##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number: 1-13521
      Hypercom Corporation
 (Exact name of registrant as
    specified in its charter)
  Delaware

86-0828608(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   2851 West Kathleen Road,
 Phoenix, Arizona 85053
 (Address of principal executive
    offices) (Zip Code)
  (602) 504-5000
 (Registrants telephone number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $.001 par value per share

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
    Class

Outstanding at March 3, 2008Common Stock, $.001 par value per share

53,355,702 shares   DOCUMENTS
    INCORPORATED BY REFERENCE
  Document

Parts Into Which IncorporatedNotice and Proxy Statement for the 2008 Annual

Part III (Items 10, 11, 12, 13 and 14)Meeting of Stockholders (Proxy Statement)




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##### 





TABLE OF
    CONTENTS
  
  Item No.

Caption

PagePART I1.


Business


31A.


Risk Factors


151B.


Unresolved Staff Comments


272.


Properties


273.


Legal Proceedings


274.


Submission of Matters to a Vote of Security
    Holders


28PART II5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


296.


Selected Financial Data


307.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


317A.


Quantitative and Qualitative Disclosures About
    Market Risk


518.


Financial Statements and Supplementary Data


529.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


529A.


Controls and Procedures


529B.


Other Information


53PART III10.


Directors, Executive Officers and Corporate
    Governance


5311.


Executive Compensation


5312.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


5313.


Certain Relationships and Related Transactions,
    and Director Independence


5314.


Principal Accountant Fees and Services


53PART IV15.


Exhibits and Financial Statement Schedules


54Signatures


55Exhibit Index


95EX-10.20EX-21.1EX-23.1EX-24.1EX-31.1EX-31.2EX-32   1




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CAUTIONARY
    STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
      Form 10-K
 2




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PART I  Unless otherwise indicated, the terms Hypercom,
    the Company, we, our, and
    our business refer to Hypercom Corporation and its
    subsidiaries on a consolidated basis.
  Item 1.
    Business  General
      Recent
    Developments
  e-Transactions
       3




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Business
    History
  on-site
    Disclosures about Segments of an Enterprise and
    Related Information
    Electronic
    Payment Industry
     4




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Market
    Size and Barriers to Entry
    
    Price.  Pricing is a significant consideration
    in our customers purchase decisions. Consequently,
    terminal manufacturers have been increasingly challenged to
    deliver products and services that target critical
    specifications at competitive price points.
    Scale.  The design, manufacture and
    distribution of POS terminals on a global basis requires a
    significant investment in development, manufacturing and
    distribution resources. As a result, smaller or regional
    manufacturers may have limited ability to compete with larger
    manufacturers who can spread costs on a broader basis at higher
    volumes.
    Certification Standards and Costs.  All payment
    solutions must be certified with card associations, financial
    institutions and payment processors. Certification standards are
    constantly changing and the certification process can be a
    lengthy and expensive undertaking. Many terminal manufacturers
    in the industry lack the relationships, knowledge and experience
    necessary to obtain these certifications quickly and
    cost-effectively, thereby limiting or delaying their time to
    market and overall competitiveness.
    Commitment to Future Technologies.  New
    standards, regulations and certifications in the electronic
    payment industry require terminal manufacturers to continually
    develop new technologies that enhance the performance and
    profitability of both customers and end-users. Such requirements
    necessitate significant annual investment in research and
    development.
    Global Presence.  Large customers may prefer
    terminal manufacturers that have a worldwide presence with the
    ability to provide services and support in many geographic
    regions. Smaller or regional manufacturers may be competitive in
    their niche, but they may not be able to provide cost-effective
    equipment, services and timely support on a global scale.  Market
    Growth Drivers
    
    Security Standards.  New industry security and
    interoperability standards are driving recertification and
    replacement of electronic payment systems, particularly in
    Europe and the U.S. In order to offer electronic payment
    systems that connect to payment networks, electronic payment
    system providers must certify their products and services with
    card associations, financial institutions and payment processors
    as well as comply with government and telecommunication company
    regulations. The major card associations have 5




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introduced new security standards to address the continually
    growing need for transaction security. The two major security
    standards initiatives in the industry are EMV and PCI. The name
    EMV comes from the initial letters of EuroPay International,
    MasterCard International and Visa International, the three
    companies that originally cooperated to develop the standard.
    EMV is a set of global specifications for cards, terminals, and
    applications designed to ensure interoperability between smart
    cards and electronic payment systems on a global basis, increase
    functionality of electronic payment systems and reduce fraud.
    The move to comply with EMV specifications should continue to
    significantly promote terminal replacement, particularly in
    regions such as Europe, Asia-Pacific, and Central and South
    America, where EMV implementation conversion dates have been
    established. Visa International and MasterCard International
    cooperated in recent years to develop and release the Payment
    Card Industry (PCI) specification and test methods
    for the certification of electronic payment systems for secure
    debit transactions. This new set of standards supersedes
    previous security standards separately issued by Visa and
    MasterCard (not including EMV) and has been a driver of
    additional terminal replacement.  
    Interoperability Standards.  In the U.S.,
    payment processors have two levels of certification, referred to
    as Class A and Class B. Class B certification
    ensures that an electronic payment system adheres to the payment
    processors basic functional and network requirements.
    Class A certification adds another stipulation that the
    payment processor will support the electronic payment system on
    its internal help desk systems. Obtaining these certifications
    can be costly and time intensive, and is required by
    U.S. payment processors. Electronic payment systems must
    also comply with evolving country-specific security regulations.
    Countries such as Australia, Canada, Germany, the Netherlands,
    New Zealand, Singapore, Sweden and Switzerland have particularly
    stringent and specific security standards. Electronic payment
    systems also must comply with recommendations of
    quasi-regulatory authorities and standard-setting committees,
    which address, among other things, fraud prevention, processing
    protocols and technologies utilized. New standards are
    continually being adopted as a result of worldwide fraud
    prevention initiatives, increasing the need for system
    compatibility and new developments in technology. These complex
    and evolving requirements will provide an opportunity for
    continuous replacement of outdated equipment with newly
    certified electronic payment systems.
    Broadband & Internet
    Protocol.  Internet Protocol (IP)
    connectivity provides faster transmission of transaction data at
    a lower cost, enabling more advanced payment and other
    value-added applications at the point of sale. Major
    telecommunications carriers have expanded their communications
    networks and lowered fees to allow more merchants to utilize IP
    networks cost effectively. The faster processing and lower costs
    associated with IP connectivity have opened new markets for
    electronic payment systems, many of which have previously been
    primarily cash-only industries such as quick service restaurants
    (QSRs).
    Contactless.  Contactless technology creates a
    convenient way to pay for goods and services. It is an emerging
    technology and rapidly gaining acceptance. It can deliver
    extremely fast transaction times, reduce waiting times and
    eliminate the need for paper signatures and receipts. It is
    especially suitable for access control and use in employee
    cafeterias, QSRs, gas stations and public transit systems.
    Wireless.  Wireless electronic payment
    solutions are being developed to increase transaction efficiency
    and mobility. Wireless terminals can provide consumers with
    additional security by allowing them to maintain control of
    their payment card at all times. Additionally, the cost per
    transaction using wireless terminals may be lower than that of
    wired terminals in regions burdened with high telecommunications
    costs such as Europe and Asia-Pacific. It also enables terminal
    deployment in those regions lacking an established landline
    telecommunications infrastructure. We provide IP,
    Code-Division Multiple Access (CDMA), General
    Packet Radio Service (GPRS), Bluetooth and Wi-Fi
    connectivity across our range of wireless products.
    Debit.  Debit is the dominant payment
    instrument in most international markets and is rapidly growing
    in the U.S. Debit cards allow banks to reach a wider
    population of potential cardholders, thereby increasing the
    number of transactions. The cost of a debit transaction is
    generally lower than that of a credit transaction and combined
    with PIN-based security or biometric technology, provides a
    solution that helps reduce fraud. As a 6




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
    Emerging Regions and Markets.  In the
    U.S. and Europe, consumer markets such as QSRs and
    unattended/self service have started using IP POS terminal
    devices. These lesser penetrated vertical markets represent a
    significant opportunity for us, as do geographies in each of our
    Americas, EMEA and Asia-Pacific segments, such as Brazil, China,
    Eastern Europe, India, Mexico and Russia, which are experiencing
    rapid growth in the usage of card-based payments. The increasing
    adoption of electronic payments in these regions is driven
    primarily by strong economic growth, improving
    telecommunications infrastructure development, strong support
    from governments seeking to increase sales tax collection, and
    the dramatic increase of wireless networks for voice and data
    communications.
    Multiple Applications.  In addition to payment,
    terminals have the capability to perform concurrent applications
    like loyalty, stored value, on-screen advertising, electronic
    signature capture, age identification, and benefits
    authorization and transfer. The secure integration of these
    applications along with payment processing provides a
    comprehensive solution that allows merchants a means of
    competitive differentiation, revenue enhancement and cost
    reduction.
    Non-Traditional Applications.  The government
    sector, particularly in the U.S., is a significant opportunity
    for terminal manufacturers. Initiatives such as identity
    verification, check imaging/conversion, electronic benefit
    transfer programs, and the U.S. militarys payment
    programs are all potential drivers of terminal deployment.
    Additionally, electronic transaction terminals and transaction
    services technology can be utilized in the healthcare sector to
    provide fast and secure transmission of health benefits
    eligibility, authorization and payment.  Competition
  start-ups
    multi-lane
  Competitive
    Strategy
    
    Further Penetrate Existing Markets.  We plan to
    continue promoting and marketing the functionality of our
    product portfolio to address the specific needs of key vertical
    markets. We intend to continue to focus on these attractive
    electronic transaction markets, as well as increase our
    penetration of markets such as automatic teller machines
    (ATMs), Electronic Benefit Transfer
    (EBT), Medical EBT, and unattended and integrated
    kiosks. In planning to maintain our leadership in the
    independent retail market, we have further organized our
    products to target both the high-end and low-end markets,
    through acceptance of magnetic and smart cards, support of
    credit, debit, check, EBT and a full range of prepaid products,
    including gift cards and loyalty programs, among others. Our
    products are easily integrated with a full range of 7




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optional internal or external devices, including secure PIN
    pads, check imaging equipment, barcode readers, contactless and
    RFID readers and biometric devices. Our secure PIN pads support
    credit and debit transactions, as well as a wide range of
    applications that are either built into electronic payment
    systems or connect to electronic cash registers
    (ECRs) and other electronic payment systems.  
    Capitalize on Demand for Wireless
    Transactions.  We plan to accommodate the growing
    demand for reliable, secure, convenient and cost-efficient
    wireless devices. Potential users of this technology include
    mobile merchants such as taxi and delivery drivers, in-flight
    airline service providers, stadium event operators, off-site
    services and
    pay-at-table
    restaurants. These merchants are looking for a POS terminal that
    utilizes the convenience of wireless communication technologies
    and the security of being able to receive real-time
    authorizations with the reliability of a wired terminal.
    Simultaneously, we are aggressively transitioning into the
    consumer transaction market by providing processing alternatives
    like stored value and prepaid replenishment services for the
    transportation sector and electronic wallet technology as an
    alternative to cash payments.
    Capitalize on Terminalization Requirements of Emerging
    Geographic Regions.  We plan to continue seeking
    opportunities to expand global market share by leveraging our
    product portfolio and distribution channels in emerging,
    high-growth regions in Europe, Asia-Pacific and South America.
    In addition to expanding into new geographic markets, we will
    benefit from a replacement cycle that is ongoing in various
    geographic regions for a variety of reasons, including
    valued-added technologies (signature capture, contactless,
    multi-application); new security standards (EMV and PCI); and
    newer communications technologies (wireless, IP connectivity).
    Focus on Market-Driven Product Development.  We
    plan to continue concentrating our research and development
    resources on new products and services that address the current
    and near future requirements of our customers and end-users. We
    plan to focus our development efforts in the following areas:
    enhanced security at both the terminal and transaction level;
    advanced communications technologies such as
    IP-enabled
    and wireless terminals; multiple-application; contactless
    technologies; and products for new vertical markets such as
    unattended/integrated kiosks and ATMs. We will continue to work
    with our customers to ensure our products meet their needs and
    technical requirements and are brought to market in a timely and
    cost-effective manner.
    Improve Total Cost Structure.  We plan to
    continue reducing our cost of manufacturing, research and
    development, selling, services delivery, general, and
    administrative functions to enhance our profitability and
    competitiveness. We intend to further reduce our product costs
    through design and process improvements, reductions in component
    costs, and more efficient inventory management and distribution,
    which we intend to accomplish in part due to our previously
    announced shift to a contract manufacturing model. We will
    continue to maintain a market-centric approach to our research
    and product development activities, thus ensuring that our
    efforts are directed at commercially feasible opportunities. As
    our current infrastructure is suitable to our current and
    foreseeable business requirements, our incremental investment
    requirements should be nominal and our existing cost structure
    is expected to be significantly leverageable at higher volumes
    of revenue. We continue to evaluate our sales channel
    infrastructure and will pursue alternate channels where it makes
    economic sense to do so. We also intend to continue to refine
    our foreign exchange hedging program and global tax strategy to
    minimize those costs and risks associated with international
    operations.
    Continue to Pursue Recurring Revenue
    Opportunities.  We plan to further identify and
    pursue opportunities that are complementary to our existing
    products to provide recurring revenue, including expanding our
    services business, which provides deployment, help-desk, repair
    and other post-sale services, in Australia, Brazil and Mexico.
    We will continue to pursue similar opportunities that will help
    us enhance our primary business of terminal manufacturing to a
    more diversified business model that includes both one-time and
    recurring revenue streams.
    Consider Strategic Acquisitions.  Although our
    acquisition and subsequent integration of TeT will require
    significant effort on our part and will be a major focus of ours
    throughout the remainder of 2008, we may augment our growth by
    acquiring complementary businesses, new products to enhance our
    core 8




