UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 FORM
10-Q xQUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the quarterly
period ended March 31, 2001 OR  ̈TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition
period from ____ to ____ Commission file
number 0-19657 TRM CORPORATION(Exact name of
  registrant as specified in its charter)
  Oregon
  93-0809419(State
  or other jurisdiction of incorporation or organization)
  (I.R.S.
  Employer Identification No.)5208 N.E. 122nd AvenuePortland, Oregon 97230(Address
  of principal executive offices) (Zip Code)
  (503) 257-8766(Registrants
  telephone number, including area code)(Former
  name, former address and former fiscal year, if changed since last report)
  Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. YESxNO ̈ Indicate the number of shares outstanding of
each of the issuers classes of common stock, as of the latest practicable
date: CLASS
  OUTSTANDING AT
  MARCH 31, 2001Common Stock
  7,063,190
   PART I
- FINANCIAL INFORMATION

ITEM 1.FINANCIAL
STATEMENTS

TRM
CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)

December
  31,
  2000
  March
  31,
  2001ASSETS
  
  (unaudited)Current assets:Cash
  and cash equivalents
  $6,012
  $4,676Accounts receivable, net
  10,703
  9,655Income tax receivable
  101
  101Inventories
  3,616
  3,286Prepaid expenses and other
  1,843
  1,817Deferred tax asset
  1,328
  1,432Total current
  assets
  23,603
  20,967Equipment and vehicles, less accumulated depreciation
  80,478
  77,730Restricted Cash
  1,780
  1,780Other Assets
  5,059
  4,994$110,920
  $105,471LIABILITIES AND SHAREHOLDERS
  EQUITYCurrent liabilities:Accounts payable
  $11,406
  $9,819Accrued expenses
  7,286
  7,238Current portion of Long-term debt
  8,360
  27,220Total current liabilities
  27,052
  44,277Long-term debt
  21,285
  1,564Deferred tax liability
  3,053
  3,053Other long-term liabilities
  228
  216Total liabilities
  51,618
  49,110Minority Interest
  4,755
  4,466Shareholders equity:Preferred stock, no par value. Authorized 5,000 shares; 1,778 shares
  issuedand outstanding
  19,798
  19,798Common stock, no par value. 50,000 authorized;7,063 shares issued and outstanding
  19,032
  19,032Accumulated other comprehensive income
  (1,697)
  (3,191)Retained earnings
  17,414
  16,256Total shareholders equity
  54,547
  51,895$110,920
  $105,471See accompanying notes to consolidated financial
statements.

TRM CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)

Three
  Months EndedMarch 31,2000
  2001Sales
  $18,081
  $18,856Less discounts
  3,169
  2,993Net sales
  14,912
  15,863Cost of sales
  8,405
  9,753Gross profit
  6,507
  6,110Selling, general and administrative expense
  6,838
  7,449Operating income (loss)
  (331)
  (1,339)Other (income) expense:Interest
  474
  715Other, net
  21
  (960)Income (loss) before minority interest
  (826)
  (1,094)Minority interest in earnings of consolidated
  subsidiary
  0
  289Income (loss) before income taxes and cumulative effect
  of change in accounting principle
  (826)
  (805)Provision (benefit) for income taxes
  (332)
  (17)Income (loss) before cumulative effect of change in
  accounting principle
  (494)
  (788)Cumulative effect of change in accounting principle
  856
  0Net income (loss)
  $362
  $(788)Earnings per share computation:Net income
  (loss)
  $362
  $(788)Preferred
  stock dividends
  (374)
  (370)Net income
  (loss) available to common Shareholders
  $(12)
  $(1,158)Basic net income (loss) per share:Shares outstanding
  7,076
  7,063Net income (loss) per share
  $(0.00)
  $(.16)Diluted net income (loss) per share:Shares outstanding
  7,076
  7,063Net income (loss) per share
  $(0.00)
  $(.16)See accompanying notes to consolidated financial
statements.

