TRM Corporation Reports Record Year 2004 Earnings

For fiscal 2004, consolidated net sales were $92.6 million, a $14.4 million or 18.5% increase, compared to $78.2 million in 2003. The increase in net sales reflects ATM unit acquisitions made during the year including the acquisition of the eFunds ATM network, strong organic ATM growth generating over 1,000 net new ATM locations, higher ATM and photocopier transaction pricing and a positive impact from currency exchange fluctuations. Cost of sales during 2004 was $50.2 million; up 15.1% from $43.6 million in 2003 reflecting an 80% increase in ATM sales and the negative impact from currency exchange fluctuations. Gross profit was $42.4 million, up 22.7% from $34.6 million in 2003. Sales, General and Administrative (SG&A) expenses were $28.6 million, a $4.8 million or 20.1% increase, compared to $23.8 million in 2003. The increase in these expenses reflects higher depreciation and amortization expense, stock offering and acquisition related expenses, including transition costs relating to the eFunds ATM networks we acquired and a negative impact from currency exchange fluctuations. Operating income increased $3.6 million or 35.8%, to $13.7 million in fiscal 2004 as compared to $10.1 million for the same period in 2003, reflecting the growth of the ATM business as well as improved operating efficiency in the photocopy business. Earnings before interest, taxes, depreciation and amortization (See Attachment 3: Reconciliation of EBITDA to Net Income), or EBITDA, was $24.5 million in fiscal 2004 compared to $18.8 million for the prior year period, an increase of $5.7 million or 30.4%. Income from continuing operations increased 35.0% to $8.3 million, compared to income of $6.2 million in fiscal 2003. Income available to common shareholders was $0.56 per diluted share in fiscal 2004 compared to $0.45 per diluted share in 2003. Q4 2004 compared to Q4 2003 During Q4 2004, consolidated net sales were $26.6 million, a $6.2 million or 30.1%, increase compared to $20.5 million for the prior year period. The increase in net sales reflects the addition of approximately 15,700 ATMs resulting from the acquisition of the eFunds ATM networks leading to approximately 200% more transactions during the quarter. Cost of sales during Q4 2004 was $15.1 million, up 45.6% from $10.4 million in Q4 2003 a result of a 70% increase in sales for the quarter. Gross profit increased 14.2% to $11.5 million from $10.1 million last year driven by higher net sales. SG&A expenses were $9.6 million, a $3.1 million or 47.1% increase, compared to $6.5 million in Q4 2003. The increase reflects transition expenses related to the eFunds acquisition, as well as higher depreciation and amortization and interest as outlined below. EBITDA was $5.8 million in Q4 2004 as compared to $5.2 million for the prior year period, an increase of $0.6 million or 11.5% (See Attachment 3: Reconciliation of EBITDA to Net Income). In Q4 2004, income from continuing operations decreased $1.6 million, from $2.3 million in Q4 2003. Income available to common shareholders was $0.02 per diluted share in Q4 2004 compared to $0.18 in Q4 2003. On November 19, 2004 we acquired the ATM business of eFunds Corporation in the United States and Canada for $150 million cash (excluding fees, expenses and similar items) significantly increasing TRMs ATM networks in both countries. In connection with the transaction, TRM entered into a five-year agreement pursuant to which eFunds provides ongoing ATM management services (MSA) for the acquired networks. During the fourth quarter we incurred certain non-recurring expenses of approximately $2.0 million associated with closing the transaction, implementation of the MSA and transition of the eFunds ATM networks. This $2.0 million is comprised of approximately $1.4 million in SG&A expenses related to staff reductions and non-capital