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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION  Washington, D.C. 20549
 FORM 10-Q þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2005 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition period from  to Commission file number
0-19657 TRM CORPORATION 
  Oregon
    
    93-0809419(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 5208 N.E. 122nd Avenue  
  (503) 257-8766 
  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. YESþ NOo Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act). YESo NO þ 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, 2005Common Stock
    
    13,956,386




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TABLE OF CONTENTS  PART I  FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II  OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 6. EXHIBITSSIGNATURECertification of Chief Executive Officer pursuant to Section 302Certification of Chief Financial Officer pursuant to Section 302Certification of Principal Accounting Officer pursuant to Section 302Certification of Chief Executive Officer pursuant to Section 906Certification of Chief Financial Officer pursuant to Section 906Certification of Principal Accounting Officer pursuant to Section 906    Table of Contents  
 PART I  FINANCIAL INFORMATION 
 ITEM 1. FINANCIAL STATEMENTS TRM Corporation
Consolidated Balance Sheets
(unaudited)
(In thousands) December 31,
    
    
    March 31,2004
    
    
    2005AssetsCurrent assets:Cash and cash equivalents
    
    $
    5,576
    
    
    $
    2,072Accounts receivable, net
    
    
    12,251
    
    
    
    15,638Income tax receivable
    
    
    115
    
    
    
    90Inventories
    
    
    7,319
    
    
    
    7,379Prepaid expenses and other
    
    
    5,011
    
    
    
    5,269Deferred tax asset
    
    
    58
    
    
    
    51Total current assets
    
    
    30,330
    
    
    
    30,499Equipment, less accumulated depreciation and amortization
    
    
    72,265
    
    
    
    73,901Restricted cash  TRM Inventory Funding Trust
    
    
    75,547
    
    
    
    76,700Goodwill
    
    
    118,444
    
    
    
    118,446Other intangible assets, less accumulated amortization
    
    
    51,241
    
    
    
    49,428Other assets
    
    
    9,473
    
    
    
    9,912Total assets
    
    $
    357,300
    
    
    $
    358,886Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    18,234
    
    
    $
    14,778Accrued expenses
    
    
    8,891
    
    
    
    7,821Accrued expenses of TRM Inventory Funding Trust
    
    
    154
    
    
    
    149Current portion of long-term debt
    
    
    10,059
    
    
    
    10,048Current portion of obligations under capital leases
    
    
    2,195
    
    
    
    1,857Total current liabilities
    
    
    39,533
    
    
    
    34,653TRM Inventory Funding Trust note payable
    
    
    74,105
    
    
    
    75,353Long-term debt
    
    
    120,177
    
    
    
    123,273Obligations under capital leases
    
    
    1,644
    
    
    
    1,333Deferred tax liability
    
    
    8,168
    
    
    
    8,866Other long-term liabilities
    
    
    241
    
    
    
    228Preferred dividends payable
    
    
    220
    
    
    
    147Total liabilities
    
    
    244,088
    
    
    
    243,853Minority interest
    
    
    1,500
    
    
    
    1,500Shareholders equity:Preferred stock, no par value -
5,000 shares authorized; no shares issued and
outstanding (1,044 at December 31, 2004)
    
    
    11,620
    
    
    
    Common stock, no par value -
50,000 shares authorized; 13,956 shares issued and
outstanding (13,139 at December 31, 2004)
    
    
    81,075
    
    
    
    92,798Additional paid-in capital
    
    
    63
    
    
    
    63Accumulated other comprehensive income:Accumulated foreign currency translation adjustments
    
    
    4,474
    
    
    
    4,015Unrealized gain on securities
    
    
    28
    
    
    
    701Retained earnings
    
    
    14,452
    
    
    
    15,956Total shareholders equity
    
    
    111,712
    
    
    
    113,533Total liabilities and shareholders equity
    
    $
    357,300
    
    
    $
    358,886
 See accompanying notes to consolidated financial statements. 2




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TRM Corporation
Consolidated Statements of Operations
(unaudited)
(In thousands, except per share data) Three months endedMarch 31,2004
    
    
    2005Sales
    
    $
    25,915
    
    
    $
    58,812Less discounts
    
    
    4,899
    
    
    
    25,407Net sales
    
    
    21,016
    
    
    
    33,405Cost of sales
    
    
    10,618
    
    
    
    17,499Gross profit
    
    
    10,398
    
    
    
    15,906Selling, general and administrative expense
    
    
    6,120
    
    
    
    11,263Operating income
    
    
    4,278
    
    
    
    4,643Interest expense
    
    
    244
    
    
    
    2,229Other expense (income), net
    
    
    154
    
    
    
    (94
    )Income from continuing operations before income taxes
    
    
    3,880
    
    
    
    2,508Provision for income taxes
    
    
    1,286
    
    
    
    857Income from continuing operations
    
    
    2,594
    
    
    
    1,651Loss from discontinued operations, net of income tax benefit of $39
    
    
    (81
    )
    
    
    Net income
    
    $
    2,513
    
    
    $
    1,651Basic and diluted per share information:Income from continuing operations
    
    $
    2,594
    
    
    $
    1,651Preferred stock dividends
    
    
    (375
    )
    
    
    (147
    )Income allocated to Series A preferred shareholders
    
    
    (336
    )
    
    
    (57
    )Net income from continuing operations available to common shareholders
    
    $
    1,883
    
    
    $
    1,447Weighted average common shares outstanding
    
    
    7,153
    
    
    
    13,408Dilutive effect of stock options
    
    
    834
    
    
    
    892Dilutive effect of warrants
    
    
    
    
    
    
    84Weighted average common shares outstanding, assuming dilution
    
    
    7,987
    
    
    
    14,384Basic income (loss) per share:From continuing operations
    
    $
    .26
    
    
    $
    .11Discontinued operations
    
    
    (.01
    )
    
    
    Net income
    
    $
    .25
    
    
    $
    .11Diluted income (loss) per share:From continuing operations
    
    $
    .23
    
    
    $
    .10Discontinued operations
    
    
    (.01
    )
    
    
    Net income
    
    $
    .22
    
    
    $
    .10
 See accompanying notes to consolidated financial statements. 3




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TRM Corporation
Consolidated Statement of Shareholders Equity
(unaudited)
(In thousands) AccumulatedAdditional
    
    
    otherComprehensive
    
    
    
