable to controlling interests	—		—			—			—			20,864			—			20,864
Net loss attributable to noncontrolling interests	—		—			—			—			—			3			3
Foreign currency translation adjustments, net of deferred income tax benefit of $(0)	—		—			—			(6,998		)	—			(2		)	(7,000		)
Balance as of September 30, 2019	44,603		$	446		$	328,340		$	(93,606	)	$	113,141		$	(100	)	$	348,221



	Three Months Ended September 30, 2018
	Common Shares			Additional Paid-In Capital			Accumulated Other Comprehensive Loss, Net			Retained Earnings		Noncontrolling Interests
	Shares	Amount		Additional Paid-In Capital			Accumulated Other Comprehensive Loss, Net			Retained Earnings		Noncontrolling Interests			Total
Balance as of June 30, 2018	45,921	$	459	$	320,383		$	(37,384	)	$	113,602	$	(89	)	$	396,971
Share-based compensation expense	—	—		4,669			—			—		—			4,669
Tax payments related to share-based compensation	—	2		(2,740		)	—			—		—			(2,738		)
Unrealized gain on interest rate swap and foreign currency forward contracts, net of deferred income tax expense of $1,370	—	—		—			5,192			—		—			5,192
Net income attributable to controlling interests	—	—		—			—			8,781		—			8,781
Net income attributable to noncontrolling interests	—	—		—			—			—		(2		)	(2		)
Foreign currency translation adjustments, net of deferred income tax benefit of $(164)	—	—		11			(1,144		)	—		(2		)	(1,135		)
Balance as of September 30, 2018	45,921	$	461	$	322,323		$	(33,336	)	$	122,383	$	(93	)	$	411,738

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

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CARDTRONICS PLC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)



	Nine Months Ended September 30, 2019
	Common Shares					Additional Paid-In Capital			Accumulated Other Comprehensive Loss, Net			Retained Earnings			Noncontrolling Interests
	Shares		Amount															Total
Balance as of December 31, 2018	46,134		$	461		$	327,009		$	(66,877	)	$	116,276		$	(97	)	$	376,772
Cumulative effect of change in accounting principle	—		—			—			366			(366		)	—			—
Issuance of common shares for share-based compensation, net of forfeitures	201		2			—			—			—			—			2
Share-based compensation expense	—		—			15,367			—			—			—			15,367
Tax payments related to share-based compensation	—		—			(2,224		)	—			—			—			(2,224		)
Repurchase of common shares	(1,732	)	(17		)	(11,812		)	—			(38,423		)	—			(50,252		)
Unrealized loss on interest rate swap and foreign currency forward contracts, net of deferred income tax benefit of $(7,860)	—		—			—			(29,473		)	—			—			(29,473		)
Net income attributable to controlling interests	—		—			—			—			35,654			—			35,654
Net loss attributable to noncontrolling interests	—		—			—			—			—			(3		)	(3		)
Foreign currency translation adjustments, net of deferred income tax benefit of $(242)	—		—			—			2,378			—			—			2,378
Balance as of September 30, 2019	44,603		$	446		$	328,340		$	(93,606	)	$	113,141		$	(100	)	$	348,221



	Nine Months Ended September 30, 2018
	Common Shares			Additional Paid-In Capital			Accumulated Other Comprehensive Loss, Net			Retained Earnings		Noncontrolling Interests
	Shares	Amount		Additional Paid-In Capital			Accumulated Other Comprehensive Loss, Net			Retained Earnings		Noncontrolling Interests			Total
Balance as of December 31, 2017	45,696	$	457	$	316,940		$	(33,595	)	$	106,670	$	(79	)	$	390,393
Cumulative effect of change in accounting principle	—	—		—			—			5,933		—			5,933
Issuance of common shares for share-based compensation, net of forfeitures	225	4		—			—			—		—			4
Share-based compensation expense	—	—		10,627			—			—		—			10,627
Tax payments related to share-based compensation	—	—		(5,245		)	—			—		—			(5,245		)
Unrealized gain on interest rate swap and foreign currency forward contracts, net of deferred income tax expense of $7,346	—	—		—			24,583			—		—			24,583
Net income attributable to controlling interests	—	—		—			—			9,780		—			9,780
Net loss attributable to noncontrolling interests	—	—		—			—			—		(14		)	(14		)
Foreign currency translation adjustments, net of deferred income tax expense of $85	—	—		1			(24,324		)	—					(24,323		)
Balance as of September 30, 2018	45,921	$	461	$	322,323		$	(33,336	)	$	122,383	$	(93	)	$	411,738

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,
	2019			2018
Cash flows from operating activities:
Net income	$	35,651		$	9,766
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, accretion, and amortization of intangible assets	137,051			133,716
Amortization of deferred financing costs and note discount	9,999			10,060
Share-based compensation expense	15,367			10,627
Deferred income tax expense	1,089			1,895
Loss on disposal and impairment of assets	3,101			15,583
Other reserves and non-cash items	(8,565		)	(753		)
Changes in assets and liabilities:
(Increase) decrease in accounts and notes receivable, net	(21,589		)	17,477
Decrease (increase) in prepaid expenses, deferred costs, and other current assets	7,810			(5,210		)
Increase in inventory, net	(4,035		)	(3,321		)
Decrease in other assets	5,047			4,987
Increase in accounts payable	5,526			2,397
Increase in restricted cash liabilities	22,629			25,709
Increase (decrease) in accrued liabilities	31,827			(22,736		)
Decrease in other liabilities	(9,216		)	(15,615		)
Net cash provided by operating activities	231,692			184,582

Cash flows from investing activities:
Additions to property and equipment	(90,319		)	(73,357		)
Acquisitions, net of cash acquired	(9,100		)	—
Net cash used in investing activities	(99,419		)	(73,357		)

Cash flows from financing activities:
Proceeds from borrowings under revolving credit facility	486,486			478,023
Repayments of borrowings under revolving credit facility	(555,588		)	(569,017		)
Debt issuance, modification, and redemption costs	(924		)	—
Tax payments related to share-based compensation	(2,224		)	(5,245		)
Proceeds from exercises of stock options	2			14
Repurchase of common shares	(50,252		)	—
Net cash used in financing activities	(122,500		)	(96,225		)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash	99			(404		)
Net increase in cash, cash equivalents, and restricted cash	9,872			14,596

Cash, cash equivalents, and restricted cash as of beginning of period	195,410			99,817
Cash, cash equivalents, and restricted cash as of end of period	$	205,282		$	114,413

Supplemental disclosure of cash flow information:
Cash paid for interest	$	14,453		$	25,754
Cash paid (refunded) for income taxes	$	5,251		$	(1,240	)

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

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CARDTRONICS PLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) General and Basis of Presentation

(a) General

Cardtronics plc, together with its wholly and majority-owned subsidiaries (collectively, the “Company”), provides convenient automated financial related services to consumers through its global network of automated teller machines and multi-function financial services kiosks (collectively referred to as “ATMs”). As of September 30, 2019, the Company was the world’s largest ATM owner/operator, providing services to over 295,000 ATMs globally, approximately 25% of which are Company-owned.

During the three months ended September 30, 2019, approximately 63% of the Company’s revenues were derived from operations in North America (including its ATM operations in the United States ("U.S."), Canada, and Mexico), approximately 30% of the Company’s revenues were derived from operations in Europe and Africa (including its ATM operations in the United Kingdom ("U.K."), Ireland, Germany, Spain, and South Africa), and approximately 7% of the Company’s revenues were derived from the Company’s operations in Australia and New Zealand. As of September 30, 2019, the Company provided processing only services or various forms of managed services solutions to approximately 206,000 ATMs. Under a managed services arrangement, retailers, financial institutions, and ATM distributors rely on Cardtronics to handle some or all of the operational aspects associated with operating and maintaining ATMs, typically in exchange for a monthly service fee, fee per transaction, or fee per service provided.

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

In addition to its retail merchant relationships, the Company also partners with leading financial institutions to brand selected ATMs within its network. As of September 30, 2019, approximately 21,000 of the Company’s ATMs were branded with approximately 500 financial institutions to place their logos on the ATMs and to provide convenient surcharge-free access for their banking customers. These financial institutions include BBVA Compass Bancshares, Inc., Citibank, N.A., Citizens Financial Group, Inc., Cullen/Frost Bankers, Inc., Discover Bank, PNC Bank, N.A., Santander Bank, N.A., TD Bank, N.A. and USAA in the U.S.; Bank of Nova Scotia, BMO Bank of Montreal, Canadian Imperial Bank Commerce, and TD Bank in Canada; Deutsche Post Bank in Germany; ING Group in Spain; Capitec Bank in South Africa, and the Bank of Queensland Limited and HSBC Holdings plc in Australia. In Mexico, the Company partners with Scotiabank and Banco Multiva.

The Company owns and operates the Allpoint network (“Allpoint”), the largest retail based surcharge-free ATM network (based on the number of participating ATMs). Allpoint, which has approximately 55,000 participating ATMs, provides surcharge-free ATM access to approximately 1,200 participating credit unions, banks, and stored-value debit card issuers. For participants, Allpoint provides scale, density, and convenience of surcharge-free ATMs that surpasses the largest banks in the U.S. Allpoint earns either a fixed monthly fee per cardholder or a fixed fee per transaction that is paid by the participants. Allpoint includes a majority of the Company’s ATMs in the U.S. and certain ATMs in the U.K., Canada, Mexico, and Australia. Allpoint also provides services to organizations that manage stored-value debit card programs on behalf of corporate entities and governmental agencies, including general purpose, payroll, and electronic benefits transfer cards. Under these programs, the issuing organizations pay Allpoint a fee per issued stored-value debit card or per transaction in return for allowing the users of those cards surcharge-free access to Allpoint’s participating ATM network.

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

(b) Basis of Presentation

This Quarterly Report on Form 10-Q (this “Form 10-Q”) has been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) applicable to interim financial information. As this is an interim period filing presented using a condensed format, it does not include all of the disclosures required by accounting principles generally accepted in the U.S. (“U.S. GAAP” or “GAAP”), although the Company believes that the disclosures are adequate to make the information not misleading. This Form 10-Q should be read along with the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Form 10-K”), which includes a summary of the Company’s significant accounting policies and other disclosures.

In management’s opinion, all normal recurring adjustments necessary for a fair presentation of the Company’s interim and prior period results have been made. The results of operations for the three and nine months ended September 30, 2019 and 2018 are not necessarily indicative of results of operations that may be expected for any other interim period or for the full fiscal year.

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

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

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

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(In thousands)
Depreciation and accretion expenses related to ATMs and ATM-related assets	$	24,899	$	22,462	$	74,890	$	68,874
Amortization of intangible assets	12,404		12,994		37,407		40,263
Total depreciation, accretion, and amortization of intangible assets excluded from Cost of ATM operating revenues	$	37,303	$	35,456	$	112,297	$	109,137

(d) Restructuring Expenses

During 2017 and 2018, the Company implemented a global corporate reorganization and cost reduction initiative (the "2017 and 2018 Restructuring Plan”), intended to improve its cost structure and operating efficiency. The 2017 and 2018 Restructuring Plan included workforce reductions, facility closures and other cost reduction measures. During the three and nine months ended September 30, 2018, the Company incurred pre-tax charges of $1.1 million and $5.5 million, respectively, related to the 2017 and 2018 Restructuring Plan, primarily consisting of employee severance.

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During the three and nine months ended September 30, 2019, the Company incurred $3.6 million and $7.0 million, respectively, of pre-tax charges related to 2019 restructuring activity (the "2019 Restructuring Plan"), consisting of workforce reductions, facility closures and professional fees.

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(In thousands)
North America	$	799	$	942	$	1,012	$	3,072
Europe & Africa	2,335		116		2,735		1,292
Corporate	449		—		3,299		1,170
Total restructuring expenses	$	3,583	$	1,058	$	7,046	$	5,534

As of September 30, 2019, the following tables reflect unpaid employee severance costs, facility costs and professional fees. These amounts are presented within the Accrued liabilities line item in the accompanying Consolidated Balance Sheets.



	As of September 30, 2019
	North America		Europe & Africa		Corporate		Total
	(In thousands)
Accrued liabilities	$	673	$	—	$	—	$	673

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



	(In thousands)
Restructuring liabilities as of December 31, 2018	$	1,531
Restructuring expenses	7,046
Payments	(7,904		)
Restructuring liabilities as of September 30, 2019	$	673

(e) Cash, Cash Equivalents, and Restricted Cash

For purposes of reporting financial condition, cash and cash equivalents include cash in bank and short-term deposit accounts. Additionally, the Company maintains cash on deposit with banks that is pledged for a particular use or restricted to support a liability. These balances are recorded in Restricted cash and/or Prepaid expenses, deferred costs, and other noncurrent assets lines in the accompanying Consolidated Balance Sheets based on when the Company expects this cash to be paid. Current restricted cash primarily consists of amounts collected on behalf of, but not yet remitted to, certain of the Company’s merchant customers or third-party service providers. Restricted cash in current and noncurrent assets are offset by corresponding liability balances in the Accrued liabilities line in the accompanying Consolidated Balance Sheets. The changes in the settlement liabilities corresponding to the changes in the balance of restricted cash during the nine month period ended September 30, 2019 and 2018 are presented in the Statements of Cash Flows within the increase in restricted cash liabilities line.

The following table provides a reconciliation of the ending cash, cash equivalents, and restricted cash balances as of September 30, 2019 and 2018, corresponding with the balances in the accompanying Consolidated Statements of Cash Flows.



	September 30,
	2019		2018
	(In thousands)
Cash and cash equivalents	$	26,534	$	40,428
Current and long-term restricted cash	178,748		73,985
Total cash, cash equivalents, and restricted cash in the Consolidated Statements of Cash Flows	$	205,282	$	114,413

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(f) Inventory, net

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

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



	September 30, 2019			December 31, 2018
	(In thousands)
ATMs	$	3,644		$	1,990
ATM spare parts and supplies	10,088			9,572
Total inventory	13,732			11,562
Less: Inventory reserves	(327		)	(170		)
Inventory, net	$	13,405		$	11,392

(g) Acquisition

In May 2019, the Company acquired ATM processing contracts for approximately 62,000 ATMs.

(2) New Accounting Pronouncements

Adoption of New Accounting Pronouncements

Lease Accounting. The Company adopted Accounting Standards Codification Topic 842, Leases (the “Lease Standard”) as of January 1, 2019, using the modified retrospective approach and using the effective date as the date of initial application. Consequently, financial information for dates and periods before January 1, 2019 have not been updated or recasted. In addition, the Company elected the practical expedients permitted under the transition guidance within the Lease Standard, which allowed the Company to carry forward prior conclusions about lease identification, lease classification, and initial direct costs. In accordance with the Company's accounting policy, the Company elected not to exclude short-term leases for any of its vehicle and equipment leases, as the lease terms associated with our operating leases are routinely longer than 12 months. In addition, the Company elected not to separate lease and non-lease components for its ATM placement agreements that contain fixed payments and are deemed to contain an operating lease under the Lease Standard.

The Company’s adoption of ASC 842 resulted in the recognition of operating lease assets and liabilities of approximately $85 million and $95 million, respectively, as well as the derecognition of certain prepaid and deferred lease balances upon adoption. Upon adoption, this guidance had no impact on the Company's consolidated income from operations, net income, or cash flows.

Hedge Accounting. The Company adopted ASU No. 2017-12, Derivatives and Hedging (Topic 815) Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12” or the “Hedging Standard”) as of January 1, 2019, using the modified retrospective transition approach, which requires the Company to account for ASU 2017-12 as of the date of adoption with any retrospective adjustments applicable to prior periods included as a cumulative-effect adjustment to accumulated other comprehensive loss and retained earnings. ASU 2017-12 amends and simplifies existing guidance in order to allow companies to more accurately present the economic effects of risk management activities in the financial statements. Upon adoption, this guidance had no impact on the Company's consolidated income from operations, net income, or cash flows.

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Upon adoption, the Lease Standard and the Hedging Standard had the following impact on the Company’s consolidated statement of financial position:



	December 31, 2018 As Reported			ASC Topic 842 (Leases)			ASU 2017-12 (Hedging)			December 31, 2018 As Adjusted
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	39,940		$	—		$	—		$	39,940
Accounts and notes receivable, net	75,643			—			—			75,643
Inventory, net	11,392			—			—			11,392
Restricted cash	155,470			—			—			155,470
Prepaid expenses, deferred costs, and other current assets	84,386			3,483			—			87,869
Total current assets	366,831			3,483			—			370,314
Property and equipment, net of accumulated depreciation	460,187			—			—			460,187
Intangible assets, net	150,847			—			—			150,847
Goodwill	749,144			—			—			749,144
Operating lease assets	—			85,068			—			85,068
Deferred tax asset, net	8,658			—			—			8,658
Prepaid expenses, deferred costs, and other noncurrent assets	51,677			—			—			51,677
Total assets	$	1,787,344		$	88,551		$	—		$	1,875,895

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of other long-term liabilities	$	20,266		$	20,602		$	—		$	40,868
Accounts payable	39,310			—			—			39,310
Accrued liabilities	369,160			(447		)	—			368,713
Total current liabilities	428,736			20,155			—			448,891

Long-term debt	818,485			—			—			818,485
Asset retirement obligations	54,413			—			—			54,413
Noncurrent operating lease liabilities	—			74,746			—			74,746
Deferred tax liability, net	41,198			—			—			41,198
Other long-term liabilities	67,740			(6,350		)	—			61,390
Total liabilities	1,410,572			88,551			—			1,499,123

Commitments and contingencies

Shareholders' equity:
Ordinary shares	461			—			—			461
Additional paid-in capital	327,009			—			—			327,009
Accumulated other comprehensive loss, net	(66,877		)	—			366			(66,511		)
Retained earnings	116,276			—			(366		)	115,910
Total parent shareholders' equity	376,869			—			—			376,869
Noncontrolling interests	(97		)	—			—			(97		)
Total shareholders’ equity	376,772			—			—			376,772
Total liabilities and shareholders’ equity	$	1,787,344		$	88,551		$	—		$	1,875,895

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Accounting Pronouncements Issued But Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements. This pronouncement, along with the ASUs issued to clarify certain provisions of ASU 2016-13, changes the impairment model for most financial assets and will require the use of an “expected loss” model for instruments measured at amortized cost. Under this model, entities will be required to estimate the lifetime expected credit loss on such instruments and record an allowance to offset the amortized cost basis of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. This pronouncement is effective for fiscal years, and for interim periods, beginning after December 15, 2019 and the Company plans to adopt this guidance effective January 1, 2020. The Company is currently evaluating the adoption of this guidance but do not expect it to have a material impact on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This guidance eliminates Step 2 from the goodwill impairment test, eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment, and provides other guidance on measuring a goodwill impairment loss. This guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those years, and early adoption is permitted. The Company expects to adopt this guidance effective January 1, 2020. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework (Topic 820): Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements. This guidance is effective for fiscal years beginning after December 15, 2019, and early adoption is permitted. The Company plans to adopt this guidance effective January 1, 2020. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). This guidance is effective for fiscal years beginning after December 15, 2019, and early adoption is permitted. The Company plans to adopt this guidance in 2020. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

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(3) Revenue Recognition

Disaggregated Revenues

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



	Three Months Ended September 30, 2019
	(In thousands)
	North America		Europe & Africa		Australia & New Zealand		Eliminations			Consolidated
Surcharge revenues	$	90,148	$	48,652	$	19,603	$	—		$	158,403
Interchange revenues	35,289		51,631		1,056		—			87,976
Bank-branding and surcharge-free network revenues	52,112		238		—		—			52,350
Managed services and processing revenues	31,046		2,280		3,730		(2,401		)	34,655
Total ATM operating revenues	208,595		102,801		24,389		(2,401		)	333,384

ATM product sales and other revenues	16,113		1,907		103		—			18,123
Total revenues	$	224,708	$	104,708	$	24,492	$	(2,401	)	$	351,507



	Three Months Ended September 30, 2018
	(In thousands)
	North America		Europe & Africa		Australia & New Zealand		Eliminations			Consolidated
Surcharge revenues	$	92,572	$	34,134	$	22,358	$	—		$	149,064
Interchange revenues	36,620		66,039		1,650		—			104,309
Bank-branding and surcharge-free network revenues	45,128		—		—		—			45,128
Managed services and processing revenues	26,447		2,646		5,409		(3,166		)	31,336
Total ATM operating revenues	200,767		102,819		29,417		(3,166		)	329,837

ATM product sales and other revenues	8,267		2,019		52		—			10,338
Total revenues	$	209,034	$	104,838	$	29,469	$	(3,166	)	$	340,175

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	Nine Months Ended September 30, 2019
	(In thousands)
	North America		Europe & Africa		Australia & New Zealand		Eliminations			Consolidated
Surcharge revenues	$	263,492	$	124,124	$	60,047	$	—		$	447,663
Interchange revenues	103,954		161,362		3,557		—			268,873
Bank-branding and surcharge-free network revenues	146,523		721		—		—			147,244
Managed services and processing revenues	85,208		6,773		11,302		(7,996		)	95,287
Total ATM operating revenues	599,177		292,980		74,906		(7,996		)	959,067

ATM product sales and other revenues	44,994		6,123		414		—			51,531
Total revenues	$	644,171	$	299,103	$	75,320	$	(7,996	)	$	1,010,598



	Nine Months Ended September 30, 2018
	(In thousands)
	North America		Europe & Africa		Australia & New Zealand		Eliminations			Consolidated
Surcharge revenues	$	272,372	$	91,191	$	69,107	$	—		$	432,670
Interchange revenues	108,259		205,910		3,839		—			318,008
Bank-branding and surcharge-free network revenues	133,565		—		—		—			133,565
Managed services and processing revenues	79,798		7,708		16,132		(9,092		)	94,546
Total ATM operating revenues	593,994		304,809		89,078		(9,092		)	978,789

ATM product sales and other revenues	32,026		6,323		208		—			38,557
Total revenues	$	626,020	$	311,132	$	89,286	$	(9,092	)	$	1,017,346

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

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

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

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•

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

•

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

•

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

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

•

Managed services and processing revenues. Under managed service agreements, the Company provides various forms of ATM-related services, including monitoring, maintenance, cash management, cash delivery, customer service, on-screen advertising, processing and other services to merchants, financial institutions, and third-party ATM operators. Under processing arrangements, the Company provides transaction processing services to merchants, financial institutions, and third-party operators. Under managed services and processing arrangements, surcharge and interchange fees are generally earned by the customer and the Company typically receives a fixed fee per transaction and/or a periodic management fee per ATM in return for providing the agreed-upon operating services. The managed services and processing fees are recognized as the related services are provided to the customers.

