UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
| [X] |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the fiscal year ended December 31, 2000 | |||||
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 |
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| 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 | |
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(State or other jurisdiction of
incorporation or organization) |
(IRS Employer
Identification Number) |
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5995 Mayfair Road, P.O. Box 3077,
North Canton, Ohio |
44720-8077 | |
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| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area
code: (330) 490-4000
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
Securities registered pursuant to
Section 12(g) of the Act: None
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. [ ]
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant as of March 5, 2001. The aggregate market value was computed by
using the closing price on the New York Stock Exchange on March 5, 2001 of
$30.08 per share.
Indicate the number of shares outstanding of each of the Registrant’s classes
of common stock, as of the latest practicable date.
Common Shares, Par Value $1.25 Per Share
$2,123,003,987
Class
Common Shares $1.25 Par Value
Outstanding at March 5, 2001
71,557,128 Shares
DOCUMENTS INCORPORATED BY REFERENCE
(1) PROXY STATEMENT FOR 2001 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 26, 2001
| PART OF 10-K | ||||||||||||
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| CAPTION OR HEADING | PAGE NO. | INCORPORATED | ITEM NO. | |||||||||
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| Information about Nominees for Election as Directors | 3-8 | III | 10 | |||||||||
| Executive Compensation | 8-17 | III | 11 | |||||||||
| Annual Meeting of Shareholders; Security Ownership of Directors and Management | 2-6 | III | 12 | |||||||||
| Compensation Committee Interlocks and Insider Participation | 8 | III | 13 | |||||||||
2
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, electronic and physical security products,
software and integrated systems. On April 17, 2000, the Registrant announced
the successful completion of its acquisition of the financial self-service
assets and related development activities of European-based Groupe Bull and
Getronics NV (European acquisition). The businesses acquired include self-service transaction systems, other self-service terminals and related services
primarily for the global banking industry. The acquisition was completed for
approximately $90 million and 400,000 French francs (translation $58 million).
The majority of subsidiaries of the European acquisition have been acquired and
consolidated. The remaining subsidiaries, which are immaterial to the
Registrant’s operations, will be consolidated upon completion of the legal
closing.
(b) Financial Information about Operating Segments
The Registrant has defined its operating segments into its three main
sales channels: North American Sales and Service (NASS), International Sales
and Service (ISS) and a group of smaller sales channels which are combined in a
category called Other. The NASS segment sells financial and retail systems, and
also services financial, retail and medical systems in the United States and
Canada. The ISS segment sells and services financial and retail systems over
the remainder of the globe. The segment called Other, sells educational,
medical, and other products and also services educational products in the
United States. A reconciliation of segment customer revenues to Consolidated
Net Sales and of segment operating contribution to Consolidated Operating
Profit is contained in Note 16 to the Consolidated Financial Statements.
(c) Description of Business
The Registrant develops,
manufactures, sells and services self-service
transaction systems, 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 2000, 1999, and 1998 the Registrant’s sales and services of
financial systems and equipment accounted for more than 90 percent 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.
The Registrant had no customers in 2000 and 1999 that accounted for more
than 10 percent of total net sales. The Registrant had one customer, IBM, its
former partner in the InterBold joint venture that accounted for $148.8 million
of the total net sales of $1.2 billion in 1998. 2000 and 1999 sales to IBM were
$12.8 and $51.6 million, respectively.
3
ITEM 1. BUSINESS. — (continued)
The Registrant’s operating results and the amount and timing of revenue
are affected by numerous factors including production schedules, customer
priorities, sales volume, and sales mix. During the past several years, the
Registrant has dramatically changed the focus of its self-service business to
that of a total solutions approach. The value of unfilled orders is not as
meaningful an indicator of future revenues due to the significant portion of
revenues derived from the Registrant’s growing service-based business, for
which order information is not available. Therefore, the Registrant believes
that backlog information is not material to an understanding of its business
and does not disclose backlog information.
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. The Registrant believes, based upon outside independent industry
surveys, that it is a leading manufacturer of self service systems 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, Triton, Wincor-Nixdorf, Dassault, Fujitsu, Itautec and Tidel. In
serving the security products market for the financial services industry, the
Registrant competes primarily with Mosler. 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 make 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 $52.0 million in 2000,
$43.0 million in 1999, and $42.9 million in 1998 for research and development
costs.
Compliance by the Registrant with federal, state and local environmental
protection laws during 2000 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,
2000 was 12,544 compared with 9,935 at the end of the preceding year. The
increase in 2000 is primarily due to the acquisition of the financial
self-service assets and related development activities of European-based Groupe
Bull and Getronics NV.
(d) Financial Information about International and U.S. Operations and Export Sales
Sales to customers outside the United States as a percent of total
consolidated net sales approximated 42.8 percent in 2000, 25.4 percent in 1999,
and 25.1 percent in 1998.
ITEM 2. PROPERTIES.
The Registrant’s corporate offices are located in North Canton, Ohio. It
owns manufacturing facilities in Canton and Newark, Ohio; Lynchburg, Staunton
and Danville, Virginia; and Sumter, South Carolina, and leases a manufacturing
facility in Rancho Dominguez, California. On January 5, 2001, the Registrant
announced the closing of the Staunton, Virginia manufacturing facility. The
Registrant also has manufacturing facilities in Argentina, Belgium, Brazil,
China, France, India, and Mexico. The Registrant has selling, service and
administrative offices in the following locations: throughout the United
States, and in Argentina, Australia, Austria, Belgium, Brazil, China, Colombia,
Denmark, Estonia, France, Germany, Hong Kong, Hungary, Indonesia, Paraguay,
Portugal, Poland, Romania, Russia, Singapore, South Africa, Spain, Taiwan,
Thailand, Turkey, the United Arab Emirates, the United Kingdom, and
4
ITEM 2. PROPERTIES. – (continued)
Uruguay. The Registrant considers that its properties are generally in good
condition, are well maintained, and are generally suitable and adequate to
carry on the Registrant’s business.
ITEM 3. LEGAL PROCEEDINGS.
At December 31, 2000, 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. While in
management’s opinion the financial statements would not be materially affected
by the outcome of any present legal proceedings, commitments, or asserted
claims, management is aware of a potential claim by the Internal Revenue
Service concerning the deductibility of interest related to loans from the
Registrant’s corporate-owned life insurance (COLI) programs.
This claim represents an exposure for additional taxes of approximately $17.6
million, excluding interest. Management is aware that both the U.S. Tax Court
and the United States District Court for the District of Delaware have recently
reached decisions disallowing the deduction of interest on COLI loans of two
similarly situated companies.
Notwithstanding these adverse court decisions, management believes that the
Registrant’s facts and circumstances are different from the above cited court
cases. The Registrant has made no provision for any possible earnings impact
from this matter because it believes it has a meritorious position and will
vigorously contest the IRS’ claim. In the event the resolution of this matter
is unfavorable, it may have a material adverse effect on the Registrant’s
result of operations for the period in which such unfavorable resolution
occurs.
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 2000.
ITEM 4a. EXECUTIVE OFFICERS OF THE REGISTRANT.
Refer to pages 6 through 9.
5
EXECUTIVE OFFICERS OF THE REGISTRANT
6
EXECUTIVE OFFICERS OF THE REGISTRANT (continued)
7
EXECUTIVE OFFICERS OF THE REGISTRANT — (continued)
8
EXECUTIVE OFFICERS OF THE REGISTRANT — (continued)
There is no family relationship, either by blood, marriage or adoption, between
any of the executive officers
of the Registrant.
9
Table of Contents
Table of Contents
Table of Contents
Other Positions
Year Elected
Held Last
Name
Age
Title
Present Office
Five Years
1999-2000
Walden W. O’Dell
55
Chairman of the Board,
President and Chief
Executive Officer
2000
President and Chief
Executive Officer
and Director
1999
Group Vice President, Tool
Group and President of Ridge
Tool Division — Emerson
1991-1999
President — Liebert
Corporation, a subsidiary of
Emerson
1999-2000
Wesley B. Vance
43
President,
North America
2000
Senior Vice President, ArvinMeritor and
President – Worldwide
Exhaust Group, ArvinMeritor
1997-1999
Managing Director – Arvin
Exhaust, Europe and Asia,
Arvin Industries, Inc.
1995-1997
Vice President, Business
Development and General
Manager – Arvin Ride
Control Emerging Markets,
Arvin Industries, Inc.
1999-2000
Gregory T. Geswein
45
Senior Vice President
and Chief Financial Officer
2000
Senior Vice President and
Chief Financial Officer –
Pioneer-Standard Electronics,
Incorporated
1985-1999
Vice President and Corporate
Controller – Mead Corporation
Table of Contents
Other Positions
Year Elected
Held Last
Name
Age
Title
Present Office
Five Years
1997-99
David Bucci
49
Senior Vice President,
North
America
1999
Group Vice President,
NASS
1993-96
Vice President, NASS
1997-99
Michael J. Hillock
49
Senior Vice President,
ISS (International Sales
and Service)
1999
Group Vice President,
ISS
1993-97
Vice President and
General Manager,
Sales and Service,
Europe, Middle East
and Africa
1998-99
Charles J. Bechtel
55
Group Vice President,
Global Services
1999
Vice President,
Global Support Services
1997-98
Vice President,
Information Systems
1990-97
Vice President, Marketing
and Sales Operations
1996-98
James L.M. Chen
40
Vice President and
Managing Director,
Asia-Pacific
1998
Philips Electronics
China B.V.
General Manager,
Business Electronics
1994-96
AT&T China Company
Limited, Managing Director,
Global Information
Solutions, China
Table of Contents
Other Positions
Year Elected
Held Last
Name
Age
Title
Present Office
Five Years
Warren W. Dettinger
47
Vice President,
General Counsel and
Assistant Secretary
1989
—
1996-97
Reinoud G. J. Drenth
37
Vice President and
Managing Director, Europe
Middle East, and Africa
1997
Vice President
Worldwide Marketing
- Diebold
1987-96
NCR
Corporation
1995
— Marketing Vice President, Financial
Services Industry
1999-2000
Charles E. Ducey, Jr.
45
Vice President,
Corporate Controller
2000
Vice President, NASS
Services
1993-1999
Controller, NASS
1990-1999
Donald E. Eagon, Jr.
58
Vice President,
Global Communications
and Investor Relations
1999
Vice President
Corporate Communications
1995-99
Jack E. Finefrock
49
Vice President,
North America
1999
Division Vice President,
NASS, Central Division
1989-95
Regional Sales Manager
Charee Francis-Vogelsang
54
Vice President and
Secretary
1983
—
1990-2000
Bartholomew J. Frazzitta
58
Vice President, Retail and
Physical Security Group
2000
Vice President and
General Manager,
Physical Security Division
Table of Contents
Other Positions
Year Elected
Held Last
Name
Age
Title
Present Office
Five Years
Larry D. Ingram
54
Vice President,
Procurement and Services
1993
—
1996-99
Dennis M. Moriarty
48
Vice President,
North America
1999
Division Vice President,
NASS, Eastern Division
1993-96
Area General Manager
- Pitney Bowes
Mailing Systems
1993-99
Anthony J. Rusciano
60
Vice President,
North America
1999
Division Vice President,
NASS, Major Accounts
Division
Charles B. Scheurer
59
Vice President,
Human Resources
1991
—
1984-97
Ernesto R. Unanue
59
Vice President and
Managing Director,
Latin America
1997
Vice President of Sales,
Caribbean and South
American Division
Robert J. Warren
54
Vice President and
Treasurer
1990
—
Table of Contents
PART II.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
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:
There were approximately 87,684 shareholders at December 31, 2000, which
includes an estimated number of shareholders who have shares held for their
accounts by banks, brokers, trustees for benefit plans and the agent for the
dividend reinvestment plan.
On the basis of amounts paid and declared the annualized quarterly
dividends per share were $0.62 in 2000, $0.60 in 1999, and $0.56 in 1998.
On October 15, 1999, 230,015 Common Shares were issued from treasury for
the acquisition of Nexus Software, Inc. The fair market value of the shares on
the date of issue was $7,023,072; these shares are considered unregistered.
On December 30, 1998, 30,060 Common Shares were issued from treasury to
Gregg A. Searle, former President, who resigned on September 30, 1998. The
shares represented the distribution of Mr. Searle’s deferred compensation
account which had been allocated in Common Shares, and accordingly, no purchase
price was paid by Mr. Searle. The fair market value of the shares on the date
of issue was $1,043,653; these shares were considered unregistered.
