##### Table of Contents



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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

| |  |                                                                                          
| |  | -----------------------------------------------------------------------------------------
| |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 
|
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| |  |                                                                                          
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| |  | For the quarterly period ended: March 31, 2001.                                          
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| |  |                                                                                          
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| |  | OR                                                                                       
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| |  |                                                                                          
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| |  | 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: 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
Number)

2851 West Kathleen Road
Phoenix, Arizona 85053
_______________

(Address of principal executive offices) (Zip Code)
(602) 504-5000
______________

(Registrants telephone number, including area code)

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

Yes      No

Number of shares of the registrants common stock, $.001 par value per share,
outstanding as of May 9, 2001, was 34,388,445.

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TABLE OF CONTENTS



|                                                                                                    |                                            |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  |  | 
|PART I - FINANCIAL INFORMATION                                                                     
|ITEM 1.       Financial Statements                                                                 
|                                                                                                    | Notes to Consolidated Financial Statements
|                                                                                                    | Independent Accountants' Review Report    
|ITEM 2.       Management's Discussion and Analysis of Financial Condition and Results of Operations
|ITEM 3.       Quantitative and Qualitative Disclosures About Market Risk                           
|PART II.      OTHER INFORMATION                                                                    
|ITEM 1.       Legal Proceedings                                                                    
|ITEM 6.       Exhibits and Reports on Form 8-K                                                     
|EX-11.1                                                                                            
|EX-15.1                                                                                            
|EX-99.1                                                                                            



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##### Table of Contents



INDEX

|         |  |                                                                                       |  |     
|-------- |  | ------------------------------------------------------------------------------------- |  | ----
|PART I.  |  | FINANCIAL INFORMATION                                                                 |  | Page
|        
|        
|        
|        
|        
|        
|        
|        
|        
|ITEM 1.  |  | Financial Statements                                                                  |  | 3   
|        
|        
|        
|        
|        
|        
|        
|        
|        
|         |  | Notes to Consolidated Financial Statements                                            |  | 6   
|        
|        
|        
|        
|        
|        
|        
|        
|        
|         |  | Independent Accountants Review Report                                                |  | 8   
|        
|        
|        
|        
|        
|        
|        
|        
|        
|ITEM 2.  |  | Managements Discussion and Analysis of
Financial Condition and Results of Operations |  | 9   
|        
|        
|        
|        
|        
|        
|        
|        
|        
|ITEM 3.  |  | Quantitative and Qualitative Disclosures About Market
Risk                            |  | 11  
|        
|        
|        
|        
|        
|        
|        
|        
|        
|PART II. |  | OTHER INFORMATION                                                                    
|        
|        
|        
|        
|        
|        
|        
|        
|        
|ITEM 1.  |  | Legal Proceedings                                                                     |  | 12  
|        
|        
|        
|        
|        
|        
|        
|        
|        
|ITEM 6.  |  | Exhibits and Reports on Form 8-K                                                      |  | 12  

