A typical ATM transaction involves the withdrawal of cash from an ATM. The cardholder presents an ATM card, issued by his or her financial institution, at an ATM that may or may not be owned by the same financial institution. The cardholder then enters a personal identification number, or PIN, to verify identity, the cardholder’s account is checked for adequate funds and, if everything is satisfactory, cash is dispensed.

The introduction of surcharge revenue in the ATM market made the deployment of off-premise ATMs economically feasible and attractive for non-financial institutions. Following this shift, according to ATM&Debit News, the number of off-premise ATMs in the United States grew at a rapid pace, increasing in number from approximately 84,000 in 1998 to an estimated 236,000 off-premise ATMs in 2007. Additionally, this period of expansion in the off-premise business model saw a notable shift in the relative prevalence of on- and off-premise ATMs.

As per ATM&Debit News, off-premise ATMs represented approximately 45% of total ATMs in the United States in 1998. By 2007, the market share of off-premise ATMs had grown to approximately 57%. Despite this long-term growth trend, the annual growth rate for off-premise ATMs has slowed considerably since 2003. Furthermore, the number of off-premise ATMs declined since 2005, indicating the continued maturation of the domestic off-premise ATM market.

The maturation of the domestic ATM market has seen an increase in the average surcharge rates charged by ATM operators. According to Dove Consulting, average surcharge rates on off-premise ATM transactions have increased by 21% from 2001 to 2006, rising from $1.48 to $1.79, respectively. On-premise ATMs have exhibited a similar trend, with average surcharge rates growing 20% over the same time period.

The Company generally operates its ATMs under multi-year contracts that provide a recurring and stable source of transaction-based revenue and typically have an initial term of five to seven years. As of September 30, 2007, the Company’s contracts with its top 10 merchant customers had a weighted average remaining life of 8 years.

Recently, the Company has entered into arrangements with financial institutions to brand certain of its Company-owned ATMs. A branding arrangement allows a financial institution to expand its geographic presence for a fraction of the cost of building a branch location and typically for less than the cost of placing one of its own ATMs at that location. Such an arrangement allows a financial institution to rapidly increase its number of branded ATM sites and improve their competitive position. Under these arrangements, the branding institution’s customers are allowed to use the branded ATM without paying a surcharge fee to the Company.

Another type of surcharge-free program the Company offers in addition to branding its ATMs is through its Allpoint and MasterCard nationwide surcharge-free ATM networks. Under the Allpoint network, financial institutions who are members of the network pay the Company a fixed monthly fee per cardholder in exchange for providing their cardholders with surcharge-free access to most of the Company’s domestic owned and/or operated ATMs.

Under the MasterCard network, the Company provides surcharge-free access to most of its domestic owned and/or managed ATMs to cardholders of financial institutions who participate in the network and who utilize a MasterCard debit card. In return for providing this service, the Company receives a fee from MasterCard for each surcharge-free withdrawal transaction conducted on its network.

For the three month period ended September 30, 2007, cost of revenues increased to $85.7 million, or 49.4%, when compared to $57.4 million for the same period in 2006.

For the three month period ended September 30, 2007, selling, general, and administrative expenses, excluding stock-based compensation, increased by $1.8 million, or 31.5%, when compared to the same period in 2006.

For the nine month period ended September 30, 2007, selling, general & administrative expenses, excluding stock-based compensation, increased $5.2 million, or 34.1%.

For the three and nine month periods ended September 30, 2007, interest expense increased by 45.5% and 18.9%, respectively, when compared to the same periods in 2006.