<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from .......... to ..........
Commission file number 1-4879
DIEBOLD, INCORPORATED
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Ohio 34-0183970
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(State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number)
5995 Mayfair Road, P.O. Box 3077, North Canton, Ohio 44720-8077
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(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (330) 489-4000
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
Common Shares, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at October 25, 1996
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<S> <C>
Common Shares $1.25 Par Value 45,888,703 Shares
- ------------------------------ ----------
</TABLE>
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995 3
Condensed Consolidated Statements of Income -
Three Months and Nine Months Ended September 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 10
INDEX TO EXHIBITS 11
</TABLE>
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
ASSETS
------
Current assets
Cash and cash equivalents $ 26,160 $ 15,698
Short-term investments 45,600 30,989
Trade receivables 242,088 197,145
Inventories 99,295 91,002
Prepaid expenses and other current assets 50,333 41,378
--------- ---------
Total current assets 463,476 376,212
Securities and other investments 137,226 146,741
Property, plant and equipment, at cost 193,980 177,573
Less accumulated depreciation and amortization 103,345 93,501
--------- ---------
90,635 84,072
Lease receivables 50,620 44,614
Other assets 94,472 98,156
--------- ---------
$ 836,429 $ 749,795
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Accounts payable and other current liabilities $ 153,749 $ 127,874
Deferred income 69,594 62,687
--------- ---------
Total current liabilities 223,343 190,561
Pensions 19,913 17,523
Postretirement benefits 21,818 21,739
Minority interest 17,499 13,775
Shareholders' equity
Preferred Shares, no par value, authorized
1,000,000 shares, none issued
Common Shares, par value $1.25, authorized
125,000,000 shares, issued 46,038,294 and
45,893,678 shares, respectively; outstanding 45,881,609
and 45,808,227, respectively 57,548 57,367
Additional capital 56,596 50,937
Retained earnings 458,181 412,432
Treasury shares, at cost (156,685 and 85,451 shares, respectively) (7,170) (3,849)
Other (11,299) (10,690)
--------- ---------
Total shareholders' equity 553,856 506,197
--------- ---------
$ 836,429 $ 749,795
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 4
DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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(Unaudited)
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------- ----------------------
September 30, September 30,
---------------------- ----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales
Products $ 184,220 $ 138,720 $ 483,800 $ 392,063
Services 87,576 77,280 252,219 227,884
--------- --------- --------- ---------
271,796 216,000 736,019 619,947
Cost of sales
Products 114,846 85,972 297,707 245,013
Services 62,564 55,738 182,369 163,152
--------- --------- --------- ---------
177,410 141,710 480,076 408,165
--------- --------- --------- ---------
Gross profit 94,386 74,290 255,943 211,782
Selling and administrative expense 41,254 34,535 118,401 102,964
Research, development and engineering expense 11,781 11,170 36,752 31,316
--------- --------- --------- ---------
53,035 45,705 155,153 134,280
--------- --------- --------- ---------
Operating profit 41,351 28,585 100,790 77,502
Investment income 4,274 5,101 13,435 11,412
Miscellaneous, net (3,461) (2,951) (7,296) (6,593)
Minority interest (2,056) (77) (2,966) (715)
--------- --------- --------- ---------
Income before taxes 40,108 30,658 103,963 81,606
Taxes on income 13,435 10,115 34,823 26,930
--------- --------- --------- ---------
Net income $ 26,673 $ 20,543 $ 69,140 $ 54,676
========= ========= ========= =========
Weighted average number of Common Shares
outstanding 45,870 45,780 45,856 45,753
Net income per Common Share $ 0.58 $ 0.45 $ 1.51 1.20
========= ========= ========= =========
Cash dividends paid per Common Share $ 0.17 $ 0.16 $ 0.51 $ 0.48
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
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<S> <C> <C>
Cash flow from operating activities:
Net income $ 69,140 $ 54,676
Adjustments to reconcile net income to cash
provided by operating activities:
Minority share of income 2,966 715
Depreciation and amortization 13,051 10,289
Other charges and amortization 10,448 12,305
Cash used by changes in certain
current assets and liabilities (44,091) (17,077)
Changes in deferred income 6,907 9,681
Other 7,734 (4,996)
-------- --------
Total adjustments (2,985) 10,917
-------- --------
Net cash provided by operating activities 66,155 65,593
Cash flow from investing activities:
Proceeds from maturities of investments 43,274 67,019
Payments for purchases of investments (54,040) (53,193)
Capital expenditures (20,104) (25,419)
Increase in certain other assets (3,226) (6,692)
-------- --------
Net cash used by investing activities (34,096) (18,285)
Cash flow from financing activities:
Dividends paid (23,391) (21,963)
Proceeds from issuance of Common Shares 1,036 1,554
Other 758 (1,454)
-------- --------
Net cash used by financing activities (21,597) (21,863)
-------- --------
Increase in cash and cash equivalents 10,462 25,445
Cash and cash equivalents at the beginning of the period 15,698 17,285
-------- --------
Cash and cash equivalents at the end of the period $ 26,160 $ 42,730
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Unaudited)
(Dollars in thousands)
1. The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal
recurring adjustments), which are, in the opinion of Management, necessary
for a fair statement of the results for the interim periods. The condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto together with
management's discussion and analysis of financial condition and results of
operations contained in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995. The results of operations for the nine month
period ended September 30, 1996 are not necessarily indicative of results
to be expected for the full year.
2. The Net income per Common Share computations in the condensed consolidated
statements of income are based on the weighted average number of shares
outstanding during each period reported.
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<CAPTION>
3. Inventory detail at: September 30, 1996 December 31, 1995
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<S> <C> <C>
Finished goods and
service parts $ 34,785 $ 22,683
Work in process 64,364 68,209
Raw materials 146 110
-------- --------
Total inventory $ 99,295 $ 91,002
======== ========
</TABLE>
4. The Company has reclassified the presentation of certain prior-year
information to conform with the current presentation format.
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 1O-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
As of September 30, 1996
(Unaudited/Dollars in thousands except for per share data)
Changes in Financial Condition
- ------------------------------
The balance sheet of the Company continued to reflect a strong financial
position at September 30, 1996. Cash, cash equivalents and short-term
investments increased to $71,760 at September 30, 1996 compared to $46,687 at
December 31, 1995. These assets along with securities and other investments
accounted for 25% and 26% of total assets at September 30, 1996 and December 31,
1995, respectively. Securities and other investments consist principally of
tax-free municipal bonds, preferred stock, and other investments.
Future capital expenditures and increases in working capital are expected to be
financed through internally generated funds. The Company's investment portfolio
is available for any funding needs if required. External financing is also
available if needed through the Company's lines of credit. At September 30,
1996, the Company had unused lines of credit approximating $40,000 and the
Company is not restricted as to the use of funds borrowed under these credit
agreements. Therefore, such commitments represent an additional and immediate
source of liquidity. The Company's strong financial position enhances its
ability to obtain additional funds if required.
Shareholders' equity per Common Share at September 30, 1996 improved to $12.07
from $11.05 at December 31, 1995. The third quarter cash dividend of $0.17 per
share was paid on September 6, 1996 to shareholders of record on August 16,
1996. On October 15, 1996, the fourth quarter cash dividend of $0.17 per share
was declared payable on December 6, 1996 to shareholders of record on November
15, 1996. Diebold, Incorporated shares are listed on the New York Stock Exchange
under the symbol of DBD. The market price during the first nine months of 1996
fluctuated within the range of $33.67 and $58.63.
Results of Operations
- ---------------------
Third Quarter 1996 Comparison to Third Quarter 1995
- ---------------------------------------------------
Net sales for the third quarter of 1996 increased from the same period in 1995
by $55,796 or 26%. Total gross profit increased $20,096 or 27% over the third
quarter's performance in 1995. Product gross profit accounted for the majority
of this increase as the result of increased sales volume of self-service
terminals both domestically and internationally and continuing cost containment
efforts. Operating expenses increased $7,330 or 16% over the same period in 1995
largely due to higher selling expenses resulting from the increases in sales
volumes and from expenditures in various new marketing programs. Operating
profit increased $12,766 or 45% over third quarter 1995's performance.
