DIEBOLD INC
8-K/A, 2000-01-04
CALCULATING & ACCOUNTING MACHINES (NO ELECTRONIC COMPUTERS)
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TABLE OF CONTENTS

ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
INDEX TO FINANCIAL STATEMENTS
SIGNATURES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 8-K/A
Amendment No. 1

Current Report

PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): October 21, 1999

Diebold, Incorporated

(Exact name of registrant as specified in its charter)
         
Ohio 1-4879 34-0183970
(State or other jurisdiction of
incorporation or organization)		 (Commission file number) (IRS Employer
Identification Number)
     
5995 Mayfair Road, PO Box 3077, North Canton, Ohio 44720-8077
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (330) 490-4000
—————————————————————————————————————————— ——————————

 

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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS

Effective October 21, 1999, the Registrant purchased all of the outstanding stock of Procomp Amazonia Industria Eletronica, S.A. (“Procomp”), a Brazilian manufacturer of innovative technological solutions including personal computers, servers, software, professional services, and retail and banking automation equipment. The purchase price was $222 million which was paid in a combination of cash and stock. The Registrant issued 1,710,214 Common Shares on October 21, 1999 as part of the acquisition. The purchase price was arrived at after careful analysis of Procomp’s historical performance, current financial status and projected future growth. The cash portion of the purchase price was funded by the use of operating funds, liquidation of investments and drawing on short term lines of credit.

As part of the acquisition, the Registrant acquired property, plant and equipment used in the manufacture and distribution of Procomp’s products. Registrant intends to leave existing operations in place as each product line will be evaluated over the next year for continued feasibility.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

(a)   Financial statements of business acquired.
 
    The financial statements of Procomp Amazonia Industria Eletronica, S.A. required by this item are contained in the financial statements and footnotes thereto listed in the Index on page 3 herein and are incorporated by reference herein.
 
(b)   Pro forma financial information.
 
    The pro forma financial information required by this item is contained in the financial statements and footnotes thereto listed in the Index on page 3 and is incorporated by reference herein.
 
(c)   Exhibits
 
10.   Stock purchase agreement between Diebold, Incorporated and Procomp Amazonia Industria Eletronica, S.A.
 
99.   Press Release

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INDEX TO FINANCIAL STATEMENTS

         
Page No.
PROCOMP AMAZONIA INDUSTRIA ELETRONICA, S.A.
Report Of Independent Auditors 4
Financial Statements
Consolidated Balance Sheets as of December 31, 1998 and 1997 (audited) and September 30, 1999 (unaudited) 5
Consolidated Statements of Income for the Years Ended December 31, 1998 and 1997 (audited) and for the Nine Months Ended September 30, 1999 and 1998 (unaudited) 6
Consolidated Statement of Shareholders’ Equity for the Years Ended December 31, 1998 and 1997 (audited) 7
Consolidated Statement of Financial Position for the Years Ended December 31, 1998 and 1997 (audited) 8
Notes To Financial Statements 9
PRO FORMA DATA FOR DIEBOLD, INC. AND PROCOMP AMAZONIA INDUSTRIA ELETRONICA, S.A.
Unaudited Pro Forma Financial Information 17
Unaudited Pro Forma Condensed Consolidated Balance Sheets as of September 30, 1999 18
Unaudited Pro Forma Condensed Consolidated Statements of Income for the Year Ended December 31, 1998 19
Unaudited Pro Forma Condensed Consolidated Statements of Income for the 9 Months Ended September 30, 1999 20
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements 21
Exhibits 21

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(Free translation into English from the Financial Statements Previously issued in Portuguese)

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of
Procomp Amazonia Industria Eletronica S.A.
Sao Paulo — SP

1.   We have audited the accompanying consolidated balance sheets of Procomp Amazonia Industria Eletronica S.A. and subsidiaries as of December 31, 1998 and 1997, and the related consolidated statements of income, changes in shareholders’ equity and changes in financial position for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
 
2.   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 evaluation the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
3.   In our opinion the consolidated balance sheets referred to in the first paragraph present fairly, in all material respects, the financial position of Procomp Amazonia Industria Eletronica S.A. and subsidiaries as of December 31, 1998 and 1997, and the results of their operations, changes in shareholders’ equity and changes in their financial position for the years then ended in conformity with generally accepted accounting principles established by Brazilian Corporate Law.
 
4.   This report originally written in Portuguese has been translated into English for the convenience of the readers.

Sao Paulo, March 4, 1999

     
/s/Deloitte Touche Tohmatsu /s/Agenor N. Yamamoto
DELOITTE TOUCHE TOHMATSU Agenor N. Yamamoto
Auditores Independentes Accountant
CRC 2 SP 011609/0-8 CRC 1 SP 115257/0-7










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PROCOMP AMAZONIA INDUSTRIA ELETRONICA S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1998 AND 1997 (audited)
AND AS OF SEPTEMBER 30, 1999 (unaudited)
(Amounts in Brazilian reais — R$)

