<PAGE> 1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from.........to.........
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Commission file number 1-4879
DIEBOLD, INCORPORATED
(Exact name of Registrant as specified in its charter)
Ohio 34-0183970
- ------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
5995 Mayfair Road, P. O. Box 3077,
North Canton, Ohio 44720-8077
- ------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (330) 489-4000
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered:
Common Shares $1.25 Par Value New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
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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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant as of March 1, 1996. The aggregate market value was computed by
using the closing price on the New York Stock Exchange on March 1, 1996 of
$ 37.625 per share.
Common Shares, Par Value $1.25 Per Share $ 1,698,050,150
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 1, 1996
Common Shares $1.25 Par Value 45,869,037 Shares
<PAGE> 2
DOCUMENTS INCORPORATED BY REFERENCE
(1) PROXY STATEMENT FOR 1996 ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD APRIL 3, 1996
<TABLE>
<CAPTION>
PART OF 10-K
INTO WHICH
CAPTION OR HEADING PAGE NO. INCORPORATED ITEM NO.
------------------ -------- ------------- --------
<S> <C> <C> <C>
Information about Nominees for
Election as Directors 3-7 III 10
Executive Compensation 9-20 III 11
Annual Meeting of Shareholders;
Security Ownership of Directors
and Management 1-7 III 12
Compensation Committee Interlocks
and Insider Participation 9 III 13
</TABLE>
2
<PAGE> 3
PART I.
ITEM 1. BUSINESS.
(a) General Development
The Registrant was incorporated under the laws of the State of Ohio in
August, 1876, succeeding a proprietorship established in 1859 and is engaged
primarily in the sale, manufacture, installation and service of automated
self-service transaction systems, security products and software.
During 1995, no significant changes occurred in the manner of conducting
the Registrant's business.
(b) Financial Information about Industry Segments
The Registrant operates predominantly in one industry segment: financial
systems and equipment. This segment accounts for more than 90% of the
consolidated net sales, operating profit and identifiable assets.
(c) Description of Business
The Registrant develops, manufactures, sells and services automated
teller machines (ATMs), electronic and physical security systems, various
products used to equip bank facilities, software and integrated systems for
global financial and commercial markets. Sales of systems and equipment are made
directly to customers by the Registrant's sales personnel and by manufacturer's
representatives and distributors. The sales/support organization works closely
with customers and their consultants to analyze and fulfill the customers'
needs. Products are sold under contract for future delivery at agreed upon
prices. In 1995, 1994, and 1993 the Registrant's sales and services of financial
systems and equipment accounted for more than 90% of consolidated net sales.
The principal raw materials used by the Registrant are steel, copper,
brass, lumber and plastics which are purchased from various major suppliers.
Electronic parts and components are also procured from various suppliers. These
materials and components are generally available in quantity at this time.
In 1995, the Registrant had one customer, International Business
Machines (IBM), who is its partner in the InterBold joint venture, that
accounted for $101,363,000 of the total consolidated net sales of $863,409,000.
Backlog as of December 31, 1995 was $168,754,000 which was an 11%
increase from December 31, 1994 backlog of $152,511,000. The Registrant has in
recent years experienced shrinking customer lead time requirements and other
industry factors. Order backlog is not, by itself, a meaningful indicator of
future revenue streams. There are numerous factors which influence the amount
and timing of revenue in future periods.
3
<PAGE> 4
ITEM 1. BUSINESS. - (continued)
All phases of the Registrant's business are highly competitive; some
products being in competition directly with similar products and others
competing with alternative products having similar uses or producing similar
results. Registrant believes, based upon outside independent industry surveys,
that it is the leading manufacturer of automated teller machines in the United
States and is also a market leader internationally. In the area of automated
transaction systems, the Registrant competes primarily with NCR Corporation,
formerly AT&T Global Information Solutions. Other competitors, which include
Omron, Olivetti and Fujitsu, comprise a smaller share of the market. In serving
the security products market for the financial services industry, the Registrant
meets numerous large competitors in the security equipment and systems field. Of
these, some compete in only one or two product lines, while others sell a
broader spectrum of products competing with the Registrant. However, the
unavailability of comparative sales information and the large variety of
individual products makes it impossible to give reasonable estimates of the
Registrant's competitive ranking in or share of the market in its security
product fields of activity. Many smaller manufacturers of safes, surveillance
cameras, alarm systems and remote drive-up equipment are found in the market.
The Registrant charged to expense approximately $35.5 million in 1995,
$28.0 million in 1994 and $21.9 million in 1993 for research and development
costs.
Compliance by the Registrant with federal, state and local environmental
protection laws during 1995 had no material effect upon capital expenditures,
earnings or the competitive position of the Registrant and its subsidiaries.
The total number of employees employed by the Registrant at December 31,
1995 was 5,178 compared with 4,731 at the end of the preceding year.
(d) Financial Information about Foreign and Domestic
Operations and Export Sales
Sales to customers in foreign countries as a percent of total
consolidated net sales approximated 19.8 percent in 1995 and 1994 and 17.6
percent in 1993.
ITEM 2. PROPERTIES.
The Registrant's corporate offices are located in North Canton, Ohio. It
owns facilities (approximately 1.6 million square feet) in Canton, Uniontown and
Newark, Ohio; Lynchburg, Virginia; Sumter, South Carolina; and leases facilities
(approximately .3 million square feet) in Akron, Canton, Canal Fulton,
Massillon, Newark and Seville, Ohio; Mexico City, Mexico; and Shanghai, China.
These facilities house manufacturing, production, associated engineering,
warehousing, testing, administration and development and distribution for all
product lines. The Registrant believes these facilities are both suitable and
adequate for existing operations.
ITEM 3. LEGAL PROCEEDINGS.
At December 31, 1995, the Registrant was a party to several lawsuits
that were incurred in the normal course of business, none of which individually
or in the aggregate is considered material in relation to the Registrant's
financial position or results of operations.
4
<PAGE> 5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the
fourth quarter of 1995.
ITEM 4a. EXECUTIVE OFFICERS OF THE REGISTRANT.
Refer to pages 6 through 9.
5
<PAGE> 6
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
Other Positions
Year Elected Held Last
Name Age Title Present Office Five Years
---- --- ----- -------------- ----------------
<S> <C> <C> <C> <C>
1989-93
Robert W. Mahoney 59 Chairman of the Board, 1993 Chairman of the Board
President and Chief and Chief Executive
Executive Officer Officer and Director
and Director - Diebold
1990-93
William T. Blair 62 Executive Vice President 1993 Vice President and
General Manager,
North American
Sales and Service - Diebold
1989-90
Vice President,
Customer Services
- Diebold
1990-93
Gerald F. Morris 52 Executive Vice President 1993 Senior Vice President
and Chief Financial Officer and Chief Financial
Officer - Diebold
1989-90
Senior Vice President,
Finance, Treasurer and
Chief Financial Officer -
The Foxboro Company
1991-93
Gregg A. Searle 47 Executive Vice President 1993 Vice President -
Diebold
General Manager -
InterBold
1990-91
Vice President,
U.S. Sales & Marketing -
InterBold
1987-90
Regional Manager,
Eastern Ohio Region,
U.S.Marketing Group -
IBM Corporation
</TABLE>
6
<PAGE> 7
EXECUTIVE OFFICERS OF THE REGISTRANT - (continued)
<TABLE>
<CAPTION>
Other Positions
Year Elected Held Last
Name Age Title Present Office Five Years
---- --- ----- -------------- ----------------
<S> <C> <C> <C> <C>
Alben W. Warf 57 Senior Vice President, 1996 1994-96
Electronic Systems Group Vice President,
Development and Self-Services Systems -
Manufacturing Diebold
1993
Vice President - Diebold
and General Manager -
InterBold
1990-93
Vice President
Development and
Manufacturing -
Diebold and InterBold
1989-90
Vice President
Engineering and
Manufacturing - Diebold
Frank G. D'Angelo 50 Vice President, 1995 1993-95
Information Systems Vice President - Diebold
and General Manager
and Chief Executive
Officer - Diebold Mexico
S.A. de C.V.
1991-93
Vice President,
Customer Service/Systems
Operations and Support
- Diebold
1990-91
Vice President,
Software Development
and Support-InterBold
1989-90
Vice President, Software
Development and
Information Systems
- Diebold
Warren W. Dettinger 42 Vice President, 1989 --
General Counsel and
Assistant Secretary
</TABLE>
7
<PAGE> 8
EXECUTIVE OFFICERS OF THE REGISTRANT - (continued)
<TABLE>
<CAPTION>
Other Positions
Year Elected Held Last
Name Age Title Present Office Five Years
---- --- ----- -------------- ---------------
<S> <C> <C> <C> <C>
1987-96
Reinoud G. J. Drenth 32 Vice President, 1996 NCR Corporation (formerly
Worldwide Marketing known as AT&T Global
Information Solutions):
1995 - Marketing Vice
President, Financial
Services Industry
1994 - Executive
Assistant, Worldwide
Industry Marketing
1993 - Marketing
Director, Northern
Europe
1991-93 - District
Manager, Financial and
Retail Systems Division
1990
Donald E. Eagon, Jr. 53 Vice President, 1990 Vice President,
Corporate Communications Public Relations and
Advertising - Diebold
1988-90
Vice President,
Public Affairs -
Figgie
International
Inc.
