e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-19657

TRM CORPORATION

(Exact name of registrant as specified in its charter)


Oregon		93-0809419

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5208 N.E. 122nd Avenue
Portland, Oregon 97230

(Address of principal executive offices) (Zip Code)

(503) 257-8766

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES þ NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer o Accelerated filer þ Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o NO þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 17,213,226 shares of common stock outstanding at November 1, 2007.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II – OTHER INFORMATION
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES
	ITEM 6. EXHIBITS
SIGNATURE
Fourteenth Amendment to Loan and Servicing Agreement
Certification of Chief Executive Officer
Certification of Chief Financial Officer
Certification of Principal Accounting Officer
Certification of Chief Executive Officer, pursuant to Section 906
Certification of Chief Financial Officer, pursuant to Section 906
Certification of Principal Accounting Officer, pursuant to Section 906

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TRM Corporation
Consolidated Balance Sheets
(Unaudited)
(In thousands)


	December 31,			September 30,
	2006			2007
Assets
Current assets:
Cash and cash equivalents	$	4,784		$	3,523
Restricted cash		—			4,064
Accounts receivable, net		4,328			3,515
Income taxes receivable		215			114
Inventories		674			50
Prepaid expenses and other		1,579			1,315
Deferred financing costs		5,270			181
Restricted cash – TRM Inventory Funding Trust		73,701			65,809
Assets held for sale		106,081			—

Total current assets		196,632			78,571
Equipment, less accumulated depreciation and amortization		11,646			6,078
Goodwill		16,748			16,748
Intangible assets, less accumulated amortization		585			644
Other assets		833			866

Total assets	$	226,444		$	102,907


Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	5,988		$	6,578
Accrued expenses		8,811			15,540
Term loans and line of credit		99,318			1,966
TRM Inventory Funding Trust note payable		71,697			62,544
Liabilities related to assets held for sale		13,437			—

Total current liabilities		199,251			86,628


Minority interest		1,500			1,500


Commitments and contingencies (notes 9 and 11)

Shareholders’ equity:
Common stock, no par value - 50,000 shares authorized; 17,194 shares issued and outstanding (17,126 at December 31, 2006)		135,595			136,023
Additional paid-in capital		63			63
Accumulated other comprehensive income - Accumulated foreign currency translation adjustment		4,692			2,683
Accumulated deficit		(114,657	)		(123,990	)

Total shareholders’ equity		25,693			14,779

Total liabilities and shareholders’ equity	$	226,444		$	102,907

See accompanying notes to consolidated financial statements.

TRM Corporation
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)


	Three months ended						Nine months ended
	September 30,						September 30,
	2006			2007			2006			2007
Sales	$	26,414		$	23,327		$	83,483		$	69,772
Less discounts		16,702			14,990			51,132			44,007

Net sales		9,712			8,337			32,351			25,765
Cost of sales:
Cost of vault cash		1,782			1,394			4,823			4,184
Other		4,111			4,233			12,056			13,360

Gross profit		3,819			2,710			15,472			8,221
Selling, general and administrative expense (including non-cash stock compensation of $955 and $350 for the nine-month periods ended September 30, 2006 and 2007, respectively)		7,150			4,712			22,529			14,337
Impairment charges (Note 10):
Goodwill		20,393			—			20,393			—
Other intangible assets		22,918			—			22,918			—
Restructuring charges (Note 12)		—			—			—			963
Equipment write-offs		18			1,198			74			1,216

Operating loss		(46,660	)		(3,200	)		(50,442	)		(8,295	)
Interest expense and amortization of debt issuance costs		—			116			—			276
Loss on early extinguishment of debt		—			—			3,105			4,059
Other expense (income), net		(133	)		(110	)		(928	)		240

Loss from continuing operations before provision (benefit) from income taxes		(46,527	)		(3,206	)		(52,619	)		(12,870	)
Provision (benefit) for income taxes		(2,395	)		59			(4,598	)		59

Loss from continuing operations		(44,132	)		(3,265	)		(48,021	)		(12,929	)
Discontinued operations:
Income (loss) from operations, including gains on sales		(54,825	)		(1,624	)		(56,850	)		3,596
Benefit for income taxes		(102	)		—			(19	)		—

Income (loss) from discontinued operations		(54,723	)		(1,624	)		(56,831	)		3,596

Net loss	$	(98,855	)	$	(4,889	)	$	(104,852	)	$	(9,333	)


Weighted average common shares outstanding		17,102			17,194			17,007			17,166
Basic and diluted income (loss) per share:
Continuing operations	$	(2.58	)	$	(.19	)	$	(2.82	)	$	(.75	)
Discontinued operations		(3.20	)		(.09	)		(3.35	)		.21

Net loss	$	(5.78	)	$	(.28	)	$	(6.17	)	$	(.54	)

See accompanying notes to consolidated financial statements.

TRM Corporation
Consolidated Statement of Shareholders’ Equity
(Unaudited)
(In thousands)


											Accumulated
									Additional		other
	Comprehensive			Common					paid-in		comprehensive			Accumulated
	loss			Shares		Amounts			capital		income			deficit			Total

Balances, December 31, 2006					17,126	$	135,595		$	63	$	4,692		$	(114,657	)	$	25,693
Comprehensive loss:
Net loss	$	(9,333	)		—		—			—		—			(9,333	)		(9,333	)
Other comprehensive income (loss) -
Foreign currency translation adjustment:
Recognized in income		(2,622	)		—		—			—		(2,622	)		—			(2,622	)
Current period adjustment		613			—		—			—		613			—			613

Comprehensive loss	$	(11,342	)

Other capital additions					—		53			—		—			—			53
Exercise of stock options					18		25			—		—			—			25
Stock option expense					—		(11	)		—		—			—			(11	)
Restricted stock expense					—		361			—		—			—			361
Restricted shares vested					50		—			—		—			—			—

Balances, September 30, 2007					17,194	$	136,023		$	63	$	2,683		$	(123,990	)	$	14,779

See accompanying notes to consolidated financial statements.

TRM Corporation
Consolidated Statements of Cash Flows
Nine months ended September 30, 2006 and 2007
(Unaudited)
(In thousands)


	2006			2007
Operating activities:
Net loss	$	(104,852	)	$	(9,333	)
Adjustments to reconcile net loss to net cash used in operating activities:
Impairment charges and asset write-downs		96,062			3,591
Depreciation and amortization		15,608			2,542
Non-cash stock compensation		955			350
Loss on disposal of equipment		366			171
Provision for doubtful accounts		397			72
Loss on early extinguishment of debt		2,560			4,059
Gain on sale of discontinued operations		(362	)		(5,336	)
Cumulative foreign currency translation adjustments recognized in income		(1,538	)		(2,622	)
Changes in items affecting operations, net of effects of business dispositions:
Restricted cash		—			(4,064	)
Accounts receivable		2,143			612
Inventories		608			978
Income tax receivable		(4	)		101
Prepaid expenses and other		(295	)		412
Accounts payable		101			884
Accrued expenses		(6,175	)		(182	)
Deferred income taxes		(5,082	)		—

Cash provided by (used in) operating activities		492			(7,765	)

Investing activities:
Proceeds from sale of equipment		43			52
Capital expenditures		(4,464	)		(41	)
Proceeds from sale of discontinued operations		4,280			103,671
Acquisition of intangible and other assets		(778	)		(428	)

Cash provided by (used in) investing activities		(919	)		103,254

Financing activities:
Borrowings on notes payable		116,431			1,289
Repayment of notes payable		(114,001	)		(98,641	)
Debt financing costs		(2,979	)		—
Principal payments on capital lease obligations		(576	)		(26	)
Decrease (increase) in restricted cash – TRM Inventory Funding Trust		(9,761	)		7,892
Proceeds (repayments) of TRM Inventory Funding Trust note, net		9,671			(9,153	)
Proceeds from exercise of stock options		91			25
Other		(19	)		53

Cash used in financing activities		(1,143	)		(98,561	)

Effect of exchange rate changes		(271	)		(1,491	)

Net decrease in cash and cash equivalents		(1,841	)		(4,563	)
Beginning cash and cash equivalents, including $3,302 classified as assets held for sale at December 31, 2006		9,708			8,086

Ending cash and cash equivalents	$	7,867		$	3,523


Supplemental cash flow information:
Payments:
Cash paid for interest	$	6,245		$	534
Cash paid for income taxes	$	79		$	17

See accompanying notes to consolidated financial statements.

TRM Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Interim Financial Data

The consolidated financial statements of TRM Corporation and its subsidiaries included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting only of normal recurring adjustments, which, in the opinion of management, are necessary for a fair statement of the results of the interim periods. These consolidated financial statements should be read in conjunction with our annual report on Form 10-K for the year ended December 31, 2006. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The results of operations for the periods presented are not necessarily indicative of the results to be expected for any subsequent interim period or for the year ending December 31, 2007.