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 1O-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
As of September 30, 1996
(Unaudited/Dollars in thousands except for per share data)
Nine-Month 1996 Comparison to Nine-Month 1995
- ---------------------------------------------
Consolidated net sales for the nine months ended 1996 exceeded the same period
in 1995 by $116,072 or 19%. Total gross profit increased $44,161 or 21% over
1995's performance. Product gross profit continued to account for the majority
of this increase in total gross profit resulting from increased domestic and
international sales volumes, reduction of costs and economies of scale in the
manufacturing process. Operating expenses increased $20,873 or 16% over the same
period in 1995 due to the higher selling and administrative expenses associated
with the increase in sales activity, expenditures related to the research and
development of new products and expenditures in various new marketing programs.
Operating profit for the nine months ended 1996 exceeded the same period in 1995
by $23,288 or 30%.
The Company's backlog of unfilled orders was $238,158 at September 30, 1996,
compared to $169,308 at September 30, 1995, a $68,850 or 41% increase. The
Company believes, however, that order backlog information is not, by itself, a
meaningful indicator of future revenue streams. There are numerous factors which
influence the amount and timing of revenue recognized in future periods.
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1(i) Amended and Restated Articles of Incorporation of Diebold,
Incorporated -- incorporated by reference to Exhibit 3.1(i) of
Registrant's Annual Report on Form 10-K for the year ended December
31, 1994.
3.1(ii) Code of Regulations -- incorporated by reference to Exhibit 4(c) to
Registrant's Post-Effective Amendment No. 1 to Form S-8
Registration Statement No. 33-32960.
3.2 Certificate of Amendment by Shareholders to Amended Articles of
Incorporation of Diebold, Incorporated --incorporated by reference
to Exhibit 3.2 to Registrant's Form 10-Q for the quarter ended
March 31, 1996.
4. Rights Agreement dated as of February 10, 1989 between Diebold,
Incorporated and Ameritrust Company National Association --
incorporated by reference to Exhibit 2.1 to Registrant's
Registration Statement on Form 8-A dated February 10, 1989.
*10.1 Form of Employment Agreement as amended and restated as of
September 13, 1990 -- incorporated by reference to Exhibit 10.1 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1990.
* Reflects management contract or other compensatory arrangement.
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*10.2 Schedule of Certain Officers who are Parties to Employment
Agreements in the form of Exhibit 10.1 --incorporated by reference
to Exhibit 10.2 to Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995.
*10.3 Supplemental Retirement Benefit Agreement with William T. Blair --
incorporated by reference to Exhibit 10.3 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995.
*10.5 Supplemental Employee Retirement Plan (as amended January 1, 1994)
-- incorporated by reference to Exhibit 10.5 of Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994.
10.6 Amended and Restated Partnership Agreement dated as of September
12, 1990 -- incorporated by reference to Exhibit 10 to Registrant's
Form 8-K dated September 26, 1990.
*10.7 1985 Deferred Compensation Plan for Directors of Diebold,
Incorporated -- incorporated by reference to Exhibit 10.7 to
Registrant's Annual Report on Form 10-K for the year ended December
31, 1992.
*10.8 1991 Equity and Performance Incentive Plan -- incorporated by
reference to Exhibit 4(a) to Registrant's Form S-8 Registration
Statement No. 33-39988.
*10.9 Long-Term Executive Incentive Plan -- incorporated by reference to
Exhibit 10.9 of Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993.
*10.10 1992 Deferred Incentive Compensation Plan (as amended and restated
as of July 1, 1993) -- incorporated by reference to Exhibit 10.10
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993.
*10.11 Annual Incentive Plan -- incorporated by reference to Exhibit 10.11
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992.
*10.12 Employment Agreement with Robert P. Barone -- incorporated by
reference to Exhibit 10.12 to Registrant's Form 10-Q for the
quarter ended September 30, 1994.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
No reports have been filed by the Registrant on Form 8-K during the
period covered by this report.
* Reflects management contract or other compensatory arrangement.
