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Diebold Inc. the world's third largest ATM manufacturer based on shipments,
has become current with key U.S. Securities and Exchange Commission filings, enabling the company to resume normal reporting beginning with its third quarter, which ended Tuesday.
The North Canton, Ohio-based manufacturer, yesterday filed its 10-K form for 2007 with the SEC quarterly reports on Form 10-Q for the quarters ended June 30, 2007; September 30, 2007; March 31 of this year and June 30 of this year. Sales for 2007 totaled $2.97 billion, up 1.4% from $2.94 billion a year earlier. Net income last year was $590,000, down 61.9% from $1.55 million in 2006.
In becoming current, Diebold raised its fullyear 2008 guidance to $1.52 to $1.62 per share from $1.37 to $1.47 per share.
"The upward revision in Diebold's earnings expectations," the company says, "are a result of earlier-than-expected progress from its cost reduction initiatives, improved profitability from the company's Brazilian voting and lottery businesses, continued demand for the company's solutions in the global financial markets,
and a lower anticipated tax rate."
Gil Luria, vice president of research at Los Angeles-based Webush Morgan Securities, Wednesday reiterated his "buy" rating for Diebold.
"We believe Diebold will grow earnings at an impressive rate even in a tough environment as it continues to cut cost costs and begins to buy back shares in November," Luria says.
In 2006, Diebold launched a cost-cutting initiative aimed at saving $100 million in expenses by the end of this year. The company nearly has completed that
phase and is rolling out a second cost-cutting project to save an additional $100 million in expenses by 2010 (ADN, 8/21).
Hartford, Conn.-based United Technologies Corp., which made an unsolicited bid to buy Diebold, said it would not make any additional comments about the company.
Diebold said the filings open a new chapter for the company. "The completion of these filings also marks the conclusion of the previously disclosed internal review of other accounting terms," Diebold said in a news release. Diebold announced in January it would restate financial results for the previous four years after concluding discussions with the Office of the Chief Accountant of the U.S. Securities and
Exchange Commission (ADN,1/17).
The discussions centered on Diebold's use of "bill and hold," a revenue-recognition method that attracted government scrutiny. Under " bill and hold," Diebold recorded revenue from the sale of equipment before customers received it.
Diebold dropped the accounting method in October for another form of revenue recognition. The company now records revenue when it installs the product. If a third party installs Diebold equipment, Diebold records the revenue when it ships the merchandise.
Because of the change in revenue recognition, Diebold announced it would restate earnings for 2003, 2004, 2005 and 2006. Because of the discussions with the Office of the Chief Accountant, Diebold also delayed filing for more
than a year to complete financial reports as regulators, outside auditors and consultants pored over its books.
Tuesday's filing includes adjustments in Diebold's internal review, but investigations by the U.S. Department of Justice and SEC are ongoing, the company says.
Despite the cloud, Thomas W. Swidarski, Diebold president and CEO, appeared optimistic about the filings. "We are very pleased that we have become current with our financial reporting, which has been a top priority for the company for more than a year," Swidarski said in a statement.