2



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##### Table of Contents









PART I FINANCIAL INFORMATION







ITEM 1. FINANCIAL STATEMENTS

HYPERCOM CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

|                                                                                                           |                                                                                                                                                                              |   |             |         |   |              |         |         |  
|---------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----------- | ------- | - | ------------ | ------- | ------- | -
|                                                                                                           |                                                                                                                                                                              |   | March 31,   |        
|                                                                                                           |                                                                                                                                                                              |   | 2001        |         |   | December 31, |        
|                                                                                                           |                                                                                                                                                                              |   | (unaudited) |         |   | 2000         |        
|                                                                                                           |                                                                                                                                                                              |   |             |         |   |              |        
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|ASSETS                                                                                                    
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|Current
assets:                                                                                           
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Cash and cash equivalents                                                                                                                                                    |   | $           | 7,225   |   |              | $       | 13,008  |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Marketable securities, at market                                                                                                                                             |   |             |        |   |              |         | 2,110   |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Accounts receivable, net of allowance for
doubtful
accounts of $3,073 and $3,655                                                                                             |   |             | 75,544  |   |              |         | 79,010  |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Current portion of net investment in direct financing leases                                                                                                                 |   |             | 16,943  |   |              |         | 20,023  |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Inventories, net                                                                                                                                                             |   |             | 65,031  |   |              |         | 70,358  |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Deferred income taxes                                                                                                                                                        |   |             | 12,946  |   |              |         | 12,946  |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Prepaid taxes                                                                                                                                                                |   |             | 1,641   |   |              |         | 3,035   |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Prepaid expenses and other current assets                                                                                                                                    |   |             | 22,032  |   |              |         | 19,059  |  
|                                                                                                           |                                                                                                                                                                              |   |             |         |   |             
|Total current assets                                                                                       |                                                                                                                                                                              |   | 201,362     |         |   |              | 219,549 |        
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Property, plant and equipment, net                                                                                                                                           |   |             | 40,440  |   |              |         | 42,164  |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Long-term marketable securities, at market                                                                                                                                   |   |             | 155     |   |              |         | 820     |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Long-term portion of net investment in direct financing leases                                                                                                               |   |             | 32,734  |   |              |         | 42,102  |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Deferred income taxes                                                                                                                                                        |   |             | 9,024   |   |              |         | 9,024   |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Goodwill, net of amortization of $5,617 and $4,609                                                                                                                           |   |             | 31,708  |   |              |         | 31,785  |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Intangible assets, net of amortization of $2,968 and $2,459                                                                                                                  |   |             | 7,420   |   |              |         | 6,780   |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Other assets                                                                                                                                                                 |   |             | 14,980  |   |              |         | 17,013  |  
|                                                                                                           |                                                                                                                                                                              |   |             |         |   |             
|Total assets                                                                                               |                                                                                                                                                                              | $ | 337,823     |         |   | $            | 369,237 |        
|                                                                                                           |                                                                                                                                                                              |   |             |         |   |             
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                      
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|Current liabilities:                                                                                      
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Accounts payable                                                                                                                                                             |   | $           | 34,286  |   |              | $       | 32,531  |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Accrued liabilities                                                                                                                                                          |   |             | 21,833  |   |              |         | 22,137  |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Deferred revenue                                                                                                                                                             |   |             | 2,596   |   |              |         | 2,390   |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Income taxes payable                                                                                                                                                         |   |             |        |   |              |         | 3,237   |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Current portion of long-term debt                                                                                                                                            |   |             | 66,956  |   |              |         | 84,036  |  
|                                                                                                           |                                                                                                                                                                              |   |             |         |   |             
|Total current liabilities                                                                                  |                                                                                                                                                                              |   | 125,671     |         |   |              | 144,331 |        
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Long-term debt                                                                                                                                                               |   |             | 16,818  |   |              |         | 16,355  |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Other non-current liabilities                                                                                                                                                |   |             | 343     |   |              |         | 404     |  
|                                                                                                           |                                                                                                                                                                              |   |             |         |   |             
|Total liabilities                                                                                          |                                                                                                                                                                              |   | 142,832     |         |   |              | 161,090 |        
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|Stockholders equity:                                                                                     
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Common stock, $.001 par value; 100,000,000 shares authorized;
34,336,411 and 34,299,999 shares issued and outstanding for
March 31, 2001 and December 31, 2000, respectively |   |             | 14      |   |              |         | 14      |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Additional paid-in capital                                                                                                                                                   |   |             | 152,635 |   |              |         | 152,658 |  
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Receivables from stockholder                                                                                                                                                 |   |             | (1,498  | ) |              |         | (1,498  | )
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                           | Retained earnings                                                                                                                                                            |   |             | 46,437  |   |              |         | 59,923  |  
|                                                                                                           |                                                                                                                                                                              |   |             |         |   |             
|                                                                                                           |                                                                                                                                                                              |   | 197,588     |         |   |              | 211,097 |        
|                                                                                                          
|                                                                                                          
|                                                                                                          
|                                                                                                          
|Treasury stock, 240,088 and 276,500 shares (at cost) at March 31, 2001
and December 31, 2000, respectively |                                                                                                                                                                              |   | (2,597      | )       |   |              | (2,950  | )      
|                                                                                                           |                                                                                                                                                                              |   |             |         |   |             
|Total stockholders equity                                                                                 |                                                                                                                                                                              |   | 194,991     |         |   |              | 208,147 |        
|                                                                                                           |                                                                                                                                                                              |   |             |         |   |             
|Total liabilities and stockholders equity                                                                 |                                                                                                                                                                              | $ | 337,823     |         |   | $            | 369,237 |        
|                                                                                                           |                                                                                                                                                                              |   |             |         |   |             

The accompanying notes are an integral part of the consolidated financial
statements.

3



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##### Table of Contents



HYPERCOM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except per share amounts)