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DIEBOLD, INCORPORATED
---------------------
(Registrant)
Date: October 29, 1996 By: /s/ Robert W. Mahoney
----------------- ---------------------
Robert W. Mahoney
Chairman of the Board, President
and Chief Executive Officer
Date: October 29, 1996 By: /s/ Gerald F. Morris
----------------- --------------------
Gerald F. Morris
Executive Vice President and
Chief Financial Officer
(Principal Accounting and
Financial Officer)
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DIEBOLD, INCORPORATED
FORM 10-Q
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE NO.
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<S> <C> <C>
3.1 (i) Amended and Restated Articles of Incorporation of Diebold,
Incorporated -- incorporated by reference to Exhibit 3.1(i) of
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994. --
3.1 (ii) Code of Regulations -- incorporated by reference to Exhibit 4(c) to
Registrant's Post-Effective Amendment No. 1 to Form S-8 Registration
Statement No. 33-32960. --
3.2 Certificate of Amendment by Shareholders to Amended Articles
of Incorporation of Diebold, Incorporated -- incorporated by
reference to Exhibit 3.2 to Registrant's Form 10-Q for the
quarter ended March 31, 1996. --
4. Rights Agreement dated as of February 10, 1989 between Diebold,
Incorporated and Ameritrust Company National Association --
incorporated by reference to Exhibit 2.1 to Registrant's
Registration Statement on Form 8-A dated February 10, 1989. --
10.1 Form of Employment Agreement as amended and restated as of
September 13, 1990 -- incorporated by reference to Exhibit
10.1 to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1990. --
10.2 Schedule of Certain Officers who are Parties to Employment
Agreements in the form of Exhibit 10.1 -- incorporated by
reference to Exhibit 10.2 to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1995. --
10.3 Supplemental Retirement Benefit Agreement with William T. Blair --
incorporated by reference to Exhibit 10.3 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995. --
</TABLE>
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<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE NO.
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<S> <C> <C>
10.5 Supplemental Employee Retirement Plan (as amended January 1,
1994) -- incorporated by reference to Exhibit 10.5 of
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994. --
10.6 Amended and Restated Partnership Agreement dated as of
September 12, 1990 -- incorporated by reference to Exhibit 10
to Registrant's Form 8-K dated September 26, 1990. --
10.7 1985 Deferred Compensation Plan for Directors of Diebold,
Incorporated -- incorporated by reference to Exhibit 10.7
to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992. --
10.8 1991 Equity and Performance Incentive Plan -- incorporated by
reference to Exhibit 4(a) to Registrant's Form S-8 Registration
Statement No. 33-39988. --
10.9 Long-Term Executive Incentive Plan -- incorporated by reference to
Exhibit 10.9 of Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993. --
10.10 1992 Deferred Incentive Compensation Plan (as amended and
restated as of July 1, 1993) -- incorporated by reference to
Exhibit 10.10 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993. --
10.11 Annual Incentive Plan -- incorporated by reference to Exhibit 10.11
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992. --
10.12 Employment Agreement with Robert P. Barone -- incorporated by
reference to Exhibit 10.12 to Registrant's Form 10-Q for the
quarter ended September 30, 1994. --
27. Financial Data Schedule. 13
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 26,160
<SECURITIES> 45,600
<RECEIVABLES> 242,088
<ALLOWANCES> 0
<INVENTORY> 99,295
<CURRENT-ASSETS> 463,476
<PP&E> 193,980
<DEPRECIATION> 103,345
<TOTAL-ASSETS> 836,429
<CURRENT-LIABILITIES> 223,343
<BONDS> 0
<COMMON> 57,548
0
0
<OTHER-SE> 514,777
<TOTAL-LIABILITY-AND-EQUITY> 836,429
<SALES> 483,800
<TOTAL-REVENUES> 736,019
<CGS> 297,707
<TOTAL-COSTS> 480,076
<OTHER-EXPENSES> 155,153
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 103,963
<INCOME-TAX> 34,823
<INCOME-CONTINUING> 69,140
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,140
<EPS-PRIMARY> $1.51
<EPS-DILUTED> $1.51
</TABLE>
