TRM Corporation (Nasdaq: TRMM) today announced the appointment of Richard Stern to the positions of President and Chief Executive Officer, effective June 15, 2007.
Mr. Stern is currently the Chief Operating Officer of TRM Corporation. He was also appointed to the Company's Board of Directors effective immediately. Jeffrey Brotman will remain with the Company as non-executive Chairman.
Mr. Brotman stated, "As an integral part of the restructuring process, Richard has enacted several successful cost saving measures from which we are already benefiting, and he has been critical in developing our strategy for the future. Richard has proven himself a highly effective leader and the board has great confidence in him. I look forward to continuing to work closely with Richard."
Richard Stern, Chief Operating Officer, said, "I want to thank Jeff Brotman for his significant contributions to TRM Corporation. As a result of his leadership, the Company is in a much stronger position today. Jeff has guided us through the very arduous process of selling off certain non-core assets which then allowed us to repay our previously crippling debt load. With respect to the future, I am encouraged with the initial results of our restructuring efforts but our work is far from complete. We have specific goals for 2007 which, when successfully implemented, should generate incremental and material cost savings as well as allow us to grow our portfolio and ultimately enhance shareholder value."
The Company also announced today that Edward E. Cohen has resigned from the Company's board of directors and as Chairman of the Executive Committee of the Board, also effective on June 15, 2007.
Separately, TRM Corporation (Nasdaq: TRMM) today announced fourth quarter and full year 2006 financial results. The Company intends to file its Form 10-K no later than May 23, 2007.
Jeff Brotman, President and CEO of TRM Corporation, stated, "TRM Corporation underwent substantial change in 2006 and we appreciate investors' patience in our reporting process. Since June 2006, we have sold our U.K. photocopy business, our U.S. photocopy business, our Canadian ATM operations, our U.K. ATM operations and our German ATM operations. We have made progress in our restructuring efforts and have transferred our service organization to an independent provider, dramatically reduced the number of our employees and closed various locations. All of these efforts reflect our commitment to improve our cost structure and we expect to have a simpler and more efficient business model as a result of these actions. As of today, we are focusing on our core strength as a leader in the non-bank ATM industry in the U.S. and we are optimistic about our organic and strategic opportunities for the remainder of the year."
Fourth Quarter 2006 Financial Results
- Gross sales from continuing operations were $24.9 million, compared to $29.8 million in the fourth quarter 2005.
- Gross profit from continuing operations was $3.2 million, compared to $4.0 million in the fourth quarter of 2005.
- Operating loss from continuing operations improved to $5.5 million from $12.8 million in the fourth quarter of 2005.
- Loss from continuing operations improved to $6.3 million from $9.3 million in the fourth quarter of 2005.
- Loss from discontinued operations was $9.0 million in the fourth quarter of 2006.
- Net loss (including both continuing and discontinued operations) was $15.2 million compared to $13.7 million in the fourth quarter of 2005.
Discontinued operations include our Canadian ATM, U.K. ATM, German ATM and U.S. photocopy businesses. The Company also recorded losses on asset retirements of $507,000 in the fourth quarter.
The average number of transacting ATMs in the network during the fourth quarter of 2006 was 11,511 compared to 13,926 during the fourth quarter of 2005, total withdrawals were 9.4 million, and average monthly transactions per ATM was 274 compared to 277 in the fourth quarter of 2005. The decrease in transacting ATMs is primarily a result of attrition in ATM contracts acquired from eFunds in 2004 as well as the Company's decision to cease renewal of certain ATM contracts operating below the Company's targeted volume and profitability levels.
Fiscal Year 2006 Financial Results
- Sales from continuing operations decreased 14.2 % to $111.7 million from $130.3 million in 2005.
- Gross profit from continuing operations was $19.2 million compared to $27.8 million in 2005.
- Operating loss from continuing operations was $58.8 million in 2006, compared to an operating loss of $10.0 million in 2005.
- Loss from continuing operations was $56.5 million in 2006 and includes non-cash charges of $46.1 million for the impairment of certain assets.
- Loss from discontinued operations was $63.6 million in 2006 and includes non-cash charges of $50.0 million for the impairment of certain assets.
- Net loss (including both continuing and discontinued operations) increased to $120.1 million in 2006 from $8.9 million in 2005.
The Company's United States ATM sales were $107.7 million in 2006 compared to $125.9 million for 2005. The $18.2 million decrease in ATM sales was due to a combination of a $16.4 million decrease in transaction-based sales and a $3.0 million decrease in service sales, partially offset by a $1.2 million increase in sales of ATM equipment.
TRM Corporation had cash and cash equivalents of $4.8 million at December 31, 2006, compared to $9.7 million at December 31, 2005, and a net working capital deficit of $2.6 million at December 31, 2006 compared to a net working capital deficit of $89.2 million at December 31, 2005. The working capital deficits were principally caused by the classification of all debt facilities as current liabilities due to loan covenant defaults. Working capital at December 31, 2006 includes $92.6 million of net assets held for sale.
In January 2007, TRM Corporation repaid substantially all of its $100 million of bank debt outstanding, leaving a balance of $2.0 million outstanding at the end of the first quarter of 2007.
Corporate Restructuring Plan
In November 2006, TRM Corporation implemented a corporate restructuring plan that sought to significantly alter the Company's cost structure, allow for fulfillment of outstanding debt obligations, and utilize strategic relationships to lower the fixed costs of operations. This involved the reduction of controllable selling, general and administrative expenses by approximately 15%.
As part of the restructuring plan, in the fourth quarter of 2006, TRM Corporation entered into agreements to sell operations that accounted for approximately 58% of net sales in 2006. Additionally during the first quarter of 2007, TRM's field service employees were transferred to an independent provider who assumed the cost of these employees as part of the transfer, leaving the Company with 91 employees as of March 31, 2007 compared to 364 as of December 31, 2006. Additionally, the Company closed facilities, including self storage units and service centers, as well as pursued more favorable relationships in order to aggressively reduce costs.
Richard Stern, Chief Operating Officer of TRM Corporation, said, "We are encouraged with the initial results of our restructuring efforts and I want to thank all of our employees for their persistence and dedication to TRM during this period of change. While we are pleased with the material cost savings we have created as of today, our work is far from complete. We have specific goals for 2007 which, when successfully implemented, should generate incremental and material cost savings as well as allow us to grow our portfolio and ultimately enhance shareholder value."
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