USA Technologies Comments on Purported Board Nominations From Former Board Member
After USAT received Mr. Tirpak's notice, USAT initiated contact with him in order to explore whether a resolution could be reached that would be in the best interests of USAT and its shareholders. Unfortunately, Mr. Tirpak has indicated that he is only prepared to amicably resolve this matter if we give him and his hand-picked nominees a majority of the USAT board of directors.
The current USA Technologies management team and board of directors are executing on a plan that they believe is driving real and sustainable improvement in financial results, while enhancing shareholder value. Since being named chairman and chief executive officer on November 30, 2011, Mr. Herbert has delivered on his commitment to improve the accountability, transparency, corporate governance, and financial results of USA Technologies. In fact, only last week, USAT announced that revenues in its fiscal third quarter ended March 31, 2012 were expected to be up 36 percent compared to the prior year, recurring revenues were expected to increase 39 percent from the prior year, and the number of connections added to its ePort Connect® service increased at better than double-digit rates from the prior year. Most importantly, USAT is making progress on its planned path towards profitability with anticipated positive Adjusted EBITDA for the quarter. In short, the plan is working.
Stephen P. Herbert, Chairman and Chief Executive Officer of USA Technologies, stated, "When I took over the helm of USA Technologies in late 2011, I was clear in communicating my objectives to shareholders: focus on the bottom line and drive towards profitable operations, improve efficiency, enhance corporate governance, communicate more frequently and directly with shareholders, and, remain focused on meeting the current and future needs of our customers. All of these objectives were set forth in my letter to shareholders earlier this year and reiterated when USA Technologies held its first earnings conference call in February 2012. Together with my fellow board members and management team, I am happy to say that in a matter of a few short months, we have already achieved significant progress on each of these objectives."
Under Mr. Herbert's leadership as chairman, the USA Technologies Board of Directors has taken a proactive approach to corporate governance. In November 2011, the independent directors, including Mr. Tirpak, unanimously named Steven D. Barnhart as lead independent director, in accordance with current corporate governance best practices. In addition, three new independent directors have been named to the USA Technologies board since the beginning of 2012.
Today, the USA Technologies Board of Directors consists of 8 directors, 6 of whom are independent as defined by NASDAQ regulations. The board brings both a wealth of experience and depth of industry knowledge that is relevant to USAT's strategy and operations. Board members have wide and diverse backgrounds and accomplishments in a range of functional areas including financial, legal, and capital markets as well as across various sectors of the payments industry.
Mr. Herbert added, "It's unfortunate that Brad Tirpak insists on once again causing a distraction for USAT, its management team and its board. The fact that this latest action is happening in the midst of significant progress—at a time when USA Technologies is on a positive track—should tell our shareholders all they need to know about his intentions. Unfortunately, we believe that Mr. Tirpak's actions will erode shareholder value."
The Company notes that Mr. Tirpak voluntarily resigned just last month from the Board of Directors after all other board members requested him to step down due, in part, to conduct they viewed to be detrimental to USA Technologies and prohibited by USAT's Code of Business Conduct and Ethics. Of Mr. Tirpak's six other nominees, two had already been evaluated and rejected by the board's Nominating Committee in favor of more qualified candidates who have since joined the board. Mr. Tirpak was a member of the Nominating Committee and fully participated in the evaluation of these candidates and the decision to reject them in favor of the more qualified candidates who now sit on the board.
Mr. Herbert concluded, "Over the coming weeks, shareholders will be hearing more from USA Technologies and its board. Our hope is that they will recognize the significant progress that has been made since I became chairman and chief executive officer late last year, including our multi-faceted value-creating plan, the major commitment to corporate governance and shareholder value we have made, and the noteworthy improvements in financial performance that have been delivered."
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: All statements other than statements of historical fact included in this release, including without limitation the financial position, anticipated connections to our network, business strategy and the plans and objectives of the Company's management for future operations, are forward-looking statements. When used in this release, words such as "anticipate", "believe", "estimate", "expect", "intend", and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the Company's management, as well as assumptions made by and information currently available to the Company's management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, business, financial market and economic conditions, including but not limited to, the ability of the Company to retain key customers from whom a significant portion of its revenues is derived; the ability of the Company to compete with its competitors to obtain market share; the ability of the Company to obtain widespread commercial acceptance of it products; and whether the Company's existing or anticipated customers purchase ePort devices in the future at levels currently anticipated by the Company. Readers are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement made by us in this release speaks only as of the date of this release. Unless required by law, the Company does not undertake to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.