    Preferred
    
    Common
    
    
    
    paid-in
    
    comprehensive
    
    
    Retainedincome
    
    
    Shares
    
    
    Amounts
    
    
    Shares
    
    
    Amounts
    
    
    capital
    
    
    income
    
    
    earnings
    
    
    TotalBalances, December 31, 2004
    
    
    
    
    
    
    1,044
    
    
    $
    11,620
    
    
    
    13,139
    
    
    $
    81,075
    
    
    $
    63
    
    
    $
    4,502
    
    
    $
    14,452
    
    
    $
    111,712Comprehensive income:Net income
    
    $
    1,651
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,651
    
    
    
    1,651Other comprehensive income:Foreign currency translation
adjustment
    
    
    (459
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (459
    )
    
    
    
    
    
    
    (459
    )Unrealized gain on securities
    
    
    673
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    673
    
    
    
    
    
    
    
    673Comprehensive income
    
    $
    1,865Conversion of Series A preferred stock
    
    
    
    
    
    
    (1,044
    )
    
    
    (11,620
    )
    
    
    782
    
    
    
    11,620
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    73
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73Exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Tax benefit of options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (147
    )
    
    
    (147
    )Balances, March 31, 2005
    
    
    
    
    
    
    
    
    
    $
    
    
    
    
    13,956
    
    
    $
    92,798
    
    
    $
    63
    
    
    $
    4,716
    
    
    $
    15,956
    
    
    $
    113,533
 See accompanying notes to consolidated financial statements. 4




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TRM Corporation
Consolidated Statements of Cash Flows
(unaudited)
(In thousands) Three months endedMarch 31,2004
    
    
    2005Operating activities:Net income
    
    $
    2,513
    
    
    $
    1,651Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    2,221
    
    
    
    4,928Loss on disposal of equipment
    
    
    61
    
    
    
    151Changes in
items affecting operations, net of effect of business acquisitions:Accounts receivable
    
    
    (750
    )
    
    
    (3,414
    )Income tax
receivable
    
    
    
    
    
    
    25Inventories
    
    
    (34
    )
    
    
    (126
    )Prepaid expenses and other
    
    
    (124
    )
    
    
    (285
    )Accounts payable
    
    
    841
    
    
    
    (3,384
    )Accrued expenses
    
    
    (812
    )
    
    
    (1,050
    )Deferred income taxes
    
    
    1,247
    
    
    
    706Total operating activities
    
    
    5,163
    
    
    
    (798
    )Investing activities:Proceeds from sale of equipment
    
    
    25
    
    
    
    35Capital expenditures
    
    
    (1,329
    )
    
    
    (4,794
    )Acquisition of a business
    
    
    (5,823
    )
    
    
    Acquisition of intangible and other assets
    
    
    (580
    )
    
    
    (465
    )Total investing activities
    
    
    (7,707
    )
    
    
    (5,224
    )Financing activities:Borrowings on notes payable
    
    
    3,915
    
    
    
    5,697Repayment of notes payable
    
    
    (754
    )
    
    
    (2,501
    )Principal payments on capital lease obligations
    
    
    (521
    )
    
    
    (614
    )Increase in restricted cash
    
    
    (2,433
    )
    
    
    (1,153
    )Proceeds from issuance of TRM Inventory Funding Trust note, net of
repayments
    
    
    2,486
    
    
    
    1,248Proceeds from exercise of stock options
    
    
    3,468
    
    
    
    72Preferred stock dividends
    
    
    (375
    )
    
    
    (220
    )Other
    
    
    
    
    
    
    (13
    )Total financing activities
    
    
    5,786
    
    
    
    2,516Effect of exchange rate changes
    
    
    (25
    )
    
    
    2Net increase (decrease) in cash and cash equivalents
    
    
    3,217
    
    
    
    (3,504
    )Beginning cash and cash equivalents
    
    
    5,724
    
    
    
    5,576Ending cash and cash equivalents
    
    $
    8,941
    
    
    $
    2,072
 See accompanying notes to consolidated financial statements. 5




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TRM Corporation Notes to Condensed Consolidated Financial Statements (unaudited)  1.
    Interim Financial Data The consolidated financial statements of TRM Corporation and its subsidiaries included herein
have been prepared by us, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission and reflect all adjustments, consisting only of normal recurring
adjustments, which, in the opinion of management, are necessary for a fair statement of the results
of the interim periods. These consolidated financial statements should be read in conjunction with
our annual report on Form 10-K for the year ended December 31, 2004. Certain information and
footnote disclosures normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant to such rules and
regulations. The results of operations for the periods presented are not necessarily indicative of
the results to be expected for any subsequent interim period or for the year ending December 31,
2005.  2.
    Financial Statement Reclassifications Certain financial statement reclassifications have been made to prior period amounts to
conform to the current period presentation. These changes had no impact on shareholders equity or
previously reported net income.  3.
    Net Income Per Share Basic and diluted net income per share are based on the weighted average number of shares
outstanding during each period, with diluted net income per share including the effect of
potentially dilutive securities. For diluted net income per share,
the calculation includes the effect of potentially dilutive
securities, unless such effect is antidilutive. Weighted average
common shares outstanding, assuming dilution, include the incremental shares that would be issued
upon the assumed exercise of stock options and warrants. For the three months ended March 31,
2004, warrants exercisable for 300,000 common shares were excluded from the calculation of diluted
earnings per share because their inclusion would have been antidilutive. These warrants could be
dilutive in the future.  4.
    Inventories (in thousands): December 31,
    
    
    March 31,2004
    
    
    2005Parts
    
    $
    4,349
    
    
    $
    4,868ATMs held for resale
    
    
    2,896
    
    
    
    2,409Paper, toner and developer
    
    
    74
    
    
    
    102Total
    
    $
    7,319
    
    
    $
    7,379
 6




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5.
    Long-Term Debt (in thousands): March 31,2005Syndicated
loan facility:Term loan
    
