<PAGE>
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------ ----------
Commission file number 0-19657
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TRM CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Oregon 93-0809419
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5208 N.E. 122nd Avenue
Portland, Oregon 97230
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(Address of principal executive offices) (Zip Code)
(503) 257-8766
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
CLASS OUTSTANDING AT SEPTEMBER 30, 2000
----- ---------------------------------
Common Stock 7,063,190
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRM CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1999 2000
---------------- -------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,775 $ 8,270
Accounts receivable, net 7,362 9,575
Income tax receivable 378
Inventories 3,771 4,660
Prepaid expenses and other 2,188 2,341
Deferred tax asset 1,243 1,243
---------------- -------------
Total current assets 31,717 26,089
Equipment and vehicles, less accumulated depreciation 62,648 75,514
Deferred tax asset 2,921
Other assets 1,541 5,206
---------------- -------------
$ 95,906 $ 109,730
================ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 2,880 8,662
Accrued expenses 3,539 6,562
---------------- -------------
Total current liabilities 6,419 15,224
Long Term Debt 23,192 29,720
Deferred income taxes 5,016 4,929
---------------- -------------
Total liabilities 34,627 49,873
---------------- -------------
Minority Interest -- 5,174
Shareholders' equity:
Preferred stock, no par value. Authorized
5,000 shares; 1,778 shares issued
and outstanding 19,798 19,798
Common stock, no par value. Authorized
50,000 shares; issued and
outstanding 7,071 and 7,063 shares, respectively 19,095 19,032
Accumulated other comprehensive income (427) (2,318)
Retained earnings 22,813 18,171
---------------- -------------
Total shareholders' equity 61,279 54,683
---------------- -------------
$ 95,906 109,730
================ =============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
TRM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- --------------------------------
1999 2000 1999 2000
-------------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
Sales $ 16,257 $ 19,159 $ 50,474 $ 56,577
Less discounts 2,787 2,846 8,974 9,228
-------------- ------------ ------------- --------------
Net sales 13,470 16,313 41,500 47,349
Cost of sales 7,555 11,493 21,952 30,510
-------------- ------------ ------------- --------------
Gross profit 5,915 4,820 19,548 16,839
Selling, general and administrative expense 5,544 7,091 16,570 21,353
-------------- ------------ ------------- --------------
Operating income (loss) 371 (2,271) 2,978 (4,514)
Other (income) expense:
Interest 143 539 237 1,557
Other, net (110) (287) (334) (200)
-------------- ------------ ------------- --------------
Income (loss) before minority interest in earnings
of a consolidated subsidiary 338 (2,523) 3,075 (5,871)
Minority interest 47 76
Income (loss) before income taxes 338 (2,476) 3,075 (5,795)
Provision (benefit) for income taxes 132 (1,012) 1,201 (2,276)
-------------- ------------ ------------- --------------
Net income (loss) $ 206 $ (1,464) $ 1,874 $ (3,519)
============== ============ ============= ==============
Earnings per share computation:
Net income (loss) $ 206 $ (1,464) $ 1,874 $ (3,519)
Preferred stock dividends (374) (377) (1,122) (1,123)
--------------- ------------ ------------- --------------
Net income (loss) available to common
Shareholders $ (168) $ (1,841) $ 752 $ (4,642)
============== ============ ============= ==============
Basic net income (loss) per share:
Shares outstanding 7,110 7,063 7,103 7,069
--------------- ------------ ------------- --------------
Net income (loss) per share $ (.02) $ (.26) $ .11 $ (.66)
============== ============ ============= ==============
Diluted net income (loss) per share:
Shares outstanding 7,110 7,063 7,289 7,069
-------------- ------------ ------------- --------------
Net income (loss) per share $ (.02) $ (.26) $ .10 $ (.66)
============== ============ ============= ==============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
TRM CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(unaudited)
(In thousands)
<TABLE>
<CAPTION>
Accumulated
Other
Comprehensive Preferred Stock Common Stock Comprehen- Retained
Income Shares Amounts Shares Amounts sive Income Earnings Total
------------- ------- ----------- -------- ---------- --------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1999 1,778 $ 19,798 7,071 $ 19,095 $ (427) $ 22,813 $61,279
Comprehensive income