TRM CORPORATION

CONSOLIDATED STATEMENT OF SHAREHOLDERS
EQUITY
(unaudited)
(In thousands)


Comprehensive
  Preferred
  Stock
  Common
  Stock
  Accumulated Other Comprehensive
  RetainedIncome
  Shares
  Amounts
  Shares
  Amounts
  Income
  Earnings
  TotalBalances, December 31, 2000
  
  1,778
  $19,798
  7,063
  $19,032
  $(1,697)
  $17,414
  $54,547Comprehensive income:Net loss
  $(788)
  
  
  
  --
  
  (788)
  (788)Other Comprehensive
  income (loss), net of tax:Foreign currency translation adjustment
  (1,494)
  
  
  
  
  (1,494)
  
  (1,494)Comprehensive income
  $(2,282)Preferred stock dividends
  
  
  
  
  
  
  (370)
  (370)Balances, March 31, 2001
  
  1,778
  $19,798
  7,063
  $19,032
  $(3,191)
  $16,256
  $51,895See accompanying notes to consolidated
financial statements.

TRM CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)

Three
  Months Ended
  March 31,2000
  2001Operating activities:Net income (loss)
  $362
  $(788)Adjustments to reconcile net income (loss) to net cash provided (used
  in) by operating activities:Cumulative effect of accounting change, net of tax
  (856)
  0Depreciation and amortization
  2,132
  2,286Minority Interest in earnings of consolidated subsidiary
  
  (289)Other
  
  (76)Loss (Gain) on disposal of equipment 
  and vehicles
  (24)
  31Changes in items affecting operations:Accounts receivable
  (576)
  979Inventories
  (527)
  328Income tax receivable
  (310)
  0Prepaid expenses and other
  (1,960)
  18Accounts payable
  4,813
  (1,642)Accrued expenses
  736
  (432)Deferred income tax
  198
  (104)Cash provided by (used in) operating activities
  3,988
  311Cash flows from investing activities:Proceeds from sale of equipment
  93
  206Capital expenditures
  (6,671)
  (889)Other
  (806)
  (69)Cash used in investing activities
  (7,384)
  (752)Cash flows from financing activities:Net borrowings on notes payable
  (12,040)
  (861)Other long-term liabilities
  
  (12)Net proceeds from issuance of common stock
  35
  -Dividends on preferred stock
  (374)
  0Cash used in financing activities
  (12,379)
  (873)Effect of exchange rate changes
  (528)
  (22)Net increase (decrease) in cash and cash equivalents
  (16,303)
  (1,336)Cash and cash equivalents at beginning of period
  16,775
  6,012Cash and cash equivalents at end of period
  $472
  $4,676See accompanying notes to consolidated financial
statements.

TRM CORPORATION

Notes to Condensed Consolidated
Financial Statements (unaudited)

1.           Interim
Financial Data:

The condensed financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission and reflect all
adjustments, consisting only of normal recurring adjustments, which, in the
opinion of management, are necessary for a fair statement of the results of the
interim periods.  These condensed
interim financial data should be read in conjunction with the Companys latest
annual report to shareholders.2.           Net
Income Per Share:

Basic
and diluted net income per share are based on the weighted average number of
common shares outstanding during each year, with diluted including the effect
of potentially dilutive securities.  For
the three months ended March 31, 2000 and 2001, the weighted average number of
common shares for basic net income per share computations were 7,076,000 and
7,063,000, respectively. In calculating basic net income per share, dividends
for preferred stock are deducted to arrive at income available for common
stockholders.  For diluted net income
per share, the calculation assumes the conversion of common stock equivalents
including the conversion of preferred stock to common unless such conversion is
anti-dilutive.  For the three months
ended March 31, 2000 and 2001, no shares were added to the weighted average
shares outstanding because the addition of shares would be anti-dilutive.3.           Inventories
(in thousands):