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

Due to the transactional nature of the Company’s revenue, there are no significant judgments that affect the determination of the amount and timing of its revenues.

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Contract Balances

As of September 30, 2019, the Company has recognized no significant contract assets. Contract liabilities totaled $7.6 million and $8.4 million at September 30, 2019 and December 31, 2018, respectively. These amounts represent deferred revenues for advance consideration received primarily in relation to bank-branding and surcharge-free network arrangements. The revenue recognized during the three and nine months ended September 30, 2019 and 2018 on previously deferred revenues was not material. The Company expects to recognize the revenue associated with its contract liabilities ratably over various periods extending over the next 36 months. During the three and nine months ended September 30, 2019, the Company did not recognize any significant impairment losses related to its contract assets.

Contract Acquisition Cost

The Company expects that the incremental commissions paid to sales personnel, together with other associated costs, are recoverable, and therefore, the Company capitalizes these amounts as deferred contract acquisition costs. Deferred contract acquisition costs totaled $7.7 million and $7.9 million at September 30, 2019 and December 31, 2018, respectively. Sales commissions capitalized are generally amortized over a 4-5 year period corresponding with the related agreements. Similarly, the costs incurred to fulfill a contract, primarily consisting of prepaid merchant commissions and other consideration paid or provided to merchant partners, are capitalized and recognized over the duration of the related contract. The Company does not capitalize the costs of obtaining a contract if the associated contract is one year or less.

(4) Share-based Compensation

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

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(In thousands)
Cost of ATM operating revenues	$	367	$	229	$	994	$	404
Selling, general, and administrative expenses	5,266		4,440		14,373		10,223
Total share-based compensation expense	$	5,633	$	4,669	$	15,367	$	10,627

For the three and nine months ended September 30, 2019, total share-based compensation expense increased by $1.0 million and $4.7 million compared to the same periods of 2018, respectively. This increase is attributable to the amount, timing and terms of share-based payment awards granted during the periods, net of estimated forfeitures.

Restricted Stock Units. The Company grants restricted stock units (“RSUs”) under its Long-Term Incentive Plan (“LTIP”), which is an annual equity award program under the Fourth Amended and Restated 2007 Stock Incentive Plan. The ultimate number of RSUs, that are determined to be earned under the LTIP are approved by the Compensation Committee of the Company’s Board of Directors ("Board"), based on the Company’s achievement of previously specified performance levels at the end of the associated performance period. RSU grants are service-based (“Time-RSUs”), performance-based (“Performance-RSUs”), or market-based (“Market-Based-RSUs”). Each is recognized ratably over the associated service period. For Time-RSUs and Market-Based-RSUs, the Company recognizes the related compensation expense based on the grant date fair value. The grant date fair value of the Time-Based RSUs is the Company's closing stock price on the date of grant while the grant date fair value of the Market-Based-RSUs is derived from a Monte Carlo simulation. For Performance-RSUs, the Company recognizes the related compensation expense based on the estimated performance levels that management believes will ultimately be met. Time-RSUs are convertible into the Company’s common shares upon passage of the annual graded vesting periods, which begin 1-2 years after the grant date and extend 3-4 years. Performance-RSUs and Market-Based RSUs will be earned to the extent the Company achieves the associated performance-based or market-based vesting conditions and these awards are convertible into the Company’s common shares after the passage of the vesting periods which extend 3-4 years from the grant date. Although these RSUs are not considered to be earned and outstanding until the vesting conditions are met, the Company recognizes the related compensation expense over the

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requisite service period (or to an employee’s qualified retirement date, if earlier) using a graded vesting methodology. RSUs may also be granted outside of LTIPs, with or without performance-based vesting requirements.

The number of the Company’s earned non-vested RSUs as of September 30, 2019, and changes during the nine months ended September 30, 2019, are presented below:



	Number of Shares		Weighted Average Grant Date Fair Value
Non-vested RSUs as of December 31, 2018	911,165		$	28.74
Granted	250,966		33.69
Vested	(269,539	)	33.84
Forfeited	(23,586	)	30.69
Non-vested RSUs as of September 30, 2019	869,006		$	28.54

The above table only includes earned RSUs. The Performance-RSUs and Market-Based RSUs granted in 2018 and 2019 that are not yet earned are not included. The number of Performance-RSUs granted at target in 2018, net of forfeitures, was 279,515 units with a weighted average grant date fair value of $23.03 per unit. The number of Performance-RSUs granted at target in 2019, net of forfeitures, was 118,796 units with a weighted average grant date fair value of $33.80 per unit. The number of Market-Based RSUs granted in 2018, net of forfeitures, was 134,989 units with a weighted average grant date fair value $24.13. The number of Market-Based RSUs granted in 2019, net of forfeitures, was 120,560 units with a weighted average grant date fair value of $49.31 per unit. Time-RSUs are included in the listing of outstanding RSUs as granted.

As of September 30, 2019, the unrecognized compensation expense associated with earned RSUs was $12.3 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 1.74 weighted average remaining life years.

Options. The number of the Company’s outstanding stock options as of September 30, 2019, and changes during the nine months ended September 30, 2019, are presented below:



	Number of Shares	Weighted Average Exercise Price
Options outstanding as of December 31, 2018	234,959	$	22.31
Granted	145,221	31.99
Options outstanding as of September 30, 2019	380,180	26.01

Options vested and exercisable as of September 30, 2019	78,326	$	22.31

As of September 30, 2019, the unrecognized compensation expense associated with outstanding options was approximately $2.4 million, which will be recognized over the remaining weighted average vesting period of approximately 1.98 years.

(5) Earnings Per Share

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

Potentially dilutive securities for the three and nine months ended September 30, 2019 included all outstanding stock options and RSUs, which were included in the calculation of diluted earnings per share for these periods. The potentially dilutive effect of outstanding warrants and the underlying shares exercisable under the Company’s $287.5 million of 1.00% Convertible Senior Notes due 2020 (the “Convertible Notes”) were excluded from diluted shares outstanding as the exercise price exceeded the average market price of the Company’s common shares. The effect of the note hedge, described in Note 9. Long-Term Debt, was also excluded as the effect is anti-dilutive.

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The allocated details of our Earnings per Share are as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(in thousands, excluding share and per share amounts)
Net income available to common shareholders	$	20,864	$	8,781	$	35,654	$	9,780
Weighted average common basic shares outstanding (for basic calculation)	45,058,226		46,073,739		46,040,027		45,945,728
Dilutive effect of outstanding common stock options and RSUs	445,939		403,048		435,326		440,795
Weighted average common dilutive shares outstanding (for diluted calculation)	45,504,165		46,476,787		46,475,353		46,386,523

Net income per common share - basic	$	0.46	$	0.19	$	0.77	$	0.21
Net income per common share - diluted	$	0.46	$	0.19	$	0.77	$	0.21

For both the three and nine months ended September 30, 2019, there were 145,221 stock options excluded from the computation of diluted earnings per share as their inclusion in the share count would have been anti-dilutive. For both the three and nine months ended September 30, 2018, there were no anti-dilutive share-based awards outstanding.

(6) Shareholders' Equity

Share Repurchases. On March 26, 2019, the Company announced that its Board had authorized a share repurchase program, enabling the repurchase of up to $50 million of its Class A ordinary shares through August 31, 2020. Share repurchases under the authorized plan could be effected on behalf of the Company through open market transactions, privately negotiated transactions, or otherwise, pursuant to SEC trading rules.

During the three months ended September 30, 2019, the Company repurchased and canceled 1,054,713 of its outstanding Class A ordinary shares at a weighted average price of $28.44 per share, for an aggregate purchase price of approximately $30 million. During the nine months ended September 30, 2019, the Company repurchased and canceled an accumulated total of 1,732,392 outstanding Class A ordinary shares at a weighted average price of $28.86 per share, for an aggregate purchase price of approximately $50 million. The amounts presented for share repurchases on the Consolidated Statements of Shareholders' Equity include the applicable stamp taxes payable in the U.K. of $0.3 million.

Accumulated Other Comprehensive Loss, net. Accumulated other comprehensive loss, net, is a separate component of Shareholders’ equity in the accompanying Consolidated Balance Sheets. The following tables present the changes in the balances of each component of Accumulated other comprehensive loss, net, for the three and nine months ended September 30, 2019:



	Foreign Currency Translation Adjustments				Unrealized Losses on Interest Rate Swap and Foreign Currency Forward Contracts				Total
	(In thousands)
Total accumulated other comprehensive loss, net as of June 30, 2019	$	(56,936	)	⁽¹⁾	$	(26,874	)	⁽²⁾	$	(83,810	)
Other comprehensive loss before reclassification	(6,998		)	⁽³⁾	(3,525		)	⁽⁴⁾	(10,523		)
Amounts reclassified from accumulated other comprehensive loss, net	—			⁽³⁾	727			⁽⁴⁾	727
Net current period other comprehensive loss	(6,998		)	⁽¹⁾	(2,798		)	⁽²⁾	(9,796		)
Total accumulated other comprehensive loss, net as of September 30, 2019	$	(63,934	)	⁽¹⁾	$	(29,672	)	⁽²⁾	$	(93,606	)

(1)Net of deferred income tax (benefit) of $(5,474) and $(5,474) as of September 30, 2019 and June 30, 2019, respectively.

(2)Net of deferred income tax expense of $11,253 and $11,835 as of September 30, 2019 and June 30, 2019, respectively.

(3)No incremental deferred income tax (benefit) was recognized.


(4)	Net of deferred income tax (benefit) expense of $(725) and $142 for Other comprehensive income before reclassification and Amounts reclassified from accumulated comprehensive loss, net, respectively, as of September 30, 2019. For additional information, see Note 13. Derivative Financial Instruments.

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	Foreign Currency Translation Adjustments				Unrealized Losses on Interest Rate Swap and Foreign Currency Forward Contracts				Total
	(In thousands)
Total accumulated other comprehensive loss, net as of December 31, 2018	$	(66,312	)	⁽¹⁾	$	(565	)	⁽²⁾	$	(66,877	)
Other comprehensive income (loss) before reclassification	2,378			⁽³⁾	(29,489		)	⁽⁴⁾	(27,111		)
Amounts reclassified from accumulated other comprehensive loss, net	—				382			⁽⁴⁾	382
Net current period other comprehensive income (loss)	2,378				(29,107		)		(26,729		)
Total accumulated other comprehensive loss, net as of September 30, 2019	$	(63,934	)	⁽¹⁾	$	(29,672	)	⁽²⁾	$	(93,606	)

(1)Net of deferred income tax (benefit) of $(5,474) and $(5,232) as of September 30, 2019 and December 31, 2018, respectively.

(2)Net of deferred income tax expense of $11,253 and $19,112 as of September 30, 2019 and December 31, 2018, respectively.

(3)Net of deferred income tax (benefit) expense of $(242).


(4)	Net of deferred income tax (benefit) expense of $(7,917) and $57 for Other comprehensive income before reclassification and Amounts reclassified from accumulated other comprehensive loss, net, respectively, as of September 30, 2019. For additional information, see Note 13. Derivative Financial Instruments.

The Company records unrealized gains and losses related to its interest rate swap contracts net of taxes, in the Accumulated other comprehensive loss, net line within the accompanying Consolidated Balance Sheets. The amounts reclassified from Accumulated other comprehensive loss, net are recognized in the Cost of ATM operating revenues, Interest expense, net, or Other (income) expense lines in the accompanying Consolidated Statements of Operations.

The Company has elected the portfolio approach for the deferred tax asset of the unrealized gains and losses related to the interest rate swap contracts in Accumulated other comprehensive loss, net within 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 within the accompanying Consolidated Balance Sheets and into continuing operations as a tax expense when the Company ceases to hold any interest rate swap contracts. As of September 30, 2019, the disproportionate tax effect is $14.6 million.

The Company currently believes that the unremitted earnings of certain of its subsidiaries 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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(7) Intangible Assets

Goodwill

The following table presents the net carrying amounts of the Company’s intangible assets with indefinite lives as of December 31, 2018 and September 30, 2019, as well as the changes in the net carrying amounts for the nine months ended September 30, 2019 by segment. For additional information related to the Company’s segments, see Note 17. Segment Information .



	North America		Europe & Africa			Australia & New Zealand			Total
	(In thousands)
Goodwill, gross as of December 31, 2018	$	556,570	$	231,121		$	151,494		$	939,185
Accumulated impairment loss	—		(50,003		)	(140,038		)	(190,041		)
Goodwill, net as of December 31, 2018	$	556,570	$	181,118		$	11,456		$	749,144

Foreign currency translation adjustments	3,146		(6,906		)	(486		)	(4,246		)

Goodwill, gross as of September 30, 2019	559,716		224,215			151,008			934,939
Accumulated impairment loss	—		(50,003		)	(140,038		)	(190,041		)
Goodwill, net as of September 30, 2019	$	559,716	$	174,212		$	10,970		$	744,898

Intangible Assets with Definite Lives

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



	September 30, 2019							December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(In thousands)
Merchant and bank-branding contracts/relationships	$	482,552	$	(371,696	)	$	110,856	$	476,429	$	(340,899	)	$	135,530
Trade names	17,025		(11,445		)	5,580		18,010		(9,804		)	8,206
Technology	10,875		(7,151		)	3,724		10,963		(6,490		)	4,473
Non-compete agreements	4,362		(4,362		)	—		4,247		(4,244		)	3
Revolving credit facility deferred financing costs	5,225		(1,965		)	3,260		4,170		(1,535		)	2,635
Total intangible assets with definite lives	$	520,039	$	(396,619	)	$	123,420	$	513,819	$	(362,972	)	$	150,847

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(8) Accrued Liabilities

The Company’s accrued liabilities consisted of the following:



	September 30, 2019		December 31, 2018
	(In thousands)
Accrued merchant settlement	$	238,237	$	198,512
Accrued merchant fees	35,487		33,551
Accrued taxes	34,005		32,899
Accrued compensation	21,457		26,147
Accrued processing costs	10,360		7,365
Accrued interest	9,453		3,343
Accrued armored	8,913		7,984
Accrued maintenance	6,231		3,911
Accrued purchases	4,806		6,654
Accrued cash management fees	4,057		8,882
Accrued telecommunications costs	2,788		2,187
Other accrued expenses	45,902		37,725
Total accrued liabilities	$	421,696	$	369,160

(9) Long-Term Debt

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



	September 30, 2019		December 31, 2018
	(In thousands)
Revolving credit facility, including swingline credit facility (weighted average combined interest rate of 2.5% and 2.8% as of September 30, 2019 and December 31, 2018, respectively)	$	183,947	$	259,081
1.00% Convertible Senior Notes due December 2020, net of unamortized discount and capitalized debt issuance costs	272,590		263,507
5.50% Senior Notes due May 2025, net of capitalized debt issuance costs	296,383		295,897
Total long-term debt	$	752,920	$	818,485

The Convertible Notes with a face value of $287.5 million are presented net of unamortized discount and capitalized debt issuance costs of $14.9 million and $24.0 million as of September 30, 2019 and December 31, 2018, respectively. The 5.50% Senior Notes due 2025 (the “2025 Notes”) with a face value of $300.0 million are presented net of capitalized debt issuance costs of $3.6 million and $4.1 million as of September 30, 2019 and December 31, 2018, respectively.

Revolving Credit Facility

On September 19, 2019, the Company, entered into a first amendment to its second amended and restated credit agreement ( the “First Amendment”, or as amended, the “Amended Credit Agreement ”). The First Amendment increased the revolving commitments to an aggregate principal amount equal to $750 million from $600 million, with borrowings to be used for general corporate purposes. The First Amendment also extended the maturity date from November 19, 2023 to September 19, 2024 and amended the accordion feature allowing the Company to (a) increase the available borrowings under the credit facility to $850 million and (b) incur incremental term loans under the facility. Any term loans will rank equal in right of payment with revolving loans under the credit facility and will not mature earlier than the revolving loans.

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The total commitments under the credit facility can be borrowed in U.S. dollars, alternative currencies (including Euros, U.K. pounds sterling, Canadian dollars, Australian dollars and South African rand), or a combination thereof. Borrowings (not including swingline loans) accrue interest, at the Company’s option and based on the type of currency borrowed, at the Alternate Base Rate, the Canadian Prime Rate, the Adjusted LIBO Rate, the Canadian Dealer Offered Rate, the Bank Bill Swap Reference Rate or the Johannesburg Interbank Agreed Rate (each, as defined in the Credit Agreement) plus a margin depending on the Company’s most recent Total Net Leverage Ratio (as defined in the Credit Agreement). The margin for Alternative Base Rate loans and Canadian Prime Rate loans varies between 0% and 0.75%, and the margin for Adjusted LIBO Rate loans, Canadian Dealer Offered Rate loans, Bank Bill Swap Reference Rate loans and Johannesburg Interbank Agreed Rate Loans varies between 1.00% and 1.75%. Swingline loans denominated in U.S. dollars bear interest at the Alternate Base Rate plus a margin as described above, swingline loans denominated in Canadian dollars bear interest at the Canadian Prime Rate plus a margin as described above and swingline loans denominated in other alternative currencies bear interest at the Overnight Foreign Currency Rate (as defined in the Credit Agreement) plus the applicable margin for the Adjusted LIBO Rate, the Bank Bill Swap Reference Rate or the Johannesburg Interbank Agreed Rate, as applicable.

Each of the Credit Facility Guarantors (as defined in the Credit Agreement) has guaranteed the full and punctual payment of the obligations under the revolving credit facility and the obligations under the revolving credit facility are secured by substantially all of the assets of the Credit Facility Guarantors. In addition, the obligations of the CFC Borrowers (as defined in the Credit Agreement) are guaranteed by the CFC Guarantors and secured by substantially all of the assets of the CFC Guarantors (as defined in the Credit Agreement).

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, (iv) notification of certain events, and (v) certain covenants relating to, among other things, the sale or transfer of assets, fundamental changes, incurrence or guarantee of indebtedness, liens, investments, hedging transactions with affiliates and sale and leaseback transactions. Financial covenants in the Credit Agreement require the Company to maintain: (i) as of the last day of any fiscal quarter, a Total Net Leverage Ratio (as defined in the Credit Agreement) of no more than 4.25 to 1.00, and (ii) as of the last day of any fiscal quarter, an Interest Coverage Ratio (as defined in the Credit Agreement) of no less than 3.00 to 1.00. Additionally, the Company is limited on the amount of restricted payments; 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 3.75 to 1.00 at the time such restricted payment is made.

As of September 30, 2019, the Company had $183.9 million of outstanding borrowings under its $750.0 million revolving credit facility and was in compliance with all applicable covenants and ratios under the Credit Agreement. The Company also had $10.5 million outstanding in letters of credit. The weighted average interest rates on the Company’s outstanding borrowings under the revolving credit facility were 2.5% and 2.8%, as of September 30, 2019 and December 31, 2018, respectively.

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

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

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

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The Convertible Notes have a conversion price of $52.35 per share, which equals a conversion rate of 19.1022 shares per $1,000 principal amount of Convertible Notes, for a total of approximately 5.5 million shares underlying the debt. The conversion rate, however, is subject to adjustment under certain circumstances. Conversion can occur: (i) any time on or after September 1, 2020, (ii) after March 31, 2014, during any calendar quarter that follows a calendar quarter in which the price of the shares exceeds 135% of the conversion price for at least 20 days during the 30 consecutive trading-day period ending on the last trading day of the quarter, (iii) during the ten consecutive trading-day period following any five consecutive trading-day period in which the trading price of the Convertible Notes is less than 98% of the closing price of the shares multiplied by the applicable conversion rate on each such trading day, (iv) upon specified distributions to Cardtronics plc’s shareholders upon recapitalizations, reclassifications, or changes in shares, and (v) upon a make-whole fundamental change. A fundamental change is defined as any one of the following: (i) any person or group that acquires 50% or more of the total voting power of all classes of common equity that is entitled to vote generally in the election of Cardtronics plc’s directors, (ii) Cardtronics plc engages in any recapitalization, reclassification, or changes of common shares as a result of which the shares would be converted into or exchanged for, shares, other securities, other assets, or property, (iii) Cardtronics plc engages in any share exchange, consolidation, or merger where the shares converted into cash, securities, or other property, (iv) the Company engages in certain sales, leases, or other transfers of all or substantially all of the consolidated assets, or (v) Cardtronics plc’s shares are not listed for trading on any U.S. national securities exchange.

None of the Convertible Notes were deemed convertible as of September 30, 2019 and therefore remain classified in the Long-term debt line in the accompanying Consolidated Balance Sheets at September 30, 2019. The Convertible Notes are due December 2020 and will be classified as a current liability in the Company's Consolidated Balance Sheets at December 31, 2019.