                             
September 30, December 31, December 31,
1999 1998 1997
(unaudited) (audited) (audited)
R$ R$ R$
ASSETS
CURRENT ASSETS
Cash and banks 35,258,692 1,826,078 7,061,977
Short-term investments 17,055,121 63,612,965 3,662,245
Trade accounts receivable 62,980,837 53,713,246 54,510,750
Recoverable taxes 21,802,412 15,427,626 7,626,200
Other credits 25,289,116 14,315,953 9,963,615
Inventories 89,245,116 77,817,261 49,097,685
Prepaid expenses 647,672 412,018 429,677
Total current assets 252,278,966 227,125,147 132,352,149
LONG-TERM ASSETS
Intercompany loan — 206,436 1,616,911
Collateralized marketable security 3,205,383 6,251,388 7,866,710
Deferred income tax 8,506,001 5,156,151 5,870,852
Technical assistance inventories — 4,306,967 2,554,089
Other credits 658,429 898,396 1,124,996
Total long-term assets 12,369,813 16,819,338 19,033,558
PERMANENT ASSETS
Investments 281,477 1,449,292 523,328
Property, plant and equipment 28,579,760 17,067,888 17,617,158
Leased assets — 5,357,315 9,480,509
Deferred assets 232,679 303,495 —
Total permanent assets 29,093,916 24,177,990 27,620,995
293,742,695 268,122,475 179,006,702
LIABILITIES
CURRENT LIABILITIES
Suppliers 23,310,334 15,650,959 7,525,569
Loans and financing 56,094,858 54,634,332 7,704,382
Taxes and social charges payable 5,542,376 5,443,206 4,653,068
Accrual for vacation and social charges 7,986,558 4,750,604 3,971,597
Accrual for income and social contribution tax 1,391,153 955,933 917,329
Other accruals 17,159,382 2,969,830 2,009,389
Dividends payable — 345,740 —
Accounts payable 1,743,659 3,314,776 1,479,566
Advances from customers 4,119,402 2,179,379 791,049
Total current liabilities 117,347,722 90,244,759 29,051,949
LONG-TERM LIABILITIES
Loans and financing — 154,769 759,295
Intercompany loan — — 16,181
Accrual for labor contingencies — 1,636,275 1,083,337
Total long-term liabilities — 1,791,044 1,858,813
Minority interest 2 2 2
SHAREHOLDERS’ EQUITY
Capital 122,808,724 122,808,724 116,830,177
Premium on share capital — 32,000 32,000
Capital reserve — investment subsidy 40,224,443 13,462,464 12,424,486
Profit reserve — 1,773,861 956,791
Retained Earnings 13,361,804 38,009,621 17,852,484
Total shareholders’ equity 176,394,971 176,086,670 148,095,938
293,742,695 268,122,475 179,006,702

See notes to consolidated financial statements.

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PROCOMP AMAZONIA INDUSTRIA ELETRONICA S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997 (audited)
AND FOR THE NINE-MONTH PERIODS ENDED
SEPTEMBER 30, 1999 AND 1998 (unaudited)
(Amounts in Brazilian reais — R$)

                                     
September 30, September 30, December 31, December 31,
1999 1998 1998 1997
(unaudited) (unaudited) (audited) (audited)
R$ R$ R$ R$
Gross sales and services revenue 485,413,562 334,705,812 462,623,549 315,750,300
Taxes on sales and returns (87,404,642 ) (27,293,744 ) (39,489,007 ) (37,370,629 )
Net revenue 398,008,920 307,412,068 423,134,542 278,379,671
Cost of goods sold and of services rendered (359,733,265 ) (249,015,286 ) (340,314,348 ) (204,834,594 )
Gross profit 38,275,655 58,396,782 82,820,194 73,545,077
Operating income/(expense)
Selling expense (28,322,513 ) (20,654,104 ) (28,322,407 ) (26,159,629 )
General and administrative expense (22,553,937 ) (15,799,033 ) (23,505,213 ) (18,831,524 )
Financial expense (48,014,430 ) (5,754,345 ) (9,207,955 ) (3,683,245 )
Financial income 41,045,621 4,523,366 9,586,278 5,806,887
Other operating income/(expense), net 325,604 55,616 (69,255 ) 253,305
Total operating expense — net (57,519,655 ) (37,628,500 ) (51,518,552 ) (42,614,206 )
Operating income (19,244,000 ) 20,768,282 31,301,642 30,930,871
Non-operating expense (6,072,002 ) (588,115 ) (830,138 ) (1,156,226 )
Income before income tax and social contribution and minority interest (25,316,002 ) 20,180,167 30,471,504 29,774,645
Income tax and social contribution 815,223 (6,219,369 ) (9,275,861 ) (9,072,116 )
Minority interest — — — (2 )
Net income for the year (24,500,779 ) 13,960,798 21,195,643 20,702,527

See notes to consolidated financial statements

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PROCOMP AMAZONIA INDUSTRIA ELETRONICA S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEARS
ENDED DECEMBER 31, 1998 AND 1997 (audited)
(Amounts in Brazilian reais — R$)
                                                     