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competencies, or new technologies to complement our research and
    development activities. Any acquisition would be intended to
    broaden our suite of electronic payment solutions, expand our
    presence in selected geographies, broaden our customer base,
    expand recurring revenue opportunities or increase our
    penetration of selected channels and vertical markets.  Product
    Lines and Services
    Terminals
    and Peripherals
    
    Terminals includes the Optimum L4150, L4200
    and L4250  compact, high-performance signature
    capture and PIN entry card payment terminals specifically
    designed for multilane retailers (the L4150 is not currently
    offered in our Asia-Pacific segment); the Optimum T4100 and
    T4200 family  powerful 32-bit desktop terminals for
    true multi-application (currently offered only in our Americas
    segment); the Optimum T2100  a handover desktop
    terminal specifically designed to quickly perform EMV
    transactions; the T7Plus  a terminal that includes a
    combination of features and functions for merchants who need a
    reliable, low-cost POS terminal; the Optimum M2100, M4100, M4230
    and M4240  mobile terminals that leverage the latest
    in wireless communication technologies. The Optimum L4150,
    L4200, L4250, T4100 and T4200 family are RFID-ready terminals.
    Peripherals includes printers, PIN pads,
    check readers, receipt capture devices, biometric, RFID
    verification devices and external modems. Our family of durable,
    high-security PIN pads and card acceptance devices are designed
    for either indoor or outdoor use. The products include the
    Optimum P2100  an EMV-compliant PIN pad for
    integrated retail environments (currently offered only in our
    EMEA segment); the PV130 and P1300  PCI-approved PIN
    entry devices that meet the latest PCI security standards; the
    S9, S9S and S9C  secure PIN pads built for indoor
    use; and the S1200 and S1300  the outdoor components
    to our QSR drive-thru solution.  Transaction
    Networking Devices, Transaction Management Systems and
    Application Software
  ® tm tact ® ®
  Services
    Asset Management Services on-site
 9




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
    NetSet Brazil, NetSet Chile and Hypercom de
    Mexico NetSet Brazil, NetSet Chile and Hypercom
    de Mexico are highly capable services organizations that provide
    services to major banks, card associations and other customers
    in our industry. NetSet Brazil is our largest service
    organization, covering all of Brazil with multiple service
    centers and service resources located throughout the country. We
    continually seek to expand our service market share by
    increasing the deployed population of our terminals and product
    offerings in Brazil, as well as servicing terminals manufactured
    by our competitors. Hypercom de Mexico and NetSet Chile operate
    under a similar business model as NetSet Brazil and cover
    substantially all of their respective countries.
    ACG Group On February 8, 2007, we
    acquired the existing business and assets of ACG Group Pty
    Limited and its associated entities in Australia
    (ACG) to provide asset management services to
    merchant locations throughout Australia. We expect to leverage
    this investment and apply this service capability to
    opportunities throughout the Asia-Pacific region.
    Pan-region Repair Services Through
    NetSet Americas Servicio Centro, our repair facility in Sonora,
    Mexico, we provide quality repair services for in-warranty and
    out-of-warranty equipment repairs to North American customers.
    During 2007, we transitioned our existing
    U.S.-based
    repair operations to this new facility.
    Authorized Repair Facilities In addition
    to our direct repair service offering, we selectively authorize
    capable third-party repair facilities to service and repair
    Hypercom equipment through our Authorized Repair Facility
    program. This program seeks to offer increased choices for
    repair service with our assurance of repair service quality and
    cycle time for our customers.
    Enhanced Warranty Solutions Our
    multi-year agreement with The Warranty Group allows customers to
    purchase enhanced warranty plans for select Hypercom payment
    terminals and other devices. The plans will extend the term
    protection of our standard industry-leading warranty for a total
    coverage of up to five years.  Trusted Transaction Services dial-up
  Hypercom Payment Solutions U.S.-based
 10




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Product
    Marketing
    Sales and
    Distribution
    
    Americas  North America; Mexico, the Caribbean and
    Central America (MCC); and South America;
    EMEA; and
    Asia-Pacific.    
    Payment processors;
    Distributors/resellers;
    Large retail chains and QSRs;
    Financial institutions;
    ISOs; and
    Government entities.        
    Global Presence.  We are one of the largest
    worldwide providers of electronic payment system solutions for
    use at the point of sale. We have developed a global network of
    sales, support and development centers. We believe that our
    experience and global presence enable us to market, distribute
    and service our products more effectively, and in more markets
    than most of our competitors.
    Comprehensive Product Portfolio.  We offer a
    full range of products and services that address the spectrum of
    market requirements. Our product portfolio ranges from the
    low-cost, established and reliable T7 family of terminals to the
    more recently released, high-performance 32-bit Optimum family.
    Our terminals are further complemented by a wide variety of
    peripherals that enhance their capabilities. Our services
    include deployment, help-desk, repair and maintenance. We have
    major service centers in each of our segments:
    Americas  Brazil, Chile and Mexico; EMEA 
    the U.K.; and Asia-Pacific  Australia.
    Low Total Cost of Ownership.  The total cost of
    ownership includes the following costs: deployment,
    implementation, application certification, repair and
    maintenance and product obsolescence. We continue to 11




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support and focus on providing our customers with a clear
    migration strategy for new technologies, versus a buy today,
    replace tomorrow strategy.  
    Technology Adoption.  Our technological
    advances have continued to support industry adoption of
    value-added features, such as electronic receipt capture, smart
    cards, electronic signature capture, positive identification and
    multi-application. We offer network products to host such
    multi-application offerings. Other technology innovations
    include IP and wireless connectivity, as well as RFID and
    contactless acceptance. Our engineering has consistently focused
    on quality and performance, including speed of the transaction,
    number of and type of completed transactions, the speed of
    application download and the user interface. Our modular design
    allows our customers to only select the features that meet their
    specific needs, thereby minimizing their costs and increasing
    their flexibility. We have reorganized our development team in
    recent years to more rapidly develop, prototype, and release new
    products to meet customer needs.
    Terminal Management and Networking
    Expertise.  We are a leader in the fields of
    terminal management and networking with a significant number of
    installations of our POS network controllers worldwide,
    managing, not only our terminals, but those of our competitors
    as well.
    Security Expertise.  We are the industry leader
    in secure, state-of-the-art, network payment transactions
    providing full EMV and PCI certification, regulatory
    certifications, association certifications, contactless
    authentication, signature capture, identity and biometric
    authentication and enterprise security management, ensuring both
    physical and logical high performance interfaces are secure and
    certified for use globally, by both public telephony and mission
    critical computing processors.  Research
    and Development
    
    Identification of the applicable market and development
    parameters;
    Rapid development of engineering specifications, including
    target costs;
    State of the art design and engineering;
    Accelerated testing;
    Quality assurance; and
    Pilot production.       12




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Manufacturing
    and Resource Procurement
      on-site
      Industry
    Standards and Government Regulations
      
    Security Standards.  Security standards in our
    industry are promulgated largely by government, regional bank
    associations and card associations. These standards ensure the
    integrity of the payment process and protect the privacy of
    consumers using electronic transaction systems. New standards
    are continually being adopted or proposed as a result of
    worldwide fraud prevention initiatives, increasing the need for
    new security solutions and technologies. We have developed a
    security architecture that incorporates physical, electronic,
    operating system, encryption and application-level security
    measures in order to remain compliant with the growing variety
    of international requirements. This architecture is particularly
    successful in countries that have stringent and specific
    security requirements.
    EMV and PCI Standards.  EMV standards define a
    set of requirements to ensure interoperability between chip
    cards and terminals on a global basis, regardless of the
    manufacturer, the financial institution, or where the card is
    issued or used. Specific certifications are required for all
    electronic payment systems and their application software. PCI
    is a set of specification and test methods for the certification
    of electronic payment systems for secure debit transactions. We
    obtain EMV/PCI certifications where required.
    Payment Processor/Financial Institution
    Requirements.  In the U.S., we are required to
    certify our products with payment processors. We actively
    perform the essential Class B and Class A product
    certifications with all the major payment processors in the
    U.S. and international markets. The Class B
    certification process pertains to successful testing of the
    integrity of the host (interface) message formats with the
    payment processors requirements and specifications. Once
    the Class B certification process is completed, the payment
    processor may elect to take the software application and the
    hardware for additional in-house testing and support.
    Class A certification (which may take up to 12 months
    or more) includes more intensive 13




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functional and user-acceptance testing in order to establish
    their help-desk infrastructure. Class A Certification
    enables payment processors to provide direct support, deploy and
    promote the new products with their merchant base and sales
    force. We have significant experience in attaining these
    critical payment processor certifications and have a large
    portfolio of Class A certifications with major
    U.S. payment processors. We also have obtained
    certifications from international financial institutions and
    payment processors so that our products can be used on their
    specific networks.  
    WEEE and RoHS Directives.  In the European
    Union, we are subject to the Waste Electrical and Electronic
    Equipment (WEEE) Directive and the Restriction on
    Hazardous Substances (RoHS) Directive. The WEEE
    Directive requires producers of electrical and electronic
    equipment to label all covered products and also establish
    collection, treatment, and recovery systems for their electric
    and electronic waste. The RoHS Directive restricts the use of
    certain material in physical devices that include our solutions
    and/or
    require active steps to promote the recycling of materials.
    Telecommunications Regulatory Authority and Carrier
    Requirements.  Our products must comply with
    government regulations, including those imposed by the Federal
    Communications Commission (FCC) and similar
    telecommunications authorities worldwide regarding emissions,
    hazardous materials, radiation, safety and connections with
    telephone lines and radio networks. Our products must also
    comply with recommendations of quasi-regulatory authorities and
    of standards-setting committees. Our products have been
    certified as compliant with a large number of national
    requirements, including those of the FCC and Underwriters
    Laboratory in the U.S., and similar requirements in other
    countries. Wireless network carriers also have standards with
    which systems connected to their networks must comply. In
    addition to national requirements for telecommunications
    systems, many wireless network carriers have their own
    certification process for devices to be used on their networks.  Proprietary
    Rights
        Employees
    U.S.