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, Inc. to purchase all or a portion of their Convertible Notes for 100% of the notes’ par value plus any accrued and unpaid interest.

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(In thousands)
Cash interest per contractual coupon rate	$	719	$	719	$	2,157	$	2,157
Amortization of note discount	2,854		2,708		8,450		8,018
Amortization of debt issuance costs	216		196		633		572
Total interest expense related to Convertible Notes	$	3,789	$	3,623	$	11,240	$	10,747

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



	September 30, 2019			December 31, 2018
	(In thousands)
Principal balance	$	287,500		$	287,500
Unamortized discount and capitalized debt issuance costs	(14,910		)	(23,993		)
Net carrying amount of Convertible Notes	$	272,590		$	263,507

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In connection with the issuance of the Convertible Notes, Cardtronics, Inc. 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, Inc. purchased call options granting Cardtronics Inc. the right to acquire up to approximately 5.50 million common shares with an initial strike price of $52.35. The call options automatically become exercisable upon conversion of the Convertible Notes, and will terminate on the second scheduled trading day immediately preceding December 1, 2020. Cardtronics Inc. also sold to the initial purchasers warrants to acquire up to approximately 5.50 million common shares with a strike price of $73.29. The warrants will expire incrementally on a series of expiration dates subsequent to the maturity date of the Convertible Notes through August 30, 2021. If the conversion price of the Convertible Notes remains between the strike prices of the call options and warrants, Cardtronics plc’s shareholders will not experience any dilution in connection with the conversion of the Convertible Notes; however, to the extent that the price of the shares exceeds the strike price of the warrants on any or all of the series of related expiration dates of the warrants, Cardtronics plc would be required to issue additional shares to the warrant holders. The amounts allocated to both the note hedge and warrants were recorded in the Shareholders’ equity section in the accompanying Consolidated Balance Sheets.

$300.0 million 5.50% Senior Notes Due 2025

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

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

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

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

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

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

(10) Asset Retirement Obligations

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Asset retirement obligations (“ARO”) consist of costs to deinstall the Company’s ATMs and restore the ATM sites to their original condition. These costs to deinstall are estimated based on current market rates. In most cases, the Company is contractually required to perform the deinstallation of company-owned ATMs, and in some cases, site restoration work. For each group of similar ATM placements, the Company estimates the fair value of the future ARO based on the discounted estimated future cash flows and recognizes the amount as a liability in the accompanying Consolidated Balance Sheets. The Company capitalizes the initial estimated fair value of the future ARO as part of the cost basis of the related assets and depreciates the ARO assets on a straight-line basis over their estimated useful lives, which are based on the average time period that an ATM is installed in a location before being deinstalled. The ARO liabilities, which are recognized at discounted amounts, are accreted to their estimated future value over the same period of time.

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




Asset retirement obligations at December 31, 2018	$	61,223
Additional obligations	4,087
Accretion expense	1,346
Payments	(5,007		)
Foreign currency translation adjustments	(1,913		)
Asset retirement obligations at September 30, 2019	59,736
Less: current portion of asset retirement obligations	6,787
Asset retirement obligations, excluding current portion, at September 30, 2019	$	52,949

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

(11) Leases

The Company leases facilities consisting of office and warehouse space as well as vehicles and office equipment. The Company's facility leases have various remaining terms extending up to 12 years, some of which may include one or more options to extend the associated lease term by up to 5-10 years, and some may include options for the Company or the lessor to terminate the leases prior to the end of the lease term. The exercise of lease renewal options is at the Company's discretion. From time to time, the Company may sublease office or warehouse space. This sublease activity is currently not significant. The Company's vehicle and office equipment leases currently have remaining lease terms extending up to 5 years and these leases typically have original terms of approximately 4-6 years. The Company has not historically extended its vehicle and office equipment leases beyond their original term. Similarly, the Company has not historically subleased these assets.

In addition, certain ATM placement agreements are deemed to contain an operating lease of merchant space under the Lease Standard. These ATM placement agreements have remaining terms extending from less than 1 year to more than 5 years. These arrangements consist of semi-permanent or through-the-wall placements of company-owned ATMs at merchant or financial institution locations. These arrangements are deemed to contain a lease as our counterparty lacks the practical ability to substitute alternative space. The renewal provisions under ATM placement agreements vary.

The Company's ATM placement agreements that are deemed to contain an operating lease generally require fixed and/or variable merchant commissions. The variable payments are based on the type and volume of transactions conducted on the ATMs at each respective location. In addition, the merchant commissions may also change, in accordance with the terms of these agreements, responsive to changes in interchange fees or interest rates. Certain Company facility leases require variable payments based on an index or based on external market rates. The Company's vehicle and office equipment leases do not generally include variable payments.

The Company recognizes the accounting impact of lease extension options when reasonably certain that a right to extend a lease will be exercised. The Company does not provide residual value guarantees within or in conjunction with any of its leases. As of September 30, 2019, all material leases of facilities, vehicles, office equipment, and merchant space had commenced.

The Company is not currently party to any significant finance leases. As a result, the net assets recorded under finance leases and the associated liabilities are not material.

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See Note 2. New Accounting Pronouncements for the accounting impact of the Company's adoption of ASC 842-Leases on January 1, 2019.

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Balance sheet information related to operating leases is as follows:



	Classification	September 30, 2019		January 1, 2019 (Upon Adoption)
Assets		(In thousands)
Operating lease assets	Operating lease assets	$	82,222	$	85,068
Total operating lease assets		$	82,222	$	85,068

Liabilities
Current
Operating lease liabilities	Current portion of other long-term liabilities	$	20,743	$	20,602
Noncurrent
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	74,064		74,746
Total operating lease liabilities		$	94,807	$	95,348

Operating lease costs during the three and nine months ended September 30, 2019 were as follows:



		Three Months Ended		Nine Months Ended
	Classification	September 30, 2019		September 30, 2019
		(In thousands)
Operating lease costs	Cost of ATM operating revenues ⁽¹⁾	$	7,197	$	21,473
Operating lease costs	Selling, general, and administrative expenses ⁽²⁾	1,361		4,275
Total operating lease cost		$	8,558	$	25,748

(1)

Includes the fixed and variable cost of facilities, vehicles, and equipment that are deemed direct operating lease costs. The variable lease cost associated with these leases was not significant. In addition, includes the fixed and variable cost associated with ATM placement agreements that are deemed to contain a lease. The variable cost associated with these placements was approximately $0.7 million and $2.9 million in the three and nine months ended September 30, 2019, respectively.


(2)	Includes the fixed and variable cost of facilities, vehicles, and equipment that are deemed general and administrative operating lease costs. The variable lease cost associated with these leases was not significant.

The following table presents the weighted-average remaining term and weighted-average discount rate associated with the Company's operating leases.



Lease Term and Discount Rate	September 30, 2019		January 1, 2019 (Upon Adoption)
Weighted-average remaining lease term (years)
Operating leases	6.9		7.1
Weighted-average discount rate
Operating leases	3.32	%	3.45	%



	Nine Months Ended September 30, 2019
	(In thousands)
Additional lease information is summarized below:
Operating cash outflows resulting from payments of operating lease liabilities	$	15,237
New operating lease assets recognized during the period	$	12,929

During the nine months ended September 30, 2019, the Company paid $15.2 million to satisfy the recognized operating lease obligations. The Company also recognized $12.9 million in new operating lease assets primarily consisting of equipment leases and ATM placement agreements that are deemed to contain an operating lease. Comparative prior period information is not presented above as the Company adopted the Lease Standard on January 1, 2019 using this effective date as the date of initial application.

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The following table presents the September 30, 2019 undiscounted cash flows associated with the Company's recognized operating lease liabilities in the next five years and thereafter.



Maturity of Recognized Operating Lease Liabilities	Operating Lease Payments⁽¹⁾
	(In thousands)
2019	$	5,345
2020	22,508
2021	20,356
2022	12,676
2023	8,782
After 2023	38,311
Total lease payments	107,978
Less: Interest ⁽²⁾	(13,171		)
Present value of operating lease liabilities ⁽³⁾	$	94,807


(1)	Operating lease payments reflect the Company's current fixed obligations under the operating lease agreements. The Company has identified no extensions that are reasonably certain of being exercised and there are no significant lease agreements that have been signed and not yet commenced.


(2)	Calculated using the estimated incremental borrowing rate for each lease.


(3)	Includes current operating lease liabilities of $20.7 million and noncurrent operating lease liabilities of $74.1 million.

The following table presents the fixed payment obligations under the Company’s operating leases and ATM placement agreements as of December 31, 2018, as presented in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. The fixed payment obligations associated with ATM placement agreements that were deemed not to contain a lease as the Company's counterparty has the practical ability to substitute alternative space, are not included in the recognized operating lease liabilities above as of September 30, 2019.



	(In thousands)
2019	$	36,590
2020	29,760
2021	24,990
2022	13,081
2023	8,523
Thereafter	39,222
Total	$	152,166

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(12) Other Liabilities

The Company’s other liabilities consisted of the following:



	September 30, 2019		December 31, 2018
	(In thousands)
Current portion of other long-term liabilities
Operating lease liabilities	$	20,743	$	—
Asset retirement obligations	6,787		6,810
Acquisition related contingent consideration	5,003		—
Interest rate swap and cap contracts	8,073		396
Deferred revenue	3,266		4,109
Other	2,854		8,951
Total current portion of other long-term liabilities	$	46,726	$	20,266

Noncurrent portion of other long-term liabilities
Acquisition related contingent consideration	$	16,734	$	38,266
Interest rate swap and cap contracts	17,383		2,894
Deferred revenue	4,339		4,319
Other	10,757		22,261
Total noncurrent portion of other long-term liabilities	$	49,213	$	67,740

As of September 30, 2019 and December 31, 2018, the Acquisition related contingent consideration lines consisted of the estimated fair value of the contingent consideration associated with the Spark ATM Systems Pty Ltd. (“Spark”) acquisition in 2017.

(13) Derivative Financial Instruments

Risk Management Objectives of Using Derivatives

The Company is exposed to interest rate risk associated with its vault cash rental obligations and, to a lesser extent, borrowings under its revolving credit facility. The Company utilizes varying notional amount interest rate swap contracts and interest rate cap agreements (“Interest Rate Derivatives”) to manage the interest rate risk associated with its vault cash rental obligations in the U.S., Canada, the U.K., and Australia. The Company has also entered into an interest rate swap to mitigate its exposure to floating interest rates on its revolving credit facility borrowings outstanding. The Company is also exposed to foreign currency exchange rate risk with respect to its operations outside the U.S.

The Company’s Interest Rate Derivatives serve to mitigate interest rate risk by converting a portion of the Company’s monthly floating-rate vault cash rental payments to either monthly fixed-rate vault cash rental payments or to vault cash rental payments with a capped rate. Typically, the Company receives monthly floating-rate payments from its Interest Rate Derivative counterparties that correspond to, in all material respects, the monthly floating-rate payments required by the Company to its vault cash rental providers for the portion of the average outstanding vault cash balances that have been hedged. The floating-rate payments may or may not be capped or limited. In return, the Company pays its counterparties a monthly fixed-rate amount based on the same notional amounts outstanding. By converting the vault cash rental obligation interest rate from a floating-rate to a fixed-rate or a capped rate, the impact of favorable and unfavorable changes in future interest rates on the monthly vault cash rental payments recognized in the Cost of ATM operating revenues line in the accompanying Consolidated Statement of Operations, has been reduced.

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

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Accounting Policy

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

In accordance with the new Hedging Standard, the Company reports the gain or loss related to each highly effective cash flow hedging instrument, including any ineffectiveness, as a component of Accumulated other comprehensive loss, net within the accompanying Consolidated Balance Sheets and reclassifies the gain or loss into earnings within the Cost of ATM operating revenues, Interest expense, net, or Other income lines of the accompanying Consolidated Statements of Operations in the same period or periods during which the hedged transaction affects and has been forecasted in earnings. The classification of the gain or loss is determined based on the associated hedge designation.

As discussed above, the Company generally utilizes fixed-for-floating Interest Rate Derivatives where the underlying pricing terms of the cash flow hedging instrument agree, in all material respects, with the pricing terms of the vault cash rental obligations to the Company’s vault cash providers. Therefore, the amount of ineffectiveness associated with the Interest Rate Derivatives has historically been immaterial. If the Company concludes 1) the vault cash obligations that have been hedged are no longer probable or 2) that underlying terms of the vault cash rental agreements have changed such that they do not sufficiently agree to the pricing terms of the Interest Rate Derivatives, the Interest Rate Derivative contracts would be deemed ineffective. The Company does not currently anticipate terminating or modifying terms of its existing derivative instruments prior to their expiration dates.

Accordingly, the Company recognizes all of its Interest Rate Derivative contracts as assets or liabilities in the accompanying Consolidated Balance Sheets at fair value and any changes in the fair values of the related Interest Rate Derivative contracts have been reported in Accumulated other comprehensive loss, net within the accompanying Consolidated Balance Sheets. The unrealized gains and losses related to the interest rate swap contracts have been reported net of taxes in Accumulated other comprehensive loss, net within the accompanying Consolidated Balance Sheets. For additional information related to the Company’s interest rate swap contracts with respect to its fair value measurements, see Note 14. Fair Value Measurements .

Cash Flow Hedges

During the three months ended September 30, 2019, the Company entered into new forward-starting interest rate swap contracts to hedge its exposure to floating interest rates on its expected vault cash balances outstanding in the U.S. in future periods. These interest rate swap contracts begin January 1, 2020 with a $300.0 million aggregate notional amount that increases to $400.0 million on January 1, 2021 and will terminate on December 31, 2024. In addition, the Company entered into new forward-starting interest rate swap contracts to hedge its exposure to floating interest rates on its expected vault cash balances outstanding in Australia in future periods. These interest rate swap contracts begin January 1, 2020 with a $40 million Australian Dollar aggregate notional amount and will terminate on December 31, 2021.

Summary of Outstanding Interest Rate Derivatives

The notional amounts, weighted average fixed rates, and terms associated with the interest rate swap contracts and cap agreement that are currently in place in the U.S., Canada, the U.K, and Australia (as of the date of the issuance of this 2019 Form 10-Q) are as follows:

Outstanding Interest Rate Derivatives Associated with Vault Cash Rental Obligations

North America – Interest Rate Swap Contracts



Notional Amounts U.S. $		Weighted Average Fixed Rate	Notional Amounts CAD$			Weighted Average Fixed Rate	Term
(In millions)			(In millions)
$	1,000	2.06%	CAD	$	125	2.46%	October 1, 2019 – December 31, 2019
$	1,300	1.84%	CAD	$	125	2.46%	January 1, 2020 – December 31, 2020
$	1,000	1.61%	CAD	$	125	2.46%	January 1, 2021 – December 31, 2021
$	800	1.28%					January 1, 2022 – December 31, 2022
$	400	1.11%					January 1, 2023 – December 31, 2024

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North America – Interest Rate Cap Contracts



Notional Amounts U.S. $		Cap Rate ⁽¹⁾	Term
(In millions)
$	200	3.25%	January 1, 2021 – December 31, 2023

(1) Maximum amount of interest to be paid each year as per terms of cap. Cost of cap is amortized through vault cash rental expense over term of cap.

Europe & Africa – Interest Rate Swap Contracts



Notional Amounts		Weighted Average
U.K. £		Fixed Rate	Term
(In millions)
£	550	0.90%	October 1, 2019 – December 31, 2019
£	500	0.94%	January 1, 2020 – December 31, 2020
£	500	0.94%	January 1, 2021 – December 31, 2021
£	500	0.94%	January 1, 2022 – December 31, 2022

Australia & New Zealand – Interest Rate Swap Contracts



Notional Amounts AUS $		Weighted Average Fixed Rate	Term
(In millions)
$	150	1.95%	October 1, 2019 – December 31, 2019
$	140	1.59%	January 1, 2020 – December 31, 2020
$	40	0.71%	January 1, 2021 – December 31, 2021

Outstanding Interest Rate Derivatives Associated with Revolving Credit Facility Borrowings



Notional Amounts U.K. £		Weighted Average Fixed Rate		Term
(In millions)
£	80	0.95	%	October 1, 2019 – January 1, 2020
£	50	0.95	%	January 2, 2020 – January 1, 2021

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

Balance Sheet Data



	September 30, 2019				December 31, 2018
Asset (Liability) Derivative Instruments	Balance Sheet Location	Fair Value			Balance Sheet Location	Fair Value
		(In thousands)				(In thousands)
Derivatives designated as hedging instruments:
Interest rate swap contracts	Prepaid expenses, deferred costs, and other current assets	$	1,432		Prepaid expenses, deferred costs, and other current assets	$	4,489
Interest rate swap contracts	Prepaid expenses, deferred costs, and other noncurrent assets	3,393			Prepaid expenses, deferred costs, and other noncurrent assets	15,316
Interest rate swap contracts	Current portion of other long-term liabilities	(8,073		)	Current portion of other long-term liabilities	(396		)
Interest rate swap and cap contracts	Other long-term liabilities	(17,383		)	Other long-term liabilities	(2,894		)
Total derivative instruments, net		$	(20,631	)		$	16,515

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					Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income	Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income
	2019			2018			2019			2018
	(In thousands)						(In thousands)
Interest rate swap contracts	$	(3,406	)	$	4,587	Cost of ATM operating revenues	$	(668	)	$	(605	)
Interest rate swap contracts	(119		)	—		Interest expense, net	(59		)	—
Total	$	(3,525	)	$	4,587		$	(727	)	$	(605	)



	Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationship	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivative Instruments					Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income	Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income
	2019			2018			2019			2018
	(In thousands)						(In thousands)
Interest rate swap contracts	$	(28,989	)	$	20,106	Cost of ATM operating revenues	$	(210	)	$	(4,477	)
Interest rate swap contracts	(500		)	—		Interest expense, net	(172		)	—
Total	$	(29,489	)	$	20,106		$	(382	)	$	(4,477	)

As of September 30, 2019, the Company expects to reclassify $6.6 million of net derivative-related losses contained in the Accumulated comprehensive loss, net line within its accompanying Consolidated Balance Sheets into earnings during the next twelve months concurrent with the recording of the related vault cash rental expense amounts.

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The following tables show the impact of our cash flow hedge accounting relationships on the statement of operations for the three and nine months ended September 30, 2019 and 2018:



	Location and Amount of Loss Recognized in Income on Cash Flow Hedging Relationships in the Three Months Ended September 30,
	2019				2018
	(In thousands)
	Cost of ATM Operating Revenues		Interest Expense, net		Cost of ATM Operating Revenues
Total amount of expense presented in the statements of operations in which the effects of cash flow hedges are recorded	$	208,860	$	6,751	$	216,849

Amount of loss reclassified from accumulated other comprehensive income into income	$	668	$	59	$	605



	Location and Amount of Loss Recognized in Income on Cash Flow Hedging Relationships in the Nine Months Ended September 30,
	2019				2018
	(In thousands)
	Cost of ATM Operating Revenues		Interest Expense, net		Cost of ATM Operating Revenues
Total amount of expense presented in the statements of operations in which the effects of cash flow hedges are recorded	$	623,099	$	20,265	$	647,692

Amount of loss reclassified from accumulated other comprehensive income into income	$	210	$	172	4,477

Other Derivatives

On October 14, 2019, the Company entered into foreign currency forward contracts with an aggregate notional of $150 million to manage the exposure associated with its expected credit facility borrowings in U.K. pounds sterling. These derivatives may be settled between November 2, 2020 and December 1, 2020.

(14) Fair Value Measurements

The following tables provide the financial assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2019 and December 31, 2018 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 refers to 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, 2019
	Total			Level 1		Level 2			Level 3
	(In thousands)
Assets
Assets associated with interest rate swap contracts	$	4,825		$	—	$	4,825		$	—
Liabilities
Liabilities associated with interest rate swap contracts	$	(25,456	)	$	—	$	(25,456	)	$	—
Liabilities associated with acquisition related contingent consideration	$	(21,737	)	$	—	$	—		$	(21,737	)

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	Fair Value Measurements at December 31, 2018
	Total			Level 1		Level 2			Level 3
	(In thousands)
Assets
Assets associated with interest rate swap contracts	$	19,805		$	—	$	19,805		$	—
Liabilities
Liabilities associated with interest rate swap contracts	$	(3,290	)	$	—	$	(3,290	)	$	—
Liabilities associated with acquisition related contingent consideration	$	(38,266	)	$	—	$	—		$	(38,266	)

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

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

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

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

Acquisition related contingent consideration. Liabilities from acquisition related contingent consideration are estimated using a Monte Carlo simulation and market observable, as well as internal projections, and other significant non-observable inputs (Level 3) based on the Company’s best estimate of future operational results upon which the payment of these obligations are contingent. Future changes to the estimated contingent liability either higher or lower may occur as the estimated internal projections and other significant non-observable inputs for the calculation become available and are updated as deemed necessary. These future updates could result in a material change in the estimated contingent liability. The estimates and significant non-observable inputs may differ from actual results. As the estimated contingent liability is based upon performance relative to certain agreed upon earnings targets in 2019 and 2020, the performance based payments are expected to occur in 2020 and 2021, respectively. As of September 30, 2019, the estimated fair value of the Company’s acquisition related contingent consideration liability was approximately $21.7 million. Based on current forecasts, the Company estimates that approximately $5.0 million of the total aggregate estimated liability will be paid in the first quarter of 2020 with the remaining amount being paid in the first quarter of 2021. During the three and nine months ended September 30, 2019, the Company recognized a $6.8 million gain and $15.5 million gain in Other income to revise the estimated fair value of the contingent consideration liability. The foreign exchange gains recognized during the three and nine months ended September 30, 2019, to remeasure the South African Rand denominated liability to U.S. Dollars were approximately $1.8 million and $1.1 million, respectively. Both the revision to the estimated fair value and the foreign exchange adjustments are included in the Other income line in the Consolidated Statements of Operations.

