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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 1-4879
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DIEBOLD, INCORPORATED
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Ohio 34-0183970
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(State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number)
5995 Mayfair Road, P.O. Box 3077, North Canton, Ohio 44720-8077
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (330) 489-4000
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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 Shares, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at July 25, 1996
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<S> <C>
Common Shares $1.25 Par Value 45,870,166 Shares
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</TABLE>
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995 3
Condensed Consolidated Statements of Income -
Three Months and Six Months Ended June 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 10
INDEX TO EXHIBITS 11
</TABLE>
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
1996 1995
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<S> <C> <C>
ASSETS
- -------
Current assets
Cash and cash equivalents $ 26,944 $ 15,698
Short-term investments 40,410 30,989
Trade receivables 226,130 197,145
Inventories 91,988 91,002
Prepaid expenses and other current assets 54,522 41,378
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Total current assets 439,994 376,212
Securities and other investments 149,079 146,741
Property, plant and equipment, at cost 185,491 177,573
Less accumulated depreciation and amortization 99,744 93,501
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85,747 84,072
Lease receivables 48,029 44,614
Other assets 96,664 98,156
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$ 819,513 $ 749,795
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Accounts payable and other current liabilities $ 150,564 $ 127,874
Deferred income 78,533 62,687
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Total current liabilities 229,097 190,561
Pensions 19,345 17,523
Postretirement benefits 21,791 21,739
Minority interest 14,685 13,775
Shareholders' equity
Preferred Shares, no par value, authorized
1,000,000 shares, none issued
Common Shares, par value $1.25, authorized
125,000,000 shares, issued 46,013,861 and
45,893,678 shares, respectively; outstanding 45,857,176
and 45,808,227, respectively 57,517 57,367
Additional capital 56,242 50,937
Retained earnings 439,304 412,432
Treasury shares, at cost (156,685 and 85,451 shares, respectively) (7,170) (3,849)
Other (11,298) (10,690)
----------- -----------
Total shareholders' equity 534,595 506,197
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$ 819,513 $ 749,795
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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(Unaudited)
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------ ------------------------
June 30, June 30,
------------------------ ------------------------
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Net sales
Products $ 164,325 $ 130,254 $ 299,580 $253,343
Services 84,012 76,646 164,643 150,604
-------- --------- -------- --------
248,337 206,900 464,223 403,947
Cost of sales
Products 100,473 79,920 182,861 159,041
Services 60,229 53,997 119,805 107,414
-------- -------- -------- --------
160,702 133,917 302,666 266,455
-------- -------- -------- --------
Gross profit 87,635 72,983 161,557 137,492
Selling and administrative expense 39,931 35,155 77,147 68,429
Research, development and engineering expense 12,925 10,040 24,971 20,146
-------- -------- -------- --------
52,856 45,195 102,118 88,575
-------- -------- -------- --------
Operating profit 34,779 27,788 59,439 48,917
Investment income 5,126 2,666 9,161 6,311
Miscellaneous, net (2,342) (1,749) (3,836) (3,642)
Minority interest (836) (246) (910) (638)
--------- --------- ---------- ----------
Income before taxes 36,727 28,459 63,854 50,948
Taxes on income 12,300 9,515 21,388 16,815
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Net income $ 24,427 $ 18,944 $ 42,466 $ 34,133
======== ======== ========= ========
Weighted average number of Common Shares
outstanding 45,848 45,753 45,849 45,739
Net income per Common Share $ 0.53 $ 0.41 $ 0.93 $ 0.75
======== ======== ========= ========
Cash dividends paid per Common Share $ 0.17 $ 0.16 $ 0.34 $ 0.32
======== ======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
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<S> <C> <C>
Cash flow from operating activities:
Net income $ 42,466 $ 34,133
Adjustments to reconcile net income to cash
provided by operating activities:
Minority share of income 910 638
Depreciation and amortization 8,135 6,674
Other charges and amortization 5,366 8,531
Cash used by changes in certain
current assets and liabilities (25,656) (3,169)
Changes in deferred income 15,846 22,813
Other 6,353 (9,584)
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Total adjustments 10,954 25,903
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Net cash provided by operating activities 53,420 60,036
Cash flow from investing activities:
Proceeds from maturities of investments 35,344 55,890
Payments for purchases of investments (50,105) (39,255)
Capital expenditures (10,094) (16,177)
Increase in certain other assets (2,255) (4,684)
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Net cash used by investing activities (27,110) (4,226)
Cash flow from financing activities:
Dividends paid (15,594) (14,638)
Proceeds from issuance of Common Shares 530 1,290
Other -- (780)
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Net cash used by financing activities (15,064) (14,128)
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Increase in cash and cash equivalents 11,246 41,682
Cash and cash equivalents at the beginning of the period 15,698 17,285
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Cash and cash equivalents at the end of the period $ 26,944 $ 58,967
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Unaudited)
(Dollars in thousands)
1. The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal
recurring adjustments), which are, in the opinion of Management,
necessary for a fair statement of the results for the interim periods.
The condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
together with management's discussion and analysis of financial condition
and results of operations contained in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995. The results of
operations for the six month period ended June 30, 1996 are not
necessarily indicative of results to be expected for the full year.
2. The Net income per Common Share computations in the condensed
consolidated statements of income are based on the weighted average
number of shares outstanding during each period reported.
<TABLE>
<CAPTION>
3. Inventory detail at: June 30, 1996 December 31, 1995
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<S> <C> <C>
Finished goods and
service parts $ 26,623 $ 22,683
Work in process 65,197 68,209
Raw materials 168 110
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Total inventory $ 91,988 $ 91,002
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</TABLE>
4. The Company has reclassified the presentation of certain prior-year
information to conform with the current presentation format.
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 1O-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
As of June 30, 1996
(Unaudited)
(Dollars in thousands except for per share data)
Changes in Financial Condition
- ------------------------------
The balance sheet of the Company continued to reflect a strong financial
position at June 30, 1996. Cash, cash equivalents and short-term investments
increased to $67,354 at June 30, 1996 compared to $46,687 at December 31, 1995.
These assets along with securities and other investments accounted for 26% of
total assets at June 30, 1996 and December 31, 1995. Securities and other
investments consist principally of tax-free municipal bonds, preferred stock,
and other investments.
Future capital expenditures and increases in working capital are expected to be
financed through internally generated funds. The Company's investment
portfolio is available for any funding needs if required. External financing
is also available if needed through the Company's lines of credit. At June 30,
1996, the Company had unused lines of credit approximating $40,000 and the
Company is not restricted as to the use of funds borrowed under these credit
agreements. Therefore, such commitments represent an additional and immediate
source of liquidity. The Company's strong financial position enhances its
ability to obtain additional funds if required.
Shareholders' equity per Common Share at June 30, 1996 improved to $11.66 from
$11.05 at December 31, 1995. The second quarter cash dividend of $0.17 per
share was paid on June 7, 1996 to shareholders of record on May 17, 1996.
Diebold, Incorporated shares are listed on the New York Stock Exchange under
the symbol of DBD. The market price during the first six months of 1996
fluctuated within the range of $33.67 and $48.25.
Results of Operations
- ---------------------
Second Quarter 1996 Comparison to Second Quarter 1995
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Net sales for the second quarter of 1996 increased from the same period in 1995
by $41,437 or 20%. Total gross profit increased $14,652 or 20% over the second
quarter's performance in 1995. Product gross profit accounted for the majority
of this increase as the result of increased sales volume of ATMs both
domestically and internationally and continuing cost containment efforts.
Operating expenses increased $7,661 or 17% over the same period in 1995 largely
due to higher selling expenses resulting from the increases in sales volumes
and expenditures related to the continuing research and development of new
products. Operating profit increased $6,991 or 25% over second quarter 1995's
performance.