|                                         |                                          |                          |        |                    |         |   |           |        |        |  
|---------------------------------------- | ---------------------------------------- | ------------------------ | ------ | ------------------ | ------- | - | --------- | ------ | ------ | -
|                                         |                                          |                          |        | Three Months Ended |        
|                                         |                                          |                          |        |                    |        
|                                         |                                          |                          |        | March 31,          |         |   | March 31, |       
|                                         |                                          |                          |        | 2001               |         |   | 2000      |       
|                                         |                                          |                          |        |                    |         |   |           |       
|Net revenue                              |                                          | $                        | 71,075 |                    |         | $ | 77,333    |       
|                                        
|                                        
|                                        
|                                        
|Costs and expenses:                     
|                                        
|                                        
|                                        
|                                        
|                                         | Costs of revenue                         |                          |        | 45,949             |         |   |           | 46,645 |       
|                                        
|                                        
|                                        
|                                        
|                                         | Research and development                 |                          |        | 8,253              |         |   |           | 10,703 |       
|                                        
|                                        
|                                        
|                                        
|                                         | Selling, general and administrative      |                          |        | 21,469             |         |   |           | 22,817 |       
|                                        
|                                        
|                                        
|                                        
|                                         | Special
direct
financing lease provision |                          |        | 7,182              |         |   |           |       |       
|                                         |                                          |                          |        |                    |         |  
|                                         |                                          | Total costs and expenses |        |                    | 82,853  |   |           |        | 80,165 |  
|                                         |                                          |                          |        |                    |         |  
|                                         |                                          | Loss from operations     |        |                    | (11,778 | ) |           |        | (2,832 | )
|                                        
|                                        
|                                        
|                                        
|Interest and other income                |                                          |                          | 254    |                    |         |   | 686       |       
|                                        
|                                        
|                                        
|                                        
|Interest and other expense               |                                          |                          | (2,491 | )                  |         |   | (191      | )     
|                                        
|                                        
|                                        
|                                        
|Foreign currency loss                    |                                          |                          | (2,551 | )                  |         |   | (381      | )     
|                                        
|                                        
|                                        
|                                        
|Loss from investment in equity affiliate |                                          |                          |       |                    |         |   | (1,700    | )     
|                                         |                                          |                          |        |                    |         |  
|                                         |                                          | Loss before income taxes |        |                    | (16,566 | ) |           |        | (4,418 | )
|                                        
|                                        
|                                        
|                                        
|Income tax benefit                       |                                          |                          | 3,313  |                    |         |   | 544       |       
|                                         |                                          |                          |        |                    |         |  
|                                         |                                          | Net loss                 |        | $                  | (13,253 | ) |           | $      | (3,874 | )
|                                         |                                          |                          |        |                    |         |  
|Net loss per share:                     
|                                        
|                                        
|                                        
|                                        
|                                         | Basic loss per share                     |                          | $      | (0.39              | )       |   | $         | (0.11  | )     
|                                         |                                          |                          |        |                    |         |  
|                                         | Weighted average basic common shares     |                          |        | 34,336             |         |   |           | 33,959 |       
|                                         |                                          |                          |        |                    |         |  
|                                         | Diluted loss per share                   |                          | $      | (0.39              | )       |   | $         | (0.11  | )     
|                                         |                                          |                          |        |                    |         |  
|                                         | Weighted average diluted common shares   |                          |        | 34,336             |         |   |           | 33,959 |       
|                                         |                                          |                          |        |                    |         |  

The accompanying notes are an integral part of the consolidated financial
statements.

4



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##### Table of Contents



HYPERCOM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)