ITEM 6. SELECTED FINANCIAL DATA.
(Dollars in thousands except per share amounts)
10
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 1998 to
2000. Comments on significant year-to-year fluctuations follow the table.
11
Acquisitions
On April 17, 2000, the Registrant announced the successful completion of its
acquisition of the financial self-service assets and related development
activities of European-based Groupe Bull and Getronics NV (European
acquisition). The businesses acquired include ATMs, cash dispensers, other
self-service terminals and related services primarily for the global banking
industry. The acquisition was completed for approximately $90,000 and 400,000
French francs (translation $58,080). The majority of subsidiaries of the
European acquisition have been acquired and consolidated. The remaining
subsidiaries, which are immaterial to the Registrant’s operations, will be
consolidated upon completion of the legal closing. The reported revenue from
the European acquisition was $148,785 for the period of April 17, 2000 through
December 31, 2000. The acquisition was accretive at the operating profit level
and slightly dilutive on earnings per share. While the Registrant expects the
European acquisition to be slightly accretive in 2001, given the seasonal
nature of its business, it will likely be dilutive in the first quarter of
2001.
On October 21, 1999, the Registrant acquired Procomp Amazonia Industria
Eletronica, S.A. (Procomp), a Brazilian manufacturer and marketer of innovative
technical solutions, including personal computers, servers, software,
professional services, retail and banking automation equipment and voting
machines. The acquisition was effected in a combination of cash and stock for
$222,310. Prior to the acquisition, Procomp was a major distributor for the
Registrant in Latin America. Procomp results following the acquisition are
consolidated with the results of the Registrant. Procomp reported revenue of
$309,167 and $41,615 for the year ended December 31, 2000 and the period of
October 22, 1999 through December 31, 1999, respectively. The acquisition was
accretive on earnings per share and at the operating profit level.
The acquisitions have been accounted for as purchase business combinations and,
accordingly, the purchase prices have 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 amounts of goodwill and periods of amortization for the European
acquisition and Procomp are $146,080 over 20 years and $135,219 over 17 years,
respectively.
Net Sales
Net sales for 2000, which totaled $1,743,608 (including net sales from
acquisitions of $457,952) grew $484,431 or 38.5 percent over 1999 and $557,901
or a 47.1 percent increase over 1998. While a slowing domestic market continues
to affect U.S. product sales, the Registrant’s investment in global
distribution channels and recent acquisitions continue to fuel substantial
growth and increased market share. The Registrant’s 2000 sales were
particularly enhanced by a single order received by Procomp (Brazil) of
$106,000 for electronic voting machines for the Brazilian market. Recent U.S.
election events could provide opportunities in the U.S. market for the
Registrant’s technology.
Product sales for 2000 increased 41.2 percent over 1999 and 42.6 percent over
1998 sales. Excluding the acquisitions, product sales grew 6.3 percent over
1999 and remained flat from 1998 due to a slowing demand for self-service
products. Service revenues for 2000 grew 34.3 percent and 54.8 percent over
1999 and 1998 respectively. Excluding acquisitions, service revenues grew 8.1
percent and 21.1 percent over 1999 and 1998, respectively. The Registrant’s
global service revenue is supported by comprehensive service solutions in the
self-service, security and firstline businesses in support of our customers.
Customer solutions continue to be the Registrant’s focus. The recent alignment
of Diebold North America’s core operations to a single business unit positions
the Registrant’s production and distribution organizations to focus on its
customer requirements. From a global perspective, the recent European
acquisition, which includes manufacturing and service capabilities, will
significantly improve the Registrant’s ability to respond to customer demands.
Product Revenue by Geography
* Europe, Middle East and Africa
Product sales of $1,069,405 (including sales of $311,035 from acquisitions)
grew 41.2 percent over 1999 and 42.6 percent over 1998 volumes. Product sales
in the United States increased $34,595 or 6.7
12
percent over 1999 and $54,783 or 11.1 percent over 1998. Growth in security solutions, Nexus and self-service
solutions to original equipment manufacturers (OEM) accounted for the majority
of the growth in 2000. Product sales in Asia Pacific (including sales from
acquisitions of $9,301) grew 44.6 percent over 1999 and 65.8 percent over 1998
volumes. Excluding acquisitions, Asia Pacific experienced growth rates of 27.4
percent over 1999 and 46.1 percent over 1998. Also, product sales in EMEA
(including sales from acquisitions of $81,915) grew 156.5 percent and 157.3
percent over 1999 and 1998 respectively. Excluding acquisitions, growth in EMEA
was 22.9 percent and 23.3 percent above 1999 and 1998 volumes. Latin America
product sales (including acquisitions of $219,817) grew 159.6 percent over 1999
and 133.2 percent over 1998 volumes. Excluding acquisitions, Latin America
declined between 1999 and 1998 due to poor economic conditions. Also, product
sales in Canada declined 26.7 percent and 46.4 percent as compared to 1999 and
1998, respectively due to establishing distribution operations to replace IBM
as the Registrant’s primary distributor.
Service Revenue
Total service revenues for 2000 of $674,203 increased over 1999 and 1998 by
$172,272 or 34.3 percent and $238,657 or 54.8 percent, respectively. Domestic
revenues are up $24,049 or 5.7 percent over 1999 and up $54,378 or 13.8 percent
over 1998. Domestic service revenues have maintained strong growth in the
highly competitive service market. The Registrant expects its enhanced service
offerings will continue to sustain solid growth. Including acquisitions,
international service revenue was up $148,223 or 188.7 percent over 1999 and up
$184,279 or 433.8 percent over 1998. Excluding acquisitions, international
service revenue was up 24.6 percent over 1999 and 88.7 percent over 1998.
International service revenue increased substantially in all geographies as the
Registrant continues to establish a worldwide service support infrastructure to
enhance total solutions capability.
Total Revenue by Product/Service Solution
Self-service solutions revenue (including acquisitions of $149,945) grew 25.4
percent and 22.3 percent as compared to the periods of 1999 and 1998,
respectively. This growth is a result of the Registrant’s global acquisition
strategy, which was executed in 2000 and 1999. Along with the acquisition
strategy, the Registrant is focused on professional and special services to
integrate a broad array of solutions to its customer base worldwide. The
Registrant has experienced significant growth in professional service offerings
over prior periods. Excluding the voting machine order in Brazil, these
services increased 135.2 percent and 337.1 percent over 1999 and 1998,
respectively.
Operating Segment Revenue and Operating Profit
Customer Revenues by Segment
Operating Profit by Segment
North American Sales and Service (NASS) revenues for 2000 of $965,859 increased
$38,884 or 4.2 percent over 1999 and 8.4 percent over 1998. NASS product
revenues were flat year over year reflecting the current market pressures while
service revenues were up $24,477 or 5.9 percent. Revenues from annual service
contracts remain strong domestically. International Sales and Service (ISS)
revenues of $728,828 (including revenues from acquisitions of $457,952)
increased 148.5 percent over 1999 and 176.7 percent over 1998 volumes. ISS revenues
13
excluding acquisitions were $270,876, up from 1999 by 15.2 percent and
2.8 percent over 1998. ISS product revenues, excluding acquisitions, were up
slightly year over year, while service operations yielded increased service
revenues of 31.0 percent. Other revenue of $48,921, which includes Nexus, OEM
sales, MedSelect and sales to Campus Card, was an increase from 1999 of $10,035
or 25.8 percent.
Total 2000 operating profits (including acquisitions) of $182,057 grew 12.7
percent over 1999 and 27.1 percent above 1998 profits. NASS operating profit
decreased 5.6 percent as compared to 1999 and increased 0.2 percent over 1998.
NASS operating profits were affected by flat product revenues caused by a
slowing demand for self-service terminals. ISS operating profits including
acquisitions grew 107.2 percent and 393.9 percent over 1999 and 1998,
respectively.
Cost of Sales and Expenses
Cost of sales for 2000 including acquisitions was 67.9 percent of sales
compared to 63.7 percent of sales in 1999 and 65.7 percent of sales in 1998.
Cost of sales as a percentage of sales increased year over year due mainly to a
competitive self-service market globally, which includes acquisitions carrying
a higher cost of sales, offset with lower operating expenses. Excluding
acquisitions, product cost of sales as a percentage of revenue was up 1.6
percent over 1999 due mainly to pricing pressures in the domestic and
international markets and was favorable to 1998. Service cost of sales
including acquisitions as a percent of sales increased in 2000 to 72.2 percent
up from 71.3 percent and 70.4 percent from 1999 and 1998, respectively. The
2000 increases are due primarily to lower realized gross profits on
acquisitions. Excluding acquisitions, service cost of sales percentage improved
from 70.9 percent of revenue in 1999 to 70.1 percent in 2000.
Product gross profits in 2000 including acquisitions declined to 34.8 percent
from 41.3 percent in 1999 and from 38.3 percent in 1998 mainly due to the lower
gross margins experienced in the acquisitions and the impact of foreign
currency fluctuations. Excluding acquisitions, product gross profits were 40.6
percent compared to 42.2 percent in 1999. Service gross profits were 27.8
percent compared to 28.7 percent in 1999 and 29.6 percent in 1998. Service
gross profits excluding acquisitions improved to 29.9 percent from 29.1 percent
in 1999.
Operating expenses expressed as a percent of sales (including
acquisitions) decreased by 2.6 percentage points over 1999 and 6.4 percentage
points over 1998 expenses. The Registrant is leveraging its worldwide
administrative infrastructure and improving productivity by investing in
E-initiatives and other automation to improve customer support on a worldwide
basis.
Excluding realignment and special charges, operating profit as a percentage of
revenue, was 13.1 percent as compared to 1999 of 14.5 percent and 14.1 percent
in 1998. Operating profit as a percent to sales excluding acquisitions
improved over 1999 and 1998, respectively.
Other Income, Net and Minority Interest
Investment income declined in 2000 compared to 1999, as expected, by $4,719 and
remained relatively flat compared to 1998’s results. The decline compared to
1999 was largely attributable to unfavorable performance in the Registrant’s
preferred stock portfolio and use of both short- and long-term investments to
purchase Procomp and the European acquisition. The Registrant continues to use
finance receivables as an investment strategy, which yielded an improved return
over 1999 and 1998, offsetting some of the decline in the above investments.
Interest expense is largely related to interest on borrowings obtained as
additional funding for the Procomp and European acquisitions and has increased
over 1999 and 1998 by $14,070 and $16,938, respectively. Interest expense is
expected to decline as the Registrant continues to pay down the borrowings from
investments. Miscellaneous expense, net, excluding interest expense, increased
from 1999 by $19,153 and from 1998 by $19,678. These increases were in part
related to additional goodwill amortization expense recognized in relation to
both the Procomp and European acquisitions. Additional goodwill amortization
accounted for $11,793 and $13,370 of the increases compared to 1999 and 1998,
respectively.
The Registrant also incurred foreign exchange losses in 2000. Foreign exchange
losses in total increased $9,442 over 1999 and $9,049 over 1998. The majority
of the exchange losses were related to the Procomp operation in Latin America.
Minority interest of $3,040 increased over 1999 by $1,871 and 1998 by $1,197,
due to improved results of joint venture operations and an additional joint
venture added in 2000 related to the European acquisition. Minority interests
for all companies are calculated as a percentage of profits of the joint
ventures based on formulas defined in the relevant agreements establishing each
venture.
14
Income
Income before taxes in 2000 was $204,357 or 11.7 percent of revenue compared to
$200,127 (excluding realignment charges and in-process research and
development) or 15.9 percent of revenue from 1999 and $180,924, 15.3 percent
(excluding realignment and special charges) in 1998. Income excluding
acquisitions as a percent to sales remained constant as compared to 1999 and
improved over 1998 (excluding realignment and special charges).
The effective tax rate was 33.0 percent in 2000 compared with 36.0 percent in
1999 and 36.4 percent in 1998. The lower tax rate in 2000 was favorably
impacted by the Registrant's receipt of tax refunds associated with the
Registrant’s export sales. The details of the reconciliation between the U.S.
statutory rate and Registrant’s effective tax rate are included in Note 14 of
the 2000 Consolidated Financial Statements.
Excluding realignment, special charges and in-process research and development,
net income including acquisitions increased 7.3 percent from 1999 and remained
flat as compared to 1998, respectively. Excluding acquisitions, net income
increased 4.0 percent from 1999 and decreased 3.2 percent over 1998 (excluding
realignment, special charges and in-process research and development).