International


TotalSales, Marketing and Operations


74



70



144Development


71



121



192Service Operations


39



514



553Manufacturing


33



256



289Finance and Administration


63



54



117Total Employees


280



1,015



1,295  14




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Available
    Information
  (602) 504-5000. Form 10-K, Form 10-Q, Form 8-K,
  Item 1A.
    Risk
    Factors  Form 10-K Form 10-K,
  Risks
    Related To Our Business
  We
    have in the past and may in the future make acquisitions and
    strategic investments, which involve numerous risks. We may not
    be able to address these risks without substantial expense,
    delay or other operational or financial problems.
    
    the loss of the $10 million we deposited with the TeT
    parent company, Thales, related to the TeT acquisition, which
    Thales may be entitled to retain under certain circumstances.
    the inability to assimilate the technologies, operations and
    personnel of the acquired business, technology or product;
    the potential disruption of our existing business, including the
    diversion of management attention and the redeployment of
    resources;
    the loss of customers;
    the possibility of our entering markets in which we have limited
    prior experience;
    the loss of key employees of an acquired business; and
    the inability to obtain the desired strategic and financial
    benefits from the acquisition or investment.   15




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##### Table of Contents



A
    competitor is seeking to stop one of our lenders, Francisco
    Partners, from meeting its obligations to loan us
    $60 million to partially fund the TeT acquisition and, if
    this competitor is successful, we may be forced to find
    alternative financing, which may be more expensive, if it is
    available at all.
    and/or
  International
    operations pose additional challenges and risks that if not
    properly managed could adversely affect our financial
    results.
    
    changes in foreign country regulatory requirements;
    various import/export restrictions and the availability of
    required import/export licenses;
    imposition of foreign tariffs and other trade barriers;
    political and economic instability;
    foreign currency exchange rate fluctuations;
    inability to secure commercial relationships to help establish
    our presence in international markets;
    inability to hire and train personnel capable of marketing,
    installing and integrating our products and services, supporting
    customers and managing operations in foreign countries;
    building our brand name and awareness of our products and
    services among foreign customers;
    competition from existing market participants that may have a
    longer history in and greater familiarity with the foreign
    markets we enter;
    extended payment terms and the ability to collect accounts
    receivable;
    the ability to repatriate funds;
    complicated tax and regulatory schemes where failure to comply
    may result in fines, penalties or litigation;
    complications associated with enforcing legal agreements in
    certain foreign countries, including Brazil, China and in
    developing countries; and
    availability of qualified and affordable staff with which to
    manage our foreign operations. 16




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##### Table of Contents



Quarterly
    revenue and operating results can vary, depending on a number of
    factors.
    
    variations in product mix, timing and size of fulfilled orders
    as a result of customer deferral of purchases
    and/or
    delays in the delivery of our products and services;
    accomplishment of certain performance parameters embedded in our
    service level agreements;
    market demand for new product offerings;
    delays in the delivery of our products and services;
    the type, timing and size of orders and shipments;
    product returns and warranty claims;
    variations in product mix and cost during any period;
    development of new relationships and maintenance and enhancement
    of existing relationships with customers and strategic partners;
    deferral of customer contracts in anticipation of product or
    service enhancements;
    deferral of certain revenue or gross margin in accordance with
    GAAP requirements;
    incremental costs incurred as a result of product quality
    and/or
    performance issues;
    inventory obsolescence and write-downs related to product life
    cycles;
    write-off of doubtful accounts receivable;
    variations in operating expenses, including research and
    development, selling, and general and administrative expenses;
    lease portfolio risk adjustments and loss provisions;
    restructuring activities;
    employment and severance agreement charges;
    foreign currency exchange rate fluctuations;
    availability and cost of financing;
    variations in income tax as a function of income recognition by
    tax jurisdiction;
    changing security standards or other technological
    changes; and
    industry and economic conditions, including competition,
    industry standards, product certification requirements, trade
    restrictions and other regulations.  The
    loss of one or more of our key customers could significantly
    reduce our revenues and profits.
   17




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##### Table of Contents



Our
    products may contain defects that may be difficult or even
    impossible to correct. Product defects could result in lost
    sales, additional costs and customer erosion.
    
    delays in shipping products;
    cancellation of orders;
    additional warranty expense;
    delays in the collection of receivables;
    product returns;
    the loss of market acceptance of our products;
    claims against us;
    diversion of research and development resources from new product
    development; and
    inventory write-downs.    We may
    accumulate excess or obsolete inventory that could result in
    unanticipated price reductions and write downs and adversely
    affect our financial results.
    
    the need to maintain significant inventory of components that
    are in limited supply;
    buying components in bulk for the best pricing;
    responding to the unpredictable demand for products;
    responding to customer requests for short lead-time delivery
    schedules;
    failure of customers to take delivery of ordered
    products; and
    product returns.   18




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##### Table of Contents



Security
    is vital to our customers and therefore breaches in the security
    of transactions involving our products or services could
    adversely affect our reputation and results of
    operations.
    If we
    are unable to adequately protect our proprietary technology, our
    competitors may develop products substantially similar to our
    products and use similar technologies, which may result in the
    loss of customers.
      Our
    products and other proprietary rights may infringe on the
    proprietary rights of third parties, which may expose us to
    claims and litigation.
      A
    disruption in our manufacturing and assembly capabilities or
    those of our third-party manufacturers or suppliers would
    negatively impact our ability to meet customer
    requirements.
   19




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##### Table of Contents



We are
    subject to a complex system of domestic and foreign taxation and
    unanticipated changes in our tax rates or exposure to additional
    tax liabilities could affect our profitability.
      Fluctuations
    in currency exchange rates may adversely affect our financial
    results.
  non-U.S. dollar non-U.S. dollar non-U.S. dollar
  Adverse
    resolution of litigation may adversely affect our business or
    financial results.
   20




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##### Table of Contents



Our
    future success is substantially dependent on the continued
    service of our senior management and other key
    employees.
      Shipments
    of electronic payment systems may be delayed by factors outside
    of our control, which can harm our relationships with our
    customers.
    While
    we believe we comply with environmental laws and regulations, we
    are still exposed to potential risks associated with
    them.
  and/or and/or
  Force
    majeure events, such as threats of terrorism, terrorist attacks,
    other acts of violence or war, and health epidemics may
    adversely affect the markets in which our common stock trades,
    our ability to operate our business and our financial
    results.
   21




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##### Table of Contents



Chinas
    changing economic environment may impact our ability to do
    business in China.
    Uncertainties
    with respect to the Chinese legal system may adversely affect
    us.
    If we
    are unable to maintain the quality of our internal control over
    financial reporting, any unremediated material weaknesses could
    materially and adversely affect our ability to provide timely
    and accurate financial information about our business, which
    could harm our business and stock price.
  Form 10-K.
 22




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##### Table of Contents



Risks
    Related To The Industry
  The
    markets in which we compete are highly competitive, maturing,
    and subject to price erosion.
        We are
    subject to industry and technology changes and are dependent on
    development and market acceptance of new products. If we are
    unable to adequately respond to these changes and to market
    demands in a timely manner, our business will not be
    successful.
    
    identify, develop, or manufacture new products, services and
    technologies in a cost effective manner;
    market or support these new products, services and technologies
    on a timely and effective basis;
    eliminate defects in new products and service offerings;
    gain market acceptance for new products, services and
    technologies; or
    respond to technological changes, new industry standards, and
    announcements of new products, services and technologies by
    competitors.   23




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##### Table of Contents



We are
    subject to extensive industry standards and government
    regulations. Our failure to properly comply with these standards
    and regulations could adversely affect our production and
    sales.
    
    industry standards imposed by EuroPay International, MasterCard
    International, VISA International, and others;
    certification standards required for connection to some public
    telecommunications networks;
    Federal Communications Commission regulations;
    Underwriters Laboratories regulations (or other similar
    regulations in countries in which we sell our products);
    the WEEE and RoHS Directives in the European Union; and
    certification standards set by domestic processors.    Risks
    Related To Our Common Stock
  We
    have incurred significant losses in the past and our results of
    operations have and may continue to vary from quarter to
    quarter, impacted in particular by business reviews performed by
    management. If our financial performance is not in line with
    investor expectations, the price of our common stock will suffer
    and our access to future capital may be impaired.
      Our
    stock price has been and may continue to be
    volatile.
    Our
    publicly-filed reports are reviewed by the SEC from time to time
    and any significant changes required as a result of such review
    may have a material adverse impact on the trading price of our
    common stock.
   24




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##### Table of Contents



We are
    subject to anti-takeover effects of certain charter and bylaw
    provisions and Delaware law.
    
    make it more difficult for a third party to acquire control of
    us, and discourage a third party from attempting to acquire
    control of us;
    may limit the price some investors are willing to pay for our
    common stock;
    enable us to issue preferred stock without a vote of our
    stockholders or other stockholder action;
    provide for a classified Board of Directors (the
    Board) and regulate nominations for the Board;
    make it more difficult for stockholders to take certain
    corporate actions; and
    may delay or prevent a change of control.    Our
    stock price could be affected because a substantial number of
    shares of our common stock will be available for sale in the
    future.
    The
    issuance of warrants to purchase common stock as part of the TeT
    acquisition could result in a lowering of our stock
    price.
    We
    currently do not intend to pay any dividends on our common
    stock.
   25




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##### Table of Contents



Risks
    Related To Our Indebtedness
  Our
    credit agreements contain various covenants and restrictions
    that limit the discretion of management in operating our
    business and could prevent us from engaging in some activities
    that may be beneficial to us and our stockholders.
    
    grant liens on assets;
    make restricted payments (including paying dividends on capital
    stock or redeeming or repurchasing capital stock);
    make investments (including investments in joint ventures);
    merge, consolidate or transfer all or substantially all of our
    assets;
    incur additional debt; or
    engage in certain transactions with affiliates.    We may
    be required to incur additional debt to meet the future capital
    requirements of our business. Should we be required to incur
    additional debt, the restrictions imposed by the terms of our
    debt arrangements could adversely affect our financial condition
    and our ability to respond to changes in our
    business.
    
    our vulnerability to adverse economic conditions and competitive
    pressures may be heightened;
    our flexibility in planning for, or reacting to, changes in our
    business and industry may be limited;
    we may be sensitive to fluctuations in interest rates if any of
    our debt obligations are subject to variable interest
    rates; and
    our ability to obtain additional financing in the future for
    working capital, capital expenditures, acquisitions, general
    corporate purposes or other purposes may be impaired.    The
    current condition of the credit markets may not allow us to
    secure financing for potential future activities on satisfactory
    terms, or at all.
   26




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##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties  Americas
        EMEA
    Asia-Pacific
          Item 3.
    Legal
    Proceedings   27




---



##### Table of Contents



SPA
    Syspatronic AG v. Hypercom Corporation, et al. (United
    States District Court for the Eastern District of Texas, Civil
    Action
    No. 2:07-CV-416
    (LED), filed on September 18, 2007)
      Wool v.
    Hypercom Corporation, et al. (Superior Court of the State of
    Arizona, County of Maricopa, Civil Action
    No. CV2008-050575,
    filed on February 13, 2008)
    CardSoft,
    Inc., et al. v. Hypercom Corporation, et al. (United States
    District Court for the Eastern District of Texas, Civil Action
    No. 2:08-CV-00098,
    filed on March 6, 2008)
    Item 4.
    Submission
    of Matters to a Vote of Securities Holders   28




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##### Table of Contents



Executive
    Officers of the Registrant
    Name

Age

Title

Other Business Experience since 1/1/2003Norman Stout


50


Chairman of the Company
    (since December 2007)

Director, Hypercom Corporation (since 2003); Chief Executive
    Officer, Mitel US; Chief Executive Officer, Inter-Tel, Inc.;
    Chief Strategy Officer and Chief Administrative Officer,
    Inter-Tel, Inc.Philippe Tartavull


50


Chief Executive Officer and
    President (since December 2007)

Director, Hypercom Corporation (since December 2007 and April
    2006  January 2007); President and Chief Operating
    Officer, Hypercom Corporation; President, Oberthur Card Systems,
    USADouglas J. Reich


64


Senior Vice President, General
    Counsel, Chief Compliance
    Officer and Secretary
    (since November 2001)Scott Tsujita


44


Senior Vice President, Finance,
    Treasury and Investor Relations
    (since October 2003)

Senior Vice President, Finance and Treasurer, Hypercom
    Corporation; Senior Executive Officer, Golden Eagle Leasing,
    Inc., Hypercoms former U.S. leasing subsidiary   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    RANGE OF
    SALES PRICES
  High


LowYear Ended 12/31/07First Quarter

$
6.43


$
4.76Second Quarter


6.38



5.58Third Quarter


6.19



4.33Fourth Quarter


5.58



4.50Year Ended 12/31/06First Quarter

$
9.57


$
6.32Second Quarter


11.16



8.00Third Quarter


9.70



6.77Fourth Quarter


7.95



6.08      29




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K
  Years Ended December 31,2007