We incurred a net loss of $120.1 million in the year ended December 31, 2006 and a loss from continuing operations of $12.9 million in the nine months ended September 30, 2007. As a result of our financial performance for the three months ended September 30, 2006, we failed to meet certain financial covenants of our financing agreements with GSO Origination Funding Partners LP and other lenders. On November 20, 2006, we entered into amendments that restructured our loans and waived the failure to meet the loan covenants. Under the restructured loan agreements principal payments of $69.9 million were due in the first quarter of 2007. During January 2007, we sold our Canadian, United Kingdom and German ATM businesses and our United States photocopy business and used $98.4 million from the proceeds of those sales to make principal and interest payments under these loans, leaving a remaining balance of principal plus accrued interest of $2.0 million as of January 31, 2007. We are uncertain whether our remaining operations can generate sufficient cash to comply with the covenants of our restructured loan agreements and to pay our obligations on an ongoing basis. Because there are cross-default provisions in TRM Inventory Funding Trust’s Loan and Servicing Agreement, if we fail to comply with the covenants of our restructured loan agreements and are declared to be in default by GSO Origination Funding Partners LP and other lenders, we may be declared in default of the provisions of the Loan and Servicing Agreement as well, and the lender may be able to demand payment. These factors, among others, may indicate that we may be unable to continue as a going concern for a reasonable period of time. Our financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should we be unable to continue as a going concern. Our continuation as a going concern is contingent upon our ability to generate sufficient cash to pay our obligations on an ongoing basis.

In connection with the sales of our ATM businesses in Canada, the United Kingdom and Germany, and our photocopy businesses in the United States and Canada in the first six months of 2007, we made various representations and warranties and/or provided indemnities, including those relating to taxation matters. Further, the sales prices are subject to adjustment based on

working capital amounts, the value of accounts receivable as of the closing of the sales or other factors. The purchasers may make claims against us relating to the representations or warranties or provisions for adjustment of the sales prices, and those claims could be substantial. The purchaser of our United Kingdom and German ATM business has asserted claims pursuant to the sales agreement, and we are disputing certain of those claims. We have recorded a liability for repayment of our best estimate of the ultimate settlement of those claims. Currently, none of the other purchasers are pursuing claims against us. Because we used substantially all of the net proceeds from the business sales to reduce our debt, we might not have sufficient cash to pay claims relating to our 2007 business sales without additional financing.

In November 2006 we announced the implementation of a corporate restructuring plan involving an initial reduction of then-existing controllable selling, general and administrative expenses of approximately 15%. Subsequent to that announcement, we have sold operations that accounted for approximately 61% of our net sales in 2006. In connection with our restructuring plan and the sales of a substantial part of our operations, we have reduced our number of employees from 364 as of December 31, 2006 to 41 as of September 30, 2007.

We expect to be able to refinance the outstanding balances under our financing agreement and have begun initial efforts to do so. However, we can provide no assurance that we will be able to do so.

If we are unable to refinance our debt, obtain additional financing to pay claims under the agreements for sales of businesses in January 2007, if necessary, or get our lenders to agree to any further forbearance from calling our loans, we might be forced to seek protection of the courts through reorganization, bankruptcy or insolvency proceedings.

2. Financial Statement Reclassifications

Certain financial statement reclassifications have been made to prior period amounts to conform to the current period presentation. These changes had no impact on shareholders’ equity or previously reported net income. As discussed in Note 9, we have reclassified the results of operations of our Canadian, United Kingdom and United States photocopier operations and our Canadian, United Kingdom and German ATM operations to discontinued operations for all periods presented.

3. Net Loss Per Share

Basic and diluted net loss per share are based on the weighted average number of shares outstanding during each period, with diluted net loss per share including the effect of potentially dilutive securities. For diluted net loss per share, the calculation includes the effect of potentially dilutive securities, unless such effect is antidilutive. For the three and nine months ended September 30, 2006, our stock options and shares of unvested restricted stock were excluded from the calculation of diluted earnings per share because their inclusion would have been antidilutive. For the three and nine months ended September 30, 2007 our stock options, warrants and shares of unvested restricted stock were excluded from the calculation of diluted earnings per share because their inclusion would have been antidilutive.

4. Equipment


	December 31,			September 30,
	2006			2007
	(in thousands)
Photocopiers	$	6,771		$	—
ATMs		11,267			10,416
Furniture and fixtures		1,307			1,254
Computer equipment		7,116			6,877

		26,461			18,547
Accumulated depreciation and amortization		(14,815	)		(12,469	)

	$	11,646		$	6,078

5. Term Loans and Line of Credit


	December 31,		September 30,
	2006		2007
	(in thousands)
Term loans	$	92,808	$	1,966
Lines of credit		6,510		—

	$	99,318	$	1,966

As of September 30, 2006, our financial performance caused us to not be in compliance with certain covenants in our credit agreements pursuant to which we then owed $94.9 million. Our lenders had the right to seek to accelerate the loans under the operative loan documents, but they did not do so or exercise other remedies. Instead, on November 20, 2006, we entered into agreements under which they waived our defaults and agreed with us to restructure our loans. As restructured, the interest rates on our loans were increased. The increased interest cost was deferred and added to principal. In addition, the maturity dates of the loans were changed so that a total of $69.9 million was due on or before February 28, 2007. The financial covenants were modified to require achievement of certain levels of earnings before interest, taxes, depreciation and amortization and certain other non cash expenses which we refer to as adjusted EBITDA, and to limit capital expenditures. As of September 30, 2007, we were not in compliance with the adjusted EBITDA covenant. We have received waivers of the violations of our adjusted EBITDA covenant for the months of December 2006 through September 2007. In connection with the loan restructuring, we also granted warrants to the holders of our Term Loan B to purchase 3.1 million shares of our common stock at a price of $1.3638 per share. The warrants are exercisable for a period of seven years following November 20, 2006. We agreed to file a registration statement with the SEC covering the resale of the shares issuable upon the exercise of the warrants and to use our best efforts to have the registration statement declared effective by the SEC no later than May 18, 2007. However, because we filed our Annual Report on Form 10-K for 2006 and our Quarterly Report on Form 10-Q for the first quarter of 2007 late and are currently focusing on filing timely periodic reports, we have not yet filed the registration statement. Under the terms of the registration rights agreement, the warrant holders can seek damages due to our inability to file the registration statement. We have not received any demands from the warrant holders to file the registration statement as of the date of this report; we plan to file the registration statement as soon as reasonably practicable. Because the present value of the cash flows under the terms of the revised debt instruments were less than 10% different than the present value of the remaining cash flows

under the terms of the original instruments, we accounted for the restructuring of our loans as a modification of the previously outstanding debt. Accordingly, we charged to expense the legal fees we incurred and recorded the fair value of the warrants and loan fees as deferred financing costs.

We estimated the total fair value of the warrants issued to the holders of Term Loan B to be $2.8 million using the Black-Scholes valuation model. We recorded the fair value of the warrants and $1.0 million of loan fees incurred from our lenders in connection with the restructuring of our loans in November 2006 as additional deferred financing costs. These costs, together with $2.8 million of previously unamortized deferred financing costs associated with the credit facility established in June 2006, aggregated $6.6 million. In connection with the early payment of most of our debt in January 2007, substantially all of the remaining unamortized deferred financing costs were charged to expense as a loss on early extinguishment of debt in the first quarter of 2007.

Because we are uncertain whether we can comply with all of the terms of the restructured loan agreement, the balance of the loan has been classified as a current liability on our balance sheet.

As discussed further in Note 9, during the first six months of 2007 we sold our Canadian, United Kingdom and German ATM businesses and our United States and Canadian photocopy businesses and used $98.6 million from the proceeds of those sales to make principal and interest payments under our financing agreements with GSO Origination Funding Partners LP and other lenders. Following these payments, as of September 30, 2007, the only remaining balance under our term loans and line of credit was $2.0 million on our Term Loan B which is due in June 2012.

In January 2007 we entered into an amendment to our United States vault cash agreement which, among other changes, extended the facility for five years and reduced the facility size to $100 million. Because there are cross-default provisions in TRM Inventory Funding Trust’s Loan and Servicing Agreement, if we fail to comply with the covenants of our restructured loan agreements and are declared to be in default by GSO Origination Funding Partners LP and other lenders, we may be declared in default of the provisions of the Loan and Servicing Agreement as well, and the lender may be able to demand payment. Therefore, the Trust’s debt is classified as a current liability and the vault cash is classified as a current asset on our consolidated balance sheet.

6. Stock-based Compensation

In the first quarter of 2006, we adopted Statement of Financial Accounting Standards, or SFAS, No. 123R, “Share-Based Payment.” As a result of this adoption, we now record the grant date fair value of share-based compensation arrangements, net of estimated forfeitures, as compensation expense over the underlying service periods. In April 2006 we accelerated the vesting of certain options granted to our former President and Chief Executive Officer. We recorded non-cash compensation expense of $618,000 in connection with this action in the second quarter of 2006. Stock-based compensation expense, which is included in selling general

and administrative expense during the nine months ended September 30, 2006 and 2007 was as follows (in thousands):


	2006		2007
Modification of options previously granted	$	618	$	—
Amortization of:
Option grants		91		(11	)
Restricted shares		246		361

	$	955	$	350

A summary of stock option activity during the nine months ended September 30, 2007 follows:


	Number of			Weighted average
	shares			exercise price
Outstanding January 1, 2007		658,125		$	6.39
Options granted		30,000			.98
Options exercised		(20,375	)		1.59
Options forfeited		(380,625	)		7.47

Outstanding September 30, 2007		287,125			4.73

As of September 30, 2007, options to purchase 207,125 shares of common stock at a weighted average exercise price of $5.89 per share were vested and exercisable.

