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Article by DailyStocks_admin    (09-30-08 06:35 AM)

Filed with the SEC from Sep 18 to Sep 24:

Global Cash Access Holdings (GCA)
ValueAct Capital reported ownership of 4,338,411 shares (5.6%) of Global Cash Access Holdings , after buying 482,100 shares on Sept. 17 and 18 at $4.45 to $4.71 apiece. ValueAct said it acquired the stake for investment purposes, and may propose changes in operations, governance or capitalization. (GCA)
ValueAct Capital reported ownership of 4,338,411 shares (5.6%) of Global Cash Access Holdings , after buying 482,100 shares on Sept. 17 and 18 at $4.45 to $4.71 apiece. ValueAct said it acquired the stake for investment purposes, and may propose changes in operations, governance or capitalization.

BUSINESS OVERVIEW

Global Cash Access Holdings, Inc. (“the Company” or “Holdings”) is a holding company, the principal asset of which is the capital stock of Global Cash Access, Inc. (“GCA”). GCA directly or indirectly owns all of the assets and either all or a majority of the equity interests of the subsidiaries that operate our business. These subsidiaries include Central Credit, LLC (“Central” or “Central Credit”), Global Cash Access (Canada) Inc. (“GCA Canada”) (formerly known as CashCall Systems Inc.), Global Cash Access (BVI) Inc. (“BVI”), Arriva Card, Inc. (“Arriva”), Global Cash Access Switzerland A.G. (“GCA Switzerland”), Innovative Funds Transfer, LLC (“IFT”) (formerly known as QuikPlay, LLC), Global Cash Access (UK) Ltd. (“GCA UK”), Global Cash Access (HK) Ltd. (“GCA HK”) and GCA (Macau) S.A. (“GCA Macau”). IFT is a joint venture that is 60% owned by GCA and 40% owned by International Game Technology (“IGT”). Unless otherwise indicated, the terms “we,” “us,” “our,” “our company” and “our business” refer to Global Cash Access Holdings, Inc. together with its consolidated subsidiaries.

Overview
We are a provider of cash access products and related services to the gaming industry in the United States and several international markets. Our products and services provide gaming establishment patrons access to cash through a variety of methods, including Automated Teller Machine (“ATM”) cash withdrawals, credit card cash advances, point-of-sale (“POS”) debit card transactions, check verification and warranty services and money transfers. In addition, we also provide products and services that improve credit decision-making, automate cashier operations and enhance patron marketing activities for gaming establishments. Commencing in the third quarter of 2006, we began offering, through Arriva, the Arriva Card, a private-label revolving credit card aimed at consumers who perform cash advance transactions in gaming establishments. In February 2008, we announced that as part of our strategy of focusing on our core electronic payments business, we will discontinue offering the Arriva Card.
We provide cash access products and related services at gaming establishments worldwide. In general, our contracts with gaming establishments are exclusive and range in duration from one to three years.
In 2007, we processed over 90.5 million transactions, which resulted in approximately $21.3 billion in cash being disbursed to gaming patrons. For the year ended December 31, 2007, we generated revenues and operating income of $600.9 million and $72.7 million, respectively.
We began our operations in July 1998 as a joint venture limited liability company among M&C International, entities affiliated with Bank of America, N.A. (“Bank of America”) and First Data Corporation (“First Data”). In September 2000, Bank of America sold its entire ownership interest in us to M&C International and First Data. In March 2004, all of our outstanding ownership interests were contributed to a holding company and all of First Data’s ownership interest in us was redeemed. Simultaneously, Bank of America reacquired an ownership interest in us (the “Recapitalization”). In May 2004, M&C International sold a portion of its ownership interest to a number of private equity investors, including entities affiliated with Summit Partners, and we converted from a limited liability company to a corporation (the “Private Equity Restructuring”). In September 2005, we completed an initial public offering of our common stock. In 2007, M&C International distributed its holdings of our common stock to its two principals, Karim Maskatiya and Robert Cucinotta.
Our principal executive offices are located at 3525 East Post Road, Suite 120, Las Vegas, Nevada 89120. Our telephone number is (800) 833-7110. Our Internet web site address is http://www.globalcashaccess.com. The information on our web site is not part of this Annual Report on Form 10-K or our other filings with the United States Securities and Exchange Commission (“SEC”).
Our Business
Our cash access products and services enable three primary types of electronic payment transactions: ATM cash withdrawals, credit card cash advances and POS debit card transactions. As of December 31, 2007, patrons could complete any of these three transactions at any of our Casino Cash Plus 3-in-1 ATMs, Automated Cashier Machines (“ACMs”) or 3-in-1 Enabled redemption devices. In addition, patrons can complete credit card cash advances and POS debit card transactions at any of our QuikCash kiosks, all of which we own. We also provide check verification and warranty services to gaming establishments that cash patron checks. Commencing in the third quarter of 2006, through Arriva, we began offering the Arriva Card, a private-label revolving credit card aimed at consumers who perform cash advance transactions in gaming establishments. In February 2008, we announced that as part of our strategy of focusing on our core electronic payments business, we will discontinue offering the Arriva Card.
ATM Cash Withdrawals
ATM cash withdrawal transactions represent the largest category of electronic payment transactions that we process, as measured by dollar and transaction volume. In an ATM cash withdrawal, a patron directly accesses funds from a device enabled with our ATM service by either using an ATM card to withdraw funds from his or her bank account or using a credit card to access his or her line of credit; in either event the patron must use the Personal Identification Number (“PIN”) associated with such card. Our processor then routes the transaction request through an electronic funds transfer (“EFT”) network to the patron’s bank or issuer. Depending upon a number of factors, including the patron’s account balance or credit limit and daily withdrawal limit (which is usually $300 to $500 during a 24-hour period and is determined by the patron’s bank or issuer), the bank or issuer will either decline or authorize the transaction. If the transaction is authorized, then the ATM-enabled device dispenses the cash to the customer. For a transaction using an ATM card, the patron’s bank account is debited by the amount of cash disbursed plus a service fee that we assess the patron for the use of ATM service. For a transaction using a credit card, the patron’s credit card account is charged by the amount of cash disbursed plus a service fee that we assess the patron for the use of our ATM service. The service fee is currently a fixed dollar amount and not a percentage of the transaction size. In most circumstances we share the majority of this service fee with our gaming establishment customer for the right to operate on its premises. We also receive a fee, we refer to as reverse interchange, from the patron’s bank for accommodating the bank’s customer.