    $
    117,500Domestic line of credit
    
    
    3,500Foreign line of credit
    
    
    12,273Other
    
    
    48133,321Less current
portion
    
    
    (10,048
    )$
    123,273
 The weighted average interest rate on the term loan as of March 31, 2005 was 6.89%, the
interest rate on borrowings under the domestic line of credit was 7.0%, and the weighted average
interest rate on borrowings under the foreign line of credit was 7.65%.  6.
    Business Acquisitions During 2004 our ATM segment acquired three ATM businesses. Effective March 31, 2004, we
acquired all of the outstanding shares of Inkas Financial Corp. Ltd. (Inkas). In June 2004 we
acquired all of the outstanding shares of Mighty Cash Financial Services, Inc. (Mighty Cash). On
November 19, 2004, we acquired substantially all of the assets constituting eFunds Corporations
business of operating ATMs. The following table reflects the unaudited combined results of TRM, Inkas, Mighty Cash and
eFunds ATM business for the three months ended March 31, 2004, as if each of the acquisitions had
taken place at the beginning of 2004. The pro forma information includes adjustments for the
amortization of contract rights and other amortizable intangible assets acquired, depreciation of
fixed assets, decreased interest income, increased interest expense and the tax effects of these
adjustments. The pro forma information does not necessarily reflect the actual results that would
have occurred nor is it necessarily indicative of future results of operations of the combined
companies. Net sales (in thousands)
    
    $
    34,908Net income (in thousands)
    
    $
    806Basic net income per share
    
    $
    .05Diluted net income per share
    
    $
    .04
  7.
    Shareholders Equity Preferred and Common Stock During the month of January 2005, 76,190 Series A Preferred shares were converted, at the
option of the holders, to 57,141 shares of common stock. On March 5, 2005, the remaining 967,343
Series A Preferred shares automatically converted to common stock, leaving no Series A preferred
stock remaining issued and outstanding. The automatic conversion resulted in issuance of an
aggregate of 725,497 shares of common stock. 7




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Common Stock Options and Warrants We apply Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and the related interpretations in accounting for stock-based compensation plans.
Accordingly, we have recognized no compensation expense for our stock-based compensation plans.
The following table illustrates the effect on net income and earnings per share if we had applied
the fair value recognition provisions of Statement of Financial Accounting Standards (SFAS) No.
123, Accounting for Stock-Based Compensation, (in thousands, except per share data): Three months endedMarch 31,2004
    
    
    2005Net income, as reported
    
    $
    2,513
    
    
    $
    1,651Deduct total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax
effects
    
    
    (86
    )
    
    
    (373
    )Pro forma net income
    
    $
    2,427
    
    
    $
    1,278Basic net income per share:As reported
    
    $
    .25
    
    
    $
    .11Pro forma
    
    $
    .24
    
    
    $
    .08Diluted net income per share:As reported
    
    $
    .22
    
    
    $
    .10Pro forma
    
    $
    .22
    
    
    $
    .08
 During the quarter ended March 31, 2005, options were exercised for the purchase of 9,050
common shares at prices ranging from $1.80 to $9.25. In addition, warrants were exercised on a
cashless basis, resulting in the issuance of an additional 25,861 common shares during the quarter. 8




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8. Provision for Income Taxes Our effective tax rate for the first three months of 2005 was 34.2%, resulting in a tax
provision of $857,000. For the first three months of 2004, our effective tax rate was 33.1%, and
the tax provision was $1.3 million.  9.
    Segment Reporting We
have two reportable segments: ATM and Photocopy. ATM owns
and operates ATM machines in retail establishments, sells ATM machines, and services equipment for
others. Photocopy owns and maintains self-service photocopiers in retail establishments. The accounting policies of the segments are substantially the same as those described in Note
1 to the financial statements in our Annual Report on Form 10-K for the year ended December 31,
2004. We evaluate each segments performance based on operating income or loss excluding costs of
raising capital and pursuing potential acquisitions. In our financial statements for the first
quarter of 2004 we reported segment performance based on operating income or loss. The 2004
information below has been restated to conform to the current presentation. Information regarding
the operations of these reportable segments is as follows (in thousands): Three months endedMarch 31,2004
    
    
    2005Net sales:ATM
    
    $
    9,605
    
    
    $
    24,527Photocopy
    
    
    11,411
    
    
    
    8,878$
    21,016
    
    
    $
    33,405Operating income excluding unallocated costs:ATM
    
    $
    2,115
    
    
    $
    5,894Photocopy
    
    
    2,861
    
    
    
    488$
    4,976
    
    
    $
    6,382Reconciliation of segment data to income from continuing
operations before income taxes:Operating income excluding unallocated costs
    
    $
    4,976
    
    
    $
    6,382Unallocated costs
    
    
    698
    
    
    
    1,739Interest expense
    
    
    244
    
    
    
    2,229Other (income) expense, net
    
    
    154
    
    
    
    (94
    )Income from continuing operations before income taxes
    
    $
    3,880
    
    
    $
    2,508
 Management
periodically reviews the expenses associated with each business
segment as well as those expenses that are for general corporate
purposes, but not directly related to the operation of any one
business segment, such as the cost of raising capital and pursuing
acquisitions. Unallocated costs are those expenses management believes
are attributable to general corporate purposes. 9




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Total assets as of March 31, 2005 (in thousands): ATM (including goodwill of $118.4 million)
    
    $
    312,402Photocopy
    
    
    46,484$
    358,886
  10.
    New Accounting Standards In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123R,
Share-Based Payment, an amendment of SFAS No. 123, Accounting for Stock-Based Compensation.
SFAS 123R eliminates the ability to account for share-based payments using Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to
Employees, and instead requires companies to
recognize compensation expense using a fair-value based method for costs related to share-based
payments, including stock options and employee stock purchase plans. The expense will be measured
as the fair value of the award at its grant date based on the estimated number of awards that are
expected to vest, and recorded over the applicable service period. In the absence of an observable
market price for a share-based award, the fair value would be based upon a valuation methodology
that takes into consideration various factors, including the exercise price of the award, the
expected term of the award, the current price of the underlying shares, the expected volatility of
the underlying share price, the expected dividends on the underlying shares and the risk-free
interest rate. The requirements of SFAS 123R are effective January 1, 2006 and apply to all awards
granted, modified or cancelled after that date, and to the portion of previously granted awards
that have not vested by the adoption date. We are evaluating the requirements of SFAS 123R and
expect that the adoption of SFAS 123R will have a significant impact on our consolidated results of
operations and earnings per share. We have not yet determined the method of adoption or the
financial statement impact of adopting SFAS 123R, and we have not determined whether the adoption
will result in amounts that are similar to the current pro forma disclosures under SFAS 123.  11.
    Subsequent Event  Insurance Settlement On April 27, 2005 we reached agreement with our D&O insurer to obtain reimbursement of monies
we spent to settle litigation described in Note 16 to our audited consolidated financial statements
in our 2004 Annual Report on Form 10-K. Upon execution of a final settlement agreement and the
exchange of full and final releases between us and our insurer, a payment of $700,000 will be made. 10