Net loss $ (3,519) (3,519) (3,519)
Other comprehensive
income (loss), net of tax
Foreign currency
translation adjustment (1,891) (1,891) (1,891)
----------
Comprehensive income $ (5,410)
==========
Issuance of stock to
employees 8 35 35
Repurchase of common stock (16) (98) (98)
(1,123) (1,123)
------- ----------- -------- ---------- --------------- ---------- ---------
Balances, September 30, 2000 1,778 $ 19,798 7,063 $ 19,032 $ (2,318) $ 18,171 $54,683
======= =========== ======== ========== =============== ========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
4
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TRM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------------------------
1999 2000
------------------- -------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,874 $ (3,519)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 6,510 8,383
Other -- (107)
(Gain) loss on disposal of equipment
and vehicles (34) 110
Changes in items affecting operations:
Accounts receivable 926 (2,249)
Inventories (214) (930)
Income tax receivable (450) 365
Prepaid expenses and other (129) (489)
Accounts payable (5,021) 6,035
Accrued expenses 1,671 3,152
Deferred income tax (10) (2,920)
------------------- -------------------
Cash provided by operating activities 5,123 7,831
------------------- -------------------
Cash flows from investing activities:
Proceeds from sale of equipment 499 2,108
Capital expenditures (16,485) (24,344)
Other (1,058) (1,337)
Proceeds from sale of subsidiary shares 5,000
Acquisition of a business, net of cash acquired (799)
------------------- -------------------
Cash used in investing activities (17,044) (19,372)
------------------- -------------------
Cash flows from financing activities:
Net borrowings on notes payable 6,900 4,904
Net proceeds from issuance of common stock 149 35
Repurchase of common stock (36) (98)
Dividends on preferred stock (1,122) (1,123)
------------------- -------------------
Cash provided by financing activities 5,891 3,718
------------------- -------------------
Effect of exchange rate changes (189) (682)
------------------- -------------------
Net decrease in cash and cash equivalents (6,219) (8,505)
Cash and cash equivalents at beginning of period 14,285 16,775
------------------- -------------------
Cash and cash equivalents at end of period $ 8,066 $ 8,270
=================== ===================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
TRM CORPORATION
Notes to Condensed Consolidated Financial Statements (unaudited)
----------------------------------------------------------------
1. Interim Financial Data:
The condensed financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission and reflect all adjustments, consisting
only of normal recurring adjustments, which, in the opinion of management,
are necessary for a fair statement of the results of the interim periods.
These condensed interim financial data should be read in conjunction with
the Company's latest annual report to shareholders.
2. Net Income Per Share:
Basic and diluted net income per share are based on the weighted average
number of common shares outstanding during each year, with diluted
including the effect of potentially dilutive securities. For the three
months and nine months ended September 30, 1999 and September 30, 2000, the
weighted average number of common shares for basic net income per share
computations were 7,110,000 and 7,103,000, and 7,063,000 and 7,069,000,
respectively. For diluted net income per share, 186,000 shares were added
to weighted average shares outstanding for the nine month period ended
September 30, 1999, representing potential dilution for stock options
outstanding, calculated using the treasury stock method. In calculating
basic net income per share, dividends for preferred stock are deducted to
arrive at income available for common stockholders. For diluted net income
per share, the calculation assumes the conversion of common stock
equivalents including the conversion of preferred stock to common unless
such conversion is anti-dilutive. No shares were added to the weighted
average shares outstanding for the three-month period ended September 30,
1999 or for the three and nine months ended September 30, 2000, because the
addition of shares would be anti-dilutive.
3. Inventories (in thousands):
<TABLE>
<CAPTION>
December 31, September,
1999 2000
------------ ------------
<S> <C> <C>
Paper $ 696 $ 803
Toner and developer 550 475
Parts 2,525 3,382
------------ ------------
$ 3,771 $ 4,660
============ ============
</TABLE>
4. Segment Reporting (in thousands):
The Company has three reportable segments: CopyCenters, ATM and e-Commerce.