Credit Card Cash Advances and POS Debit Card Transactions
Patrons can also obtain credit card cash advances and POS debit card transactions using many of our devices. A patron’s credit card cash advance limit is usually a sub-limit of the total credit line and is set by the card-issuing bank. These limits vary significantly and can be larger or smaller than the POS debit limit. A credit card cash advance transaction obligates the patron to repay the issuing bank over time on terms that are preset by the cardholder agreement. A patron’s POS debit card allows him or her to make cash withdrawals at the point of sale in an amount equal to the lesser of the amount of funds in his or her account or a daily limit that is generally five to ten times as large as the patron’s daily ATM limit. A POS debit card transaction immediately reduces the balance in the patron’s account.
When a patron requests a credit card cash advance or POS debit card transaction, our processor routes the transaction request through one of the card associations (e.g., VISA or MasterCard) or EFT networks (e.g., Star, Interlink or Maestro) to the issuing bank. Depending upon several factors, such as the available credit or bank account balance, the transaction is either authorized or declined by the issuing bank. If authorized, the patron’s bank account is debited or their credit card balance is increased by an amount equal to the funds requested plus a service fee that we charge the patron. The service fee is a percentage of the transaction size. If the transaction is authorized, our machines inform the patron that the transaction has been approved. If the transaction involves one of the card associations that have permitted us to complete transactions at an ACM, cash is dispensed. Otherwise, our machines instruct the patron to proceed to the gaming establishment’s cashier to complete the transaction, because credit card cash advances and POS debit card transactions involving other card associations or that are not undertaken at an ACM must currently be completed in face-to-face environments and a unique signature must be received in order to comply with rules of those card associations. Once at the cashier, the patron acknowledges payment of the fee and authorizes the transaction by placing his or her signature on a money order issued by our money order provider and made payable to the gaming establishment in an amount equal to the face amount and receives the face amount in cash. We remit the face amount to our money order provider and retain the fee. The gaming establishment deposits the money order in its own bank, and after a period of two to three days, the money order is presented to our money order provider for payment. In general, we pay the gaming establishment a portion of the service fee as a commission for the right to operate on their premises, although this payment as percentage of the fee is generally smaller for credit card cash advances and POS debit card transactions than for ATM withdrawals. We do not pay commissions in Switzerland and Belgium. In addition, we are obligated to pay interchange fees to the issuing bank and processing costs related to the electronic payment transaction.
Check Verification and Warranty Services
Although the usage of checks relative to other forms of payment is declining, patrons still cash checks at gaming establishments to fund their gaming play. When a patron presents a check at the cashier, the gaming establishment can (a) accept or deny the transaction based on its own customer information and at its own risk; (b) obtain third-party verification information about the check writer and the check to manage its risk; or (c) obtain a warranty on payment of the check which entitles the gaming establishment to reimbursement of the full face amount of the check if it is dishonored.
There are a number of check verification services. One such service is our Central Credit database, which is used primarily by gaming establishments to make credit issuing decisions. Central Credit maintains information on the check cashing history of many patrons. In general, we do not charge separately for check verification queries to our Central Credit database on a per transaction basis, but rather charge a fixed monthly subscription fee.
If a gaming establishment chooses to have a check warranted, it sends a request to a check warranty service provider, asking whether it will warrant the check. If the check warranty service provider warrants payment on the check, the gaming establishment is obligated to pay a fee for that service. The gaming establishment then pays the patron the face amount and deposits the check. If the check is dishonored by the patron’s bank, the gaming establishment invokes the warranty, and the check warranty service provider purchases the check from the gaming establishment for the face amount and then pursues collection activities on its own.
We currently provide check warranty services on two platforms: TRS Recovery Services (formerly known as TeleCheck Recovery Services, Inc.) (“TeleCheck”) and Central Credit Check Warranty. Our Central Credit Check Warranty product is currently the larger of the two platforms as measured by face amount of checks warranted. Under our agreement with TeleCheck, we receive all of the check warranty revenue and we pay a portion of TeleCheck’s operating expenses and warranty expenses. Operating expenses are fixed at a percentage of check warranty revenues. Warranty expenses are defined as any amounts paid by TeleCheck to gaming establishments to purchase dishonored checks. Our agreement further provides that TeleCheck will pay us the actual collections realized within 120 days after a check is purchased, subject to the obligation to pay us a guaranteed minimum amount of dishonored checks. In our Central Credit Check Warranty product, we receive all of the warranty revenue and incur all of the warranty risk, collection responsibility and operating expenses. We use and pay certain third party services to assist us in the warranty decision and the collection processes.

Central Credit
In addition to the three primary types of electronic payment transactions described above, a small number of gaming establishment patrons choose to access funds through credit extended by the gaming establishment. Central Credit is a gaming patron credit bureau specifically designed for the gaming industry to allow gaming establishments to improve their credit-granting decisions. Our Central Credit database contains gaming patron credit history and transaction data on gaming patrons. Our gaming credit reports are comprised of information recorded from patron credit histories at hundreds of gaming establishments. We provide such information to gaming establishments, who use that data, among other things, to determine if or how much credit they will grant credit to a patron. At a gaming establishment’s request, we can augment the information provided in our gaming credit reports with traditional credit reports or bank ratings provided by third-party consumer credit bureaus and bank reporting agencies. We charge our customers for access to gaming patron credit reports on a monthly basis; our fees are a combination of a fixed minimum fee plus per-transaction charges for certain requests.
Other
We also market money transfer services that allow patrons to receive money transfers at gaming establishments and provide information services that automate cashier operations and enhance patron marketing activities. In the third quarter of 2006, we launched the Arriva Card, a credit card for consumers who perform cash advance transactions in gaming establishments. CIT Bank is the issuer of the card and provides the credit to the customers, while Arriva is the administrator and servicer of Arriva Card accounts. As servicer, we earn interest and other fees from customers related to the use of their Arriva Cards. In February 2008, we announced that as part of our strategy of focusing on our core electronic payments business, we will discontinue offering the Arriva Card.
Our Products and Services
Our customer solutions consist of cash access products and services, information services, cashless gaming products and credit card servicing.