Capital reserve
Subscribed
and paid Monetary Premium on Investment Profit Retained
capitalquota correction share capital subsidy reserve legal earnings
R$ R$ R$ R$ R$ R$
BALANCE AT DECEMBER 31, 1996 34,962,689 9,221,414 24,718,595 18,189,015
Capital increase -
Extraord. Gen. Meeting 3/24/97 56,226,037 (9,221,414 ) (26,922,356 ) (20,082,267 )
Extraord. Gen. Meeting 3/24/97 2,811,274
Extraord. Gen. Meeting 4/9/97 1,608,177
Extraord. Gen. Meeting 4/18/97 21,222,000
Premium on share capital 32,000
Investment Subsidy for the year:
Income taxes 5,978,546
ICMS (State value-added tax) 7,295,415
Reversal of income tax on unrealized profits 1,354,286
Net income for the year 20,702,527
Appropriation of net income:
Transfer to legal reserve 956,791 (956,791 )
BALANCE AT DECEMBER 31, 1997 116,830,177 — 32,000 12,424,486 956,791 17,852,484
Portion of the equity subsidiaries
Mecaf and PCS valued at adj. cost (see note 4) 1,778,564
Capital increase -
Extraord. Gen. Meeting 12/4/98 5,978,547 (5,978,547 )
Investment Subsidy for the year:
Income taxes 3,318,074
ICMS (State value-added tax) 3,171,885
Reversal of income tax on unrealized profits 526,566
Net income for the year 21,195,643
Appropriation of net income:
Transfer to legal reserve 817,070 (817,070 )
Dividends (2,000,000 )
BALANCE AT DECEMBER 31, 1998 122,808,724 — 32,000 13,462,464 1,773,861 38,009,621

[Additional columns below]

[Continued from above table, first column(s) repeated]
             
Total
R$
BALANCE AT DECEMBER 31, 1996 87,091,713
Capital increase -
Extraord. Gen. Meeting 3/24/97
Extraord. Gen. Meeting 3/24/97 2,811,274
Extraord. Gen. Meeting 4/9/97 1,608,177
Extraord. Gen. Meeting 4/18/97 21,222,000
Premium on share capital 32,000
Investment Subsidy for the year:
Income taxes 5,978,546
ICMS (State value-added tax) 7,295,415
Reversal of income tax on unrealized profits 1,354,286
Net income for the year 20,702,527
Appropriation of net income:
Transfer to legal reserve
BALANCE AT DECEMBER 31, 1997 148,095,938
Portion of the equity subsidiaries
Mecaf and PCS valued at adj. cost (see note 4) 1,778,564
Capital increase -
Extraord. Gen. Meeting 12/4/98
Investment Subsidy for the year:
Income taxes 3,318,074
ICMS (State value-added tax) 3,171,885
Reversal of income tax on unrealized profits 526,566
Net income for the year 21,195,643
Appropriation of net income:
Transfer to legal reserve
Dividends (2,000,000 )
BALANCE AT DECEMBER 31, 1998 176,086,670

See notes to the consolidated financial statements.

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PROCOMP AMAZONIA INDUSTRIA ELETRONICA S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997 (audited)
(Amounts in Brazilian reais — R$)

                     
December 31, December 31,
1998 1997
(audited) (audited)
R$ R$
SOURCE OF FUNDS
From operation:
Net income for the year 21,195,643 20,702,527
Expenses/(income)which do not affect working capital:
Depreciation and amortization 13,039,054 19,666,722
Write-off of investments — 1,120,779
Retirement of permanent assets 2,742,266 7,159,739
Total from operations 36,976,963 48,649,767
From shareholders’:
Increase/(decrease) in minority interest — (4,061,060 )
Payment of capital increase — 25,641,451
Premium on share capital — 32,000
Total from shareholders’ — 21,612,391
From third parties:
Portion of the equity of the subsidiaries Mecaf and PCS valued at cost method (see note 4) 1,778,564 —
Investment in subsidies 6,489,959 13,273,961
Reversal of income tax on unrealized profit 526,566 1,354,286
Decrease in long-term assets 2,214,220 153,947
Increase in long-term liabilities — 812,254
Total from third parties 11,009,309 15,594,448
Total source of funds 47,986,272 85,856,606
APPLICATION OF FUNDS
Acquisition of fixed assets 10,954,249 22,585,232
Increase in deferred assets 458,102 —
Acquisition of investments 925,964 804,947
Dividends 2,000,000 —
Decrease in long-term liabilities 67,769 —
Total application of funds 14,406,084 23,390,179
INCREASE IN NET WORKING CAPITAL 33,580,188 62,466,427
REPRESENTED BY
Current assets
At the end of the year 227,125,147 132,352,149
At the beginning of the year 132,352,149 70,086,266
Increase 94,772,998 62,265,883
Current liabilities
At the end of the year 90,244,759 29,051,949
At the beginning of the year 29,051,949 29,252,493
Increase/(decrease) 61,192,810 (200,544 )
INCREASE IN WORKING CAPITAL 33,580,188 62,466,427

See notes to consolidated financial statements

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PROCOMP AMAZONIA INDUSTRIA ELETRONICA S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (audited)
(Amounts in Brazilian reais — R$)

1. COMPANY’S OPERATION

The Company and its subsidiaries are engaged in the industry, trade, lease, importation and exportation of electronic equipment and its accessories, parts and materials necessary for manufacturing the equipment; rendering of technical assistance services for installation and maintenance of the equipment; development and commercialization of computer programs; elaboration of integration design and solutions for the computer business. The Company’s operating activities (operating profit), conducted in the area covered by SUDAM (Superintendency for the Development of the Amazon), are income tax-exempt for a period of ten years beginning on January 15, 1993.