1983-93
Charee Francis-Vogelsang 49 Vice President and 1993 Vice President
Secretary - Diebold and Secretary - Diebold
and Secretary - InterBold
1989-90
Bartholomew J. Frazzitta 53 Vice President and 1990 Vice President, Marketing
General Manager, and Product Management -
Security Products Diebold
1990-92
Michael J. Hillock 44 Vice President and General 1993 Vice President,
Manager, Sales and Service North American
Europe, Middle East, and Africa Sales and Service,
Eastern Division - Diebold
1988-90
Managing Director -
Diebold Pacific Limited
</TABLE>
8
<PAGE> 9
EXECUTIVE OFFICERS OF THE REGISTRANT - (continued)
<TABLE>
<CAPTION>
Other Positions
Year Elected Held Last
Name Age Title Present Office Five Years
---- --- ----- -------------- ---------------
<S> <C> <C> <C> <C>
1988-93
Larry D. Ingram 49 Vice President, 1993 Divisional Vice President,
Procurement and Services Materials Management
- Diebold
1991-92
Edgar N. Petersen 57 Vice President and General 1993 Vice President and General
Manager, Sales and Service Manager, International
Canada, Asia-Pacific, and Sales and Service - Diebold
Latin America 1990-91
Vice President,
International Sales
and Marketing - InterBold
1989-90
Vice President,
International Sales - Diebold
1988-91
Charles B. Scheurer 54 Vice President, 1991 Vice President,
Human Resources Human Resources
and Corporate Services
- Diebold
1988-90
Robert L. Stockamp 52 Vice President and 1990 Controller, Operations
Corporate Controller - Diebold
1988-90
Robert J. Warren 49 Vice President and 1990 Controller, Corporate
Treasurer Financial Accounting and
Services and
Assistant Treasurer
- Diebold
</TABLE>
There is no family relationship, either by blood, marriage or adoption, between
any of the executive officers of the Registrant.
9
<PAGE> 10
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
On January 26, 1996, the Board of Directors of the Registrant declared a
three-for-two stock split which was effected in the form of a stock dividend,
distributed on February 23, 1996, to shareholders of record on February 9, 1996.
Accordingly, all numbers of Common Shares, except authorized shares and treasury
shares, and all per share data have been restated to reflect this stock split in
addition to the three-for-two stock split declared on February 1, 1994,
distributed on February 22, 1994, to shareholders of record on February 10,
1994, and the three-for-two stock split declared on January 27, 1993,
distributed on February 26, 1993, to shareholders of record on February 10,
1993.
The Common Shares of the Registrant are listed on the New York Stock
Exchange with a symbol of DBD. The price ranges of Common Shares for the
Registrant are as follows:
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
1st Quarter $27.42 $22.00 $28.50 $22.59
2nd Quarter 29.50 23.17 30.17 23.83
3rd Quarter 32.92 28.83 31.17 26.59
4th Quarter 41.42 30.00 30.09 26.25
------ ------ ------ ------
Full Year $41.42 $22.00 $31.17 $22.59
====== ====== ====== ======
</TABLE>
There were approximately 4,100 registered shareholders of record at
December 31, 1995.
On the basis of amounts paid and declared the annualized quarterly
dividends per share were $0.64 in 1995 and $0.59 in 1994.
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
-------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Net Sales $863,409 $760,171 $623,277 $543,852 $506,217
Net Income * 76,209 63,511 48,374 23,205 35,745
Net Income per share* 1.67 1.40 1.07 0.51 0.80
Total Assets 745,198 666,174 609,019 558,914 535,593
Cash dividends paid per Common Share 0.64 0.59 0.53 0.50 0.47
</TABLE>
*1992 amounts include a one-time charge of $17,932 ($0.40 per share)
resulting from the adoption of SFAS 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions."
10
<PAGE> 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
MANAGEMENT'S ANALYSIS OF RESULTS OF OPERATIONS
The table below presents the changes in comparative financial data from 1993 to
1995. Comments on significant year-to-year fluctuations follow the table.
<TABLE>
<CAPTION>
1995 1994 1993
------------------------------ ------------------------------- -----------------
Percent Percent Percent Percent Percent
of Net Increase of Net Increase of Net
(Dollars in thousands) Amount Sales (Decrease) Amount Sales (Decrease) Amount Sales
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales
Products............................. $553,622 64.1% 15.5% $479,314 63.1% 30.5% $367,385 58.9%
Services............................. 309,787 35.9 10.3 280,857 36.9 9.8 255,892 41.1
--------------------------------------------------------------------------------------
863,409 100.0 13.6 760,171 100.0 22.0 623,277 100.0
Cost of sales
Products............................. 348,560 63.0 11.8 311,790 65.0 33.8 233,041 63.4
Services............................. 220,418 71.2 14.4 192,699 68.6 6.9 180,198 70.4
--------------------------------------------------------------------------------------
568,978 65.9 12.8 504,489 66.4 22.1 413,239 66.3
--------------------------------------------------------------------------------------
Gross profit.......................... 294,431 34.1 15.2 255,682 33.6 21.7 210,038 33.7
Selling and administrative expense.... 144,490 16.7 12.6 128,309 16.9 20.9 106,110 17.0
Research, development and
engineering expense................. 43,130 5.0 17.8 36,599 4.8 5.1 34,838 5.6
--------------------------------------------------------------------------------------
187,620 21.7 13.8 164,908 21.7 17.0 140,948 22.6
--------------------------------------------------------------------------------------
Operating profit....................... 106,811 12.4 17.7 90,774 11.9 31.4 69,090 11.1
Other income, net...................... 6,612 0.8 28.3 5,152 0.7 (9.0) 5,664 0.9
Minority interest...................... (200) 0.0 (89.7) (1,948) (0.3) (54.0) (4,239) (0.7)
--------------------------------------------------------------------------------------
Income before taxes.................... 113,223 13.1 20.5 93,978 12.4 33.3 70,515 11.3
Taxes on income........................ 37,014 4.3 21.5 30,467 4.0 37.6 22,141 3.5
--------------------------------------------------------------------------------------
Net income............................. $ 76,209 8.8% 20.0% $ 63,511 8.4% 31.3% $ 48,374 7.8%
===================================================================================================================================
</TABLE>
11
<PAGE> 12
NET SALES
Net sales for 1995 totaled $863,409, which represented growth of $103,238 or
13.6 percent from 1994 and $240,132 or 38.5 percent from 1993. This was the
Registrant's sixth consecutive year of record sales.
Product net sales of $553,622 grew $74,308 or 15.5 percent from 1994
and $186,237 or 50.7 percent from 1993. The Registrant continued to experience
strong growth in domestic sales of ATMs, and also continued to realize
increases in sales from all other major product lines during 1995. Total
domestic product revenue was up 15.5 percent from 1994. Sales of products
outside the United States increased 16.2 percent from 1994.
Service net sales of $309,787 increased $28,930 or 10.3 percent from
1994 and were up $53,895 or 21.1 percent from 1993. The major factors
contributing to the service revenue gain in 1995 were the growth of the
installed base of equipment resulting from new product installations and growth
of new service offerings such as first-line maintenance.
Total product backlog of unfilled orders was $168,754 at December 31,
1995, compared with $152,511 at the end of 1994 and $161,303 at the end of 1993.
The Registrant has continued its commitment to reducing its production cycle
time because the Registrant has in recent years experienced shrinking customer
lead time requirements and other industry factors. Order backlog is not, by
itself, a meaningful indicator of future revenue streams. There are numerous
factors which influence the amount and timing of revenue in future periods.
COST OF SALES AND EXPENSES
Cost of sales for 1995 was $568,978, compared with $504,489 in 1994 and $413,239
in 1993.
Gross profits on product sales increased $37,538 and $70,718 from 1994
and 1993, respectively, to a level of $205,062 in 1995. Product gross margins in
1995 were 37.0 percent of product sales, compared with 35.0 percent in 1994 and
36.6 percent in 1993.
Service gross profits of $89,369 in 1995 increased from $88,158 in 1994
and $75,694 in 1993. Service gross margins as a percentage of service sales were
31.4 percent in 1994 and 29.6 percent in 1993, as compared with 28.8 percent in
1995. The reduction in the service gross margin in 1995 was mainly due to the
decline of service margins in Mexico caused by the devaluation of the Mexican
peso and lower than normal margins experienced by the Registrant while in the
start-up phase of various new service business opportunities.
Supporting the Registrant's volume growth and market expansion,
operating expenses increased $22,712 or 13.8 percent from 1994 and were $46,672
or 33.1 percent above 1993. Total operating expenses of $187,620 in 1995
remained at the 1994 level of 21.7 percent of net sales, as compared with 22.6
percent in 1993.
Operating profit of $106,811 in 1995 represented an increase of $16,037
or 17.7 percent from 1994 and $37,721 or 54.6 percent from 1993. Operating
profit again grew faster than net sales as manufacturing cost reductions and
expense controls caused the operating profit margin to widen from 11.9 percent
and 11.1 percent in 1994 and 1993, respectively, to 12.4 percent in 1995.
OTHER INCOME, NET AND MINORITY INTEREST
Other income, net increased $1,460 or 28.3 percent from 1994 and $948 or 16.7
percent from 1993. Investment income increased in 1995 due to rising interest
rates and return on investment in lease receivables. The increase in investment
income was offset, however, by increases in certain expenses related to
Registrant-owned insurance contracts and amortization related to certain assets.
Minority interest of $200 decreased from $1,948 in 1994 and $4,239 in
1993. Minority interest consisted primarily of income or losses allocated to the
minority ownership of InterBold and Diebold Financial Equipment Company, Ltd.
(China). Minority interests for both companies are calculated as a percentage of
profits of the joint ventures based on formulas defined in the relevant
agreements establishing each venture.
INCOME
Income before taxes amounted to $113,223 in 1995. This was an increase of
$19,245 or 20.5 percent from 1994 and $42,708 or 60.6 percent from 1993. Income
before taxes also improved as a percentage of net sales, representing 13.1
percent in 1995, compared with 12.4 percent in 1994 and 11.3 percent in 1993.
The effective tax rate was 32.7 percent in 1995, compared with 32.4
percent in 1994 and 31.4 percent in 1993. The primary reason for the slightly
higher tax rate in 1995 was a reduction in tax-exempt interest as a percentage
of pretax income. Details of the reconciliation between the U.S. statutory rate
and the effective tax rate are included in Note 12 of the 1995 Consolidated
Financial Statements.