Long-term debt. The carrying amount of the long-term debt balance related to borrowings under the Company’s revolving credit facility approximates fair value due to the fact that any outstanding borrowings are subject to short-term floating interest rates. As of September 30, 2019, the fair value of the 2020 Notes and 2025 Notes totaled $282.4 million and $305.9 million respectively, based on the quoted prices in markets that are not active (Level 2). For additional information related to long-term debt, see Note 9. Long-Term Debt.

Additions to asset retirement obligations liability. The Company estimates the fair value of additions to its ARO liability using expected discounted future cash flow at the Company’s credit-adjusted risk-free interest rate. Liabilities added to the ARO are measured at fair value at the time of the asset installations using significant non-observable (Level 3) inputs. These liabilities are evaluated periodically based on estimated current fair value. Amounts added to the ARO liability during the nine months ended September 30, 2019 totaled $4.1 million.

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Interest rate derivatives. As of September 30, 2019, the recognized fair value of the Company’s Interest Rate Derivatives resulted in an asset of $4.8 million and a liability of $25.5 million. These financial instruments are carried at fair value and are valued using pricing models based on significant other observable inputs (Level 2), while taking into account the creditworthiness of the party that is in the liability position with respect to each trade. For additional information related to the valuation process of this asset or liability, see Note 13. Derivative Financial Instruments.

(15) Commitments and Contingencies

Legal Matters

The Company is subject to various legal proceedings and claims arising in the ordinary course of its business. The Company has provided reserves where necessary for contingent liabilities, based on ASC 450, contingencies, when it has determined that a liability is probable and reasonably estimable. The Company’s management does not expect the outcome in any legal proceedings or claims, 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 ARO consist primarily of costs to deinstall the Company’s ATMs and to restore the ATM sites to their original condition. In most cases, the Company is contractually required to perform this deinstallation of its owned ATMs, and in some cases, site restoration work. As of September 30, 2019, the Company had $59.7 million accrued for these liabilities. For additional information, see Note 10. Asset Retirement Obligations .

Acquisition related contingent consideration. As of September 30, 2019, the Company had $21.7 million accrued for the Spark acquisition related contingent consideration. For additional information related to the Spark acquisition related contingent consideration, see Note 14. Fair Value Measurements .

(16) Income Taxes

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(In thousands, excluding percentages)
Income tax expense	$	4,086		$	7,854		$	10,780		$	10,409
Effective tax rate	16.4		%	47.2		%	23.2		%	51.6		%

The Company’s income tax expense for the three months ended September 30, 2019 totaled $4.1 million, resulting in an effective tax rate of 16.4%, compared to an expense of $7.9 million, and an effective tax rate of 47.2%, for the same period of 2018. The Company’s income tax expense for the nine months ended September 30, 2019 totaled $10.8 million, resulting in an effective tax rate of 23.2%, compared to an expense of $10.4 million, and an effective tax rate of 51.6%, for the same period of 2018. The decrease in the tax rate for the three and nine months ended September 30, 2019, compared to the same period of 2018, was primarily attributable to tax benefits from the utilization of interest deductions disallowed in the prior year and the nontaxable gain recorded to revise the fair value of the acquisition related contingent consideration liability.

As of September 30, 2019, the Company has recorded an uncertain tax benefit of $2.4 million, of which $1.5 million was for net operating losses generated in prior years with an associated valuation allowance, and $0.4 million was for a deferred tax asset for the related U.S. federal tax benefit. A net amount of $0.5 million of this uncertain tax benefit was recorded to tax expense during the nine months ended September 30, 2019.

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

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

(17) Segment Information

As of September 30, 2019, the Company’s operations consisted of its North America, Europe & Africa, and Australia & New Zealand segments. The Company’s ATM operations in the U.S., Canada, Mexico, and Puerto Rico are included in its North America segment. The North America segment also includes the Company’s transaction processing operations, which service its internal ATM operations, along with external customers. The Company’s ATM operations in the U.K., Ireland, Germany, Spain, and South Africa are included in its Europe & Africa segment, along with i-design (the Company’s ATM advertising business based in the U.K.). The Company’s Australia & New Zealand segment consists of its ATM operations in these two countries. Corporate primarily includes the Company’s corporate general and administrative expenses. While each of the reporting segments provides similar kiosk-based and/or ATM-related services, each segment is managed separately and requires different marketing and business strategies.

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

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

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(In thousands)
Net income attributable to controlling interests and available to common shareholders	$	20,864		$	8,781		$	35,654		$	9,780
Adjustments:
Interest expense, net	6,751			8,852			20,265			27,185
Amortization of deferred financing costs and note discount	3,377			3,397			9,999			10,060
Income tax expense	4,086			7,854			10,780			10,409
Depreciation and accretion expense	33,466			30,647			99,644			93,453
Amortization of intangible assets	12,404			12,994			37,407			40,263
EBITDA	80,948			72,525			213,749			191,150
Add back:
Loss on disposal and impairment of assets	637			466			3,101			15,583
Other income ⁽¹⁾	(3,703		)	(1,297		)	(9,454		)	(1,324		)
Noncontrolling interests ⁽²⁾	15			12			46			31
Share-based compensation expense	5,633			4,669			15,367			10,627
Restructuring expenses ⁽³⁾	3,583			1,058			7,046			5,534
Acquisition related expenses ⁽⁴⁾	—			—			—			2,633
Adjusted EBITDA	87,113			77,433			229,855			224,234
Less:
Depreciation and accretion expense ⁽⁵⁾	33,466			30,646			99,644			93,451
Adjusted EBITA	$	53,647		$	46,787		$	130,211		$	130,783


(1)	Includes foreign currency translation gains/losses, the revaluation of the estimated acquisition related contingent consideration, 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 one of the Company's Mexican subsidiaries.


(3)	For the three and nine months ended September 30, 2019, expenses include employee severance costs, facility costs and professional fees related to the 2019 Restructuring Plan. For the three and nine months ended September 30, 2018, expenses include employee severance and other costs incurred in conjunction with a corporate reorganization and cost reduction initiative.


(4)	For the nine months ended September 30, 2018, expenses primarily include employee severance costs and lease termination costs related to the DCPayments acquisition.


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

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



	Three Months Ended September 30, 2019
	North America		Europe & Africa		Australia & New Zealand			Corporate			Eliminations			Total
	(In thousands)
Revenue from external customers	$	222,329	$	104,686	$	24,492		$	—		$	—		$	351,507
Intersegment revenues	2,379		22		—			—			(2,401		)	—
Cost of revenues	148,215		60,477		17,264			368			(2,542		)	223,782
Selling, general, and administrative expenses	17,517		10,292		2,286			16,162			—			46,257
Restructuring expenses	799		2,335		—			449			—			3,583
Loss (gain) on disposal and impairment of assets	225		457		(45		)	—			—			637

Adjusted EBITDA	58,977		33,939		4,941			(10,896		)	152			87,113

Depreciation and accretion expense⁽³⁾	19,460		11,838		1,252			934			(18		)	33,466
Adjusted EBITA	39,517		22,101		3,690			(11,831		)	170			53,647

Capital expenditures ⁽¹⁾	$	18,723	$	12,638	$	672		$	3,233		$	—		$	35,266



	Three Months Ended September 30, 2018 ⁽²⁾
	North America		Europe & Africa		Australia & New Zealand			Corporate			Eliminations			Total
	(In thousands)
Revenue from external customers	$	206,465	$	104,241	$	29,469		$	—		$	—		$	340,175
Intersegment revenues	2,569		597		—			—			(3,166		)	—
Cost of revenues	141,171		65,785		21,227			229			(2,883		)	225,529
Selling, general, and administrative expenses	16,053		9,657		2,537			13,682			(33		)	41,896
Restructuring expenses	942		116		—			—			—			1,058
Acquisition related expenses	—		—		285			(285		)	—			—
Loss on disposal and impairment of assets	246		232		(12		)	—			—			466

Adjusted EBITDA	51,810		29,397		5,705			(9,242		)	(237		)	77,433

Depreciation and accretion expense⁽³⁾	17,405		11,788		1,265			203			(15		)	30,646
Adjusted EBITA	34,405		17,609		4,440			(9,445		)	(222		)	46,787

Capital expenditures ⁽¹⁾	$	9,853	$	10,931	$	1,595		$	4,296		$	—		$	26,675

Table of Contents



	Nine Months Ended September 30, 2019
	North America		Europe & Africa		Australia & New Zealand			Corporate			Eliminations			Total
	(In thousands)
Revenue from external customers	$	636,663	$	298,615	$	75,320		$	—		$	—		$	1,010,598
Intersegment revenues	7,508		488		—			—			(7,996		)	—
Cost of revenues	429,287		187,429		54,540			995			(8,004		)	664,247
Selling, general, and administrative expenses	50,981		31,745		6,800			42,386			—			131,912
Restructuring expenses	1,012		2,735		—			3,299			—			7,046
Loss (gain) on disposal and impairment of assets	1,327		1,874		(100		)	—			—			3,101

Adjusted EBITDA	163,904		79,930		13,979			(28,014		)	56			229,855

Depreciation and accretion expense ⁽³⁾	58,317		36,175		3,741			1,467			(56		)	99,644
Adjusted EBITA	105,587		43,755		10,238			(29,482		)	113			130,211

Capital expenditures ⁽¹⁾	$	41,873	$	32,538	$	3,535		$	12,373		$	—		$	90,319



	Nine Months Ended September 30, 2018 ⁽²⁾
	North America			Europe & Africa		Australia & New Zealand		Corporate			Eliminations			Total
	(In thousands)
Revenue from external customers	$	618,538		$	309,522	$	89,286	$	—		$	—		$	1,017,346
Intersegment revenues	7,482			1,610		—		—			(9,092		)	—
Cost of revenues	426,751			194,358		66,198		404			(8,491		)	679,220
Selling, general, and administrative expenses	47,132			29,479		7,953		40,214			(214		)	124,564
Restructuring expenses	3,072			1,292		—		1,170			—			5,534
Acquisition related expenses	(348		)	1,516		920		545			—			2,633
Loss on disposal and impairment of assets	10,880			4,613		90		—			—			15,583

Adjusted EBITDA	152,137			87,296		15,134		(29,990		)	(343		)	224,234

Depreciation and accretion expense ⁽³⁾	51,257			38,286		3,774		203			(69		)	93,451
Adjusted EBITA	100,879			49,010		11,360		(30,193		)	(273		)	130,783

Capital expenditures ⁽¹⁾	$	27,437		$	29,475	$	5,017	$	11,428		$	—		$	73,357


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


(2)	The segment information presented for the three and nine months ended September 30, 2018 has been revised to ensure consistency with the current allocation of certain intercompany revenues and expenses.


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

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Identifiable Assets



	September 30, 2019		December 31, 2018
	(In thousands)
North America	$	1,243,891	$	1,195,693
Europe & Africa	494,105		494,457
Australia & New Zealand	60,369		63,613
Corporate	30,728		33,581
Total	$	1,829,093	$	1,787,344

(18) Supplemental Guarantor Financial Information

The 2025 Notes are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by Cardtronics plc and certain of its subsidiaries and certain of its future subsidiaries, with the exception of Cardtronics plc’s immaterial subsidiaries and CFC Guarantors (as defined in the Credit Agreement). The guarantees of the 2025 Notes by any Guarantor 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 the Company, (iii) the designation of the Guarantor as an unrestricted subsidiary 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 the Company, its ceasing to guarantee other debt of the Company or another Guarantor. A Guarantor 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 the Company or another Guarantor), unless no default under the Indenture exists and either the successor to the Guarantor assumes its guarantee of the 2025 Notes or the disposition, consolidation, or merger complies with the “Asset Sales” covenant in the Indenture.

The following information reflects the Condensed Consolidating Statements of Comprehensive (Loss) Income for the three and nine months ended September 30, 2019 and 2018, the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018, and the Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018 for: (i) Cardtronics plc, the parent Guarantor of the 2025 Notes (“Parent”), (ii) Cardtronics Inc. (“Issuer”), (iii) the 2025 Notes Guarantors (the “Guarantors”), and (iv) the 2025 Notes Non-Guarantors.

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Condensed Consolidated Statements of Comprehensive Income



	Three Months Ended September 30, 2019
	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations			Total
	(In thousands)
Revenues	$	—		$	—		$	258,256		$	95,941		$	(2,690	)	$	351,507
Operating costs and expenses	9,283			(8		)	224,335			89,607			(3,088		)	320,129
Income (loss) from operations	(9,283		)	8			33,921			6,334			398			31,378
Interest expense (income), net, including amortization of deferred financing costs and note discount	—			3,256			9,703			(2,895		)	64			10,128
Equity in earnings of subsidiaries	(28,401		)	(10,286		)	(10,996		)	—			49,683			—
Other (income) expense	18			1,007			6,575			(5,856		)	(5,447		)	(3,703		)
Income before income taxes	19,100			6,031			28,639			15,085			(43,902		)	24,953
Income tax expense (benefit)	(1,767		)	(1,001		)	5,336			1,518			—			4,086
Net income	20,867			7,032			23,303			13,567			(43,902		)	20,867
Net income attributable to noncontrolling interests	—			—			—			—			3			3
Net income attributable to controlling interests and available to common shareholders	20,867			7,032			23,303			13,567			(43,905		)	20,864
Other comprehensive (loss) income attributable to controlling interest	(9,795		)	—			12,284			(22,233		)	9,949			(9,795		)
Comprehensive income (loss) attributable to controlling interests	$	11,072		$	7,032		$	35,587		$	(8,666	)	$	(33,956	)	$	11,069



	Three Months Ended September 30, 2018
	Parent			Issuer			Guarantors		Non-Guarantors			Eliminations			Total
	(In thousands)
Revenues	$	—		$	—		$	244,932	$	98,268		$	(3,025	)	$	340,175
Operating costs and expenses	7,739			7			212,391		94,408			(1,955		)	312,590
Income (loss) from operations	(7,739		)	(7		)	32,541		3,860			(1,070		)	27,585
Interest expense (income), net, including amortization of deferred financing costs and note discount	—			6,691			10,037		(4,548		)	69			12,249
Equity in (earnings) losses of subsidiaries	(15,024		)	(4,241		)	54		—			19,211			—
Other (income) expense	(29		)	(8		)	2,968		1,200			(5,428		)	(1,297		)
Income (loss) before income taxes	7,314			(2,449		)	19,482		7,208			(14,922		)	16,633
Income tax expense (benefit)	(1,465		)	(1,657		)	9,132		1,844			—			7,854
Net income (loss)	8,779			(792		)	10,350		5,364			(14,922		)	8,779
Net loss attributable to noncontrolling interests	—			—			—		—			(2		)	(2		)
Net income (loss) attributable to controlling interests and available to common stockholders	8,779			(792		)	10,350		5,364			(14,920		)	8,781
Other comprehensive income (loss) attributable to controlling interest	4,050			(1		)	9,038		(4,992		)	(4,044		)	4,051
Comprehensive income (loss) attributable to controlling interests	$	12,829		$	(793	)	$	19,388	$	372		$	(18,964	)	$	12,832

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	Nine Months Ended September 30, 2019
	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations			Total
	(In thousands)
Revenues	$	—		$	—		$	741,269		$	277,682		$	(8,353	)	$	1,010,598
Operating costs and expenses	25,851			18			652,657			273,593			(8,762		)	943,357
Income (loss) from operations	(25,851		)	(18		)	88,612			4,089			409			67,241
Interest expense (income), net, including amortization of deferred financing costs and note discount	—			9,628			28,888			(8,430		)	178			30,264
Equity in earnings of subsidiaries	(56,588		)	(34,915		)	(16,337		)	—			107,840			—
Other (income) expense	(3		)	1,277			15,970			(13,834		)	(12,864		)	(9,454		)
Income before income taxes	30,740			23,992			60,091			26,353			(94,745		)	46,431
Income tax expense (benefit)	(4,911		)	(2,545		)	14,568			3,668			—			10,780
Net income	35,651			26,537			45,523			22,685			(94,745		)	35,651
Net loss attributable to noncontrolling interests	—			—			—			—			(3		)	(3		)
Net income attributable to controlling interests and available to common shareholders	35,651			26,537			45,523			22,685			(94,742		)	35,654
Other comprehensive loss attributable to controlling interest	(26,728		)	—			(5,969		)	(20,760		)	26,728			(26,729		)
Comprehensive income attributable to controlling interests	$	8,923		$	26,537		$	39,554		$	1,925		$	(68,014	)	$	8,925



	Nine Months Ended September 30, 2018
	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations			Total
	(In thousands)
Revenues	$	—		$	—		$	731,636		$	294,594		$	(8,884	)	$	1,017,346
Operating costs and expenses	19,649			16			656,272			291,170			(5,857		)	961,250
Income (loss) from operations	(19,649		)	(16		)	75,364			3,424			(3,027		)	56,096
Interest expense (income), net, including amortization of deferred financing costs and note discount	—			19,850			31,206			(13,941		)	130			37,245
Equity in (earnings) losses of subsidiaries	(25,667		)	5,415			34,589			—			(14,337		)	—
Other (income) expense	(18		)	176			(683		)	(6,806		)	6,007			(1,324		)
Income (income) before income taxes	6,036			(25,457		)	10,252			24,171			5,173			20,175
Income tax expense (benefit)	(3,730		)	(4,965		)	13,258			5,846			—			10,409
Net income (loss)	9,766			(20,492		)	(3,006		)	18,325			5,173			9,766
Net loss attributable to noncontrolling interests	—			—			—			—			(14		)	(14		)
Net income (loss) attributable to controlling interests and available to common shareholders	9,766			(20,492		)	(3,006		)	18,325			5,187			9,780
Other comprehensive income (loss) attributable to controlling interest	259			(1		)	29,055			(28,798		)	(256		)	259
Comprehensive income (loss) attributable to controlling interests	$	10,025		$	(20,493	)	$	26,049		$	(10,473	)	$	4,931		$	10,039

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Condensed Consolidated Balance Sheets



	As of September 30, 2019
	Parent		Issuer		Guarantors			Non-Guarantors		Eliminations			Total
	(In thousands)
Assets
Cash and cash equivalents	$	47	$	6	$	6,920		$	19,561	$	—		$	26,534
Accounts and notes receivable, net	—		—		67,946			27,170		—			95,116
Restricted cash	—		—		161,132			17,616		—			178,748
Other current assets	—		1,432		38,279			45,674		(18		)	85,367
Total current assets	47		1,438		274,277			110,021		(18		)	385,765
Property and equipment, net	—		—		333,363			112,494		—			445,857
Intangible assets, net	—		—		108,278			15,142		—			123,420
Goodwill	—		—		611,781			133,117		—			744,898
Operating lease assets	—		—		40,222			42,000		—			82,222
Investments in and advances to subsidiaries	395,436		422,775		579,740			—		(1,397,951		)	—
Intercompany receivable	18,532		163,742		215,463			382,751		(780,488		)	—
Deferred tax asset, net	1,176		—		(1,699		)	13,933		—			13,410
Prepaid expenses, deferred costs, and other noncurrent assets	—		3,542		21,235			8,744		—			33,521
Total assets	$	415,191	$	591,497	$	2,182,660		$	818,202	$	(2,178,457	)	$	1,829,093
Liabilities and Shareholders' Equity
Current portion of other long-term liabilities	$	—	$	4,568	$	17,288		$	24,870	$	—		$	46,726
Accounts payable and accrued liabilities	643		2,396		366,010			96,858		(67		)	465,840
Total current liabilities	643		6,964		383,298			121,728		(67		)	512,566
Long-term debt	—		272,590		341,479			138,851		—			752,920
Intercompany payable	66,327		276		556,203			160,721		(783,527		)	—
Asset retirement obligations	—		—		29,043			23,906		—			52,949
Noncurrent operating lease liabilities	—		—		45,944			28,120		—			74,064
Deferred tax liability, net	—		—		39,160			—		—			39,160
Other long-term liabilities	—		9,337		15,996			23,880		—			49,213
Total liabilities	66,970		289,167		1,411,123			497,206		(783,594		)	1,480,872
Shareholders' equity	348,221		302,330		771,537			320,997		(1,394,864		)	348,221
Total liabilities and shareholders' equity	$	415,191	$	591,497	$	2,182,660		$	818,203	$	(2,178,458	)	$	1,829,093

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	As of December 31, 2018
	Parent		Issuer		Guarantors			Non-Guarantors		Eliminations			Total
	(In thousands)
Assets
Cash and cash equivalents	$	89	$	6	$	26,124		$	13,721	$	—		$	39,940
Accounts and notes receivable, net	—		—		47,209			28,434		—			75,643
Restricted cash	—		—		140,145			15,325		—			155,470
Other current assets	1		4,374		38,570			52,843		(10		)	95,778
Total current assets	90		4,380		252,048			110,323		(10		)	366,831
Property and equipment, net	—		—		330,743			129,444		—			460,187
Intangible assets, net	—		—		124,236			26,611		—			150,847
Goodwill	—		—		611,632			137,512		—			749,144
Investments in and advances to subsidiaries	375,535		410,955		181,116			19,226		(986,832		)	—
Intercompany receivable	7,412		211,359		145,103			363,961		(727,835		)	—
Deferred tax asset, net	342		—		(1,688		)	10,004		—			8,658
Prepaid expenses, deferred costs, and other noncurrent assets	—		10,957		24,742			15,978		—			51,677
Total assets	$	383,379	$	637,651	$	1,667,932		$	813,059	$	(1,714,677	)	$	1,787,344
Liabilities and Shareholders' Equity
Current portion of other long-term liabilities	$	—	$	—	$	16,654		$	3,624	$	(12	)	$	20,266
Accounts payable and accrued liabilities	642		240		316,974			90,681		(67		)	408,470
Total current liabilities	642		240		333,628			94,305		(79		)	428,736
Long-term debt	—		263,507		351,292			203,686		—			818,485
Intercompany payable	5,964		69,711		562,552			92,851		(731,078		)	—
Asset retirement obligations	—		—		28,355			26,058		—			54,413
Deferred tax liability, net	—		—		40,873			325		—			41,198
Other long-term liabilities	—		2,620		25,998			39,122		—			67,740
Total liabilities	6,606		336,078		1,342,698			456,347		(731,157		)	1,410,572
Shareholders' equity	376,773		301,573		325,234			356,712		(983,520		)	376,772
Total liabilities and shareholders' equity	$	383,379	$	637,651	$	1,667,932		$	813,059	$	(1,714,677	)	$	1,787,344