A summary of restricted stock activity during the nine months ended September 30, 2007 follows:


	Number of
	shares
Unvested shares outstanding January 1, 2007		258,040
Shares granted		500,000
Shares vested		(50,000	)
Shares forfeited		(2,010	)

Unvested shares outstanding September 30, 2007		706,030

The fair value of the shares granted during 2007 was $1.55 per share, and they vest annually over four years.

7. Provision for Income Taxes

Our effective tax rate for the first nine months of 2006 was 8.7%, resulting in a tax benefit attributed to continuing operations of $4.6 million. We have recorded no benefit from our losses for the first nine months of 2007 because we are uncertain that we will be able to realize the benefit of our net operating loss carryforwards and future deductible amounts. As of September 30, 2007, we have net operating losses of approximately $17 million available to offset future taxable income for United States federal income tax purposes which expire in the years 2020 through 2027. Our Canadian subsidiary has net operating loss carryforwards of approximately $21 million available to offset future taxable income in Canada which expire in the years 2009 through 2016. However, we have sold substantially all of the assets of our Canadian subsidiary, and it no longer has any significant operations.

8. Segment Reporting

For the six months ended June 30, 2006, we disclosed information about two reportable segments – Automated Teller Machines (“ATM”) and Photocopy. Because of changes in our internal reporting practices, in our financial statements for the three- and nine-month periods ended September 30, 2006, we disclosed information about six reportable segments – ATM operations in the United States, Canada, the United Kingdom and Germany, and photocopy operations in the United States and Canada. Subsequent to September 30, 2006, we have sold our ATM businesses in Canada, the United Kingdom and Germany and our photocopy businesses in the United States and Canada. In the accompanying statements of operations, we have classified the results of the businesses sold as discontinued operations. As a result, we now have only one operating segment – ATM operations in the United States. Our United States ATM business owns and/or operates ATM machines, sells ATM machines and services equipment for others.

Substantially all of our revenues from continuing operations for the three and nine-month periods ended September 30, 2006 and 2007 were derived from sales to customers in the United States. As of September 30, 2007, substantially all of our assets were located in the United States.

9. Discontinued Operations and Sales of Businesses

In June 2006 we sold all of the outstanding shares of our United Kingdom photocopier subsidiary to an unrelated third party for cash.

Effective January 1, 2007, we sold substantially all of the assets of our Canadian ATM business for approximately Canadian $13.0 million (U.S. $11.1 million using exchange rates as of January 12, 2007), subject to certain adjustments. We have recorded a gain on the sale of $2.3 million.

January 24, 2007), subject to certain adjustments which have not yet been agreed upon. We have recorded a gain on the sale of $5.1 million.

On January 29, 2007, we sold substantially all of the assets of our United States photocopy business for approximately $8.7 million, subject to certain adjustments. We have recorded a gain on the sale of approximately $565,000.

On June 19, 2007, we sold substantially all of the assets of our Canadian photocopy business to an unrelated third party. The sales price for the assets was approximately Canadian $615,000 (approximately U.S. $571,000 using exchange rates as of June 19, 2007) in cash and assumption of liabilities, plus 50% of the cash flows from the operation of the business for seven years. We recorded a gain on the sale of approximately $29,000.

In connection with these sales, we made various representations and warranties and/or provided indemnities, including indemnities relating to taxation matters. Further, the sales prices are subject to adjustment based on working capital amounts, the value of accounts receivable as of the closing of the sale, or other factors, the amounts for which have not yet been agreed upon. The purchasers may make claims against us relating to the representations, warranties or indemnities, or provisions for adjustment of the sales prices, and those claims could be substantial. The purchaser of our United Kingdom and German ATM businesses has asserted claims pursuant to the sales agreement, and we are disputing certain of those claims. Based on our negotiations with the purchaser, we have recorded a $6.5 million liability for repayment of our best estimate of the ultimate settlement of those claims. Currently, none of the other purchasers are pursuing claims against us. Because we used substantially all of the net proceeds from the business sales to reduce our debt, we might not have sufficient cash to pay claims relating to our 2007 business sales without additional financing.

The aggregate of the sales prices for the businesses we sold in the first six months of 2007 was approximately $105 million, before selling costs. We used $98.6 million of the net cash proceeds of $102.4 million to make principal and interest payments on our debt. The balance was used to fund escrow deposits and deposits with our bank to collateralize outstanding letters of credit. As of September 30, 2007, $4.1 million was held by our bank as collateral for outstanding letters of credit, and is reported as restricted cash on our balance sheet.

The operations of our Canadian, United Kingdom and German ATM businesses and our Canadian, United Kingdom and United States photocopy businesses are shown as discontinued operations for the three- and nine-month periods ended September 30, 2006 and 2007. Because the terms of our financing agreements required us to use substantially all of the net proceeds from the sales of businesses to pay debt, we have allocated interest expense to discontinued operations based upon the lesser of the amount repaid or debt outstanding. No general corporate overhead has been allocated to discontinued operations.

Net revenues of discontinued operations through the dates of sale (in thousands):


	Three months ended				Nine months ended
	September 30,				September 30,
	2006		2007		2006		2007
Canada photocopy	$	750	$	—	$	2,755	$	1,102
United Kingdom photocopy		—		—		1,646		—
United States photocopy		5,551		—		17,457		1,368
Canada ATM		1,852		—		5,476		—
United Kingdom ATM		8,913		—		24,346		1,653
Germany ATM		48		—		59		130

	$	17,114	$	—	$	51,739	$	4,253

Pretax income (loss) from discontinued operations for the three- and nine-month periods ended September 30, 2006 and 2007 through the dates of sale (in thousands):


	Three months ended September 30,
	2006								2007
				Gain on							Gain on
	Operations			sale		Total			Operations		sale			Total
Canada photocopy	$	(2,944	)	$	—	$	(2,944	)	$	—	$	—		$	—
United Kingdom photocopy		(286	)		—		(286	)		—		—			—
United States photocopy		(17,878	)		—		(17,878	)		—		(268	)		(268	)
Canada ATM		(6,420	)		—		(6,420	)		—		(48	)		(48	)
United Kingdom ATM		(27,112	)		—		(27,112	)		—		(1,308	)		(1,308	)
Germany ATM		(185	)		—		(185	)		—		—			—

	$	(54,825	)	$	—	$	(54,825	)	$	—	$	(1,624	)	$	(1,624	)


	Nine months ended September 30,
	2006								2007
				Gain on								Gain on
	Operations			sale		Total			Operations			sale		Total
Canada photocopy	$	(2,806	)	$	—	$	(2,806	)	$	(2,975	)	$	29	$	(2,946	)
United Kingdom photocopy		(787	)		1,900		1,113			—			—		—
United States photocopy		(16,458	)		—		(16,458	)		398			565		963
Canada ATM		(6,591	)		—		(6,591	)		(113	)		2,313		2,200
United Kingdom ATM		(31,492	)		—		(31,492	)		(1,617	)		5,051		3,434
Germany ATM		(616	)		—		(616	)		(55	)		—		(55	)

	$	(58,750	)	$	1,900	$	(56,850	)	$	(4,362	)	$	7,958	$	3,596

Subsequent to the sales of our United States photocopy and Canadian photocopy and ATM businesses, we have resolved certain contingencies associated with those sales. In connection with the resolution of those contingencies and our revised estimate of the ultimate settlement of claims by the buyer of our United Kingdom ATM business, we recorded additional losses on the sales of discontinued operations of $221,000 in the second quarter of 2007 and $1.6 million in the third quarter of 2007.

Substantially all of the assets and liabilities of our United States photocopy business and our ATM businesses in Canada, the United Kingdom and Germany, which were sold in January

2007, are presented in the accompanying balance sheet as of December 31, 2006, as held for sale.

A charge of $2.7 million is included in discontinued operations for the first nine months of 2007 to write down the carrying amount of the assets of the Canadian photocopy business to their estimated fair value less cost to sell.

10. Impairment Charges

During the third quarter of 2006 we recorded non-cash charges of $96.1 million for the impairment of certain assets, of which $43.3 million is included in continuing operations and $52.8 million is included in discontinued operations.

	•		ATM goodwill. Because of continuing decreases in sales and operating margins in the ATM segments and other factors, we re-evaluated our financial forecasts in the third quarter of 2006 and concluded that it was necessary to review goodwill in our United States, Canadian and United Kingdom ATM segments for impairment of value. The review, consisting of a comparison of the carrying value of the goodwill to its implied fair value, resulted in impairment charges of $20.4 million in the United States, $5.8 million in Canada and $17.5 million in the United Kingdom. Our estimate of the implied fair value of the United States ATM segment’s goodwill was based on the quoted market price of our common stock and the discounted value of estimated future cash flows over a six-year period with residual value, using an 11% discount rate. Our estimate of the implied fair value of the Canadian and United Kingdom ATM segments’ goodwill was based on the estimated selling prices of those ATM segments.