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS Forward-Looking Statements Information in Managements Discussion and Analysis of Financial Condition and Results of
Operations and elsewhere in this Quarterly Report on Form 10-Q with respect to our beliefs, plans,
objectives, goals, expectations, anticipations, intentions, financial condition, results of
operations, future performance and business, including, without limitation, increasing ATM
revenues, decreases in photocopy volume and growth of our business (including acquisitions)
constitutes forward-looking statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. We have based these forward-looking
statements on managements current expectations about future events. These statements can be
identified by the fact that they do not relate strictly to historical or current facts, and by
words such as may, could, should, would, believe, expect, anticipate, estimate,
intend, plan or other similar words or expressions. Any or all of the forward-looking statements in this report and in any other public statements
we make may turn out to be wrong. This can occur as a result of inaccurate assumptions or as a
consequence of known or unknown risks and uncertainties. We discuss
many of these risks and uncertainties that may impact
our business in Risk Factors in our Annual Report on Form 10-K for the year ended
December 31, 2004. Because of these risks and uncertainties, our actual results may differ materially from those that might be
anticipated from our forward-looking statements. Other factors beyond
those referred to above could
also adversely affect us. Therefore, you are cautioned not to place undue reliance on our
forward-looking statements. We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise. This discussion is
provided as permitted by the Private Securities Litigation Reform Act of 1995. Overview We are one of the largest multinational owners and operators of ATM networks, with operations
in the United States, the United Kingdom and Canada. As an independent sales organization, or ISO,
we own and operate off-premises ATM networks which exclude bank branch locations. We have the
second largest off-premises ATM network in both the United States and the United Kingdom and the
third largest off-premises ATM network in Canada. In addition, we own and operate a photocopier
network with self-service photocopiers deployed throughout the United States, the United Kingdom
and Canada. At
March 31, 2005, our ATM networks had a total of 21,672 machines deployed throughout the
United Kingdom, United States and Canada representing an increase of 18,075 ATM machines (or 503%)
when compared to the total at March 31, 2004. The increase in the number of ATMs was principally
due to our acquisitions of ATM networks covering approximately 16,600 ATMs during the last three
quarters of 2004. Our ATM operations 11




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##### Table of Contents



produced net sales of $24.5 million during the first quarter of 2005, an increase of $14.9
million (or 155%) as compared to the same period in the prior year. At March 31, 2005, we had a total of 24,776 installed photocopiers in the United States,
Canada and the United Kingdom, a decrease of 1,101 photocopiers (or 4.3%) when compared to March 31,
2004. The decrease in the number of photocopiers was caused primarily by the elimination of low
volume sites. Photocopy net sales were $8.9 million for the quarter ended March 31, 2005, down
from $11.4 million during the same period in 2004. Consolidated Results of Operations The following table sets forth, for the periods indicated, statement of operations data,
expressed as a percentage of sales of each item on our Consolidated Statements of Operations (see
page 3 of this Quarterly Report on Form 10-Q). Three months endedMarch 31,
    
    
    March 31,2004
    
    
    2005Sales
    
    
    100.0
    %
    
    
    100.0
    %Less discounts
    
    
    18.9
    
    
    
    43.2Net sales
    
    
    81.1
    
    
    
    56.8Cost of sales
    
    
    41.0
    
    
    
    29.8Gross profit
    
    
    40.1
    
    
    
    27.0Selling, general and administrative expense
    
    
    23.6
    
    
    
    19.1Operating income
    
    
    16.5
    
    
    
    7.9Interest expense
    
    
    .9
    
    
    
    3.8Other (income) expense, net
    
    
    .6
    
    
    
    (.2
    )Income from continuing operations before income taxes
    
    
    15.0
    
    
    
    4.3Provision for income taxes
    
    
    5.0
    
    
    
    1.5Income from continuing operations
    
    
    10.0
    
    
    
    2.8Loss from discontinued operations
    
    
    (.3
    )
    
    
    Net income
    
    
    9.7
    %
    
    
    2.8
    %
 12




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##### Table of Contents



Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004 ATM Results of Operations Three months ended March 31,% of
    
    
    
    
    
    
    % of2004
    
    
    sales
    
    
    2005
    
    
    sales(in thousands, except operating and percentage data)Transaction-based sales
    
    $
    11,272
    
    
    
    94.1
    %
    
    $
    45,905
    
    
    
    95.4
    %Service sales
    
    
    567
    
    
    
    4.7
    
    
    
    642
    
    
    
    1.3Sales of ATM equipment
    
    
    144
    
    
    
    1.2
    
    
    
    1,565
    
    
    
    3.3Total sales
    
    
    11,983
    
    
    
    100.0
    
    
    
    48,112
    
    
    
    100.0Less discounts
    
    
    2,378
    
    
    
    19.8
    
    
    
    23,585
    
    
    
    49.0Net sales
    
    
    9,605
    
    
    
    80.2
    
    
    
    24,527
    
    
    
    51.0Cost of sales
    
    
    4,958
    
    
    
    41.4
    
    
    
    11,712
    
    
    
    24.4Gross profit
    
    $
    4,647
    
    
    
    38.8
    %
    
    $
    12,815
    
    
    
    26.6
    %Operating Data:Average number of ATMs
    
    
    3,456
    
    
    
    
    
    
    
    20,265Withdrawal transactions
    
    
    4,023,210
    
    
    
    
    
    
    
    18,588,309Average withdrawals per ATM per month
    
    
    388
    
    
    
    
    
    
    
    306Average transaction-based sales per
withdrawal transaction
    
    $
    2.80
    
    
    
    
    
    
    $
    2.47Average discount per withdrawal transaction
    
    $
    .59
    
    
    
    
    
    
    $
    1.27Net transaction-based sales per withdrawal
transaction
    
    $
    2.21
    
    
    
    
    
    
    $
    1.20
 Photocopy Results of Operations Three months ended March 31,% of
    
    
    
    
    
    
    % of2004
    
    
    sales
    
    
    2005
    
    
    sales(in thousands, except operating and percentage data)Sales
    
    $
    13,932
    
    
    
    100.0
    %
    
    $
    10,700
    
    
    