Casino Cash Plus 3-in-1 ATM is an unmanned, cash-dispensing machine that offers patrons a quick way to access cash through ATM cash withdrawals, POS debit card transactions and credit card cash advances using our patented “3-in-1 rollover” functionality. Our patented “3-in-1 rollover” functionality allows a gaming patron to easily convert an unsuccessful ATM cash withdrawal into a POS debit card transaction or a credit card cash advance. When a patron is denied a standard ATM transaction, our “3-in-1 rollover” functionality automatically provides the option of obtaining funds via a POS debit card transaction or a credit card cash advance. For authorized ATM transactions, the Casino Cash Plus 3-in-1 ATM dispenses cash to the patron. For successful POS debit card transactions and credit card cash advances, once the transaction is authorized, the Casino Cash Plus 3-in-1 ATM instructs the patron to proceed to the cashier who completes the transaction by undertaking certain procedures in accordance with the rules of the major card associations, printing the money order, and dispensing cash to the patron. In addition to our own ATM, we have a strategic alliance with Capital One, N.A. (“Capital One”), pursuant to which we have incorporated our “3-in-1 rollover” functionality into Capital One ATMs and redemption devices that are located in gaming establishments. As of December 31, 2007 we had incorporated our “3-in-1 rollover” functionality into 166 Capital One ATMs and redemption devices that are located in gaming establishments.
QuikCash is the brand name of our stand-alone, non-ATM cash advance kiosks for the gaming industry. Our QuikCash kiosks are customer-activated terminals that provide patrons with access to credit card cash advances and POS debit card transactions. Once the transaction is authorized, the patron is instructed to proceed to the cashier who undertakes certain procedures in accordance with the rules of the major card associations, prints the money order, and dispenses cash to the patron.
Automated Cashier Machine (“ACM”) is an unmanned, cash-dispensing “virtual cashier” which was designed to provide gaming establishment patrons with credit card cash advances, POS debit card transactions, and ATM cash withdrawals as well as check cashing services without the need to visit the cashier after the initial “registration transaction.” Our ACMs provide gaming patrons the same cash access features as our Casino Cash Plus 3-in-1 ATMs. After an initial face-to-face enrollment transaction performed with the assistance of a gaming establishment’s cashier, our ACMs use biometric facial recognition technology, as a surrogate for face-to-face interaction with the cashier, to verify the patron’s identity. ATM transactions, check cashing transactions, POS debit card transactions and credit card cash advance involving one of the major card associations can be completed at the ACM without the assistance of a cashier. We assume chargeback liability for any credit card cash advance transaction in which we do not obtain a contemporaneous cardholder signature, which may result in increased chargeback liability. The use of biometric facial recognition is not an accepted surrogate for face-to-face interaction by other major card associations. We have been working with the card associations to achieve broader acceptance of biometric facial recognition as an approved transaction completion protocol.
Check verification and warranty services allow gaming establishments to manage or eliminate risk on patron checks that they cash. A gaming establishment can query our Central Credit database to review the check cashing history of a gaming establishment patron before deciding whether to cash the patron’s check. If the gaming establishment wants additional protection against loss, it can seek a warranty on payment of the check. We have an exclusive relationship with TeleCheck to market check warranty services to gaming establishments. As an alternative to TeleCheck’s check warranty service, we have developed our own Central Credit Check Warranty service that is based upon our Central Credit database, our proprietary patron transaction database, third-party risk analytics and actuarial assumptions.
Money transfer services are provided through a contractual relationship with Western Union Financial Services, Inc. (“Western Union”). We are the worldwide exclusive marketer to the gaming industry of Western Union’s electronic and paper-based systems for receiving funds transfers at gaming establishments. Western Union contracts directly with gaming establishments and we receive a monthly payment based upon the number of transactions completed.
Information Services
We market our information services to gaming establishments to improve credit decision-making, to automate cashier operations and to enhance patron marketing activities.

Improve Credit Decision-Making
Central Credit is the leading gaming patron credit bureau, which allows gaming establishments to improve their credit-granting decisions. Our Central Credit database contains decades of gaming patron credit history and transaction data on millions of gaming patrons. Our gaming credit reports are comprised of information recorded from patron experiences at hundreds of gaming establishments. We provide such information to gaming establishments, who use that data, for among other things, to determine if or how much credit they will grant to a patron. To allow gaming establishments to improve their credit-granting decisions, Central Credit offers a variety of tools, including underwriting of gaming patron credit requests, and gaming credit reports. At a gaming establishment’s request, we can augment the information provided in our gaming credit reports with traditional credit reports or bank ratings obtained from third-party consumer credit bureaus and bank reporting agencies.
Automated Cashier Operations
QuikCash Plus (“QCP”) Web is a proprietary browser-based, full service cash access transaction processing system for gaming establishment cashier operations that runs on a gaming establishment’s own computer hardware. Cashiers using QCP Web can process credit card cash advances, POS debit card transactions, check verification and warranty services and money transfer services online through a single terminal. QCP Web reduces cage operating complexity, improves transaction times, saves space by eliminating multiple pieces of hardware and reduces training requirements for cage operators, potentially lowering operating costs for gaming establishments. QCP Web is delivered as an application service with a customizable user interface that allows gaming establishments to add additional workstations by simply connecting them to the application server. In addition, QCP Web can assist gaming establishments in satisfying legal reporting requirements by providing information that may assist in completing required regulatory reports such as Currency Transaction Reports (“CTRs”) and Suspicious Activity Reports (“SARs”).
Enhance Patron Marketing
Gaming establishment marketing professionals can use our patron data to develop, implement and refine their customer loyalty programs. Because we have data on patron cash access activity across multiple gaming establishments, we are uniquely able to help an operator understand how much of a patron’s cash access activity, in aggregate, is being done in other gaming establishments in order to gauge the patron’s loyalty to the gaming establishment.
QuikReports is a browser-based reporting tool that provides marketing professionals with real-time access to, and analysis of, information on patron cash access activity. We provide this information through a secure Internet connection at user-specified levels of detail ranging from aggregated summary information to individual cash access transactions. For example, an operator may use QuikReports to focus its marketing efforts on target patrons by generating a report of the patrons who accessed the greatest amounts of cash at the operator’s gaming establishment during a specified period, and comparing the amounts of cash accessed at the operator’s gaming establishments with the aggregate amounts of cash accessed at other gaming establishments that are part of our network. A gaming establishment may also use QuikReports to monitor or analyze the cash access activities of its patrons to determine peak periods, the relative popularity of various cash access methods, or the traffic volumes, at particular machines in particular locations.
QuikMarketing. Through our QuikMarketing service, we query our proprietary patron transaction database using criteria supplied by the gaming establishment. We then assist in the distribution through a third-party mailhouse of gaming establishment-supplied marketing materials to patrons in our database that match target patron criteria supplied by the gaming establishment. Our proprietary patron transaction database includes information that is captured from transactions we process in which personal information is available; ATM transactions are not included. Patrons may “opt out” of having their names included in QuikMarketing mailing lists
Cashless Gaming Products
A recent trend in gaming has been the movement towards cashless gaming as a more efficient means for gaming operators to manage their slot machine operations. Cashless gaming, also known as “ticket-in-ticket-out” (“TITO”), reduces the amount of cash utilized in slot machines by dispensing bar-coded tickets instead of cash for jackpots and cash-outs. To capitalize on the movement towards cashless gaming initiatives, we have developed, together with our strategic partners, products that facilitate an efficient means of accessing funds in a cashless gaming environment. Our cash access services are platform independent and our existing infrastructure has been designed to be adaptable to new platforms and/or operating environments.
3-in-1 Enabled Redemption Device is a multi-function patron kiosk, which incorporates our “3-in-1 rollover” functionality for cash access into self-service kiosks for slot ticket redemption services provided by redemption device manufacturers, including NRT Technology Corporation (“NRT”). When a patron presses the cash out button on a cashless slot machine, the patron receives the value of the winnings on a paper ticket dispensed from a printer embedded in the slot machine.