	•		Finite-lived intangible assets associated with the ATM businesses. Because of faster than anticipated attrition of customer contracts, operating losses and revised financial forecasts, we concluded that it was necessary to review the carrying value of the long-lived assets of our United States, Canadian and United Kingdom ATM segments. As a result, we determined that the future cash flows from those assets were not adequate to recover those assets, and we recorded impairment charges of $22.9 million in the United States, $272,000 in Canada and $7.7 million in the United Kingdom, based on comparisons of the carrying amounts of the assets to their estimated fair values. Our estimate of the fair value of the United States assets was based on the discounted values of estimated future cash flows over a seven-year period using an 11% discount rate. Our estimates of the fair value of the Canadian and United Kingdom assets were based on the estimated selling prices of those ATM segments.

	•		Photocopy equipment in the United States and Canada. Because of operating losses in our United States and Canadian photocopy segments and revised financial forecasts, we concluded that it was necessary to review the carrying value of those segments’ long-lived assets, which consist almost entirely of photocopy equipment. As a result, we determined that future cash flows from the photocopy segments were not adequate to recover the carrying value of that equipment, and we recorded impairment charges of $18.7 million in the United States and $2.7 million in Canada based on a comparison of

the carrying amounts of these assets to their estimated fair values. Our estimates of the fair values of the asset groups were based on the estimated selling price of the United States photocopy segment and the discounted value of estimated future cash flows over a ten-year period using an 11% discount rate for the Canadian photocopy segment.

11. Litigation and Potential Claims

In the ordinary course of business, we may be subject to lawsuits, investigations and claims. There are currently no material legal proceedings pending against us.

As described in Note 9, in the first six months of 2007 we sold our ATM businesses in the United Kingdom, Germany and Canada, and our photocopy businesses in the United States and Canada in four separate transactions. The total of the sales prices for the businesses we sold was approximately $105 million. In connection with these sales, we made various representations and warranties and/or provided indemnities including those relating to taxation matters. Further, the sales prices are subject to adjustment based on working capital amounts, the value of accounts receivable as of the closing of the sale or other factors. The purchasers may make claims against us relating to the representations, warranties or indemnities, or provisions for adjustment of the sales prices, and those claims could be substantial. The purchaser of our United Kingdom and German ATM businesses has asserted claims pursuant to the sales agreement, and we are disputing certain of those claims. We have recorded a liability for repayment of our best estimate of the ultimate settlement of those claims.

12. Corporate Restructuring, Equipment Write-downs and Inventory Write-down

In connection with the corporate restructuring plan we announced in November 2006 and the subsequent sales of a substantial portion of our operations, we have made significant staff reductions, including termination of substantially all of our United States field service employees. We have also vacated leased warehouse and office space occupied by the terminated employees. During the first six months of 2007 we paid severance of $167,000 to terminated employees. During the first quarter of 2007 we vacated warehouse and office space in eleven United States locations. The vacated space was leased under leases with remaining terms up to seven years. We recorded a liability of $796,000 as of March 31, 2007, which was the estimated fair value of the costs that we expect to incur without any economic benefit, and we charged that amount to expense in the first quarter of 2007. We estimated the fair value of the liability based on the discounted value of the remaining lease payments, reduced by estimated sublease payments that we reasonably expect could be obtained for use of the properties.

The costs for both severance payments and vacated leases are included in restructuring charges in our statement of operations for the nine months ended September 30, 2007.

effective to refurbish and upgrade most of our stored machines to current standards. As a result, in the third quarter of 2007 we charged $1.1 million to equipment write-offs to write down the equipment to be sold to its estimated net realizable value.

Additionally, since we no longer have field service technicians on our staff, we are no longer using our inventory of parts and used ATMs in the normal course of business, and we have decided to sell or otherwise dispose of that inventory. As a result, in the third quarter of 2007 we charged $270,000 to cost of sales to write down our inventories to their estimated net realizable value.

13. New Accounting Standards

In June 2006, the Financial Accounting Standards Board, or FASB, issued FASB Interpretation No. 48, or FIN 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements. It prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The interpretation became effective for us beginning in 2007. Our adoption of FIN 48 did not have a material impact on our results of operations, financial position or cash flows.

In September 2006, the FASB issued SFAS 157, “Fair Value Measurements.” SFAS 157 establishes a framework for measuring fair value under generally accepted accounting principles and expands disclosures about fair value measurements. This statement does not require any new fair value measurements. The statement is effective for us beginning in 2008. We anticipate no material impact on our results of operations, financial position or cash flows as a result of adopting this statement.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115,” which allows companies the option to measure certain financial instruments and other items at fair value. The provisions of SFAS No. 159 are effective for us beginning in 2008. We are currently evaluating the impact, if any, this statement will have on our financial statements.


ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Information in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q with respect to our beliefs, plans, objectives, goals, expectations, anticipations, intentions, financial condition, results of operations, future performance and business, including, without limitation, growth of our business (including acquisitions) constitutes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We have based these forward-looking statements on management’s current expectations about future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts, and by words such as “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan” or other similar words or expressions.

Any or all of the forward-looking statements in this report and in any other public statements we make may turn out to be wrong. This can occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. We discuss many of the risks and uncertainties that may impact our business in Item 1A — “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2006. Because of these risks and uncertainties, our actual results may differ materially from those that might be anticipated from our forward-looking statements. Other factors beyond those referred to above could also adversely affect us. Therefore, you are cautioned not to place undue reliance on our forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise except as required by law.

Overview

During 2006 we operated ATM networks in the United States, United Kingdom, Canada and Germany, and we operated photocopier networks in the United States, United Kingdom and Canada. In June 2006 we sold our United Kingdom photocopy business. In January 2007 we sold our ATM businesses in the United Kingdom, Germany and Canada and our United States photocopy business. In June 2007 we sold our Canadian photocopy business. Our remaining business operates ATMs in the United States. During the first nine months of 2007 our United States ATM networks had an average of 10,486 transacting ATMs compared to an average of 12,667 transacting ATMs during the first nine months of 2006.

We had a $12.9 million loss from continuing operations in the first nine months of 2007, including a $4.1 million loss on early extinguishment of debt. In the first nine months of 2006 we had a loss from continuing operations of $48.0 million, including impairment charges of $43.3 million and a loss on early extinguishment of debt of $3.1 million.

Our financial performance in the third quarter of 2006 caused us not to be in compliance with certain covenants in our credit facility with Wells Fargo Foothill, GSO Origination Funding Partners LP and other lenders, and in November 2006, we entered into agreements with the lenders to restructure our loans. Under the modified agreements all but $25 million of our debt was due in the first quarter of 2007. Because of the new repayment terms, during January 2007 we sold our Canadian, United Kingdom and German ATM businesses and our United States photocopier business, and used $98.4 million from the proceeds of those sales to make principal and interest payments under our financing agreements. In June 2007 we sold our Canadian photocopy business and used $232,000 of the proceeds from that sale to make further principal and interest payments under our financing agreements. After these payments, as of June 30, 2007, we owed $1.9 million of principal and accrued interest under the credit facility. In connection with these sales, we have made various representations and warranties and/or provided indemnities. Further, the sales prices are subject to adjustment based on working capital amounts, the value of accounts receivable as of the closing of the sale or other factors. The purchasers may make claims against us relating to the representations or warranties or provisions for adjustment of the sale prices, and those claims could be substantial. The purchaser of our United Kingdom and German ATM businesses has asserted claims pursuant to the sales agreement, and we are disputing certain of those claims. We have recorded a liability for repayment of our best estimate of the ultimate settlement of those claims. Because we used substantially all of the net proceeds from the business sales to reduce our debt, we might not have sufficient cash to pay such claims without additional financing which may not be available to us.

Three Months Ended September 30, 2007 Compared to Three Months Ended September 30, 2006

ATM Results of Operations – Continuing Operations


	Three months ended September 30,
	2006					2007
	Amount		%			Amount		%
	(in thousands, except operating and percentage data)
Transaction-based sales	$	24,809		100.0	%	$	21,826		100.0	%
Less discounts		16,702		67.3			14,990		68.7

Net transaction-based sales		8,107		32.7	%		6,836		31.3	%

Service and other sales		1,009					978
Sales of ATM equipment		596					523

Net sales		9,712					8,337
Cost of sales:
Cost of vault cash		1,782					1,394
Other		4,111					4,233

Gross profit	$	3,819				$	2,710


Operating data:
Average number of transacting ATMs		12,236					10,176
Withdrawal transactions		11,068,157					9,152,248
Average withdrawals per ATM per month		302					300
Average transaction-based sales per withdrawal transaction	$	2.24				$	2.39
Average discount per withdrawal transaction	$	1.51				$	1.64
Net transaction-based sales per withdrawal transaction	$	.73				$	.75

Sales

For the third quarter of 2007, sales from continuing operations decreased by $3.1 million, or 12%, to $23.3 million from $26.4 million for the third quarter of 2006.

The $3.1 million decrease in sales was primarily a result of a $3.0 million decrease in transaction-based sales.

The $3.0 million decrease in transaction-based sales resulted from:

	•		A 16.8% decrease in the average number of transacting ATMs in our networks, primarily as a result of attrition of the contracts acquired from eFunds Corporation in November 2004. We expect that the number of ATMs in our networks will continue to decrease during the remainder of 2007.

	•		A .7% decrease in average withdrawal transactions per ATM per month.

