Cardtronics, Inc. 2010 Annual Report and Form 10-K and Form Report Annual 2010 Inc. Cardtronics, Where Cash Meets Commerce Cardtronics 3250 Briarpark Drive, Suite 400 Houston, TX 77042 800.786.9666 cardtronics.com 2010 Annual Report and Form 10-K Corporate Headquarters Cardtronics, Inc. 3250 Briarpark Drive, Suite 400 ‘10 Houston, TX 77042 ‘10 800.786.9666 ‘09 ‘08 ‘09 www.cardtronics.com ‘08 Stock Listing ‘07 Cardtronics, Inc. common stock is listed ‘07 on the NASDAQ Global Market Exchange ‘06 and trades under the ticker symbol CATM. ‘06 Investor Contact Chris Brewster, Chief Financial Officer 832.308.4128 [email protected] 172.8 247.3 358.7 392.4 431.4 $293.6 $378.3 $493.0 $493.4 $532.1 Notice of Annual Meeting Total Transactions Total Revenue The Annual Meeting of Shareholders will be held (in millions) (in millions) at 4:00 p.m. local time on June 15th, 2011 at ‘10 Cardtronics’ headquarters: 3250 Briarpark Drive, ‘09 Suite 400, Houston, TX 77042 ‘06 Transfer Agent ‘07 ‘08 Wells Fargo Shareowner Services 161 North Concord Exchange South St. Paul, MN 55075 800.767.3330 24.6% 22.4% 23.2% 30.2% 32.3% Gross Profit Margin Cautionary Note Regarding Forward-Looking Statements ‘10 ‘10 Except for the historical information and discussions contained herein, statements contained in this annual ‘09 report may constitute “forward-looking statements” within the meaning of the Private Securities Litigation ‘09 Reform Act of 1995. Achieving the results described ‘08 in these statements involves a number of risks, uncertainties and other factors that could cause actual ‘07 results to differ materially, as discussed in Cardtronics’ ‘06 filings with the Securities and Exchange Commission, ‘06 and in the attached Form 10-K. ‘08 ‘07 3 $52.9 $60.6 $81.9 $11 $110.4 0.4 $130.8 $0.32 $0.1$0.13 $0.19 $0.68 $1.00 Adjusted EBITDA* Adjusted Diluted Earnings (in millions) per Share* ©2011 Cardtronics, Inc. *For details on the calculation of Adjusted EBITDA and Adjusted Diluted Earnings per Share, please see the reconciliation included at the end of this annual report A GLOBAL FAMILY OF CONSUMER BRANDS ® A LETTER FROM THE CEO DEAR CARDTRONICS SHAREHOLDERS PERFORMANCE — BY THE NUMBERS In a record-breaking financial year at Cardtronics, revenue exceeded the half-billion dollar threshold for the first time, rising 8% to $532.1 million from $493.4 million in 2009. Perhaps even more impressive, significant double-digit increases highlighted Cardtronics’ bottom-line performance. Adjusted EBITDA* in 2010 totaled $130.8 million, an increase of 19% over 2009; Adjusted Net Income* rose an impressive 51% year-over-year, reaching $41.2 million in 2010; and Adjusted Net Income per Diluted Share* rose 47% from $0.68 in 2009 to $1.00 in 2010. Centrally important to this across-the-board financial growth, transactions on Cardtronics-owned and -serviced ATMs exceeded 431 million in 2010, increasing approximately 10% over 2009. BEHIND THE NUMBERS Cardtronics achieved its 2010 performance on the foundation of a strong core business, improvements in operating costs and Steve Rathgaber robust customer growth. An impressive caliber of companies CEO chose to partner with us, while we continued to make critical strides in all of our key business areas, highlighting Cardtronics’ singular expertise and unique positioning in the market. Each of these deals clearly showcases the value of our franchise, and ARDTRONICS creates a unique point of connection demonstrates how we deliver more value to our partners. for the financial and commercial needs of consumers, • U.S. ATM Branding: New or expanded deals were merchants and financial institutions, facilitating C executed with BB&T, Huntington Bank, PNC Bank and real-time value exchange that drives increased sales and SunTrust in the U.S. In Puerto Rico, Scotiabank became our powers consumer loyalty and satisfaction... where cash meets first non-U.S. ATM branding partner. commerce. • Mexico ATM Branding: In early 2011, Grupo Financiero Banorte, Mexico’s third largest financial institution, agreed Cardtronics has developed a financial kiosk network that to place its brand on 1,000 Cardtronics ATMs in OXXO is nearly impossible to replicate, creating a real-world stores across Mexico, with an additional 1,000 ATMs to community of merchants, financial institutions and consumers. be branded between late 2011 and early 2012. This community allows us to optimize our capital investments by • ATM Managed Services: A new Managed Services driving transactions higher and increasing unit revenue. We contract with Kroger, the nation’s largest grocer, covered have thus made our company into much more than just an approximately 800 ATMs and added another top-ten operator of ATMs. retailer to Cardtronics’ portfolio, while deals with Travelex and Carnival Cruise Lines extended Cardtronics’ ATM Over the past 12 months, my first full year here at Cardtronics, management into major travel and tourism destinations. our management team has been dedicated to realizing the full • Allpoint Network: By early 2011, the Allpoint Network, potential of our powerful