2. PRESENTATION OF FINANCIAL STATEMENTS

The consolidated financial statements are presented in accordance with Corporate Law accounting practices.

3. SIGNIFICANT ACCOUNTING POLICIES

     
3.1. Short-term investments and collateralized marketable securities
Are recorded at cost plus interest earned to the balance sheet date.
3.2. Trade accounts receivable and allowance for doubtful account
Trade accounts receivable and other credits are recorded and maintained in the balance sheet at the nominal value of the credit instruments. The allowance is recorded at an amount considered sufficient to cover potential losses on uncollectible accounts.
3.3. Inventories
Are valued at average cost of acquisition or production, which does not exceed the replacement cost or realization value.
The inventory of materials shipped, for demonstration purposes, that does not return to the Company within a medium term of six months is charged to income as a provision for losses.
3.4. Technical assistance inventory
Parts and components assigned for providing technical assistance services are valued by the average cost of acquisition and amortized at an annual rate of 20% to recognized their obsolescence. During 1997, back up assigned for providing technical assistance services were transferred to fixed assets and are being depreciated at a rate of 20% p.a.
3.5. Property, plant and equipment
Operating assets
Are carried at acquisition or production cost, monetarily adjusted through December 31, 1995. Depreciation is calculated using the straight-line method at the following annual rates: industrial machinery, equipment and devices, furniture and fixtures and installations — 10%; computer equipment — 20% to 50%; right to use software — 20% and back-up material — 20%.

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PROCOMP AMAZONIA INDUSTRIA ELETRONICA S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (audited)
(Amounts in Brazilian reais — R$)

     
3.5. Property, plant and equipment (continued)
Leased assets
Assets intended for leasing (bank automation equipment) are recorded at cost of acquisition and/or production, monetarily adjusted through December 31, 1995. Depreciation is calculated in accordance with the respective lease contract term. Income from leasing of such assets is accounted for in accordance with the installment amount of contracts.
3.6. Investments
Are carried at acquisition cost, monetarily adjusted through December 31, 1995.
3.7. Suppliers
Are recorded and maintained in the balance sheet at the nominal value of the debt instruments.
3.8. Loans and financing
Are recorded at original value plus exchange or monetary variation and interest accrued to the balance sheet date.
3.9. Provision for income tax
Is calculated on net income, adjusted by additions and deductions in accordance with tax law, at a rate of 15% plus an additional 10% on taxable income which exceeds R$ 240,000 per year. The portion of income tax on tax-exempt activities (SUDAM — Superintendency for the Development of the Amazon) is charged to income for the period and credited to capital reserve (investment subsidy). Until December 31, 1997, in addition to the tax incentive of SUDAM, the Company and its subsidiary (Procomp Industria Eletronica Ltda.) were granted an income tax reduction up to 50% of the portion of tax calculated at the rate of 15%, relating to expenses incurred in research and development of the computer area. The provision for income tax is charged to income for the year, net of this incentive amount. The income and social contribution taxes on temporary differences are deferred.
3.10. Provision for social contribution
Is calculated at a rate of 8% on income for the year, adjusted by additions and deductions in accordance with tax law.
3.11. ICMS incentives (State Value-Added Tax)
Procomp Amazonia Industria Eletronica S.A. pays 15% of the ICMS (state value-added tax) amount due for goods sold whose products have been previously approved by SUFRAMA/Secretary of Industry and Commerce of the Amazon and from June 1997 to December 1998 there occurred a reduction on the basis of calculation on the ICMS of these goods that resulted in a single taxation of 7%. The Company also has a 50% reduction of the ICMS on sales of products that it does not manufacture (the majority consisting of imported goods). The amount that corresponds to the above tax incentives (ICMS not paid) is debited to income for the year as if it were due and credited to the capital reserve account (investment subsidy).

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PROCOMP AMAZONIA INDUSTRIA ELETRONICA S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (audited)
(Amounts in Brazilian reais — R$)

     
3.12. Provision for vacation and social changes
Is calculated based on salaries in effect at the balance sheet date according to the vacation period earned but not taken (from the date of admission or prior acquisition period to the balance sheet date), plus special bonus (1/3 of salary) and respective social charges.
3.13. Related-party transactions
Transactions (purchase and sale of products and services) between the companies are conducted under normal market conditions and recorded in accounts receivable/payable, respectively. Transactions originating from businesses other than those related to the Company’s normal operations are recorded in specific long-term accounts.
3.14. Gross sales and services revenues
Revenues from sale of equipment and software are recorded in income in the month in which the assets are sold. Revenues from leased equipment and technical assistance services are recorded monthly in income, according to the terms of the respective contracts.
3.15. Cost of services rendered
• The cost of technical assistance services consists principally of    allocation of labor, average cost of acquisition of material and    amortization/depreciation of components and parts (back-up    material) utilized in the services rendered.
• The cost for leasing services refers to the appropriation of    depreciation of leased equipment, according to the terms of the    contracts.

4. CONSOLIDATION

In preparing the consolidated financial statements, the following were eliminated: the balances (accounts receivable and payable and intercompany loans) and transactions (income and expenses) arising from business between consolidated companies. The shareholders’ equity and net income have been adjusted by the unearned income relating to the sale of inventories and assets assigned for leasing, net of tax effects.