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Condensed Consolidated Statements of Cash Flows



	Nine Months Ended September 30, 2019
	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations		Total
	(In thousands)
Net cash provided by operating activities	$	51,695		$	6,265		$	86,483		$	87,249		$	—	$	231,692
Additions to property and equipment				—			(69,745		)	(20,574		)	—		(90,319		)
Acquisitions, net of cash acquired	—			—			(9,100		)	—			—		(9,100		)
Net cash used in investing activities	—			—			(78,845		)	(20,574		)	—		(99,419		)
Proceeds from borrowings under revolving credit facility	—			70,700			279,291			136,495			—		486,486
Repayments of borrowings under revolving credit facility	—			(70,700		)	(289,279		)	(195,609		)	—		(555,588		)
Intercompany financing	737			(6,265		)	5,819			(291		)	—		—
Tax payments related to share-based compensation	(2,224		)	—			—			—			—		(2,224		)
Proceeds from exercises of stock options	2			—			—			—			—		2
Debt issuance, modification, and redemption costs	—			—			(924		)	—			—		(924		)
Repurchase of common shares	(50,252		)	—			—			—			—		(50,252		)
Net cash used in financing activities	(51,737		)	(6,265		)	(5,093		)	(59,405		)	—		(122,500		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	—			—			(762		)	861			—		99
Net increase (decrease) in cash, cash equivalents, and restricted cash	(42		)	—			1,783			8,131			—		9,872
Cash, cash equivalents, and restricted cash as of beginning of period	89			6			166,269			29,046			—		195,410
Cash, cash equivalents, and restricted cash as of end of period	$	47		$	6		$	168,052		$	37,177		$	—	$	205,282

Table of Contents



	Nine Months Ended September 30, 2018
	Parent			Issuer			Guarantors			Non-Guarantors			Eliminations		Total
	(In thousands)
Net cash provided by operating activities	$	5,230		$	4,400		$	160,927		$	14,025		$	—	$	184,582
Additions to property and equipment	—			—			(52,422		)	(20,935		)	—		(73,357		)
Net cash used in investing activities	—			—			(52,422		)	(20,935		)	—		(73,357		)
Proceeds from borrowing under revolving credit facility	—			273,700			37,445			166,878			—		478,023
Repayments of borrowings under revolving credit facility	—			(278,100		)	(110,334		)	(180,583		)	—		(569,017		)
Intercompany financing	—			—			(5,144		)	5,144			—		—
Tax payments related to share-based compensation	(5,245		)	—			—			—			—		(5,245		)
Proceeds from exercise of stock options	14			—			—			—			—		14
Net cash used in financing activities	(5,231		)	(4,400		)	(78,033		)	(8,561		)	—		(96,225		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	—			—			(26		)	(378		)	—		(404		)
Net increase (decrease) in cash, cash equivalents, and restricted cash	(1		)	—			30,446			(15,849		)	—		14,596
Cash, cash equivalents, and restricted cash as of beginning of period	88			7			51,499			48,223			—		99,817
Cash, cash equivalents, and restricted cash as of end of period	$	87		$	7		$	81,945		$	32,374		$	—	$	114,413

(19) Concentration Risk

Significant merchant customers. During the trailing twelve months ended September 30, 2019, the Company derived approximately 23% of its total revenues from ATMs placed at the locations of its top five merchant customers. The Company’s top five merchant customers, none accounting for more than 6% of total revenue for the trailing twelve months ended September 30, 2019, were Alimentation Couche-Tard Inc., Co-operative Food, CVS Caremark Corporation, Speedway LLC, and Walgreens Boots Alliance, Inc. Accordingly, a significant percentage of the Company’s future revenues and operating income will be dependent upon the successful continuation of its relationships with these merchants.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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


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


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


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


•	changes in interest rates and foreign currency rates;


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


•	the Company’s ability to manage concentration risks with and changes in the mix of key customers, merchants, vendors, and service providers;


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


•	the Company’s ability to manage cybersecurity risks and protect against cyber-attacks and manage and prevent cyber incidents, data breaches or losses, or other business disruptions;


•	the Company’s ability to respond to changes implemented by networks and how they determine interchange, and potential reductions in the amount of net interchange that it receives from global and regional debit networks due to pricing changes implemented by those networks as well as changes in how issuers route their ATM transactions over those networks;


•	the Company’s ability to provide new ATM solutions to retailers and financial institutions including the demand for any such new ATM solutions as well as its ability to place additional banks’ brands on ATMs currently deployed;


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


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


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


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


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


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


•	the additional risks the Company is exposed to in its United Kingdom (“U.K.”) armored transport business;


•	the Company’s ability to pursue, complete, and successfully integrate acquisitions, strategic alliances, or joint ventures;


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


•	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, human, and regulatory regime and macro-economic environment to which it will be subject to as a U.K. company;


•	the Company's ability to manage the potential impact of a determination to make changes to LIBOR, if any;


•	the Company’s ability to adequately maintain and upgrade its ATM fleet to address changes in industry standards, regulations and consumer behavior patterns;


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


•	the Company’s ability to manage the fluctuation of its operating results, including as a result of the foregoing and other risk factors included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

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For additional information regarding known material factors that could cause the Company’s actual results to differ from its projected results, see: Part I. Item 1A. Risk Factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. Readers are cautioned not to place undue reliance on forward-looking statements contained in this document, which speak only as of the date of this Form 10-Q. Except as required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events, or otherwise.

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

Overview

Cardtronics plc provides convenient automated consumer financial services through its network of automated teller machines and multi-function financial services kiosks (collectively referred to as “ATMs”). As of September 30, 2019, we were the world’s largest ATM owner/operator, providing services to over 295,000 ATMs. During the three months ended September 30, 2019, 63% of our total revenues were derived from operations in North America (including our ATM operations in the United States ("U.S."), Canada, and Mexico), 30% of our total revenues were derived from operations in Europe and Africa (including our ATM operations in the United Kingdom ("U.K."), Ireland, Germany, Spain, and South Africa), and 7% of our total revenues were derived from operations in Australia and New Zealand. Included in our network as of September 30, 2019 were approximately 206,000 ATMs to which we provided processing only services or various forms of managed services solutions. Under a managed services arrangement, retailers, financial institutions, and ATM distributors rely on us to handle some or all of the operational aspects associated with operating and maintaining ATMs, typically in exchange for a monthly service fee, fee per transaction, or fee per service provided.

Through our network, we deliver various ATM-based financial services to cardholders and provide ATM management and ATM equipment-related services (typically under multi-year contracts) to large retail merchants, smaller retailers, financial institutions, and operators of facilities such as shopping malls, airports, and train stations. In doing so, we provide our retail and financial institution 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 electronic funds transfer (“EFT”) transaction processing platforms that provide transaction processing services to our network of ATMs, as well as to other ATMs operated under managed services arrangements. Additionally, we provide processing services for issuers of debit cards.

We also own and operate the Allpoint network (“Allpoint”), the largest retail based surcharge-free ATM network (based on the number of participating ATMs). Allpoint, with approximately 55,000 participating ATMs, provides surcharge-free ATM access to approximately 1,200 participating credit unions, banks, and stored-value debit card issuers that are principally located in North America. For participants, Allpoint provides scale, density, and convenience of surcharge-free ATMs that surpasses the largest banks in the U.S. In exchange, Allpoint earns either a fixed monthly fee per cardholder or a fixed fee per transaction that is paid by the participants. Allpoint includes a majority of our ATMs in the U.S. and certain ATMs in the U.K., Canada, Mexico, and Australia. Allpoint also provides services to organizations that manage stored-value debit card programs on behalf of corporate entities and governmental agencies, including general purpose, payroll, and electronic benefits transfer (“EBT”) cards. Under these programs, the issuing organizations pay us a fee per issued stored-value debit card or per transaction in return for allowing the users of those cards surcharge-free access to Allpoint’s ATM network.

For additional information related to our operations and the manner in which we derive revenues, see our Annual Report on Form 10-K for the year ended December 31, 2018 (the “2018 Form 10-K”).

Strategic Outlook

Over the past decade, we have expanded our operations and the capabilities and service offerings of our ATMs through strategic acquisitions and investments, continued to deploy ATMs in high-traffic locations under contracts with well-known retailers, and expanded our relationships with leading financial institutions through the growth of Allpoint, our surcharge-free ATM network and our bank-branding programs. More recently, we have expanded our ATM capabilities and service offerings to financial institutions, as we are seeing increasing interest from financial institutions for outsourcing of ATM-related services due to our cost efficiency advantages and higher service levels, as well as the role that our ATMs can play in maintaining financial institutions physical presence for their customers as they reduce their physical branches. We have also expanded our capabilities and are in the process of deploying deposit-taking ATMs in certain locations within the U.S. Additionally, we have enabled 11,000 of our ATMs in the U.S. with cardless cash access and plan to enable additional ATMs with these capabilities in the future.

In January 2017, we acquired DirectCash Payments Inc. ("DCPayments"), a leading ATM operator with operations in Australia, New Zealand, Canada, the U.K., and Mexico and Spark ATM Systems Pty Ltd. (“Spark”), an independent ATM deployer in South Africa. The expansion of our operations through acquisitions has allowed us to grow in our existing markets as well as enter into new markets. We may explore additional acquisitions that are deemed strategic opportunities.

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We will continue to expand our ATM footprint organically and launch new products and services that will allow us to further leverage our existing ATM network. We see opportunities to expand our operations through the following efforts:


•	expanding our relationships with leading financial institutions;


•	working with financial technology companies with a primary focus on the retail consumer finance business (or “Fintechs”) and card issuers to further leverage our extensive ATM network;


•	increasing transaction levels at our existing locations;


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


•	developing and providing additional services at our existing ATMs;


•	pursuing additional managed services opportunities; and


•	pursuing opportunities to expand into new international markets over time.

For additional information related to each of our strategic points above, see Part I. Item 1. Business - Our Strategy in our 2018 Form 10-K.

Developing Trends and Recent Events

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

Increase in surcharge-free offerings in the U.S. Many U.S. national and regional financial institutions aggressively compete for market share, and part of their competitive strategy is to increase their number of customer touch points, including the establishment of an ATM network to provide convenient, surcharge-free access to cash for their cardholders. Bank-branding of ATMs and participation in surcharge-free networks allow financial institutions to rapidly increase surcharge-free ATM access for their customers at a lower cost than owning and operating ATM networks. Additionally, many financial institutions find that providing convenient and free access to ATMs is an important factor in customers establishing or maintaining an account with a particular institution. These factors have led to an increase in bank-branding and participation in surcharge-free ATM networks and we believe that there will be continued growth in such arrangements.

Managed services. While many financial institutions (and some retailers) own and operate significant ATM networks that serve as extensions of their physical branches and increase the level of service offered to their customers, large ATM networks are costly to own and operate and typically do not provide significant revenue for financial institutions or retailers. Owning and operating an ATM network is not a core competency for the majority of financial institutions and retailers; therefore, we believe there is an opportunity for a large non-bank ATM owner/operator, such as ourselves, with lower costs and an established operating history, to contract with financial institutions and retailers to manage their ATM networks. Such an arrangement could reduce a financial institution or retailer’s operating costs while extending their customer service. Additionally, we believe there are opportunities to provide selected ATM-related services on an outsourced basis, such as transaction processing services, to other independent owners and operators of ATMs.

Growth in other automated consumer financial services. The majority of all ATM transactions in our geographies are cash withdrawals, with the remainder representing other banking functions such as balance inquiries and balance transfers. We believe that there are opportunities for a large non-bank ATM owner/operator, such as ourselves, to facilitate additional financial services with customers, such as deposit taking, money transfers, and stored-value debit card reload services. These additional automated consumer financial services could result in additional revenue streams for us and could ultimately result in increased profitability. However, they generally would require additional capital expenditures on our part to offer these services more broadly and would increase regulatory compliance activities. We have commenced a plan to deploy nearly 1,000 deposit-taking ATMs in certain locations in the U.S. and may deploy additional deposit-taking ATMs in the future.

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

We believe that our network of ATMs, located in well-known retail establishments throughout the U.S., provides a convenient and cost-effective way for stored-value cardholders to access their cash and potentially conduct other financial services transactions. Furthermore, through Allpoint, we partner with financial institutions that manage stored-value debit card programs on behalf of corporate entities and governmental agencies, and we are able to provide the users of those cards convenient, surcharge-free access to their cash.

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

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United Kingdom. The U.K. is the largest ATM market in Europe. According to LINK (which connects the ATM networks of all the U.K. ATM operators), approximately 62,000 ATMs were deployed in the U.K. as of September 2019, of which approximately 60% were operated by non-banks (inclusive of our nearly 18,000 ATMs). Electronic payment alternatives have gained popularity in the U.K. and we have seen both the number of ATM deployments and total withdrawals slow in recent years. In light of recent changes to the LINK interchange rate that includes a 5% decrease that came into effect on July 1, 2018 and a second additional 5% decrease in the LINK interchange rate that came into effect on January 1, 2019, we have changed certain of our ATMs to pay-to-use, whereby we no longer receive interchange from customers' banks, but instead, the customer now pays us a convenience fee. We have also removed certain ATMs from service and have taken other measures to mitigate the impact of the LINK interchange reduction. For additional information, see Decrease in interchange rates below. We believe there are emerging opportunities with financial institutions in this market to outsource certain components of their ATM operations and we are actively working to grow our offerings for such services.

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Germany. There are approximately 58,000 ATMs in Germany that are primarily deployed in bank branch locations. The top four independent ATM deployers accounted for less than 10% of the market as of December 31, 2018. Cardtronics entered the German market in August 2013 through the acquisition of Cardpoint. Cardtronics is presently the largest independent ATM deployer in Germany with approximately 1,600 ATMs. The German ATM market is highly fragmented and may be under-deployed, based on its population’s high use of cash relative to other markets in which we operate, such as the U.S. and the U.K. As a result, this fragmented and potentially under-deployed ATM market is attractive to us and we believe there are a number of opportunities for growth in this market. We have continued to expand our ATM count in this market by adding new ATMs with new retail partners, such as Total, and have also added free-to-use ATM access to bank customers, such as Postbank.

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Canada. We entered the Canadian market in October 2011, and in January 2017, we significantly expanded our operations in Canada through our acquisition of DCPayments. We currently operate approximately 11,000 ATMs in Canada and estimate that there are currently approximately 70,000 ATMs in total in the Canadian market. We plan to seek additional partnerships with financial institutions to implement bank-branding and other financial services, similar to our bank-branding and surcharge-free strategy in the U.S., to drive additional transactions to our network.


•	Mexico. There are approximately 50,000 ATMs in Mexico, most of which are owned by national and regional financial institutions. We currently operate approximately 1,000 ATMs in Mexico and plan to selectively pursue growth opportunities with merchants and financial institutions in the region.


•	Spain. In October 2016, we launched our business in Spain, joining a top Spain ATM network and signing agreements to provide ATMs at multiple retail chains. There are approximately 51,000 ATMs in Spain, and we currently operate a very small portion. We plan to continue to grow in this market through additional merchant and financial institution relationships.

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Australia and New Zealand. In January 2017, in connection with our acquisition of DCPayments, we expanded operations into Australia and New Zealand. During the year following our acquisition, the Australian ATM market was significantly impacted by the removal of surcharge fees by the major banks to non-customers at their ATMs. The Australian and New Zealand ATM market is comprised of approximately 30,000 ATMs, and we are the largest independent ATM deployer in this region with approximately 9,000 ATMs. For further information regarding the removal of surcharge fees, see Australia market changes and asset impairment below. We believe there are opportunities for longer-term growth in Australia, which would likely include expansion of services to financial institutions in this market.

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South Africa. In January 2017, in connection with our acquisition of Spark, we obtained operations in South Africa. Spark is a leading independent ATM operator in South Africa, and we have recently grown in this market by expanding the number of ATMs we operate. We expect to continue to grow in this market with merchants and financial institutions. We operate approximately 3,900 ATMs in South Africa and estimate that this market has approximately 34,000 ATMs in total.

Increase in surcharge rates. As financial institutions increase the surcharge rates charged to non-customers for the use of their ATMs, it enables us to increase the surcharge rates charged on our ATMs in selected markets. We also believe that higher surcharge rates in the market make our surcharge-free offerings more attractive to consumers and other financial institutions.

Decrease in interchange rates. The interchange rates paid to independent ATM deployers, such as ourselves, are in some cases set by the various EFT networks and major interbank networks through which the transactions conducted on our ATMs are routed. In past years, certain networks have reduced the net interchange rates paid to ATM deployers for ATM transactions in the U.S. by reducing the transaction rates charged to financial institutions and increasing per transaction fees charged by the networks to ATM operators. In addition to the impact of the net interchange rate decrease, we saw certain financial institutions migrate their volume away from some networks to take advantage of the lower pricing offered by other networks, resulting in lower net interchange rates per transaction realized by us. If financial institutions move to take further advantage of lower interchange rates, or if networks reduce the interchange rates they currently pay to ATM deployers or increase their network fees, our future revenues and gross profits could be negatively impacted. During 2019, we saw a reduction in net interchange on a portion of our transactions, primarily related to higher fees retained by a major network. We have taken measures to mitigate our exposure to interchange rate reductions by networks, including, but not limited to: (i) where possible, routing transactions through a preferred network such as Allpoint, where we have influence over the per transaction rate, (ii) negotiating directly with our financial institution partners for contractual interchange rates on transactions involving their customers, (iii) developing contractual protection from such rate changes in our agreements with merchants and financial institution partners, and (iv) negotiating pricing directly with certain networks.

Interchange rates in the U.K. are primarily set by LINK, the U.K.’s major interbank ATM network. LINK has historically set these rates annually using a cost-based methodology that incorporates ATM service costs from two years prior (i.e., operating costs from 2017 are considered for determining the 2019 interchange rate). In addition to LINK transactions, certain card issuers in the U.K. have issued cards that are not affiliated with the LINK network, and instead carry the Visa or MasterCard network brands. In recent years, transactions conducted on our ATMs from these cards have totaled approximately 4% of our annual withdrawal transactions in the U.K. For these transactions, we receive interchange revenues based on rates that are set by Visa or MasterCard, respectively. The interchange rates set by Visa and MasterCard have historically been less than the rates that have been established by LINK. In July 2018, the LINK interchange rate was reduced by 5% and an additional 5% rate reduction commenced on January 1, 2019. There are no further scheduled rate reductions at this time, but the impact of the recent rate reductions has adversely impacted our revenues and profits in the U.K. We continue to evaluate and assess the impact of interchange rate changes on our U.K. business and have taken certain actions and may continue to take additional actions to mitigate the impact of the current and potential future price reductions. Our mitigating activities have included, and may in the future include, removal of lower profitability sites, contract renegotiations with certain merchants, and conversion of certain ATMs to pay-to-use. The first 5% rate reduction that occurred on July 1, 2018, adversely impacted our 2018 profits by approximately $8 million, when taken together with other rate reductions. The second 5% decrease in the LINK interchange rate occurred January 1, 2019. On an unmitigated basis, we expect that these rate reductions will adversely impact our operating income by approximately $19 million in 2019. LINK implemented a Financial Inclusion Program intended to preserve free-to-use ATMs in certain remote and under-served areas, and we are participating in this program. Should there be any additional significant change in the LINK scheme or its membership, our U.K. revenues and profits could be more adversely impacted. During the three months ended September 30, 2019, 15.5% of our total ATM operating revenues were derived from interchange fees in Europe & Africa. A portion of these revenues are subject to pricing changes that we may be unable to offset through lower payments to merchants.

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

U.S. same-store cash withdrawal transactions during the three months ended September 30, 2019 increased approximately 2% from the same period in 2018. Growth in Allpoint and bank-branding transactions positively impacted the same-store growth rate, driven by growth in the number of financial institutions participating in Allpoint and branding our ATMs, and increased marketing efforts to existing Allpoint and bank-branding customers.

7-Eleven U.S. relationship. The Company had a long standing relationship with 7-Eleven in the U.S. that ended during the quarter ended March 31, 2018. In previous periods, this relationship accounted for a material portion of the Company’s consolidated revenues and profits. The Company began a transition to 7-Eleven’s new service provider during the third quarter of 2017 that was completed in February 2018. 7-Eleven in the U.S. accounted for less than 1% of total revenues in 2018, all of which was earned in the first quarter of 2018.

Withdrawal transaction and revenue trends - U.K. Historically, the majority of our ATMs in the U.K. have been free-to-use ATMs, meaning the transaction is free to the consumer and we earn an interchange rate paid by the customer’s bank. We also operate surcharging or pay-to-use ATMs, which are now increasing in the market and in our ATM estate due to the LINK interchange rate reduction discussed above. During the three months ended September 30, 2019, same-store cash withdrawal transactions at our ATMs in the U.K were down 3% compared to the same period in 2018. We believe the growth rate was adversely impacted by changes in consumer payments behavior, where consumers are conducting more tap and pay (non-cash) transactions for small payments at retailers.