    100.0
    %Less discounts
    
    
    2,521
    
    
    
    18.1
    
    
    
    1,822
    
    
    
    17.0Net sales
    
    
    11,411
    
    
    
    81.9
    
    
    
    8,878
    
    
    
    83.0Cost of sales
    
    
    5,660
    
    
    
    40.6
    
    
    
    5,787
    
    
    
    54.1Gross profit
    
    $
    5,751
    
    
    
    41.3
    %
    
    $
    3,091
    
    
    
    28.9
    %Operating Data:Average number of photocopiers
    
    
    25,960
    
    
    
    
    
    
    
    24,670Average photocopies per machine per month
    
    
    2,078
    
    
    
    
    
    
    
    1,749Average sales per photocopier per month
    
    $
    178.90
    
    
    
    
    
    
    $
    144.57Average sales per photocopy
    
    $
    .086
    
    
    
    
    
    
    $
    .083Average discount per photocopy
    
    $
    .015
    
    
    
    
    
    
    $
    .014Average net sales per photocopy
    
    $
    .071
    
    
    
    
    
    
    $
    .069Average gross profit per photocopy
    
    $
    .036
    
    
    
    
    
    
    $
    .024
 Sales For the first quarter of 2005, consolidated sales increased by $32.9 million, or 127%, to
$58.8 million from $25.9 million for the first quarter of 2004. ATM sales increased by $36.1
million due primarily to acquisitions during 2004, while photocopier sales decreased by 13




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$3.2 million due to a decline in installed photocopiers and in the average number of
photocopies per machine. During the first quarter of 2005, sales and expenses were affected by the decline in value of
the U.S. dollar as compared to the British pound and the Canadian dollar. Approximately 31% of
consolidated sales for the quarter were generated in the United Kingdom and Canada by our
subsidiaries in those countries. The average exchange rates during the first quarter of 2005 were
$1.902 to £1.00 and Canadian $.813 to U.S. $1.00, compared to $1.828 to £1.00 and Canadian $.758 to
U.S. $1.00 during the first quarter of 2004. As a result of these increases in the value of the
British pound and Canadian dollar, we reported $877,000 more in sales during the first quarter of
2005 than we would have reported had the exchange rates remained constant at the averages for the
first quarter of 2004. This gain was substantially offset by corresponding exchange rate-related
increases in expenses. ATM sales.ATM sales were $48.1 million for the first quarter of 2005 compared to $12.0
million for the first quarter of 2004. The $36.1 million increase in ATM sales was a combination
of a $34.6 million increase in transaction-based sales and a $1.4 million increase in sales of ATM
equipment. The
$34.6 million increase in transaction-based sales resulted from:  
    Expansion of our ATM networks  The average number of transacting ATMs in
our networks during the first quarter of 2005 increased to nearly six times the average
in the same period in 2004. The increase of 16,809 average ATMs has resulted primarily
from the acquisition between March 31, 2004 and November 19, 2004 of approximately
16,600 existing ATM contracts in addition to sales of new contracts by our sales force.
    The increase in the number of ATMs in our network was partially offset by:  
    A 21.1% decrease in average withdrawals per ATM per month, to 306 from
388 in the first quarter of 2004.
    An 11.8% decrease in average transaction-based sales per withdrawal
transaction, to $2.47 from $2.80 in the first quarter of 2004. Both the decrease in average withdrawals per month and average transaction-based sales per
withdrawal are due primarily to the acquisition of the eFunds ATM network in November 2004. The ATMs
acquired from eFunds had substantially fewer withdrawals per ATM per month and lower sales per ATM
than our historical averages. The value of the British pound and Canadian dollar relative to the U.S. dollar increased for
the first quarter of 2005 compared to same period in 2004, resulting
in a $750,000 increase in ATM
sales. This increase was substantially offset by exchange rate-related increases in costs. 14




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Photocopier sales.Photocopier sales in the first quarter of 2005 were $10.7 million compared
to $13.9 million in the first quarter of 2004. The $3.2 million decrease resulted primarily from:  
    Declining photocopy volume   Continuing a trend, photocopy volume
declined by 20.0% for the first quarter of 2005 compared to the same period in 2004, to
129 million copies from 162 million copies, due to a combination of:  
    a decline in installed photocopiers to an average of 24,670 in the
first quarter of 2005 from an average of 25,960 for the same period in 2004, as we
continued a program of eliminating lower volume sites that were either unprofitable
or marginally profitable; and
    a decline in the average number of photocopies made per unit per month
to 1,749 for the first quarter of 2005 from 2,078 for the same period in 2004 due
primarily to price increases that became effective in late 2003, as well as
competition from alternative media and copying services. The declining volume was partially offset by:  
    Exchange rate benefit   The value of the British pound and Canadian
dollar relative to the U.S. dollar increased for the first quarter of 2005 compared to
the same period in 2004, resulting in a $127,000 increase in photocopier sales. This
increase was substantially offset by exchange rate-related increases in costs. Sales Discounts Sales discounts on a consolidated basis as a percentage of sales were 43.2% in the first
quarter of 2005 and 18.9% in the first quarter of 2004. Sales discounts in the ATM business
increased to 51.4% of transaction-based sales in the first quarter of 2005 from 21.1% in the first
quarter of 2004. The increased discounts were caused by an increase in the percentage of merchants
who provide their own cash in their ATMs (self-fill contracts) and merchants for whom we provide
only processing services (processing only contracts). The increased percentage of self-fill and
processing only contracts resulted from our acquisitions in 2004, since most of the ATMs in the
networks we acquired were either self-fill or processing only contracts. Sales discounts in the
photocopier business decreased in the first quarter of 2005 to 17.0% of sales from 18.1% in the
first quarter of 2004, as a result of declining volumes and merchant contracts that provide
percentage discounts that decrease as copy volume decreases. Cost of Sales Cost of sales on a consolidated basis decreased to 29.8% of sales in the first quarter of
2005, from 41.0% in the first quarter of 2004. Cost of sales as a percentage of sales declined in
the ATM segment, but increased in the photocopier segment. 15