December
  31,
  2000
  March
  31,
  2001Paper
  $661
  $602Toner and developer
  482
  276Parts
  2,473
  2,408$3,616
  $3,286

4.           Segment
Reporting (in thousands):

The
Company has three reportable segments: 
Photocopy, ATM, and e-commerce. 
Photocopy owns and maintains self-service photocopiers in retail
establishments.  ATM owns and operates
ATM machines in retail establishments. The e-commerce business develops
software to deliver products and services through ATMs.The
Company evaluates each segments performance based on income or loss before
interest and income taxes, excluding non-recurring charges.  Information regarding the operations in
these reportable segments is as follows:Three
  Months EndedMarch
  31,
  2000
  March
  31,
  2001SalesPhotocopy
  $16,956
  $14,921ATM
  1,125
  3,677e-Commerce
  0
  258$18,081
  $18,856RESTATED:Depreciation and
  amortization:Photocopy
  $1,987
  $1,728ATM
  145
  452e-Commerce
  0
  105$2,132
  $2,285Income (loss) before
  interest, taxes, minority interest, and cumulative effect of accounting
  change:Photocopy
  $1,420
  $1,171ATM
  (1,772)
  (593)e-commerce
  0
  (957)$(352)
  $(379)AS ORIGINALLY REPORTED
  IN FORM 10-Q:Depreciation and
  amortization:Photocopy
  $2,515
  $1,728ATM
  145
  452e-Commerce
  0
  105$2,660
  $2,285Income (loss) before
  interest, taxes, minority interest, and cumulative effect of accounting
  change:Photocopy
  $129
  $1,171ATM
  (1,009)
  (593)e-commerce
  0
  (957)$(880)
  $(379)In
the fourth quarter of 2000, the Company changed its method of allocating Team
Headquarters overhead expenses across the Photocopy and ATM segments.  This change in allocation method is intended
to reflect the changing business model experienced as the ATM segment becomes
an increasingly larger portion of the overall business.  This reallocation of Team Headquarters
expense is based on activity directly related to each segment.  The reallocation resulted in a first quarter
2000 benefit in Photocopy income (loss) before interest, taxes, minority
interest, and cumulative effect of change in accounting of $763,000 and a
corresponding decrease of $763,000 in the ATM business.  The first quarter 2000 results have been
restated to reflect this change.Additionally,
in the fourth quarter of 2000, the Company changed its method of depreciation
of a substantial portion of its photocopier assets from the straight-line
method to the units of production method in order to more closely match its
transaction based revenue stream and its depreciation charges.  This change was applied retroactively to
January 1, 2000 resulting in a benefit of $317,000 net of tax in the first
quarter of 2000 to the Photocopy business. Additionally, a one time benefit of
$856,000 net of tax was recorded in the first quarter of 2000 for the
cumulative change in accounting method for previous periods.  The Photocopy business segment depreciation
and income (loss) before interest, taxes, minority interest, and cumulative
effect of accounting change have been restated to reflect this change.ITEM 2.MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL                        CONDITION
AND RESULTS OF OPERATIONS

GeneralAs of March 31, 2001 the
Company had a total of 1,740 ATM operating units installed, with 659 and 1,081
deployed in the United States and United Kingdom respectively, as compared to
689 total units installed at March 31, 2000, an increase of 1,051 units, most
of which occurred in the United Kingdom. 
During the last six months, the Company has very actively managed its
United States ATM account base, removing ATMs which were not generating
adequate transaction volumes to be profitable. 
The ATM business contributed $3.7 million to quarterly gross revenues, a
227% increase over the same period last year. 
The Company believes that revenues generated from services delivered
through its ATM network will become an increasingly higher percentage of its
overall revenue in the future as it expands the product offerings through its
ATM network, and pursues new geographic opportunities.