Net income increased to $76,209 or 8.8
12
<PAGE> 13
percent of net sales, compared with income of $63,511 or 8.4 percent of net
sales in 1994 and $48,374 or 7.8 percent of net sales in 1993.
MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITION
The Registrant continued to enhance its financial position during 1995. Total
assets increased $79,024 or 11.9 percent to a 1995 year-end level of $745,198.
Asset turnover (excluding cash, cash equivalents and short-term and long-term
investment securities) decreased to 1.72 in 1995 from 1.88 in 1994.
Total current assets at December 31, 1995, of $376,212 represented an
increase of $46,554 or 14.1 percent from the prior year-end. The increase in
trade receivables and inventories comprises the majority of this increase and is
a result of higher sales volumes and expansion of international operations in
1995. Trade receivables increased $44,038 or 28.8 percent to a December 31,
1995, level of $197,145. As a percentage of net sales, trade receivables were
20.7 percent and 20.1 percent in 1993 and 1994, respectively, as compared with
22.8 percent in 1995. Inventories at year-end 1995 totaled $91,002, which
represented an increase of only $5,459 or 6.4 percent from 1994. This increase
in inventory was accomplished in spite of the growth of product sales of 15.5
percent in 1995.
Long-term securities and other investments declined by $9,059 or 5.8
percent to a December 31, 1995, level of $146,741 largely due to maturities of
tax-exempt municipal bonds, which were reinvested into certain other assets.
The Registrant anticipates being able to meet both short- and long-term
operational funding requirements without liquidating individual securities
prior to maturity by varying the timing of maturities within the portfolio.
However, since most of these securities are marketable, they could readily be
converted into cash and cash equivalents if needed.
Total property, plant and equipment, net of accumulated depreciation,
was $84,072 at the end of 1995, which resulted in an increase of $19,359 or
29.9 percent over prior year-end. Capital expenditures were $35,308 in 1995,
compared with $22,641 in 1994. This increase resulted primarily from the need
to meet higher manufacturing capacity requirements; expansion of facilities for
research, software development, management development and support services;
and investment in internal applications hardware and software. With the
increase in off-premises placement of ATMs, the Registrant is experiencing more
requests for lease financing. As such, lease receivables increased from $31,178
in 1994 to $40,017 in 1995 due to shipment of additional equipment under
capital lease agreements. Other assets increased as a result of increases in
pension assets and certain assets acquired in relation to new businesses.
Total current liabilities at December 31, 1995, were $185,964,
representing an increase of $26,209 or 16.4 percent from the prior year-end. The
primary cause for the increase in current liabilities was an increase in
deferred income of $11,620 or 25.0 percent to a level of $58,090 as well as an
increase in other current liabilities of $6,917 or 34.5 percent from the prior
year-end. The increase in other current liabilities is mainly due to a
difference in the timing of payment of certain compensation and
compensation-related tax liabilities in 1995 as compared with 1994. The
Registrant's current ratio was 2.0 at the end of 1995, compared with 2.1 at the
end of 1994.
At December 31, 1995, the Registrant had lines of credit totaling
$40,000, all unrestricted as to use. Due to the strong liquidity position, the
Registrant continued its practice of having no long-term debt. The Registrant's
financial position provides it with sufficient resources to meet projected
future capital expenditures, dividend and working capital requirements. However,
if the need arises, the Registrant's strong financial position should ensure the
availability of adequate additional financial resources.
Pension liabilities were $17,523 at December 31, 1995, representing an
increase of $6,978 or 66.2 percent over prior year-end. The primary causes for
the increase in pension liabilities were due to the additional minimum
liability of $4,034, net of deferred taxes, recorded in 1995 as well as net
periodic pension costs of $3,528 less contributions made to the plans in 1995.
The net periodic pension costs of $3,528 charged to income in 1995 represent an
increase of $2,509 from the prior year, primarily due to use of the new 1983
Group Annuity Mortality Table.
Minority interests of $13,775 represented the minority interest in
InterBold owned by IBM and the minority interests in Diebold Financial Equipment
Company, Ltd. (China) owned by the Shanghai FarEast Aero-Technology Import and
Export Corporation and the Industrial and Commercial Bank of China, Shanghai
Pudong Branch. Shareholders' equity increased $46,978 or 10.2 percent to
$506,197 at December 31, 1995. Included within shareholders' equity is a
translation adjustment related to the year-end revaluation of foreign net
assets. Shareholders' equity per share was $11.05 at the end of 1995, compared
with $10.05 in 1994. The Common Shares of the Registrant are listed on the New
York Stock Exchange with a symbol of DBD. There were approximately 4,100
registered shareholders of record as of December 31, 1995.
On January 26, 1996, the Board of Directors declared a three-for-two
stock split effected in the form of a stock dividend, distributed on February
23, 1996, to shareholders of record on February 9, 1996. Accordingly, all
numbers of Common Shares, except
13
<PAGE> 14
authorized shares and treasury shares, and all per share data have been restated
to reflect this stock split. In addition to the stock split, the Board of
Directors declared a first-quarter 1996 cash dividend of $0.17 per share. This
amount, which represents a 6.3 percent increase from the prior year's quarterly
dividend rate, will be paid on March 29, 1996, to shareholders of record on
March 8, 1996. Comparative quarterly cash dividends paid in 1995 and 1994 were
$0.16 and $0.15, respectively.
MANAGEMENT'S ANALYSIS OF CASH FLOWS
During 1995, the Registrant generated $71,152 in cash from operating
activities, compared with $39,017 in 1994 and $93,977 in 1993. In addition
to net income of $76,209, adjusted for depreciation, amortization and other
charges of $29,458, increases in accounts payables and other certain assets and
liabilities of $20,783 also increased cash provided by operations. Cash was
utilized in operations to fund long-term lease receivables and increases in
inventory levels and trade receivables as a result of additional sales volumes
and growth of international operations. Expressed as a percentage of total
assets employed, the Registrant's cash yield from operations was 9.5 percent in
1995, compared with 5.9 percent in 1994 and 15.4 percent in 1993.
Net cash generated from operating activities in 1995 was used to
reinvest $43,173, in assets of the Registrant, compared with $38,299 in 1994
and $62,703 in 1993. The Registrant returned $29,290 to shareholders in the
form of cash dividends paid during 1995, which was a 9.8 percent increase from
1994 and a 21.1 percent increase from 1993.
OTHER BUSINESS INFORMATION
In April 1995, the Registrant acquired Applied Network Technologies,
Incorporated based in Waco, Texas. The acquisition strengthens the Registrant's
capability to provide comprehensive software and systems integration expertise,
particularly as the Registrant expands into new markets such as education and
healthcare. Also in April 1995, the Registrant and Optical Data Systems, Inc.
formed a strategic alliance to provide total networking solutions, including
local and wide area networking hardware, software and support to the financial,
healthcare and education industries. The agreement further enhances the
Registrant's position as a systems integrator and strengthens its professional
services business. In September 1995, the Registrant exercised an option to
increase its ownership in Diebold HMA Private Ltd. in India to 50 percent from
its original 24 percent stake. The joint venture was created in 1991 to
assemble, market and service ATMs in India. This additional investment reflects
the Registrant's heightened interest in an area of the world that is entering a
period of significant growth potential. In October 1995, Diebold entered into a
merger agreement to purchase the stock of Griffin Technology Incorporated based
in Farmington, New York. Griffin is a provider of computerized campus-wide,
card-based systems for colleges and universities in the United States. The
purchase of Griffin, which was finalized in December 1995, accelerates the
strategic initiative the Registrant undertook to expand its presence in the
elementary, secondary and university education marketplace, as well as in
other campus-type environments.