The decreases in the number of ATMs in our network and average withdrawal transaction per ATM were partially offset by:

•

A 6.7% increase in average transaction-based sales per withdrawal transaction.

Sales Discounts

Sales discounts decreased to $15.0 million in the third quarter of 2007 from $16.7 million in the third quarter of 2006. Sales discounts as a percentage of transaction-based sales increased to 68.7% in the third quarter of 2007 from 67.3% in the third quarter of 2006. While our transaction-based sales increased by $.15 per withdrawal, our discounts increased by only $.13 per transaction, resulting in an increase in our net transaction-based sales of $.02 per withdrawal.

Cost of Sales

Although sales from continuing operations decreased by $3.1 million in the third quarter of 2007 compared to the third quarter of 2006, cost of sales decreased by only $266,000 as a result of factors discussed in this section. As a result, cost of sales increased to 24.1% of sales in the third quarter of 2007, from 22.3% in the third quarter of the prior year.

As a result of the sale of our United States photocopy business, we determined that we could no longer economically keep a staff of field service employees that would provide the geographic coverage needed to provide maintenance to our ATMs. We decided that it would be more economical to hire third parties to perform maintenance on our equipment and on merchant’s equipment where that is our responsibility. During the first and second quarters of 2007 we transitioned our ATM maintenance function from our own field service employees to third parties. During the third quarter of 2007, our expense for third party ATM service increased by $1.1 million as compared to the same period in 2006. This increase was partially offset by a decrease of $776,000 in our cost of labor, parts and vehicle expense attributed to our United States ATM business. As of December 31, 2006, we had 129 field service employees in the United States doing maintenance on equipment for both our ATM and photocopy businesses. As of June 30, 2007, we had terminated all of our field service employees.

The increase in ATM maintenance costs and inventory writedowns charged to cost of sales was partially offset by:

•

A decrease in our cost of vault cash of $388,000, or 21.8%, as compared to the third quarter of 2006. The number of ATMs for which we provide cash has decreased by 15.4% from September 30, 2006 to September 30, 2007, and the total amount of vault cash in our system has decreased by 22.3%, to $65.8 million at September 30, 2007 from

			$84.7 million at September 30, 2006. In addition, the interest rate on our vault cash facility has decreased to 6.7% as of September 30, 2007 from 7.1% as of September 30, 2006, primarily as a result of a negotiated .35% decrease in the mark-up over the commercial paper rate.

	•		A decrease in armored car carrier costs of $224,000, or 25.6%, as compared to the third quarter of 2006. This decrease in expense is due primarily to the reduction in the number of ATMs for which we provide cash.

Selling, General and Administrative Expense

Selling, general and administrative expense attributed to continuing operations decreased by $2.4 million to $4.7 million in the third quarter of 2007 from $7.1 million in the third quarter of the prior year. Selling, general and administrative expense as a percent of sales decreased to 20.2% in the third quarter of 2007 from 27.1% in the third quarter of the prior year. Specific decreases included:

	•		Amortization expense decreased by $1.3 million due to the reduction of the basis of our intangible assets as a result of impairment charges taken in the third quarter of 2006.

	•		Labor costs (excluding non-cash stock compensation expense) decreased by $1.3 million, or approximately 47%. In connection with and following the sales of businesses in January and June 2007 we have substantially reduced our selling, general and administrative staff, from 102 employees as of December 31, 2006, to 41 employees as of September 30, 2007.

Equipment Write-offs

In the third quarter of 2007 contracts with three merchants that had TRM-owned ATMs in their stores were terminated, and we began removing those ATMs. In part because we no longer have technicians on our staff, we decided that we would not be refurbishing, upgrading and redeploying these ATMs, and we arranged to sell them to third parties. In addition, based on a review of our ATMs in storage, we decided that it would not be cost-effective to refurbish and upgrade most of our stored machines to current standards. As a result, in the third quarter of 2007 we charged $1.1 million to equipment write-offs to write down the equipment to be sold to its estimated net realizable value.

Tax Rate

Our effective tax rate for continuing operations for the third quarter of 2006 was 5.1%, resulting in a tax benefit attributed to continuing operations of $2.4 million. We have recorded no benefit from our losses for the third quarter of 2007 because we are uncertain that we will be able to realize the benefit of our net operating loss carryforwards and future deductible amounts.

Discontinued Operations

The operations of our Canadian, United Kingdom and German ATM businesses and our Canadian, United Kingdom and United States photocopy businesses are shown as discontinued operations in our consolidated statements of operations for the three-month periods ended September 30, 2006 and 2007. Because the terms of our financing agreements required us to use substantially all of the net proceeds from the sales of businesses in June 2006, January 2007 and June 2007 to pay debt, we have allocated interest expense to discontinued operations based upon the lesser of the amount repaid or debt outstanding. No general corporate overhead has been allocated to discontinued operations.

Our pretax loss from discontinued operations for the third quarter of 2007 was $1.6 million, compared to a pretax loss of $54.8 million for the third quarter of 2006. Our pretax loss from discontinued operations for the third quarter of 2006 includes impairment charges of $52.8 million. See Note 9 to our consolidated financial statements for additional information regarding our discontinued operations.

Net Loss

Our net loss for the third quarter of 2007 was $4.9 million compared to a net loss of $98.9 million for the third quarter of 2006.

Nine Months Ended September 30, 2007 Compared to Nine Months Ended September 30, 2006

ATM Results of Operations – Continuing Operations


	Nine months ended September 30,
	2006					2007
	Amount		%			Amount		%
	(in thousands, except operating and percentage data)
Transaction-based sales	$	76,253		100.0	%	$	64,721		100.0	%
Less discounts		51,132		67.1			44,007		68.0

Net transaction-based sales		25,121		32.9	%		20,714		32.0	%

Service and other sales		4,475					3,349
Sales of ATM equipment		2,755					1,702

Net sales		32,351					25,765
Cost of sales:
Cost of vault cash		4,823					4,184
Other		12,056					13,360

Gross profit	$	15,472				$	8,221


Operating data:
Average number of transacting ATMs		12,667					10,486
Withdrawal transactions		33,663,157					27,361,645
Average withdrawals per ATM per month		295					290
Average transaction-based sales per withdrawal transaction	$	2.27				$	2.37
Average discount per withdrawal transaction	$	1.52				$	1.61
Net transaction-based sales per withdrawal transaction	$	.75				$	.76

Sales

For the first nine months of 2007, sales from continuing operations decreased by $13.7 million, or 16.4%, to $69.8 million from $83.5 million for the first nine months of 2006.

The $13.7 million decrease in sales was primarily a result of an $11.5 million decrease in transaction-based sales, a $1.1 million decrease in service and other sales and a $1.1 million decrease in sales of ATM equipment.

The $11.5 million decrease in transaction-based sales resulted from:

	•		A 17.2% decrease in the average number of transacting ATMs in our networks, primarily as a result of attrition of the contracts acquired from eFunds Corporation in November 2004. We expect that the number of ATMs in our networks will continue to decrease during the remainder of 2007.

	•		A 1.7% decrease in average withdrawal transactions per ATM per month.

The decreases in the number of ATMs in our network and average withdrawal transaction per ATM were partially offset by:

•

A 4.4% increase in average transaction-based sales per withdrawal transaction.

The decrease in service and other sales was due to the decrease in transacting ATMs in our networks and changes to customer contracts resulting in a reduction of charges.

The decrease in sales of ATM equipment was due to an unusually large number of ATM machines that we owned and operated that were sold to a customer during the first quarter of 2006. We continue to operate those ATMs, but they are now owned by the customer.

Sales Discounts

Sales discounts decreased to $44.0 million in the first nine months of 2007 from $51.1 million in the first nine months of 2006. Sales discounts as a percentage of transaction-based sales increased to 68.0% in the first nine months of 2007 from 67.1% in the first nine months of 2006. While our transaction-based sales increased by $.10 per withdrawal, our discounts increased by only $.09 per transaction, resulting in an increase in our net transaction-based sales of $.01 per withdrawal.

Cost of Sales

Although sales from continuing operations decreased by $13.7 million in the first nine months of 2007 compared to the first nine months of 2006, cost of sales increased by $665,000 as a result of factors discussed in this section. As a result, cost of sales increased to 25.1% of sales in the first nine months of 2007, from 20.2% in the first nine months of the prior year.

As a result of the sale of our United States photocopy business, we determined that it would be more economical to hire third parties to perform maintenance on our equipment and on merchant’s equipment where that is our responsibility. During the first and second quarters of 2007 we transitioned our ATM maintenance function from our own field service employees to third parties. During the first nine months of 2007, our expense for third party ATM service increased by $2.8 million as compared to the same period in 2006. This increase was partially offset by a decrease of $933,000 in our cost of labor, parts and vehicle expense attributed to our United States ATM business. As of December 31, 2006, we had 129 field service employees in the United States doing maintenance on equipment for both our ATM and photocopy businesses. As of June 30, 2007, we had terminated all of our field service employees.

Additionally, since we no longer have field service technicians on our staff, we are no longer using our inventory of parts and used ATMs in the normal course of business, and we have decided to sell or otherwise dispose of that inventory. As a result, cost of sales for the first nine months of 2007 includes a $270,000 charge to write down our inventories to their estimated net realizable value.