Management’s Analysis of Financial Condition
The Registrant continued to enhance its financial position during 2000 through
its strategic acquisitions and improved asset management strategies. Total
assets increased $286,596 or 22.1 percent to a 2000 year-end level of
$1,585,427. The European acquisition and Procomp accounted for $253,895 of the
gain in assets in 2000. Inventory turnover has improved to 6.3 at December 31,
2000 as compared to 5.5 at December 31, 1999. Days sales outstanding has
decreased from 77 days at December 31, 1999 to 69 days at December 31, 2000.
Total current assets at December 31, 2000, of $804,363 represented an increase
of $156,427 or 24.1 percent from the prior year-end. Trade receivables
decreased $35,327 from 1999 excluding the effects of the European acquisition
and Procomp trade receivables of $65,169 and $36,219, respectively. Inventories
increased $18,110 excluding the European acquisition and Procomp’s December 31,
2000 inventory of $24,268 and $29,718, respectively. Short-term notes
receivable are primarily from Procomp’s financing to Brazilian customers.
Short-term investments and long-term securities and other investments decreased
by $48,028, or 20.7 percent to a level of $184,552 at December 31, 2000. The
decrease was due to the liquidation of certain securities for the European
acquisition. The Registrant anticipates being able to meet both short- and
long-term operational funding requirements through the use of cash generated
from operations. Certain securities may be liquidated in the future for
strategic acquisitions or to pay down debt. The Registrant’s securities can be
readily converted into cash and cash equivalents if needed.
Total property, plant and equipment, net of accumulated depreciation, was
$174,946 at the end of 2000. The European acquisition and Procomp accounted
for $9,447 and $17,210 of total property, plant and equipment, respectively.
Capital expenditures were $42,694 in 2000, compared with $40,341 in 1999. The
increase in 2000 capital spending versus 1999 was primarily due to setting up
sales and service operations internationally. Capital expenditures are
expected to increase as international expansion continues and as the Registrant
invests in capital items, especially information technology, to support the
future growth of its business.
Total current liabilities at December 31, 2000, were $566,792, which
represented an increase of $184,385 over the prior year-end. The primary cause
for the increase is due to an increase in short-term notes payable of $146,159
that were largely used to fund the European acquisition. The Registrant’s
current ratio dropped to 1.4 at December 31, 2000 versus 1.7 at the end of
1999, due primarily to the short-term borrowings to fund the acquisitions.
At December 31, 2000, the Registrant had bank credit lines approximating
$225,000 U.S. dollars, EUR 100,000 (translation $94,413) and $17,000 AUD
(Australian dollars) (translation $9,504), with $263,609 of outstanding
borrowings under these agreements. In addition, the Registrant had outstanding
$20,800 of Industrial Development Revenue Bonds. The proceeds of the bonds
issued in 1997 were used to finance three manufacturing facilities located in
Staunton and Danville, Virginia and in Lexington, North Carolina.
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
15
Registrant’s strong financial position should provide adequate access to capital markets.
Pension liabilities decreased by $2,054 from 1999 or 8.4 percent, excluding the
effects of the European acquisition of $6,131. The net periodic pension income
of $5,719, included in income in 2000, represented an increase of $10,785 from
the prior year. Postretirement liabilities at December 31, 2000, were $28,123,
an increase of $5,626 over the prior year end, with the European acquisition
representing $5,357 of the increase. Net periodic health and life benefit
expense charged to income in 2000 of $1,498 increased slightly over the prior
year’s expense of $1,477. In addition, the Registrant matches employee
contributions to its defined contribution 401(k) savings plan. The Registrant
matched 60 percent of each employee’s first three percent
on savings and 30 percent of each employee’s second three percent on savings. Net expense for
401(k) match was $7,155 in 2000, which was down from the prior year by $1,857.
Minority interests of $5,260 represented the minority interest in Diebold
Financial Equipment Company, Ltd. (China) owned by the Aviation Industries of
China and the Industrial and Commercial Bank of China, Shanghai Pudong Branch;
in Diebold OLTP Systems, C.A. (Venezuela), owned by five individual investors; in
Diebold Argentina, owned by Ciccone Calcografica S.A., in Diebold Colombia,
owned by Richardson and Company Ltd and in Agences Bancaires Services &
Securite, S.A., owned by Serse S.A. and Solymatic S.A.. On December 31, 2000,
the Registrant purchased the remaining ownership interest in Diebold Argentina
from Ciccone Calcografica S.A. for $4,875.
Shareholders’ equity increased $91,671 or 10.9 percent to $936,066 at December 31, 2000. Equity increased primarily due to current year earnings.
Shareholders’ equity per share was $13.08 at the end of 2000, compared with
$11.88 in 1999. The Common Shares of the Registrant are listed on the New York
Stock Exchange with a symbol of DBD. There were approximately 4,278 registered
shareholders of record as of December 31, 2000.
The Board of Directors declared a first quarter 2001 cash dividend of $0.16 per
share. This amount, which represents a 3.2 percent increase from the prior
year’s quarterly dividend rate, will be paid on March 9, 2001, to shareholders
of record on February 16, 2001. Comparative quarterly cash dividends paid in
2000 and 1999 were $0.155 and $0.15 per share, respectively.
Management’s Analysis of Cash Flows
During 2000, the Registrant generated $146,195 in cash from operating
activities, compared with $188,585 in 1999 and $177,238 in 1998. In addition
to net income of $136,919 adjusted for depreciation, amortization and minority
interest of $71,720, decreases in deferred income taxes, accounts payable (net
of the European acquisition), deferred income and increases in other certain
assets and liabilities decreased cash provided by operations. Cash was utilized
in operations to reduce accounts payable, maintain adequate inventory levels
and to organize the operations of the European acquisition. Expressed as a
percentage of total assets employed, the Registrant’s cash yield from
operations was 9.2 percent in 2000, 14.5 percent in 1999 and 17.6 percent in
1998.
Net cash generated from operating and financing activities in 2000 was used to
reinvest $215,357 in assets of the Registrant, compared with $281,800 in 1999
and $96,509 in 1998. The Registrant returned $44,271 to shareholders in the
form of cash dividends paid during 2000, which was a 6.2 percent increase from
1999 and a 14.6 percent increase from 1998.
Other Business Information
Subsequent Events
On January 5, 2001, the Registrant announced the closing of the Staunton,
Virginia manufacturing facility. The closing is estimated to be completed by
the end of the first quarter of 2001. The decision to close the facility
coincides with the streamlining of the Registrant’s manufacturing operations in
North America in order to balance capacity among global facilities. The
facility was opened in 1997 for precision sheet metal processing for ATM
components. The Lynchburg, Virginia facility will continue to perform this
process for the Registrant. Some of the equipment used at the Staunton facility
will replace older equipment at facilities in Lynchburg and Sumter, South
Carolina.
Closing costs to be incurred during the first quarter of 2001 are estimated at
$2,500 to $3,000 and include closure of the facility, transfer of equipment as
well as separation packages and outplacement services offered to employees.
16
New Accounting Pronouncement
In December 1999, the Securities and Exchange Commission (“SEC”) issued Staff
Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition.” SAB 101 does not
change existing accounting literature on revenue recognition, but rather
explains the SEC staff’s general framework for revenue recognition. SAB 101
states that changes in accounting to apply the guidance in SAB 101 may be
accounted for as a change in accounting principle. Through issuance of SAB
101B, the change in accounting principle must be recorded by the fourth quarter
2000. The Registrant has reviewed its revenue recognition practices in
conjunction with SAB 101 and 101B requirements. The Registrant has adopted this
bulletin in 2000, which has had no material effect on the Registrant’s results
of operations or statement of financial position.
In June 1998, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for
Derivative Instruments and Hedging Activities,” which establishes accounting
and reporting standards for derivative instruments and hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. The Registrant will adopt SFAS No. 133 as required
for its first quarterly filing of fiscal year 2001. It is expected that the
adoption will not have a material effect on the Registrant’s results of
operation or statement of financial position.
Realignment and Special Charges
As of December 31, 1999, the Registrant completed its realignment plan
originally announced in the second quarter of 1998. Under the realignment plan
in 1998, the Registrant recorded realignment and special charges of $61,117
($41,850 after-tax or $0.60 per diluted share). The majority of the
realignment charge related to three areas: the ending of the InterBold joint
venture with IBM, the exiting of the manufacturing and distribution channel for
certain low-end self-service terminal products and the exiting of the
proprietary electronic security business. The realignment charge was made up of
two components: a special charge of $9,864 primarily for the write-off of
inventory from exited lines of business and a realignment charge of $51,253 for
all other realignment costs. In December 1999, the realignment plan concluded
and the remaining accrual of $3,261, which primarily represented employee
costs that were not utilized, was brought back through income.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Registrant does not have material exposure to interest rate risk, foreign
currency exchange rate risk or commodity price risk. As the Registrant
continues to expand internationally it expects market risks to have a greater
impact on its financial position and results of operation.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Refer to pages 18 through 41.
17
Consolidated Balance Sheets
See accompanying Notes to Consolidated Financial Statements.
18
Consolidated Statements of Income
See accompanying Notes to Consolidated Financial Statements.
19
Consolidated Statements of Shareholders’ Equity
See accompanying Notes to Consolidated Financial Statements.
20
Consolidated Statements of Cash Flows
See accompanying Notes to Consolidated Financial Statements.
21
Notes to Consolidated Financial Statements
Diebold, Incorporated and Subsidiaries
Note 1: Summary of Significant
Principles of consolidation
The Consolidated Financial Statements include the accounts of the Registrant
and its wholly and majority-owned subsidiaries. All significant intercompany
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 with a maturity of three months or less
at the time of purchase to be cash equivalents.
International operations
The Registrant translates the assets and liabilities of its non-U.S.
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. Sales to
customers outside the United States approximated 42.8 percent of net sales in
2000, 25.4 percent in 1999, and 25.1 percent in 1998.
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, 2000 and 1999, because of the relatively short maturity of
these instruments.
Trade receivables and revenue recognition
Revenue is generally recognized based on the terms of the sales contracts. The
majority of sales contracts for products are written with selling terms “F.O.B.
factory.” However, certain sales contracts may have other terms such as
“F.O.B. destination” or “upon installation.” The Registrant recognizes revenue
on these contracts when the appropriate event has occurred. 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. Service revenue is recognized in the period service
is performed and subject to the individual terms of the service contract.
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
Investments in debt and equity securities with readily determinable fair values
are accounted for at fair value. The Registrant’s investment portfolio is
classified as available-for-sale.
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 $52,028, $42,975,
and $42,946 in 2000, 1999 and 1998, respectively.
22
In-process research and development
Associated with the acquisition of Nexus Software, Inc. in the last quarter of
1999, the Registrant wrote off $2,050 of in-process research and development.
Advertising costs
Advertising costs are expensed as incurred. Total advertising costs charged to
expense was $13,913, $13,747 and $11,806 in 2000, 1999 and 1998, respectively.
Other assets
Other assets consist primarily of pension assets, computer software, customer
demonstration equipment, deferred tooling and certain other assets. These
assets are stated at cost and, if applicable, are amortized ratably over a
period of three to five years.
Goodwill
Goodwill is the costs in excess of the net assets of acquired businesses. These
assets are stated at cost and are amortized ratably over a period not exceeding
20 years. The Registrant periodically monitors the value of goodwill by
assessing whether the asset can be recovered over its remaining useful life
through undiscounted cash flows generated by the underlying businesses. If it
is determined that the carrying value of goodwill will not be recovered from
the undiscounted future cash flows of the acquired business, the carrying value
would be considered impaired and reduced by a charge to operations in the
amount of the impairment. An impairment charge is measured as any deficiency
in the amount of estimated undiscounted future cash flows of the acquired
business available to recover the carrying value related to goodwill.
Deferred income
Deferred income is largely related to service contracts and is recognized for
customer service 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.
Stock-based compensation
Compensation cost is measured on the date of grant only if the current market
price of the underlying stock exceeds the exercise price. The Registrant
provides pro forma net income and pro forma net earnings per share disclosures
for employee stock option grants made in 1995 and subsequent years as if the
fair value based method had been applied.
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.
Earnings per share
Basic earnings per share are computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding for
the period. Diluted earnings per share reflect the potential dilution that
could occur if common stock equivalents were exercised and then shared in the
earnings of the Registrant.