CopyCenters owns and maintains self-service photocopiers in retail
establishments. ATM owns and operates ATM machines in retail
establishments. The e-commerce business develops software
6
<PAGE>
to deliver products and services to ATMs. Prior to 1999, the Company had
only one business segment.
The Company evaluates each segment's performance based on income or loss
before interest, income taxes, and minority interest excluding
non-recurring charges. Information regarding the operations in these
reportable segments is as follows:
<TABLE>
<CAPTION>
(Dollar Amounts in Thousands)
Three months ended Nine months ended
September 30, September 30, September 30, September 30,
1999 2000 1999 2000
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales:
CopyCenters $ 15,756 $ 15,343 $ 49,783 $ 49,351
ATM 501 3,314 691 6,664
e-Commerce 502 562
------------ ------------ ------------ ------------
$ 16,257 $ 19,159 $ 50,474 $ 56,577
============ ============ ============ ============
Depreciation and
amortization:
CopyCenters $ 2,324 $ 2,499 $ 6,427 $ 7,410
ATM 50 441 83 861
e-Commerce 80 112
------------ ------------ ------------ ------------
$ 2,374 $ 3,020 $ 6,510 $ 8,383
============ ============ ============ ============
Income (loss) before
interest and taxes &
minority interest:
CopyCenters $ 925 $ 1,475 $ 3,980 $ 2,551
ATM (444) (3,085) (668) (5,928)
e-Commerce (374) (937)
------------ ------------ ------------ ------------
$ 481 $ (1,984) $ 3,312 $ (4,314)
============ ============ ============ ============
Capital expenditures:
CopyCenters $ 3,944 $ 4,391 $ 12,932 $ 8,319
ATM 2,009 3,487 3,553 15,989
e-Commerce 36 36
------------ ------------ ------------ ------------
$ 5,953 $ 7,914 $ 16,485 $ 24,344
============ ============ ============ ============
As of As of
Dec 31, September 30,
1999 2000
------------ ------------
Assets:
CopyCenters $ 71,984 $ 75,877
ATM 23,922 22,262
e-Commerce 11,591
------------ -------------
$ 95,906 $ 109,730
============ ============
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
During the quarter ending September 30, 2000, the Company continued the
expansion of its new ATM services business while its CopyCenters services
business generated solid cash flow. The Company's e-commerce business, conducted
by its subsidiary iATMglobal.net, continued to build a Web-based distribution
channel to deliver e-commerce goods and services to customers through ATMs.
Also in the third quarter of 2000, NCR Corporation (NYSE:NCR), the largest
global supplier of Automated Teller Machines (ATMs), made a strategic equity
investment in iATMglobal.net. NCR invested $5 million in exchange for 20%
ownership interest in iATMglobal.net and has agreed to enable iATMglobal.net's
e-commerce software on NCR ATMs.
As of September 30, 2000, the Company had a total of 1,947 ATM operating
units installed, with 1,031 and 916 deployed in the United States and United
Kingdom respectively, as compared to 292 in the United States at September 30,
1999, an overall increase of 1,655 units. The ATM business contributed $3.3
million to quarterly gross revenues and $6.7 million year to date compared to
$501,000 for the quarter and $691,000 year to date ended September 30, 1999. The
Company believes that revenues generated from goods and services delivered
through its ATM network will become an increasingly higher percentage of its
overall revenue in the future as it expands the product offerings through its
ATM network, and pursues new geographic opportunities.
As a result of the Company's development of its ATM services business and
start up of its e-commerce subsidiary, the Company expects to record a loss for
the fourth quarter of 2000.
In the CopyCenters business, as of September 30, 2000, the Company had
35,759 TRM Copy Centers in operation compared to 32,638 at September 30, 1999,
an increase of 3,121 centers (9.56%). In the third quarter of 2000, the
CopyCenters business generated earnings of $1.5 million before interest, taxes,
depreciation, amortization and minority interest, compared to $925,000 in the
same quarter of 1999.