The ticket can then be inserted into other slot machines or exchanged for cash at a redemption device. The availability of our cash access services on these slot ticket redemption devices provides us with additional points of contact with gaming patrons at locations that are closer to the slot machines than traditional cash access devices that are typically located on the periphery of the area within the gaming establishment where gaming activity is conducted. These additional points of contact provide gaming patrons with more opportunities to access their cash with less cashier involvement, thereby creating labor cost savings for gaming establishments. In addition, by incorporating our cash access services into a redemption device, we enjoy the benefit of the redemption device manufacturer’s existing relationships with gaming establishments and its sales and marketing efforts directed towards additional gaming establishments. We have the exclusive right to provide cash access services on self-service redemption devices serviced by NRT. We have a similar alliance with Western Money Systems, another provider of slot ticket and player point redemption kiosks, subject to completion of development and regulatory approval. We have a similar alliance with Glory (U.S.A.) Inc.

MANAGEMENT DISCUSSION FROM LATEST 10K

Overview
We are a provider of cash access products and related services to the gaming industry in the United States and several international markets. Our products and services provide gaming establishment patrons access to cash through a variety of methods, including ATM cash withdrawals, credit card cash advances, POS debit cash advances, check cashing and money transfers. In addition, we also provide products and services that improve credit decision-making, automate cashier operations and enhance patron marketing activities for gaming establishments.
We began our operations as a joint venture limited liability company among M&C International and entities affiliated with Bank of America Corporation and First Data in July 1998. In September 2000, Bank of America Corporation sold its entire ownership interest in us to M&C International and First Data. In March 2004, GCA issued $235 million in aggregate principal amount of 8 3/4% senior subordinated notes due 2012 and borrowed $260 million under senior secured credit facilities. Global Cash Access Holdings, Inc. was formed to hold all of the outstanding ownership interests of Global Cash Access, Inc. and has guaranteed the obligations under the senior secured credit facilities. A substantial portion of the proceeds of these senior subordinated notes and senior secured credit facilities were used to redeem all of First Data’s ownership interest in us and a portion of M&C International’s ownership interest in us through a recapitalization (the “Recapitalization”), in which Bank of America Corporation reacquired an ownership interest in us. In May 2004, we completed a private equity restructuring (the “Private Equity Restructuring”) in which M&C International sold a portion of its ownership interest in us to a number of private equity investors, including entities affiliated with Summit Partners, and we converted from a limited liability company to a Delaware corporation.
In September 2005, we completed an initial public offering of common stock. In connection with that offering, our various equity securities that were outstanding prior to the offering were converted into common stock. In addition, we became a guarantor, on a subordinated basis, of Global Cash Access, Inc.’s senior subordinated notes. In 2007, M&C International distributed its holdings of our common stock to its two principals, Karim Maskatiya and Robert Cucinotta.
Other than insubstantial assets that are immaterial in amount and nature, the sole asset of Global Cash Access Holdings, Inc. is the capital stock of Global Cash Access, Inc. The consolidated financial data set forth and discussed below reflects our financial condition as if Global Cash Access, Inc. had been a wholly-owned subsidiary of Global Cash Access Holdings, Inc. during each of periods and at the dates presented.
In connection with our conversion from a limited liability company to a corporation for United States federal income tax purposes, we recognized deferred tax assets and liabilities from the expected tax consequences of differences between the book basis and tax basis of our assets and liabilities at the date of conversion into a taxable entity. Prior to our conversion to a corporation, we operated our business as a limited liability company that was treated as a pass through entity for United States federal income tax purposes, making our owners responsible for taxes on their respective share of our earnings. The pro forma information presented with our consolidated statements of income reflects the expected tax effects had we operated our business through a taxable corporation during all periods presented.
Principal Sources of Revenues and Expenses
We derive our revenues as follows:
Cash Advance . Cash advance revenues are comprised of transaction fees assessed to gaming patrons in connection with credit card cash advances and POS debit card transactions at the time the transactions are authorized. Such fees are based on a combination of a fixed amount plus a percentage of the face amount of the credit card cash advance or POS debit card transaction amount. The average amount disbursed per cash advance transaction has increased in recent years, contributing to our revenue growth. We expect this trend to continue.
ATM . ATM revenues are comprised of transaction fees in the form of cardholder surcharges assessed to gaming patrons in connection with ATM cash withdrawals at the time the transactions are authorized and reverse interchange fees paid to us by the patrons’ issuing banks. Cardholder surcharges are recognized as revenue when a transaction is initiated and reverse interchange is recognized as revenue on a monthly basis based on the total transactions occurring during the month. The cardholder surcharges assessed to gaming patrons in connection with ATM cash withdrawals are currently a fixed dollar amount and not a percentage of the transaction amount. The number of transactions completed at our ATMs, and the average surcharge assessed to patrons have both increased in recent years, contributing to our revenue growth. We expect these trends to continue.

Check Services . Check services revenues are principally comprised of check warranty revenues and are generally based upon a percentage of the face amount of checks warranted. These fees are paid to us by gaming establishments. In some cases, gaming establishments pass on the fees to patrons. From 2002 to 2004, the face amount of checks warranted declined. In the fourth quarter of 2004, we introduced our Central Credit Check Warranty product, and its successful adoption in the marketplace has contributed to an increase in the face amount of checks warranted. This has been the principal reason that check services revenues increased in 2005 and 2006.
Central Credit and Other Revenues . Central Credit revenues are based upon either a flat monthly unlimited usage fee or a variable fee structure driven by the volume of patron credit histories generated, while other revenues are primarily based on a fee for specific service performed.
Our principal costs and expenses include:
Cost of Revenues (exclusive of Depreciation and Amortization). Cost of revenues are costs and expenses directly related to the generation of revenue and exclude depreciation and amortization. For cash advance, ATM and, to a much lesser extent, check services, we pay a commission to the gaming establishment at which the transaction occurs. Commissions are the largest component of cost of revenues (exclusive of depreciation and amortization). We expect commissions to increase as a percentage of revenue as new contracts are signed or existing contracts are renewed. We pay credit card associations and POS debit networks interchange fees for services they provide in routing transactions through their networks. In addition, we pay fees to participate in various ATM networks. The amounts of these interchange fees are determined by the card associations and networks in their sole discretion, and are subject to increase in their discretion from time to time. Many of our cash advance contracts enable us to pass through to our gaming establishment customers, who may in turn pass through to patrons, the amount of any increase in interchange or processing fees. In the past, the major card associations have increased interchange rates at least annually, and they may do so in the future. We pay connectivity and processing fees to our network services providers. We incur warranty expense when checks that we have warranted through our Central Credit check warranty service or that TeleCheck has warranted through its check warranty service are dishonored upon presentment for payment. Our contract with TeleCheck limits our warranty expense for checks warranted by TeleCheck to a maximum percentage of the total face amount of dishonored checks. We have no limits on warranty expense for our Central Credit check warranty service. Other cost of revenues (exclusive of depreciation and amortization) consists primarily of costs related to delivering our Central Credit service and our patron marketing activities.
Operating Expenses . Operating expenses consist primarily of salaries and benefits, armored carrier expenses, bank fees, legal expenses, telecommunications expenses and the cost of repair and maintenance on our cash access devices.
Interest Income . We generate interest income on the amount of cash in our bank accounts and on cash that is deposited into accounts to settle our credit card cash advance and POS debit card transactions.
Interest Expense . Interest expense includes interest incurred on our senior secured credit facilities and our senior subordinated notes, and the amortization of deferred financing costs. Interest expense also includes the cash usage fees associated with the cash used in our ATMs.
Loss on Early Extinguishment of Debt . Loss on early extinguishment of debt includes the redemption premiums paid to retire our borrowings and the write-off of the deferred financing costs related to retired borrowings.
Income Tax . Our earnings are subject to taxation under the tax laws of the jurisdictions in which we operate. Prior to our conversion to a Delaware corporation, our domestic earnings were not subject to taxation because we were organized as a Delaware limited liability company, which is a flow-through entity for tax purposes. Subsequent to our conversion to a Delaware corporation, our domestic earnings have been subject to corporate taxation.
Minority Interest, Net of Tax . We operate IFT, a joint venture with IGT. We own 60% of the equity interests of IFT and IGT owns 40% of the equity interests. The joint venture was formed to develop and market cash access products using slot tickets. The minority interest shown on the consolidated financial statements reflects the addition to our net income of the 40% of IFT’s losses that are attributable to IGT net of the expected tax benefit associated with those losses.