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

Australia has historically been a direct charge ATM market, where cardholders have paid a fee (or "surcharge") to the operator of an ATM for each transaction, unless the ATM where the transaction was completed was part of the cardholder’s issuing bank ATM network. There is no broad interchange arrangement in Australia between card issuers and ATM operators to compensate the ATM operator for its service to a financial institution’s cardholder in the absence of the direct charge to the cardholders. During the three months ended September 30, 2019, approximately 80% of the Company’s revenues in Australia were sourced from direct charges paid by cardholders. Consequently, the actions taken by the largest banks in Australia in 2017 resulted in a significant increase in the availability of free-to-use ATMs and could, in the future, result in a significant decrease in our revenues. While the direct impact we have experienced is difficult to quantify, the ultimate impact of this action could increase over time as consumers’ behavior patterns change as a result of the introduction of a large number of free-to-use ATMs in Australia that did not previously exist.

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Alternative payment options. We face indirect competition from alternative payment options, including card-based and mobile phone-based contactless payment technology in all of our markets. Australia and the U.K. have reported increasing rates of contactless payment use. Prior to our acquisition of DCPayments and since our ownership of the Australian component of the business, we have observed declines in transactions at Australian ATMs, as cash-based payments have declined as a percentage of total payments in recent years, with growth in contactless payments appearing to be the primary driver of the decline. Several banks in the U.S. have issued or are in the process of issuing contactless cards to their customers, enabling an additional payment choice for U.S. consumers. U.S. consumer adoption of this new payment choice could impact our transactions in the future in the U.S. market.

Capital investments. Our capital investments over the last several years have included significant expenditures to upgrade and replace ATMs at certain locations in response to certain changes in network operating rules. Our capital spending in 2019 has been and will continue to be driven by the following: (i) our strategic initiatives to enhance the consumer experience at our ATMs and drive transaction growth, (ii) certain software and hardware enhancements required to facilitate our strategic initiatives, enhance security, and retain the necessary support, (iii) other compliance related matters including terminal upgrades required due to polymer note introductions, (iv) long-term renewals of existing merchant contracts, (v) growth opportunities across our enterprise, and (vi) investments in the infrastructure of our business, including the implementation of an enterprise resource planning (“ERP”) system which was substantially completed during the nine months ended September 30, 2019.

U.K. planned exit from the European Union (“Brexit”). On March 29, 2017, the U.K. government officially triggered Article 50 of the Treaty on the European Union ("EU"), which commenced the process for the U.K. to exit the EU. The U.K. was originally scheduled to exit the EU on March 29, 2019, subject to a transition period extending through December 2020. However, the British Parliament failed to ratify the withdrawal agreement that was previously negotiated by representatives of the British government and the EU. On October 28, 2019, following the U.K.'s failure to exit the EU on the originally scheduled exit date of March 29, 2019, the EU further extended the deadline for the U.K. to approve a negotiated withdrawal agreement to January 31, 2020. Given the delay, there remains considerable uncertainty associated with the timing and terms of the withdrawal. Failure to obtain parliamentary approval of the negotiated withdrawal agreement would mean that the U.K. would leave the EU with no agreement (a so-called “hard Brexit”). Although the ultimate impact of Brexit on our business is unknown, we continue to monitor the negotiation of a withdrawal agreement and of a future relationship between the EU and the U.K.

Dynamic Currency Conversion ("DCC"). Effective April 13, 2019, Visa allows DCC on international ATM transactions globally. This change allows us to expand our DCC offerings in certain of our markets, and we are currently in the process of deploying DCC at many of our ATMs across our network. On March 19, 2019, the European Parliament adopted Regulation 2019/518 applicable to DCC charges. The additional transparency and price comparability requirements on DCC transactions are effective from April 2020. Our DCC revenues currently account for approximately 4% our total revenues, the majority of which is derived from our U.K. operations. As a result of Brexit, we are uncertain, at this time, if this new proposed regulation will have any significant impact on our revenues. Regardless of the outcome of Brexit and whether the U.K. adopts the EU proposed regulations, we do not believe this regulation will have a material impact on our revenues based on our current operations and the intended purpose of the proposed regulations.

Restructuring Expenses. During 2017 and 2018, we implemented a global corporate reorganization and cost reduction initiative (the "2017 and 2018 Restructuring Plan”), intended to improve our cost structure and operating efficiency. The 2017 and 2018 Restructuring Plan included workforce reductions, facility closures and other cost reduction measures. During the three and nine months ended September 30, 2018, we incurred pre-tax charges of $1.1 million and $5.5 million, related to the 2017 and 2018 Restructuring Plan, primarily consisting of employee severance.

During the three months and nine months ended September 30, 2019, we incurred $3.6 million and $7.0 million, respectively, of pre-tax charges related to the 2019 restructuring activity (the "2019 Restructuring Plan"), consisting of workforce reductions, facility closures and professional fees.

Next generation bank note upgrade in Australia. Next generation bank notes are in the process of being introduced by the Reserve Bank of Australia. The new $5 note was introduced on September 1, 2016, and the new $50 note, the most widely disseminated note in Australia, was introduced on October 18, 2018. The new $20 note was recently introduced on October 9, 2019 and we expect that the new $100 will be issued in October 2020. The introduction of these next generation bank notes has required upgrades to software and physical ATM components on our ATMs in Australia.

U.S. Tax Reform. On December 22, 2017, House of Representatives 1 (“H.R. 1”), originally known as the Tax Cuts and Jobs Act (“U.S. Tax Reform”) was enacted and signed into legislation. In accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP” or “GAAP”), the effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. As a result of this legislation, during the three months ended December 31, 2017, we provisionally recognized

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one-time net tax benefits totaling $11.6 million. In accordance with Securities and Exchange Commission ("SEC") Accounting Bulletin No.118 during 2018, we reduced the estimated one-time tax related to U.S. Tax Reform by $0.4 million and completed our accounting for the tax effects of this change in law.

Acquisitions. On January 6, 2017, we completed the acquisition of DCPayments, a leading operator of approximately 25,000 ATMs with operations in Australia, New Zealand, Canada, the U.K., and Mexico. On January 31, 2017, we completed the acquisition of Spark, an independent ATM operator in South Africa, with a growing network of approximately 2,300 ATMs. The agreed purchase consideration for Spark included initial cash consideration, paid at closing, and potential additional contingent consideration. The additional purchase consideration is contingent upon Spark achieving certain agreed upon earnings targets in 2019 and 2020 to be paid in 2020 and 2021, respectively. In May 2019, we acquired ATM processing contracts for approximately 62,000 ATMs in our North America segment.

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

Factors Impacting Comparability Between Periods

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Foreign currency exchange rates. Our reported financial results are subject to fluctuations in foreign currency exchange rates. We estimate that the year-over-year fluctuation of the currencies in the markets in which we operate relative to the U.S. dollar caused our reported total revenues to be lower by $7.6 million and $28.4 million during the three and nine months ended September 30, 2019, respectively.


•	7-Eleven ATM removal. The 7-Eleven ATM placement agreement in the U.S. expired in July 2017, and all ATM operations in the U.S. were transitioned to the new service provider by the end of February 2018. 7-Eleven in the U.S accounted for $5.4 million, or less than 1% of total revenues during the nine months ended September 30, 2018.

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Results of Operations

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



	Three months ended September 30,										Nine Months Ended September 30,
	2019					2018					2019					2018
	(In thousands, excluding percentages)
Revenues:
ATM operating revenues	$	333,384		94.8	%	$	329,837		97.0	%	$	959,067		94.9	%	$	978,789		96.2	%
ATM product sales and other revenues	18,123			5.2		10,338			3.0		51,531			5.1		38,557			3.8
Total revenues	351,507			100.0		340,175			100.0		1,010,598			100.0		1,017,346			100.0
Cost of revenues:
Cost of ATM operating revenues ⁽¹⁾	208,860			59.4		216,849			63.7		623,099			61.7		647,692			63.7
Cost of ATM product sales and other revenues	14,922			4.2		8,680			2.6		41,148			4.1		31,528			3.1
Total cost of revenues	223,782			63.7		225,529			66.3		664,247			65.7		679,220			66.8
Operating expenses:
Selling, general, and administrative expenses ⁽²⁾	46,257			13.2		41,896			12.3		131,912			13.1		124,564			12.2
Restructuring expenses	3,583			1.0		1,058			0.3		7,046			0.7		5,534			0.5
Acquisition related expenses	—			—		—			—		—			—		2,633			0.3
Depreciation and accretion expense	33,466			9.5		30,647			9.0		99,644			9.9		93,453			9.2
Amortization of intangible assets	12,404			3.5		12,994			3.8		37,407			3.7		40,263			4.0
Loss on disposal and impairment of assets	637			0.2		466			0.1		3,101			0.3		15,583			1.5
Total operating expenses	96,347			27.4		87,061			25.6		279,110			27.6		282,030			27.7
Income from operations	31,378			8.9		27,585			8.1		67,241			6.7		56,096			5.5
Other expenses:
Interest expense, net	6,751			1.9		8,852			2.6		20,265			2.0		27,185			2.7
Amortization of deferred financing costs and note discount	3,377			1.0		3,397			1.0		9,999			1.0		10,060			1.0
Other income	(3,703		)	(1.1	)	(1,297		)	(0.4	)	(9,454		)	(0.9	)	(1,324		)	(0.1	)
Total other expenses	6,425			1.8		10,952			3.2		20,810			2.1		35,921			3.5
Income before income taxes	24,953			7.1		16,633			4.9		46,431			4.6		20,175			2.0
Income tax expense	4,086			1.2		7,854			2.3		10,780			1.1		10,409			1.0
Net income	20,867			5.9		8,779			2.6		35,651			3.5		9,766			1.0
Net income (loss) attributable to noncontrolling interests	3			—		(2		)	—		(3		)	—		(14		)	—
Net income attributable to controlling interests and available to common shareholders	$	20,864		5.9	%	$	8,781		2.6	%	$	35,654		3.5	%	$	9,780		1.0	%

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(1)

Excludes effects of depreciation, accretion, and amortization of intangible assets of $37.3 million and $35.5 million for the three months ended September 30, 2019 and 2018, respectively, and $112.3 million and $109.1 million for the nine months ended September 30, 2019 and 2018, respectively. See Item 1. Financial Statements, Note 1. General and Basis of Presentation – (c) Cost of ATM Operating Revenues Presentation. The inclusion of this depreciation, accretion, and amortization of intangible assets in Cost of ATM operating revenues would have increased our Cost of ATM operating revenues as a percentage of total revenues by 10.6% and 10.4% for the three months ended September 30, 2019 and 2018, respectively, and 11.1% and 10.7% for the nine months ended September 30, 2019 and 2018, respectively.


(2)	Includes share-based compensation expense of $5.3 million and $4.4 million for the three months ended September 30, 2019 and 2018, respectively, and $14.4 million and $10.2 million for the nine months ended September 30, 2019 and 2018, respectively.

Key Operating Metrics

The following table reflects certain key measures that gauge our operating performance for the periods indicated:



	Three months ended September 30,								Nine Months Ended September 30,
	2019			% Change		2018			2019			% Change		2018
Average number of transacting ATMs:
North America	43,668			(1.2	)%	44,183			43,316			(3.4	)%	44,829
Europe & Africa	23,950			(1.9	)	24,406			23,861			(3.7	)	24,769
Australia & New Zealand	7,243			(8.4	)	7,909			7,642			(5.4	)	8,077
Total Company-owned	74,861			(2.1	)	76,498			74,819			(3.7	)	77,675
North America	14,078			0.1		14,064			14,077			(0.7	)	14,172
Europe & Africa	269			n/m		55			244			39.4		175
Total Merchant-owned	14,347			1.6		14,119			14,321			(0.2	)	14,347
Average number of transacting ATMs – ATM operations	89,208			(1.6	)	90,617			89,140			(3.1	)	92,022

Managed Services and Processing:
North America⁽¹⁾	203,781			47.9		137,789			170,336			25.8		135,406
Australia & New Zealand	1,721			(17.9	)	2,096			1,605			(23.9	)	2,108
Average number of transacting ATMs – Managed services and processing	205,502			46.9		139,885			171,941			25.0		137,514

Total average number of transacting ATMs	294,710			27.9		230,502			261,081			13.7		229,536

Total transactions (in thousands):
ATM operations	308,494			(9.5	)	340,870			926,165			(7.5	)	1,001,737
Managed services and processing, net	458,572			58.0		290,213			1,076,388			26.4		851,495
Total transactions	767,066			21.5		631,083			2,002,553			8.1		1,853,232

Total cash withdrawal transactions (in thousands):
ATM operations	203,061			(8.9	)	222,864			611,695			(5.8	)	649,674

Per ATM per month amounts (excludes managed services and processing):
Cash withdrawal transactions	759			(7.3	)	819			762			(2.8	)	784

ATM operating revenues ⁽²⁾	$	1,130		1.0		$	1,119		$	1,094		0.6		$	1,088
Cost of ATM operating revenues ^{(2) (3)}	733			(3.6	)	760			729			(2.0	)	744
ATM adjusted operating gross profit ^{(2) (3)}	$	397		10.6	%	$	359		$	365		6.1	%	$	344

ATM adjusted operating gross profit margin	35.1		%			32.1		%	33.4		%			31.6		%


(1)	In May 2019, the Company completed the acquisition of ATM processing contracts that will provide transaction processing services for approximately 62,000 ATMs. This transaction added approximately 62,000 and 31,000 ATMs to the average number of transacting ATMs for the three and nine months ended September 30th, 2019, respectively.

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


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

Revenues



	Three Months Ended September 30,								Nine Months Ended September 30,
	2019			2018			% Change		2019			2018			% Change
	(In thousands, excluding percentages)
North America
ATM operating revenues	$	208,595		$	200,767		3.9	%	$	599,177		$	593,994		0.9	%
ATM product sales and other revenues	16,113			8,267			94.9		44,994			32,026			40.5
North America total revenues	224,708			209,034			7.5		644,171			626,020			2.9
Europe & Africa
ATM operating revenues	102,801			102,819			—		292,980			304,809			(3.9	)
ATM product sales and other revenues	1,907			2,019			(5.5	)	6,123			6,323			(3.2	)
Europe & Africa total revenues	104,708			104,838			(0.1	)	299,103			311,132			(3.9	)
Australia & New Zealand
ATM operating revenues	24,389			29,417			(17.1	)	74,906			89,078			(15.9	)
ATM product sales and other revenues	103			52			98.1		414			208			99.0
Australia & New Zealand total revenues	24,492			29,469			(16.9	)	75,320			89,286			(15.6	)

Eliminations	(2,401		)	(3,166		)	(24.2	)	(7,996		)	(9,092		)	(12.1	)

Total ATM operating revenues	333,384			329,837			1.1		959,067			978,789			(2.0	)
Total ATM product sales and other revenues	18,123			10,338			75.3		51,531			38,557			33.6
Total revenues	$	351,507		$	340,175		3.3	%	$	1,010,598		$	1,017,346		(0.7	)%

Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018

ATM operating revenues. ATM operating revenues during the three months ended September 30, 2019 increased $3.5 million, or 1.1%, compared to the same period of 2018. Absent the foreign currency exchange rate movements, ATM operating revenues would have increased $11.0 million, or 3.3%. The increase was due to growth in our bank-branding and surcharge-free network revenues and higher managed services and transaction processing revenues in the U.S. This increase was partially offset by the impact of the 5% decrease in the LINK interchange rate in the U.K. that came into effect on January 1, 2019 as well as the decline in the number of transacting ATMs deployed in the U.K. and Australia & New Zealand.

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



	Three Months Ended September 30,
	2019			2018			Change			% Change
	(In thousands, excluding percentages)
North America
Surcharge revenues	$	90,148		$	92,572		$	(2,424	)	(2.6	)%
Interchange revenues	35,289			36,620			(1,331		)	(3.6	)
Bank-branding and surcharge-free network revenues	52,112			45,128			6,984			15.5
Managed services and processing revenues	31,046			26,447			4,599			17.4
North America total ATM operating revenues	208,595			200,767			7,828			3.9
Europe & Africa
Surcharge revenues	48,652			34,134			14,518			42.5
Interchange revenues	51,631			66,039			(14,408		)	(21.8	)
Bank-branding and surcharge-free network revenues	238			—			238			—
Managed services and processing revenues	2,280			2,646			(366		)	(13.8	)
Europe & Africa total ATM operating revenues	102,801			102,819			(18		)	—
Australia & New Zealand
Surcharge revenues	19,603			22,358			(2,755		)	(12.3	)
Interchange revenues	1,056			1,650			(594		)	(36.0	)
Managed services and processing revenues	3,730			5,409			(1,679		)	(31.0	)
Australia & New Zealand total ATM operating revenues	24,389			29,417			(5,028		)	(17.1	)
Eliminations	(2,401		)	(3,166		)	765			(24.2	)
Total ATM operating revenues	$	333,384		$	329,837		$	3,547		1.1	%

North America. For the three months ended September 30, 2019, ATM operating revenues in our North America segment increased $7.8 million, or 3.9%, compared to the same period of 2018. The increase was due to growth in bank-branding and surcharge-free network revenues and higher managed services and transaction processing revenues in the U.S., partially offset by lower surcharge and interchange revenues due to a lower number of transacting ATMs, a slight decrease in non-monetary transactions and increased network fees impacting our interchange revenues.

Europe & Africa. For the three months ended September 30, 2019, ATM operating revenues in our Europe & Africa segment were relatively unchanged compared to the same period of 2018. Our ATM operating revenues would have been higher by approximately $5.5 million or 5.3%, absent the foreign currency exchange rate movements. Adjusted for foreign currency, ATM operating revenues increased due to higher dynamic currency conversion revenues recognized within the surcharge category, an increase in the number of transacting ATMs and the transaction activity in Germany, Spain, and South Africa, partially offset by the impact of the 5% decrease in the LINK interchange rate in the U.K. that came into effect on January 1, 2019, as well as fewer transacting ATMs in the U.K. The transition of a portion of our U.K. ATMs to pay-to-use resulted in higher surcharge revenues offsetting the lower interchange revenues. For additional information related to our constant-currency calculations, see Non-GAAP Financial Measures below.

Australia & New Zealand. For the three months ended September 30, 2019, ATM operating revenues in our Australia & New Zealand segment decreased $5.0 million, or 17.1%, compared to the same period of 2018. Approximately $1.6 million of this decline was a result of foreign currency exchange rate movements with the remainder due to a reduction in the number of transacting ATMs and fewer transactions per ATM.

ATM product sales and other revenues. For the three months ended September 30, 2019, ATM product sales and other revenues increased 75.3% compared to the same period of 2018. The increase was primarily related to higher equipment sales in the U.S.

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Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018

ATM operating revenues. ATM operating revenues during the nine months ended September 30, 2019 decreased $19.7 million, or 2.0%, compared to the same period of 2018. The decrease was primarily a result of foreign currency exchange rate movements impacting the results of our Europe & Africa and Australia & New Zealand segments. Absent the foreign currency exchange rate movements, ATM operating revenues would have increased $8.1 million or 0.8%. This constant-currency increase resulted from growth in our surcharge-free network and bank-branding revenues as well as higher managed services and transaction processing revenues in the U.S., higher dynamic currency conversion revenues recognized within the surcharge category and an increase in the number of transacting ATMs and transaction activity from new placement agreements in certain locations within our Europe & Africa segment. The increase was partially offset by the two 5% decreases in the LINK interchange rate in the U.K. that came into effect on July 1, 2018 and January 1, 2019, the termination of the 7-Eleven contract in the U.S. and the removal of ATM's at 7-Eleven locations that contributed $5.4 million to ATM operating revenues in the first two months of 2018 and by a reduction in the number of transacting ATMs deployed in the U.K and Australia & New Zealand.

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



	Nine Months Ended September 30,
	2019			2018			Change			% Change
	(In thousands, excluding percentages)
North America
Surcharge revenues	$	263,492		$	272,372		$	(8,880	)	(3.3	)%
Interchange revenues	103,954			108,259			(4,305		)	(4.0	)
Bank-branding and surcharge-free network revenues	146,523			133,565			12,958			9.7
Managed services and transaction processing revenues	85,208			79,798			5,410			6.8
North America total ATM operating revenues	599,177			593,994			5,183			0.9
Europe & Africa
Surcharge revenues	124,124			91,191			32,933			36.1
Interchange revenues	161,362			205,910			(44,548		)	(21.6	)
Bank-branding and surcharge-free network revenues	721			—			721			—
Managed services and processing revenues	6,773			7,708			(935		)	(12.1	)
Europe & Africa total ATM operating revenues	292,980			304,809			(11,829		)	(3.9	)
Australia & New Zealand
Surcharge revenues	60,047			69,107			(9,060		)	(13.1	)
Interchange revenues	3,557			3,839			(282		)	(7.3	)
Managed services and transaction processing revenues	11,302			16,132			(4,830		)	(29.9	)
Australia & New Zealand total ATM operating revenues	74,906			89,078			(14,172		)	(15.9	)
Eliminations	(7,996		)	(9,092		)	1,096			(12.1	)
Total ATM operating revenues	$	959,067		$	978,789		$	(19,722	)	(2.0	)%

North America. For the nine months ended September 30, 2019, ATM operating revenues in our North America segment increased $5.2 million, or 0.9%, compared to the same period of 2018. This increase was attributable to growth in bank-branding and surcharge-free network revenues, higher managed services and transaction processing revenues, and higher same-store withdrawal transactions. The increase was partially offset by the termination of the 7-Eleven contract in the U.S. and the removal of ATMs at 7-Eleven locations that contributed approximately $5.4 million to ATM operating revenues in the first two months of 2018, lower surcharge and interchange revenues due to a lower number of transacting ATMs, a slight decrease in non-monetary transactions and increased network fees impacting our interchange revenues.

