(2) Acquisitions

Acquisition of the Cardpoint ATM Portfolio

On August 7, 2013, Cardtronics Europe Limited (“Cardtronics Europe”), a newly formed wholly-owned subsidiary of the Company, entered into, and consummated the transactions contemplated by, the Share Sale and Purchase Agreement (the “Purchase Agreement”) including the purchase of all of the outstanding shares issued by Cardpoint Limited (“Cardpoint”) from Payzone Ventures Limited (the “Seller”) and the individuals named as warrantors in the Purchase Agreement.

Pursuant to the Purchase Agreement, Cardtronics Europe acquired all of the outstanding shares issued by Cardpoint for purchase consideration of £100.0 million ($153.5 million) in cash, which included the aggregate amount required to be paid (including principal and interest) in order to fully discharge all of Cardpoint’s outstanding indebtedness to the Seller at closing. Additionally, as part of the Purchase Agreement, Cardtronics Europe entered into a locked box agreement, under which additional cash at closing was paid to the Seller in the amount of approximately £5.9 million ($9.0 million) as additional consideration for earnings since February 28, 2013. No further working capital adjustments were required under the Purchase Agreement. The Company also paid to certain members of Cardpoint’s management transaction bonuses on behalf of the Seller in an aggregate amount of approximately £0.5 million ($0.7 million), pursuant to the Purchase Agreement. The total amount paid for the acquisition was approximately £105.4 million ($161.8 million) at closing, which was financed through borrowings under the Company’s amended revolving credit facility.

As a result of the Cardpoint acquisition, the Company significantly increased the size of its European operations. Cardpoint operated approximately 7,100 ATMs in the U.K. and approximately 800 ATMs in Germany as of the acquisition date, substantially all of which were owned by Cardpoint. Approximately one-fourth of the ATMs deployed in the U.K. are placed with well-known multi-location retailers, whereas the remainder of the ATMs in the U.K. and most of the ATMs in Germany are primarily placed with individual merchants at their retail locations.

The results of operations of the acquired Cardpoint portfolio have been included in the Company's consolidated statement of operations subsequent to the August 7, 2013 acquisition date. Revenue and loss from operations of $46.3 million and $1.7 million, respectively, were included in the year ended December 31, 2013. The loss from operations includes approximately $5.8 million in acquisition-related expenses incurred during the year related to this acquisition.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date (amounts in thousands). The total purchase consideration was allocated to the assets acquired and liabilities assumed, including identifiable intangible assets, based on their respective fair values at the date of acquisition. This allocation resulted in goodwill of approximately $90.9 million, all of which has been assigned to the Company's Europe reporting segment, which now includes operations from both the U.K. and Germany. The recognized goodwill is primarily attributable to expected synergies. None of the goodwill or intangible asset amounts are expected to be deductible for income tax purposes.



	(In thousands)
Cash and cash equivalents	$	4,782
Accounts and notes receivable		619
Inventory		863
Restricted cash		7,522
Prepaid expenses, deferred costs, and other current assets		6,665
Property and equipment		28,548
Deferred tax assets		22,117
Intangible assets		59,673
Goodwill		90,913
Total assets acquired		221,702

Accounts payable		6,052
Accrued liabilities		24,393
Deferred revenue		56
Asset retirement obligations		16,521
Deferred tax liabilities		12,852
Total liabilities assumed		59,874

Net assets acquired	$	161,828

The fair values of intangible assets acquired have been initially estimated by utilizing a discounted cash flow approach, with the assistance of an independent appraisal firm. The intangible assets acquired as part of the Cardpoint acquisition are being amortized on a straight-line basis, and the preliminary fair values consist of the following:


	Fair Values		Useful Lives	Weighted Average Period Before Next Renewal
	(In thousands)
Customer contracts	$	50,291	7 years	3.9 years
Trade name		9,096	15 years	N/A
Non-compete agreements		286	1 year	N/A
Total	$	59,673

Pro Forma Results of Operations

The following table presents the unaudited pro forma combined results of operations of the Company and the acquired Cardpoint portfolio for the years ended December 31, 2013 and 2012, after giving effect to certain pro forma adjustments including: (i) amortization of acquired intangible assets, (ii) the impact of certain fair value adjustments such as depreciation on the acquired property and equipment, and (iii) interest expense adjustment for historical long-term debt of Cardpoint that was repaid and interest expense on additional borrowings by the Company to fund the acquisition.



	2013				2012
	As Reported		Pro Forma		As Reported		Pro Forma
			(Unaudited)				(Unaudited)
	(In thousands, excluding per share amounts)
Total revenues	$	876,486	$	938,962	$	780,449	$	883,350
Net income attributable to controlling interests and available to common stockholders		23,816		24,220		43,591		42,670

Earnings per share – basic	$	0.52	$	0.53	$	0.97	$	0.95
Earnings per share – diluted	$	0.52	$	0.53	$	0.96	$	0.94

The unaudited pro forma financial results do not reflect the impact of other acquisitions consummated by the Company during the year ended December 31, 2013 (see further details below), as the impact would not be material to its condensed consolidated results of operations. The unaudited pro forma financial results assume that the Cardpoint acquisition occurred on January 1, 2012, and are not necessarily indicative of the actual results that would have occurred had those transactions been completed on that date. Furthermore, it does not reflect the impacts of any potential operating efficiencies, savings from expected synergies, or costs to integrate the operations. The unaudited pro forma financial results are not necessarily indicative of the future results to be expected for the consolidated operations.

Other Acquisitions

On March 7, 2013, the Company completed the acquisition of i-design, a Scotland-based provider and developer of marketing and advertising software and services for ATM owners. Additionally, the Company acquired the majority of the assets of Aptus Group, LLC (“Aptus”) on May 1, 2013, Merrimak ATM Group, LLC (“Merrimak”) on June 3, 2013, and CGI, Inc. (“CGI”) on October 1, 2013. Aptus, Merrimak, and CGI were providers of ATM services to fleets of approximately 3,300 ATMs, 4,800 ATMs, and 1,000 ATMs respectively, consisting primarily of merchant-owned machines.

The acquisitions of i-design, Aptus, Merrimak, and CGI did not have a material effect on the Company's consolidated results of operations during the year ended December 31, 2013, both on an individual basis and on a combined basis.