In
the first quarter of 2001, the CopyCenters business, conducted a consolidation
of its United States service areas in order to achieve greater operational
efficiencies.  This consolidation
resulted in a decrease to 31 service centers from 47 at December 31, 2000 in
the United States.  The service areas
the Company operates in include 31 in the United States, 5 in Canada, 15 in the
United Kingdom and 3 in France.  In
addition, third party service supports the Companys customers in over 100
additional locations.  As of
March 31, 2001, the Company had 32,241 TRM CopyCenters compared to 36,042
at March 31, 2000, a decrease of 3,801 CopyCenters (10.5%).  Over the last two quarters, the Company has
substantially phased out locations which were using older, liquid toner
technology based photocopiers.  In this
process, a number of CopyCenters locations were either eliminated or converted
to a minimum monthly charge pricing program.

In
the first quarter of 2000 the Company formed a subsidiary to deliver a unique
distribution channel to access the Internet using its existing ATMs initially
and eventually rolling out the software capability worldwide to other
ATMs.  iATMglobal.net continues TRMs
previous work on the development of a Remote Access Application Protocol (RAAP)
which will provide the infrastructure for e-tailers to use the ATM as an
additional way to sell goods and services. 
In conjunction with strategic e-commerce partners, iATMs are expected to
be able to deliver a wide range of services, including event and travel
ticketing, Internet banking services, affinity vouchers, and other goods and
services.  It is expected that anything
the Internet delivers to consumers can be available using the iATM network.  The Companys e-Commerce business
contributed $258,000 to revenues in the first quarter of 2001.

Results of OperationsThe
following table sets forth, for the periods indicated, selected statement of
operations data, expressed as a percentage of sales, and the percentage change
in dollar amounts of each item on the Consolidated Statements of Operations
(see page 3 of this Form 10-Q).

Percentage Change
  
  As a Percentage of
  SalesIncrease
  (Decrease)
  
  2000
  
  2001Sales
  4.3%
  
  100.0%
  
  100.0%Sales discounts
  (5.5)
  
  17.5
  
  15.9Cost of sales
  16.0
  
  46.5
  
  51.7Selling, general and
  administrative
  8.9
  
  37.8
  
  39.5Operating
  loss
  304
  
  (1.8)
  
  (7.1)Interest expense, net
  50.9
  
  2.6
  
  3.8Other expense (income)
  net
  (4,666)
  
  0.1
  
  (5.1)Loss before income
  taxes
  (2.5)
  
  (4.5)
  
  (4.3)Benefit for income
  taxes
  (94.9)
  
  (1.8)
  
  (0.1)Net loss before
  cumulative effect of accounting change
  59.5%
  
  (2.7)%
  
  (4.2)%Three Months ended
March 31, 2001 Compared to Three Months ended March 31, 2000

For
the quarter ended March 31, 2000, consolidated sales increased by $775,000
(4.3%) to $18.9 million from $18.1 million for 2000.  Revenues from the Companys expanding ATM business drove the
revenue increase and contributed $3.7 million of the totals for the quarter, up
$2.6 million from the same period last year. 
CopyCenter revenue was $14.9 million for the quarter.  The Companys e-Commerce revenue contributed
$258,000 for the quarter.

CopyCenters
sales were down 12.0% for the quarter ended March 31, 2001 as compared to the
same period in 2000.  The decrease is
primarily due to decreasing copy volumes and a decrease in billed units of
4.7%.  Revenues per billed unit were down
6.5% in the first quarter 2001 compared to the 2000.

Revenues
from the Companys ATM business were $3.7 million during the first quarter of
2001 as compared to $1.1 million 2000, an increase of 226.8% .  This revenue increase is attributable to the
expanded number of installed ATM operating units, which increased by 1,051
units over the first quarter of 2000.

Sales
discounts are the portion of revenue retained by retail customers.  Sales discounts generally vary at individual
retail businesses depending on volume  the higher the volume, the greater the
discount, and are typically smaller in the ATM business.  The decrease in sales discounts for the
quarter ended March 31, 2001 compared to the prior year is $176,000 (5.5 %),
which is attributed to lower volumes in the photocopy business.