The increase in ATM maintenance costs and inventory writedowns charged to cost of sales was partially offset by:

	•		A decrease in our cost of vault cash of $638,000, or 13.2%, as compared to the first nine months of 2006. The number of ATMs for which we provide cash has decreased by 15.4% from September 30, 2006 to September 30, 2007, and the total amount of vault cash in our system has decreased by 22.3%, to $65.8 million at September 30, 2007 from $84.7 million at September 30, 2006. In addition, the interest rate on our vault cash facility has decreased to 6.7% as of September 30, 2007 from 7.1% as of September 30, 2006, primarily as a result of a negotiated .35% decrease in the mark-up over the commercial paper rate.

	•		A decrease in armored car carrier costs of $225,000, or 9.1%, as compared to the first nine months of 2006. This decrease in expense is due primarily to the reduction in the number of ATMs for which we provide cash.

	•		A $713,000 decrease in the cost of ATM machines sold due to the $1.1 million decrease in ATM sales as compared to the first nine months of 2006.

Selling, General and Administrative Expense

Selling, general and administrative expense attributed to continuing operations decreased by $8.2 million to $14.3 million in the first nine months of 2007 from $22.5 million in the first nine months of the prior year. Selling, general and administrative expense as a percent of sales decreased to 20.5% in the first nine months of 2007 from 27.0% in the first nine months of the prior year. Specific decreases included:

	•		Amortization expense decreased by $3.8 million due to the reduction of the basis of our intangible assets as a result of impairment charges taken in the third quarter of 2006.

	•		Labor costs (excluding non-cash stock compensation expense) decreased by $3.2 million, or approximately 40%. In connection with and following the sales of businesses in January and June 2007 we have substantially reduced our selling, general and administrative staff, from 102 employees as of December 31, 2006, to 41 employees as of September 30, 2007.

	•		Non-cash stock compensation expense decreased by $605,000. In the second quarter of 2006, we recorded $618,000 of expense in connection with the acceleration of the vesting of options granted to our former President and Chief Executive Officer.

Impairment Charges

In the third quarter of 2006 we decided it was necessary to review goodwill for impairment. The review resulted in an impairment charge of $20.4 million relating to goodwill of our United States ATM business. We also decided that it was necessary to review the carrying value of certain of our long-lived assets. As a result of that review, in the third quarter of 2006 we also recorded an impairment charge of $22.9 million relating to finite-lived intangible assets of our United States ATM business.

Restructuring Charges

In connection with the corporate restructuring plan we announced in November 2006 and the subsequent sales of a substantial portion of our operations, we have made significant staff reductions, including termination by the end of May 2007 of substantially all of our United States field service employees. We have also vacated leased warehouse and office space occupied by the terminated employees. During the first six months of 2007 we paid severance of $167,000 to terminated employees. During the first six months of 2007 we vacated warehouse and office space in eleven United States locations. The vacated space was leased under leases with remaining terms up to seven years. We recorded a liability of $796,000 as of March 31, 2007, which was the estimated fair value of the costs that we expect to incur without any economic benefit, and we charged that amount to expense in the first quarter of 2007. We estimated the fair value of the liability based on the discounted value of the remaining lease payments, reduced by estimated sublease payments that we reasonably expect could be obtained for use of the properties.

The costs for both severance payments and vacated leases are included in restructuring charges in our statement of operations for the nine months ended September 30, 2007.

Equipment Write-offs

In the third quarter of 2007 contracts with three merchants that had TRM-owned ATMs in their stores were terminated, and we began removing those ATMs. In part because we no

longer have technicians on our staff, we decided that we would not be refurbishing, upgrading and redeploying these ATMs, and we arranged to sell them to third parties. In addition, based on a review of our ATMs in storage, we decided that it would not be cost-effective to refurbish and upgrade most of our stored machines to current standards. As a result, in the third quarter of 2007 we charged $1.1 million to equipment write-offs to write down the equipment to be sold to its estimated net realizable value.

Loss on Early Extinguishment of Debt

In January 2007 we used $98.4 million of the net proceeds from the sales of businesses to make principal and interest payments on our term loans and line of credit. In connection with those payments we wrote off deferred financing costs of $4.1 million. In the second quarter of 2006 we refinanced our previous debt and recorded a $3.1 million loss on early extinguishment of debt consisting of the writeoff of deferred financing costs and prepayment penalties.

Other Income

Other income in the first nine months of 2006 includes currency exchange gains of $316,000, a gain on the settlement of an interest rate cap of $173,000, and interest income of $151,000.

Tax Rate

Discontinued Operations

On June 28, 2006, we sold all of the outstanding shares of our United Kingdom photocopier subsidiary to an unrelated third party for cash.

Effective January 24, 2007, we sold all of the shares of our United Kingdom ATM subsidiary that owned our ATM businesses in the United Kingdom and Germany for approximately £43.2 million (approximately $84.8 million using exchange rates as of January 24, 2007), subject to certain adjustments which have not yet been agreed upon. We have recorded a gain on the sale of $5.1 million.

The operations of our Canadian, United Kingdom and German ATM businesses and our Canadian, United Kingdom and United States photocopy businesses are shown as discontinued operations in our consolidated statements of operations for the nine-month periods ended September 30, 2006 and 2007. Because the terms of our financing agreements required us to use substantially all of the net proceeds from the sales of businesses in June 2006 and January and June 2007 to pay debt, we have allocated interest expense to discontinued operations based upon the lesser of the amount repaid or debt outstanding. No general corporate overhead has been allocated to discontinued operations.

Our pretax income from discontinued operations for the first nine months of 2007 was $3.6 million, compared to a pretax loss of $56.9 million for the first nine months of 2006. The pretax income from discontinued operations for the first nine months of 2007 consisted of losses from operations of $4.4 million and gains on the sales of the discontinued businesses of $8.0 million. See Note 9 to our consolidated financial statements for additional information regarding our discontinued operations.

Net Loss

Our net loss for the first nine months of 2007 was $9.3 million compared to a net loss of $104.9 million for the first nine months of 2006. The net loss for 2006 included impairment charges of $96.1 million.

Liquidity and Capital Resources

General

We incurred a net loss of $120.1 million in the year ended December 31, 2006. As a result of our financial performance for the three months ended September 30, 2006, we failed to meet certain financial covenants of our financing agreements with GSO Origination Funding Partners LP and other lenders. On November 20, 2006, we entered into amendments that restructured our loans and waived the failure to meet the loan covenants. Under the restructured loan agreements principal payments of $69.9 million were due in the first quarter of 2007. During January 2007 we sold our Canadian, United Kingdom and German ATM businesses and our United States photocopy business and used $98.4 million from the proceeds of those sales to make principal and interest payments under these loans, leaving a remaining balance of principal plus accrued interest of $2.0 million. We are uncertain whether our remaining operations can

generate sufficient cash to comply with the covenants of our restructured loan agreements and to pay our obligations on an ongoing basis. Because there are cross-default provisions in TRM Inventory Funding Trust’s Loan and Servicing Agreement, if we fail to comply with the covenants of our restructured loan agreements and are declared to be in default by GSO Origination Funding Partners LP and other lenders, we may be declared in default of the provisions of the Loan and Servicing Agreement as well, and the lender may be able to demand payment. These factors, among others, may indicate that we may be unable to continue as a going concern for a reasonable period of time. Our financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should we be unable to continue as a going concern. Our continuation as a going concern is contingent upon our ability to generate sufficient cash to pay our obligations on an ongoing basis.

Our principal ongoing funding requirements are for working capital to finance our operations, fund capital expenditures and fund any claims under agreements for sales of businesses in January 2007.

During the first nine months of 2007 we used $7.8 million of cash in our operating activities (including discontinued operations), compared to $492,000 provided by operating activities during the first nine months of 2006. Cash used in operating activities in 2007 includes $4.1 million reclassified as restricted cash to secure letters of credit. During the first nine months of 2007 we received $104 million in proceeds from the sales of businesses, and we used most of those proceeds to repay debt and accrued interest. During the first nine months of 2007 our capital expenditures were $41,000, down from $4.5 million in the first nine months of 2006.

We had cash and cash equivalents of $3.5 million at September 30, 2007, compared to $4.8 million at December 31, 2006, and a net working capital deficit of $8.1 million at September 30, 2007 compared to a net working capital deficit of $2.6 million at December 31, 2006. We are negotiating settlements of liabilities in excess of $10 million that are included in current liabilities on our balance sheet as of September 30, 2007. We expect that the ultimate settlements will include extended payment terms that will result in reclassification of a substantial portion of those liabilities to long-term debt. As of December 31, 2006, we classified all of the assets of the businesses sold in January 2007 as current assets, because the proceeds from those sales were required to be used to pay debt classified as a current liability. This debt was substantially repaid in January 2007. Subject to the matter discussed in the next paragraph, we believe that our liquidity and capital resources are adequate for our currently anticipated needs.