14
<PAGE> 15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
CONSOLIDATED BALANCE SHEETS
DIEBOLD, INCORPORATED AND SUBSIDIARIES
DECEMBER 31, 1995 AND 1994
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995 1994
==========================================================================================================
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents..................................................... $ 15,698 $ 17,285
Short-term investments (Note 3)............................................... 30,989 38,400
Trade receivables............................................................. 197,145 153,107
Inventories (Note 4).......................................................... 91,002 85,543
Deferred income taxes (Note 12)............................................... 31,746 28,141
Prepaid expense and other current assets...................................... 9,632 7,182
- ----------------------------------------------------------------------------------------------------------
Total current assets....................................................... 376,212 329,658
- ----------------------------------------------------------------------------------------------------------
Securities and other investments (Note 3)....................................... 146,741 155,800
Property, plant and equipment, at cost (Note 5)................................. 177,573 152,314
Less accumulated depreciation and amortization................................ 93,501 87,601
- ----------------------------------------------------------------------------------------------------------
84,072 64,713
Deferred income taxes (Note 12)................................................. 5,096 5,764
Lease receivables (Note 6)...................................................... 40,017 31,178
Other assets ................................................................... 93,060 79,061
- ----------------------------------------------------------------------------------------------------------
$745,198 $666,174
==========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable.............................................................. $ 66,904 $ 60,962
Estimated income taxes........................................................ 7,910 7,105
Accrued insurance............................................................. 16,844 16,350
Accrued installation costs.................................................... 9,253 8,822
Deferred income............................................................... 58,090 46,470
Other current liabilities..................................................... 26,963 20,046
- ----------------------------------------------------------------------------------------------------------
Total current liabilities.................................................. 185,964 159,755
- ----------------------------------------------------------------------------------------------------------
Pensions (Note 10).............................................................. 17,523 10,545
Postretirement benefits (Note 10)............................................... 21,739 21,627
Minority interest (Note 2)...................................................... 13,775 15,028
Commitments and contingencies (Note 13)......................................... --- ---
Shareholders' equity (Note 8)
Preferred Shares, no par value, authorized
1,000,000 shares, none issued............................................... --- ---
Common Shares, par value $1.25; authorized 50,000,000 shares;
issued 45,893,678 and 30,515,146 shares, respectively;
outstanding 45,808,227 and 30,460,046, respectively........................ 57,367 38,144
Additional capital............................................................ 50,937 68,320
Retained earnings............................................................. 412,432 365,513
Treasury shares, at cost (85,451 and 55,100 shares, respectively)............. (3,849) (3,186)
Other......................................................................... (10,690) (9,572)
- ----------------------------------------------------------------------------------------------------------
Total shareholders' equity.................................................. 506,197 459,219
- ----------------------------------------------------------------------------------------------------------
$745,198 $666,174
==========================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
15
<PAGE> 16
CONSOLIDATED STATEMENTS OF INCOME
DIEBOLD, INCORPORATED AND SUBSIDIARIES
YEARS ENDED DECEMBER 31, 1995,
1994 AND 1993 (In thousands
except per share amounts)
<TABLE>
<CAPTION>
1995 1994 1993
============================================================================================================================
<S> <C> <C> <C>
Net sales
Products............................................................... $553,622 $479,314 $367,385
Services............................................................... 309,787 280,857 255,892
- ----------------------------------------------------------------------------------------------------------------------------
863,409 760,171 623,277
- ----------------------------------------------------------------------------------------------------------------------------
Cost of sales
Products............................................................... 348,560 311,790 233,041
Services............................................................... 220,418 192,699 180,198
- ----------------------------------------------------------------------------------------------------------------------------
568,978 504,489 413,239
- ----------------------------------------------------------------------------------------------------------------------------
Gross profit............................................................. 294,431 255,682 210,038
Selling and administrative expense....................................... 144,490 128,309 106,110
Research, development and engineering expense............................ 43,130 36,599 34,838
- ----------------------------------------------------------------------------------------------------------------------------
187,620 164,908 140,948
- ----------------------------------------------------------------------------------------------------------------------------
Operating profit......................................................... 106,811 90,774 69,090
Other income (expense)
Investment income...................................................... 16,111 11,051 10,477
Miscellaneous, net..................................................... (9,499) (5,899) (4,813)
Minority interest (Note 2)............................................... (200) (1,948) (4,239)
- ----------------------------------------------------------------------------------------------------------------------------
Income before taxes...................................................... 113,223 93,978 70,515
Taxes on income (Note 12)................................................ 37,014 30,467 22,141
- ----------------------------------------------------------------------------------------------------------------------------
Net income............................................................... $ 76,209 $ 63,511 $ 48,374
============================================================================================================================
Average number of shares (Notes 8 and 9)................................. 45,766 45,495 45,374
Net income per share (Notes 8 and 9)..................................... $ 1.67 $ 1.40 $ 1.07
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
16
<PAGE> 17
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
DIEBOLD, INCORPORATED AND SUBSIDIARIES
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
Common Shares
--------------------
Par Additional Retained Treasury
Number* Value Capital Earnings Shares Other* Total
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
January 1, 1993.......................... 20,101,471 $25,127 $73,508 $304,501 $(1,207) $(2,255) $399,674
- ------------------------------------------------------------------------------------------------------------------------------
Net income - 1993......................... 48,374 48,374
Stock options exercised................... 68,406 86 1,498 1,584
Unearned compensation..................... 4,500 6 195 280 481
Performance shares (Note 8)............... 28,911 35 1,829 1,864
Dividends declared (Note 8)............... (24,191) (24,191)
Pensions (Note 10)........................ (8) (8)
Translation adjustment.................... (194) (194)
Treasury shares........................... (537) (537)
Three-for-two stock split................. 10,085,446 12,607 (12,607) ---
- ------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1993....................... 30,288,734 $37,861 $64,423 $328,684 $(1,744) $(2,177) $427,047
- ------------------------------------------------------------------------------------------------------------------------------
Net income - 1994......................... 63,511 63,511
Stock options exercised................... 36,184 46 543 589
Unearned compensation..................... 9,000 11 338 228 577
Performance shares (Note 8)............... 50,553 63 2,809 2,872
Dividends declared (Note 8)............... (26,682) (26,682)
Translation adjustment.................... (5,974) (5,974)
Treasury shares........................... (1,442) (1,442)
Unrealized loss on investment
securities (Note 3)...................... (1,649) (1,649)
Issuance of shares for acquisitions....... 130,675 163 207 370
- ------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1994....................... 30,515,146 $38,144 $68,320 $365,513 $(3,186) $(9,572) $459,219
- ------------------------------------------------------------------------------------------------------------------------------
Net income - 1995......................... 76,209 76,209
Stock options exercised................... 46,149 58 98 156
Unearned compensation..................... 9,000 11 294 344 649
Performance shares (Note 8)............... 55,050 69 1,755 1,824
Dividends declared (Note 8)............... (29,290) (29,290)
Pensions (Note 10)........................ (1,087) (1,087)
Translation adjustment.................... (2,982) (2,982)
Treasury shares........................... (445) (663) (1,108)
Unrealized gain on investment
securities (Note 3)...................... 2,607 2,607
Three-for-two stock split................. 15,268,333 19,085 (19,085) ---
- ------------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1995....................... 45,893,678 $57,367 $50,937 $412,432 $(3,849) $(10,690) $506,197
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*See Note 8
See accompanying Notes to Consolidated Financial Statements.
17
<PAGE> 18
CONSOLIDATED STATEMENTS OF CASH FLOWS
DIEBOLD, INCORPORATED AND SUBSIDIARIES
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
1995 1994 1993
============================================================================================================================
<S> <C> <C> <C>
Cash flow from operating activities:
Net income..................................................... $76,209 $63,511 $48,374
- ----------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net income to cash
provided by operating activities:
Minority share of income..................................... 200 1,948 4,239
Depreciation and amortization................................ 14,174 13,240 12,231
Other charges and amortization............................... 15,284 16,774 11,181
Deferred income taxes........................................ (4,527) (17,974) (2,956)
Loss on disposal of assets, net.............................. 1,786 1,150 2,622
Gain on sale of investments, net............................. (810) (2,316) (600)
Cash provided (used) by changes in certain
assets and liabilities:
Trade receivables.......................................... (44,038) (23,851) (8,565)
Inventories................................................ (5,459) (10,560) 6,411
Prepaid expenses and other current assets.................. (2,450) 9,094 1,174
Accounts payable........................................... 5,942 16,370 14,109
Other certain assets and liabilities....................... 14,841 (28,369) 5,757
- ----------------------------------------------------------------------------------------------------------------------------
Total adjustments.............................................. (5,057) (24,494) 45,603
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities...................... 71,152 39,017 93,977
Cash flow from investing activities:
Proceeds from maturities of investments........................ 64,008 72,460 88,403
Proceeds from sales of investments............................. 16,184 10,951 12,277
Payments for purchases of investments.......................... (66,052) (73,290) (140,032)
Capital expenditures........................................... (35,308) (22,641) (18,343)
Increase in certain other assets............................... (22,131) (28,477) (5,070)
Other.......................................................... 126 2,698 62
- ----------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities.......................... (43,173) (38,299) (62,703)
- ----------------------------------------------------------------------------------------------------------------------------
Cash flow from financing activities:
Dividends paid................................................. (29,290) (26,682) (24,191)
Distribution of affiliate's earnings to minority interest
holder....................................................... (2,527) -- (3,569)
Proceeds from issuance of Common Shares........................ 1,177 2,291 3,112
Other.......................................................... 1,074 1,952 (2,051)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities.......................... (29,566) (22,439) (26,699)
- ----------------------------------------------------------------------------------------------------------------------------
(Decrease) increase in cash and cash equivalents................. (1,587) (21,721) 4,575
Cash and cash equivalents at the beginning of the year........... 17,285 39,006 34,431
- ----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at the end of the year................. $15,698 $17,285 $39,006
============================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
18
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DIEBOLD, INCORPORATED AND SUBSIDIARIES
(Dollars in thousands except per share amounts)
NOTE 1: SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The Consolidated Financial Statements include the accounts of the Registrant and
its wholly- and majority-owned subsidiaries. All significant inter-company
accounts and transactions have been eliminated.
STATEMENTS OF CASH FLOWS
For the purposes of the Consolidated Statements of Cash Flows, the Registrant
considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents. Cash paid during 1995, 1994 and
1993 for income taxes amounted to $40,487, $37,488 and $30,134, respectively.
FOREIGN OPERATIONS
The Registrant translates the assets and liabilities of its foreign subsidiaries
at the exchange rates in effect at year-end and the results of operations at the
average rate throughout the year. The translation adjustments are recorded
directly as a separate component of shareholders' equity, while transaction
gains (losses) are included in net income. The Registrant does not have any
investment-type transactions or any unperformed forward exchange contracts.
Sales to customers in foreign countries as a percent of net sales
approximated 19.8 percent in 1995 and 1994 and 17.6 percent in 1993. The
investment used to generate this sales volume is considered minimal by
management.
FINANCIAL INSTRUMENTS
The carrying amount of financial instruments including cash and cash
equivalents, trade receivables and accounts payable approximated fair value as
of December 31, 1995 and 1994, because of the relatively short maturity of these
instruments.
TRADE RECEIVABLES AND SALES
Revenue, after provision for installation, is generally recognized based on the
terms of the contracts which, for product sales, is usually when material to be
installed for customer orders is shipped from the plants.
The equipment that is sold is usually shipped and installed within one year.
Installation that extends beyond one year is ordinarily attributable to causes
not under the control of the Registrant.
The concentration of credit risk in the Registrant's trade receivables with
respect to the banking and financial services industries is substantially
mitigated by the Registrant's credit evaluation process, reasonably short
collection terms and the geographical dispersion of sales transactions from a
large number of individual customers. The Registrant maintains allowances for
potential credit losses, and such losses have been minimal and within
management's expectations.
INVENTORIES
Inventories are valued at the lower of cost or market applied on a first-in,
first-out basis. Cost is determined on the basis of actual cost.