Costs
of sales on a consolidated basis increased $1.3 million or 16% for the quarter
ended March 31, 2001 compared to 2000. 
The increase of $1.8 million is due to the ATM Business and was
primarily related to service and maintenance of ATM machines and increased
processing fees associated with increases in ATM transactions.  The Company had 689 installed ATM machines
in the first quarter of 2000 as compared to 1,740 in the same period 2001.  This increase in cost of sales for ATM  was partially offset by a decrease of
$617,000 in the photocopy business.

Selling,
general and administrative expenses increased $611,000 or 8.9% during the
quarter ended March 31, 2001 compared to 2000. 
The increase of $1.2 million is due to the addition of the Companys
e-Commerce business.  This increase was
partially offset by decreases in temporary labor expenses, commissions, and
incentive compensation.

During
the quarter ended March 31, 2001, interest expense increased to $715,000 from
$474,000 in 2000.  The increase was
primarily due to a higher level of borrowings under the Companys revolving
credit facility and higher interest costs on those borrowings.  These borrowings were used to finance the
purchase of ATMs and the formation of the e-commerce business.

Other
income increased $981,000 during the quarter ended March 31, 2001, compared to
2000, primarily due to a $801,000 contract termination settlement with the
Woolwich PLC.  Woolwich provided cash
inventory and cash management services for all of the Companys ATMs located in
England, Scotland, and Wales during 2000. 
In addition, Woolwich provided sponsorship into the LINK cash delivery
network in the United Kingdom.  In
mid-2000, a change in regulation allowed TRM to be a direct member of
LINK.  As a result of this change, and
Woolwichs desire to exit the surcharging market in the United Kingdom, TRM and
Woolwich terminated their relationship effective at the end of March 2001.

The
Companys effective tax rate, excluding e-Commerce, for ongoing operations for
the quarter ended March 31, 2001, was 39.0 percent, resulting in an income
tax benefit of $47,000, compared to an effective rate of 40 percent and an
income tax benefit of $332,000 in 2000. 
The Companys e-Commerce business recorded losses in the first quarter
2001 of $973,000 but recorded an income tax expense of $30,000 related to
profits earned by Strategic Software Solutions, a subsidiary of iATMglobal.net,
during the same period.  This expense
resulted in a net tax benefit of $17,000 for the quarter on a consolidated
basis.

Liquidity and Capital
Resources

At
December 31, 2000, the Company was not in compliance with all of its loan
covenants.  In February 2001 the Company
executed an amendment to its loan agreement waiving past non-compliance and
establishing new covenants.  The Company
is in compliance with the revised covenants. 
The Companys existing line of credit matures on January 4, 2002,
and consequently, the $27.2 million outstanding at March 31, 2001, has all
been classified as a current liability. 
As of May 8, 2001, the Company has $25.6 million outstanding on
this line of credit.  The Company
intends to replace its line of credit before the maturity date with a
combination of longer term equipment based financing and a new line of credit.

During
the first quarter of 2001, the Company generated $311,000 of cashflow from
ongoing operations, and funded capital expenditures of $889,000 primarily from
cash generated from operations.  Capital
expenditures were primarily for ATM machines, photocopy equipment and computer
related expenditures in the e-Commerce business.

During
the quarter, the Company renewed its vault cash inventory program supporting
its US ATM network.  The facility was
renewed through January 2002 and reduced to $20 million.

The
Company currently anticipates approximately $8 million of capital expenditures
for calendar 2001, the majority of which will be used to acquire ATM machines
for the expanding United Kingdom ATM business. 
The Company expects to finance these capital expenditures with cash
generated by operations and equipment based financings.