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Europe & Africa. For the nine months ended September 30, 2019, ATM operating revenues in our Europe & Africa segment decreased $11.8 million, or 3.9%, compared to the same period of 2018. Absent the foreign currency exchange rate movements our ATM operating revenues would have increased by approximately $6.6 million, or 2.1%, in the nine months ended September 30, 2019. Adjusted for foreign currency, ATM operating revenues increased due to higher dynamic currency conversion revenues, reported within the surcharge category and an increase in the number of transacting ATMs in Germany, Spain, and South Africa. The increase was partially offset by the impact of the two 5% decreases in the LINK interchange rate in the U.K. that came into effect on July 1, 2018 and January 1, 2019 as well as a reduction in the number of transacting ATMs deployed in the U.K. The transition of a portion of our U.K. ATMs to pay-to-use resulted in higher surcharge revenues, partially offsetting the lower interchange revenues. For additional information related to our constant-currency calculations, see Non-GAAP Financial Measures below.

Australia & New Zealand. For the nine months ended September 30, 2019, ATM operating revenues in our Australia & New Zealand segment decreased $14.2 million, or 15.9%, compared to the same period of 2018. Approximately $6.2 million of this decline was a result of foreign currency exchange rate movements with the remainder due to a reduction in the number of transacting ATMs and fewer transactions per ATM.

ATM product sales and other revenues. For the nine months ended September 30, 2019, ATM product sales and other revenues increased 33.6% compared to the same period of 2018. The increase was primarily related to higher equipment sales in the U.S.

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



	Three Months Ended September 30,								Nine Months Ended September 30,
	2019			2018			% Change		2019			2018			% Change
	(In thousands, excluding percentages)
North America
Cost of ATM operating revenues	$	134,313		$	133,498		0.6	%	$	391,588		$	398,488		(1.7	)%
Cost of ATM product sales and other revenues	13,902			7,673			81.2		37,699			28,263			33.4
North America total cost of revenue	148,215			141,171			5.0		429,287			426,751			0.6
Europe & Africa
Cost of ATM operating revenues	59,656			65,007			(8.2	)	184,752			191,904			(3.7	)
Cost of ATM product sales and other revenues	821			778			5.5		2,677			2,454			9.1
Europe & Africa total cost of revenues	60,477			65,785			(8.1	)	187,429			194,358			(3.6	)
Australia & New Zealand
Cost of ATM operating revenues	17,065			20,998			(18.7	)	53,768			65,387			(17.8	)
Cost of ATM product sales and other revenues	199			229			(13.1	)	772			811			(4.8	)
Australia & New Zealand total cost of revenues	17,264			21,227			(18.7	)	54,540			66,198			(17.6	)
Corporate total cost of revenues	368			229			60.7		995			404			146.3

Eliminations	(2,542		)	(2,883		)	(11.8	)	(8,004		)	(8,491		)	(5.7	)

Cost of ATM operating revenues	208,860			216,849			(3.7	)	623,099			647,692			(3.8	)
Cost of ATM product sales and other revenues	14,922			8,680			71.9		41,148			31,528			30.5
Total cost of revenues	$	223,782		$	225,529		(0.8	)%	$	664,247		$	679,220		(2.2	)%

Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018

Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets). Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) during the three months ended September 30, 2019 decreased $8.0 million, or 3.7%. Absent the foreign currency exchange rate movements, our Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) decreased $3.5 million, or 1.6%. The decrease in Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) was primarily a result of lower merchant commissions, lower communications costs and fewer company-owned ATMs in the U.K. and Australia & New Zealand.

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



	Three Months Ended September 30,
	2019			2018			Change			% Change
	(In thousands, excluding percentages)
North America
Merchant commissions	$	66,620		$	67,931		$	(1,311	)	(1.9	)%
Vault cash rental	11,981			11,567			414			3.6
Other costs of cash	15,577			14,540			1,037			7.1
Repairs and maintenance	13,409			11,530			1,879			16.3
Communications	3,445			3,846			(401		)	(10.4	)
Transaction processing	2,695			1,639			1,056			64.4
Employee costs	8,009			9,174			(1,165		)	(12.7	)
Other expenses	12,577			13,271			(694		)	(5.2	)
North America total cost of ATM operating revenues	134,313			133,498			815			0.6
Europe & Africa
Merchant commissions	23,962			25,754			(1,792		)	(7.0	)
Vault cash rental	3,685			3,668			17			0.5
Other costs of cash	4,921			6,192			(1,271		)	(20.5	)
Repairs and maintenance	3,339			3,445			(106		)	(3.1	)
Communications	2,699			3,020			(321		)	(10.6	)
Transaction processing	5,678			5,892			(214		)	(3.6	)
Employee costs	10,187			11,089			(902		)	(8.1	)
Other expenses	5,185			5,947			(762		)	(12.8	)
Europe & Africa total cost of ATM operating revenues	59,656			65,007			(5,351		)	(8.2	)
Australia & New Zealand
Merchant commissions	9,629			11,574			(1,945		)	(16.8	)
Vault cash rental	1,568			2,392			(824		)	(34.4	)
Other costs of cash	1,485			2,083			(598		)	(28.7	)
Repairs and maintenance	1,668			2,018			(350		)	(17.3	)
Communications	610			824			(214		)	(26.0	)
Transaction processing	577			520			57			11.0
Employee costs	1,105			1,315			(210		)	(16.0	)
Other expenses	423			272			151			55.5
Australia & New Zealand total cost of ATM operating revenues	17,065			20,998			(3,933		)	(18.7	)
Corporate	368			229			139			60.7
Eliminations	(2,542		)	(2,883		)	341			(11.8	)
Total cost of ATM operating revenues	$	208,860		$	216,849		$	(7,989	)	(3.7	)%

North America. For the three months ended September 30, 2019, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) in our North America segment increased $0.8 million, or 0.6%, compared to the same period of 2018. The increase was primarily attributable to higher repairs and maintenance costs, higher transaction processing costs and higher costs of cash partially offset by lower merchant commissions and lower personnel costs.

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Europe & Africa. For the three months ended September 30, 2019, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) in our Europe & Africa segment decreased by $5.4 million, or 8.2%, compared to the same period of 2018. Excluding foreign currency exchange rate movements, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) decreased approximately 3.3% driven by lower merchant commissions and costs of cash in the U.K. The lower merchant commissions were a result of the reduction in the number of transacting ATMs deployed in the U.K. and the negotiation of lower merchant commissions in response to the LINK interchange rate changes. The lower costs of cash in the U.K. were a result of enhanced ATM security measures resulting in fewer cash losses during the period. These lower costs were partially offset by additional costs in Germany, Spain, and South Africa consistent with the growth in revenue in these countries.

Australia & New Zealand. For the three months ended September 30, 2019, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) in our Australia & New Zealand segment decreased $3.9 million, or 18.7%, compared to the same period of 2018 primarily due to foreign currency exchange rate movements, a reduction in the number of transacting ATMs, and fewer transactions per ATM. For additional information related to our constant-currency calculations, see Non-GAAP Financial Measures below.

Cost of ATM product sales and other revenues. For the three months ended September 30, 2019, our cost of ATM product sales and other revenues increased 71.9% from the same period of 2018 which is directionally consistent with the increase in revenue from ATM product sales primarily in the U.S.

Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018

Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets). Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) during the nine months ended September 30, 2019 decreased $24.6 million, or 3.8%, compared to the same period of 2018. Absent the foreign currency exchange rate movements, our Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) decreased $6.0 million, or 0.9%. The decrease in Cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) was primarily a result of lower merchant commissions, lower communications costs, fewer company-owned ATMs in the U.K. and Australia & New Zealand and the realization of improved operational efficiency as a result of the 2017 and 2018 Restructuring Plan, partially offset by comparatively lower U.K. business rates (property taxes) on ATMs in the same period of 2018.

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):

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	Nine Months Ended September 30,
	2019			2018			Change			% Change
	(In thousands, excluding percentages)
North America
Merchant commissions	$	192,098		$	200,630		$	(8,532	)	(4.3	)%
Vault cash rental	36,729			36,083			646			1.8
Other costs of cash	46,375			44,610			1,765			4.0
Repairs and maintenance	39,160			33,503			5,657			16.9
Communications	9,897			12,031			(2,134		)	(17.7	)
Transaction processing	6,449			4,672			1,777			38.0
Employee costs	23,496			27,098			(3,602		)	(13.3	)
Other expenses	37,384			39,861			(2,477		)	(6.2	)
North America total cost of ATM operating revenues	391,588			398,488			(6,900		)	(1.7	)
Europe & Africa
Merchant commissions	71,572			78,930			(7,358		)	(9.3	)
Vault cash rental	11,117			10,630			487			4.6
Other costs of cash	17,183			18,897			(1,714		)	(9.1	)
Repairs and maintenance	10,816			10,991			(175		)	(1.6	)
Communications	8,580			9,671			(1,091		)	(11.3	)
Transaction processing	16,818			16,809			9			0.1
Employee costs	31,936			33,850			(1,914		)	(5.7	)
Other expenses	16,730			12,126			4,604			38.0
Europe & Africa total cost of ATM operating revenues	184,752			191,904			(7,152		)	(3.7	)
Australia & New Zealand
Merchant commissions	29,527			36,575			(7,048		)	(19.3	)
Vault cash rental	5,324			6,771			(1,447		)	(21.4	)
Other costs of cash	5,086			5,898			(812		)	(13.8	)
Repairs and maintenance	5,404			6,948			(1,544		)	(22.2	)
Communications	2,011			2,674			(663		)	(24.8	)
Transaction processing	1,573			1,796			(223		)	(12.4	)
Employee costs	3,447			4,004			(557		)	(13.9	)
Other expenses	1,396			721			675			93.6
Australia & New Zealand total cost of ATM operating revenues	53,768			65,387			(11,619		)	(17.8	)
Corporate	995			404			591			146.3
Eliminations	(8,004		)	(8,491		)	487			(5.7	)
Total cost of ATM operating revenues	$	623,099		$	647,692		$	(24,593	)	(3.8	)%

North America. For the nine months ended September 30, 2019, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) in our North America segment decreased $6.9 million, or 1.7%, compared to the same period of 2018. The decrease was primarily due to lower merchant commissions, lower communications costs, and improved operational efficiency as a result of the 2017 and 2018 Restructuring Plan, partially offset by an increase in repairs and maintenance costs.

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Europe & Africa. For the nine months ended September 30, 2019, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) in our Europe & Africa segment decreased by $7.2 million, or 3.7%, compared to the same period of 2018. Excluding foreign currency exchange rate movements, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangible assets) increased 2.4% as a result of the additional transacting ATMs and transaction activity from new placement agreements in Germany, Spain, and South Africa as well as a reduction in our estimated U.K. business rates (property taxes) on ATMs in the same period of 2018, partly offset by a decrease in merchant commissions.

Australia & New Zealand. For the nine months ended September 30, 2019, our cost of ATM operating revenues (exclusive of depreciation, accretion, and amortization of intangibles assets) in our Australia & New Zealand segment decreased $11.6 million, or 17.8%, compared to the same period of 2018 primarily due to foreign currency exchange rate movements, the decline in the number of transacting ATMs, and fewer transactions per ATM. For additional information related to our constant-currency calculations, see Non-GAAP Financial Measures below.

Cost of ATM product sales and other revenues. For the nine months ended September 30, 2019, our cost of ATM product sales and other revenues increased 30.5% from the same period of 2018 which is directionally consistent with the increase in revenue from ATM product sales primarily in the US.

Selling, General, and Administrative Expenses



	Three Months Ended September 30,								Nine Months Ended September 30,
	2019			2018			% Change		2019			2018			% Change
	(In thousands, excluding percentages)
Selling, general, and administrative expenses	$	40,991		$	37,456		9.4	%	$	117,539		$	114,341		2.8	%
Share-based compensation expense	5,266			4,440			18.6		14,373			10,223			40.6
Total selling, general, and administrative expenses	$	46,257		$	41,896		10.4	%	$	131,912		$	124,564		5.9	%

Percentage of total revenues:
Selling, general, and administrative expenses	11.7		%	11.0		%			11.6		%	11.2		%
Share-based compensation expense	1.5		%	1.3		%			1.4		%	1.0		%
Total selling, general, and administrative expenses	13.2		%	12.3		%			13.1		%	12.2		%

Selling, general, and administrative expenses (“SG&A expenses”), excluding share-based compensation expense. For the three and nine months ended September 30, 2019, SG&A expenses, excluding share-based compensation expense, increased $3.5 million, or 9.4%, and $3.2 million, or 2.8%, respectively, compared to the same periods of 2018. This increase is primarily a result of higher software costs related to our cloud based ERP system, our investments in information security and technology as well as higher health insurance costs.

Share-based compensation expense. For the three and nine months ended September 30, 2019, share-based compensation expense increased $0.8 million and $4.2 million, respectively, compared to the same periods of 2018. This increase is a result of the amount, timing and terms of share-based payment awards granted during the periods, net of estimated forfeitures. For additional information related to share-based compensation expense, see Item 1. Financial Statements, Note 4. Share-based Compensation.

Restructuring Expenses

During 2017 and 2018, we implemented a global corporate reorganization and cost reduction initiative (the "2017 and 2018 Restructuring Plan”), intended to improve our cost structure and operating efficiency. The 2017 and 2018 Restructuring Plan included workforce reductions, facility closures and other cost reduction measures. During the three and nine months ended September 30, 2018, we implemented additional workforce reductions in an effort to continue our cost reduction initiative and thereby improve our cost structure and operating efficiency.

During the three and nine months ended September 30, 2019, we incurred $3.6 million and $7.0 million of pre-tax charges related to the 2019 restructuring activity (the "2019 Restructuring Plan"), consisting of workforce reductions, facility closures and professional fees.

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

Acquisition Related Expenses

Acquisition related expenses. During the nine months ended September 30, 2018, we incurred acquisition expenses of $2.6 million, related primarily to employee severance and lease termination costs related to the DCPayments acquisition.

Depreciation and Accretion Expense



	Three Months Ended September 30,								Nine Months Ended September 30,
	2019			2018			% Change		2019			2018			% Change
	(In thousands, excluding percentages)
Depreciation and accretion expense	$	33,466		$	30,647		9.2	%	$	99,644		$	93,453		6.6	%

Percentage of total revenues	9.5		%	9.0		%			9.9		%	9.2		%

Depreciation and accretion expense. For the three and nine months ended September 30, 2019, depreciation and accretion expense increased $2.8 million, or 9.2%, and $6.2 million, or 6.6%, respectively, compared to the same periods of 2018. This increase was primarily due to the timing of capital additions in the ordinary course of business.

Amortization of Intangible Assets



	Three Months Ended September 30,								Nine Months Ended September 30,
	2019			2018			% Change		2019			2018			% Change
	(In thousands, excluding percentages)
Amortization of intangible assets	$	12,404		$	12,994		(4.5	)%	$	37,407		$	40,263		(7.1	)%

Percentage of total revenues	3.5		%	3.8		%			3.7		%	4.0		%

Amortization of intangible assets. For the three and nine months ended September 30, 2019, amortization of intangible assets decreased by $0.6, or 4.5%, and $2.9 million, or 7.1%, respectively, compared to the same periods of 2018. This decrease was primarily due to the timing of the related intangible assets becoming fully amortized.

Loss on Disposal and Impairment of Assets



	Three Months Ended September 30,								Nine Months Ended September 30,
	2019			2018			% Change		2019			2018			% Change
	(In thousands, excluding percentages)
Loss on disposal and impairment of assets	$	637		$	466		36.7	%	$	3,101		$	15,583		(80.1	)%

Percentage of total revenues	0.2		%	0.1		%			0.3		%	1.5		%

Loss on disposal and impairment of assets. During the three and nine months ended September 30, 2019, we recognized losses of approximately $0.6 million, and $3.1 million, respectively, related to the disposal of ATM assets in the normal course of business. During the nine months ended September 30, 2018, losses were primarily driven by ATM asset impairment and disposal in the U.S. and the exit from one of our leased facilities in the U.K.

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Interest Expense, net



	Three Months Ended September 30,								Nine Months Ended September 30,
	2019			2018			% Change		2019			2018			% Change
	(In thousands, excluding percentages)
Interest expense, net	$	6,751		$	8,852		(23.7	)%	$	20,265		$	27,185		(25.5	)%

Percentage of total revenues	1.9		%	2.6		%			2.0		%	2.7		%

Interest expense, net. For the three and nine months ended September 30, 2019, interest expense, net, decreased $2.1 million, or 23.7%, and $6.9 million, or 25.5%, respectively, compared to the same periods of 2018. This decrease was attributable to a comparatively lower outstanding long-term debt balance and a lower weighted average interest rate following the December 2018 redemption of our $250.0 million 5.125% Senior notes. These borrowings were refinanced under our revolving credit facility with a lower interest rate. For additional information related to our outstanding borrowings, see Item 1. Financial Statements, Note 9. Long-Term Debt.

Other Income

During the three and nine months ended September 30, 2019, we recognized gains of $6.8 million and $15.5 million, respectively, in Other income to revise the estimated fair value of the acquisition related contingent consideration liability. These amounts partially offset foreign currency translation gains/losses and other non-operating costs. For additional information on the acquisition related contingent consideration, see Item 1. Financial Statements, Note 14. Fair Value Measurements .

Income Tax Expense



	Three Months Ended September 30,								Nine Months Ended September 30,
	2019			2018			% Change		2019			2018			% Change
	(In thousands, excluding percentages)
Income tax expense	$	4,086		$	7,854		(48.0	)%	$	10,780		$	10,409		3.6	%

Effective tax rate	16.4		%	47.2		%			23.2		%	51.6		%

Income tax expense. The Company’s income tax expense for the three and nine months ended September 30, 2019, totaled $4.1 million and $10.8 million, respectively, resulting in effective tax rates of 16.4% and 23.2%, respectively. The Company's income tax expense for the three and nine months ended September 30, 2018, totaled $7.9 million and $10.4 million, respectively, resulting in effective tax rates of 47.2% and 51.6%, respectively. The decrease in the tax rate for the three and nine months ended September 30, 2019 compared to the same period of 2018 was primarily attributable to tax benefits from the utilization of interest deductions disallowed in the prior year and the nontaxable gain recorded to revise the fair value of the acquisition related contingent consideration liability.

Non-GAAP Financial Measures

DISCLOSURE OF NON-GAAP FINANCIAL INFORMATION

In order to assist readers of our consolidated financial statements in understanding the operating results that management uses to evaluate the business and for financial planning purposes, we present the following non-GAAP measures as a complement to financial results prepared in accordance with U.S. GAAP: EBITDA, Adjusted EBITDA, Adjusted EBITA, Adjusted Net Income, Adjusted Net Income per diluted share, Adjusted Free Cash Flow, and certain other results presented on a constant-currency basis. We believe that the presentation of these measures and the identification of notable, non-cash, non-operating costs 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. We also believe that these measures are relevant and provide useful information widely used by analysts, investors and other interested parties in our industry to provide a baseline for evaluating and comparing our operating performance and, in the case of free cash flow, our liquidity results. 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.

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Furthermore, 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 contained within our consolidated financial statements. The non-GAAP measures that we use are not defined in the same manner by all companies and therefore may not be comparable to other similarly titled measures of other companies.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin

EBITDA is calculated by adding interest expense, income tax expense, depreciation and accretion and amortization to net income. EBITDA and Adjusted EBITDA exclude these items as these amounts can vary substantially from company to company within the Company’s industry depending upon capital structures, tax jurisdictions, accounting methods, the book values of assets and the methods by which the assets were acquired. Adjusted EBITDA also excludes certain non-cash, non-operating costs and/or (if applicable in a particular period) certain costs not anticipated to occur in future periods. These excluded items consist of share-based compensation expense, acquisition and divestiture-related expenses, restructuring expenses, gains or losses on disposal and impairment of assets and other income and expense. Adjusted EBITDA is also calculated to exclude amounts attributable to noncontrolling interests. Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by total revenues.

Adjusted Net Income, Adjusted Net Income per Diluted Share, and Adjusted Tax Rate

Adjusted Net Income represents net income computed in accordance with U.S. GAAP, before amortization of intangible assets and deferred financing costs, gains or losses on disposal and impairment of assets, share-based compensation expense, certain other income and expense amounts, acquisition related expenses, certain non-operating expenses, and (if applicable in a particular period) certain costs not anticipated to occur in future periods (together, the “Adjustments”). The non-GAAP tax rate used to calculate Adjusted Net Income was approximately 23.7% and 23.4% for the three and nine months ended September 30, 2019, respectively, and 24.6% and 24.9% for the three and nine months ended September 30, 2018, respectively. The non-GAAP tax rates represent the GAAP tax rate for the period as adjusted by the estimated tax impact of the items adjusted from the measure. Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by weighted average diluted shares outstanding.

Adjusted Free Cash Flow

Adjusted Free Cash Flow is defined as cash provided by operating activities less the impact of changes in restricted cash due to the timing of payments of restricted cash liabilities and less payments for capital expenditures, including those financed through direct debt, but excluding acquisitions. The Adjusted Free Cash Flow measure does not take into consideration certain other non-discretionary cash requirements such as mandatory principal payments on portions of our long-term debt.