Comprehensive income
The Registrant displays comprehensive income in the Consolidated Statements of
Shareholders’ Equity and accumulated other comprehensive income separately from
retained earnings and additional paid-in-capital in the Consolidated Balance
Sheets and Statements of Shareholders’ Equity. Items considered to be other
comprehensive income include adjustments made for foreign currency translation
(under SFAS 52), pensions (under SFAS 87) and unrealized holding gains and
losses on available-for-sale securities (under SFAS 115).
Accumulated other comprehensive income (loss) balances for 2000, 1999 and 1998
for foreign currency translations were ($7,440), $464 and ($9,094), for
pensions were ($1,995), ($3,502) and ($4,116), and for unrealized holding
gains/(losses) on investment securities were ($3,223), ($2,827) and $408,
respectively. The related tax (expense) or benefit for adjustments to
accumulated other comprehensive income for 2000, 1999 and 1998 for pensions
were ($330), ($331), and $1,506 and for unrealized holding gains/(losses) on
investment securities were ($269), $1,742, and $243, respectively.
Translation adjustments are not booked net of tax. Those adjustments are
accounted for under the indefinite reversal criterion of APB Opinion 23,
“Accounting for Income Taxes—Special Areas.”
23
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.
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 for the period of January 1 through
January 27, 1998, include the accounts of InterBold, a joint venture between the
Registrant and IBM. The joint venture provided ATMs and other financial
self-service systems worldwide.
On January 27, 1998, the Registrant completed its purchase of IBM’s 30 percent minority
interest in InterBold for $16,141.
Note 3: Investment Securities
At December 31, 2000 and 1999, the investment portfolio was classified as
available-for-sale. The marketable debt and equity securities are stated at fair
value. The fair value of securities and other investments is estimated based on
quoted market prices.
The Registrant’s investment securities, excluding insurance contracts, at
December 31, are summarized as follows:
Realized gains (losses) from sale of securities were ($3,183), $1,451 and $289
in 2000, 1999 and 1998, respectively. Proceeds from the sales of
available-for-sale securities were $11,446, $60,427 and $599 in 2000, 1999 and
1998, respectively. Gains and losses are determined using the specific
identification method.
24
Note 4: Inventories
Major classes of inventories at December 31, are summarized as follows:
Note 5: Property, Plant and Equipment
Property, plant and equipment at December 31, together with annual depreciation
and amortization rates, consisted of the following:
Note 6: Finance Receivables
The components of finance receivables for the net investment in sales-type
leases are as follows:
Future minimum lease receivables due from customers under sales-type leases as
of December 31, 2000, are as follows:
Note 7: Short-Term Financing
The Registrant’s short-term financing is as follows:
1
75,000 Euro (EUR) borrowing translated at the applicable 12/31/2000 spot rate.
2
12,900 Australian (AUD) dollar borrowing translated at the applicable
12/31/2000 spot rate.
The Registrant has available credit facilities with domestic and foreign banks
for various purposes. The amount of available committed loans at December 31,
2000 was $14,400 and EUR 25,000 ($23,600 translated).
In addition, an uncommitted AUD 4,100 ($2,300 translated) line of credit remains
available as well as an unused $25,000 line of credit.
The average short-term rate on the bank credit lines was 6.72 percent and 6.69
percent at December 31, 2000 and 1999, respectively. Interest on short-term
financing charged to expense for the year ended December 31, 2000 was $12,530,
EUR 2,683 (translation $2,533) and AUD 573 (translation $320) and for 1999 was
$2,112.
The Registrant’s short-term financing agreements contain various restrictive
covenants, including debt to capitalization and interest coverage ratios. As of
December 31, 2000, the Registrant is in compliance with all restrictive
covenants.
Note 8: Realignment and Special Charges
In the second quarter of 1998, the Registrant recognized realignment and special
charges of
25
$61,117 ($41,850 after-tax or $0.60 per diluted share) in connection
with a corporate-wide realignment program. As expected, the realignment plan
concluded as of December 31, 1999. At the conclusion of the plan, $3,261 of the
original realignment accrual was brought back through income due to less than
expected costs for lower than expected contractual lease obligations, and for
lower than expected job eliminations.
Realignment exit costs were accounted for under EITF 94-3, “Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (Including Certain Costs Incurred in a Restructuring.)” Long-lived
asset impairments were accounted for under Statement of Financial Accounting
Standards (SFAS) No. 121, “Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed of.” Inventory charges were taken when
it was determined that the utility, as a result of the realignment decisions,
was less than the costs for the affected inventory. Special charges of $9,864
mainly represent the write-off of inventory for exited businesses and all other
realignment charges of $51,253 were recognized as a separate operating expense
in the Consolidated Statements of Income.
Elements of the realignment and special charges were divided into three
categories: Facility closing and write down of assets, employee costs and other
exit costs. Facility closing and write-down of assets costs were estimated to be
$40,343. Items included in this category were certain impaired intangible
assets, mainly relating to the separation from IBM in the InterBold joint
venture in 1998, manufacturing assets relating to exited businesses, redundant
inventory of exited businesses and contractual costs to exit leased facilities.
North American facilities were consolidated and several facilities were closed
under the realignment program.
Termination pay and separation costs were estimated to be $8,269. More than 600
employees were estimated to be terminated, and at the conclusion of the
realignment plan as of December 31, 1999, 560 jobs had been eliminated. The
estimated costs in this category included the termination pay, job outplacement
and fringe benefit costs for each eliminated job. Terminations came from all
areas of the Registrant.
Other exit costs under the realignment program were estimated to be $12,505.
These costs included legal, insurance and communications costs and the write-off
of accounts receivable relating to exited businesses.
Assets relating to the realignment were written down or scrapped. Costs from the
realignment were paid from operating funds over the term of the realignment
plan. The entire realignment plan was completed as of December 31, 1999.
26
The following table shows the realignment charge and accrual and all activity
through December 31, 2000:
Note 9: Bonds Payable
Bonds payable at December 31 consisted of the following:
In 1997, three industrial development revenue bonds were issued on behalf of the
Registrant. The proceeds from the bond issuances were used to construct new
manufacturing facilities in Danville and Staunton, Virginia and Lexington, North
Carolina. The Registrant guaranteed the payments of principal and interest on
the bonds by obtaining letters of credit. Each industrial development revenue
bond carries a variable interest rate, which is reset weekly by the remarketing
agents. The bonds can be called at anytime. The Registrant is in compliance with
the covenants of its loan agreements and believes that the covenants will not
restrict its future operations.
Interest paid on these bonds charged to expense was $877 in 2000, $682 in 1999
and $743 in 1998.
Note 10: Shareholders’ Equity
On the basis of amounts declared and paid, the annualized quarterly dividends
per share were $0.62 in 2000, $0.60 in 1999 and $0.56 in 1998.
In the following
chart, the Registrant provides net income and basic earnings per share reduced
by the pro forma amounts calculating compensation cost for the Registrant’s
fixed stock option plan under the fair value method. The fair value of each
option grant was estimated on the date of grant using the Black-Scholes
option-pricing model with the following assumptions for 2000, 1999 and 1998,
respectively: risk-free interest rates of 6.4, 5.1 and 4.7 percent; dividend
yield of 1.6, 1.4 and 1.8 percent; volatility of 31, 33 and 24 percent; and
average expected lives of six years for management and four years for executive
management and non-employee directors. Pro forma net income reflects only
options granted since January 1, 1995.
Fixed stock options
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. The exercise price
of options granted since January 1, 1995, was equal to the market price at the
grant date, and accordingly, no compensation
27
cost has been recognized. 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 6,265,313, of which 4,406,839 shares were available for issuance at
December 31, 2000. The 1991 Plan will expire on April 2, 2001. The 1991 Plan
replaced the Amended and Extended 1972 Stock Option Plan (1972 Plan), which
expired by its terms on April 2, 1992. All final options under the 1972 Plan
were exercised in 2000 and the 1972 Plan was deregistered.
Under the 1997 Milestone Stock Option Plan (Milestone Plan), options for 100
Common Shares were granted to all eligible salaried and hourly employees. The
exercise price of the options granted under the Milestone Plan was equal to the
market price at the grant date, and accordingly, no compensation cost has been
recognized. In general, all options are exercisable beginning two years from the
date of grant. The number of Common Shares that may be issued or delivered
pursuant to the Milestone Plan is 600,000 of which 533,300 shares were available
for issuance at December 31, 2000. The Milestone Plan will expire on March 2,
2002.
28
The following is a summary with respect to options outstanding at December 31,
2000, 1999 and 1998, and activity during the years ending on those dates:
The following table summarizes pertinent information regarding fixed stock
options outstanding and options exercisable at December 31, 2000:
29
Restricted share grants
The 1991 Plan also provides for the issuance of restricted shares to certain
employees. Outstanding shares granted at December 31, 2000, totaled 389,182
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-seven-year vesting period.
Performance share grants
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 for
the period ended December 31, 2000, were set in January 1998. Based on
performance, no payout was made in 2001. No performance share grants were made
in 2000 because the executive compensation program was reevaluated. Interim
awards of restricted shares with performance measures were made.
The compensation cost that has been charged against income for its
performance-based share grant plan was $116, ($1,712) and $2,280 in 2000, 1999
and 1998, respectively.
Rights Agreement
On January 28, 1999 the Board of Directors announced the adoption of a new
Rights Agreement that provided for Rights to be issued to shareholders of record
on February 11, 1999. The description and terms of the Rights were set forth in
the Rights Agreement, dated as of February 11, 1999, between the Registrant and
the Bank of New York, as Agent. Under the Rights Agreement, the Rights trade
together with the Common Shares and are not exercisable. In the absence of
further Board action, the Rights generally will become exercisable and allow the
holder to acquire Common Shares at a discounted price if a person or group
acquires 20 percent or more of the outstanding Common Shares. Rights held by
persons who exceed the applicable threshold will be void. Under certain
circumstances, the Rights will entitle the holder to buy shares in an acquiring
entity at a discounted price. The Rights Agreement also includes an exchange
option. In general, after the Rights become exercisable, the Board of Directors
may, at its option, effect an exchange of part or all of the Rights (other than
Rights that have become void) for Common Shares. Under this Option, the
Registrant would issue one Common Share for each Right, subject to adjustment in
certain circumstances. The Rights are redeemable at any time prior to the Rights
becoming exercisable and will expire on February 11, 2009, unless redeemed or
exchanged earlier by the Registrant.
Note 11: Earnings Per Share
The following data show the amounts used in computing earnings per share and the
effect on the weighted-averaged number of shares of dilutive potential common
stock.
Fixed stock options on 1,383 Common Shares in 2000 and 1,377 Common Shares in
1999 were not included in computing diluted earnings per share, because their
effects were antidilutive.
Note 12: Pension Plans and Postretirement Benefits
The Registrant has several pension plans covering substantially all domestic
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
30
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.
Employees of the Registrant’s operations in foreign countries participate to
varying degrees in local pension plans, which in the aggregate are not
significant.
Approximately 90 percent of the plan assets at September 30, 2000 and 1999 were
invested in listed stocks and investment grade bonds.
Minimum liabilities have been recorded in 2000 and 1999 for the plans whose
total accumulated benefit obligation exceeded the fair value of the plan’s
assets.
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.
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 by $108, while a one-percentage-point decrease in the trend
rate would decrease the service and interest components of the healthcare
benefits by $96.
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 7.0
percent in 2000 to 4.5 percent through the year of 2005 and remain at that level
thereafter. The effect of a one- percentage-point annual increase in these
assumed healthcare cost trend rates would increase the healthcare accumulated
postretirement benefit obligation by $1,994, while a one-percent decrease in the
trend rate would decrease the accumulated postretirement benefit obligation by
$1,768.
The following table sets forth the change in benefit obligation, change in
plan assets, the funded status, the Consolidated Balance Sheet presentation and
the relevant assumptions for the Registrant’s defined benefit pension plans and
health and life insurance post-retirement benefits at December 31:
31
32
The projected benefit obligation, accumulated benefit obligation and fair value
of plan assets for the pension plans with accumulated benefit obligations in
excess of plan assets were ($46,018), ($42,934), and $0, respectively, as of
December 31, 2000, and ($39,398), ($37,087) and $14,866, respectively, as of
December 31, 1999. The amounts included within other comprehensive income
arising from a change in the additional minimum pension liability, net of tax
were $1,507 and $614 in 2000 and 1999, respectively.