2006


2005


2004


2003Statements of Operations Data:Net revenue

$
293,802


$
248,565


$
245,223


$
241,285


$
218,816Costs of revenue


218,354



159,540



172,091
e


144,140



128,212Provision for deferred contract costs














11,305
f


Gross profit

$
75,448


$
89,025


$
73,132


$
85,840


$
90,604Gross profit percentage


25.7
%


35.8
%


29.8
%


35.6
%


41.4
%Research and development

$
28,753


$
27,706


$
27,555


$
27,188


$
24,163Selling, general, and administrative


60,710



60,105



72,649



65,242



57,662In-process research and development






1,000b











Gain on sale of real property


(3,796
)


(2,953
)cTotal operating expenses


85,667



85,858



100,204
e


92,430



81,825Income (loss) from continuing operations


(10,219
)


3,167



(27,072
)


(6,590
)


8,779Income (loss) before discontinued operations


(8,575
)a


4,737



(30,243
)


(12,530
)


851Income (loss) from discontinued operations


1,098



2,233



(3,123
)d


3,868



10,347
dghNet income (loss)

$
(7,477
)

$
6,970


$
(33,366
)

$
(8,662
)

$
11,198Diluted income (loss) per share:Income (loss) before discontinued operations

$
(0.16
)

$
0.09


$
(0.58
)

$
(0.24
)

$
0.02Loss from discontinued operations


0.02



0.04



(0.06
)


0.07



0.20Diluted income (loss) per share

$
(0.14
)

$
0.13


$
(0.64
)

$
(0.17
)

$
0.22Weighted average basic shares


52,927



53,248



52,395



51,252



49,146Weighted average diluted shares


52,927



53,966



52,395



51,252



50,351Balance Sheet Data:Cash and equivalents

$
76,925


$
34,190


$
35,940


$
23,445


$
65,415Short-terms investments


4,988



47,228



57,951



69,962



17,400Working capital


119,657



141,923



143,039



159,789



155,048Total assets


250,244



236,716



238,914



277,260



264,568Short and long-term debt










8,377



8,829



9,857Total stockholders equity


174,499



178,931



170,774



205,372



204,297     a)
    
    In June 2007, we completed the sale of our headquarters
    facilities, located in Phoenix, Arizona, for a sale price of
    $16.3 million. We recorded a gain of $3.8 million on
    the sale in the second quarter of 2007. See Note 9 to our
    consolidated financial statements included herein. During the
    second quarter of 2007, we initiated a reconfiguration of our
    global sales and marketing organizations and incurred charges of
    $2.9 million during the year. During the second quarter of
    2007, we increased inventory reserves by $6.1 million
    primary related to non-PCI compliant products and components. 30




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##### Table of Contents



b)
    
    During December 2006, we acquired TPI and incurred a
    $1.0 million charge for the acquired in-process research
    and development. See Note 3 to our consolidated financial
    statements included herein.c)
    
    During September 2006, we completed the sale of our real
    property in Hong Kong for $5.2 million. We recorded a gain
    of approximately $3.0 million on the sale in the third
    quarter of 2006. See Note 9 to our consolidated financial
    statements included herein.d)
    
    During the fourth quarter of 2005, we made the decision to sell
    our U.K. lease portfolio (the U.K. Lease Business)
    as this leasing business did not align with our core business.
    As of December 31, 2005, the U.K. Lease Business
    operating results have been classified as discontinued
    operations in the statements of operations for all periods
    presented. We recognized a $6.6 million loss on the
    write-down of the U.K. Lease Business to its estimated fair
    value based on purchase offers received from potential buyers.
    See Note 5 to our consolidated financial statements
    included herein.e)
    
    During 2005, we performed a comprehensive review of our
    financial performance; market strategy; products; product
    development and life cycle management; and employee, customer
    and vendor relationships. The objective of the business review
    was to create a plan to improve profitability and customer
    relations, transition more rapidly to 32-bit technology
    products, rationalize operations and reorganize our corporate
    structure. As a result of this business review, we recorded
    charges of $16.3 million to costs of revenue and
    $2.7 million to operating expenses during 2005. See
    Note 4 to our consolidated financial statements included
    herein.f)
    
    During the second quarter of 2004, we recorded an
    $11.3 million charge to cost of revenue to reserve all
    costs previously deferred under a contract with the Brazilian
    Health Ministry. See Note 15 to our consolidated financial
    statements included herein.g)
    
    During 2003, we completed the disposition of all remaining
    operating units identified and initially held for sale in
    September 2002. In connection with the disposition of these
    operating units, we recorded a loss on sale of the units
    totaling $3.2 million during 2003 comprised of a
    $0.3 million cash infusion made by us in accordance with
    the terms of the sale, non-cash inventory and fixed asset
    write-downs of $1.4 million, severance costs of
    $0.5 million, the write-off of $0.8 million in
    uncollectible accounts receivable, and facility lease and other
    exit costs of $0.2 million.h)
    
    Consistent with our strategy of disposing of operating units not
    aligned with our core business, we sold our direct finance lease
    subsidiary, Golden Eagle Leasing, Inc. (Golden
    Eagle), effective October 1, 2003, for
    $30.0 million gross cash proceeds, and recorded a
    $7.0 million gain net of severance and other exit costs. As
    a result of the disposition, the net operating results of Golden
    Eagle have been classified as discontinued operations in the
    statement of operations for all periods presented.    Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-K. Form 10-K.
  Critical
    Accounting Policies and Estimates
   31




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##### Table of Contents



Revenue
    Recognition
  No. 00-21, Revenue Arrangements with Multiple Deliverables, 97-2, Software Revenue Recognition, 81-1, Accounting for Performance of Construction-Type and Certain
    Production Type Contracts, Revenue
    Recognition in Financial Statements and/or
  on-site
    
    The delivered item(s) has value to the customer on a standalone
    basis;
    There is objective and reliable evidence of the fair value of
    the undelivered item(s); and
    If the arrangement includes a general right of return relative
    to the delivered item(s), delivery or performance of the
    undelivered item(s) is considered probable and substantially in
    our control.    Share-Based
    Compensation
  Accounting for Stock Issued to Employees Share Based Payment
 32




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##### Table of Contents



Accounting for Stock Appreciation
    Rights and other Variable Stock Option Award Plans
    Allowance
    for Doubtful Accounts
      Sales-Type
    Leases
  Accounting for Leases.
   33




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##### Table of Contents



Inventories
  first-in, and/or
  Product
    Warranty
    Legal
    Contingencies
    Foreign
    Currency
    Income
    Taxes
  Accounting for
    Uncertainty in Income Taxes-an interpretation of FASB Statement
    No. 109 Accounting for Income Taxes
   34




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##### Table of Contents



Overview
    of Financial Results
    Year
    2007
  multi-lane
    
    Outsourcing our manufacturing requirements to a third-party
    contract manufacturer, including supply chain, production,
    assembly, and testing performed in Shenzhen, China and in
    Atibaia, Brazil. Transitioning of our entire manufacturing
    operations in Shenzhen, China to third-party manufacturing
    partner locations, which commenced in 2007 and is expected to be
    completed in 2008.
    Shutdown of manufacturing operations in Atibaia, Brazil in
    accordance with our plans to cease negative margin terminal
    sales. This activity was completed during the third quarter of
    2007;
    Consolidating global software development activities to
    Singapore, Latvia, and India, and reducing similar activities
    now performed in the U.S. and Sweden. The consolidation of
    global development activities was completed in 2007;
    Relocating U.S. service and repair operations from Phoenix,
    Arizona to Hermosillo, Mexico, which was completed in
    2007; and
    Reorganizing and reducing the manufacturing and operations
    management team in Phoenix, Arizona consistent with the move to
    third-party contract manufacturing, which commenced in 2007 and
    is expected to continue during 2008.  Form 10-K.
 35




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##### Table of Contents



Business Combinations (Rule 3-05 Regulation S-X).
  Goodwill and Other Intangible
    Assets
        Year
    2006
   36




---



##### Table of Contents



multi-lane
            Year
    2005
  multi-lane
    
    Implementing an end-of-product-life cycle strategy, including
    identifying products and related inventory with near term
    end-of-life requirements resulting in charges of
    $12.1 million;
    More aggressively addressing and correcting product performance
    issues, including negotiated warranty and product
    trade-in/trade-out programs required for the end-of-product-life
    cycle strategies resulting in charges of $7.4 million; 37




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##### Table of Contents




    Implementing certain workforce reductions, including members of
    the senior management team, sales, operations and manufacturing
    personnel, as well as moving certain research and development
    resources to lower cost foreign geographies, and compensation
    plan changes resulting in charges of $5.4 million;
    Vacating a leased building in Phoenix, Arizona due to the
    reductions in force resulting in a charge of $1.0 million
    in future rental expense, net of estimated sublet recoveries;
    Evaluating other assets and liabilities and evaluating the past
    underlying operating decisions or strategies supporting such
    assets and liabilities, resulting in charges of
    $1.8 million;
    Investing in the implementation of a comprehensive product
    marketing function; and
    Evaluating opportunities for short, medium and long-term
    improvements in manufacturing costs.    2005


2005


2005First


Second


Fourth


2005Quarter


Quarter


Quarter


Full YearCosts of revenue:Warranty charges and product return accruals

$
706


$
6,076


$
667


$
7,449Inventory write-downs


2,132



7,090



2,889



12,111One-time termination benefits and related costs






177



292



469Other


148



161







309Total costs of revenue


2,986



13,504



3,848



20,338Operating expenses:One-time termination benefits and related costs


1,543



2,021



1,349



4,913Idle facility lease charge










1,013



1,013Other


525



463



632



1,620Total operating expenses


2,068



2,484



2,994



7,546Non-operating expenses and income taxes:Other, including tax impact of above entries






61



(203
)


(142
)Total non-operating expenses and income taxes






61



(203
)


(142
)$
5,054


$
16,049


$
6,639


$
27,742        38




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##### Table of Contents



Results
    of Continuing Operations
    Year Ended December 31,2007


2006


2005Net revenue


100.0
%


100.0
%


100.0
%Costs of revenue


74.3



64.2



70.2Gross profit


25.7



35.8



29.8Research and development


9.8



11.1



11.2Selling, general and administrative


20.7



24.2



29.6Acquired in-process research and development






0.4



Gain on sale of real property


(1.3
)


(1.2
)


Income (loss) from continuing operations


(3.5
)


1.3



(11.0
)Interest and other income net of interest and other expense


1.4



1.4



0.7Foreign currency loss


(0.6
)


(0.3
)


(0.6
)Income (loss) before taxes and discontinued operations


(2.7
)


2.4



(10.9
)Provision for income taxes


(0.2
)


(0.5
)


(1.4
)Income (loss) before discontinued operations


(2.9
)


1.9



(12.3
)Income (loss) from discontinued operations


0.4



0.9



(1.3
)Net income (loss)


(2.5
)%


2.8
%


(13.6
)%  39




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##### Table of Contents



Comparison
    of Years Ended December 31, 2007 and 2006
  Dollars in thousands% of





% of


Increase2007


Rev


2006


Rev


(Decrease)(Dollars in thousands)Net revenue:Product

$
206,360



70.2
%

$
191,286



77.0
%

$
15,074Services


87,442



29.8
%


57,279



23.0
%


30,163Total net revenue


293,802



100.0
%


248,565



100.0
%


45,237Costs of revenue:Product


149,787



51.0
%


117,756



47.4
%


32,031Services


68,567



23.3
%


41,784



16.8
%


26,783Total costs of revenue


218,354



74.3
%


159,540



64.2
%


58,814Gross profit


75,448



25.7
%


89,025



35.8
%


(13,577
)Operating expenses:Research and development


28,753



9.8
%


27,706



11.1
%


1,047Selling, general and administrative


60,710



20.7
%


60,105



24.2
%


605In-process research and development






0.0
%


1,000



0.4
%


(1,000
)Gain on sale of real property


(3,796
)


(1.3
)%


(2,953
)


(1.2
)%


(843
)Total operating expenses


85,667



29.2
%


85,858



34.5
%


(191
)Income (loss) from continuing operations


(10,219
)


(3.5
)%


3,167



1.3
%


(13,386
)Non-operating income


2,122



0.8
%


2,916



1.1
%


(794
)Income (loss) before income taxes and discontinued operations


(8,097
)


(2.7
)%


6,083



2.4
%


(14,180
)Provision for income taxes


(478
)


(0.2
)%


(1,346
)


(0.5
)%


868Income (loss) before discontinued operations


(8,575
)


(2.9
)%


4,737



1.9
%


(13,312
)Income (loss) from discontinued operations


1,098



0.4
%


2,233



0.9
%


(1,135
)Net income (loss)