Subsidiary companies included in the consolidation

                                                 
Procomp Industria Procomp Comercio e
Eletronica Ltda. Mecaf Eletronica S.A Servicos Ltda.
1998 1997 1998 1997 1998 1997
Shares/quotes held 95,837,001 95,837,001 78,480 — 99,999 —
Ownership (%) 99.99 % 99.99 % 99.99 % — 99.99 % —
Capital Stock 95,837,003 95,837,003 10,557,627 — 100,000 —
Net income/(loss) for the year 3,115,341 (4,185,467 ) 4,687,773 — (827,070 ) —
Shareholders’ equity/(deficit) 94,075,718 90,868,884 6,917,534 — (725,688 ) —

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PROCOMP AMAZONIA INDUSTRIA ELETRONICA S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (audited)
(Amounts in Brazilian reais — R$)

4. CONSOLIDATION (continued)

In addition to the above mentioned subsidiaries, the net income of Procomp Industria Eletronica Ltda. through June 1997 has also been included in the consolidation. On July 30, 1997, Procomp Eletronica Ltda. was merged into Procomp Industria Eletronica Ltda., based on the balance sheet as of June 30, 1997.

In February 1998, Procomp Industria Eletronica Ltda. acquired 51% of the capital of Mecaf Eletronica S.A (Mecaf) (previously it held 49%) and now it has an interest of 99.99%.

Procomp Comercio e Servicos Ltda. (PCS) started its operations in April 1998.

The financial statements of the subsidiaries Mecaf Eletronica S.A. and Procomp Comercio e Servicos Ltda., recorded under the cost method in the official records, for not being considered relevant, were consolidated into the accompanying financial statements for the year ended December 31, 1998

5. RELATED-PARTY LOANS

                                   
Receivable Payable
1998 1997 1998 1997
R$ R$ R$ R$
Procomp Argentina S.A. 206,436 88,911 — —
PDV Comercio e Representacoes Ltda. — — — 16,181
Mecaf Eletronica S.A. — 1,528,000 — —
Total 206,436 1,616,911 — 16,181

6. COLLATERALIZED MARKETABLE SECURITIES

Refers to investments in bank deposit certificates — CDB, with monthly maturity from January 1999 to December 2000, subject to 20% interest per annum. These investments are linked to the sale of equipment manufactured by the Company. On December 31, 1998, these investments total R$ 10,985,593, of which R$ 4,734,205 (in 1997, R$ 3,524,553) is recorded in short-term investments and R$ 6,251,388 (in 1997, R$ 7,866,710) in long-term assets.

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PROCOMP AMAZONIA INDUSTRIA ELETRONICA S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (audited)
(Amounts in Brazilian reais — R$)

7. INVENTORIES

                     
1998 1997
R$ R$
Finished products 11,696,580 6,488,498
Materials held for resale 1,351,904 2,409,169
Raw materials 46,706,602 28,510,426
Material held for demonstration purposes 2,890,116 4,069,310
Material on loan 349,944 1,414,140
Material in repair 1,202,068 816,234
Other material held by third parties 3,108,466 561,461
Technical assistance — consumption material 11,913,600 9,195,489
Material in transit 1,879,665 535,988
Allowance for losses from materials on demonstration and on loan (3,281,684 ) (4,903,030 )
Total 77,817,261 49,097,685
Technical assistance inventory 7,998,381 6,117,727
Allowance for obsolescence (3,691,414 ) (3,563,638 )
Total 4,306,967 2,554,089

During 1997, a portion of the back-up material assigned for providing technical assistance services, in the amount of R$ 6,586,000, was transferred to fixed assets and is being depreciated at an annual rate of 20%.

8. PROPERTY, PLANT AND EQUIPMENT

                                   
1998 1997
Accumulated
Cost Depreciation Net Net
R$ R$ R$ R$
Industrial machinery, equipment and devices 1,133,195 (730,401 ) 402,794 406,835
Furniture and fixtures 3,187,903 (1,461,505 ) 1,726,398 1,668,411
Computer equipment 4,548,279 (2,446,379 ) 2,101,900 2,244,370
Installations 1,704,382 (793,503 ) 910,879 474,152
Rights of use of telephone lines 996,647 — 996,647 984,201
Rights of use of software 7,737,878 (6,003,716 ) 1,734,162 2,806,904
Vehicles 536,959 (218,701 ) 318,258 298,897
Back-up material 9,610,747 (2,965,332 ) 6,645,415 7,742,346
Other fixed assets 7,811,012 (5,579,577 ) 2,231,435 991,042
Subtotal 37,267,002 (20,199,114 ) 17,067,888 17,617,158
Leased assets 43,564,582 (38,207,267 ) 5,357,315 9,480,509
Total 80,831,584 (58,406,381 ) 22,425,203 27,097,667

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PROCOMP AMAZONIA INDUSTRIA ELETRONICA S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (audited)
(Amounts in Brazilian reais — R$)

9. LOANS AND FINANCING

                   
1998 1997
R$ R$
Short term 54,634,332 7,704,382
Long term 154,769 795,295
Total 54,789,101 8,499,677

Short term financing relates to the importation of assets, used in the Company’s activities, that is subject to exchange variation, plus Libor and variable spreads with maturity in September 1999 and, also, financing obtained from Diebold, Inc. and Verifone Inc., with maturity on a quarterly basis (final maturity in March 2000), that are subject to exchange variation plus interest of 11% per annum, a portion of which is long-term.