network to drive greater benefits for Cardtronics’ surcharge-free ATM network – the largest our partners in both the retail and financial services industries of its kind, totaled over 43,000 ATMs, including new and, in so doing, continuing to become an ever more integral international locations in Australia and Mexico. Deals with part of their businesses. MasterCard and Univision highlighted a growing trend of prepaid card issuers and program managers leveraging In 2010, I am proud to say that Cardtronics delivered the best the Allpoint Network to give cardholders surcharge-free financial performance in the history of the company. cash access. * Please refer to our 10-K for a reconciliation of these non-GAAP measures. • Retail ATM Placements: EZCORP (specialty consumer the world’s largest non-bank owner of ATMs. The Company finance), Ricker Oil Company (convenience stores) and operates over 37,000 ATMs across the globe. Of these, Wegmans (supermarkets) are among the new high- Cardtronics owns nearly 20,000 in the United States, profile retail homes for Cardtronics ATMs. In all, merchant approximately 3,000 in the United Kingdom and over 2,500 ATM placements, excluding managed service locations, in Mexico. We have focused on becoming the ATM service increased over 700 ATMs from year-end 2009 to 2010. provider of choice for blue-chip merchants, and we continue to • United Kingdom Accomplishments: Bank Machine, leverage these powerful brands and their premium locations to Cardtronics’ U.K.-based subsidiary, expanded transactions offer new types of service to financial institutions. in 2010 by 37% year-over-year with a series of impressive accomplishments – growing the popular £5 note machine Cardtronics was a pioneer of the ATM Branding model, portfolio to 300 ATMs, expanding ATM coverage in stores enabling financial institutions of all sizes to increase their of Wal-Mart subsidiary ASDA, launching Bank Machine’s brand visibility and better serve their customers in the most first U.K. financial services ATM convenient locations. This highly popular management program with and successful program has resulted Yorkshire Building Society, in over 12,000 Cardtronics ATMs deploying new signage to carrying financial institution brands increase ATM visibility and more. today. Cardtronics has also been a leader in developing surcharge-free LEADERSHIP EVOLUTION programs for financial institutions. Our During 2010, we instituted Allpoint surcharge-free network reaches organizational changes to better over 26 million cardholders from over align Cardtronics’ management with 1,100 institutions. These are more than the retail and financial services market numbers – they validate our innovative segments fueling the growth of our concepts and represent a powerful company. These changes are already ability to influence retail traffic, thus reaping rewards – both increasing making Cardtronics a more valued retail our visibility with existing clients and partner. dedicating more resources to new sales initiatives. In addition to the overall restructuring, Cardtronics invested in our marketing Cardtronics places a premium on technology enhancements capability by hiring an experienced new Chief Marketing that drive net-new transactions from existing machines, further Officer and additional marketing staff, invested in our people optimizing our investment. As the banking industry continues to by bringing in a new Executive Vice President of Human embrace image-deposit ATM technology, Cardtronics boasts Resources and invested in our existing customers by launching a the fourth largest image-enabled ATM network in the country comprehensive, multi-year client loyalty initiative. with 2,200 advanced function financial kiosks capable of multi-bank image deposit deployed in 7-Eleven stores. We The Cardtronics Board of Directors went through its own improved our support for mobile locator apps, which help our evolution as well. After nine years of dedicated leadership and retail and financial institution partners deliver customers to our stewardship, Fred R. Lummis stepped down as Chairman of the conveniently located ATMs. We launched ATM advertising Board in November. Mr. Lummis had served as chairman since through partner i-design Group Plc. Finally, we completed the June 2001, when the CapStreet Group purchased a controlling transition of all Cardtronics ATMs to our in-house transaction interest in Cardtronics. Concurrent with Mr. Lummis’ departure, processing platform, an important differentiator in delivering the Board appointed Dennis F. Lynch as chairman and also cost savings, improved performance and the introduction of welcomed Mark Rossi as a new independent director. new products and services to the market. Mr. Rossi, currently Senior Managing Director of Cornerstone Equity Investors LLC, brings many years of investment experience Across the pond, Bank Machine has continued to innovate to the Cardtronics Board. I, as well as the entire Cardtronics as well. Green Team, Bank Machine’s own cash-in-transit management team, offer our sincere thanks to Mr.