Constant Currency

Management calculates certain GAAP as well as non-GAAP measures on a constant-currency basis using the average foreign currency exchange rates applicable in the corresponding period of the previous year and applying these rates to the measures in the current reporting period to assess performance and eliminate the effect foreign currency exchange rates have on comparability between periods.

Reconciliation of Non-GAAP Financial Statements

Reconciliations of the non-GAAP financial measures used herein to the most directly comparable U.S. GAAP financial measures are presented as follows:

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Net income attributable to controlling interests and available to common shareholders	$	20,864		$	8,781		$	35,654		$	9,780
Adjustments:
Interest expense, net	6,751			8,852			20,265			27,185
Amortization of deferred financing costs and note discount	3,377			3,397			9,999			10,060
Income tax expense	4,086			7,854			10,780			10,409
Depreciation and accretion expense	33,466			30,647			99,644			93,453
Amortization of intangible assets	12,404			12,994			37,407			40,263
EBITDA	80,948			72,525			213,749			191,150

Add back:
Loss on disposal and impairment of assets	637			466			3,101			15,583
Other income ⁽¹⁾	(3,703		)	(1,297		)	(9,454		)	(1,324		)
Noncontrolling interests ⁽²⁾	15			12			46			31
Share-based compensation expense	5,633			4,669			15,367			10,627
Restructuring expenses ⁽³⁾	3,583			1,058			7,046			5,534
Acquisition related expenses ⁽⁴⁾	—			—			—			2,633
Adjusted EBITDA	87,113			77,433			229,855			224,234
Less:
Depreciation and accretion expense ⁽⁵⁾	33,466			30,646			99,644			93,451
Adjusted EBITA	53,647			46,787			130,211			130,783
Less:
Interest expense, net	6,751			8,852			20,265			27,185
Adjusted pre-tax income	46,896			37,935			109,946			103,598
Income tax expense ⁽⁶⁾	11,114			9,332			25,748			25,789
Adjusted Net Income	$	35,782		$	28,603		$	84,198		$	77,809

Adjusted Net Income per share – basic	$	0.79		$	0.62		$	1.83		$	1.69
Adjusted Net Income per share – diluted	$	0.79		$	0.62		$	1.81		$	1.68

Weighted average shares outstanding – basic	45,058,226			46,073,739			46,040,027			45,945,728
Weighted average shares outstanding – diluted	45,504,165			46,476,787			46,475,353			46,386,523


(1)	Includes foreign currency translation gains/losses, the revaluation of the estimated acquisition related contingent consideration, 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 one of the Company's Mexican subsidiaries.


(3)	For the three and nine months ended September 30, 2019, expenses include employee severance costs, facility costs and professional fees related to the 2019 Restructuring Plan. For the three and nine months ended September 30, 2018, expenses include employee severance and other costs incurred in conjunction with a corporate reorganization and cost reduction initiative.


(4)	For the nine months ended September 30, 2018, expenses primarily include employee severance costs and lease termination costs related to the DCPayments acquisition.


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


(6)	For the three and nine months ended September 30, 2019, the non-GAAP tax rate used to calculate Adjusted Net Income was 23.7% and 23.4%, respectively, and 24.6% and 24.9% for the three and nine months ended September 30, 2018, respectively, which represents the Company’s GAAP tax rate as adjusted for the net tax effects related to the items excluded from Adjusted Net Income.

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

(in thousands, excluding percentages)



Consolidated revenue:	Three Months Ended September 30,
	2019						2018		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	333,384	$	7,441	$	340,825	$	329,837	1.1	%	3.3	%
ATM product sales and other revenues	18,123		112		18,235		10,338		75.3		76.4
Total revenues	$	351,507	$	7,553	$	359,060	$	340,175	3.3	%	5.6	%



	Nine Months Ended September 30,
	2019						2018		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	959,067	$	27,782	$	986,849	$	978,789	(2.0	)%	0.8	%
ATM product sales and other revenues	51,531		635		52,166		38,557		33.6		35.3
Total revenues	$	1,010,598	$	28,417	$	1,039,015	$	1,017,346	(0.7	)%	2.1	%



North America revenue:	Three Months Ended September 30,
	2019						2018		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	208,595	$	397	$	208,992	$	200,767	3.9	%	4.1	%
ATM product sales and other revenues	16,113		11		16,124		8,267		94.9		95.0
Total revenues	$	224,708	$	408	$	225,116	$	209,034	7.5	%	7.7	%



	Nine Months Ended September 30,
	2019						2018		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	599,177	$	3,161	$	602,338	$	593,994	0.9	%	1.4	%
ATM product sales and other revenues	44,994		120		45,114		32,026		40.5		40.9
Total revenues	$	644,171	$	3,281	$	647,452	$	626,020	2.9	%	3.4	%

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Europe & Africa revenue:	Three Months Ended September 30,
	2019						2018		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	102,801	$	5,459	$	108,260	$	102,819	—	%	5.3	%
ATM product sales and other revenues	1,907		95		2,002		2,019		(5.5	)	(0.8	)
Total revenues	$	104,708	$	5,554	$	110,262	$	104,838	(0.1	)%	5.2	%



	Nine Months Ended September 30,
	2019						2018		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	292,980	$	18,379	$	311,359	$	304,809	(3.9	)%	2.1	%
ATM product sales and other revenues	6,123		480		6,603		6,323		(3.2	)	4.4
Total revenues	$	299,103	$	18,859	$	317,962	$	311,132	(3.9	)%	2.2	%



Australia & New Zealand revenue:	Three Months Ended September 30,
	2019						2018		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	24,389	$	1,584	$	25,973	$	29,417	(17.1	)%	(11.7	)%
ATM product sales and other revenues	103		6		109		52		98.1		109.6
Total revenues	$	24,492	$	1,590	$	26,082	$	29,469	(16.9	)%	(11.5	)%



	Nine Months Ended September 30,
	2019						2018		% Change
	U.S. GAAP		Foreign Currency Impact		Constant - Currency		U.S. GAAP		U.S. GAAP		Constant - Currency
ATM operating revenues	$	74,906	$	6,243	$	81,149	$	89,078	(15.9	)%	(8.9	)%
ATM product sales and other revenues	414		35		449		208		99.0		115.9
Total revenues	$	75,320	$	6,278	$	81,598	$	89,286	(15.6	)%	(8.6	)%

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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 (in thousands, excluding percentages and per share amounts)



	Three Months Ended September 30,
	2019						2018		% Change
	Non - GAAP ⁽¹⁾		Foreign Currency Impact		Constant - Currency		Non - GAAP ⁽¹⁾		Non - GAAP ⁽¹⁾		Constant - Currency
Adjusted EBITDA	$	87,113	$	2,175	$	89,288	$	77,433	12.5	%	15.3	%
Adjusted Net Income	$	35,782	$	1,004	$	36,786	$	28,603	25.1	%	28.6	%
Adjusted Net Income per share – diluted ⁽²⁾	$	0.79	$	0.02	$	0.81	$	0.62	27.4	%	30.6	%



	Nine Months Ended September 30,
	2019						2018		% Change
	Non - GAAP ⁽¹⁾		Foreign Currency Impact		Constant - Currency		Non - GAAP ⁽¹⁾		Non - GAAP ⁽¹⁾		Constant - Currency
Adjusted EBITDA	$	229,855	$	6,340	$	236,195	$	224,234	2.5	%	5.3	%
Adjusted Net Income	$	84,198	$	2,249	$	86,447	$	77,809	8.2	%	11.1	%
Adjusted Net Income per share – diluted ⁽²⁾	$	1.81	$	0.05	$	1.86	$	1.68	7.7	%	10.7	%


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


(2)	Adjusted Net Income per diluted share is calculated by dividing Adjusted Net Income by the weighted average diluted shares outstanding of 45,504,165 and 46,476,787 for the three months ended September 30, 2019 and 2018, respectively, and 46,475,353 and 46,386,523 for the nine months ended September 30, 2019 and 2018, respectively.

Reconciliation of Adjusted Free Cash Flow



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	(In thousands)
Net cash provided by operating activities	$	176,462		$	74,807		$	231,692		$	184,582
Restricted cash settlement activity ⁽¹⁾	(92,983		)	(361		)	(22,629		)	(25,709		)
Adjusted net cash provided by operating activities	83,479			74,446			209,063			158,873
Net cash used in investing activities, excluding acquisitions ⁽²⁾	(35,266		)	(26,675		)	(90,319		)	(73,357		)
Adjusted free cash flow	$	48,213		$	47,771		$	118,744		$	85,516

(1)

Restricted cash settlement activity represents the change in our restricted cash excluding the portion of the change that is attributable to foreign exchange and disclosed as part of the effect of exchange rate changes on cash, cash equivalents, and restricted cash in the accompanying Consolidated Statements of Cash Flows. Restricted cash primarily consists of amounts collected on behalf of, but not yet remitted to, certain of the Company’s merchant customers or third-party service providers that are pledged for a particular use or restricted to support these obligations.


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

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Liquidity and Capital Resources

Overview

As of September 30, 2019, we had $ 26.5 million in cash and cash equivalents and $752.9 million in outstanding long-term debt.

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

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

Operating Activities

Net cash provided by operating activities totaled $231.7 million during the nine months ended September 30, 2019, compared to net cash provided by operating activities of $184.6 million during the same period of 2018. Excluding changes in restricted cash during the periods due to the timing of settlements, our cash flows from operating activities were up $50.2 million. This increase is primarily attributable to growth in profits and lower interest payments as well as favorable working capital changes.

Investing Activities

Net cash used in investing activities totaled $99.4 million during the nine months ended September 30, 2019, compared to net cash used in investing activities of $73.4 million during the same period of 2018. The change in net cash used in investing activities during the nine months relative to the prior year was related to the following: i) organic growth projects, including the purchase of ATMs for both new and existing ATM management agreements, ii) technology and product development, iii) investments in our infrastructure, iv) ongoing refreshment of our ATMs and operational assets and v) $9.1 million related to an acquisition in 2019.

Anticipated future capital expenditures. We currently anticipate that our capital expenditures for the year will total approximately $130 million, which is primarily expected to be utilized to support new business growth. We expect such capital expenditures to be funded primarily through our cash flows from operations.

Financing Activities

Net cash used in financing activities totaled $122.5 million during the nine months ended September 30, 2019, compared to cash used in financing activities of $96.2 million during the same period of 2018. During the nine months ended September 30, 2019, we used approximately $50 million to repurchase 1,732,392 Class A ordinary shares and used excess available cash to pay down borrowings under our revolving credit facility. The Board authorization to repurchase up to $50 million of our Class A ordinary shares has now been exhausted.

For information related to our financing facilities, see Item 1. Financial Statements, Note 9. Long-Term Debt.

New Accounting Pronouncements

For information related to accounting pronouncements not yet adopted during 2019, see Item 1. Financial Statements, Note 2. New Accounting Pronouncements.

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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 2018 Form 10-K.

We are exposed to certain risks related to our ongoing business operations, including interest rate risk associated with our vault cash rental obligations and, to a lesser extent, borrowings under our revolving credit facility. The following quantitative and qualitative information is provided about financial instruments to which we were a party at September 30, 2019 and from which we may incur future gains or losses from changes in market interest rates or foreign currency exchange rates. We do not enter into derivative or other financial instruments for speculative or trading purposes.

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

Interest Rate Risk

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

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

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

Outstanding Interest Rate Derivatives Associated with Vault Cash Rental Obligations

North America – Interest Rate Swap Contracts



Notional Amounts U.S. $		Weighted Average Fixed Rate		Notional Amounts CAD$			Weighted Average Fixed Rate		Term
(In millions)				(In millions)
$	1,000	2.06	%	CAD	$	125	2.46	%	October 1, 2019 – December 31, 2019
$	1,300	1.84	%	CAD	$	125	2.46	%	January 1, 2020 – December 31, 2020
$	1,000	1.61	%	CAD	$	125	2.46	%	January 1, 2021 – December 31, 2021
$	800	1.28	%						January 1, 2022 – December 31, 2022
$	400	1.11	%						January 1, 2023 – December 31, 2024

North America - Interest Rate Cap Contracts



Notional Amounts U.S. $		Cap Rate ⁽¹⁾		Term
(In millions)
$	200	3.25	%	January 1, 2021 – December 31, 2023

(1)Maximum amount of interest to be paid each year as per terms of cap. Cost of cap is amortized through vault cash rental expense over term of cap.

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Europe & Africa – Interest Rate Swap Contracts



Notional Amounts U.K. £		Weighted Average Fixed Rate		Term
(In millions)
£	550	0.90	%	October 1, 2019 – December 31, 2019
£	500	0.94	%	January 1, 2020 – December 31, 2020
£	500	0.94	%	January 1, 2021 – December 31, 2021
£	500	0.94	%	January 1, 2022 – December 31, 2022

Australia & New Zealand – Interest Rate Swap Contracts



Notional Amounts AUS $		Weighted Average Fixed Rate		Term
(In millions)
$	150	1.95	%	October 1, 2019 – December 31, 2019
$	140	1.59	%	January 1, 2020 – December 31, 2020
$	40	0.71	%	January 1, 2021 – December 31, 2021

Summary of Interest Rate Exposure on Average Outstanding Vault Cash

The following table presents a hypothetical sensitivity analysis of our annual vault cash rental expense in North America based on our average outstanding vault cash balance and interest rate derivatives for the quarter ended September 30, 2019 and assuming a 100 basis point increase in interest rates (in millions):



North America
Average outstanding vault cash balance	$	1,715
Interest rate swap contracts fixed notional amount	(1,095		)
Residual unhedged outstanding vault cash balance	$	620

Additional annual interest incurred on 100 basis point increase	$	6.20

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

The following table presents a hypothetical sensitivity analysis of our annual vault cash rental expense in Europe & Africa based on our average outstanding vault cash balance for the quarter ended September 30, 2019 and assuming a 100 basis point increase in interest rates (in millions):



Europe & Africa
Average outstanding vault cash balance	$	1,056
Interest rate swap contracts fixed notional amount	(683		)
Residual unhedged outstanding vault cash balance	$	373

Additional annual interest incurred on 100 basis point increase	$	3.73

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The following table presents a hypothetical sensitivity analysis of our annual vault cash rental expense in Australia based on our average outstanding vault cash balance for the quarter ended September 30, 2019 and assuming a 100 basis point increase in interest rates (in millions):



Australia
Average outstanding vault cash balance	$	268
Interest rate swap contracts fixed notional amount	(103		)
Residual unhedged outstanding vault cash balance	$	165

Additional annual interest incurred on 100 basis point increase	$	1.65

As of September 30, 2019, we had an asset of $4.8 million and a liability of $25.5 million recorded in the accompanying Consolidated Balance Sheets related to our interest rate swap contracts, which represented the fair value asset or liability, respectively, of the interest rate swap and foreign currency forward contracts, as derivative instruments are required to be carried at fair value. The fair value estimate was calculated as the present value of amounts estimated to be received or paid to a marketplace participant in a selling transaction. These interest rate swap contracts are valued using pricing models based on significant other observable inputs (Level 2 inputs under the fair value hierarchy prescribed by U.S. GAAP). For each highly effective hedging relationship, the gain or loss on the derivative instrument is reported as a component of the Accumulated other comprehensive loss, net line in the accompanying Consolidated Balance Sheets. The gain or loss is reclassified into earnings in the Vault cash rental expense line in the accompanying Consolidated Statements of Operations in the same period or periods during which the hedged transaction affects earnings and has been forecasted into earnings.

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

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. In November 2018, we entered into a second amended and restated credit agreement (the “Credit Agreement”) increasing the available borrowings under our revolving credit facility to $600 million. On December 19, 2018, we redeemed our outstanding 2022 Notes, drawing the necessary proceeds to fund the redemption from our revolving credit facility. During the quarter ended September 30, 2019, we increased the borrowing capacity on our revolving credit facility to $750 million. As of September 30, 2019, outstanding borrowings under our revolving credit facility, which carries a floating interest rate, were $183.9 million, the majority of which is denominated in U.K. pounds sterling. To mitigate the interest rate risk associated with these borrowings, we entered into interest rate swap contracts to effectively fix the interest rate on a portion of the expected outstanding borrowings. For information related to our financing facilities, see Item 1. Financial Statements, Note 9. Long-Term Debt.

Outstanding Interest Rate Derivatives Associated with Revolving Credit Facility Borrowings



Notional Amounts U.K. £		Weighted Average Fixed Rate		Term
(In millions)
£	80	0.95	%	October 1, 2019 – January 1, 2020
£	50	0.95	%	January 2, 2020 – January 1, 2021

Transition from LIBOR. We are currently evaluating the impact of the transition from LIBOR as an interest rate benchmark to other potential alternative reference rates. Currently we have several debt and derivative instruments that reference LIBOR-based rates. The transition from LIBOR is expected to take place in 2021, and we will continue to assess the impact of this transition. For additional information related to the transition from LIBOR, see Part 1, Item 1A. Risk Factors - Changes in interest rates could increase our operating costs by increasing interest expense under our credit facilities and our vault cash rental costs - in our Annual Report on Form 10-K for the year ended December 31, 2018.

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Foreign Currency Exchange Rate Risk

As a result of our operations in the U.K., Australia, Canada, Germany, South Africa, Mexico, Spain, Ireland, and New Zealand, we are exposed to market risk from changes in foreign currency exchange rates. The functional currencies of our international subsidiaries are their respective local currencies. The results of operations of our international subsidiaries are translated into U.S. dollars using average foreign currency exchange rates in effect during the periods in which those results are recorded and the assets and liabilities are translated using the foreign currency exchange rate in effect as of each balance sheet reporting date. These resulting translation adjustments to assets and liabilities have been reported in Accumulated other comprehensive loss, net within the accompanying Consolidated Balance Sheets. As of September 30, 2019, this accumulated translation loss totaled $64.0 million compared to $66.3 million as of December 31, 2018.

Our consolidated financial results were significantly impacted by changes in foreign currency exchange rates during the three months ended September 30, 2019 compared to the prior year. Our total revenues during the three and nine months ended September 30, 2019 would have been higher by approximately $7.6 million and $28.4 million had the foreign currency exchange rates from the three months ended September 30, 2018 remained unchanged from the prior year. A sensitivity analysis indicates that, if the U.S. dollar uniformly strengthened or weakened 10% against the British pound, Euro, Mexican peso, Canadian dollar, Australian dollar, or South African rand, the effect upon our operating income would have been approximately $1.8 million and $3.5 million for the three and nine months ended September 30, 2019, respectively.

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

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 management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission. Based upon that evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of September 30, 2019 at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

During the third quarter of 2019, we implemented a cloud based Enterprise Resource Planning ("ERP") system and other associated financial consolidation and reporting systems. In connection with this implementation, we have updated the processes that comprise our internal control over financial reporting, as necessary, to accommodate related changes in our systems and business processes. We do not believe this implementation will have an adverse effect on our internal control over financial reporting. Except as disclosed above, there were no other material changes in our internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the three months ended September 30, 2019, 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

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

Item 1A. Risk Factors

You should carefully consider the risks discussed in Part I. Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2018 (“2018 Form 10-K”) and other information included and incorporated by reference in this report. These risks could materially affect our business, financial condition, or future results. There have been no material changes in our assessment of our risk factors from those set forth in our 2018 Form 10-K.

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

The following table presents information with respect to our purchases of Class A ordinary shares during the three months ended September 30, 2019. All of the shares repurchased were canceled.



Period	Total number of shares purchased ⁽¹⁾	Average price paid per share		Total number of shares purchased as part of publicly announced program	Approximate dollar value of shares that may yet be purchased under the program
July 1, 2019 - July 31, 2019	357,819	$	27.95	357,819	$	20,000,044
August 1, 2019 - August 31, 2019	640,336	28.68		640,336	1,638,818
September 1, 2019 - September 30, 2019	56,558	28.87		56,558	—
Total	1,054,713	$	28.44	1,054,713

⁽¹⁾On March 26, 2019, the Company announced a stock repurchase program, under which it was authorized to repurchase up to $50 million of its Class A ordinary shares through August 31, 2020. The Company repurchased 677,679 shares for approximately $20 million during the three months ended June 30, 2019 and 1,054,713 shares for approximately $30 million during the three months ended September 30, 2019. As of September 30, 2019, the Company had completed all repurchases associated with the $50 million authorization.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Item 6. Exhibits



Exhibit Number		Description
31.1*		Certification of the Chief Executive Officer of Cardtronics plc pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Chief Financial Officer of Cardtronics plc pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of the Chief Executive Officer and Chief Financial Officer of Cardtronics plc pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
10.1		Amendment to Employment Agreement by and between Cardtronics USA, Inc. and Gary Ferrera, dated as of July 31, 2019 (incorporated here in by reference to Exhibit 10.1 of the Current Report on Form 8-K, filed by Cardtronics plc on August 1, 2019, File No. 001-37820).
10.2		Employment Agreement by and between Cardtronics UK Limited and Marc Terry, dated as of August 21, 2019 (incorporated here in by reference to Exhibit 10.1 of the Current Report on Form 8-K, filed by Cardtronics plc on August 26, 2019, File No. 001-37820).
10.3		First Amendment To Second Amended and Restated Credit Agreement, dated as of September 19, 2019 (incorporated here in by reference to Exhibit 10.1 of the Current Report on Form 8-K, filed by Cardtronics plc on September 20, 2019, File No. 001-37820).
104		The cover page from this Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted in Inline XBRL.
101.INS*		XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL 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.

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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 30, 2019		/s/ Gary W. Ferrera
		Gary W. Ferrera
		Chief Financial Officer
		(Duly Authorized Officer and
		Principal Financial Officer)

October 30, 2019		/s/ Paul A. Gullo
		Paul A. Gullo
		Chief Accounting Officer
		(Duly Authorized Officer and
		Principal Accounting Officer)