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HOUSTON -- Tidel Technologies, Inc. reported record product sales for both the three-month and six-month periods ended March 31, 1999 due to record shipments of ATM products.

Unit shipments increased 34 percent and 38 percent for the three-month and six-month periods, respectively, compared to the same periods a year ago. Tidel attributes the record shipments to strong demand for both models of its Ignition series ATM, which were introduced last October.

As expected, gross profit as a percentage of revenue declined from 37.8 percent for the second quarter of 1998 to 32.8 percent for the same period in 1999. On a year-to-date basis, gross profit as a percentage of revenue declined from 37.3 percent in 1998 to 33 percent in 1999. The company said the decline is primarily the result of lower average sales prices for ATM products this year compared to last year.

Prices for the Ignition series ATMs are slightly lower than sales prices for comparable products a year ago, due to continued competition in the marketplace for low-cost cash dispensing equipment. Also, the company has offered pricing discounts on its remaining inventories of AnyCard model ATMs. Gross profit as a percentage of sales is expected to improve upon the liquidation of the remaining AnyCard inventory.

Income before taxes decreased from approximately $1,468,000 in the second quarter of 1998 to $1,038,000 in the second quarter of 1999, or 29 percent, due to the previously noted decline in gross profit. On a year-to-date basis, income before taxes decreased from approximately $1,757,000 in 1998 to $1,438,000 in 1999, or 18 percent.

Second quarter basic earnings per share were 4 cents per share, as compared to 9 cents per share for the second quarter in fiscal 1998. On a year-to-date basis, basic earnings per share were 6 cents per share in 1999, as compared to 11 cents per share in 1998. The company's earnings in 1999 were subject to taxes at the statutory state and federal rates, while there was no provision for taxes in the same periods a year ago.

In 1999, Tidel reported several significant business developments:

• Receipt-based prepaid phone card software
In January, Tidel introduced the industry's first receipt-based prepaid phone card software designed for ATM resellers. The software delivers phone card information directly on the ATM receipt and allows ATM users to purchase unlimited amounts of prepaid long distance in five-dollar increments.

• TACC IV
Tidel also introduced its next-generation Timed Access Cash Controller (TACC) product -- the TACC IV -- which contains the most significant improvements to the product line since its introduction more than 20 years ago. Tidel has shipped over 100,000 TACC products to more than 30 countries since inception, and the company will market the TACC IV to new customers as well as its existing customer base.

• Chameleon ITMs
Tidel signed a customer contract to sell Chameleon Internet Transaction Machines to Los Angeles-based Cash Technologies, Inc. Bruce Korman, Cash Tech's Chairman and CEO indicated that Cash Tech could deploy as many as 2,000 units during the initial contract period. This first "volume" order for the ITM establishes Tidel's Chameleon as the first interactive multimedia kiosk that combines support for the e-commerce options of the Internet with traditional ATM functionality.

• Alliance to sell Ignition series ATMs
One of Tidel's largest distributors, Financial Technologies Inc., formed an alliance with Red Crown Marketing to offer turnkey ATM packages to over 2,600 BP Amoco dealers and jobbers representing more than 15,000 stations nationwide. The alliance will feature Tidel as FTI's preferred equipment provider.