In connection with the sales of our ATM businesses in the United Kingdom, Germany and Canada, and our photocopy businesses in the United States and Canada during the first six months of 2007, we made various representations and warranties and/or provided indemnities including those relating to taxation matters. Further, the sales prices are subject to adjustment based on working capital amounts, the value of accounts receivable as of the closing of the sale or other factors. The purchasers may make claims against us relating to the representations or warranties or provisions for adjustment of the sales prices, and those claims could be substantial. The purchaser of our United Kingdom and German ATM business has asserted claims pursuant

to the sales agreement, and we are disputing certain of those claims. Based on our negotiations with the purchaser, we have recorded a $6.5 million liability for repayment of our best estimate of the ultimate settlement of those claims. Currently, none of the other purchasers are pursuing claims against us. Because we used substantially all of the net proceeds from the business sales to reduce our debt, we might not have sufficient cash to pay claims relating to our 2007 business sales without additional financing.

We believe that as of September 30, 2007, the remaining cost of upgrading the ATMs we own to comply with new industry standards known as triple DES will be approximately $150,000. These costs will be capitalized and depreciated over the remaining life of each asset. As of September 30, 2007, approximately 94% of our owned ATMs in the United States were compliant with triple DES. We intend to complete the upgrade of our ATMs to comply with these new standards by December 31, 2007, and we expect to fund the upgrades with cash on hand and from our operations.

Syndicated Credit Facility

As of September 30, 2006, our financial performance caused us to not be in compliance with certain covenants in our credit agreements pursuant to which we then owed $94.9 million. Our lenders had the right to seek to accelerate the loans under the operative loan documents, but they did not do so or exercise other remedies. Instead, on November 20, 2006, we entered into agreements under which they waived our defaults and agreed with us to restructure our loans. As restructured, the interest rates on our loans were increased. The increased interest cost was deferred and added to principal. In addition, the maturity dates of the loans were changed so that a total of $69.9 million was due on or before February 28, 2007. The financial covenants were modified to require achievement of certain levels of earnings before interest, taxes, depreciation and amortization and certain other non cash expenses which we refer to as adjusted EBITDA, and to limit capital expenditures. As of September 30, 2007, we were not in compliance with the adjusted EBITDA covenant. We have received waivers of the violations of our adjusted EBITDA covenant for the months of December 2006 through September 2007. We also granted warrants to the holders of our Term Loan B to purchase 3.1 million shares of our common stock at a price of $1.3638 per share. The warrants are exercisable for a period of seven years following November 20, 2006. We agreed to file a registration statement with the SEC covering the resale of the shares issuable upon the exercise of the warrants and to use our best efforts to have the registration statement declared effective by the SEC no later than May 18, 2007. However, because we filed our Annual Report on Form 10-K for 2006 and our Quarterly Report on Form 10-Q for the first quarter of 2007 late and are currently focusing on filing timely periodic reports, we have not yet filed the registration statement. We have not received any demands from the warrant holders to file the registration statement as of the date of this report; we plan to file the registration statement as soon as reasonably practicable. Because the present value of the cash flows under the terms of the revised

debt instruments were less than 10% different than the present value of the remaining cash flows under the terms of the original instruments, we accounted for the restructuring of our loans as a modification of the previously outstanding debt. Accordingly, we charged to expense the legal fees we incurred and recorded the fair value of the warrants and loan fees as deferred financing costs.

We estimated the total fair value of the warrants issued to the holders of Term Loan B to be $2.8 million using the Black-Scholes valuation model. We recorded the fair value of the warrants and $1.0 million of loan fees incurred from our lenders in connection with the restructuring of our loans in November 2006 as additional deferred financing costs. These costs, together with $2.8 million of previously unamortized deferred financing costs associated with the credit facility established in June 2006, aggregated $6.6 million. In connection with the early payment of most of our debt in January 2007, substantially all of the remaining unamortized deferred financing costs was charged to expense as a loss on early extinguishment of debt in the first quarter of 2007.

Because we are uncertain whether we can comply with all of the terms of the restructured loan agreement, the balance of the loan has been classified as a current liability on our balance sheet.

As discussed further in Note 9 to our condensed consolidated financial statements, during the first six months of 2007 we sold our Canadian, United Kingdom and German ATM businesses and our United States and Canadian photocopy businesses and used $98.6 million from the proceeds of those sales to make principal and interest payments under our financing agreements with GSO Origination Funding Partners and other lenders. Following these payments, as of June 30, 2007, the only remaining balance under our term loans and line of credit was $1.9 million on our Term Loan B which is due in June 2012.

United States Vault Cash Facility

General. In March 2000, we established a facility for funding the cash which is placed in our ATM equipment (which we refer to as “vault cash”) for our United States ATMs. As of September 30, 2007, we had access to $100 million of vault cash under the facility of which $65.8 million was being used.

Structure of the facility. The facility is based on the relationship among three primary companies. These companies are:

	•		TRM Inventory Funding Trust, or the Trust. The Trust is a Delaware business trust that was created pursuant to a deposit trust agreement among GSS Holdings, Inc. as depositor, Wilmington Trust Company as owner trustee, and TRM ATM Corporation as servicer. The majority equity holder in the Trust is Autobahn Funding Company, LLC, and the minority equity holder is GSS Holdings, Inc. Neither we, TRM ATM Corporation nor any of our other affiliates have any ownership interest in the Trust.

	•		TRM ATM Corporation, or TRM ATM. TRM ATM is one of our subsidiaries and acts as the servicer under the facility.

	•		Autobahn Funding Company, LLC, or Autobahn. Autobahn is an affiliate of DZ Bank AG, Deutsche Zentral-Genossenschaftsbank Frankfurt am Main, and is the lender under the facility. Autobahn is independent of us, TRM ATM and our other affiliates.

Operation of the facility. We obtain our vault cash under the facility pursuant to a Loan and Servicing Agreement. In accordance with that agreement, Autobahn raises funds by issuing asset-backed commercial paper. Autobahn then loans those funds to the Trust at an interest rate equal to the interest rate borne by the commercial paper plus 1.35%. The loaned funds are then deposited into an account from which, at the direction of TRM ATM acting as the servicer of the facility, they are disbursed to armored car carriers for transportation to our United States ATMs. The loaned funds are then available for withdrawal from the ATMs by the public. The cash at all times remains the property of the Trust, and the Trust is ultimately obligated to repay Autobahn.

The Trust, as borrower under the facility, and TRM ATM, as servicer, use their cash from operations, which is principally derived from ATM withdrawal and interchange fees, to fund a settlement account from which, in combination with its vault cash, TRM ATM directs repayment of the loans to the Trust, the interest on the loans, a specified return on the equity investment made by the investors in the Trust and the fees described below.

The Trust engages TRM ATM, as servicer, and other agents and contractors from time to time to perform all duties assigned under the Loan and Servicing Agreement. Under the terms of the November 2004 amendment to the facility, TRM ATM is permitted to subservice certain servicing functions to eFunds Corporation pursuant to a master services agreement related to our acquisition of the eFunds ATM business.

The Loan and Servicing Agreement contains covenants applicable to us, including a minimum tangible net worth requirement of $12 million.

Collateral and credit enhancement. The Trust’s borrowings from Autobahn are collateralized by the assets of the Trust, principally the vault cash. In addition, where the vault cash is placed in an ATM, the Trust has a security interest in all of the fees and charges earned or received with respect to that ATM until those fees are distributed to TRM ATM.

Autobahn is a party to a liquidity purchase agreement with other lenders, which ensures that the Trust continues to have funds available for the term of the agreement and that Autobahn will have the funds necessary to repay the commercial paper it issues. Each lender party to the agreement is required to have a credit rating at least as high as the credit rating of the commercial paper that Autobahn issues.

Cost of the facility. The primary costs paid in connection with the facility are:

	•		Interest on the loaned funds. The loans bear interest at an interest rate equal to 1.35% plus the interest rate borne by the commercial paper that was issued to raise the funds for the loans.

	•		Return for equity investors. Autobahn and GSS Holdings, Inc., as equity investors in the Trust, receive a return on the value of their investments, which were $1,485,000 and $15,000, respectively, as of September 30, 2007. Autobahn’s annual return is equal to 1.35% plus the interest rate borne by the commercial paper that is outstanding. GSS Holdings’ annual return is equal to 25.0%.

	•		Fees. Autobahn receives a commitment fee and the collateral agent receives administrative fees in connection with the facility.

Interest on loaned funds, return for the equity investors and fees paid to Autobahn and the collateral agent aggregated $3.8 million for the nine months ended September 30, 2007.

Risk of loss and insurance. Any risk with regard to the Trust or the ability of the Trust to repay the Trust’s debt resides with the Trust and with GSS Holdings as the minority equity investor and with Autobahn as the majority equity investor. TRM ATM serves only as an administrator or servicer of the Trust.

We maintained letters of credit totaling $3.8 million, or 6.1% of loans outstanding on September 30, 2007, to guarantee the performance of the servicer of the facility. The Trust’s subcontractors maintain insurance on behalf of the Trust so as to ensure the cash is safe while stored at correspondent banks, and during delivery to ATM equipment and to vault or bank storage facilities.

United Kingdom Vault Cash Facility

Before its sale in January 2007, our United Kingdom ATM business obtained vault cash under an agreement with a local bank. Vault cash obtained under the program remained the property of the bank, and was not included on our balance sheet.

Canadian Vault Cash Facility

Before its sale in January 2007, our Canadian ATM business obtained vault cash under an agreement with an armored car carrier that has a corresponding agreement with a local bank.