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 for
the year ended December 31, 2000 the Registrant matched 60 percent of a
participating employee’s first three percent of contributions and 30 percent of
a participating employee’s second three percent of contributions. Total
Registrant match in 2000, 1999 and 1998 was $7,155, $9,012, and $9,338,
respectively.
Note 13: Leases
The Registrant’s future minimum lease payments due under operating leases for
real and personal property in effect at December 31, 2000 are as follows:
Rental expense for 2000, 1999 and 1998 under all lease agreements amounted to
approximately $36,361, $32,281, and $34,158, respectively.
Note 14: Income Taxes
Income tax expense attributable to income from continuing operations consists
of:
In addition to the 2000 income tax expense of $67,438, certain deferred income
tax benefits of ($60) 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:
33
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:
At December 31, 2000, the Registrant’s international subsidiaries had deferred
tax assets relating to net operating loss carryforwards of $3,305, $1,974 of
which expires in years 2001 through 2010, and $1,331 of which has an indefinite
carryforward period. The Registrant recorded a valuation allowance to reflect
the estimated amount of deferred tax assets, which, more likely than not, will
not be realized. The valuation allowance relates to certain international net
operating losses and other international deferred tax assets.
Note 15: Commitments and Contingencies
At December 31, 2000, 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. While in management’s opinion the
financial statements would not be materially affected by the outcome of any
present legal proceedings, commitments, or asserted claims, management is aware
of a claim by the Internal Revenue Service concerning the deductibility of
interest related to loans from the Registrant’s corporate owned life insurance
(COLI) programs.
This claim represents an exposure for additional taxes of approximately $17,600,
excluding interest. Management is aware that both the U.S. Tax Court and the
United States District Court for the District of Delaware have recently reached
decisions disallowing the deduction of interest on COLI loans of two similarly
situated companies.
Notwithstanding these adverse court decisions, management believes that the
Registrant’s facts and circumstances are different from the above cited court
cases. The Registrant has made no provision for any possible earnings impact
from this matter because it believes it has a meritorious position and will
vigorously contest the IRS’ claim. In the event the resolution of this matter is
unfavorable, it may have a material adverse effect on the Registrant’s result of
operations for the period in which such unfavorable resolution occurs.
Note 16: Segment Information
The Registrant has defined its segments into its three main sales channels:
North American Sales and Service (NASS), International Sales and Service (ISS)
and Other, which combines several of the Registrant’s smaller sales channels.
These sales channels are evaluated based on the following information presented:
revenues from customers, revenues from intersegment transactions, and operating
profit contribution to the total corporation. A reconciliation between segment
information and the Consolidated Financial Statements is also disclosed. All
income and expense items below operating profit are not allocated to the
segments and are not disclosed. Revenue by geography and revenue by product and
service solution are also disclosed.
The NASS segment sells financial and retail systems and also services financial,
retail and medical systems in the United States and Canada. The ISS segment
sells and services financial and retail systems over the remainder of the globe.
The segment called Other, sells products to educational and medical institutions
and other customers. This segment also services educational customers in the
United States. Each of the sales channels buys the goods it sells from the
Registrant’s manufacturing plants through intercompany sales that are eliminated
on consolidation. Each year, inter-company pricing is agreed upon, which drives
sales channel operating profit contribution. As permitted under SFAS 131,
certain information not routinely
34
used in the management of these segments,
information not allocated back to the segments or information that is
impractical to report is not shown. Items not disclosed are as follows: Interest
revenue, interest expense, depreciation, amortization, equity in the net income
of investees accounted for by the equity method, income tax expense or benefit,
extraordinary items, significant noncash items and long-lived assets.
More than 90 percent of the Registrant’s customer revenues are derived from the
sales and service of financial systems and equipment. The Registrant had no
customers in 2000 and 1999 that accounted for more than 10 percent of total net
sales. The Registrant had one customer, IBM, its former partner in the InterBold
joint venture that accounted for $148,755 of the total net sales of $1,185,707
in 1998. 2000 and 1999 sales to IBM were $12,799 and $51,552, respectively.
35
Reconciliation of Segment Information to Consolidated Statements of Income
Product Revenue by Geography
Total Revenue Domestic vs. International
Total Revenue by Product /Service Solution
36
Note 17: Acquisitions
On April 17, 2000, the Registrant acquired the financial self-service assets
and related development activities of European-based Groupe Bull and Getronics
NV (European acquisition). The businesses acquired include ATMs, cash
dispensers, other self-service terminals and related services primarily for the
global banking industry. The acquisition was completed for approximately
$90,000 and 400,000 French francs (translation $58,080), including professional
and legal fees. The majority of subsidiaries of the European acquisition have
been acquired and the results of operations, which are not material to the
Registrant, consolidated. The remaining subsidiaries will be consolidated upon
completion of the legal closing. The acquisition has been accounted for under
the purchase method of accounting. Accordingly, the purchase price has been
allocated to identifiable tangible and intangible assets acquired and
liabilities assumed, based upon their respective fair values, with an estimated
$146,080 allocated to goodwill, subject to change once all subsidiaries have
been consolidated, which is being amortized over a 20 year economic life from
the date of acquisition.
Unaudited pro forma financial information assuming the European acquisition was
effected on January 1, 2000 is as follows: revenues $1,818,292, net income
$136,153 and diluted earnings per share $1.90.
On December 31, 2000, the Registrant purchased the remaining ownership interest
in Diebold Agrentina from Ciccone Calcografica S.A. for $4,875.
During 1999, the following acquisition occurred and was accounted for under the
purchase method of accounting. The results have been included in the
Consolidated Financial Statements since the date of acquisition.
On October 21, 1999, the Registrant acquired Procomp Amazonia Industria
Eletronica, S.A. (Procomp), a Brazilian manufacturer and marketer of innovative
technical solutions, including personal computers, servers, software,
professional services and retail and banking automation equipment. The
acquisition was effected in a combination of cash and stock for $222,310, which
included goodwill of $135,219 to be amortized over 17 years. The value of
shares issued was $41,953.
Yearly unaudited pro forma financial information assuming the acquisition of
Procomp was effected on January 1, 1999 and 1998, respectively, is as follows:
revenue $1,502,505 and $1,518,977, net income $118,346 and $79,434, and diluted
earnings per share $1.67 and $1.12. In 1999, unaudited pro forma results were
severely impacted by the devaluation of the Brazilian real.
Note 18: Subsequent Events (Unaudited)
On January 5, 2001, the Registrant announced the closing of the Staunton,
Virginia manufacturing facility. The closing is estimated to be completed by
the end of the first quarter of 2001. The facility was opened in 1997 for
precision sheet metal processing for ATM components. Some of the equipment
used at the Staunton facility will replace older equipment at facilities in
Lynchburg, Virginia and Sumter, South Carolina
.
Closing costs to be incurred during the first quarter of 2001 are estimated at
$2,500 to $3,000 and include closure of the facility, transfer of equipment as
well as separation packages and outplacement services offered to employees.
Note 19: Quarterly Financial Information (Unaudited)
See “Comparison of Selected Quarterly Financial Data (Unaudited)” on page 39 of
this Annual Report on
37
Forward-Looking Statement Disclosure
In the Registrant’s written or oral statements, the use of the words
“believes,” “anticipates,” “expects” and similar expressions is intended to
identify forward-looking statements that have been made and may in the future
be made by or on behalf of the Registrant, including statements concerning
future operating performance, the Registrant’s share of new and existing
markets, and the Registrant’s short- and long-term revenue and earnings growth
rates. Although the Registrant believes that its outlook is based upon
reasonable assumptions regarding the economy, its knowledge of its business,
and on key performance indicators which impact the Registrant, there can be no
assurance that the Registrant’s goals will be realized. The Registrant is not
obligated to report changes to its outlook. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date hereof. The Registrant’s uncertainties could cause actual results to
differ materially from those anticipated in forward-looking statements. These
include, but are not limited to:
38
Comparison of Selected Quarterly Financial Data (Unaudited)
See Note 19 to Consolidated Financial Statements and 5-Year Summary 2000-1996
39
Report of Management
The management of Diebold, Incorporated 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 Annual Report on 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
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 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 LLP and the Managing Director
of Internal Audit have full and free access to the Audit Committee.
/s/Gregory T. Geswein
40
5-Year Summary 2000-1996
41
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 8 of the Registrant’s proxy statement for the 2001 Annual
Meeting of Shareholders (“2001 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. Information with respect to Section 16(a)
Beneficial Ownership Reporting Compliance” is included on page 6 of the
Registrant’s proxy statement for the 2001 Annual Meeting and is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information with respect to executive compensation is included on pages 8
through 17 of the Registrant’s proxy statement for the 2001 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 2 through 6 of the Registrant’s
proxy statement for the 2001 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 8 of the Registrant’s proxy statement for the
2001 Annual Meeting is incorporated herein by reference.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K.
42
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K. (continued)
2. Exhibits
43
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K. (continued)
44
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K. (continued)
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by Registrant during
the fourth quarter of 2000.
45
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.
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.