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 1O-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
As of June 30, 1996
(Unaudited / Dollars in thousands except for per share data)
First Half 1996 Comparison to First Half 1995
- ---------------------------------------------
Consolidated net sales for the first half of 1996 exceeded the same period in
1995 by $60,276 or 15%. Total gross profit increased $24,065 or 18% over
1995's first half performance. Product gross profit continued to account for
the majority of this increase in total gross profit resulting from increased
domestic and international sales volumes and reduction of costs. Operating
expenses increased $13,543 or 15% over the same period in 1995 due to the
higher selling and administrative expenses associated with the increase in
sales activity and expenditures related to the research and development of new
products. Operating profit for the first half 1996 exceeded the first half
1995 by $10,522 or 22%.
The Company's backlog of unfilled orders was $214,172 at June 30, 1996,
compared to $155,967 at June 30, 1995, a $58,205 or 37% increase. The Company
believes, however, that order backlog information is not, by itself, a
meaningful indicator of future revenue streams. There are numerous factors
which influence the amount and timing of revenue recognized in future periods.
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1(i) Amended and Restated Articles of Incorporation of Diebold,
Incorporated -- incorporated by reference to Exhibit 3.1(i) of
Registrant's Annual Report on Form 10-K for the year ended December
31, 1994.
3.(ii) Code of Regulations -- incorporated by reference to Exhibit 4(c) to
Registrant's Post-Effective Amendment No. 1 to Form S-8
Registration Statement No. 33-32960.
3.2 Certificate of Amendment by Shareholders to Amended Articles of
Incorporation of Diebold, Incorporated -- incorporated by reference
to Exhibit 3.2 to Registrant's Form 10-Q for the quarter ended
March 31, 1996.
4. Rights Agreement dated as of February 10, 1989 between Diebold,
Incorporated and Ameritrust Company National Association --
incorporated by reference to Exhibit 2.1 to Registrant's
Registration Statement on Form 8-A dated February 10, 1989.
* 10.1 Form of Employment Agreement as amended and restated as of
September 13, 1990 -- incorporated by reference to Exhibit 10.1 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1990.
* Reflects management contract or other compensatory arrangement.
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* 10.2 Schedule of Certain Officers who are Parties to Employment
Agreements in the form of Exhibit 10.1 -- incorporated by reference
to Exhibit 10.2 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995.
* 10.3 Supplemental Retirement Benefit Agreement with William T. Blair --
incorporated by reference to Exhibit 10.3 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995.
* 10.5 Supplemental Employee Retirement Plan (as amended January 1, 1994)
-- incorporated by reference to Exhibit 10.5 of Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994.
10.6 Amended and Restated Partnership Agreement dated as of September
12, 1990 -- incorporated by reference to Exhibit 10 to Registrant's
Form 8-K dated September 26, 1990.
* 10.7 1985 Deferred Compensation Plan for Directors of Diebold,
Incorporated -- incorporated by reference to Exhibit 10.7 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1992.
* 10.8 1991 Equity and Performance Incentive Plan -- incorporated by
reference to Exhibit 4(a) to Registrant's Form S-8 Registration
Statement No. 33-39988.
* 10.9 Long-Term Executive Incentive Plan -- incorporated by reference to
Exhibit 10.9 of Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993.
* 10.10 1992 Deferred Incentive Compensation Plan (as amended and restated
as of July 1, 1993) -- incorporated by reference to Exhibit 10.10
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993.
* 10.11 Annual Incentive Plan -- incorporated by reference to Exhibit 10.11
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992.
* 10.12 Employment Agreement with Robert P. Barone -- incorporated by
reference to Exhibit 10.12 to Registrant's Form 10-Q for the
quarter ended September 30, 1994.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
No reports have been filed by the Registrant on Form 8-K during the
period covered by this report.
* Reflects management contract or other compensatory arrangement.
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
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.