Key Events in 2007
•
The employment of Kirk Sanford and Harry Hagerty, the Company’s former chief executive officer and former chief financial officer, respectively, ceased in July and October, respectively.

•
William Harris resigned from the Board of Directors in August.

•
On September 1, 2007, many of the Company’s casino customers in the United Kingdom (“UK”) chose to discontinue the provision of the Company’s credit card cash advance services as a result of the UK Gambling Act 2005 becoming effective.

•
Scott Betts, the Company’s current chief executive officer, joined the Company on October 31, 2007.

•
On November 14, 2007, we announced the commencement of an internal investigation related to allegations by an individual whose identity was not made known to the Company. On December 21, 2008, we announced the completion of this internal investigation, which resulted in no finding of evidence of fraud or intentional misconduct to substantiate any of the allegations.
Results of Operations
Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

Total Revenues
Total revenues for the year ended December 31, 2007 were $600.9 million, an increase of $52.7 million, or 9.6%, as compared to the year ended December 31, 2006. This increase was primarily due to the reasons described below.
Cash Advance . Cash advance revenue for the year ended December 31, 2007 was $316.0 million, an increase of $29.0 million, or 10.1%, as compared to the year ended December 31, 2006. This increase was driven by increases in both the total number of cash advance transactions occurring at our cage sites or ATM’s within our customers’ facilities and an increase in the average amount of cash advanced per transaction.
ATM . ATM revenue for the year ended December 31, 2007 was $240.6 million, an increase of $18.9 million, or 8.5%, as compared to the year ended December 31, 2006. The increase was primarily attributable to an increase in the number of transactions occurring at the ATM’s that we manage at our customers’ properties.
Check Services . Check services revenue for the year ended December 31, 2007 was $31.2 million, an increase of $2.0 million, or 7.0%, as compared to the year ended December 31, 2006. This increase was driven both by an increase in the number of checks warranted and an increase in the total face value of checks warranted.
Central Credit and Other . Central Credit and other revenues for the year ended December 31, 2007, were $13.1 million, an increase of $2.9 million, or 28.3%, as compared to the year ended December 31, 2006. The increase was primarily due to the addition of new contracts for credit check services.
We expect revenue in 2008, excluding the contemplated acquisition of Certegy Gaming Services, to be largely consistent with those amounts seen in 2007 as total gaming patronage and revenues began to decline in late 2007. We expect those trends to continue into 2008.
Costs and Expenses
Cost of Revenues (exclusive of Depreciation and Amortization) . Cost of revenues (exclusive of depreciation and amortization) increased 11.6% from $389.3 million to $434.4 million. As a percentage of revenue, Cost of revenue (exclusive of depreciation and amortization) increased from 71.0% in 2006 to 72.3% in 2007. This increase is primarily due to an increased proportion of interchange fees driven by the increased proportion of revenue coming from cash advance transactions and increased commissions paid to our customers as a percentage of revenue resulting from renewals at rates less favorable to the Company in 2007. We expect that commissions and interchange will continue to increase, and we expect that in 2008 cost of revenues (exclusive of depreciation and amortization) will increase at a rate faster than revenues.
Operating Expenses . Operating expenses for the year ended December 31, 2007 were $82.0 million, an increase of $18.2 million, or 28.5%, as compared to the year ended December 31, 2006. This increase in operating expenses is primarily attributed to: 1) an increase in professional services fees related to the conduct of an internal investigation in the fourth quarter of 2007 of approximately $4.3 million, 2) an increase in non-cash stock compensation expense of $13.1 million due primarily to departure of our former CEO and CFO resulting in an accelerated recognition of otherwise amortizing costs, and 3) approximately $3.2 million of additional payroll expense from the growth in average head count and approximately $0.8 million in termination benefits to former executives. Offsetting these increases are other operating income of 1) $2.6 million related to our settlement of the Visa Check/MasterMoney Antitrust Litigation and 2) $1.0 million in recovery of escheatment items related to our booth operations. We expect operating expenses to decrease in 2008 compared to those levels experienced in 2007.
Depreciation and Amortization . Depreciation expense for the year ended December 31, 2007 was $6.3 million, an increase of $1.9 million, or 44.2%, as compared to the year ended December 31, 2006. This increase was primarily driven by increased capital expenditures resulting from increased ATM placement at our customers’ properties. Amortization expense, which relates principally to computer software, customer contracts and our 3-in-1 rollover patent was flat in 2007 as compared to 2006. We do not expect depreciation and amortization to vary significantly in 2008 from those amounts incurred in 2007.
Primarily as a result of the factors described above, operating income for the year ended December 31, 2007 was $72.7 million, a decrease of $12.5 million, or 14.7%, as compared to the year ended December 31, 2006.