INVESTMENT SECURITIES
Effective January 1, 1994, the Registrant adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." There was no cumulative effect on the Consolidated Income
Statement resulting from the adoption of Statement 115.
DEPRECIATION AND AMORTIZATION
Depreciation of property, plant and equipment is computed using the
straight-line method for financial statement purposes. Accelerated methods of
depreciation are used for federal income tax purposes. Amortization of leasehold
improvements is based upon the shorter of original terms of the lease or life of
the improvement.
RESEARCH AND DEVELOPMENT
Total research and development costs charged to expense were $35,470, $28,029
and $21,911 in 1995, 1994 and 1993, respectively.
19
<PAGE> 20
OTHER ASSETS
Other assets include mainly pension assets and certain other assets acquired in
relation to new businesses. These assets are stated at cost and, if applicable,
are amortized ratably over a period of three to 25 years.
DEFERRED INCOME
Deferred income is recognized for customer billings in advance of the period in
which the service will be performed and is recognized in income on a
straight-line basis over the contract period.
TAXES ON INCOME
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss
carryforwards and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
USE OF ESTIMATES IN PREPARATION OF CONSOLIDATED
FINANCIAL STATEMENTS
The preparation of the Consolidated Financial Statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the Consolidated
Financial Statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
NEW ACCOUNTING PRONOUNCEMENTS
During 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which provides
guidance for recognition of impairment losses to long-lived assets. The
statement is effective for fiscal years beginning after December 15, 1995. The
Registrant does not anticipate the adoption of this statement to have a material
effect on the Registrant's financial position or results of operations.
RECLASSIFICATIONS
The Registrant has reclassified the presentation of certain prior-year
information to conform with the current presentation format.
NOTE 2: RELATED PARTY TRANSACTIONS
INTERBOLD JOINT VENTURE
The Consolidated Financial Statements include the accounts of InterBold, a joint
venture between the Registrant and IBM, of which the Registrant owns 70 percent.
The joint venture provides ATMs and other financial self-service systems
worldwide. IBM's ownership interest in InterBold is reflected as minority
interest on the Registrant's Consolidated Balance Sheets. Net profits of
InterBold are allocated based upon a formula as specified in the partnership
agreement.
NOTE 3: INVESTMENT SECURITIES
At December 31, 1995 and 1994, the investment portfolio was classified as
available-for-sale due to the potential needs for liquidity to fund future
acquisitions, joint ventures and strategic alliances throughout the world as
part of a continuing strategy to strengthen the Registrant's international
competitiveness. The marketable debt and equity securities are stated at fair
value, and the Registrant includes as a separate component of shareholders'
equity until realized net unrealized holding gains of $958 (net of taxes of
$516) and net unrealized holding losses of $1,649 (net of taxes of $888) at
December 31, 1995 and 1994, respectively. The fair value of securities and other
investments is estimated based on quoted market prices.
20
<PAGE> 21
The Registrant's investment securities, excluding insurance contracts, at
December 31, are summarized as follows:
<TABLE>
<CAPTION>
Amortized Fair
Cost Basis Value
- -----------------------------------------------------
<S> <C> <C>
1995:
=====================================================
Short-term investments:
Tax-exempt municipal bonds $ 25,609 $ 25,856
Certificates of deposit..... 5,133 5,133
- -----------------------------------------------------
$ 30,742 $ 30,989
- -----------------------------------------------------
Securities and other investments:
Tax-exempt municipal bonds $115,634 $117,285
Equity securities.......... 24,997 24,573
- -----------------------------------------------------
$140,631 $141,858
- -----------------------------------------------------
<CAPTION>
Amortized Fair
Cost Basis Value
- -----------------------------------------------------
<S> <C> <C>
1994:
=====================================================
Short-term investments:
Tax-exempt municipal bonds $ 29,337 $ 29,426
Certificates of deposit..... 8,974 8,974
- -----------------------------------------------------
$ 38,311 $ 38,400
- -----------------------------------------------------
Securities and other investments:
Tax-exempt municipal bonds $132,277 $129,743
Equity securities.......... 22,670 22,670
- -----------------------------------------------------
$154,947 $152,413
- -----------------------------------------------------
</TABLE>
The contractual maturities of tax-exempt municipal bonds at December 31, 1995,
are as follows:
<TABLE>
<CAPTION>
Amortized Fair
Cost Basis Value
====================================================
<S> <C> <C>
Due within one year........... $ 25,609 $ 25,856
Due after one year
through five years........... 114,839 116,456
Due after five years
through 10 years............ 795 829
- ----------------------------------------------------
$141,243 $143,141
- ----------------------------------------------------
</TABLE>
NOTE 4: INVENTORIES
Major classes of inventories at December 31 are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
===================================================
<S> <C> <C>
Finished goods and
service parts........... $22,683 $20,786
Work in process........... 68,209 64,617
Raw materials............. 110 140
- ---------------------------------------------------
$91,002 $85,543
- ---------------------------------------------------
</TABLE>
21
<PAGE> 22
NOTE 5: PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, together with annual depreciation
and amortization rates, consisted of the following:
<TABLE>
<CAPTION>
Annual
1995 1994 Rates
========================================================
<S> <C> <C> <C>
Land and land
improvements......... $ 4,337 $ 3,907 5-20%
Buildings.............. 34,856 30,786 2-20%
Machinery, equipment
and rotatable
spares............... 125,404 109,203 5-40%
Leasehold
improvements......... 2,198 2,013 Lease
Construction in Term
progress............. 10,778 6,405 ---
- --------------------------------------------------------
$177,573 $152,314
- --------------------------------------------------------
</TABLE>
NOTE 6: LEASE RECEIVABLES
The components of lease receivables for the net investment in sales-type leases
are as follows:
<TABLE>
<CAPTION>
1995 1994
===========================================================
<S> <C> <C>
Expected minimum
lease payments................. $ 63,716 $ 52,340
Less: Unearned
interest income................. (23,699) (21,162)
- -----------------------------------------------------------
$ 40,017 $ 31,178
- -----------------------------------------------------------
</TABLE>
Future expected minimum lease receivables due from customers under sales-type
leases as of December 31, 1995, are as follows:
<TABLE>
===========================================
<S> <C>
1996 $5,537
1997 7,860
1998 8,649
1999 8,916
2000 9,079
Thereafter 23,675
- -------------------------------------------
$ 63,716
- -------------------------------------------
</TABLE>
NOTE 7: SHORT-TERM FINANCING
At December 31, 1995, bank credit lines approximated $40,000 with various banks
for short-term financing. There were no short-term borrowings under these
agreements at any time during 1995 and 1994.
The Registrant has informal understandings with certain of the banks to
maintain compensating balances which are not legally restricted as to
withdrawal. The lines of credit can be withdrawn at each bank's option.
NOTE 8: SHAREHOLDERS' EQUITY
On January 26, 1996, the Board of Directors declared a three-for-two stock
split effected in the form of a stock dividend, distributed on February 23,
1996, to shareholders of record on February 9, 1996. Accordingly, all numbers of
Common Shares, except authorized shares and treasury shares, and all per share
data have been restated to reflect this stock split in addition to the
three-for-two stock split declared on February 1, 1994, distributed on February
22, 1994, to shareholders of record on February 10, 1994.
On the basis of amounts declared and paid, the annualized quarterly
dividends per share were $0.64 in 1995, $0.59 in 1994 and $0.53 in 1993.
Under the 1991 Equity and Performance Incentive Plan (1991 Plan), Common
Shares are available for grant of options at a price not less than 85 percent of
the fair market value of the Common Shares on the date of grant. In general,
options are exercisable in cumulative annual installments over five years,
beginning one year from the date of grant. The number of Common Shares that may
be issued or delivered pursuant to the 1991 Plan is 2,176,875, of which
1,638,228 shares were available for issuance at December 31, 1995. The 1991 Plan
will expire on April 2, 2002.
The 1991 Plan replaced the Amended and Extended 1972 Stock Option Plan (1972
Plan), which expired by its terms on April 2, 1992. Awards already outstanding
under the 1972 Plan are unaffected by the adoption of the 1991 Plan.
The following is a summary with respect to options for both plans during
1995:
<TABLE>
<CAPTION>
Shares Option
Under Price Per
Option Share
====================================================
<S> <C> <C>
Balance,
January 1, 1995 ......... 664,244 $ 9-26
Options granted ............ 205,650 23-29
Options exercised ......... (69,224) 9-27
Options expired
or terminated ............. (13,815) 13-27
- ----------------------------------------------------
Balance,
December 31, 1995 .... 786,855 $ 9-29
- ----------------------------------------------------
</TABLE>
At December 31, 1995, there were 200,553 and 114,588 shares subject to options
issued under the 1991 Plan and the 1972 Plan, respectively, that were
exercisable.
The 1991 Plan also provides for the issuance of restricted shares without
cost to certain employees. Outstanding awards granted at December 31, 1995,
totaled 173,475 restricted shares. The shares are subject to forfeiture under
certain circumstances. Unearned compensation representing the fair market value
of the shares at the date of grant will be charged to income over the
three-to-five-year vesting period.
The 1991 Plan also provides for the issuance of Common Shares based on
certain management objectives achieved within a specified performance period of
at least one year as determined by the Board of Directors. The management
objectives set in 1995 are based on a three-year performance period ending
December 31, 1997. The management objectives for the period ended December 31,
1995, were set in April 1993. The objectives were exceeded and a payout was made
in the form of a combination of cash and Common Shares in 1996.