10. NET SALES AND SERVICES REVENUES AND COSTS OF GOODS SOLD AND OF SERVICES RENDERED BY ACTIVITY

Net sales and services revenues and costs of goods sold and services rendered are distributed by activity as follows:

                                     
Revenue Cost
1998 1997 1998 1997
R$ R$ R$ R$
Sale of equipment — hardware 288,650,167 164,988,174 240,812,904 107,773,659
Sale of software and related services 42,212,782 24,011,006 34,296,502 28,757,856
Leasing of equipment 12,939,334 17,770,298 6,923,758 15,838,302
Technical assistance services 79,332,259 71,610,193 58,281,184 52,464,777
Total 423,134,542 278,379,671 340,314,348 204,834,594

11. RECONCILIATION BETWEEN PROVISION AND ACCRUAL FOR INCOME AND SOCIAL CONTRIBUTION TAX

                   
1998 1997
R$ R$
Description
Income tax and social contribution — current expense 8,034,594 10,199,778
(-) Income tax on operating profit — activity under tax incentive (shareholders’ equity — capital reserve) (3,318,074 ) (5,978,546 )
(-) Withholding income tax on financial investments and services paid (1,662,970 ) (386,054 )
(-) Prepaid income tax and social contribution (1,888,419 ) (2,917,849 )
(-) Prior year income tax adjustments (209,198 ) —
Accrual for income and social contribution tax 955,933 917,329

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PROCOMP AMAZONIA INDUSTRIA ELETRONICA S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (audited)
(Amounts in Brazilian reais — R$)

11. RECONCILIATION BETWEEN PROVISION AND ACCRUAL FOR INCOME AND SOCIAL CONTRIBUTION TAX (continued)

Deferred income tax

The balances on December 31 for deferred income tax consist as follows:

                     
1998 1997
R$ R$
Taxable temporary differences 13,947,373 14,366,464
Depreciation differences — agreement rates versus tax rates 1,305,760 2,494,776
Unearned income on intercompany sales 1,666,615 3,503,382
Total 16,919,748 20,364,622
Income tax — assets 4,229,940 5,091,156
Income tax — capital reserve (322,908 ) (849,474 )
Social contribution 1,249,119 1,629,170
Total 5,156,151 5,870,852

12. CAPITAL SHARE

The subscribed and paid-in capital is represented by 115,590,267 common, nominative shares without nominal value, distributed as follows:

                     
Shares Ownership %
Eric Jan Roorda 35,059,516 30.3 %
Erich Muschellack 30,575,495 26.4 %
Roberto Rauh 24,236,673 21.0 %
ML America Investments Ltd. 19,982,090 17.3 %
Fernando Antonio Leme 5,736,491 5.0 %
Paulo Ferreira Aratangy 1 —
Paulo Cesar Carmona Felizardo 1 —
Total 115,590,267 100.0 %

13. CONTINGENCIES

The Company and its subsidiaries are challenging in court the claims filed by ex-employees which, as of December 31, 1998, amounted to R$ 4,754,500. Based on its legal counsel’s estimate of the amount of potential losses, the company recorded an accrual for labor contingencies which, as of December 31, 1998, amounted to R$ 1,636,275 (in 1997, R$ 1,083,337).

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PROCOMP AMAZONIA INDUSTRIA ELETRONICA S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 (audited)
(Amounts in Brazilian reais — R$)

14. YEAR 2000

The Company and its subsidiaries are developing a program for adapting its computer systems to the year 2000. In this regard, the Company and its subsidiaries are investing in projects of systems and software to ensure the proper functioning of the systems. Management does not expect the occurrence of material effects on the recording of their transactions after December 31, 1999.

15. SUBSEQUENT EVENT

In mid January 1999, the Central Bank of Brazil changed the Brazilian exchange policy and extinguished the so-called exchange band by which it managed the floating margin of the Brazilian real in relation to the dollar of the United States, thus, allowing the market to be free to negotiate the exchange rate without the Central Bank’s interference. As a result the Brazilian real devalued by 40% through February 25, 1999 relative to the dollar of the United States when compared to the rate prevailing on December 31, 1998. To date, it is not possible to determine to what extent the new exchange rate will impact the Company’s operations.

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DIEBOLD, INCORPORATED AND SUBSIDIARIES

UNAUDITED PRO FORMA FINANCIAL DATA

The following Unaudited Pro Forma Condensed Consolidated Balance Sheets as of September 30, 1999 were prepared assuming the acquisition of Procomp had been consummated on September 30, 1999. The Unaudited Pro Forma Condensed Consolidated Statements of Income for the Year Ended December 31, 1998 and for the Nine Months ended September 30, 1999 were prepared assuming the acquisition of Procomp had occurred on January 1, 1998 and January 1, 1999, respectively. The acquisition of Procomp has been accounted for as a purchase business combination and, accordingly, the purchase price has been allocated to identifiable tangible and intangible assets acquired and liabilities assumed, based upon their respective fair values, with the excess allocated to goodwill to be amortized over the estimated economic lives from the respective dates of acquisition. The pro forma financial information does not purport to represent what the Registrant’s consolidated results of operations would have been if the acquisition had in fact occurred on these dates, nor does it purport to indicate the future consolidated financial position or future consolidated results of operations of the Registrant. The pro forma adjustments are based on currently available information, certain assumptions that management believes are reasonable, the translation from Brazilian reais to United States dollars, and the translation from Brazilian GAAP to US GAAP.