|                                                                                                                                        |                                                                            |                                                     |        |                    |         |   |           |         |         |  
|--------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------- | --------------------------------------------------- | ------ | ------------------ | ------- | - | --------- | ------- | ------- | -
|                                                                                                                                        |                                                                            |                                                     |        | Three Months Ended |        
|                                                                                                                                        |                                                                            |                                                     |        |                    |        
|                                                                                                                                        |                                                                            |                                                     |        | March 31,          |         |   | March 31, |        
|                                                                                                                                        |                                                                            |                                                     |        | 2001               |         |   | 2000      |        
|                                                                                                                                        |                                                                            |                                                     |        |                    |         |   |           |        
|Cash flows from operating activities:                                                                                                  
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Net loss                                                                   |                                                     | $      | (13,253            | )       |   | $         | (3,874  | )      
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:                                              
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Depreciation/amortization                                                  |                                                     |        | 3,839              |         |   |           | 2,915   |        
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Bad debt expense                                                           |                                                     |        | 556                |         |   |           | 196     |        
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Deferred components of direct financing leases                             |                                                     |        | (130               | )       |   |           | (2,453  | )      
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Provision for losses on direct financing leases                            |                                                     |        | 10,145             |         |   |           | 2,291   |        
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Provision for excess and obsolete inventory                                |                                                     |        | 445                |         |   |           | 671     |        
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Equity loss in affiliates                                                  |                                                     |        |                   |         |   |           | 1,700   |        
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Foreign currency loss                                                      |                                                     |        | 2,720              |         |   |           | 381     |        
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Deferred income taxes                                                      |                                                     |        |                   |         |   |           | 929     |        
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Other                                                                      |                                                     |        | 51                 |         |   |           | 6       |        
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|(Increase) decrease in accounts receivable, inventories, prepaid income taxes,
prepaid expenses and other current assets & other assets |                                                                            |                                                     | 6,472  |                    |         |   | (24,443   | )      
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|Decrease in accounts payable, accrued liabilities,
deferred revenue & income taxes payable                                              |                                                                            |                                                     | (2,824 | )                  |         |   | (13,793   | )      
|                                                                                                                                        |                                                                            |                                                     |        |                    |         |  
|                                                                                                                                        |                                                                            | Net cash provided by (used in) operating activities |        |                    | 8,021   |   |           |         | (35,474 | )
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|Cash flows from investing activities:                                                                                                  
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Advances to related parties                                                |                                                     |        |                   |         |   |           | (1,170  | )      
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Payments received on notes receivable                                      |                                                     |        | 355                |         |   |           | 529     |        
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Principal payments received on direct financing leases                     |                                                     |        | 3,182              |         |   |           | 2,692   |        
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Funding of direct financing leases                                         |                                                     |        | (8,324             | )       |   |           | (9,767  | )      
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Acquisition of controlling interests in subsidiaries,
net of cash acquired |                                                     |        |                   |         |   |           | (22,912 | )      
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Acquisition of other assets                                                |                                                     |        | (326               | )       |   |           | (545    | )      
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Proceeds from disposal of property,
plant & equipment                      |                                                     |        | 206                |         |   |           | 379     |        
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Purchase of property, plant & equipment                                    |                                                     |        | (228               | )       |   |           | (2,550  | )      
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Purchase of marketable securities                                          |                                                     |        |                   |         |   |           | (582    | )      
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Proceeds from maturity of marketable securities                            |                                                     |        | 2,775              |         |   |           | 22,529  |        
|                                                                                                                                        |                                                                            |                                                     |        |                    |         |  
|                                                                                                                                        |                                                                            | Net cash used in investing activities               |        |                    | (2,360  | ) |           |         | (11,397 | )
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|Cash flows from financing activities:                                                                                                  
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Proceeds of bank notes payable
and other debt instruments                  |                                                     |        | 1,000              |         |   |           | 79,464  |        
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Repayment of bank notes payable
and other debt instruments                 |                                                     |        | (17,617            | )       |   |           | (57,469 | )      
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Proceeds from sale of lease receivables                                    |                                                     |        | 5,420              |         |   |           |        |        
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                        | Proceeds from issuance of common stock                                     |                                                     |        | 97                 |         |   |           | 6,426   |        
|                                                                                                                                        |                                                                            |                                                     |        |                    |         |  
|                                                                                                                                        |                                                                            | Net cash provided by (used in) financing activities |        |                    | (11,100 | ) |           |         | 28,421  |  
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|Effect of exchange rate changes on cash                                                                                                 |                                                                            |                                                     | (344   | )                  |         |   | (238      | )      
|                                                                                                                                        |                                                                            |                                                     |        |                    |         |  
|Net decrease in cash                                                                                                                    |                                                                            |                                                     | (5,783 | )                  |         |   | (18,688   | )      
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|                                                                                                                                       
|Cash & cash equivalents, beginning of period                                                                                            |                                                                            |                                                     | 13,008 |                    |         |   | 26,093    |        
|                                                                                                                                        |                                                                            |                                                     |        |                    |         |  
|Cash & cash equivalents, end of period                                                                                                  |                                                                            | $                                                   | 7,225  |                    |         | $ | 7,405     |        
|                                                                                                                                        |                                                                            |                                                     |        |                    |         |  

The accompanying notes are an integral part of the consolidated financial
statements.

5



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##### Table of Contents









NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED AND IN THOUSANDS)

NOTE 1 BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair statement of results for the periods have been included. Operating
results for the three month period ended March 31, 2001, are not necessarily
indicative of the results to be expected for the year ending December 31, 2001.

Certain prior year amounts have been reclassified to conform with the current
period presentation.

This financial information is intended to be read in conjunction with
Hypercoms audited financial statements and footnotes thereto included in
Hypercoms Annual Report on Form 10-K for the year ended December 31,2000.

NOTE 2 INVENTORIES

Inventories consist of the following:

|                 |  |           |        |  |              |   |        | 
|---------------- |  | --------- | ------ |  | ------------ | - | ------ | 
|                 |  | March 31, |        |  | December 31, |  
|                 |  | 2001      |        |  | 2000         |  
|                 |  |           |        |  |              |  
|Purchased parts  |  | $         | 27,078 |  |              | $ | 29,744 | 
|                
|                
|                
|                
|Work in progress |  |           | 6,023  |  |              |   | 7,256  | 
|                
|                
|                
|                
|Finished goods   |  |           | 31,930 |  |              |   | 33,358 | 
|                 |  |           |        |  |              |  
|                 |  | $         | 65,031 |  |              | $ | 70,358 | 
|                 |  |           |        |  |              |  

NOTE 3 SEGMENT INFORMATION

As of December 31, 2000 Hypercom had two segments: Point-of-Sale (POS) and
Network Systems and Equipment Leasing.

Hypercoms reportable segments are strategic business units that offer
different products and services. They are managed separately because each
requires different technologies and marketing strategies.