In February 1989, the Board of Directors declared a dividend distribution of
one right for each outstanding Common Share of the Registrant. Pursuant to the
Rights Agreement covering the Shareholder Rights Plan, each right entitles the
registered holder to purchase one one-hundredth of a share of Cumulative
Redeemable Serial Preferred Shares, without par value, at a price of $130. The
rights become exercisable 20 days after a person or group acquires 20 percent or
more of the Registrant's shares. At that time, rights certificates would be
issued and could be traded independently from the Registrant's shares. If the
Registrant is involved in certain mergers or other business combination
transactions at any time after the rights become
22
<PAGE> 23
exercisable, then the rights will be modified so as to entitle the holder to buy
a number of an acquiring company's shares having a market value of twice the
exercise price of each right. In addition, if a holder of 20 percent or more
acquires the Registrant by means of a reverse merger in which the Registrant and
its shares survive, or engages in certain other self-dealing transactions with
the Registrant, each right not owned by the acquirer will become exercisable for
a number of Common Shares of the Registrant with a market value of two times the
exercise price of the right. The rights are redeemable for $0.01 per right at
any time before 20 percent or more of the Registrant's shares have been
acquired, and will expire on February 10, 1999, unless redeemed earlier by the
Registrant. As a result of the stock split effected on February 23, 1996, each
Common Share is currently accompanied by one-third of a right.
NOTE 9: INCOME PER SHARE
The income per share computations are based upon the weighted average number of
Common Shares outstanding during each year. The inclusion in the computation of
incremental shares applicable to outstanding stock options and performance
shares would have no material effect.
NOTE 10: PENSION PLANS AND
POSTRETIREMENT BENEFITS
The Registrant has several pension plans covering substantially all employees.
Plans covering salaried employees provide pension benefits that are based on the
employee's compensation during the 10 years before retirement. The Registrant's
funding policy for those plans is to contribute annually at an actuarially
determined rate. Plans covering hourly employees and union members generally
provide benefits of stated amounts for each year of service. The Registrant's
funding policy for those plans is to make at least the minimum annual
contributions required by applicable regulations.
The plan assets at December 31, 1995, were invested in listed stocks and
investment grade bonds.
A summary of the components of net periodic pension costs follows:
<TABLE>
<CAPTION>
1995 1994 1993
=====================================================
<S> <C> <C> <C>
Benefit earned
during the year..... $6,360 $ 5,384 $ 4,731
Interest accrued on
projected benefit
obligation.......... 12,268 10,327 9,783
Actual return on
plan assets......... (42,503) (14,209) (16,970)
Net amortization and
deferral............ 27,403 (483) 3,030
- -----------------------------------------------------
Net periodic pension
costs............... $3,528 $ 1,019 $ 574
- -----------------------------------------------------
</TABLE>
Assumptions used to measure the projected benefit obligation at December 31, and
the expected long-term rate of return on plan assets are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
=====================================================
<S> <C> <C> <C>
Discount rate............ 7.25% 7.25% 7.25%
Expected long-term rate
of return on plan assets 9.00% 9.00% 9.00%
Rate of increase in
compensation levels .... 5.00% 5.50% 5.50%
- -----------------------------------------------------
</TABLE>
Minimum liabilities have been recorded in 1995, 1994 and 1993 for the plans
whose total accumulated benefit obligation exceeded the fair value of the plan's
assets.
The Registrant offers an employee 401(k) Savings Plan (Savings Plan) to
encourage eligible employees to save on a regular basis by payroll deductions,
and to provide them with an opportunity to become shareholders of the
Registrant. Under the Savings Plan in 1995, the Registrant matched 80 percent of
a participating employee's first 4 percent of earnings and 40 percent of a
participating employee's second 4 percent of earnings.
23
<PAGE> 24
The following table sets forth the funded status and amounts recognized in the
Consolidated Balance Sheets at December 31, for the Registrant's defined benefit
pension plans:
<TABLE>
<CAPTION>
1995 1994
==================================================================================================================================
Plan assets Accumulated Plan assets Accumulated
in excess of benefits in in excess of benefits in
accumulated excess of accumulated excess of
benefits plan assets benefits plan assets
==================================================================================================================================
<S> <C> <C> <C> <C>
Fair value of plan assets......................... $188,872 $ 12,617 $154,068 $ 12,143
Less:
Actuarial present value of projected
benefit obligation:
Vested employees.............................. 111,082 23,717 93,851 23,691
Nonvested employees........................... 6,732 4,318 5,919 637
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligation................ 117,814 28,035 99,770 24,328
Amounts related to future
salary increases............................ 17,815 1,574 24,325 1,328
- ---------------------------------------------------------------------------------------------------------------------------------
Total projected benefit obligation................ 135,629 29,609 124,095 25,656
- ---------------------------------------------------------------------------------------------------------------------------------
Plan assets less projected benefits............... 53,243 (16,992) 29,973 (13,513)
Unrecognized prior service costs, net........... 6,302 3,144 6,888 3,141
Unamortized net transition (asset)
obligation.................................... (14,407) 299 (15,951) 359
Unrecognized net (gain) loss.................... (24,620) 4,207 534 2,858
Adjustment required to recognize
minimum liability............................. --- (6,076) --- (5,030)
- ---------------------------------------------------------------------------------------------------------------------------------
Prepaid pension costs (accrued obligations)..... $20,518 $(15,418) $ 21,444 $(12,185)
=================================================================================================================================
</TABLE>
24
<PAGE> 25
In addition to providing pension benefits, the Registrant provides
healthcare and life insurance benefits for certain retired employees. Eligible
employees may be entitled to these benefits based upon years of service with the
Registrant, age at retirement and collective bargaining agreements. Presently,
the Registrant has made no commitments to increase these benefits for existing
retirees or for employees who may become eligible for these benefits in the
future. Currently there are no plan assets, and the Registrant funds the
benefits as the claims are paid.
A summary of the components of net periodic postretirement (life and health)
benefit costs follows:
<TABLE>
<CAPTION>
1995 1994 1993
=======================================================
<S> <C> <C> <C>
Interest cost............. $2,104 $1,925 $1,930
Service cost ............. 61 59 42
Amortization ............. 207 93 --
- -------------------------------------------------------
Net periodic postretirement
benefit cost............. $2,372 $2,077 $1,972
- -------------------------------------------------------
</TABLE>
The effect of a one percentage point annual increase in the assumed healthcare
cost trend rate would increase the service and interest cost components of the
healthcare benefits from $1,965 to $2,145, a 9.2 percent increase.
Measurement of the accumulated postretirement benefit obligation at December
31, was based on a discount rate of 7.25 percent in 1995 and 1994. The following
table sets forth the components of the accumulated postretirement benefit
obligation at December 31:
<TABLE>
<CAPTION>
1995 1994
============================================================
<S> <C> <C>
Retirees............................ $24,857 $26,056
Fully eligible active
plan participants............... 447 329
Other active plan participants...... 768 1,060
- ------------------------------------------------------------
Accumulated postretirement
benefit obligation.............. 26,072 27,445
Unrecognized net gain (loss)........ (1,373) (3,595)
- ------------------------------------------------------------
Accrued postretirement
benefit obligation.............. $24,699 $23,850
- ------------------------------------------------------------
</TABLE>
The postretirement benefit obligation was determined by application of the
terms of medical and life insurance plans together with relevant actuarial
assumptions and healthcare cost trend rates projected at annual rates declining
from 12.75 percent in 1995 to 4.5 percent through the year 2005 as well as the
following years. The effect of a one percentage point annual increase in these
assumed healthcare cost trend rates would increase the healthcare accumulated
postretirement benefit obligation from $23,815 to $25,118, a 5.5 percent
increase.
25
<PAGE> 26
NOTE 11: LEASES
The Registrant's future minimum lease payments due under operating leases for
real and personal property in effect at December 31, 1995, were as follows:
<TABLE>
<CAPTION>
Vehicles
Real and
Expiring Total Estate Equipment
=================================================
<S> <C> <C> <C>
1996 ........... $21,002 $ 5,760 $15,242
1997 ........... 18,716 4,990 13,726
1998 ........... 13,404 4,127 9,277
1999 ........... 5,246 2,945 2,301
2000 ........... 2,103 2,042 61
Thereafter .... 2,718 2,718 ---
- -------------------------------------------------
$63,189 $22,582 $40,607
- -------------------------------------------------
</TABLE>
Rental expense for 1995, 1994 and 1993 under all lease agreements amounted to
approximately $22,000, $18,100 and $16,500, respectively.
NOTE 12: INCOME TAXES
Income tax expense attributable to income from continuing operations consists
of:
<TABLE>
<CAPTION>
1995 1994 1993
========================================================
<S> <C> <C> <C>
Federal and foreign
Current............ $33,127 $39,115 $24,024
Deferred........... (1,113) (12,795) (4,619)
- --------------------------------------------------------
32,014 26,320 19,405
State and local
Current.......... 5,339 5,211 3,347
Deferred......... (339) (1,064) (611)
- --------------------------------------------------------
5,000 4,147 2,736
- --------------------------------------------------------
$37,014 $30,467 $22,141
- --------------------------------------------------------
</TABLE>
In addition to the 1995 income tax expense of $37,014, certain deferred income
tax expenses of $818 were allocated directly to shareholders' equity.
A reconciliation of the difference between the U.S. statutory tax rate and the
effective tax rate is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
====================================================
<S> <C> <C> <C>
Statutory tax rate......... 35.0% 35.0% 35.0%
State and local income
taxes, net of federal tax
benefit.................. 2.9 2.9 2.5
Exempt income.............. (3.2) (3.9) (5.0)
Insurance contracts....... (3.9) (4.3) (3.7)
Other..................... 1.9 2.7 2.6
- ----------------------------------------------------
Effective tax rate........ 32.7% 32.4% 31.4%
- ----------------------------------------------------
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Registrant's deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
1995 1994
===================================================
<S> <C> <C>
DEFERRED TAX ASSETS:
Postretirement benefits..... $12,486 $11,329
Accrued expenses............ 14,661 12,014
Inventory................... 5,822 6,502
Partnership income.......... 2,664 2,464
Deferred revenue............ 7,757 7,490
Net operating
loss carryforwards......... 2,405 ---
Other....................... 12,651 9,912
- ---------------------------------------------------
58,446 49,711
Valuation allowance (2,457) ---
- ---------------------------------------------------
Net deferred tax assets 55,989 49,711
- ---------------------------------------------------
DEFERRED TAX LIABILITIES:
Pension..................... 7,591 7,965
Amortization................ 3,820 2,996
Depreciation................ 2,251 1,464
Other....................... 5,485 3,381
- ---------------------------------------------------
Net deferred tax liabilities. 19,147 15,806
- ---------------------------------------------------
Net deferred tax asset....... $36,842 $33,905
===================================================
</TABLE>
26
<PAGE> 27
At December 31, 1995, the Registrant's foreign subsidiaries had deferred assets
relating to net operating loss carryforwards of $2,405, that expire in years
1997 through 2005. For financial reporting purposes, a valuation allowance of
$2,405 has been recognized to offset the deferred tax assets relating to the net
operating loss carryforwards.