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DIEBOLD, INCORPORATED AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1999
(In U.S. Dollars in thousands)

                                     
(1) (2) (3) (4)
Diebold Inc. Procomp Adjustments Consolidated
ASSETS
Current Assets
Cash and cash equivalents $ 16,805 $ 18,194 $ (2,357 ) $ 32,642
Short-term investments 43,438 8,800 — 52,238
Trade and notes receivable 319,821 32,498 (15,428 ) 336,891
Inventories 127,818 45,870 — 173,688
Prepaid expenses and other current assets 72,817 28,079 — 100,896
Total current assets 580,699 133,441 (17,785 ) 696,355
Securities and other investments 215,337 1,799 — 217,136
Property, plant and equipment, at cost 292,380 12,896 — 305,276
Less accumulated depreciation and amortization 147,631 — — 147,631
144,749 12,896 — 157,645
Finance receivables 71,342 558 — 71,900
Other assets 87,329 4,099 130,068 221,496
$ 1,099,456 $ 152,793 $ 112,283 $ 1,364,532
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and other current liabilities $ 190,783 $ 31,605 $ (15,428 ) $ 206,960
Current notes payable — 28,945 178,000 206,945
Deferred income 76,125 — — 76,125
Total current liabilities 266,908 60,550 162,572 490,030
Bonds payable 20,800 — — 20,800
Pensions 25,245 — — 25,245
Postretirement benefits 22,395 — — 22,395
Minority interests 3,928 1 — 3,929
Shareholders’ equity
Common shares 87,012 — 2,138 89,150
Additional capital 45,795 63,369 (23,554 ) 85,610
Retained earnings 666,538 28,873 (28,873 ) 666,538
Treasury shares (23,067 ) — — (23,067 )
Accumulated other comprehensive income (15,257 ) — — (15,257 )
Other (841 ) — — (841 )
Total shareholders’ equity 760,180 92,242 (50,289 ) 802,133
$ 1,099,456 $ 152,793 $ 112,283 $ 1,364,532

1)   Reflects the Unaudited Condensed Consolidated Balance Sheets of Diebold, Inc. and Subsidiaries as of September 30, 1999, previously presented on Form 10-Q.
2)   Reflects the Unaudited Condensed Consolidated Balance Sheets of Procomp as of September 30, 1999, in accordance with U.S. generally accepted accounting principles. Certain amounts have been reclassified to conform to the Registrant’s presentation.
3)   Reflects adjustments made to present Pro Forma Condensed Consolidated Balance Sheets. Please refer to notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
4)   Reflects the Condensed Consolidated Balance Sheets of the Registrant, on a pro forma basis assuming the acquisition of Procomp.

See accompanying notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

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DIEBOLD, INCORPORATED AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(In U.S. dollars in thousands except per share amounts)

                                   
(1) (2) (3) (4)
Net sales Diebold, Inc. Procomp Adjustments Consolidated
Products $ 750,161 $ 241,676 $ (21,380 ) $ 970,457
Services 435,546 112,974 — 548,520
1,185,707 354,650 (21,380 ) 1,518,977
Cost of sales
Products 462,788 204,898 (17,916 ) 649,770
Special charges 9,864 — — 9,864
Services 306,805 81,018 — 387,823
779,457 285,916 (17,916 ) 1,047,457
Gross profit 406,250 68,734 (3,464 ) 471,520
Selling and administrative expense 194,535 37,038 — 231,573
Research, development and engineering expense 54,215 7,652 — 61,867
Realignment charges 51,253 — — 51,253
300,003 44,690 — 344,693
Operating profit 106,247 24,044 (3,464 ) 126,827
Investment income 18,587 — — 18,587
Miscellaneous, net (3,184 ) 4,432 (18,649 ) (17,401 )
Minority interest (1,843 ) — — (1,843 )
Income/(loss) before taxes 119,807 28,476 (22,113 ) 126,170
(Taxes)/benefit on income (43,659 ) (4,502 ) 2,235 (45,926 )
Net income $ 76,148 $ 23,974 $ (19,878 ) $ 80,244
Basic weighted — average shares outstanding 68,960 70,524
Diluted weighted — average shares outstanding 69,310 70,874
Basic earnings per share $ 1.10 $ 1.14
Diluted earnings per share $ 1.10 $ 1.13

1)   Reflects the Unaudited Condensed Consolidated Statements of Income of Diebold, Inc. and Subsidiaries for the Year Ended December 31, 1998, previously presented on Form 10-K.
2)   Reflects the Unaudited Condensed Consolidated Statements of Income of Procomp for the year ended December 31, 1998, in accordance with U.S. generally accepted accounting principles. Certain amounts have been reclassified to conform to the Registrant’s presentation.
3)   Reflects adjustments made to present Pro Forma Condensed Consolidated Statements of Income. Please refer to notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
4)   Reflects the Unaudited Condensed Consolidated Statements of Income of the Registrant, on a pro forma basis assuming the acquisition of Procomp.