In the third quarter of 2000 the Company's e-commerce business, generated
$502,000 in gross revenues from contracted software engineering services, with
no revenue generated in 1999.
In the first quarter of 2000 the Company replaced its existing line of
credit. The Company signed a new Loan Agreement with Bank of America N.A. to
provide a line of credit commitment equal to $30 million through June 30, 2001,
reducing to $25 million through June 30, 2002. The Company is not presently in
compliance with all the financial ratios under this facility. Bank of America
has advised the Company that it will forebear until January 20, 2001. Also in
the first quarter of 2000, the Company (through a special purpose finance
entity) established a $30 million Loan Facility to provide vault cash for its
ATM network. The financing was completed off the Company's balance sheet on a
non-recourse basis. The company presently has $24.9 million funded under the
facility to supply its ATMs with cash. See "Liquidity and Capital Resources."
8
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
statement of operations data, expressed as a percentage of sales, and the
percentage change in dollar amounts of each item on the Consolidated Statements
of Operations (see page 3 of this Form 10-Q).
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, Percentage Change September 30, Percentage Change
1999 2000 Increase (Decrease) 1999 2000 Increase (Decrease)
---- ---- ------------------- ---- ---- -------------------
<S> <C> <C> <C> <C> <C> <C>
Sales 100.0% 100.0% 17.9% 100.0% 100.0% 12.1%
Sales discounts 17.1 14.9 2.1 17.8 16.3 2.8
Cost of sales 46.5 60.0 52.1 43.5 53.9 39.0
Selling, general and
Administrative 34.1 37.0 27.9 32.8 37.7 28.9
Special charges -- -- -- -- --
Operating income (loss) 2.3 (11.9) (712.1) 5.9 (7.9) (251.6)
Interest expense, net .9 2.8 276.9 .5 2.8 557.0
Other (income) expense
Net (.7) (1.6) 160.9 (.7) (.4) (40.1)
Income (loss) before
Minority interest 2.1 (13.1) (846.4) 6.1 (10.3) (290.9)
Minority interest .2 N/A .1 N/A
Income (loss) before
Income taxes 2.1 (12.9) (832.5) 6.1 (10.2) (288.5)
Provision (benefit)
for income taxes .8 (5.3) (866.7) 2.4 (4.0) (289.5)
----- ----- ------ ----- ----- ------
Net income (loss) 1.3% (7.6)% (810.7)% 3.7% (6.2)% (287.8)%
===== ===== ====== ===== ===== ======
</TABLE>
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE AND
NINE MONTHS ENDED SEPTEMBER 30, 1999
For the three and nine month period ended September 30, 2000, consolidated
sales increased by $2.9 million (17.9%) and $6.1 million (12.1%), respectively.
ATM revenue increased $2.8 million in the third quarter of 2000 and $6.0 million
year to date, while the CopyCenters business revenues decreased by $413,000 in
the third quarter of 2000 and $567,000 year to date as compared to the same
periods in 1999. The e-commerce segment of the Company's business generated
$502,000 for the quarter and year to date ended September 30, 2000.
CopyCenters sales were $15.3 million and $49.3 million for the quarter and
year to date ended September 30, 2000, respectively compared to $15.8 million
and $49.8 million during the same periods in 1999. Billed units increased 11.9%
and 12.4%, respectively while revenue per billed unit decreased 13.4% for the
third quarter of 2000 and 12.2% year to date, resulting in a slight decrease in
revenue on the higher installed base.
Revenues from the Company's new ATM business were $3.3 million and $6.7
million for the quarter and year to date ended September 30, 2000, respectively,
as compared to $501,000 for the quarter and $691,000 for the year to date ended
September 30, 1999. The Company is expecting a continued increase in ATM revenue
in 2000 and into 2001 because of the aggressive growth plans it has for the ATM
services business.
In the third quarter of 2000 the Company's e-commerce business, generated
$502,000 in gross revenues from contracted software engineering services with no
revenue generated last year.
9
<PAGE>
Sales discounts are the portion of revenue retained by retail customers.