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##### Table of Contents



ATM cost of sales.Cost of sales in our ATM operations increased by $6.8 million to $11.7
million in the first quarter of 2005 from $5.0 million for the same time period in 2004, as a
result of:  
    Expansion of our ATM networks to an average of 20,265 ATMs in the first
quarter of 2005 compared to an average of 3,456 in the first quarter of 2004; and  
    Exchange rate effects  The ATM segment reported approximately $285,000
more in cost of sales in the first quarter of 2005 than it would have reported had the
exchange rate for the British pound remained at the average for the first quarter of
2004. However, expressed as a percentage of sales, cost of sales in our ATM operations (excluding
sales of ATM equipment and the related cost of sales) decreased to 22.2% of sales from 41.2% in the
first quarter of 2004 due to the increase in the percentage of self-fill and processing only
contracts resulting from our acquisitions. Photocopier cost of sales.Cost of sales in our photocopier operations increased to $5.8
million in the first quarter of 2005 compared to $5.7 million for the same time period in 2004.
The reduction in photocopy volume resulted in a decline in the cost of paper and other supplies by
$277,000, which was offset by a $338,000 increase in cost of parts. Exchange rate effects caused us to report $352,000 more in consolidated cost of sales in the
first quarter of 2005 than we would have reported had the exchange rates for the British pound and
Canadian dollar remained at the average for same time period in 2004. Selling, General and Administrative Expense Selling, general and administrative expense increased by $5.1 million to $11.3 million in the
first quarter of 2005 from $6.1 million in the first quarter of 2004. However, selling, general
and administrative expense as a percent of sales decreased to 19.1% in the first quarter of 2005
from 23.6% in the first quarter of 2004. Specific increases included:  
    Amortization expense increased by $2.2 million, primarily due to the
amortization of intangible assets relating to ATM contracts acquired in 2004; and
    Labor expense increased by $1.9 million due to an increase in
administrative employees necessary to accommodate our expanding business, including
integration of businesses acquired in 2004.
    The cost of outsourced services increased by $885,000,
primarily due to the
selling, general and administrative portion of charges by eFunds Corporation under the
services agreement we entered into with eFunds in November 2004 as part of our
acquisition of its ATM business.
    The increase in the value of the British pound and Canadian dollar caused
an increase of $157,000 in selling, general and administrative expense. 16




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Interest Expense Interest expense increased by $2.0 million to $2.2 million in the first quarter of 2005 from
$244,000 in the first quarter of 2004. The increase in interest expense is due primarily to the
increase in outstanding borrowings related to the eFunds ATM network acquisition. In the first quarter of 2004 our average interest-bearing debt was $17 million. In the first
quarter of 2005 our average interest-bearing debt was approximately $135 million, mostly borrowings
pursuant to our $150 million syndicated loan facility underwritten and arranged by Bank of America,
N.A. Tax Rate Our effective tax rate for the first quarter of 2005 was 34.2%, resulting in a tax provision
of $857,000. For the first quarter of 2004, the effective tax rate was 33.1%, and the tax
provision was $1.3 million. Loss from Discontinued Operations Our software development segment, which is shown as discontinued operations, had a loss of
$81,000 in the first quarter of 2004. This segment has had no operations since the fourth quarter
of 2004. Net Income Net income for the first quarter of 2005 was $1.7 million, a decrease of $862,000 compared to
the $2.5 million in net income for the same period in 2004. After giving effect to Series A
preferred stock dividends and a portion of undistributed income allocated to the preferred
shareholders, income from continuing operations available to common shareholders was $1.4 million
in the first quarter of 2005 and $1.9 million in the first quarter of 2004. Increased ATM volume
primarily contributed to the $5.5 million increase in gross profit to $15.9 million in the first
quarter of 2005. An increase in selling, general and administrative expense of $5.1 and a $2.0
million increase in interest expense offset the increased gross profit. Liquidity and Capital Resources General Our principal ongoing funding requirements are for working capital to finance the continued
growth of our business (including acquisitions), service bank debt and service lease obligations. During
the first three months of 2005, we used $798,000 of cash for operating
activities as compared to $5.2 million generated from operating
activities in the same period in 2004. The decrease in cash flows from
operating activities was due primarily to an increase in accounts
receivable and a reduction in accounts payable during the quarter.
Net borrowings of $3.2 million helped to finance
$4.8 million in capital expenditures, mostly ATM equipment. 17




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##### Table of Contents



We had cash and cash equivalents of $2.1 million at March 31, 2005, compared to $5.6 million
at December 31, 2004, and a net working capital deficit of $4.2 million at March 31, 2005 compared
to a net working capital deficit of $9.2 million at December 31, 2004. We believe that the total cost of upgrading our ATMs to comply with new industry standards
known as triple DES and EMV will be approximately $3.4 million in the United States and
approximately $4.1 million in the United Kingdom. These costs
are being capitalized and depreciated
over the remaining life of each asset. As of May 6, 2005, approximately 7% of our ATMs in the
United States and 85% of our ATMs in the United Kingdom were compliant with either triple DES or
EMV. Bank of America Credit Facility As of March 31, 2005, we owed $133.3 million pursuant to our $150 million syndicated loan
facility: $117.5 million under the term loan and $15.8 million under the $30 million lines of credit. Bank of
America had issued a letter of credit in the amount of $3.6 million to guarantee our performance
under our agreements relating to TRM Inventory Funding Trust, leaving a balance available under our
lines of credit of $10.6 million as of March 31, 2005. U.S. Vault Cash Facility TRM Inventory Funding Trust, which we refer to as the Trust, provides cash to be placed in our
United States ATM machines, which we refer to as vault cash, by accessing commercial paper markets.
Because we are the primary beneficiary of the Trust, the Trusts accounts are included in our
consolidated financial statements. Pursuant to the trust agreement, up to $150 million of cash is
available for use in our United States ATM network, of which $76.7 million was being used at March
31, 2005. U.K. Vault Cash Facility Our U.K. ATM business obtains vault cash under an agreement with a local bank. Vault cash
obtained under the program remains the property of the bank, and is not included on our balance
sheet. We are insured against risk of loss while the cash is in or being distributed to our ATM
network. During the first quarter of 2005, we accessed amounts ranging from £22.3 million ($42.1
million based on exchange rates as of March 31, 2005) to £38.1 million ($72.0 18