Disclosure Regarding
Euro Conversion

On January 1, 1999, eleven
member countries of the European Community began a process to convert their
existing sovereign currencies to a single common denomination, the Euro.  The process of conversion is gradual over
the next three years, culminating in the eventual removal from circulation of
all existing domestic currency for the participating countries.  The Company presently operates in the United
Kingdom and France and transacts business in the local currency of those
countries.  France will be subject to
the Euro Conversion, and the United Kingdom may become subject to the
conversion.  The Company believes that
it will be able to accommodate the conversion to the Euro without a material
impact on its financial statements.

Forward-Looking
Statements

Information in Managements
Discussion and Analysis, in this Form 10-Q about the Companys goals, plans
and expectations regarding expansion financing, capital expenditures, effectively
using a third-party network of service providers, expanding the ATM business,
offering and providing e–commerce goods and services through SmartATMs,
and replacing its bank line of credit, constitutes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. 
The following factors that could cause the actual results to differ
materially from the forward-looking statements:  business conditions in the market areas in which the Company
operates, competitive factors, customer demand for the Companys services, the
Companys ability to execute its plans successfully and the volatility of paper
costs.  Any forward-looking statements
should be considered in light of these factors as well as risk factors and
business conditions discussed in the Companys SEC Form 10-K for the year ended
December 31, 2000.

ITEM
3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK

The
Company is exposed to minimal market risks. 
Sensitivity of results of operations to these risks is managed by
maintaining a conservative investment portfolio, which is comprised solely of
money market funds, and entering into long-term debt obligations with
appropriate price and term characteristics.  The Company does not hold or issue derivative commodity
instruments or other financial instruments for trading purposes.  Financial instruments held for other than
trading purposes do not impose a material market risk.

The
Company is exposed to interest rate risk, as additional financing will be
needed due to the capital expenditures associated with expanding the Companys
business operations.  The interest rate
that the Company will be able to obtain on debt financing will depend on market
conditions at that time, and may differ from the rates the Company has secured
on its current debt.  Additionally, the
Company is exposed to interest rate risk related to its credit facility as of
March 31, 2001.  Advances against the
credit facility periodically renew, at which point the borrowings are subject
to the then current market interest rates, which may differ from the rates the
Company is currently paying on its borrowings.

The
Company is exposed to foreign currency exchange rate risk, as it has operations
in Canada, France and the United Kingdom. 
The relative amount of business transacted in these countries is
outlined in footnote 12 to the Consolidated Financial Statements of the
Companys 2000 Form 10-K.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL
PROCEEDINGS

Mr.
Frederick Paulsell, a director of the Company, and certain members of his
family have filed a lawsuit against Messrs. Edward Cohen and Daniel G. Cohen,
also directors of the Company, and ReadyCash Investment Partners, LP, a
significant shareholder of the Company, ReadyCash GP, Inc., the general partner
of ReadyCash and others, claiming that the defendants agreed to purchase one
million shares of the Companys common stock for $13 a share from Mr. Paulsell
and his family members at or around the time of the investment transaction
between ReadyCash and the Company in the spring of 1998.  Mr. Paulsell and his family also claim that
Messrs. Edward Cohen and Daniel G. Cohen have breached this alleged
agreement and the defendants are liable to Mr. Paulsell and his family members
for damages of at least $12 million for breach of contract, common law fraud
and securities fraud.  In connection
with this litigation, the Company has received a letter from counsel for Messrs. Edward
Cohen and Daniel G. Cohen claiming that they are entitled to be
indemnified by the Company for any liability related to this litigation,
including the costs of defending against the claims of Mr. Paulsell and his
family, and requesting that the Company reimburse them for their expenses to
date in defending this litigation.  The
Company is considering this request and has notified its insurance carrier.

ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K.

(a)         Exhibits

None

(b)         Reports on Form 8-K.

No
reports on Form 8–K were filed during the period.

SIGNATURE

Pursuant to the requirements of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

TRM CORPORATIONDate:
  May 15, 2001
  By:
  /s/ Daniel L. SpaldingDaniel L. SpaldingSenior Vice President, Finance andChief Financial Officer