$
(7,477
)


(2.5
)%

$
6,970



2.8
%

$
(14,447
)Diluted income (loss) per share

$
(0.14
)





$
0.13






$
(0.27
)   Net revenue
  multi-lane
    Cost of revenue and gross profit
 40




---



##### Table of Contents



multi-lane
    Research and development
  Applicability of FASB Statement No. 2
    Business Combinations Accounted for by the Purchase Method
  Selling, general and administrative
   41




---



##### Table of Contents



Interest income, interest expense, and foreign
    currency
  Income tax expense
  Accounting for Income Taxes
 42




---



##### Table of Contents



Comparison
    of Years Ended December 31, 2006 and 2005
  Dollars in thousands% of





% of


Increase2006


Rev


2005


Rev


(Decrease)(Dollars in thousands)Net revenue:Product

$
191,286



77.0
%

$
190,214



77.6
%

$
1,072Services


57,279



23.0
%


55,009



22.4
%


2,270Total net revenue


248,565



100.0
%


245,223



100.0
%


3,342Costs of revenue:Product


117,756



47.4
%


131,326



53.6
%


(13,570
)Services


41,784



16.8
%


40,765



16.6
%


1,019Total costs of revenue


159,540



64.2
%


172,091



70.2
%


(12,551
)Gross profit


89,025



35.8
%


73,132



29.8
%


15,893Operating expenses:Research and development


27,706



11.1
%


27,555



11.2
%


151Selling, general and administrative


60,105



24.2
%


72,649



29.6
%


(12,544
)In-process research and development


1,000



0.4
%










1,000Gain on sale of real property


(2,953
)


(1.2
)%










(2,953
)Total operating expenses


85,858



34.5
%


100,204



40.9
%


(14,346
)Income (loss) from continuing operations


3,167



1.3
%


(27,072
)


(11.0
)%


30,239Non-operating income


2,916



1.1
%


355



0.1
%


2,561Income (loss) before income taxes and discontinued operations


6,083



2.4
%


(26,717
)


(10.9
)%


32,800Provision for income taxes


(1,346
)


(0.5
)%


(3,526
)


(1.4
)%


2,180Income (loss) before discontinued operations


4,737



1.9
%


(30,243
)


(12.3
)%


34,980Income (loss) from discontinued operations


2,233



0.9
%


(3,123
)


(1.3
)%


5,356Net income (loss)

$
6,970



2.8
%

$
(33,366
)


(13.6
)%

$
40,336Diluted income (loss) per share

$
0.13






$
(0.64
)





$
0.77   Net revenue
  multi-lane
   43




---



##### Table of Contents



multi-lane
  Cost of revenue and gross profit
      Research and development U.S.-based
   44




---



##### Table of Contents



Selling, general and administrative
    Interest income, interest expense, and foreign
    currency
  Income tax expense
    Segment
    and Geographical Information
     45




---



##### Table of Contents



Form 10-K.
    Year Ended December 31,% of





% of





% of2007


Revenue


2006


Revenue


2005


RevenueNet revenue:Americas

$
158,538



54.0
%

$
145,575



58.6
%

$
146,444



59.7
%EMEA


81,383



27.7
%


67,476



27.1
%


58,560



23.9
%Asia-Pacific


53,881



18.3
%


35,514



14.3
%


40,219



16.4
%Total net revenue

$
293,802



100.0
%

$
248,565



100.0
%

$
245,223



100.0
%Operating income:Americas

$
9,412



3.2
%

$
26,825



10.8
%

$
9,773



4.0
%EMEA


15,032



5.1
%


10,671



4.3
%


612



0.2
%Asia-Pacific


9,108



3.1
%


10,404



4.2
%


9,550



3.9
%Shared Cost Centers


(43,771
)


(14.9
)%


(44,733
)


(18.0
)%


(47,007
)


(19.2
)%Total operating income

$
(10,219
)


(3.5
)%

$
3,167



1.3
%

$
(27,072
)


(11.0
)%   multi-lane
  multi-lane
   46




---



##### Table of Contents



Liquidity
    and Capital Resources
  and/or
  Cash
    flows from continuing operations
      2007


2006


ChangeAccounts receivable

$
(19,084
)

$
(3,641
)

$
(15,443
)Inventories


20,683



(16,748
)


37,431Accounts payable


7,623



4,638



2,985Other


(4,413
)


(10,716
)


6,303Increase (decrease) in operating assets and liabilities

$
4,809


$
(26,467
)

$
31,276     Cash
    flows from investing activities
   47




---



##### Table of Contents



Cash
    flows from financing activities
      Cash
    flows from discontinued operations (see Notes 5 and 21 to
    our consolidated financial statements included
    herein)
          Projected
    liquidity and capital resources
       48




---



##### Table of Contents



Contractual
    Obligations
    Less than


1-3


3-5


AfterTotal


1 Year


Years


Years


5 YearsLong-term debt(1)

$



$



$



$



$
Capital lease obligations


















Operating leases


14,908



3,260



6,591



1,597



3,460Minimum purchase obligations(2)


17,334



17,334











Total

$
32,242


$
20,594


$
6,591


$
1,597


$
3,460     (1)
    
    Excludes payments under our senior credit facility with
    Francisco Partners and revolving credit facility with a bank, as
    no borrowings have taken place yet under either credit facility.
    All amounts outstanding under the senior credit facility are due
    four years from the funding date, which is expected to occur by
    March 31, 2008. All amounts outstanding, if any, under the
    revolving credit facility are due on January 15, 2011.(2)
    
    Minimum purchase obligations include all outstanding obligations
    to purchase goods or services at December 31, 2007
    including agreements that are cancelable without penalty and
    agreements, which are enforceable and legally binding. We
    estimate that approximately 80% of the outstanding purchase
    obligations at December 31, 2007 are non-cancelable due to
    the customized nature of the order and the long lead time
    requirements.  Debt
    Amendments
    Stock
    Repurchase
  Rule 10b5-1
 49




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
  Regulation S-K Consolidation of
    Variable Interest Entities
  2008
    Outlook
        Impact of
    Recently Issued Accounting Pronouncements
  Business Combinations Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
 50




---



##### Table of Contents



Fair
    Value Measurements
  Fair
    Value Option for Financial Assets and Financial
    Liabilities  ncluding an amendment of FASB
    Statement No. 115
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk          International
    operations pose additional challenges and risks that if not
    properly managed could adversely affect our financial
    results Form 10-K.
   51




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Regulation S-X Form 10-K.
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
    Rules 13a-15(e) 15d-15(e)
  Changes
    in Internal Control over Financial Reporting
    Managements
    Report on Internal Control Over Financial Reporting
  Rules 13a-15(f) 15d-15(f). Internal Control 
    Integrated Framework.
    Form 10-K.
 52




---



##### Table of Contents



Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    www.hypercom.com Form 8-K
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  Form 10-K:
  (1) Audited Consolidated Financial StatementsReports of Independent Registered Public
    Accounting FirmConsolidated Balance Sheets at December 31,
    2007 and 2006Consolidated Statements of Operations for the
    years ended December 31, 2007, 2006, and 2005Consolidated Statements of Stockholders
    Equity for the years ended December 31, 2007, 2006, and
    2005Consolidated Statements of Cash Flows for the
    years ended December 31, 2007, 2006, and 2005Notes to Consolidated Financial Statements(2) Financial Statement ScheduleSchedule II  Valuation and
    Qualifying Accounts      53




---



##### Table of Contents



SIGNATURES      Date: March 14, 2008

By: /s/  Philippe
    TartavullPhilippe
    TartavullChief Executive Officer and President       Signature

TitlePrincipal Executive, Financial and
         Accounting Officers/s/  Philippe
    TartavullPhilippe
    Tartavull

Chief Executive Officer, President and
    Director/s/  Shawn
    RathjeShawn
    Rathje

Chief Accounting Officer and Corporate
    ControllerDirectors*Daniel
    Diethelm

Director*Johann
    J. Dreyer

Director*Ian
    K. Marsh

Director*Phillip
    J. Riese

Director*Norman
    Stout

Director   Form 10-K Form 10-K.
  *By:
    /s/  Philippe
    TartavullAttorney-in-Fact 54




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
            Ernst &
    Young
   55




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
              Ernst &
    Young
   56




---



##### Table of Contents



HYPERCOM
    CORPORATION
  CONSOLIDATED BALANCE SHEETS
  December 31,2007


2006(Dollars in thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents

$
76,925


$
34,190Short-term investments


4,988



47,228Accounts receivable, net of allowance for doubtful accounts of
    $4,034 and $1,934, respectively


71,341



52,777Inventories


22,343



52,632Prepaid expenses and other current assets


15,251



8,202Deferred income taxes


497



691Total current assets


191,345



195,720Property, plant and equipment, net


17,694



27,261Intangible assets, net


10,502



5,733Goodwill


10,224



2,691Deferred acquisition costs


12,529



Other long-term assets


7,950



5,311Total assets

$
250,244


$
236,716LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
30,448


$
22,931Accrued payroll and related expenses


9,889



6,201Accrued sales and other taxes


7,427



7,781Product warranty liabilities


1,754



2,636Accrued other liabilities


16,154



9,603Deferred revenue


5,497



2,185Income taxes payable


519



2,460Total current liabilities


71,688



53,797Deferred tax liabilities


620



380Other liabilities


3,437



3,608Total liabilities


75,745



57,785Commitments and contingenciesStockholders equity:Common stock, $.001 par value; 100,000,000 shares
    authorized; 53,167,702 and 53,127,205 shares outstanding at
    December 31, 2007 and 2006, respectively


56



56Additional paid-in capital


251,034



247,989Accumulated deficit


(53,842
)


(46,365
)Treasury stock, 3,162,248 shares (at cost) at
    December 31, 2007 and 2006


(22,749
)


(22,749
)Total stockholders equity


174,499



178,931Total liabilities and stockholders equity

$
250,244


$
236,716    57




---



##### Table of Contents



HYPERCOM
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Year Ended December 31,2007


2006


2005(Dollars in thousands, except per share data)Net revenue:Products

$
206,360


$
191,286


$
190,214Services


87,442



57,279



55,009Total net revenue


293,802



248,565



245,223Costs of revenue:Products


149,787



117,756



131,326Services


68,567



41,784



40,765Total costs of revenue


218,354



159,540



172,091Gross profit


75,448



89,025



73,132Operating expenses:Research and development


28,753



27,706



27,555Selling, general and administrative


60,710



60,105



72,649In-process research and development






1,000



Gain on sale of real property


(3,796
)


(2,953
)


Income (loss) from continuing operations


(10,219
)


3,167



(27,072
)Interest income


3,954



4,758



2,679Interest expense


(122
)


(1,072
)


(787
)Foreign currency loss


(1,685
)


(699
)


(1,297
)Other expense


(25
)


(71
)


(240
)Income (loss) before income taxes and discontinued operations


(8,097
)


6,083



(26,717
)Provision for income taxes


(478
)


(1,346
)


(3,526
)Income (loss) before discontinued operations


(8,575
)


4,737



(30,243
)Income (loss) from discontinued operations


1,098



2,233



(3,123
)Net income (loss)

$
(7,477
)

$
6,970


$
(33,366
)Basic income (loss) per share:Income (loss) before discontinued operations

$
(0.16
)

$
0.09


$
(0.58
)Income (loss) from discontinued operations


0.02



0.04



(0.06
)Basic income (loss) per share

$
(0.14
)

$
0.13


$
(0.64
)Diluted income (loss) per share:Income (loss) before discontinued operations

$
(0.16
)

$
0.09


$
(0.58
)Income (loss) from discontinued operations


0.02



0.04



(0.06
)Diluted income (loss) per share

$
(0.14
)

$
0.13


$
(0.64
)Shares used in computing net income (loss) per common share:Basic


52,927,296



53,248,194



52,395,001Diluted


52,927,296



53,965,576



52,395,001    58




---



##### Table of Contents



HYPERCOM
    CORPORATION
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY
  Additional











TotalCommon Stock





Paid-in


Deferred


Accumulated


Treasury


StockholdersShares


Balance


Capital


Compensation


Deficit


Stock


Equity(Dollars in thousands)Balance as of December 31, 2004


52,254,935


$
52


$
228,567


$
(505
)

$
(19,969
)

$
(2,773
)