The following table presents certain segment financial information unaudited
and in thousands for the three month periods ended March 31, 2001 and 2000:

6



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##### Table of Contents



For the Three Months Ended March 31, 2001:

|                        |  |         |         |  |           |   |        |           |  |   |              |   |  |       |          |   |  |   |         |  
|----------------------- |  | ------- | ------- |  | --------- | - | ------ | --------- |  | - | ------------ | - |  | ----- | -------- | - |  | - | ------- | -
|                        |  | POS and |        
|                        |  | Network |         |  | Equipment |  
|                        |  | Systems |         |  | Leasing   |   |        | Corporate |  |   | Eliminations |   |  | Total |         
|                        |  |         |         |  |           |   |        |           |  |   |              |   |  |       |         
|Net revenue             |  | $       | 63,523  |  |           | $ | 7,552  |           |  | $ |             |   |  | $     |         |   |  | $ | 71,075  |  
|                       
|                       
|                       
|                       
|Operating income (loss) |  | $       | 812     |  |           | $ | (7,541 | )         |  | $ | (5,049       | ) |  | $     |         |   |  | $ | (11,778 | )
|                       
|                       
|                       
|                       
|Segment Assets          |  | $       | 596,205 |  |           | $ | 76,074 |           |  | $ | 185,719      |   |  | $     | (520,175 | ) |  | $ | 337,823 |  

For the Three Months Ended March 31, 2000:

|                        |  |         |         |  |           |   |        |           |  |   |              |   |  |       |          |   |  |   |         |  
|----------------------- |  | ------- | ------- |  | --------- | - | ------ | --------- |  | - | ------------ | - |  | ----- | -------- | - |  | - | ------- | -
|                        |  | POS and |        
|                        |  | Network |         |  | Equipment |  
|                        |  | Systems |         |  | Leasing   |   |        | Corporate |  |   | Eliminations |   |  | Total |         
|                        |  |         |         |  |           |   |        |           |  |   |              |   |  |       |         
|Net revenue             |  | $       | 72,113  |  |           | $ | 5,220  |           |  | $ |             |   |  | $     |         |   |  | $ | 77,333  |  
|                       
|                       
|                       
|                       
|Operating income (loss) |  | $       | 3,258   |  |           | $ | 9      |           |  | $ | (6,099       | ) |  | $     |         |   |  | $ | (2,832  | )
|                       
|                       
|                       
|                       
|Segment Assets          |  | $       | 446,995 |  |           | $ | 71,126 |           |  | $ | 138,803      |   |  | $     | (306,481 | ) |  | $ | 350,443 |  

NOTE 4  INCOME TAXES

The income tax benefit for federal, state and foreign taxes was $3.3 million
and $0.5 million for the three month period ended March 31, 2001 and 2000,
respectively. The Companys effective rate of income tax benefit was 20% and
12.3% for the three months ended March 31, 2001, and 2000, respectively.

The income tax benefit for the quarters ended March 31, 2001 and 2000, differed
from the U.S. statutory rate principally due to foreign taxes, attributable to
foreign operations, that are less than the U.S. statutory rate, research and
experimentation credits, and the non-recognition of tax benefit on foreign
currency translation losses.

NOTE 5  NET INVESTMENT IN DIRECT FINANCING LEASES

During the quarter ended March 31, 2001, the Companys Equipment Leasing
segment recorded an incremental charge to strengthen credit reserves for
certain segments of its lease receivables in the amount of
$7.2 million in addition to its normal provision. This
charge represents managements estimate of potential loan losses that exceed
its historical rate of loan losses.

Additionally, during the quarter ended March 31, 2001, the Company sold a
portion of its lease receivables. Proceeds from the sales amounted to $6.9
million, of which $5.4 million was received as of March 31, 2001, and the
remaining $1.5 million was recorded in prepaid expenses and other current
assets. There was a corresponding reduction in net investment in financing
leases of $7.0 million as a result of these sales.

NOTE 6  RELATED PARTY TRANSACTIONS

During the quarter ended March 31, 2001, the Company received $1.0 million in
cash in exchange for a note payable to a director and stockholder of the
Company. The note, which bears interest at 12% annually, is due with 30 days
notification. The outstanding balance on this note is included in long-term
debt.

NOTE 7  SUBSEQUENT EVENTS

Effective April 1, 2001, the Company entered into a second amendment to the
Forbearance and Modification Agreement with its principal lending group. Under
the amendment, the Company is required, among other things, to make periodic
payments through May 15, 2001, sufficient enough to reduce the outstanding
balance of its revolving credit loan to $32 million. At March 31, 2001, the
outstanding balance on the revolving credit loan was $38.3 million. The
amendment also provides that if the balance is reduced below $32 million,
certain interest rate reductions and waiver of scheduled fees will also be
provided.