46
47
INDEPENDENT AUDITORS’ REPORT ON
The Board of Directors and Shareholders
We have audited the accompanying consolidated balance sheets of Diebold,
Incorporated and subsidiaries as of December 31, 2000 and 1999 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, 2000. 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, 2000. 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 auditing standards generally
accepted in the United States of America. 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, 2000 and 1999 and the results
of their operations and their cash flows for each of the years in the
three-year period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America. 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 LLP
KPMG LLP
48
DIEBOLD, INCORPORATED AND SUBSIDIARIES
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
49
EXHIBIT INDEX
50
2000
1999
1998
High
Low
High
Low
High
Low
1st Quarter
$
28.50
$
21.50
$
39.88
$
22.06
$
55.31
$
41.69
2nd Quarter
32.87
25.37
30.69
20.75
44.44
23.63
3rd Quarter
31.94
24.00
30.38
22.69
31.44
20.00
4th Quarter
34.75
22.94
27.63
19.69
36.88
19.13
Full Year
$
34.75
$
21.50
$
39.88
$
19.69
$
55.31
$
19.13
2000
1999
1998
1997
1996
Net Sales
$
1,743,608
$
1,259,177
$
1,185,707
$
1,226,936
$
1,030,191
Net Income
136,919
128,856
76,148
122,516
97,425
Basic earnings per share
1.92
1.86
1.10
1.78
1.42
Diluted earnings per share
1.92
1.85
1.10
1.76
1.40
Total Assets
1,585,427
1,298,831
1,004,188
991,050
859,101
Cash dividends paid per Common Share
0.62
0.60
0.56
0.50
0.45
Table of Contents
2000
1999
1998
Percentage
Percentage
Percentage
Percentage
Percentage
of Net
Increase
of Net
Increase
of Net
(Dollars in thousands)
Amount
Sales
(Decrease)
Amount
Sales
(Decrease)
Amount
Sales
Net sales
Products
$
1,069,405
61.3
%
41.2
%
$
757,246
60.1
%
0.9
%
$
750,161
63.3
%
Services
674,203
38.7
34.3
501,931
39.9
15.2
435,546
36.7
1,743,608
100.0
38.5
1,259,177
100.0
6.2
1,185,707
100.0
Cost of sales
Products
697,562
65.2
56.8
444,732
58.7
(3.9
)
462,788
61.7
Special charges
—
—
—
—
—
(100.0
)
9,864
—
Services
486,891
72.2
36.1
357,633
71.3
16.6
306,805
70.4
1,184,453
67.9
47.6
802,365
63.7
2.9
779,457
65.7
Gross profit
559,155
32.1
22.4
456,812
36.3
12.4
406,250
34.3
Selling and administrative expense
274,507
15.7
24.0
221,393
17.6
13.8
194,535
16.4
Research, development and
engineering expense
55,693
3.2
10.3
50,507
4.0
(6.8
)
54,215
4.6
In-process research and development
—
—
(100.0
)
2,050
0.2
100.0
—
—
Realignment charges
—
—
(100.0
)
(3,261
)
(0.3
)
(106.4
)
51,253
4.3
330,200
18.9
22.0
270,689
21.5
(9.8
)
300,003
25.3
Operating profit
228,955
13.1
23.0
186,123
14.8
75.2
106,247
9.0
Other income (expense), net
(21,558
)
(1.2
)
(231.6
)
16,384
1.3
6.4
15,403
1.3
Minority interest
(3,040
)
(0.2
)
160.1
(1,169
)
(0.1
)
(36.6
)
(1,843
)
(0.2
)
Income before taxes
204,357
11.7
1.5
201,338
16.0
68.1
119,807
10.1
Taxes on income
67,438
3.9
(7.0
)
72,482
5.8
66.0
43,659
3.7
Net income
$
136,919
7.9
%
6.3
%
$
128,856
10.2
%
69.2
%
$
76,148
6.4
%
Table of Contents
2000
1999
1998
United States
$
550,215
$
515,620
$
495,432
Canada
17,188
23,440
32,083
Asia Pacific
78,524
54,317
47,373
EMEA*
157,283
61,321
61,126
Latin America
266,195
102,548
114,147
Total
$
1,069,405
$
757,246
$
750,161
Table of Contents
2000
1999
1998
Domestic
$
447,446
$
423,397
$
393,068
International
226,757
78,534
42,478
Total
$
674,203
$
501,931
$
435,546
2000
1999
1998
Self-service
solutions
$
672,501
$
536,166
$
549,942
Security solutions
194,194
179,957
178,095
Professional
and special
services
202,710
41,123
22,124
Custom
maintenance
674,203
501,931
435,546
Total
$
1,743,608
$
1,259,177
$
1,185,707
2000
1999
1998
NASS
$
965,859
$
926,975
$
891,288
ISS
728,828
293,316
263,428
Other
48,921
38,886
30,991
Total
$
1,743,608
$
1,259,177
$
1,185,707
2000
1999
1998
NASS
$
145,131
$
153,799
$
144,886
ISS
36,891
17,801
7,470
Other
35
(9,997
)
(9,106
)
Total
$
182,057
$
161,603
$
143,250
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Diebold, Incorporated and Subsidiaries
December 31, 2000 and 1999
(Dollars in thousands, except per share amounts)
2000
1999
ASSETS
Current assets
Cash and cash equivalents
$
65,184
$
27,299
Short-term investments
61,328
57,348
Trade receivables less allowances of $12,093 for 2000 and $9,221 for 1999
363,571
312,506
Notes receivable
13,663
13,287
Inventories
205,567
169,785
Finance receivables
35,101
19,592
Deferred income taxes
17,232
27,022
Prepaid expense and other current assets
42,717
21,097
Total current assets
804,363
647,936
Securities and other investments
123,224
175,232
Property, plant and equipment, at cost
363,493
320,640
Less accumulated depreciation and amortization
188,547
159,916
174,946
160,724
Deferred income taxes
6,044
12,638
Finance receivables
94,364
83,804
Goodwill
296,101
160,073
Other assets
86,385
58,424
$
1,585,427
$
1,298,831
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Notes payable
$
263,609
$
117,450
Accounts payable
111,055
96,351
Estimated income taxes
5,594
13,558
Accrued insurance
13,365
16,299
Deferred income
59,242
88,319
Other current liabilities
113,927
50,430
Total current liabilities
566,792
382,407
Bonds payable
20,800
20,800
Pensions and other benefits
28,386
24,309
Postretirement benefits and other benefits
28,123
22,497
Minority interest
5,260
4,423
Commitments and contingencies
—
—
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 72,019,205 and
71,482,997 shares, respectively; outstanding 71,547,232 and 71,096,290 shares respectively
90,024
89,354
Additional capital
98,530
87,169
Retained earnings
784,063
691,415
Treasury shares, at cost (471,973 and 386,707 shares, respectively)
(15,944
)
(13,644
)
Accumulated other comprehensive income
(12,658
)
(5,865
)
Other
(7,949
)
(4,034
)
Total shareholders’ equity
936,066
844,395
$
1,585,427
$
1,298,831
Table of Contents
Diebold, Incorporated and Subsidiaries
Years Ended December 31, 2000, 1999 and 1998
(Dollars in thousands, except per share amounts)
2000
1999
1998
Net sales
Products
$
1,069,405
$
757,246
$
750,161
Services
674,203
501,931
435,546
1,743,608
1,259,177
1,185,707
Cost of sales
Products
697,562
444,732
462,788
Special charges
—
—
9,864
Services
486,891
357,633
306,805
1,184,453
802,365
779,457
Gross profit
559,155
456,812
406,250
Selling and administrative expense
274,507
221,393
194,535
Research, development and engineering expense
55,693
50,507
54,215
In-process research and development
—
2,050
—
Realignment charges
—
(3,261
)
51,253
330,200
270,689
300,003
Operating profit
228,955
186,123
106,247
Other income (expense)
Investment income
18,242
22,961
18,587
Interest expense
(17,681
)
(3,611
)
(743
)
Miscellaneous, net
(22,119
)
(2,966
)
(2,441
)
Minority interest
(3,040
)
(1,169
)
(1,843
)
Income before taxes
204,357
201,338
119,807
Taxes on income
67,438
72,482
43,659
Net income
$
136,919
$
128,856
$
76,148
Basic weighted-average number of shares
71,296
69,359
68,960
Diluted weighted-average number of shares
71,479
69,562
69,310
Basic earnings per share
$
1.92
$
1.86
$
1.10
Diluted earnings per share
$
1.92
$
1.85
$
1.10
Table of Contents
Diebold, Incorporated and Subsidiaries
Years Ended December 31, 2000, 1999 and 1998
(Dollars in thousands)
Common Shares
Accumulated
Compre-
Other
Par
Additional
Retained
Treasury
hensive
Comprehensive
Number
Value
Capital
Earnings
Shares
Income
Income
Other
Total
Balance, January 1, 1998
69,275,714
$
86,595
$
38,247
$
566,710
$
(12,882
)
$
(9,703
)
$
(386
)
$
668,581
Net income
76,148
$
76,148
76,148
Translation adjustment
150
150
Pensions
(2,797
)
(2,797
)
Unrealized loss on investment
securities
(452
)
(452
)
Other comprehensive income
(3,099
)
(3,099
)
Comprehensive income
$
73,049
Stock options exercised
208,031
260
4,538
4,798
Unearned compensation
10,738
13
511
(163
)
361
Dividends declared and paid
(38,631
)
(38,631
)
Treasury shares
(15
)
(9,020
)
(9,035
)
Balance, December 31, 1998
69,494,483
$
86,868
$
43,281
$
604,227
$
(21,902
)
$
(12,802
)
$
(549
)
$
699,123
Net income
128,856
$
128,856
128,856
Translation adjustment
9,558
9,558
Pensions
614
614
Unrealized loss on investment
securities
(3,235
)
(3,235
)
Other comprehensive income
6,937
6,937
Comprehensive income
$
135,793
Stock options exercised
108,104
134
1,918
2,052
Unearned compensation
149,799
188
3,933
(3,485
)
636
Performance shares
20,397
26
686
712
Procomp and Nexus
acquisitions
1,710,214
2,138
37,351
9,487
48,976
Dividends declared and paid
(41,668
)
(41,668
)
Treasury shares
(1,229
)
(1,229
)
Balance, December 31, 1999
71,482,997
$
89,354
$
87,169
$
691,415
$
(13,644
)
$
(5,865
)
$
(4,034
)
$
844,395
Net income
136,919
$
136,919
136,919
Translation adjustment
(7,904
)
(7,904
)
Pensions
1,507
1,507
Unrealized loss on investment
securities
(396
)
(396
)
Other comprehensive income
(6,793
)
(6,793
)
Comprehensive income
$
130,126
Stock options exercised
273,238
343
5,444
5,787
Unearned compensation
247,635
308
5,583
(3,915
)
1,976
Performance shares
15,335
19
334
353
Dividends declared and paid
(44,271
)
(44,271
)
Treasury shares
(2,300
)
(2,300
)
Balance, December 31, 2000
72,019,205
$
90,024
$
98,530
$
784,063
$
(15,944
)
$
(12,658
)
$
(7,949
)
$
936,066
Table of Contents
Diebold, Incorporated and Subsidiaries
Years ended December 31, 2000, 1999 and 1998
(Dollars in thousands)
2000
1999
1998
Cash flow from operating activities:
Net income
$
136,919
$
128,856
$
76,148
Adjustments to reconcile net income to cash
provided by operating activities:
Minority share of income
3,040
1,169
1,843
Depreciation
35,901
34,709
25,649
Other charges and amortization
32,779
17,557
13,891
Goodwill written off under realignment plan
—
—
23,001
Deferred income taxes
15,305
8,505
(4,192
)
Loss on disposal of assets, net
3,971
5,188
1,963
Loss (gain) on sale of investments, net
127
257
(232
)
Cash provided (used) by changes in certain
assets and liabilities:
Trade receivables
(5,628
)
(16,077
)
35,994
Inventories
(7,003
)
(4,634
)
202
Prepaid expenses and other current assets
(18,933
)
19,821
1,477
Accounts payable
(20,485
)
(31,048
)
(14,162
)
Other certain assets and liabilities
(29,798
)
24,282
15,656
Net cash provided by operating activities
146,195
188,585
177,238
Cash flow from investing activities:
Payments for acquisitions, net of cash acquired
(143,332
)
(159,026
)
—
Proceeds from maturities of investments
67,617
45,521
41,438
Proceeds from sales of investments
11,446
60,427
599
Payments for purchases of investments
(35,642
)
(142,169
)
(78,348
)
Capital expenditures
(42,694
)
(40,341
)
(30,768
)
Increase in net finance receivables
(26,069
)
(17,967
)
(10,900
)
Increase in other certain assets
(46,683
)
(28,245
)
(18,530
)
Net cash used by investing activities
(215,357
)
(281,800
)
(96,509
)
Cash flow from financing activities:
Dividends paid
(44,271
)
(41,668
)
(38,631
)
Notes payable borrowings
301,130
117,450
—
Notes payable repayments
(156,321
)
—
—
Distribution for purchase of IBM’s share of minority
interest in InterBold
—
—
(16,141
)
Distribution of affiliate’s earnings to minority interest holder
(590
)
(1,000
)
—
Issuance of Common Shares
9,399
3,908
4,612
Repurchase of Common Shares
(2,300
)
(1,229
)
(8,325
)
Other
—
513
—
Net cash provided (used) by financing activities
107,047
77,974
(58,485
)
Increase (decrease) in cash and cash equivalents
37,885
(15,241
)
22,244
Cash and cash equivalents at the beginning of the year