NOTE 13: COMMITMENTS AND CONTINGENCIES
At December 31, 1995, the Registrant was a party to several lawsuits that were
incurred in the normal course of business, none of which individually or in the
aggregate is considered material by management in relation to the Registrant's
financial position or results of operations.
NOTE 14: SEGMENT INFORMATION
The Registrant operates predominantly in one industry segment, financial systems
and equipment. This industry segment accounts for more than 90 percent of the
consolidated revenues, operating profit and identifiable assets.
In 1995, the Registrant had one customer, IBM, who is its partner in the
InterBold joint venture, that accounted for $101,363 of the total net sales of
$863,409.
NOTE 15: QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
See "Comparison of Selected Quarterly Financial Data (Unaudited)" on page 28 of
this Annual Report on Form 10-K.
REGARDING "FORWARD-LOOKING" STATEMENTS
The statements in the Form 10-K that are not historical in nature are
forward-looking statements. Although the Registrant believes that its
expectations are based upon reasonable assumptions within the bounds of its
knowledge of its business, there can be no assurance that the Registrant's
financial goals will be realized. Numerous factors may affect the Registrant's
actual results and may cause results to differ materially from those expressed
in forward-looking statements made by or on behalf of the Registrant.
27
<PAGE> 28
COMPARISON OF SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
(Dollars in thousands 1995 1994 1995 1994 1995 1994 1995 1994
except per share amounts)
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales ............... $197,047 $176,764 $206,900 $188,081 $216,000 $188,199 $243,462 $207,127
Gross profit ........... 64,509 57,485 72,983 63,350 74,290 63,941 82,649 70,906
Net income .......... 15,189 12,711 18,944 16,168 20,543 16,711 21,533 17,921
Net income
per share .......... 0.34 0.28 0.41 0.36 0.45 0.37 0.47 0.39
============================================================================================================================
</TABLE>
See Note 15 to Consolidated Financial Statements and 5-Year Summary 1995-1991.
28
<PAGE> 29
REPORT OF MANAGEMENT
The management of Registrant is responsible for the contents of the consolidated
financial statements, which are prepared in conformity with generally accepted
accounting principles. The consolidated financial statements necessarily include
amounts based on judgments and estimates. Financial information elsewhere in the
Form 10-K is consistent with that in the consolidated financial statements.
The Registrant maintains a comprehensive accounting system which includes
controls designed to provide reasonable assurance as to the integrity and
reliability of the financial records and the protection of assets. An internal
audit staff is employed to regularly test and evaluate both internal accounting
controls and operating procedures, including compliance with the Registrant's
statement of policy regarding ethical and lawful conduct. The role of KPMG Peat
Marwick LLP, the independent auditors, is to provide an objective examination of
the consolidated financial statements and the underlying transactions in
accordance with generally accepted auditing standards. The report of KPMG Peat
Marwick LLP accompanies the consolidated financial statements.
The Audit Committee of the Board of Directors, composed of directors who are
not members of management, meets regularly with management, the independent
auditors and the internal auditors to ensure that their respective
responsibilities are properly discharged. KPMG Peat Marwick LLP and the Director
of Internal Audit have full and independent access to the Audit Committee.
Gerald F. Morris
Executive Vice President and Chief Financial Officer
29
<PAGE> 30
5-YEAR SUMMARY 1995-1991
DIEBOLD, INCORPORATED AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS AND RATIOS)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Net sales ........................................... $863,409 $760,171 $623,277 $543,852 $506,217
Cost of sales ....................................... 568,978 504,489 413,239 358,031 331,576
Gross profit ........................................ 294,431 255,682 210,038 185,821 174,641
Selling and administrative expense .................. 144,490 128,309 106,110 96,100 95,353
Research, development and engineering expense ....... 43,130 36,599 34,838 35,920 34,988
Operating profit .................................... 106,811 90,774 69,090 53,801 44,300
Other income, net ................................... 6,612 5,152 5,664 3,519 7,209
Minority interest ................................... (200) (1,948) (4,239) (2,484) (2,343)
Income before taxes and cumulative effect ........... 113,223 93,978 70,515 54,836 49,166
Taxes on income ..................................... 37,014 30,467 22,141 13,699 13,421
Net income (Note A) ................................. 76,209 63,511 48,374 23,205 35,745
Income per share before cumulative effect (Note B) .. 1.67 1.40 1.07 0.91 0.80
Net income per share (Note A and Note B) ............ 1.67 1.40 1.07 0.51 0.80
- ------------------------------------------------------------------------------------------------------------------------------
DIVIDEND AND COMMON SHARE DATA
Average shares outstanding (Note B) ................. 45,766 45,495 45,347 45,113 44,758
Common dividends paid ............................... $ 29,290 $ 26,682 $ 24,191 $ 22,463 $ 21,221
Common dividends paid per share (Note B) ............ 0.64 0.59 0.53 0.50 0.47
- ------------------------------------------------------------------------------------------------------------------------------
YEAR-END FINANCIAL POSITION
Current assets ...................................... $376,212 $329,658 $311,500 $290,729 $319,984
Current liabilities ................................. 185,964 159,755 138,571 117,612 115,779
Net working capital ................................. 190,248 169,903 172,929 173,117 204,205
Property, plant and equipment, net .................. 84,072 64,713 60,660 60,601 58,449
Total assets ........................................ 745,198 666,174 609,019 558,914 535,593
Long-term debt, less current maturities ............. --- --- --- --- 2,000
Shareholders' equity ................................ 506,197 459,219 427,047 399,674 396,908
Shareholders' equity per share (Note C) ............. 11.05 10.05 9.41 8.85 8.84
- ------------------------------------------------------------------------------------------------------------------------------
RATIOS
Pretax profit on net sales (%) ...................... 13.1% 12.4% 11.3% 10.1% 9.7%
Current ratio ....................................... 2.0 to 1 2.1 to 1 2.3 to 1 2.5 to 1 2.8 to 1
- ------------------------------------------------------------------------------------------------------------------------------
OTHER DATA
Capital expenditures ................................ $ 35,308 $ 22,641 $ 18,343 $ 11,977 $ 9,100
Depreciation and amortization ....................... 14,174 13,240 12,231 12,502 12,808
==============================================================================================================================
</TABLE>
Note A -- 1992 amounts include a one-time charge of $17,932 ($0.40 per
share) resulting from the adoption of Statement 106, "Employers'
Accounting for Postretirement Benefits Other than Pensions."
Note B -- After adjustment for stock splits.
Note C -- Based on shares outstanding at year-end adjusted for stock splits.
30
<PAGE> 31
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
There have been no changes in accountants or disagreements with accountants
on accounting and financial disclosures.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information with respect to directors of the Registrant is included on
pages 3 through 7 of the Registrant's proxy statement for the 1996 Annual
Meeting of Shareholders ("1996 Annual Meeting") and is incorporated herein by
reference. Refer to pages 6 through 9 of this Form 10-K for information with
respect to executive officers.
ITEM 11. EXECUTIVE COMPENSATION.
Information with respect to executive compensation is included on pages 9
through 20 of the Registrant's proxy statement for the 1996 Annual Meeting and
is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information with respect to security ownership of certain beneficial owners
and management is included on pages 1 through 7 of the Registrant's proxy
statement for the 1996 Annual Meeting and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information with respect to certain relationships and related
transactions set forth under the caption "Compensation Committee Interlocks and
Insider Participation" on page 9 of the Registrant's proxy statement for the
1996 Annual Meeting is incorporated herein by reference.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K.
(a) Documents filed as a part of this report.
1. The following additional information for the years 1995, 1994 and
1993 is submitted herewith:
Independent Auditors' Report on Financial Statements and Financial
Statement Schedule
SCHEDULE VIII. Valuation and Qualifying Accounts
All other schedules are omitted, as the required information is
inapplicable or the information is presented in the consolidated
financial statements or related notes.
31
<PAGE> 32
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM
8-K. (continued)
2. 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.
3.1(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 3.1 to Registrant's
Annual Report on Form 10-K for the year ended December
31, 1992.
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.
*10.3 Supplemental Retirement Benefit Agreement with William T.
Blair.
*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.
* Reflects management contract or other compensatory
arrangement required to be filed as an exhibit pursuant
to Item 14(c) of this report.
32
<PAGE> 33
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM
8-K. (continued)
*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.
21. Subsidiaries of the Registrant.
23. Consent of Independent Auditors.
24. Power of Attorney.
27. Financial Data Schedule.
* Reflects management contract or other compensatory
arrangement required to be filed as an exhibit pursuant
to Item 14(c) of this report.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of 1995.