DIEBOLD, INCORPORATED
--------------------------
(Registrant)
Date: July 29, 1996 By: /s/Robert W. Mahoney
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Robert W. Mahoney
Chairman of the Board, President
and Chief Executive Officer
Date: July 29, 1996 By: /s/Gerald F. Morris
-------------- --------------------------------
Gerald F. Morris
Executive Vice President and
Chief Financial Officer
(Principal Accounting and
Financial Officer)
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DIEBOLD, INCORPORATED
FORM 10-Q
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE NO.
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<S> <C> <C> <C>
3.1 (i) Amended and Restated Articles of Incorporation of Diebold,
Incorporated -- incorporated by reference to Exhibit 3.1(i)
of Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994. --
3.1 (ii) Code of Regulations -- incorporated by reference to Exhibit 4(c) to
Registrant's Post-Effective Amendment No. 1 to Form S-8 Registration
Statement No. 33-32960. --
3.2 Certificate of Amendment by Shareholders to Amended Articles of
Incorporation of Diebold, Incorporated -- incorporated by reference
to Exhibit 3.2 to Registrant's Form 10-Q for the quarter ended
March 31, 1996. --
4. Rights Agreement dated as of February 10, 1989 between Diebold,
Incorporated and Ameritrust Company National Association --
incorporated by reference to Exhibit 2.1 to Registrant's
Registration Statement on Form 8-A dated February 10, 1989. --
10.1 Form of Employment Agreement as amended and restated as of
September 13, 1990 -- incorporated by reference to Exhibit 10.1
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1990. --
10.2 Schedule of Certain Officers who are Parties to Employment
Agreements in the form of Exhibit 10.1 -- incorporated by reference
to Exhibit 10.2 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995. --
10.3 Supplemental Retirement Benefit Agreement with William T. Blair --
incorporated by reference to Exhibit 10.3 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995. --
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT NO. PAGE NO.
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<S> <C> <C>
10.5 Supplemental Employee Retirement Plan (as amended January 1,
1994) -- incorporated by reference to Exhibit 10.5 of
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994. --
10.6 Amended and Restated Partnership Agreement dated as of September 12,
1990 -- incorporated by reference to Exhibit 10 to Registrant's Form 8-K
dated September 26, 1990. --
10.7 1985 Deferred Compensation Plan for Directors of Diebold,
Incorporated -- incorporated by reference to Exhibit 10.7
to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992. --
10.8 1991 Equity and Performance Incentive Plan -- incorporated by
reference to Exhibit 4(a) to Registrant's Form S-8 Registration
Statement No. 33-39988. --
10.9 Long-Term Executive Incentive Plan -- incorporated by reference to
Exhibit 10.9 of Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993. --
10.10 1992 Deferred Incentive Compensation Plan (as amended and restated
as of July 1, 1993) -- incorporated by reference to Exhibit 10.10
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993. --
10.11 Annual Incentive Plan -- incorporated by reference to Exhibit 10.11
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992. --
10.12 Employment Agreement with Robert P. Barone -- incorporated by
reference to Exhibit 10.12 to Registrant's Form 10-Q for the
quarter ended September 30, 1994. --
27. Financial Data Schedule. 13
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 26,944
<SECURITIES> 40,410
<RECEIVABLES> 226,130
<ALLOWANCES> 0
<INVENTORY> 91,988
<CURRENT-ASSETS> 439,994
<PP&E> 185,491
<DEPRECIATION> 99,744
<TOTAL-ASSETS> 819,513
<CURRENT-LIABILITIES> 229,097
<BONDS> 0
<COMMON> 57,517
0
0
<OTHER-SE> 495,546
<TOTAL-LIABILITY-AND-EQUITY> 819,513
<SALES> 299,580
<TOTAL-REVENUES> 464,223
<CGS> 182,861
<TOTAL-COSTS> 302,666
<OTHER-EXPENSES> 102,118
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 63,854
<INCOME-TAX> 21,388
<INCOME-CONTINUING> 42,466
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,466
<EPS-PRIMARY> $0.93
<EPS-DILUTED> $0.93
</TABLE>