7



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##### Table of Contents









INDEPENDENT ACCOUNTANTS REVIEW REPORT

To the Board of Directors and Stockholders of Hypercom Corporation

We have reviewed the accompanying consolidated balance sheet of Hypercom
Corporation as of March 31, 2001, and the related consolidated statements of
operations and cash flows for the three-month period ended March 31, 2001.
These financial statements are the responsibility of the Companys management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with auditing standards generally accepted in the United States,
which will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements referred to above
for them to be in conformity with accounting principles generally accepted in
the United States.

We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet of Hypercom
Corporation as of December 31, 2000, and the related consolidated statements of
operations, stockholders equity, and cash flows for the year ended December
31, 2000, not presented herein, and in our report dated February 15, 2001, we
expressed an unqualified opinion on those consolidated financial statements.



| | /s/ Ernst & Young
LLP
| | ---------------------

Phoenix, Arizona
April 30, 2001

8



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##### Table of Contents









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

This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of The Private Securities Litigation Reform Act of 1995. Words such
as believe, expect, intend, anticipate, estimate, project, and
similar expressions identify forward-looking statements, which speak only as of
the date the statement was made. These forward-looking statements may include,
but not be limited to, projections of revenue or net income and issues that may
affect revenue or net income, projections of capital expenditures, plans for
future operations, products or services, financing needs of the Company, and
economic conditions, as well as assumptions relating to the foregoing.

Forward-looking statements are inherently subject to risks and uncertainties,
some of which cannot be predicted or quantified. Future events and actual
results could differ materially from those set forth in, contemplated by, or
underlying the forward-looking statements. Statements in this Quarterly Report,
including the Notes To The Condensed Consolidated Financial Statements and
Managements Discussion and Analysis of Results of Operations describe factors,
among others, that could contribute to or cause such differences. Additional
risk factors that could cause actual results to differ materially from those
expressed in such forward-looking statements, and that could affect the
Companys results of operations and financial position generally, are set forth
in Exhibit 99 which is attached hereto and incorporated by reference into this
Quarterly Report on Form 10-Q. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise.

RESULTS OF OPERATIONS

NET REVENUE

Net revenue for the three-month period ended March 31, 2001, decreased $6.2
million or 8.0% to $71.1 million from $77.3 million in the three months ended
March 31, 2000. This decrease was principally due to shortages in certain key
components that delayed production, a reduction in network equipment shipments
to the Companys former equity affiliate, and a difference in the attainment of
contract performance milestones, and consequently the amount of revenue
recognized, relative to a medical contract in Brazil.

COST OF REVENUE

Hypercoms cost of revenue includes the cost of raw materials, manufacturing
labor, overhead and subcontracted manufacturing costs, as well as interest
expense with respect to direct financing leases. The cost of revenue for the
three-month period ended March 31, 2001 decreased $0.7 million or 1.5% to $45.9
million from $46.6 million in the three months ended March 31, 2000.

As a percentage of revenue, gross margin decreased from 39.7% in the quarter
ended March 31, 2000 to 35.4% for the quarter ended March 31, 2001. This
decline was a result of certain higher component costs, a change in product mix
and competitive pricing pressures on legacy products.

RESEARCH AND DEVELOPMENT

Research and development (R&D) expenses consist mainly of software and hardware
engineering costs and the cost of development personnel. Research and
development expenses decreased $2.4 million or 22.4% from $10.7 million in the
quarter ended March 31, 2000 to $8.3 million in the quarter ended March 31,
2001. This decrease was attributable to decreased R&D activities related to the
ICE product family and to the ePic initiative as substantially all development
for such efforts are complete. The Company is principally focusing on product
cost reduction efforts.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

Sales and marketing expenses, administrative personnel costs, and facilities
operations make up the selling, general and administrative expenses. These
expenses totaled $21.5 million for the quarter ended March 31, 2001, compared
to $22.8 for the comparative quarter in the prior year. This $1.3 million or
5.7% decrease is attributable to worldwide cost containment measures and to a
lesser extent the decreased revenue relative to the same quarter in the prior
year, which results in lower sales commissions.

9



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##### Table of Contents



SPECIAL DIRECT FINANCING LEASE PROVISION

During the quarter ended March 31, 2001, the Companys Equipment Leasing
segment recorded an incremental charge to strengthen credit reserves
for certain segments of its lease receivables in the amount of $7.2 million in
addition to its normal provision. This charge represents managements estimate of
potential loan losses that exceed its historical rate of loan losses.

LOSS FROM OPERATIONS

The loss from operations for the quarter ended March 31, 2001 increased $9.0
million to $11.8 million compared to a loss of $2.8 million for the same
quarter in the prior year. The increase over the same quarter in the prior
year includes the $7.2 million reserve adjustment discussed above. The
remaining increase resulted primarily from the decreased
revenue and related gross margin percentage decline when compared to the same
quarter of the prior year. Historically, the first calendar quarter is the
weakest quarter due to the post-Christmas season, and Chinese New Year and
Latin holidays.

