Global Cash Access Holdings Inc. has a market cap of $559.6 million; its shares were traded at around $8.18 with a P/E ratio of 11.5 and P/S ratio of 0.9. Global Cash Access Holdings Inc. had an annual average earning growth of 1.8% over the past 5 years.GCA is in the portfolios of Jim Simons of Renaissance Technologies LLC, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:Interest expense, net for the three months ended March 31, 2010 was $4.4 million, a decrease of $0.3 million, or 7.2% as compared to the three months ended March 31, 2009. This decrease is primarily due from lower interest rates on lower average outstanding borrowings as well as a lower average draw on the Bank of America Treasury Services Agreement of $327.5 million for the three months ended March 31 2010 as compared to $390.2 million for the three months ended March 31, 2009. Interest income was also lower due to lower interest rates earned on invested cash balances during the three months ended March 31, 2010 as compared to the three months ended March 31, 2009.
Our principal source of liquidity is cash flows from operating activities, which were $21.3 million and $11.8 million for the three months ended March 31, 2010 and 2009, respectively. Changes in operating assets and liabilities accounted for a net increase of $2.2 million in cash flow from operating activities. Included in net cash provided by operating activities was $6.9 million of net income, and approximately $12.2 million of non-cash expenses.
Net cash used in investing activities totaled $1.2 million and $2.8 million for the three months ended March 31, 2010 and 2009, respectively. Included in net cash used in investing activities for the three months ended March 31, 2010 is $1.2 million used for capital investments and for the same period in 2009 is $2.2 million used for capital investments and $0.6 million of other.
Net cash provided by financing activities for the three months ended March 31, 2010 was $1.4 million due primarily to proceeds from exercises of stock options of $2.2 million offset by treasury purchases of $0.5 million and repayments of our credit facility of $0.3 million. Net cash used in financing activities for the three months ended March 31, 2009 was due to repayments of our credit facility of $15.3 million.
At March 31, 2010, we had a net deferred income tax asset of $144.7 million. We recognized a deferred tax asset upon our conversion from a limited liability company to a corporation on May 14, 2004. Prior to that time, all tax attributes flowed through to the members of the limited liability company. The principal component of the deferred tax asset is a difference between our assets for financial accounting and tax purposes. This difference results from a significant balance of Acquired Goodwill of approximately $687 million that was generated as part of the conversion to a corporation plus approximately $98 million in pre-existing goodwill carried over from periods prior to the conversion. Both of these assets are recorded for tax purposes but not for accounting purposes. This asset is amortized over 15 years for tax purposes, resulting in annual pretax income being $52.3 million lower for tax purposes than for financial accounting purposes. At an estimated blended domestic effective tax rate of 36.4%, this results in tax payments being approximately $19.0 million less than the provision for income taxes shown on the income statement for financial accounting purposes. This is an expected aggregate of $172.8 million in cash savings over the remaining life of the portion of our deferred tax asset related to the conversion.
Bank of America supplies us with currency needed for normal operating requirements of the domestic ATMs operate pursuant to the Treasury Services Agreement. Under the terms of this agreement, we pay a monthly cash usage fee based upon the product of the average daily dollars outstanding in all such ATMs multiplied by the average LIBOR for one-month United States dollar deposits for each day that rate is published in that month plus a margin of 25 basis points. We are therefore exposed to interest rate risk to the extent that the applicable LIBOR increases. As of March 31, 2010, the rate in effect, inclusive of the 25 basis points margin, was 0.487% and the currency supplied by Bank of America pursuant to this agreement was $359.6 million. Based upon the average outstanding amount of currency to be supplied by Bank of America pursuant to this agreement during the first three months of 2010, which was $327.5 million, each 1% increase in the applicable LIBOR would have a $3.3 million impact on income before taxes over a 12-month period. Foreign gaming establishments supply the currency needs for the ATMs located on their premises.
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