33
<PAGE> 34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
March 7, 1996 By: /s/Robert W. Mahoney
- -------------- ---------------------------
Date Robert W. Mahoney
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Robert W. Mahoney Chairman, President and March 7, 1996
- --------------------------- Chief Executive Officer --------------
Robert W. Mahoney and Director
(Principal Executive Officer)
/s/Gerald F. Morris Executive Vice President March 7, 1996
- --------------------------- and Chief Financial Officer --------------
Gerald F. Morris (Principal Accounting and
Financial Officer)
* Director March 7, 1996
- --------------------------- --------------
Louis V. Bockius III
/s/Daniel T. Carroll Director March 7, 1996
- --------------------------- --------------
Daniel T. Carroll
* Director March 7, 1996
- --------------------------- --------------
Donald R. Gant
/s/L. Lindsey Halstead Director March 7, 1996
- --------------------------- --------------
L. Lindsey Halstead
* Director March 7, 1996
- --------------------------- --------------
Phillip B. Lassiter
</TABLE>
34
<PAGE> 35
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Director March 7, 1996
- --------------------------- --------------
John N. Lauer
* Director March 7, 1996
- --------------------------- --------------
William F. Massy
/s/W. R. Timken, Jr. Director March 7, 1996
- --------------------------- --------------
W. R. Timken, Jr.
</TABLE>
* The undersigned, by signing his name hereto, does sign and execute this
Annual Report on Form 10-K pursuant to the Powers of Attorney executed by
the above-named officers and directors of the Registrant and filed with the
Securities and Exchange Commissions on behalf of such officers and
directors.
Dated: March 7, 1996 *By: /s/Gerald F. Morris
--------------- -------------------
Gerald F. Morris, Attorney-in-Fact
35
<PAGE> 36
INDEPENDENT AUDITORS' REPORT ON
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
The Board of Directors and Shareholders
Diebold, Incorporated
We have audited the accompanying consolidated balance sheets of Diebold,
Incorporated and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1995. In connection
with our audits of the consolidated financial statements, we also have audited
the financial statement schedule as listed in Item 14 (a)(1) of Form 10-K of
Diebold, Incorporated for each of the years in the three-year period ended
December 31, 1995. These consolidated financial statements and financial
statement schedule are the responsibility of the Registrant's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Diebold,
Incorporated and subsidiaries as of December 31, 1995 and 1994, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1995, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.
/s/KPMG Peat Marwick LLP
- -----------------------------
KPMG PEAT MARWICK LLP
Cleveland, Ohio
January 16, 1996, except for the first paragraph of Note 8 which is as of
January 26, 1996
36
<PAGE> 37
DIEBOLD, INCORPORATED AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Balance at Balance
beginning at end
of period Additions Deductions of period
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Year ended December 31, 1995
- ----------------------------
Allowance for doubtful accounts $4,053,864 $1,733,449 $245,359 $5,541,954
Year ended December 31, 1994
- ----------------------------
Allowance for doubtful accounts $1,082,506 $3,000,000 $28,642 $4,053,864
Year ended December 31, 1993
- ----------------------------
Allowance for doubtful accounts $1,032,322 $300,000 $249,816 $1,082,506
</TABLE>
37
<PAGE> 38
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT DESCRIPTION PAGE NO.
----------- -------------------- --------
<S> <C> <C>
10.2 Schedule of Certain Officers 39
who are Parties to
Employment Ageements
10.3 Supplemental Retirement Benefit 40
Agreement with William T. Blair
21 Subsidiaries of the Registrant 41
23 Consent of Independent Auditors 42
24 Power of Attorney 43
27 Financial Data Schedule 44
</TABLE>
38
<PAGE> 1
Exhibit 10.2
SCHEDULE OF CERTAIN OFFICERS WHO ARE PARTIES TO
EMPLOYMENT AGREEMENTS
Robert P. Barone
William T. Blair
Frank G. D'Angelo
Warren W. Dettinger
Reinoud G. J. Drenth
Donald E. Eagon, Jr.
Charee Francis-Vogelsang
Bartholomew J. Frazzitta
Michael J. Hillock
Larry D. Ingram
Robert W. Mahoney
Gerald F. Morris
Edgar N. Petersen
Charles B. Scheurer
Gregg A. Searle
Robert L. Stockamp
Alben W. Warf
Robert J. Warren
39
<PAGE> 1
EXHIBIT 10.3
SUPPLEMENTAL RETIREMENT AGREEMENT
WITH WILLIAM T. BLAIR
During 1995, William T. Blair agreed to stay on past his intended
retirement date for one additional year. Accordingly, the Corporation agreed to
provide him with an additional eighteen months of credit for purposes of the
unfunded non-qualified supplemental retirement plan. As a result, this projected
net benefit under such plan will be increased by $1,885 per month.
40
<PAGE> 1
EXHIBIT 21
LIST OF SIGNIFICANT SUBSIDIARIES
The following are the significant subsidiaries of the Registrant included in the
Registrant's consolidated financial statements at December 31, 1995. Other
subsidiaries are not listed because such subsidiaries are inactive and in the
aggregate are not considered to constitute a significant subsidiary.
<TABLE>
<CAPTION>
Jurisdiction Percent of voting
under which securities owned
organized by Registrant
------------ -----------------
<S> <C> <C>
InterBold New York 70% (1)
Diebold Holding Company, Inc. Delaware 100%
The Diebold Company of Canada Limited Canada 100%
Diebold of Nevada, Inc. Nevada 100%
Diebold Investment Company Delaware 100%
DBD Investment Management Company Delaware 100%
VDM Holding Company, Inc. Delaware 100%
Diebold Foreign Sales Corporation St. Thomas, U.S. Virgin Islands 100% (2)
Diebold Credit Corporation Delaware 100%
Diebold Finance Company, Inc. Delaware 100% (2)
Diebold International Limited United Kingdom 100%
Diebold Pacific, Limited Hong Kong 100%
InterBold Pacific Limited Hong Kong 70% (3)
InterBold Germany GmbH Germany 70% (3)
InterBold Singapore Pte Ltd Singapore 100% (4)
Interbold Technologies, Inc. Delaware 70% (3)
ATM Finance, Inc. Ohio 100%
Diebold Mexico Holding Company, Inc. Delaware 100%
Diebold Latin America Holding Company, Inc. Delaware 100%
Diebold HMA Private Limited India 50%
Diebold Mexico, S.A. de C.V. Mexico 100% (5)
DBD Resource Leasing, S.A. de C.V. Mexico 100% (6)
Diebold OLTP Systems, C.A. Venezuela 50%
China Diebold Financial Equipment Company LTD. (China) Peoples Republic of China 65%
Central Security Systems, Inc. Hawaii 100%
MedSelect Systems, Inc. Delaware 100%
Diebold Texas, Inc. Texas 100%
Griffin Technology Inc. New York 100%
Mayfair Software Distribution, Inc. Delaware 100% (7)
</TABLE>
(1) 70% of partnership interest is owned by Diebold Holding Company, Inc. which
is 100% owned by the Registrant.
(2) 100% of voting securities are owned by Diebold Investment Company which is
100% owned by the Registrant.
(3) 100% of voting securities are owned by InterBold which is 70% owned by
Diebold Holding Company, Inc.; Diebold Holding Company, Inc. is 100% owned
by the Registrant.
(4) 100% of voting securities are owned by InterBold Pacific Limited, which is
100% owned by InterBold.
(5) 100% of voting securities are owned by Diebold Mexico Holding Company, Inc.
which is 100% owned by the Registrant.
(6) 100% of voting securities are owned by Diebold Mexico, S.A. de C.V. which is
100% owned by Diebold Mexico Holding Company, Inc.
(7) 100% of voting securities are owned by MedSelect Systems, Inc. which is 100%
owned by the Registrant.
41
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Diebold, Incorporated
We consent to incorporation by reference in the Registration Statements (Nos.
2-44467, 2-92107, 33-32960, 33-39988, 33-55452, 33-54677 and 33-54675) on Form
S-8 of Diebold, Incorporated of our report dated January 16, 1996 relating to
the consolidated balance sheets of Diebold, Incorporated and subsidiaries as of
December 31, 1995 and 1994, and the related consolidated statements of income,
shareholders' equity and cash flows and related schedule for each of the years
in the three-year period ended December 31, 1995, which report appears in the
December 31, 1995 annual report on Form 10-K of Diebold, Incorporated.
/s/KPMG Peat Marwick LLP
- -----------------------------
KPMG PEAT MARWICK LLP
Cleveland, Ohio
March 7, 1996
42
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, That the undersigned directors of
Diebold, Incorporated, a corporation organized and existing under the laws of
the State of Ohio, do for themselves and not for another, constitute and
appoint Warren W. Dettinger, Charee Francis-Vogelsang or Gerald F. Morris, or
any one of them, a true and lawful attorney-in-fact in their names, place and
stead, to sign their names to the report on Form 10-K for the year ended
December 31, 1995, or to any and all amendments to such reports, and to cause
the same to be filed with the Securities and Exchange Commission; it being
intended to give and grant unto said attorney-in-fact and each of them full
power and authority to do and perform any act and thing necessary and proper to
be done in the premises as fully and to all intents and purposes as the
undersigned by themselves could do if personally present. The undersigned
directors ratify and confirm all that said attorneys-in-fact or either of them
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the date set opposite their signature.
43
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 15,698
<SECURITIES> 30,989
<RECEIVABLES> 197,145
<ALLOWANCES> 0
<INVENTORY> 91,002
<CURRENT-ASSETS> 376,212
<PP&E> 177,573
<DEPRECIATION> 93,501
<TOTAL-ASSETS> 745,198
<CURRENT-LIABILITIES> 185,964
<BONDS> 0
0
0
<COMMON> 57,367
<OTHER-SE> 463,369
<TOTAL-LIABILITY-AND-EQUITY> 745,198
<SALES> 553,622
<TOTAL-REVENUES> 863,409
<CGS> 348,560
<TOTAL-COSTS> 568,978
<OTHER-EXPENSES> 187,620
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 113,223
<INCOME-TAX> 37,014
<INCOME-CONTINUING> 76,209
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 76,209
<EPS-PRIMARY> 1.67
<EPS-DILUTED> 1.67
</TABLE>