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##### Table of Contents



million based on exchange rates as of March 31, 2005) under this arrangement and paid a total
of $820,000 for use of the cash. Canadian Vault Cash Facility Our Canadian ATM business obtains vault cash under an agreement with an armored car carrier
that has a corresponding agreement with a local bank. As in our U.K. vault cash arrangement, the
vault cash obtained under the Canadian program remains the property of the bank, and is not
included on our balance sheet. We are insured against risk of loss while the cash is in or being
distributed to our ATM network. During the first quarter of 2005, we accessed amounts ranging from
Canadian $10.2 million (U.S. $8.4 million based on exchange rate as of March 31, 2005) to Canadian
$17.0 million (U.S. $14.0 million based on exchange rates as of March 31, 2005) and paid a total of
$243,000 for use of the cash. Contractual Commitments and Obligations Contractual commitments and obligations as of March 31, 2005 were as follows (in thousands): Payments Due by PeriodApril 1 December 31,Contractual obligations
    
    Total
    
    
    2005
    
    
    2006-2007
    
    
    2008-2009
    
    
    After 2009TRM Corporation and subsidiariesLong-term debt
    
    $
    174,670
    
    
    $
    14,461
    
    
    $
    36,403
    
    
    $
    49,240
    
    
    $
    74,566Capital lease obligations
    
    
    3,420
    
    
    
    1,688
    
    
    
    1,648
    
    
    
    84
    
    
    
    Operating leases
    
    
    8,455
    
    
    
    2,105
    
    
    
    3,766
    
    
    
    1,601
    
    
    
    983Purchase obligations
    
    
    23,125
    
    
    
    3,750
    
    
    
    10,000
    
    
    
    9,375
    
    
    
    Total TRM Corporation and subsidiaries
    
    
    209,670
    
    
    
    22,004
    
    
    
    51,817
    
    
    
    60,300
    
    
    
    75,549TRM Inventory Funding Trust note payable
    
    
    82,417
    
    
    
    2,543
    
    
    
    79,874
    
    
    
    
    
    
    
    Total contractual cash obligations
    
    $
    292,087
    
    
    $
    24,547
    
    
    $
    131,691
    
    
    $
    60,300
    
    
    $
    75,549
 The above payments include interest where applicable, with interest on variable rate
obligations assumed to remain constant at the rate in effect as of March 31, 2005. Critical Accounting Policies and Estimates Our critical accounting policies and estimates as of March 31, 2005 are consistent with those
discussed in our Annual Report on Form 10-K for the year ended December 31, 2004. New Accounting Standards and Effects on Earnings Per Share In December 2004, the Financial Accounting Standards Board, or FASB, issued Statement of
Financial Accounting Standards, or SFAS, No. 123R, Share-Based Payment, an amendment of SFAS No.
123, Accounting for Stock-Based Compensation. SFAS 123R eliminates the ability to account for
share-based payments using Accounting Principles Board 19




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##### Table of Contents



Opinion No. 25,
Accounting for Stock Issued to Employees, and instead requires companies to
recognize compensation expense using a fair-value based method for costs related to share-based
payments, including stock options and employee stock purchase plans. The expense will be measured
as the fair value of the award at its grant date based on the estimated number of awards that are
expected to vest, and recorded over the applicable service period. In the absence of an observable
market price for a share-based award, the fair value would be based upon a valuation methodology
that takes into consideration various factors, including the exercise price of the award, the
expected term of the award, the current price of the underlying shares, the expected volatility of
the underlying share price, the expected dividends on the underlying shares and the risk-free
interest rate. The requirements of SFAS 123R are effective January 1, 2006 and apply to all awards
granted, modified or cancelled after that date, and to the portion of previously granted awards
that have not vested by the adoption date. We are evaluating the requirements of SFAS 123R and
expect that the adoption of SFAS 123R will have a significant impact on our consolidated results of
operations and earnings per share. We have not yet determined the method of adoption or the
financial statement impact of adopting SFAS 123R, and we have not determined whether the adoption
will result in amounts that are similar to the current pro forma disclosures under SFAS 123. 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk from changes in interest rates and foreign currency exchange
rates, which could impact our results of operations and financial condition. We do not hold or
issue derivative commodity instruments or other financial instruments for trading purposes. Interest Rate Risk We
invest our cash in money market accounts. The income earned from
these money market accounts is
subject to changes in interest rates. Interest income was $108,000 for the quarter ended March 31,
2005, and $27,000 for the same period in 2004. If the interest rate we earn on the $2.1 million
cash we had available for investment at March 31, 2005 increased or decreased by 1%, our interest
income would not change materially. Interest on borrowings pursuant to our syndicated loan facility is at variable rates. As of
March 31, 2005 the weighted average interest rate on our $117.5 million term loan was 6.89%, the
interest rate on the $3.5 million outstanding under the domestic line of credit was 7.0%, and the
weighted average interest rate on the $12.3 million outstanding under the foreign line of credit was
7.65%. In the first quarter of 2005 we purchased a three-year
interest rate cap, under which $50 million of our term loan will
be at the 90-day LIBOR rate not to exceed 5%, plus
applicable rate plus mandatory costs. If the interest rate for the variable-rate portion of our
borrowings under the syndicated loan facility increased by 1%, our interest cost would increase by
$833,000 per year. The Trust borrows money pursuant to a note funded by the sale of commercial paper. The Trust
owed $75.4 million at March 31, 2005 and $29.9 million at March 31, 2004 under this 20