$
205,372Issuance of common stock


1,873,021



3



7,173















7,176Purchase of treasury stock


(1,525,409
)


















(9,236
)


(9,236
)Restricted common stock issued for deferred compensation, net of
    cancellations


389,412







2,446



(2,446
)










Recognition of deferred compensation, net of award reacquisitions














828











828Net loss


















(33,366
)






(33,366
)Balance as of December 31, 2005


52,991,959



55



238,186



(2,123
)


(53,335
)


(12,009
)


170,774Issuance of common stock


1,439,442



1



6,650















6,651Purchase of treasury stock


(1,346,628
)


















(10,740
)


(10,740
)Reclassification due to the adoption of SFAS 123R










(2,123
)


2,123











Restricted common stock issued for compensation, net of
    forfeitures


42,432























Share-based compensation










5,276















5,276Net loss


















6,970







6,970Balance as of December 31, 2006


53,127,205



56



247,989







(46,365
)


(22,749
)


178,931Issuance of common stock


247,163







934















934Restricted common stock issued for compensation


93,334























Restricted common stock forfeitures


(300,000
)






(1,582
)














(1,582
)Share-based compensation










3,693















3,693Net loss


















(7,477
)






(7,477
)Balance as of December 31, 2007


53,167,702


$
56


$
251,034


$



$
(53,842
)

$
(22,749
)

$
174,499    59




---



##### Table of Contents



HYPERCOM
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2007


2006


2005(Dollars in thousands)Cash flows from continuing operations:Net income (loss) from continuing operations

$
(8,575
)

$
4,737


$
(30,243
)Adjustments to reconcile net income (loss) from continuing
    operations to net cash provided by (used in) operating
    activities:Amortization of deferred financing costs






4



15Depreciation and amortization


9,156



7,872



7,890Acquired in-process research and development






1,000Amortization of discount on short-term investments


(844
)


(1,303
)


(1,099
)Provision for doubtful accounts


2,115



826



2,046Provision for excess and obsolete inventory


8,074



2,342



18,539Provision for warranty and other product charges


2,328



125



8,926Foreign currency (gains) losses


(2,317
)


35



(1,206
)Gain on sale of real property


(3,796
)


(2,953
)Non-cash stock-based compensation


1,919



6,253



828Non-cash write-off of intangibles and other assets


509



324



2,181Deferred income tax benefit


434



(530
)


219Changes in operating assets and liabilities, net


4,809



(26,467
)


(11,850
)Net cash provided by (used in) operating activities


13,812



(7,735
)


(3,754
)Cash flows from investing activities:Purchase of property, plant and equipment


(7,481
)


(6,131
)


(4,916
)Proceeds from the sale of real property


16,250



5,190



Cash paid for acquisitions, net of cash acquired


(13,075
)


(8,319
)


Cash deposit for pending acquisition of Thales
    e-Transactions
    business


(10,000
)






Software development costs capitalized


(1,392
)


(787
)


(559
)Purchase of short-term investments


(141,006
)


(295,054
)


(216,915
)Proceeds from the sale or maturity of short-term investments


184,090



307,080



230,025Net cash provided by investing activities


27,386



1,979



7,635Cash flows from financing activities:Repayment of bank notes payable and other debt instruments


(7
)


(8,364
)


(425
)Debt issuance cost


(100
)






Proceeds from issuance of common stock


934



6,651



7,176Purchase of treasury stock






(10,740
)


(9,236
)Net cash provided by (used in) financing activities


827



(12,453
)


(2,485
)Effect of exchange rate changes on cash and cash equivalents


716



469



(333
)Net increase (decrease) in cash flow from continuing operations


42,741



(17,740
)


1,063Net cash provided by (used in) operating activities from
    discontinued operations


(6
)


3,853



11,432Net cash provided by investing activities from discontinued
    operations






12,137



Cash and cash equivalents, beginning of year


34,190



35,940



23,445Cash and cash equivalents, end of year

$
76,925


$
34,190


$
35,940    60




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 December
    31, 2007
  1.
    Description
    of Business      2.
    Significant
    Accounting Policies  Principles
    of Consolidation
    Use of
    Estimates
    Cash
    and Cash Equivalents
    Short-term
    Investments
   61




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
    Fair
    Value of Financial Instruments
  Accounting for Certain Investments in Debt and
    Equity Securities.
  Allowance
    for Doubtful Accounts
      Sales-Type
    Leases
  Accounting for Leases.
 62




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
      Inventories
  first-in, and/or
  Property,
    Plant and Equipment
    Building


30 yearsComputer equipment and software


3-5 yearsMachinery and equipment


2-5 yearsEquipment leased to customers


1-5 yearsFurniture and fixtures


3-7 years     Capitalized
    Software Development Costs
    Goodwill
   63




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
    Impairment
    of Long-Lived Assets
    Revenue
    Recognition
  No. 00-21, Revenue Arrangements with Multiple Deliverables 97-2, Software Revenue Recognition, 81-1, Accounting for Performance of Construction-Type and Certain
    Production Type Contracts Revenue Recognition in
    Financial Statements and/or
  on-site
    
    The delivered item(s) has value to the customer on a standalone
    basis;
    There is objective and reliable evidence of the fair value of
    the undelivered item(s); and
    If the arrangement includes a general right of return relative
    to the delivered item(s), delivery or performance of the
    undelivered item(s) is considered probable and substantially in
    the control of the Company. 64




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##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
     Contract
    Accounting
      Product
    Warranty
    Legal
    Contingencies
    Shipping
    and Handling Costs
    Advertising
    Costs
   65




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
  Stock-Based
    Compensation
  Accounting for Stock Issued to Employees
    and Related Interpretations Accounting for Stock-Based Compensation Share Based Payment
  Foreign
    Currency
    Income
    Taxes
      Income
    (Loss) Per Share
   66




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
    2007


2006


2005Shares used in basic income (loss) per share calculation
    (weighted average common shares outstanding)


52,927,296



53,248,194



52,395,001Effect of dilutive stock options and warrants






717,382



Shares used in diluted income (loss) per share calculation


52,927,296



53,965,576



52,395,001     Derivative
    Financial Instruments
      Comprehensive
    Income
    Reclassification
    Impact
    of Recently Issued Accounting Pronouncements
  Business Combinations Business Combinations
 67




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
    Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
  Fair
    Value Measurements
  Fair
    Value Option for Financial Assets and Financial
    Liabilities  ncluding an amendment of FASB
    Statement No. 115
  3.
    Business
    Acquisitions  ACG
    Group
       68




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##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
  (Rule 3-05 Regulation S-X).
  Goodwill and Other Intangible
    Assets
  TPI
    Software
    (Rule 3-05 Regulation S-X). Business Combinations Accounted for by the Purchase
    Method
      Thales
    e-Transactions
  e-Transactions e-Transactions e-Transactions e-Transactions e-Transactions
 69




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##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
        4.
    Restructuring
    and Other Charges  Restructuring
    
    Outsourcing the Companys entire manufacturing requirements
    to third-party contract manufacturers, including supply chain,
    production, assembly, and testing presently performed in
    Shenzhen, China and in Atibaia, Brazil. Transitioning of the
    Companys manufacturing operations commenced in 2007 and is
    expected to be completed in 2008;
    Shutdown of manufacturing operations in Atibaia, Brazil in
    accordance with the Companys plans to cease negative
    margin terminal sales. This activity was completed during the
    third quarter of 2007;
    Consolidating global software development activities to
    Singapore, Latvia, and India, reducing similar activities now
    performed in the U.S. and Sweden. The consolidation of
    global development activities is complete;
    Relocating U.S. service and repair operations from Phoenix,
    Arizona to Hermosillo, Mexico, which was completed in
    2007; and
    Reorganizing and reducing the manufacturing and operations
    management team in Phoenix, Arizona consistent with the move to
    third-party contract manufacturing, which commenced in 2007 and
    is expected to continue during 2008.    Transition toContractSeverance


Manufacturing


Total2007 charges

$
1,737


$
1,183


$
2,920Amounts utilized


(637
)


(1,183
)


(1,820
)Balance accrued at December 31, 2007

$
1,100


$



$
1,100  70




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##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
        Costs


Amounts


Balance atIncurred


Utilized


December 31,During 2007


during 2007


2007Americas

$
596


$
(572
)

$
24EMEA


365



(28
)

$
337Asia Pacific


829


$
(829
)

$
Shared cost centers


1,130



(391
)

$
739Total charges

$
2,920


$
(1,820
)

$
1,100   2005
    Business Review
          IdleWarranty


FacilityCharges


Lease


TotalBalance at January 1, 2007

$
840


$
551


$
1,391Amounts utilized


(546
)


(536
)

$
(1,082
)Amounts reversed






(15
)

$
(15
)bBalance at December 31, 2007

$
294


$



$
294
a  71




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##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
    (a)
    
    These accrued liability balances are recorded as current product
    warranty liabilities as these amounts are expected to be paid
    during 2008.(b)
    
    The Company negotiated with the landlord an early termination of
    the lease for one of the Companys facilities in Phoenix,
    Arizona. The difference between the amount paid and the balance
    in the accrual was $15,000.    Amounts


BalanceBalance at


Utilized /


Remaining atJanuary 1,


Reversed


December 31,2007


during 2007


2007Americas

$
551


$
(551
)

$
EMEA


100



(100
)










Asia Pacific


740



(446
)


294Shared cost centers










Total charges

$
1,391


$
(1,097
)

$
294   5.
    Discontinued
    Operations    2007


2006


2005United Kingdom Lease Portfolio:Net revenue

$



$
3,230


$
14,355Costs of revenues (reversals of commissions)


(1,098
)


1,195



9,531Gross profit(a)


1,098



2,035



4,824Selling, general and administrative expenses






(1,020
)


(1,397
)Foreign currency loss






(343
)


(340
)Loss on asset impairment










(6,609
)Gain on Sale






1,561



1,098



2,233



(3,522
)Golden Eagle Leasing










399Income (loss) from discontinued operations

$
1,098


$
2,233


$
(3,123
)     (a)
    
    During the period ended December 31, 2007 the Company
    received a rebate of previously paid lease origination
    commission payments related to the U.K. lease portfolio that was
    sold in 2006.  U.K.
    Lease Portfolio
  Accounting for the Impairment or
    Disposal of Long-Lived Assets
 72




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##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
      Golden
    Eagle Leasing
    6.
    Leases  Sales-Type
    Leases
    2007


2006Lease contracts receivable

$
6,495


$
1,721Unearned revenue


(524
)


(218
)Net investment in sales-type leases

$
5,971


$
1,503     Operating
    Leases
      Years Ending December 31,2008

$
5,2942009


3,3012010


8572011


3872012


Thereafter


$
9,839  73




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##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
  7.
    Short-term
    Investments        2007


2006Municipal debt securities

$



$
10,400U.S. government and agency debt securities


4,988



5,977Corporate debt securities






23,001Preferred equity securities






7,850$
4,988


$
47,228     8.
    Inventories    2007


2006Purchased parts

$
8,676


$
24,367Work in progress


4,566



6,008Finished goods


9,101



22,257$
22,343


$
52,632    74




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##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
  9.
    Property,
    Plant and Equipment    2007


2006Land and improvements

$



$
4,743Buildings


2,524



12,753Computer equipment and software


24,955



23,956Machinery and equipment


25,793



25,304Equipment leased to customers


4,350



2,843Furniture and fixtures


4,944



4,945Leasehold improvements


3,809



3,118Construction in process


3,832



37570,207



78,037Less accumulated depreciation


(52,513
)


(50,776
)$
17,694


$
27,261          75




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
  10.
    Intangible
    Assets    Gross Carrying Amount


Accumulated Amortization


Net2007


2006


2007


2006


2007


2006Capitalized software

$
6,159


$
5,668


$
(3,949
)

$
(3,088
)

$
2,210


$
2,580Customer relationships


2,830



400



(263
)


(2
)


2,567



398Unpatented technology


2,300



2,300



(240
)


(9
)


2,060



2,291Trademarks, trade names


2,220







(204
)






2,016



Service know-how


1,330







(122
)






1,208



Other


609



484



(168
)


(20
)


441



464$
15,448


$
8,852


$
(4,946
)

$
(3,119
)

$
10,502


$
5,733     Capitalized software


3 yearsCustomer relationships


10 yearsUnpatented technology


10 yearsTrademarks, trade names


10 yearsService know-how


10 yearsOther


2-5 years     11.
    Product
    Warranty    2007


2006Balance at beginning of period

$
2,636


$
5,534Warranty charges to normal operations


2,428



1,533Warranty reversals related to the 2005 Business Review


(100
)