Sales discounts generally vary at individual retail businesses depending on
volume - the higher the volume, the greater the discount. The increase in sales
discounts for the quarter and the year ended September 30, 2000 compared to the
prior year is $59,000 (2.1%) and $254,000 (2.8%), respectively, which is
primarily attributed to the Company's ATM business. CopyCenters maintained the
same level of discounts as a percentage of sales for the quarter and year to
date ended September 30, 2000.
Costs of sales on a consolidated basis increased $3.9 million (52.1%) for
the quarter and $8.6 million (39.0%) for the year to date ended September 30,
2000 compared to the same periods in 1999. ATM related costs contributed to the
increase of $3.1 million for the quarter and $5.9 million year to date.
E-commerce related increases were $191,000 for the quarter and $236,000 year to
date. CopyCenters' field labor and other costs increased by $358,000 for the
quarter and $938,000 year to date, due mostly to the increase in the installed
base and a new signage and merchandising program. CopyCenters' Service partner
related costs increased $103,000 for the quarter and $537,000 year to date. This
cost is attributed to the increase in installed units located outside a TRM
service area and are serviced by a third party. Service partner units installed
were 1,683 and 1,278 as of September 30, 2000 and September 30, 1999,
respectively. The remaining increase in cost of sales of $137,000 for the
quarter and $937,000 year to date is due to copier machine depreciation, which
relates to the additional NextGen(TM) photocopiers in the Company's installed
base.
Selling, general and administrative expenses increased $1.5 million (27.9%)
and $4.8 million (28.9%) during the quarter and year ended September 30, 2000,
respectively, compared to the same periods in 1999. E-commerce costs contributed
$813,000 for the quarter and $1.4 million year to date ended September 30, 2000.
ATM direct costs increased $437,000 for the quarter and $1.2 million year to
date. ATM indirect costs contributed $708,000 for the quarter and $2.2 million
year to date to the increase. Copycenters' costs decreased $473,000 for the
quarter and $203,000 year to date ended September 30, 2000.
Interest expense increased to $539,000 from $143,000 for the quarter ended
September 30, 2000, and increased to $1.6 million from $237,000 year to date
ended September 30, 2000 from the same periods in 1999, respectively. The
increase was due to an increase in borrowings on the Company's revolving line of
credit during 2000 primarily to finance the purchase of ATM machines operated by
the Company in its ATM business and the formation of the e-commerce subsidiary.
Borrowings to finance the cash needs of the ATM network are not expected to be
necessary for the remainder of the year as a result of the establishment of a
commercial paper facility. See the section on "Liquidity and Capital Resources"
in this Form 10-Q.
Other income increased $177,000 during the quarter ended September 30, 2000
compared to the same periods in 1999, primarily due to iATMglobal.net's interest
earned on short-term investments. Other income decreased $134,000 year to date,
compared to the same period in 1999. The decrease was primarily due to interest
income generated from Copycenter and ATM short-term investments in the first six
months of 1999. These short-term investments were not outstanding in 2000.
The Company's effective tax rate for the quarter ended September 30, 2000
is 40.9 percent, resulting in an income tax benefit of $1.0 million compared to
an effective rate of 39.1 percent and an income tax provision of $132,000 in
1999. The Company's year to date effective tax rate is 39.3 percent for the nine
months ended September 30, 2000 resulting in an income tax benefit of $2.3
10
<PAGE>
million compared to 39.1 percent effective tax rate and an income tax provision
of $1.2 million for September 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 2000, TRM generated $7.8 million
in cashflows from operations and decreased its net working capital from $25.3
million at December 31, 1999 to $10.9 million at September 30, 2000 (including
cash and cash equivalents of $8.3 million). The Company also has a $30.0 million
bank line of credit, with $27.8 million in borrowings outstanding at September
30, 2000.
During the nine months ended September 30, 2000, the Company funded capital
expenditures of $24.3 million primarily from bank borrowings on its line of
credit. Capital expenditures were primarily for NCR ATM machines, merchandising
signage and computer systems implementation costs.
