HOUSTON -- The fallout from the collapse of Credit Card Center (CCC) continues for ATM manufacturer Tidel Technologies Inc. (NASDAQ:ATMS), as the company reported a net loss of $16.4 million in the third quarter of 2001 ending on June 30. During the same period in 2000, Tidel reported net income of $2.8 million. Revenues plummeted 75.4 percent, dropping from $20.3 in 2000 to $5.0 this year.
CCC's insolvency and Tidel's inability to collect on an estimated $27 million owed to the company by CCC had a devastating effect on Tidel's bottom line in the third quarter. The company, concerned that it will be unable to collect the full amount of CCC's debt, set aside a reserve of $18 million for losses on receivables from CCC in its third quarter figures. The $18 million accounts for Tidel's third quarter loss.
But other factors, some related to CCC's collapse, have also affected Tidel's performance in the third quarter. Company officials, in a press release, said some customers shifted their focus from purchasing ATMs to converting processing contracts with merchants that had done business with CCC. In addition, some Tidel customers struggled to gain proper levels of lease financing because of negative reactions to CCC's problems.
"Although the company has executed a large number of new exclusive and preferred-provider agreements with distributors over the past few months, the company's expectations for new business were not fulfilled in the three months ended June 30," said James Rash, Tidel chairman and chief executive officer.
Tidel was also forced to write off $2.5 million in costs relating to the company's $18 million 6 percent subordinated convertible debt. Company officials have been negotiating with their debt holders, Montrose Investments Ltd. and Liberty Acorn Trust, who have exercised their right to collect on the $18 million in notes, plus interest, by August 27. Tidel officials have said on several occasions that the company does not have the funds to pay off the notes, and have brought in Banc of America Securities LLC to look into financial alternatives.
As expected, stockholders reacted negatively to Tidel's third quarter figures. Stock in the company was down 36 cents (28.8 percent) to 89 cents at the end of trading on Tuesday. The stock was trading in the $12 range last summer and currently has a 52-week high of $9.97, recorded on August 21, 2000.
Based in Houston, Tidel was the world's fifth-leading supplier of ATMs in 2000 according to the Nilson Report, shipping 13,523 units, 12,723 of them in the U.S.
