SOURCE: Tidel Technologies, Inc.

Tidel Reports Improved Third Quarter Results

HOUSTON, Aug. 19 /PRNewswire-FirstCall/ -- Tidel Technologies, Inc. (Nasdaq: ATMS - News) today announced improved third quarter results. Condensed results, together with comparable amounts for the same periods in fiscal 2001, are as follows:

                                 Three Months                 Nine Months
                                 Ended June 30,              Ended June 30,
    (In thousands,
     except per share data)   2002          2001         2002          2001

    Revenues                $6,179        $4,972      $15,554       $29,825
    Operating loss           (533)      (20,215)      (3,694)      (16,561)
    Net loss               (1,019)      (16,446)      (5,133)      (14,492)

    Basic loss per share   $(0.06)       $(0.94)      $(0.29)       $(0.83)
    Diluted loss per share $(0.06)       $(0.94)      $(0.29)       $(0.83)

Revenues for the quarter ended June 30, 2002 were $6,179,000, an increase of $1,440,000, or 30%, over the previous quarter ended March 31, 2002, and an increase of $1,207,000, or 24%, from the same quarter a year ago. An increase in the shipment of ATM units accounted for the majority of the increase in revenues. A total of 1,004 ATM units were shipped in the quarter ended June 30, 2002, representing a 53% increase over the 657 units shipped in the previous quarter ended March 31, 2002, and an increase of 51% over the 666 units shipped in the comparable quarter of the prior year. The increase was largely due to business with new customers, including some customers outside the United States. International sales were $1,128,000 representing 18% of total revenues for the quarter ended June 30, 2002, compared with $726,000, or 15% of revenues, for the same quarter of the prior year.

For the nine months ended June 30, 2002, revenues were $15,554,000, a decrease of 14% from revenues in the comparable period of the prior year of $18,038,000, excluding sales of $11,787,000 to Credit Card Center ("CCC"), formerly Tidel's largest customer who is no longer in business. Tidel shipped 2,338 ATM units for the nine months ended June 30, 2002, a decrease of 22% from the 2,997 units shipped to customers other than CCC in the previous year. During the nine months ended June 30, 2001, Tidel shipped 2,339 ATM units to CCC. The decline in shipments to customers other than CCC was attributable to decreased orders from two of Tidel's major customers. Tidel believes that it has good relationships with these customers and that their current level of purchases will increase, although there can be no assurance that this will occur.

Tidel incurred a net loss of $(1,019,000) for the quarter ended June 30, 2002, compared to a net loss of $(16,446,000) in the same quarter of 2001. For the nine months ended June 30, 2002, Tidel incurred a net loss of $(5,133,000), compared to a net loss of $(14,492,000) for the same period in 2001. The results for quarter ended June 30, 2001 included a provision for bad debts of $18,000,000 related to the collection of accounts receivable from CCC, and a charge of $2,530,000 applicable to the write-off of certain deferred financing costs as a result of the "put" of Tidel's subordinated convertible debentures. Consequently, comparisons of the net losses in 2002 with the net losses for the respective periods in 2001 are not meaningful.

Gross profit on product sales for the quarter ended June 30, 2002 increased $1,355,000 from the same quarter a year ago. Gross profit as a percentage of sales was 35% in the quarter ended June 30, 2002, compared to only 16% in the same quarter of the previous year. The improvement is directly related to the increase in the volume of ATM units produced during the quarter ended June 30, 2002.

Tidel's selling, general and administrative expenses were $2,405,000 for the quarter ended June 30, 2002, a decrease of 12% from 2001 despite increased sales for the period. Tidel has reduced its staff by more than 10% and reduced certain of its costs in the service and engineering departments. Selling, general and administrative expenses for the nine months ended June 30, 2002 only decreased 4% from the same period a year ago due to increased legal fees incurred in connection with litigation related to the CCC bankruptcy and other matters. In addition, Tidel has incurred interest expense of $675,000 per quarter, including penalty interest of $405,000 per quarter, on its subordinated debentures since the debt was "put" back to Tidel in June 2001. Although this interest has been and continues to be accrued, Tidel has made no cash payments of interest to the debenture holders since June 2001.

Management continues to negotiate with the holders of Tidel's subordinated convertible debentures to restructure the past due obligations. While Tidel and the largest holder of the debentures have agreed on proposed terms of a restructuring, there can be no assurance that this agreement will culminate in a successful restructuring of the convertible debentures or that Tidel will be able to agree on similar terms, or any terms, with the other holder of the convertible debentures. In addition, discussions are in progress with other lenders and equity investors for the purpose of obtaining capital to restructure and/or refinance the convertible debentures and the revolving credit facility with JP Morgan Chase. If a refinancing has not occurred prior to August 30, 2002, Tidel may seek an extension of the maturity of the revolving credit facility. There can be no assurance that Tidel will be successful in obtaining additional capital or in extending the maturity of the revolving credit facility or that the terms of any new financings will be favorable to Tidel. A failure either to restructure and/or refinance the convertible debentures and the revolving credit facility, or to obtain an extension of the August 30, 2002 maturity of the revolving credit facility, if necessary, could have a material adverse effect on Tidel.

James T. Rash, who has ended his medical leave of absence and resumed his duties as Chief Executive Officer, has affirmed the accuracy of Tidel's Form 10-Q for the quarterly period ended June 30, 2002 by certification letter to the U.S. Securities and Exchange Commission. This action was pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, which was enacted July 29, 2002.

Tidel, a wholly owned subsidiary of Sentinel Technologies, Inc. (a private holding company), has been a manufacturer of cash security equipment designed for specialty retail marketers since 1977.  Tidel designs and manufactures products for cash security and robbery prevention, as well as retail cash management.  To date, Tidel has sold more than 190,000 retail cash controllers in the U.S. and 38 other countries.  Tidel provides a 24-hour, seven-day customer service center and offers customer service and support in over 120 countries worldwide.  Information about the company and its products may be found on the company’s website at www.tidel.com.riodic reports filed with the U.S. Securities and Exchange Commission.

Contact:
Investor Relations
Tidel Technologies, Inc.
(800) 678-7577
investorrelations@tidel.com