27,299
42,540
20,296
Cash and cash equivalents at the end of the year
$
65,184
$
27,299
$
42,540
Cash paid for:
Income taxes
$
57,862
$
55,307
$
38,997
Short-term interest
14,199
1,427
—
Long-term interest
877
682
743
Significant noncash items:
Share issuance for acquisition of Procomp
$
—
$
41,953
$
—
Share issuance for acquisition of Nexus
—
7,023
—
Table of Contents
(Dollars in thousands, except per share amounts)
Accounting Policies
Table of Contents
Table of Contents
Amortized
Unrealized
Fair
Cost Basis
Gain(Loss)
Value
As of December 31, 2000
Short-term investments due
within one year:
Tax-exempt
municipal bonds
$
43,360
$
(410
)
$
42,950
Certificates of
deposit and
other investments
18,378
—
18,378
$
61,738
$
(410
)
$
61,328
Securities and other
investments due after one
through five years:
Tax-exempt
municipal bonds
$
54,611
$
84
$
54,695
Equity securities
24,898
(3,256
)
21,642
$
79,509
$
(3,172
)
$
76,337
Amortized
Unrealized
Fair
Cost Basis
Gain(Loss)
Value
As of December 31, 1999
Short-term investments due
within one year:
Tax-exempt
municipal bonds
$
20,897
$
(38
)
$
20,859
Certificates of
deposit and
other investments
36,489
—
36,489
$
57,386
$
(38
)
$
57,348
Securities and other
investments due after
one through five years:
Tax-exempt
municipal bonds
$
107,808
$
(1,468
)
$
106,340
Equity securities
32,236
(2,844
)
29,392
$
140,044
$
(4,312
)
$
135,732
Table of Contents
2000
1999
Finished goods and service parts
$
63,855
$
55,433
Work in process
130,578
114,300
Raw materials
11,134
52
$
205,567
$
169,785
Annual
2000
1999
Rates
Land and land
improvements
$
7,554
$
7,275
5-20
%
Buildings
73,077
64,181
2-34
%
Machinery, equipment
and rotatable
spares
261,583
236,531
15-40
%
Leasehold
Lease
improvements
5,183
4,506
Term
Construction in
progress
16,096
8,147
—
$
363,493
$
320,640
2000
1999
Total minimum
lease receivable
$
153,298
$
121,266
Estimated unguaranteed
residual values
7,131
5,587
160,429
126,853
Less:
Unearned interest income
(28,632
)
(21,750
)
Unearned residuals
(2,332
)
(1,707
)
(30,964
)
(23,457
)
$
129,465
$
103,396
2001
$
40,211
2002
37,483
2003
31,909
2004
23,890
2005
15,464
Thereafter
4,341
$
153,298
2000
1999
Revolving US$ loans
$
185,592
$
117,450
Revolving EURO loans
1
70,813
—
Revolving Australian dollar
loans
2
7,204
—
$
263,609
$
117,450
Table of Contents
Table of Contents
Facility
Closing and
Other
Write-Down
Employee
Exit
of Assets
Costs
Costs
Total
Original realignment charge
at commencement of plan
$
40,343
$
8,269
$
12,505
$
61,117
Write-off of intangibles and
long-lived assets under SFAS 121
(24,857
)
—
—
(24,857
)
Beginning accrual at commencement
of Plan
15,486
8,269
12,505
36,260
1998 activity
(13,409
)
(3,693
)
(7,910
)
(25,012
)
Balance at December 31, 1998
$
2,077
$
4,576
$
4,595
$
11,248
1999 activity
(1,849
)
(1,543
)
(4,595
)
(7,987
)
Remaining realignment accrual taken back
into income
(228
)
(3,033
)
—
(3,261
)
Balance at December 31, 1999
$
—
$
—
$
—
$
—
2000
1999
Industrial Development Revenue
Bond due January 1, 2017
$
5,800
$
5,800
Industrial Development Revenue
Bond due April 1, 2017
7,500
7,500
Industrial Development Revenue
Bond due June 1, 2017
7,500
7,500
$
20,800
$
20,800
2000
1999
1998
Net income
As reported
$
136,919
$
128,856
$
76,148
Pro forma
$
135,048
$
127,498
$
73,822
Earnings per share
As reported
Basic
$
1.92
$
1.86
$
1.10
Diluted
$
1.92
$
1.85
$
1.10
Pro forma
Basic
$
1.89
$
1.84
$
1.07
Diluted
$
1.89
$
1.83
$
1.07
Table of Contents
Table of Contents
2000
1999
1998
Weighted-
Weighted-
Weighted-
Average
Average
Average
Exercise
Exercise
Exercise
Shares
Price
Shares
Price
Shares
Price
Outstanding at the beginning of year
2,216,171
$
31
1,989,032
$
30
2,121,223
$
27
Options granted
500,294
24
412,197
34
271,150
47
Options exercised
(234,116
)
14
(112,698
)
12
(208,031
)
13
Options expired or forfeited
(77,244
)
35
(72,360
)
40
(195,310
)
39
Outstanding at the end of year
2,405,105
$
31
2,216,171
$
31
1,989,032
$
30
Options exercisable at end of year
1,577,672
1,378,795
780,967
Weighted-average fair value
of options
granted during the year
$
8
$
10
$
12
Options Outstanding
Options Exercisable
Weighted-
Average
Number
Remaining
Weighted-
Number
Weighted-
Of
Contractual
Average
Of
Average
Options
Life
Exercise
Options
Exercise
Range of Exercise Prices
Outstanding
(in Years)
Price
Exercisable
Price
$6 - 26
36,701
0.25
$
19
36,701
$
19
9 - 42
574,991
1.23
39
570,487
39
13 - 40
94,548
2.12
20
84,548
17
17 - 32
102,675
3.14
19
81,606
18
15 - 29
148,785
4.18
19
114,660
16
24 - 25
223,275
5.07
24
200,805
24
34 - 38
209,280
6.08
38
168,075
38
29 - 48
201,450
7.08
47
129,300
47
29 - 35
362,800
8.07
35
154,490
35
23 - 32
450,600
9.15
24
37,000
23
2,405,105
5.30
$
31.44
1,577,672
$
32.31
Table of Contents
(In thousands except per share amounts)
2000
1999
1998
Numerator:
Income available to Common shareholders used in
basic and diluted earnings per share
$
136,919
$
128,856
$
76,148
Denominator:
Weighted-average
number of Common
Shares
used in basic
earnings per share
71,296
69,359
68,960
Effect of dilutive fixed
stock options and
performance shares
183
203
350
Weighted-average
number of Common
Shares
and dilutive
potential Common
Shares used in
diluted earnings
per share
71,479
69,562
69,310
Basic earnings per share
$
1.92
$
1.86
$
1.10
Diluted earnings per share
$
1.92
$
1.85
$
1.10
Table of Contents
Table of Contents
Pension Benefits
Health and Life Benefits
2000
1999
2000
1999
Change in benefit obligation
Benefit obligation at beginning of year
$
240,229
$
245,302
$
20,554
$
21,844
Service Cost
7,510
9,797
42
65
Interest Cost
17,081
16,883
1,589
1,459
Assumption change
(16,991
)
(18,011
)
5,550
(809
)
Liability (gain)/loss
496
(5,306
)
570
(171
)
Benefits paid
(8,584
)
(8,077
)
(2,207
)
(1,834
)
Expenses paid
(297
)
(359
)
—
—
Other
928
—
Benefit obligation at end of year
$
240,372
$
240,229
$
26,098
$
20,554
Change in plan assets
Fair value of plan assets at beginning of year
$
310,313
$
261,208
$
—
$
—
Employer contributions
1,381
503
2,207
1,834
Benefits paid
(8,584
)
(8,077
)
(2,207
)
(1,834
)
Expenses paid
(297
)
(359
)
Investment return
55,596
57,038
—
—
Fair value of plan assets at end of year
$
358,409
$
310,313
$
—
$
—
Funded status
Funded status
$
118,037
$
70,085
$
(26,098
)
$
(20,554
)
Unrecognized net loss/(gain)
(112,614
)
(68,784
)
2,570
(3,683
)
Prior service costs not yet recognized
5,764
5,201
—
—
Unrecognized net transition obligation
(6,687
)
(8,172
)
—
—
Prepaid(accrued) pension cost
$
4,500
$
(1,670
)
$
(23,528
)
$
(24,237
)
Amounts recognized in Balance Sheet
Prepaid benefit cost
$
23,492
$
14,823
$
—
$
—
Accrued benefit liability
(23,258
)
(21,863
)
(23,528
)
(24,237
)
Intangible asset
2,265
1,036
—
—
Accumulated other comprehensive income
2,001
4,334
—
—
Net amount recognized
$
4,500
$
(1,670
)
$
(23,528
)
$
(24,237
)
Pension Benefits
Health and Life Benefits
2000
1999
1998
2000
1999
1998
Net periodic pension benefit cost
Service Cost
$
7,510
$
9,797
$
8,673
$
42
$
65
$
53
Interest Cost
17,081
16,883
15,818
1,589
1,459
1,442
Expected return on assets
(26,986
)
(21,800
)
(19,531
)
—
—
—
Transition (asset)/obligation recognition
(1,485
)
(1,484
)
(1,484
)
—
—
—
Prior service cost amortization
965
1,062
1,062
—
—
—
Net (gain)/loss recognition
(2,804
)
608
326
(133
)
(47
)
(192
)
Net periodic pension (benefit) cost
$
(5,719
)
$
5,066
$
4,864
$
1,498
$
1,477
$
1,303
Weighted-average assumptions as of
September 30 valuation date
Discount rate
7.75
%
7.50
%
7.00
%
7.75
%
7.50
%
7.00
%
Long-term rate of return on plan assets
10.00
%
9.25
%
9.25
%
—
—
—
Rate of increase in compensation level
5.00
%
5.00
%
5.00
%
—
—
—
Table of Contents
Real
Vehicles and
Expiring
Total
Estate
Equipment
2001
$
33,436
$
13,523
$
19,913
2002
26,373
10,630
15,743
2003
19,618
9,478
10,140
2004
12,282
8,562
3,720
2005
7,993
7,754
239
Thereafter
7,585
7,584
1
$
107,287
$
57,531
$
49,756
2000
1999
1998
Federal and international
Current
$
48,584
$
55,317
$
39,656
Deferred
13,266
10,840
(272
)
$
61,850
$
66,157
$
39,384
State and local
Current
$
3,373
$
4,176
$
5,132
Deferred
2,215
2,149
(857
)
5,588
6,325
4,275
Total income tax
expense
$
67,438
$
72,482
$
43,659
2000
1999
1998
Statutory tax rate
35.0
%
35.0
%
35.0
%
State and local income
taxes,
net of federal
tax benefit
1.8
2.0
2.3
Realignment charges
—
—
3.3
Exempt income
(2.6
)
(3.3
)
(4.2
)
Insurance contracts
(0.6
)
(0.2
)
(2.4
)
Other
(0.6
)
2.5
2.4
Effective tax rate
33.0
%
36.0
%
36.4
%
Table of Contents
2000
1999
Deferred Tax Assets:
Postretirement benefits
$
17,017
$
17,246
Accrued expenses
8,445
19,232
Inventory
1,417
3,630
Partnership income
2,790
1,496
Deferred revenue
3,372
4,976
Net operating
loss carryforwards
3,305
3,508
State deferred taxes
3,692
5,906
Other
15,492
10,830
55,530
66,824
Valuation allowance
(2,602
)
(2,646
)
Net deferred tax assets
$
52,928
$
64,178
Deferred Tax Liabilities:
Pension
$
10,451
$
7,075
Amortization
987
716
Depreciation
6,957
4,009
Finance receivables
7,231
7,277
Other
4,026
5,441
Net deferred tax
liabilities
29,652
24,518
Net deferred tax asset
$
23,276
$
39,660
Table of Contents
NASS
ISS
OTHER
TOTAL
2000 Segment Information by Channel
Customer Revenues
$
965,859
$
728,828
$
48,921
$
1,743,608
Intersegment Revenues
22,408
25
6,990
29,423
Operating Profit
145,131
36,891
35
182,057
1999 Segment Information by Channel
Customer Revenues
$
926,975
$
293,316
$
38,886
$
1,259,177
Intersegment Revenues
15,262
(284
)
11,502
26,480
Operating Profit
153,799
17,801
(9,997
)
161,603
1998 Segment Information by Channel
Customer Revenues
$
891,288
$
263,428
$
30,991
$
1,185,707
Intersegment Revenues
26,176
278
9,509
35,963
Operating Profit
144,886
7,470
(9,106
)
143,250
Table of Contents
2000
1999
1998
Inter-
Inter-
Inter-
Customer
segment
Operating
Customer
segment
Operating
Customer
segment
Operating
Revenues
Revenues
Profit
Revenues
Revenues
Profit
Revenues
Revenues
Profit
Total segment
information
$
1,743,608
$
29,423
$
182,057
$
1,259,177
$
26,480
$
161,603
$
1,185,707
$
35,963
$
143,250
Adjustments:
Manufacturing
—
645,899
69,979
—
600,003
58,508
—
715,793
72,182
Corporate
—
3,270
(23,081
)
—
3,438
(35,199
)
—
—
(48,068
)
Realignment
and
special
charges
—
—
—
—
—
3,261
—
—
(61,117
)
In-process
research and
development
costs
—
—
—
—
—
(2,050
)
—
—
—
Eliminations
—
(678,592
)
—
—
(629,921
)
—
—
(751,756
)
—
Total
adjustments
—
(29,423
)
46,898
—
(26,480
)
24,520
—
(35,963
)
(37,003
)
Consolidated
Statement
of income
$
1,743,608
$
—
$
228,955
$
1,259,177
$
—
$
186,123
$
1,185,707
$
—
$
106,247
Total Revenue
2000
1999
1998
United States
$
550,215
$
515,620
$
495,432
Canada
17,188
23,440
32,083
Asia Pacific
78,524
54,317
47,373
Europe, Middle East
And Africa
157,283
61,321
61,126
Latin America
266,195
102,548
114,147
Total Product Revenue
$
1,069,405
$
757,246
$
750,161
Total Revenue
2000
1999
1998
Domestic
$
997,661
$
939,017
$
888,500
Percentage of total revenue
57.2
%
74.6
%
74.9
%
International
745,947
320,160
297,207
Percentage of total revenue
42.8
%
25.4
%
25.1
%
Total Product Revenue
$
1,743,608
$
1,259,177
$
1,185,707
Total Revenue
2000
1999
1998
Self-service solutions
$
672,501
$
536,166
$
549,942
Security solutions
194,194
179,957
178,095
Professional and
special services
202,710
41,123
22,124
Custom maintenance
services
674,203
501,931
435,546
Total
$
1,743,608
$
1,259,177
$
1,185,707
Table of Contents
Form 10-K.