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arrangement. The weighted average interest rate on these borrowings at March 31, 2005 was 4.5%.
Interest and fees relating to the Trusts borrowings, which are included in cost of sales in our
consolidated financial statements, totaled $233,000 and $982,000 for the quarters ended March 31,
2004 and 2005, respectively. If the interest rate for the Trusts borrowings at March 31, 2005
increased by 1%, to a weighted average of 5.5%, our cost of sales would increase by $754,000 per
year. Our United Kingdom ATM business obtains vault cash under an agreement with a local bank.
Vault cash obtained under the program remains the property of the bank, and the cash is not
included on our consolidated balance sheet. During the first three months of 2004 we accessed
amounts ranging from £25.0 million ($46.5 million
based upon exchange rates as of March 31, 2004)
to £31.2 million ($58.0 million based upon exchange rates as of March 31, 2004). During the first
three months of 2005 we accessed amounts ranging from £22.3 million ($42.1 million based upon
exchange rates as of March 31, 2005) to £38.1 million ($72.0 million based upon exchange rates as
of March 31, 2005). Fees that we pay for use of the cash are related to the banks interest rates.
Based on the £35.5 million balance being used at March 31, 2005, if the cost of the cash increased
by 1%, our cost of sales would increase by £355,000 ($670,000 based upon exchange rates as of March
31, 2005) per year. Our Canadian ATM business obtains vault cash under an agreement with an armored car carrier
that has a corresponding agreement with a local bank. As with our U.K. vault cash arrangement, the
vault cash obtained under the Canadian program remains the property of the bank, and is not
included on our balance sheet. We are insured against risk of loss while the cash is in or being
distributed to our ATM network. During the first quarter of 2005, we accessed amounts ranging from
Canadian $10.2 million (U.S. $8.4 million based on exchange rates as of March 31, 2005) to Canadian
$17.0 million (U.S. $14.0 million based on exchange rates as of March 31, 2005) and paid a total of
$243,000 for use of the cash. Fees that we pay are related to the banks interest rates. Based on
the Canadian $14.9 million balance being used at March 31, 2005, if the cost of cash increased by
1% our cost of sales would increase by Canadian $149,000 ($123,000 based on exchange rates as of
March 31, 2005) per year. Foreign Currency Risk We have international subsidiaries subject to foreign currency exchange rate exposure. We
realize sales from, and pay the expenses of our international operations in British pounds and
Canadian dollars. Accordingly, we are exposed to the risk of foreign exchange rate fluctuations. Foreign exchange rate transaction gains, net of losses, were $66,000 for the three months
ended March 31, 2005. Foreign exchange transactions resulted in losses of $12,000 for the three
months ended March 31, 2004. If foreign currency rates were to fluctuate from rates at March 31,
2005 our financial position might be materially affected. Assuming a 10% appreciation in foreign
currency values versus the U.S. dollar from the quoted foreign currency exchange rates at March 31,
2005, the potential increase in the fair value of foreign currency-denominated assets and
liabilities would have been an aggregate of approximately $6.6 million. Assuming a 10%
appreciation in foreign currency values versus the U.S. dollar from the average for the quarter
ended March 31, 2005, the impact on sales would have been an aggregate increase 21




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of approximately $1.8 million, or 3.1%. The impact on net income for the three months ended
March 31, 2005 would have been an aggregate increase of approximately $103,000, or 6.2%. Assuming
a 10% depreciation in foreign currency values versus the U.S. dollar from the quoted foreign
currency exchange rates at March 31, 2005, the potential decrease in the fair value of foreign
currency-denominated assets and liabilities would have been an aggregate of approximately $6.6
million. Assuming a 10% depreciation in foreign currency values versus the U.S. dollar from the
average quoted foreign currency exchanges rates for the quarter ended March 31, 2005, the impact on
sales would have been an aggregate decrease of $1.8 million, or 3.1%. The impact on net income for
the three months ended March 31, 2005 would have been an aggregate decrease of approximately
$103,000, or 6.2%. 
 ITEM 4. CONTROLS AND PROCEDURES We maintain disclosure controls and procedures that are designed to ensure that information
required to be disclosed in our Securities and Exchange Act of 1934 reports is recorded, processed,
summarized and reported within the periods specified in the SECs rules and forms, and that such
information is accumulated and communicated to our management, including our Chief Executive
Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure. In designing and evaluating the disclosure controls and procedures, our
management recognized that any controls and procedures, no matter how well designed and operated,
can provide only reasonable assurance of achieving the desired control objectives, and our
management necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Under the supervision of our Chief Executive Officer and Chief Financial Officer and with the
participation of our disclosure committee appointed by such officers, we have carried out an
evaluation of the effectiveness of our disclosure controls and procedures as of the end of the
period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures are effective at a
reasonable assurance level. There have been no changes in our internal controls over financial reporting that
have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting during our most recent fiscal quarter. 22




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PART II  OTHER INFORMATION 
 ITEM 1. LEGAL PROCEEDINGS On April 27, 2005 we reached agreement with our D&O insurer to obtain reimbursement of monies
we spent to settle litigation described in Note 16 to our audited consolidated financial statements
in our 2004 Annual Report on Form 10-K. Upon execution of a final settlement agreement and the
exchange of full and final releases between us and our insurer, a payment of $700,000 will be made
to TRM, and will be included in our second quarter 2005 income. 
 ITEM 6. EXHIBITS (a) Exhibits 2.1
    (a)
    
    Purchase Agreement by and among eFunds Corporation, eFunds (Canada) Corporation, TRM ATM Corporation and TRM (Canada)
Corporation dated as of September 30, 2004 (incorporated herein by reference to Exhibit 10.3 of Form 10-Q filed for the
quarter ended September 30, 2004)2.1
    (b)
    
    Amendment No. 1 to the Purchase Agreement by and among eFunds Corporation, eFunds (Canada) Corporation, TRM ATM Corporation
and TRM (Canada) Corporation dated November 19, 2004 (incorporated herein by reference to Exhibit 2.2 of Form 8-K dated
November 19, 2004)3.1
    (a)
    
    Amendments to the Restated Articles of Incorporation (incorporated herein by reference to Exhibit 3.1(a) of Form 10-K for
the fiscal year ended June 30, 1998)3.1
    (b)
    
    Restated Articles of Incorporation (incorporated herein by reference to Exhibit 3.1(b) of Form 10-K for the fiscal year
ended June 30, 1998)3.2
    
    
    Restated Bylaws (incorporated herein by reference to Exhibit 3.2 of Form 10-K for the fiscal year ended June 30, 1998)4.1
    
    
    Specimen Stock Certificate (incorporated herein by reference to Exhibit 4.1 of Form S-3/A filed on August 25, 2004 [No.
333-116748])4.2
    
    
    Investors Rights Agreement (incorporated herein by reference to Exhibit 4.1 of Form 8-K dated July 9, 1998)4.3
    
    
    Articles V, VI and VII of the Restated Articles of Incorporation, as amended (See Exhibit 3.1)4.4
    
    
    Articles I, II, V, VII and X of the Restated Bylaws (See Exhibit 3.2)
 23




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31.1
    
    
    Certification of Chief Executive Officer of TRM Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Chief Financial Officer of TRM Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.3
    
    
    Certification of Principal Accounting Officer of TRM Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer of TRM Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18
U.S.C. Section 1350.32.2
    
    
    Certification of Chief Financial Officer of TRM Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18
U.S.C. Section 1350.32.3
    
    
    Certification of Principal Accounting Officer of TRM Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350.
 
 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized. TRM CORPORATIONDate: May 16, 2005
    By:
    Jon S. PitcherJon S. PitcherPrincipal Accounting Officer 24