Interest Income (Expense), Net. Interest income (expense), net, was $34.5 million in 2007, a decrease of $7.6 million, or 18.0%, from $42.0 million in 2006. Interest income was $3.7 million in 2007, an increase of $0.2 million, or 5.3%, as compared to 2006, due primarily to higher interest rates in 2007 as compared to 2006. Interest expense for the year ended December 31, 2007, was $38.1 million, a decrease of $4.0 million, or 9.4%, as compared to December 31, 2006. Interest expense on borrowings (including amortization of deferred financing costs) was $22.2 million in 2007 as compared to $26.4 million in 2006. The decrease in interest expense was largely due to a lower average amount of outstanding indebtedness in 2007. The cash usage fee for cash used in our ATMs is included in interest expense. ATM cash usage fees were $15.9 million in 2007 as compared to $15.7 million in 2006, an increase of $0.2 million or 1.5%. The increase resulted primarily from increases in LIBOR on which those funds are priced to 5.6% in 2007 as compared to 5.4% in 2006. The average balance of ATM cash in 2007 was $285.2 million, compared to $289.2 million in 2006. In 2006, we incurred losses on early extinguishment of debt of $3.4 million resulting from the write-off of deferred financing fees from our refinancing of our senior secured indebtedness. Assuming a constant level of LIBOR, we expect that interest income (expense), net will decline in 2008 as a result of lower anticipated levels of outstanding indebtedness.
Primarily as a result of the foregoing, income before income tax provision and minority ownership loss was $38.2 million for the year ended December 31, 2007, a decrease of $5.0 million, or 11.5%, as compared to the prior year.
Income Tax . Income tax expense was $14.7 million for the year ended December 31, 2007. The decrease in income tax expense during 2007 is primarily attributable to a decrease in taxable income as well as a slighty greater effective US federal tax rate. The higher effective rate of 38.9% in 2007 was principally due to the significant increase in non-deductibility of expense related to certain equity awards granted to our employees offset by tax basis adjustments related to certain of our subsidiary tax-based carrying values.
Primarily as a result of the foregoing, income before minority ownership loss was $23.5 million for the year ended December 31, 2007, a decrease of $3.0 million, or 11.2%, as compared to the prior year.
Minority Ownership Loss, net of Tax. Minority ownership loss, net of tax, attributable to IFT for the year ended December 31, 2007 was $236,000, an increase of $53,000 or 29.0% from $183,000 for the year ended December 31, 2006. We expect that IFT will record a loss in 2008 as well.
Primarily as a result of the foregoing, net income was $23.7 million for the year ended December 31, 2007, a decrease of $2.9 million, or 10.9%, as compared to the prior year.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

Three months ended June 30, 2008 compared to three months ended June 30, 2007

Total Revenues
Total revenues increased by 11% and 4% during the three and six month ended June 30, 2008. Increases in revenue were driven by the integration of CGS effective April 1, 2008. These increases were offset by the cessation of cash advance services in the UK in September of 2007 driven by changes in the regulatory environment in that jurisdiction. Excluding the accounts acquired in the CGS acquisition, revenue declined by 5.2% and 4.2% in the three and six months ended June 30, 2008, respectively. We define same-store as revenue derived from a gaming property that was operating on GCA’s platform during the entire reference period excluding those revenues derived from CGS customers. The increase in revenue is further discussed on a product basis below:
Cash Advance Revenue. An increase in cash advance revenue of 3% in the three months in the period ended June 30, 2008 resulted from the integration of CGS’ operations as of April 1, 2008. The equivalent prior period for the three months ended June 30, 2007 did not include CGS activity. This increase was offset due to the cessation of the cash advance product in the UK beginning in September of 2007 as a result of complying with changing regulatory requirements in that jurisdiction, and a decline in the average face amount of cash advance transactions conducted by patrons to our gaming customers’ properties, resulting in a decline in the average revenue per cash advance transaction. Revenue declined 1% in the six month period ended June 30, 2008 compared to the equivalent prior period as the declines resulting in the cessation of the UK business and the decline in the average revenue per cash advance transaction were greater than the revenue contributed by the integration of CGS effective April 1, 2008.
ATM Revenue. An increase in ATM revenue resulted from the integration of CGS’ operations as of April 1, 2008. The equivalent prior periods for the three and six months ended June 30, 2008 did not include CGS activity. An increase in the number of transactions by 3.9 million was partially offset by the decrease in the average revenue per ATM transaction.
Check Services Revenue. An increase in check services revenue resulted from the integration of CGS’ operations as of April 1, 2008. The equivalent prior periods for the three and six months ended June 30, 2008 did not include CGS activity. An increase in the revenue per check warranty transaction of $0.93 compounded by an increase in the number of check warranty transactions resulted in an overall increase in check service revenue.
Overall, revenue is expected to increase for the remaining quarters of 2008 as compared to the same period of 2007 due to the integration of the CGS acquisition offset by declines in transactions and average revenue per transaction at properties in place during 2008.
Costs and Expenses
Cost of Revenue, exclusive of depreciation and amortization, increased by 13% and 6% during the three and six months ended June 30, 2008, respectively, compared to the equivalent prior periods. These increases were greater than the rate of revenue increase during the same periods resulting in a lower gross margin percentage in the current year periods compared to the prior year periods. This gross margin percentage deterioration is primarily related to the integration of CGS which had gross margin percentage in their customer base significantly below those of GCA.
Overall, cost of revenue, exclusive of depreciation and amortization, as a percentage of revenues is expected to increase for the remaining quarters of 2008, as compared to the same period of 2007, due to the integration of CGS.
Operating expenses increased by 26% and 17% during the three and six months ended June 30, 2008, respectively. The primary driver of the increase in operating expenses is due to the integration of CGS. As a result of the integration, we incurred various costs associated with migration of CGS’ customers to our operating platform, increased our booth employee count significantly, and increased our ATM operating costs in order to service those ATMs migrated to our service platform. We also incurred a significant increase in legal costs as compared to the prior year periods driven primarily by the incurrence of costs associated with management of the derivative and class action suits brought against the Company.

Depreciation and Amortization increased by 13% and 16% for the three and six months ended June 30, 2008, respectively. This increase is due primarily to the increase in assets purchased and placed in service partially offset by the cessation of amortization of GCA customer contracts that had become fully amortized and the increase in amortization resulting from the addition of identifiable intangibles resulting from the allocation of the purchase price of the CGS acquisition.
Operating income decreased by 13% and 16% for the three and six months ended June 30, 2008, respectively, due to those factors discussed above.
Interest Income (Expense), Net decreased by 19% and 21% for the three and six months ended June 30, 2008 due to a decrease in interest income primarily resulting from significantly lower interest rates earned on invested cash balances during the quarter and year to date periods. The decrease in interest income was more than offset by a decrease in interest expense also due to significantly lower interest rates compared to the prior period moderated by higher average outstanding borrowings and a higher average draw on the Bank of America Treasury Services Agreement. The average balances drawn on this agreement were $324 million and $289 million for the three and six months ended June 30, 2008, respectively.
Income from continuing operations before income tax provision and minority ownership loss decreased by 9% and 12% during the three and six months ended June 30, 2008, respectively, due primarily to the factors described above.
Income Tax. The provision for income tax reflected an effective income tax rate of approximately 38% for the three months ended June 30, 2008, which is a comparable effective tax rate to the prior year. The effective income tax rate for the six months ended June 30, 2008 was approximately 42%, an increase from the approximate 38% observed in the equivalent six month period ended in the prior year. In the first quarter of 2008, the expiration of certain stock options that had been previously expensed for book purposes but not for tax purposes had the impact of increasing our effective tax rate by 6%, resulting in an effective tax rate of approximately 47%. No such expiration of certain stock options occurred in the second quarter of 2008 or in the same six month period of 2007.
Income from continuing operations before minority ownership loss decreased by 9% in the three months ended June 30, 2008 and decreased 18% in the six month period ended June 30, 2008 due primarily to the factors described above.
Minority Ownership Loss, Net of Tax. Minority ownership loss, net of tax attributable to Innovative Funds Transfer, LLC (“IFT”) decreased by $19 thousand or 32%.
Loss from Discontinued Operations, Net of Tax. Net income from discontinued operations increased by $1.0 million or 133% due to the decreased cost of revenue for Arriva, exclusive of depreciation and amortization primarily driven by a decrease in the recognition of bad debt expense as the valuation of the receivables portfolio was adjusted in the first quarter of 2008.