NET INTEREST, FOREIGN CURRENCY LOSSES AND OTHER ITEMS

Interest and other income of $0.3 million consisted primarily of returns on
short and long-term investments. The Company incurred interest and other
expense of $2.5 million which consisted primarily of interest expense of $1.2
million on borrowings for real property, debt, and foreign currency hedging
instruments, as well as other expenses in the amount of $1.2 million consisting
primarily of charges associated with the requirements under the debt
forbearance agreements and other related costs associated with being in default
with its lenders. Foreign currency losses of $2.6 million resulted principally
from the unfavorable translation of its net foreign investments in Brazil and
the United Kingdom. Further, the Company was unable to continue its hedging
strategies during the quarter ended March 31, 2001, as a result of being in
default with its lenders.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically financed its operations primarily through cash
generated from operations and from borrowings under a line of credit. The
Company has also used securitization conduits to finance lease receivables
generated by its Golden Eagle Leasing subsidiary.

Due to the Companys continued focus on expense reduction as well as its
emphasis on lowering accounts receivable and inventory levels, the Company
experienced positive cash flow from operations in the quarter ended March 31,
2001 of $8.0 million. The Company used $2.4 million in investing activities.
Long-term debt (most of which was categorized as current at quarter end)
decreased $16.6 million to $83.8 million at March 31, 2001, from $100.4 million
at December 31, 2000. Working capital and cash were $75.7 and $7.2 million at
March 31, 2001, compared to $75.2 and $13.0 million at December 31, 2000,
respectively.

Capital expenditures totaled $0.2 million for the three months ended March 31,
2001, compared to $2.6 million for the three months ended March 31, 2000.
Depreciation expense was $2.3 million and $1.7 million for the three months
ended March 31, 2001 and 2000, respectively.

Credit Agreements and Liquidity Concerns

Due to recent losses, the Company is not in compliance with certain debt
covenants under various loan agreements, including the ratio of funded debt to
EBITDA and a minimum tangible net worth requirement.

Effective April 1, 2001, the Company entered into a second amendment to the
Forbearance and Modification Agreement with its principal lending group. Under
such amendment, the Company is required, among other things, to make periodic
payments through May 15, 2001, sufficient enough to reduce the outstanding
balance of its revolving credit loan to $32 million. The outstanding balance
on the revolving credit loan at March 31, 2001 was $38.3 million. The
amendment also provides that if the balance is reduced below $32 million,
certain interest rate reductions and waiver of scheduled fees will also be
provided.

On February 5, 2001, the Company entered into a commitment letter with an
asset-based lender to replace its principal credit facilities. Under the
commitment letter, the Company would obtain a $40 million secured facility,
subject to borrowing base and other limitations. The facility would have a
term of three years, would be secured by substantially all the Companys U.S.
assets and would provide for interest at the prime rate plus 1 percent or LIBOR
plus 2.75 percent. The Company expects to close on the

10



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##### Table of Contents



asset-based facility by the end of June 2001. The Company is negotiating to
obtain an extension of the forbearance agreement with its current leading group
to facilitate this financing. In order to pay down and facilitate a
refinancing of its existing loans, the Company sold certain previously
unfinanced lease receivables on March 1, 2001 and applied net proceeds of $5
million to reduce its existing line of credit. In addition, the Company is
planning on securitizing substantially all the lease receivables of Golden
Eagle Leasing, Inc. The Company expects to complete a securitization by the end
of May 2001. The Company will use funds from the proceeds to pay off conduit
facilities relating to its Golden Eagle Leasing operations, with the balance of
the proceeds to further reduce the outstanding balance under its line of credit
agreement. In addition, the Company is negotiating to obtain a financing
agreement with another lender to provide up to $20 million of financing for new
lease receivables for its Golden Eagle Leasing unit.

The Company continues to accelerate cash generation through aggressively
pursuing collection of trade receivables, reducing inventories and reducing
costs.

BACKLOG

As of March 31, 2001, Hypercom had backlog of $163 million, an increase of
126%, compared to the same date in 2000. As of February 5, 2001, the backlog
was $158 million.

The Company includes in its backlog all revenue specified in signed contracts
and purchaser orders to the extent that the Company contemplates recognition of
the related revenue within one year. There can be no assurance that the
contracts included in backlog will actually generate the specified revenues or
that the actual revenues will be generated within the one-year period.







ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Hypercom is exposed to financial market risks, including changes in interest
rates and foreign currency exchange rates. Nevertheless, the fair value of
Hypercoms investment portfolio or related income would not be significantly
impacted by either a 100 basis point increase or decrease in interest rates,
due primarily to the short-term nature of the major portion of Hypercoms
investment portfolio.