The Company obtained a new source for vault cash inventory in its ATM
network during the first quarter of 2000. As of December 31, 1999, the Company
had a cash balance related to the ATM vault cash inventory of $16.1 million,
financed through its line of credit. In March of 2000, the Company established a
$30.0 million financing facility to access a commercial paper conduit to provide
vault cash for its ATM network. This agreement resulted in the removal of the
cash and underlying bank borrowings from the Company's balance sheet. The
financing was completed off the Company's balance sheet on a non-recourse basis.
As such, the ATM vault cash inventory and related debt financing was removed
from the balance sheet as of March 31, 2000. The Company has the ability to
increase this facility to $75 million to support expansion of its ATM network.
The Company has made capital expenditures of $24.3 million to date, and
expects total capital expenditures for calendar 2000 to be approximately $30
million. Approximately $25 million of the total capital expenditures will be
used to acquire ATM machines and photocopiers and the remainder will be used to
acquire computer-related systems and other capital items. The Company expects to
finance these capital expenditures with cash generated from operations, bank
borrowings and asset leasing. The Company has a bank line of credit arrangement,
which allows it flexibility in its use of proceeds. The line of credit also will
not encumber the Company's ATM assets, allowing it to refinance its existing ATM
assets and finance future ATM asset purchases, subject to limits based on the
Company's ratio of funded debt to EBIDTA. The Company expects that these sources
will provide adequate cash to fund its expansion through at least December 31,
2000.
DISCLOSURE REGARDING EURO CONVERSION
On January 1, 1999, eleven member countries of the European Community began
a process to convert their existing sovereign currencies to a single common
denomination, the Euro. The process of conversion is gradual over the next three
years, culminating in the eventual removal from circulation of all existing
domestic currency for the participating countries. The Company presently
operates in the United Kingdom and France and transacts business in the local
currency of those countries. France will be subject to the Euro Conversion, and
the United Kingdom may become subject to the conversion. The Company believes
that it will be able to accommodate the conversion to the Euro without a
material impact on its financial statements.
FORWARD-LOOKING STATEMENTS
Information in "Management's Discussion and Analysis," in this Form 10-Q
about the Company's goals, plans and expectations regarding expansion, capital
expenditures, effectively using
11
<PAGE>
a third-party network of service providers, expanding the ATM business, offering
and providing e-commerce goods and services through ATMs, constitutes
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The
following factors could cause the actual results to differ materially from the
forward-looking statements: business conditions in the market areas in which the
Company operates, competitive factors, customer demand for the Company's
services, the Company's ability to execute its plans successfully and the
volatility of paper costs. Any forward-looking statements should be considered
in light of these factors as well as risk factors and business conditions
discussed in the Company's SEC Form 10-K for the year ended December 31, 1999.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to minimal market risks. Sensitivity of results of
operations to these risks is managed by maintaining a conservative investment
portfolio, which is comprised solely of money market funds, and entering into
long-term debt obligations with appropriate price and term characteristics. The
Company does not hold or issue derivative commodity instruments or other
financial instruments for trading purposes. Financial instruments held for other
than trading purposes do not impose a material market risk.
The Company is exposed to interest rate risk, as additional financing will
be needed due to the capital expenditures associated with expanding the
Company's business operations. The interest rate that the Company will be able
to obtain on debt financing will depend on market conditions at that time, and
may differ from the rates the Company has secured on its current debt.
Additionally, the Company is exposed to interest rate risk related to its credit
facility as of September 30, 2000. Advances against the credit facility
periodically renew, at which point the borrowings are subject to the then
current market interest rates, which may differ from the rates the Company is
currently paying on its borrowings.
The Company is exposed to foreign currency exchange rate risk, as it has
operations in Canada, France and the United Kingdom. The relative amount of
business transacted in these countries is outlined in footnote 11 to the
Consolidated Financial Statements of the Company's 1999 Form 10-K.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 4.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the period.
13
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TRM CORPORATION
Date: November 14, 2000 By: /s/ Daniel L. Spalding
------------------ ----------------------------
Daniel L. Spalding
Vice President, Finance and
Chief Financial Officer
14