As in our U.K. vault cash arrangement, the vault cash obtained under the Canadian program remained the property of the bank, and was not included on our balance sheet.

Off-balance Sheet Arrangements

We have no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Contractual Commitments and Obligations

Contractual commitments and obligations as of September 30, 2007 were as follows (in thousands):


	Payments Due by Period
			October 1 –
			December 31,
Contractual obligations	Total		2007		2008-2009		2010-2011		After 2011
TRM Corporation and subsidiaries
Long-term debt	$	3,574	$	87	$	686	$	686	$	2,115
Operating leases		1,421		123		884		243		171
Purchase obligations		10,625		1,250		9,375		—		—

Total TRM Corporation and subsidiaries		15,620		1,460		10,945		929		2,286
TRM Inventory Funding Trust note payable		81,899		1,071		8,494		8,494		63,840

Total contractual cash obligations	$	97,519	$	2,531	$	19,439	$	9,423	$	66,126

The above payments include interest where applicable, with interest on variable rate obligations assumed to remain constant at the rate in effect as of September 30, 2007. The long-term debt and TRM Inventory Funding Trust note payable are shown above in accordance with their contractual terms. However, because we believe it is likely that our creditors may be able to demand payment of those debts during 2007, we have classified them as current liabilities in our consolidated balance sheet. Purchase obligations consist of a master services agreement with eFunds Corporation, which involves payment totaling at least $5 million annually over an initial term expiring in November 2009.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates as of September 30, 2007 are consistent with those discussed in our Annual Report on Form 10-K for the year ended December 31, 2006.

New Accounting Standards

expected to be taken in a tax return. The interpretation became effective for us beginning in 2007. Our adoption of FIN 48 did not have a material impact on our results of operations, financial position or cash flows.

In September 2006, the FASB issued Statement of Financial Accounting Standards, or SFAS, 157, “Fair Value Measurements.” SFAS 157 establishes a framework for measuring fair value under generally accepted accounting principles and expands disclosures about fair value measurements. This statement does not require any new fair value measurements. The statement is effective for us beginning in 2008. We anticipate no material impact on our results of operations, financial position or cash flows as a result of adopting this statement.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Standard No. 115,” which allows companies the option to measure certain financial instruments and other items at fair value. The provisions of SFAS No. 159 are effective for us beginning in 2008. We are currently evaluating the impact, if any, this statement will have on our financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from changes in interest rates, which could impact our results of operations and financial condition. We do not hold or issue derivative commodity instruments or other financial instruments for trading purposes.

We invest our cash in money market accounts. The income earned from these money market accounts is subject to changes in interest rates. Interest income from continuing operations was $246,000 for the nine months ended September 30, 2007, and $151,000 for the same period in 2006. If the interest rate we earned on the $7.6 million cash we had available for investment at September 30, 2007 increased or decreased by 1%, our interest income would increase or decrease by $76,000 per year.

Interest on borrowings pursuant to our syndicated loan facility is at variable rates. As of September 30, 2007 the interest rate on our $2.0 million term loan was 17.23%. If the interest rate for our borrowings under the term loan increased by 1%, our interest cost would increase by $20,000 per year.

Under our United States vault cash facility, the Trust borrows money pursuant to a note funded by the sale of commercial paper. The Trust owed $62.5 million at September 30, 2007 and $82.9 million at September 30, 2006 under this arrangement. The weighted average interest rate on these borrowings at September 30, 2007 was 6.70%. The Trust also pays a return to its equity investors on their investments which totaled $1,500,000 at September 30, 2006 and 2007 at a rate equal to the interest rate on the Trust’s borrowings. Interest, return for equity investors and fees relating to the Trust’s borrowings, which are included in cost of sales in our consolidated financial statements, totaled $1.3 million and $1.6 million for the quarters ended September 30, 2007 and 2006, respectively, and $3.8 million and $4.3 million for the nine-month periods ended September 30, 2007 and 2006, respectively. If the interest rate for the Trust’s

borrowings and the rate of return to the Trust’s equity investors at September 30, 2007 increased by 1%, to a weighted average of 7.70%, our cost of sales would increase by $640,000 per year.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities and Exchange Act of 1934 reports is recorded, processed, summarized and reported within the periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision of our Chief Executive Officer and Chief Financial Officer and with the participation of our disclosure committee appointed by such officers, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, and because we have not completed the testing of our remediation of certain material weaknesses in our internal control over financial reporting identified as of December 31, 2006, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are not effective at a reasonable assurance level.

Subsequent to the end of 2006, we believe that the material weaknesses in our internal control over financial reporting that we identified as of December 31, 2006 in our annual report on Form 10-K for the year ended December 31, 2006 have been remediated by the following changes, subject to completion of the testing of the remedial measures taken.

Ineffective controls over segment disclosures and impairment analysis. Beginning in the fourth quarter of 2006, each quarter our senior accounting management prepares a summary and analysis of changes in our operations, organization and financial reporting practices that might affect our operating segments or reporting units, including a conclusion on the appropriateness of the operating segments and reporting units we have identified. These summaries are reviewed by our Chief Financial Officer. Further, during the first quarter of 2007, we sold or reclassified as held for sale substantially all of the assets of all but one of our business segments, greatly simplifying the analysis of changes that might affect our operating segments or reporting units.

Inadequate staffing in the United Kingdom. In January 2007 we sold all of our operations in the United Kingdom.

Other than those as described in the three previous paragraphs, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during our most recent fiscal quarter.

ITEM 6. EXHIBITS

(a) Exhibits


2.1		Asset Purchase Agreement dated June 19, 2007, between TRM (Canada) Corporation and TRM Multitech Services Inc. (incorporated herein by reference to Exhibit 2.1 of Form 10-Q for the period ended March 31, 2007).

3.1(a)		Amendments to the Restated Articles of Incorporation (incorporated herein by reference to Exhibit 3.1(a) of Form 10-K for the fiscal year ended June 30, 1998).

3.1(b)		Restated Articles of Incorporation (incorporated herein by reference to Exhibit 3.1(b) of Form 10-K for the fiscal year ended June 30, 1998).

3.2		Restated Bylaws (incorporated herein by reference to Exhibit 3.2 of Form 10-K for the fiscal year ended June 30, 1998).

4.1		Specimen Stock Certificate (incorporated herein by reference to Exhibit 4.1 of Form S-3/A filed on August 25, 2004 [No. 333-116748]).

4.2		Investors’ Rights Agreement (incorporated herein by reference to Exhibit 4.1 of Form 8-K dated July 9, 1998).

4.3		Articles V, VI and VII of the Restated Articles of Incorporation, as amended (See Exhibit 3.1).

4.4		Articles I, II, V, VII and X of the Restated Bylaws (See Exhibit 3.2).


10.6	(a)	Employment Agreement dated August 1, 2007 by and between TRM Corporation and Michael Dolan (incorporated herein by reference to Exhibit 10.6(a) of Form 10-Q for the period ended June 30, 2007).

	(b)	Employment Agreement dated August 12, 2005 by and between TRM Corporation and Daniel E. O’Brien (incorporated herein by reference to Exhibit 10.7(f) of Form 10-Q for the period ended June 30, 2005).

	(c)	Retainer Agreement dated May 31, 2007 by and between TRM Corporation and Jeffrey F. Brotman (incorporated herein by reference to Exhibit 10.6(b) of Form 10-Q for the period ended March 31, 2007).

	(d)	Employment Agreement dated May 21, 2007, by and between TRM Corporation and Richard B. Stern (incorporated herein by


			reference to Exhibit 10.6(c) of Form 10-Q for the period ended March 31, 2007).

		(e)	Consulting Agreement dated December 12, 2006, by and between TRM Corporation and Danial J. Tierney (incorporated herein by reference to Exhibit 10.6(d) of Form 10-K for the year ended December 31, 2006).

		(f)	Severance Agreement dated December 12, 2006 by and between TRM Corporation and Danial J. Tierney (incorporated herein by reference to Exhibit 10.6(e) of Form 10-K for the year ended December 31, 2006).

		(g)	Retainer Agreement dated May 3, 2006 by and between TRM Corporation and Amy B. Krallman (incorporated herein by reference to Exhibit 10.7(j) of Form 10-Q filed for the quarter ended March 1, 2006).

		(h)	Severance Agreement and Release of Claims dated September 17, 2007, by and between TRM Corporation and Daniel E. O’Brien (incorporated herein by reference to Exhibit 10.1 of Form 8-K filed on September 19, 2007).

10.8	(a)		Fourteenth Amendment to Loan and Servicing Agreement dated as of November 2, 2007 among TRM Inventory Funding Trust, TRM ATM Corporation, Autobahn Funding Company LLC, DZ Bank AG, Deutsche Zentral-Genossenschaftsbank Frankfurt am Main, and U.S. Bank National Association.


31.1		Certification of Chief Executive Officer of TRM Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer of TRM Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.3		Certification of Principal Accounting Officer of TRM Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer of TRM Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

32.2		Certification of Chief Financial Officer of TRM Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

32.3		Certification of Principal Accounting Officer of TRM Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.


	TRM CORPORATION
Date: November 8, 2007	By:	/s/ Jon S. Pitcher
		Jon S. Pitcher
		Principal Accounting Officer

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