A substantial portion of Hypercoms revenue and capital spending is transacted
in U.S. dollars. However, Hypercom does at times enter into these transactions
in other currencies, such as the Hong Kong dollar, Australian dollar, Brazilian
Real and other Asian and European currencies. Hypercom has, from time to time,
established revenue and balance sheet hedging programs to protect against
reductions in value and cash flow volatility caused by changes in foreign
exchange rates. Such programs are intended to reduce market risks, but do not
always eliminate the impact of foreign currency exchange volatility. During
the quarter ended March 31, 2001, the Company was unable to continue its
hedging strategies as a result of being in default with its lenders, and as a
result, incurred translation losses of $2.6 million.

Hypercom does not purchase or hold any derivative financial instruments for the
purpose of speculation or arbitrage. See information/discussion appearing in
subcaption Risks Associated with International Operations and Foreign Currency
Fluctuations of CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND
RISK FACTORS set forth in Exhibit 99.1, attached hereto.

11



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##### Table of Contents









PART II OTHER INFORMATION







ITEM 1. LEGAL PROCEEDINGS

See Item 3 of Part I of Hypercoms Form 10-K for the year ended December 31,
2000, for disclosures regarding pending matters.







ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

|        |  |                                                                                                                                                                                                                                                         
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
|Number  |  | Description of Exhibit                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                         
|3.1     |  | Amended and Restated Certificate of Incorporation of the
Company. Incorporated by reference to the Companys
Registration Statement on Form S-1 (Registration No.
333-35641).                                                                           
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|3.2     |  | Amended and Restated Bylaws of the Company. Incorporated by
reference to the Companys Registration Statement on Form
S-1 (Registration No. 333-35641).                                                                                                 
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|4.0     |  | Amended and Restated Certificate of Incorporation of the
Company. Incorporated by reference to the Companys
Registration Statement on Form S-1 (Registration No.
333-35641).                                                                           
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|10.1    |  | First Amendment to Forbearance and Modification Agreement
dated February 1, 2001 by and among Bank One, Arizona, NA,
Fleet National Bank and Imperial Bank. Incorporated by
reference to the Companys Current Report on Form 8-K dated
February 9, 2001
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|10.2    |  | Second Amendment of Forbearance and Modification Agreement
effective April 1, 2001 by and among Bank One Arizona, NA,
Fleet National Bank and Imperial Bank. Incorporated by
reference to the Companys Current Report on Form 8-K dated
April 19, 2001.
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|11.1    |  | Statement re Computation of Per Share Earnings                                                                                                                                                                                                          
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|15.1    |  | Letter re Unaudited Interim Financial Information                                                                                                                                                                                                       
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|99.1    |  | Cautionary Statement Regarding Forward-Looking Statements
and Risk Factors                                                                                                                                                                              

(b) The Company filed Form 8-Ks as follows:



| |  |  | February 9, 2001, re: First Amendment to Forbearance and Modification Agreement
| | - |  | -------------------------------------------------------------------------------
|
| |  |  | April 19, 2001, re: Second Amendment to Forbearance and Modification Agreement 

12



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##### Table of Contents



SIGNATURES

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.

|                     |  |                                                                                                                                             
|-------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|HYPERCOM CORPORATION
|                    
|                    
|                    
|                    
|                    
|Date: May 11, 2000   |  | By: /s/ Jonathon E. Killmer
Jonathon E. Killmer                                                                                             
|                    
|                    
|                    
|                    
|                    
|                     |  | Executive Vice President, Chief Financial Officer And Chief
Administrative Officer (duly authorized officer and Principal
Financial Officer)

13



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##### Table of Contents



EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                         
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
|Number  |  | Description of Exhibit                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                         
|3.1     |  | Amended and Restated Certificate of Incorporation of the
Company. Incorporated by reference to the Companys
Registration Statement on Form S-1 (Registration No.
333-35641).                                                                           
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|3.2     |  | Amended and Restated Bylaws of the Company. Incorporated by
reference to the Companys Registration Statement on Form
S-1 (Registration No. 333-35641).                                                                                                 
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|4.0     |  | Amended and Restated Certificate of Incorporation of the
Company. Incorporated by reference to the Companys
Registration Statement on Form S-1 (Registration No.
333-35641).                                                                           
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|10.1    |  | First Amendment to Forbearance and Modification Agreement
dated February 1, 2001 by and among Bank One, Arizona, NA,
Fleet National Bank and Imperial Bank. Incorporated by
reference to the Companys Current Report on Form 8-K dated
February 9, 2001
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|10.2    |  | Second Amendment of Forbearance and Modification Agreement
effective April 1, 2001 by and among Bank One Arizona, NA,
Fleet National Bank and Imperial Bank. Incorporated by
reference to the Companys Current Report on Form 8-K dated
April 19, 2001.
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|11.1    |  | Statement re Computation of Per Share Earnings                                                                                                                                                                                                          
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|15.1    |  | Letter re Unaudited Interim Financial Information                                                                                                                                                                                                       
|       
|       
|       
|       
|        |  |                                                                                                                                                                                                                                                         
|       
|       
|       
|       
|99.1    |  | Cautionary Statement Regarding Forward-Looking Statements
and Risk Factors