IMGCAP(1)]
Diebold INC. Will Take A $12 Million charge to pay the cost of closing a manufacturing plant in Newark, Ohio, the ATM manufacturer said in a U.S. Securities and Exchange Commission filing Friday.
Diebold has not determined when to take the charge, Mike Jacobsen, a Diebold
spokesperson, tells ATM&Debit News. "The filing identified the cost of closing the plant, but we have not decided when to take the charge," Jacobsen says.
However, North Canton, Ohio-based Diebold expects to post a $1 million to $2
million profit when it sells the property, the company says.
Closing the Newark plant came as part of a worldwide realignment of manufacturing operations, including reduction of
the worldwide workforce (ADN, 8/14).
The repositioning includes closing two of the four Opetva ATM manufacturing
plants, executives say. In 2006, Diebold launched a cost-cutting campaign aimed at saving $100 million in expenses by the end of 2008.
The company nearly has completed that phase and is rolling out a second costcutting project to save an additional $100 million in expenses by 2010.
The Newark factory makes security equipment for bank branches and
retailers, and Diebold is shifting production to an Opteva factory in
Lexington, N.C. Diebold is moving most of the Lexington plant's Opteva manufacturing to plants in Shanghai, China, and Budapest, Hungary.
The Lexington factory makes deposit automation modules and Opteva models
740, 750 and 760.
The Shanghai plant makes Opteva models 3xx and 5xx for the Asia-Pacific
region, North America and Latin America. The Budapest factory makes the Opteva 700 series ATMs for worldwide sales and the 500 series ATMs for Europe, the Middle East and Africa.
By the end of next year, the company hopes to move 85% of Opteva assembly
and manufacturing to a low-cost region. Next year, 15% of Opteva assembly and
manufacturing will occur in high-cost regions.
In 2006, 50% of Diebold's assembly and manufacturing took place in high-cost
regions, and 50% in low-cost regions, the company says.
The Newark plant employs 100, mostly union workers. The company layoffs are
slated to begin in October and are scheduled for completion in the first quarter of
2009. Diebold announced in February it plans to layoff 800 employees or 5% of its workforce. The company currently employs 17,000 worldwide.
Diebold's charge consists of $11 million in cash and $1 million in non-cash charges. The $11 million covers severance and pensions. The $1 million non-cash charge is an accounting procedure concerning the
factory's value.
The company also will reduce its 89 warehouses to three distribution centers in
Phoenix; Columbus, Ohio; and Greensboro, N.C., according to the "Diebold Overview" posted on the company's Web site.
Diebold revealed the cost of the plant closing five days after reporting preliminary second-quarter financials for the period ending June 30. The company's preliminary second-quarter net income was $25.6
million, down 5% compared with $26.9 million for the same three-month period last year. Diebold reported an operating profit of $45.5 million compared with $27.6 million for the same three-month period last year.
Second-quarter revenue was $771 million, up 11% compared with $694.6 million for the second quarter of 2007.