LIQUIDITY AND CAPITAL RESOURCES
Overview

Cash Resources
Our cash balance, cash flows and credit facilities are expected to be sufficient to meet our recurring operating commitments and to fund our planned capital expenditures. Cash and cash equivalents at June 30, 2008 included cash in non-U.S. jurisdictions of approximately $9.6 million. Generally, these funds are available for operating and investment purposes within the jurisdiction in which they reside but are subject to taxation in the U.S. upon repatriation. We expect that the amount of cash resident in these jurisdictions will increase over the remainder of the year.
We provide cash settlement services to our customers. These services involve the movement of funds between the various parties associated with cash access transactions, and this activity results in a balance due to us at the end of each business day that we recoup over the next few business days. The balances due to us are included in settlement receivables. As of June 30, 2008, approximately $48.5 million was due to us, and we received these funds in early July 2008. As of June 30, 2008, we had approximately $77.8 million in settlement liabilities due to our customers for these settlement services.
Due to the timing differences between receipt of settlement receivables and payments to customers for settlement liabilities our actual net cash position available for other corporate purposes is determined as the sum of the cash on hand and our settlement receivables minus our settlement liabilities.

Sources and Uses of Cash

Operating Activities
Our primary source of operating cash flow is the profits we generate from our business. Operating cash outflows include payments to customers in the form of commissions, payment of network and association fees, payments to vendors for processing and telecommunication services, consulting services and supplies. We also pay salaries and benefits to our employees.
While we recognize a provision for income tax expense, we generally are not in a position to pay cash income taxes due to the deductibility of certain costs for income tax purposes that reduces our taxable income for income tax purposes to de minimis amounts.
Cash flows provided by operations decreased by $5.2 million during the six months ended June 30, 2008 as compared to the same period in 2007.

CONF CALL

Lisa Yi

Thank you and welcome everyone to the Global Cash Access second quarter 2008 earnings conference call. Joining me on today’s call are Chief Executive Officer, Scott Betts; Chief Financial Officer, George Gresham; and Senior Vice President of Finance, Mark LaBay.

On today’s call Scott will give an overview of the company’s progress and the outlook for the fiscal year and then George will provide more details on our financial performance in Q2 as well as provide an update on our outlook for the full year 2008. Following George’s comments, we’ll be happy to take questions.

A few important items before I turn it over to Scott, first we posted our earnings release and updated financial statements to our Investor website at www.globalcashaccess.com for anyone who still needs access to that information.

If during this call we use any non-GAAP financial measures and references, we will put up the appropriate GAAP financial reconciliations to our website at www.globalcashaccess.com.

The replay of today’s call will be posted on our website around 3:00 pm Pacific Time and will remain there for approximately one months. As we begin let me remind everyone today’s discussion contains forward-looking statements based on the environment as we currently see it and as such, does include risks and uncertainties.

For factors that could cause actual results to differ materially from those described in our forward-looking statements, we refer you to our SEC filings and specifically to the Form 10-K that we filed on March 17, 2008 and the risk factors set forth therein.

So with that, let me now hand it over to Scott.

Scott Betts

Thank you Lisa and welcome to everyone. I think we would all agree that it has been a tough quarter for the gaming sector as well as the overall economy. The impact on the gaming sector has been particularly pronounced as declines accelerated for most large gaming companies in the second quarter.

Destination cities such as Las Vegas and Atlantic City appear disproportionately impacted. Against this backdrop we are very pleased with our results in the quarter and how well our strategy is taking hold. Our strategy remains straightforward; one, we’re using our strong capital structure and cash flow to acquire strategic assets to fuel overall growth during this downturn.

Second, we’re investing in systems to both generate cost savings as well as give us capabilities to launch new products and services more affectively and lastly we’re accelerating our push on new products, focused on those that will help our customers lower their cost as well as drive more dollars to the gaming floor and retain their player base.

We have been able to acquire two other cash access providers in the last six months at very attractive prices. Specifically the Certegy Gaming Services integration has been substantially completed. We are right on the project’s financial objectives and we are starting to see the positive impact on our overall performance.

Despite declines in our base business reflecting segment trends, revenues in the quarter were up 11%. We closed the acquisition of Cash Systems last Friday and integration efforts are under way as we speak. Cash Systems will add a bit more than $100 million to our top line on an annualized basis and over 120 customers to the about 1,100 or so we now serve.

Importantly their customer base is disproportionately concentrated in the few regions experiencing growth. In fact due to the unique nature and location of Cash Systems customers, their revenue in Q1 of 2008 grew at around 6% year-over-year. So despite the general downturn in this segment, these two acquisitions should provide growth for GCA over the next year or so.

This growth along with favorable interest rates are allowing us to continue to make significant investments in operational improvements and to invest in new product initiatives; the other two key pieces of our strategy.

As you can see, in spite of our investments in integration costs, higher than normal legal and professional services cost as well as investments in several key projects, our net earnings remained flat versus last year with expectations of growth in the second half as we’re able to lower these costs.

Let me take a moment to update you in greater detail on the status of our various initiatives. We are now investing and executing on a clear product strategy focusing on lowering our customers’ costs and improving their marketing and data needs. We believe that the combination of our past experience and the acquired intellectual property from Cash Systems will serve as a foundation for our initiatives.

The addition of Power Cash Product and its derivatives, our intention of retooling our [Edith] product as well as other identified product additions will give GCA the most complete lineup of self service and cashless gaming products in the market.

Most importantly we believe that the current tough market conditions provide a unique opportunity to increase receptivity and interest in these products as our customers face the need to improve their bottom line and become more efficient in their marketing efforts.

On our last call I spent some time discussing the important investments we are making to improve our data platforms. This project remains on track. While the most immediate results of this initiative will be improved customer service, greater access to management data, and provide cost savings, we believe its long-term strategic lies in the opportunity to monetize that data.

Given GCA’s unique position in the gaming sector we collect transactional data from the vast majority of all gaming properties; reported and non-reporting entities alike. We believe being able to provide this business insight into competitive trends, consumer behaviors, and marketing data will set us apart from both our current and future competitors and help our customers differentiate themselves in the marketplace.

By way of a simple example we could provide a casino operator with customized marketing messages that are placed on display screens on our devices based on our knowing who the consumer is and what their cash access habits have been. Today this is not possible due to the complexity of changing those screens through the manual intervention required to alter software.