See accompanying notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

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DIEBOLD, INCORPORATED AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(In U.S. dollars in thousands except per share amounts)

                                       
(5) (6) (7) (8)
Net sales Diebold, Inc. Procomp Adjustments Consolidated
  Products $ 534,495 $ 164,586 $ (18,104 ) $ 680,977
  Services 358,762 57,509 — 416,271
Cost of sales 893,257 222,095 (18,104 ) 1,097,248
   Products 312,003 145,752 (16,892 ) 440,863
  Services 255,343 42,302 — 297,645
567,346 188,054 (16,892 ) 738,508
Gross profit 325,911 34,041 (1,212 ) 358,740
Selling and administrative expense 153,653 26,119 — 179,772
Research, development and engineering expense 35,532 2,678 — 38,210
189,185 28,797 — 217,982
Operating profit 136,726 5,244 (1,212 ) 140,758
Investment income 15,579 — — 15,579
Miscellaneous, net (5,789 ) (6,573 ) (13,553 ) (25,915 )
Minority interest (674 ) — — (674 )
Income /(loss) before taxes 145,842 (1,329 ) (14,765 ) 129,748
(Taxes)/benefit on income (52,503 ) 904 4,890 (46,709 )
Net income/(loss) $ 93,339 $ (425 ) $ (9,875 ) $ 83,039
Basic weighted — average shares outstanding 68,943 70,654
Diluted weighted — average shares outstanding 69,160 70,870
Basic earnings per share $ 1.35 $ 1.18
Diluted earnings per share $ 1.35 $ 1.17

5)   Reflects the Unaudited Condensed Consolidated Statements of Income of Diebold, Inc. and Subsidiaries for the Nine Months Ended September 30, 1999, previously presented on Form 10-Q.
6)   Reflects the Unaudited Condensed Consolidated Statements of Income of Procomp for the Nine Months Ended September 30, 1999, in accordance with U.S. generally accepted accounting principles. Certain amounts have been reclassified to conform to the Registrant’s presentation. Results in 1999 were severely impacted by the devaluation of the Brazilian reais beginning in January 1999.
7)   Reflects adjustments made to present Pro Forma Condensed Consolidated Statements of Income. Please refer to notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
8)   Reflects the Unaudited Condensed Consolidated Statements of Income of the Registrant, on a pro forma basis assuming the acquisition of Procomp. Results in 1999 were severely impacted by the devaluation of the Brazilian reais beginning in January 1999.

See accompanying notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

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DIEBOLD, INCORPORATED AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars in thousands except per share amounts)

NOTE 1 — BASIS OF PRESENTATION

The Unaudited Pro Forma Condensed Consolidated Financial Statements do not give effect to any potential cost savings and synergies that could result from the acquisitions included therein. Management believes that the assumptions used provide a reasonable basis for presenting all of the significant effects of the acquisitions included therein, that the pro forma adjustments give appropriate effect to those assumptions, and that the pro forma adjustments are properly applied in the Unaudited Pro Forma Condensed Consolidated Financial Statements.

NOTE 2 — PRO FORMA ADJUSTMENTS

Balance sheet adjustments were made to record the acquisition, eliminate inter-company receivables and payables and to eliminate subsidiary equity. The acquisition was effected through the payment of $2,357 in cash, drawing on short term lines of credit for $178,000 and issuing 1,710,214 Common Shares with a fair market value of $41,953.

Income statement adjustments were made to eliminate inter-company sales, to record amortization of the goodwill from the purchase, to record interest expense for the short term debt used to finance the acquisition, and to adjust income tax expense to the proper effective tax rate.

NOTE 3 — BASIC AND DILUTED EARNINGS PER SHARE

The basic and diluted earnings per share computations are based on the weighted-average number of shares outstanding during each period

DIEBOLD, INCORPORATED AND SUBSIDIARIES
EXHIBITS

     
Exhibit No.
10. Stock Purchase Agreement between Diebold, Incorporated and Procomp Amazonia Industria Eletronica S.A.— incorporated by reference to Exhibit 10 to Registrant’s Form 8-K dated October 21, 1999.
99. Press Release — incorporated by reference to Exhibit 99 to the Registrant’s Form 8-K dated October 21, 1999.

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DIEBOLD INCORPORATED AND SUBSIDIARIES
FORM 8-K/A

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: January 3, 2000 By: /s/ Robert L. Stockamp
Robert L. Stockamp
Vice President and Controller
(Interim Principal Accounting and
Financial Officer)

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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 8-K/A

INDEX TO EXHIBITS

         
Exhibit No. Page No.
10. Stock Purchase Agreement between Diebold, Incorporated and Procomp Amazonia Industria Eletronica S.A.— incorporated by reference to Exhibit 10 to Registrant’s Form 8-K dated October 21, 1999. —
99. Press Release — incorporated by reference to Exhibit 99 to the Registrant’s Form 8-K dated October 21, 1999. —

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