(1,408
)Utilization of warranty liability


(3,210
)


(3,023
)Balance at end of period

$
1,754


$
2,636    76




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
    12.
    Long-term
    Debt  Credit
    Facilities
            Acquisition
    Financing
   77




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
        13.
    Share
    Based Plan Compensation    2007


2006


2005Costs of revenue

$
111


$
170


$
Research and development


(104
)


896



Selling, general and administrative


1,912



5,187



828Total

$
1,919


$
6,253


$
828         Stock
    Options
  Accounting for Stock Appreciation Rights and
    other Variable Stock Option Award Plans
 78




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
    WeightedWeighted


AverageAverage


Remaining


AggregateNumber of


Exercise


Contractual


IntrinsicOptions


Price


Term


Value(In Thousands)Outstanding at December 31, 2007


2,974,536


$
7.33



6.31


$
470Vested and expected to vest at December 31, 2007


2,845,850


$
7.36



6.19


$
470Exercisable at December 31, 2007


1,919,734


$
7.71



4.91


$
466       2007


2006


2005Weighted average risk free interest rate


4.5
%


4.8
%


4.1
%Expected life of the options (in years)


5.41



5.48



5.77Expected stock price volatility


56
%


67
%


75
%Expected dividend yield










      79




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
    2005Net loss, as reported

$
(33,366
)Add stock-based employee compensation expense included in
    reported net loss


828Deduct total stock-based employee compensation expense
    determined under fair value methods for awards


(2,837
)Add reversal of stock-based compensation expense for options
    forfeited prior to vesting


2,694Pro forma net loss

$
(32,681
)Net loss per share:Basic and diluted, as reported

$
(0.64
)Basic and diluted, pro forma

$
(0.62
)Weighted average shares used in pro forma computation:Basic and diluted


52,395,001   Restricted
    Stock Awards
  and/or
 80




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
    WeightedNonvested


Average GrantShares


Date Fair ValueOutstanding


per ShareBalance at December 31, 2004


116,936



5.43Shares granted in 2005


464,000



6.20Shares vested in 2005


(104,348
)


4.78Shares forfeited in 2005


(74,588
)


6.04Balance at December 31, 2005


402,000



6.38Shares granted in 2006


92,432



8.40Shares vested in 2006


(102,000
)


6.36Shares forfeited in 2006


(50,000
)


6.42Balance at December 31, 2006


342,432



6.92Shares granted in 2007


93,334



5.76Shares vested in 2007


(60,766
)


6.14Shares forfeited in 2007


(300,000
)


6.89Balance at December 31, 2007


75,000


$
6.24     Employee
    Stock Purchase Plan
    14.
    Stockholders
    Equity     81




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
  Stock
    Options
    2007


2006


2005Weighted





Weighted





WeightedShares


Average


Shares


Average


Shares


AverageUnder


Exercise


Under


Exercise


Under


ExerciseOption


Price


Option


Price


Option


PriceBeginning balance outstanding


3,726,642


$
8.07



4,321,744


$
6.88



8,610,291


$
6.75Granted


649,070



5.29



1,083,500



9.54



1,041,500



6.08Exercised


(201,024
)


3.61



(1,060,942
)


4.38



(1,811,639
)


3.83Cancellations


(1,200,152
)


9.04



(617,660
)


8.73



(3,518,408
)


7.89Ending balance outstanding


2,974,536


$
7.33



3,726,642


$
8.07



4,321,744


$
6.88Exercisable at end of year


1,919,734


$
7.71



2,249,506


$
7.77



3,227,802


$
7.13     Options Outstanding





Options ExercisableWeighted


Weighted





WeightedShares


Average


Average


Shares


AverageUnder


Remaining


Exercise


Under


ExerciseRange of Exercise Prices

Option


Contractual Life


Price


Option


Price$ 2.46 - 3.50


238,800



3.14


$
3.49



238,800


$
3.49$ 3.52 - 5.28


792,339



7.67



4.92



304,665



4.74$ 5.41 - 6.25


385,570



7.31



6.05



252,570



6.13$ 6.28 - 9.29


672,250



7.95



7.27



415,870



7.22$ 9.31 - 9.38


170,000



2.55



9.37



170,000



9.37$ 9.40 - 9.63


45,500



2.61



9.57



38,716



9.58$10.38 - 14.44


670,077



4.81



11.68



499,113



12.032,974,536











1,919,734     Stock
    Warrants
    Employee
    Stock Purchase Plan
   82




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
    Directors
    Stock Plan
  and/or
  Stock
    Repurchase
  first-in,
    Preferred
    Stock
    15.
    Brazilian
    Health Ministry Contract  81-1, Accounting for Performance of Construction-Type and Certain
    Production-Type Contracts
 83




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
      16.
    Income
    Taxes    2007


2006


2005Income (loss) before income taxes and discountinued operations:United States

$
(15,760
)

$
(18,952
)

$
(14,645
)Foreign


7,663



25,035



(12,072
)$
(8,097
)

$
6,083


$
(26,717
)     2007


2006


2005Current:State

$
4


$
(3
)

$
5Federal


(8
)






Foreign


(40
)


(1,873
)


(3,312
)(44
)


(1,876
)


(3,307
)Deferred  Foreign


(434
)


530



(219
)Total

$
(478
)

$
(1,346
)

$
(3,526
)  84




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
    2007


2006


2005Tax expense (benefit) at the federal statutory rate


35.0
%


35.0
%


35.0
%State income taxes, net of federal income tax effect


0.0



0.0



0.0Foreign taxes


27.5



(119.7
)


(28.9
)Tax credits


0.0



0.0



3.0Translation gain


0.0



19.7



2.6Change in valuation allowance


(67.4
)


85.0



(24.8
)Other


(1.0
)


1.6



(0.1
)Effective tax rate


(5.9
)%


21.6
%


(13.2
)%     2007


2006Deferred tax assets (liabilities), current:Inventory valuation and reserves

$
2,761


$
2,447Compensation accruals


1,060



1,059Allowance for doubtful accounts


886



37Foreign, net


1,478



1,895Other






15Valuation allowance


(5,688
)


(4,762
)Deferred tax assets, current

$
497


$
691Deferred tax assets (liabilities), non-current:Tax loss carry forwards  United States

$
29,401


$
26,662Tax loss carry forwards  Foreign


22,954



23,581Intangibles


280



201Property, plant and equipment


(667
)


103Foreign


179



(380
)Other


5,340



6,035Valuation allowance


(58,107
)


(56,582
)Net deferred tax liabilities, non-current

$
(620
)

$
(380
)   Accounting for Income Taxes
 85




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
      Accounting for Uncertainty in Income Taxes-an interpretation
    of FASB Statement No. 109
  2007Gross unrecognized tax benefits at 1/1/07

$
8,352Decrease in tax positions for prior years


(624
)Increase in tax positions for current year


680Gross unrecognized tax benefits at 12/31/07

$
8,408   non-U.S. income
    17.
    Profit
    Sharing Plan   86




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
  18.
    Commitments
    and Contingencies  Lease
    Commitments
      Years Ending December 31,2008

$
3,2602009


2,9172010


2,1022011


1,5722012


1,597Thereafter


3,460$
14,908     Litigation
    SPA Syspatronic AG v. Hypercom Corporation, et al.
    (United States District Court for the Eastern District of Texas,
    Civil Action
    No. 2:07-CV-416
    (LED), filed on September 18, 2007)
    Wool v. Hypercom Corporation, et al. (Superior Court of
    the State of Arizona, County of Maricopa, Civil Action
    No. CV2008-050575,
    filed on February 13, 2008)
 87




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
    CardSoft, Inc., et al. v. Hypercom Corporation, et al.
    (United States District Court for the Eastern District of Texas,
    Civil Action
    No. 2:08-CV-00098,
    filed on March 6, 2008)
  19.
    Concentrations
    of Credit and Other Risks  Financial
    Instruments
          Inventories
     88




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
  International
    Operations
        20.
    Segment,
    Geographic, and Customer Information  Segment
  Disclosures
    about Segments of an Enterprise and Related Information
      Year Ended December 31,2007


2006


2005Net RevenueAmericas

$
158,538


$
145,575


$
146,444EMEA


81,383



67,476



58,560Asia-Pacific


53,881



35,514



40,219$
293,802


$
248,565


$
245,223   89




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
  Year Ended December 31,2007


2006


2005Operating IncomeAmericas

$
9,412


$
26,825


$
9,773EMEA


15,032



10,671



612Asia-Pacific


9,108



10,404



9,550Shared cost centers


(43,771
)


(44,733
)


(47,007
)Total segment profit (loss)

$
(10,219
)

$
3,167


$
(27,072
)Interest income


3,954



4,758



2,679Interest expense


(122
)


(1,072
)


(787
)Foreign currency loss


(1,685
)


(699
)


(1,297
)Other expense


(25
)


(71
)


(240
)Income (loss) before income taxes and discontinued operations

$
(8,097
)

$
6,083


$
(26,717
)   December 31,


December 31,2007


2006Total AssetsAmericas

$
79,210


$
68,578EMEA


29,482



35,710Asia-Pacific


55,004



60,031Shared cost centers


86,548



72,397$
250,244


$
236,716  90




---



##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
  21.
    Supplemental
    Cash Flow Information (in thousands)  2007


2006


2005Changes in operating assets and liabilities:Accounts receivable

$
(19,084
)

$
(3,641
)

$
8,201Net investment in sales-type leases










Inventories


20,683



(16,748
)


(15,057
)Income tax receivable


(1,354
)






Prepaid expenses and other current assets


(4,959
)


1,604



3,197Other assets


(4,175
)


(600
)


(774
)Accounts payable


7,623



4,638



(8,294
)Accrued payroll and related expenses


3,466



(3,653
)


51Accrued sales and other tax


(759
)


(2,101
)


1,843Accrued liabilities


2,465



(1,929
)


(2,632
)Deferred revenue


3,287



(669
)


52Income taxes payable


(1,903
)


608



(1,708
)Other liabilities


(481
)


(3,976
)


3,271Net decrease in operating assets and liabilities

$
4,809


$
(26,467
)

$
(11,850
)Cash paid during the year by continuing operations:Interest

$
(74
)

$
(575
)

$
(786
)Income taxes

$
2,128


$
(1,823
)

$
(4,298
)Noncash investing activities:Changes in accounts payable related to the purchase of property,
    plant and equipment

$
70


$
116


$
166   Discontinued
    Operations
  Year 2007.
  Year 2006.
  Year 2005.
 91




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##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
  22.
    Interim
    Financial Results (Unaudited)    First


Second


Third


Fourth


FiscalQuarter


Quarter (A)


Quarter


Quarter


Year2007:Net revenue

$
64,827


$
67,477


$
70,818


$
90,680


$
293,802Gross profit

$
20,728


$
8,714


$
21,231


$
24,775


$
75,448Income (loss) before discontinued operations

$
(3,215
)

$
(5,704
)

$
391


$
(47
)

$
(8,575
)Income (loss) from discontinued operations


690



(39
)


138



309



1,098Net income (loss)

$
(2,525
)

$
(5,743
)

$
529


$
262


$
(7,477
)Basic income (loss) per share:Continuing operations

$
(0.06
)

$
(0.11
)

$
0.01


$



$
(0.16
)Discontinued operations


0.01















0.02Net income (loss)

$
(0.05
)

$
(0.11
)

$
0.01


$



$
(0.14
)Diluted income (loss) per share:Continuing operations

$
(0.06
)

$
(0.11
)

$
0.01


$



$
(0.16
)Discontinued operations


0.01















0.02Net income (loss)

$
(0.05
)

$
(0.11
)

$
0.01


$



$
(0.14
)   92




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##### Table of Contents



HYPERCOM
    CORPORATION
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December
    31, 2007
  First


Second


Third


Fourth


FiscalQuarter


Quarter (B)


Quarter


Quarter (C)


Year (D)2006:Net revenue

$
60,969


$
66,144


$
56,669


$
64,783


$
248,565Gross profit

$
23,519


$
27,394


$
18,922


$
19,190


$
89,025Income (loss) before discontinued operations

$
2,789


$
4,210


$
473


$
(2,735
)

$
4,737Income (loss) from discontinued operations


349



2,018



(127
)