The platform investments we’re making will allow devices to be managed centrally so messages can be tailored dynamically based on a property’s desired incentive programs. We believe this will be very valuable in assisting our casinos to market more affectively to their patrons.

While these product offerings are not yet part of our current lineup, over the next few months they will play a critical part in our value proposition along side the cashless gaming products such as Power Cash.

The point here is that our success long-term will depend on our ability to lead with product innovation that helps our customers succeed. We’ll continue to leverage key partnerships like the ones we have with IGT, [Bally] Technologies and others to make this happen. We feel it is critical to continue to make the investments to meet our primary objective of being first to the market and leading with new products in 2009.

On the international front while we remain cautious on our outlook of these markets we are very pleased to announce that through our close work with the UK regulatory authorities, the United Kingdom Gaming Commission has issued a draft interpretive note of the existing regulations. We believe that provision of this draft note will permit us to provide gaming patrons in the UK with the means to access cash in a casino in a manner that is fully compliant with the existing laws.

Although this service will have more restricted provisions then what existed previously we are ideally positioned to launch this new service in that country and we are actively working on that introduction. This will be an important first step to reestablish our UK business lost last year.

I’d like to leave you with the following thoughts before I hand it over to George. First, we have a clear strategy that should provide growth and value to our shareholders as we go through these difficult times in the segment and in the economy in general.

Our acquisition of Cash Systems will add important diversification to our revenue base, increase our portfolio of protected intellectual properties and add a group of highly talented associates to our business.

Third, our product roadmap is becoming clear and the work to build this foundation for those products is well underway. We are thinking about product innovation in the gaming sector every day.

Lastly, we remain a very strong company financially with strong capital structure, conservative leverage, and strong consistent cash flow that allows us to execute our strategy in the face of strong headwinds.

With that let me turn it over to George.

George Gresham

Thanks Scott. Our revenue was up in the second quarter of 2008 by about 11% compared to last year’s second quarter. All of this increase and then some can be attributed to the integration of the Certegy Gaming Services, or CGS, accounts which contributed around $23.5 million to the quarter.

Absent the acquisition revenue on our existing base of customers declined about 5%. Like much of the gaming sector, we noted an acceleration of revenue decline in the second quarter compared to the first quarter of 2008.

We believe our same store decline on a year-over-year basis was close to 6%. These declines impacted both the CGS accounts as well as our base accounts. The other significant factor was the loss of the UK cash access business in the prior year. This business represented about $1.7 million in revenue in the second quarter of 2007.

As Scott mentioned, we are preparing to launch a new cash access system in the UK, however, due to the timing of the launch and the more restrictive constraints on the service, we do not expect to see any material impact from this change in the remainder of 2008.

Consistent with the first quarter of 2008 the rate of the decline seen in credit card cash advance are more dramatic then those seen in other product sectors as consumers either face greater credit tightening imposed on them by their financial institutions or they self regulate their spending by accessing their available funds via their debit accounts as preference over credit.

Our check warranty product grew during the quarter by about 45% compared to the prior year quarter due to both the CGS acquisition but also the acquisition of new accounts acquired and added to the platform largely in the last half of 2007.

The underlying long-term trend away from checks has not changed in our view. Recall that in the prior quarter we reclassified Arriva to discontinued operations and as a result, reclassified prior and current year revenue to that category on the income statement. Previously those revenues had been included in other revenue.

On a sequential quarter basis our revenue increased by about the amount of the revenue contributed from CGS. The base portfolio although experiencing a higher rate of same store loss then in Q1 absorbed that loss due to the roll on of acquired customers.

Gross margins came in about where we expected; at just lower than 27% given the integration of CGS. Absence CGS, there is no material change in margins on our base business. Cash Systems, like CGS, has margins lower then our basis business and as we integrate that business, you will see margin compression as a result of those accounts economically.

Our check warranty and verification business continues to perform inline with our historical performance and our interim expectations. Operating expenses excluding non-cash equity compensation, depreciation and amortization increased by about $4.5 million from the prior year quarter.

This increase was largely due to the integration of CGS, however, legal expenses continue to be about $500,000 more then the prior year due to the [inaudible] management of the class action and derivative suits we are confronting and about $1 million of costs were incurred in the quarter that resulted from the one-time efforts of integrating CGS accounts and costs associated with transitional services provided by Fidelity National Transaction Services, the former parent of CGS.

Also in the prior year quarter we recognized a $1 million benefit related to reclaimed property that did not recur in 2008. We expect to continue to incur relatively high legal expenses until such time as the various cases are definitively resolved or our retention limits on our insurance policies are consumed.

The former outcome is not reasonably possible to predict and the latter is unlikely to occur until late 2008. Included in operating expenses is non-cash compensation expense of approximately $2.4 million. Depreciation and amortization increased on a year-over-year basis due to the acquisition of CGS but was relatively flat on a sequential basis as other amortizing assets became fully amortized.

Our consideration of the appropriate fair values assignable to the CGS acquisition continues and could impact depreciation and amortization in future periods. Net interest expense decreased due to significantly lower interest rates compared to the prior year quarter.

Our effective income tax rate was about 38%. As many of you know, GCA is generally not in a tax paying position due to the amortization of intangibles that are tax deductible. This is true in 2008 as it was in 2007.

Our GAAP EPS before discontinued operations of $0.11 is the same as in the prior year quarter. Cash EPS is a non-GAAP metric we use to reflect the fact that GCA generally is not in a tax paying position even though the company records tax expense for GAAP purposes.

We define cash EPS as net income before discontinued operations plus the tax effected deferred tax intangible amortization divided by the shares. The company’s pre-tax amortization deduction is $45.7 million per year and we tax effect that figure at the current quarter’s effective tax rate in order to determine the add-back.

Cash EPS was $0.17 in the second quarter of 2008, the same as in the prior year. Due to ongoing analysis associated with the purchase accounting for CGS, we have filed an extension request for our Form 10-Q. We will be finalizing and filing our Q shortly.

Let me turn it back to Scott now for an overview of our 2008 guidance and wrap-up.

Scott Betts

Thanks George, we have updated our financial outlook for the year based on the closing of the Cash Systems acquisition in early August, further insights into segment trends and our continued investment in our key projects. We now expect that 2008 revenue will range from $682 million to $690 million, EDITDA will range from $92 million to $97 million, and GAAP EPS before discontinued operations will range from $0.39 per share to $0.42 per share.

This guidance is based on the following assumption; capital expenditures generally consistent with those in 2007, an effective tax rate for the full year of approximately 40%, fully diluted shares outstanding of 77 million.

The acquisition of Cash Systems, Inc. is expected to contribute $41 million to $44 million in revenue in 2008 assuming an accounting affective close date of August 1st, 2008. Further the acquisition is anticipated to be neutral to slightly accretive to EBITDA during 2008 and to add approximately $7 million to $9 million in EBITDA in 2009.

We feel we have positioned the company well to weather the current market conditions as well as provide opportunities for growth longer term. With that, that concludes our prepared remarks and I’d like to open it up for questions now.

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