(7
)


2,233Net income (loss)

$
3,138


$
6,228


$
346


$
(2,742
)

$
6,970Basic income (loss) per share:Continuing operations

$
0.05


$
0.08


$
0.01


$
(0.05
)

$
0.09Discontinued operations


0.01



0.04



0.01







0.04Net income (loss)

$
0.06


$
0.12


$
0.01


$
(0.05
)

$
0.13Diluted income (loss) per share:Continuing operations

$
0.05


$
0.08


$
0.01


$
(0.05
)

$
0.09Discontinued operations


0.01



0.03



0.01







0.04Net income (loss)

$
0.06


$
0.11


$
0.02


$
(0.05
)

$
0.13     (A)
    
    In June 2007, the Company completed the sale of its headquarters
    facilities, located in Phoenix, Arizona, for a sale price of
    $16.3 million resulting in a gain of $3.8 million. See
    Note 9 to the consolidated financial statements. During the
    second quarter of 2007, the Company initiated a reconfiguration
    of the Companys global sales and marketing organizations
    and incurred in charges of $2.9 million during the year.
    During the second quarter of 2007, the Company increased
    inventory reserves by $6.1 million primary related to
    non-PCI compliant products and components.(B)
    
    During the 2006 second quarter, the Company had a
    $1.6 million gain on the sale of its U.K. Lease Business,
    which was disposed of effective May 31, 2006.(C)
    
    During the 2006 fourth quarter, the Company acquired TPI and
    incurred in a one-time charge of $1.0 million for the
    acquired in-process research and development.(D)
    
    Earnings per share calculations are based on the weighted
    average number of shares outstanding for each quarter. The sum
    of the quarters may not be equal to the fiscal year amount 93




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##### Table of Contents



FINANCIAL
    STATEMENT SCHEDULE
  SCHEDULE II
    VALUATION AND QUALIFYING ACCOUNTS
  AdditionsCharges toCosts andBalance at


Expense in


Charges toBeginning of


Continuing


Other


Deductions


Balance atPeriod


Operations


Accounts


(A)


End of Period(Dollars in thousands)Year Ended December 31, 2007:Allowance for doubtful accounts

$
1,934


$
2,115


$



$
(15
)

$
4,034Year Ended December 31, 2006:Allowance for doubtful accounts

$
3,266


$
826


$



$
(2,158
)

$
1,934Year Ended December 31, 2005:Allowance for doubtful accounts

$
2,390


$
2,046


$



$
(1,170
)

$
3,266     (A)
    
    Write-offs of uncollectible amounts and recoveries of amounts
    previously written off. 94




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##### Table of Contents



EXHIBIT INDEX ExhibitNumber



Description of Exhibit and Method of Filing3
.1



Amended and Restated Certificate of Incorporation of Hypercom
    Corporation (incorporated by reference to Exhibit 3.1 to
    Hypercom Corporations Registration Statement on
    Form S-1
    (Registration
    No. 333-35461))3
.2



Second Amended and Restated Bylaws of Hypercom Corporation
    (incorporated by reference to Exhibit 3.1 to Hypercom
    Corporations Current Report on
    Form 8-K
    dated October 31, 2006)4
.1



Amended and Restated Certificate of Incorporation of Hypercom
    Corporation (incorporated by reference to Exhibit 3.1 to
    Hypercom Corporations Registration Statement on
    Form S-1
    (Registration
    No. 333-35461))10
.1



Hypercom Corporation Long-Term Incentive Plan (incorporated by
    reference to Exhibit 4.3 to Hypercom Corporations
    Registration Statement on
    Form S-8
    (Registration
    No. 333-67440))***10
.2



Amended and Restated Hypercom Corporation 1997 Employee Stock
    Purchase Plan (incorporated by reference to Exhibit 10.1 to
    Hypercom Corporations Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2004)***10
.3



Hypercom Corporation 2000 Broad-Based Stock Incentive Plan
    (incorporated by reference to Exhibit 10.1 to Hypercom
    Corporations Registration Statement on
    Form S-8
    (Registration
    No. 333-97181))***10
.4



Hypercom Corporation Nonemployee Directors Stock Option
    Plan (incorporated by reference to Exhibit 10.1 to Hypercom
    Corporations Registration Statement on
    Form S-8
    (Registration
    No. 333-97179))***10
.5



Amendment to the Hypercom Corporation Nonemployee
    Directors Stock Option Plan (Incorporated by reference to
    Appendix I of the Companys Proxy Statement on
    Schedule 14A filed on April 17, 2006)***10
.6



Factory Premises and Quarters Lease Agreement between Hypercom
    Electronic Manufacturing (Shenzhen) Co., Ltd. And Xin He
    Economic Development Company, Fu Yong Town, Boa An District,
    Shenzhen City, dated September 1, 2004 (incorporated by
    reference to Exhibit 10.1 to Hypercom Corporations
    Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2004)10
.7



Credit Agreement dated January 31, 2005, by and between
    Hypercom Corporation and Wells Fargo N.A. (incorporated by
    reference to Exhibit 10.1 to Hypercom Corporations
    Current Report on
    Form 8-K
    dated February 3, 2005)10
.8



First Amendment dated February 15, 2005, to the Credit
    Agreement dated January 31, 2005, by and between Hypercom
    Corporation and Wells Fargo N.A. (incorporated by reference to
    Exhibit 10.1 to Hypercom Corporations Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 30, 2005)10
.9



Second Amendment dated March 15, 2006, to the Credit
    Agreement dated January 31, 2005, by and between Hypercom
    Corporation and Wells Fargo N.A. (incorporated by reference to
    Exhibit 10.12 to Hypercom Corporations Annual Report
    on
    Form 10-K
    dated March 16, 2006)10
.10



Business Sale Agreement dated June 27, 2006, by and among
    Hypercom Corporation, Hypercom EMEA Ltd., Forrester UK Holdings,
    LLC and Northern Leasing Systems, Inc. (incorporated by
    reference to Exhibit 2.1 to Hypercom Corporations
    Current Report on
    Form 8-K
    dated June 27, 2006)10
.11



Employment Agreement, effective January 16, 2007, between
    Philippe Tartavull and Hypercom Corporation (incorporated by
    reference to Exhibit 10.1 to Hypercom Corporations
    Current Report on
    Form 8-K
    dated January 17, 2007)***10
.12



Separation Agreement and General Release, dated July 11,
    2007, by and between Hypercom Corporation and William Keiper
    (incorporated by reference to Exhibit 10.1 to Hypercom
    Corporations Current Report on
    Form 8-K
    filed on July 13, 2007)***10
.13



Consulting Agreement, dated July 11, 2007, by and between
    Hypercom Corporation and William Keiper (incorporated by
    reference to Exhibit 10.2 to Hypercom Corporations
    Current Report on
    Form 8-K
    filed on July 13, 2007)***10
.14



Amendment to Employment Agreement, dated July 11, 2007, by
    and between Hypercom Corporation and Philippe Tartavull
    (incorporated by reference to Exhibit 10.3 to Hypercom
    Corporations Current Report on
    Form 8-K
    filed on July 13, 2007)*** 95




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##### Table of Contents



ExhibitNumber



Description of Exhibit and Method of Filing10
.15



Amended and Restated Employment Agreement, dated July 11,
    2007, by and between Hypercom Corporation and Thomas Liguori
    (incorporated by reference to Exhibit 10.4 to Hypercom
    Corporations Current Report on
    Form 8-K
    filed on July 13, 2007)***10
.16



Separation Agreement, dated July 31, 2007, by and between
    Hypercom Corporation and Neil P. Hudd (incorporated by reference
    to Exhibit 10.1 to Hypercom Corporations Current
    Report on
    Form 8-K
    filed on August 6, 2007)***10
.17



Consulting Agreement, dated October 1, 2007, by and between
    Hypercom Corporation and Neil P. Hudd (incorporated by reference
    to Exhibit 10.2 to Hypercom Corporations Current
    Report on
    Form 8-K
    filed on August 6, 2007)***10
.18



Severance Agreement, dated August 8, 2007, by and between
    Hypercom Corporation and O.B. Rawls IV (incorporated by
    reference to Exhibit 10.1 to Hypercom Corporations
    Current Report on
    Form 8-K
    filed on August 10, 2007)***10
.19



Consulting Agreement, dated August 13, 2007, by and between
    Hypercom Corporation and O.B. Rawls IV (incorporated by
    reference to Exhibit 10.2 to Hypercom Corporations
    Current Report on
    Form 8-K
    filed on August 10, 2007)***10
.20



Contract Manufacturing Agreement, dated as of December 7,
    2007, between Hypercom Manufacturing Resources, Inc. and Venture
    Corporation (Singapore) LTD*10
.21



Binding offer letter, dated December 20, 2007, from
    Hypercom Corporation to Thales SA (incorporated by reference to
    Exhibit 10.1 to Hypercom Corporations Current Report
    on
    Form 8-K
    filed on December 20, 2007)10
.22



Exclusivity letter agreement, dated December 20, 2007, by
    and between Thales SA and Hypercom Corporation (incorporated by
    reference to Exhibit 10.2 to Hypercom Corporations
    Current Report on
    Form 8-K
    filed on December 20, 2007)10
.23



Commitment letter agreement, dated December 20, 2007, by
    and between Francisco Partners II, L.P. and Hypercom Corporation
    (incorporated by reference to Exhibit 10.3 to Hypercom
    Corporations Current Report on
    Form 8-K
    filed on December 20, 2007)10
.24



Amendment to Employment Agreement, dated December 20, 2007,
    by and between Hypercom Corporation and Philippe Tartavull
    (incorporated by reference to Exhibit 10.4 to Hypercom
    Corporations Current Report on
    Form 8-K
    filed on December 20, 2007)***10
.25



Employment Agreement, dated December 26, 2007, by and
    between Norman Stout and Hypercom Corporation (incorporated by
    reference to Exhibit 10.1 to Hypercom Corporations
    Current Report on
    Form 8-K
    filed on December 31, 2007)***10
.26



Loan and Security Agreement, dated as of January 15, 2008,
    among Hypercom U.S.A., Inc. and Hypercom Manufacturing
    Resources, Inc., as Borrowers, Certain Financial Institutions,
    as Lenders, and Bank of America, N.A., as Agent (incorporated by
    reference to Exhibit 10.2 to Hypercom Corporations
    Current Report on
    Form 8-K/A
    filed on January 22, 2008)10
.27



Share Purchase Agreement, dated as of February 13, 2008, by
    and among Thales SA, Thales Holding GmbH, Thales UK Limited, and
    Hypercom Corporation (incorporated by reference to
    Exhibit 10.1 to Hypercom Corporations Current Report
    on
    Form 8-K
    filed on February 14, 2008)10
.28



Indemnification Agreement, dated as of February 13, 2008,
    by and between Francisco Partners II, L.P. and Hypercom
    Corporation (incorporated by reference to Exhibit 10.2 to
    Hypercom Corporations Current Report on
    Form 8-K
    filed on February 14, 2008)10
.29



Credit Agreement, dated as of February 13, 2008, by and
    between Hypercom Corporation and Francisco Partners II, L.P.
    (incorporated by reference to Exhibit 10.3 to Hypercom
    Corporations Current Report on
    Form 8-K
    filed on February 14, 2008)10
.30



Separation Agreement and General Release, dated as of
    February 22, 2008, by and between Hypercom Corporation and
    Thomas Liguori (incorporated by reference to Exhibit 10.1
    to Hypercom Corporations Current Report on
    Form 8-K
    filed on February 25, 2008)***21
.1



List of Subsidiaries*23
.1



Consent of Independent Registered Public Accounting Firm* 96




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##### Table of Contents



ExhibitNumber



Description of Exhibit and Method of Filing24
.1



Powers of Attorney*31
.1



Certification of Chief Executive Officer, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002*31
.2



Certification of Chief Accounting Officer, as adopted pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002*32




Certification of Chief Executive Officer and Chief Accounting
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**     *
    
    Filed herewith.**
    
    Furnished herewith.***
    
    Management or compensatory plan or agreement.
    
    Certain Confidential Information contained in this Exhibit was
    omitted by means of redacting a portion of the text and
    replacing it with an asterisk. This Exhibit has been filed
    separately with the Secretary of the Securities and Exchange
    Commission without the redaction pursuant to Confidential
    Treatment Request under
    Rule 24b-2
    of the Securities Exchange Act of 1934, as amended. 97