Table of Contents
•
competitiveness pressures, including pricing pressures and
technological developments;
•
changes in the Registrant’s relationships with customers, suppliers,
distributors and/or partners in its business ventures;
•
changes in political economic or other factors such as currency
exchange rates, inflation rates, recessionary or expansive trends,
taxes and regulations and laws affecting the worldwide business in
each of the Registrant’s operations, including Brazil, where a
significant portion of the Registrant’s revenue is derived;
•
acceptance of the Registrant’s product and technology introductions in
the marketplace;
•
unanticipated litigation, claims or assessments;
•
the ability to replace revenue generated by IBM as its primary
international distributor;
•
ability to continue to generate revenue growth in both domestic and
international markets;
•
ability to reduce costs and expenses and improve internal operating
efficiencies; and
•
variation in consumer demand for biometrics and self-service
technologies, products and services.
Table of Contents
(Dollars in thousands, except per share amounts)
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
2000
1999
2000
1999
2000
1999
2000
1999
Net sales
$
344,592
$
283,483
$
442,102
$
296,996
$
479,950
$
312,778
$
476,964
$
365,920
Gross profit
116,823
101,088
139,935
111,006
149,040
113,817
153,357
130,901
Net income*
31,260
29,124
35,833
31,561
34,901
32,654
34,925
35,516
Basic earnings
per share*
0.44
0.42
0.50
0.46
0.49
0.47
0.49
0.50
Diluted earnings
per share*
0.44
0.42
0.50
0.46
0.49
0.47
0.49
0.50
*
The sums of the quarterly figures does not equal annual figures due to
rounding or differences in the weighted-average number of shares outstanding
during the respective periods.
Table of Contents
Gregory T. Geswein
Senior Vice President and Chief
Financial Officer
Table of Contents
Selected Financial Data
(In thousands, except per share amounts and ratios)
2000
1999
1998
1997
1996
Operating Results
Net sales
$
1,743,608
$
1,259,177
$
1,185,707
$
1,226,936
$
1,030,191
Cost of sales
1,184,453
802,365
779,457
796,836
672,679
Gross profit
559,155
456,812
406,250
430,100
357,512
Selling and administrative expense
274,507
221,393
194,535
191,842
166,572
Research, development and engineering expense
55,693
50,507
54,215
54,397
50,576
In-process research and development
—
2,050
—
—
—
Operating profit
228,955
186,123
106,247
183,861
140,364
Other income (expense), net
(21,558
)
16,384
15,403
6,894
10,533
Minority interest
(3,040
)
(1,169
)
(1,843
)
(5,096
)
(4,393
)
Income before taxes
204,357
201,338
119,807
185,659
146,504
Taxes on income
67,438
72,482
43,659
63,143
49,079
Net income
136,919
128,856
76,148
122,516
97,425
Realignment and special charges (Note A)
—
(3,261
)
61,117
—
—
Basic earnings per share (Note B)
1.92
1.86
1.10
1.78
1.42
Diluted earnings per share (Note B)
1.92
1.85
1.10
1.76
1.40
Dividend and Common Share Data
Basic weighted-average shares outstanding (Note B)
71,296
69,359
68,960
68,939
68,796
Diluted weighted-average shares outstanding (Note B)
71,479
69,562
69,310
69,490
69,350
Common dividends paid
$
44,271
$
41,668
$
38,631
$
34,473
$
31,190
Common dividends paid per share (Note B)
0.62
0.60
0.56
0.50
0.45
Year-End Financial Position
Current assets
$
804,363
$
647,936
$
543,548
$
549,837
$
487,523
Current liabilities
566,792
382,407
235,533
242,080
228,220
Net working capital
237,571
265,529
308,015
307,757
259,303
Property, plant and equipment, net
174,946
160,724
147,131
143,901
95,934
Total assets
1,585,427
1,298,831
1,004,188
991,050
859,101
Long-term debt, less current maturities
20,800
20,800
20,800
20,800
—
Shareholders’ equity
936,066
844,395
699,123
668,581
575,570
Shareholders’ equity per share (Note C)
13.08
11.88
10.15
9.69
8.36
Ratios
Pretax profit on net sales (%)
11.7
%
16.0
%
10.1
%
15.1
%
14.2
%
Current ratio
1.4 to 1
1.7 to 1
2.3 to 1
2.3 to 1
2.1 to 1
Other Data
Capital expenditures
$
42,694
$
40,341
$
30,768
$
67,722
$
33,581
Depreciation
35,901
34,709
25,649
18,701
20,984
Note A —
In the second quarter of 1998, the Registrant recorded realignment and special charges of $61,117 ($41,850 after-tax
or $0.60 per diluted share). The realignment concluded as of December 31, 1999 with $3,261 of the original
realignment accrual being brought back through income.
Note B —
After adjustment for stock splits.
Note C —
Based on shares outstanding at year-end adjusted for stock splits.
Table of Contents
Table of Contents
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.
3.3
Certificate of Amendment to Amended Articles of
Incorporation of Diebold, Incorporated — incorporated by
reference to Exhibit 3.3 to Registrant’s Form 10-K for the
year ended December 31, 1998.
4.
Rights Agreement dated as of February 11, 1999 between
Diebold, Incorporated and The Bank of New York —
incorporated by reference to Exhibit 4.1 to Registrant’s
Registration Statement on Form 8-A dated February 11, 1999.
*
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.
*
10.5(i)
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.
*
10.5 (ii)
Amendment No. 1 to the Amended and Restated
Supplemental Retirement Plan — incorporated by reference to
Exhibit 10.5 (ii) of Registrant’s Form 10-Q for the quarter
ended March 31, 1998.
*
10.7 (i)
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.
*
10.7 (ii)
Amendment No. 1 to the Amended and Restated
1985 Deferred Compensation Plan for Directors of Diebold,
Incorporated — incorporated by reference to Exhibit 10.7
(ii) to Registrant’s Form 10-Q for the quarter ended
March 31, 1998.
*
10.8 (i)
1991 Equity and Performance Incentive Plan as Amended and Restated — incorporated by reference to Exhibit
10.8 to Registrant’s Form 10-Q for the quarter ended March 31, 1997.
*
10.8 (ii)
Amendment No. 1 to the 1991 Equity and
Performance Incentive Plan as Amended and Restated —
incorporated by reference to Exhibit 10.8 (ii) to
Registrant’s Form 10-Q for the quarter ended September
30, 1998.
*
Reflects management contract or other compensatory arrangement
required to be filed as an exhibit pursuant to Item 14(c) of this report.
Table of Contents
*
10.8 (iii)
Amendment No. 2 to the 1991 Equity and Performance Incentive Plan as Amended and Restated —
incorporated by reference to Exhibit 10.8 (iii) to Registrant’s Form 10-Q for the quarter ended June 30,
1999.
*
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 (i)
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.
*
10.10 (ii)
Amendment No. 1 to the Amended and Restated 1992
Deferred Incentive Compensation Plan — incorporated by
reference to Exhibit 10.10 (ii) to Registrant’s Form 10-Q
for the quarter ended March 31, 1998.
*
10.10 (iii)
Amendment No. 2 to the Amended and Restated 1992
Deferred Incentive Compensation Plan — incorporated by
reference to Exhibit 10.10 (iii) to Registrant’s Form 10-Q
for the quarter ended September 30, 1998.
*
10.11
Annual Incentive Plan.
*
10.13 (i)
Forms of Deferred Compensation Agreement and
Amendment No. 1 to Deferred Compensation Agreement —
incorporated by reference to Exhibit 10.13 to
Registrant’s Annual Report on Form 10-K for the year
ended December 31, 1996.
*
10.13 (ii)
Section 162 (m) Deferred Compensation Agreement
(as amended and restated January 29, 1998) — incorporated
by reference to Exhibit 10.13 (ii) to Registrant’s Form 10-Q
for the quarter ended March 31, 1998.
*
10.14
Deferral of Stock Option Gains Plan — incorporated by reference to Exhibit 10.14 of the Registrant’s
Annual Report on Form 10-K for the year ended December 31, 1998.
*
10.15
Employment
Agreement with Walden W O’Dell — incorporated by reference to Exhibit 10.15 of Registrant’s Annual Report on Form 10-K for
the year ended December 31, 1999.
*
10.16
Separation Agreement with Gerald F. Morris — incorporated by reference to Exhibit 10.16 of Registrant’s Annual Report on Form 10-K for
the year ended December 31, 1999.
*
10.17(i)
Loan Agreement dated as of December 1, 1999 among Diebold, Incorporated, the Subsidiary Borrowers,
the Lenders and Bank One, Michigan as Agent incorporated by reference to Exhibit 10.17 to
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2000.
*
10.17 (ii)
First Amendment to Loan Agreement dated as of December 1,
1999 among Diebold, Incorporated, the Subsidiary Borrowers, the Lenders and Bank
One, Michigan as Agent.
*
10.17 (iii)
Second Amendment to Loan Agreement dated as of
December 1, 1999 among Diebold, Incorporated, the Subsidiary
Borrowers, the Lenders and Bank One, Michigan as Agent.
Table of Contents
*
10.18
Retirement and Consulting Agreement with Robert W. Mahoney.
*
10.19
Employment Agreement with Wesley B. Vance.
21.
Subsidiaries of the Registrant.
23.
Consent of Independent Auditors.
24.
Power of Attorney.
*
Reflects management contract or other compensatory arrangement
required to be filed as an exhibit pursuant to Item 14(c) of this
report.
Table of Contents
DIEBOLD, INCORPORATED
March 13, 2001
By:
/s/Walden W. O’Dell
Date
Walden W. O’Dell
Chairman of the Board, President
and Chief Executive Officer
Signature
Title
Date
/s/Walden W. O’Dell
Chairman of the Board, President,
March 13, 2001
Chief Executive Officer and
Director (Principal Executive
Officer)
/s/Gregory T. Geswein
Senior Vice President and Chief
March 13, 2001
Financial Officer (Principal
Accounting and Financial
Officer)
/s/Louis V. Bockius III
Director
March 13, 2001
Louis V. Bockius III
/s/Richard L. Crandall
Director
March 13, 2001
Richard L. Crandall
/s/Gale S. Fitzgerald
Director
March 13, 2001
Gale S. Fitzgerald
*
Director
March 13, 2001
Donald R. Gant
/s/L. Lindsey Halstead
Director
March 13, 2001
L. Lindsey Halstead
Table of Contents
Signature
Title
Date
*
Director
March 13, 2001
Phillip B. Lassiter
*
Director
March 13, 2001
John N. Lauer
*
Director
March 13, 2001
William F. Massy
/s/W.R. Timken, Jr.
Director
March 13, 2001
W. R. Timken, Jr.
*
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 Commission on behalf of such officers and
directors.
Dated: March 13, 2001
*By:
/s/Gregory T. Geswein
Gregory T. Geswein, Attorney-in-Fact
Table of Contents
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
Diebold, Incorporated
Cleveland, Ohio
January 23, 2001
Table of Contents
Balance at
Balance
beginning
at end
of year
Additions
Deductions
of year
Year ended December 31, 2000
Allowance for doubtful accounts
$
9,220,753
$
9,662,685
$
6,790,726
$
12,092,712
Year ended December 31, 1999
Allowance for doubtful accounts
$
8,373,672
$
9,744,245
$
8,897,164
$
9,220,753
Year ended December 31, 1998
Allowance for doubtful accounts
$
6,838,018
$
7,949,869
$
6,414,215
$
8,373,672
Table of Contents
EXHIBIT NO.
DOCUMENT DESCRIPTION
PAGE NO.
10.2
Schedule of Certain Officers who are Parties to
Employment Agreements in the form of Exhibit 10.1
and 10.15
51
10.11
Annual Incentive Plan
52
10.17(ii)
First Amendment to Loan Agreement dated as of
December 1, 1999 among Diebold, Incorporated,
the Subsidiary Borrowers, the Lenders and Bank One,
Michigan as Agent.
53
10.17(iii)
Second Amendment to Loan Agreement dated as of
December 1, 1999 among Diebold, Incorporated,
the Subsidiary Borrowers, the Lenders and Bank One,
Michigan as Agent.
54
10.18
Retirement and Consulting Agreement with Robert
W. Mahoney
55
10.19
Employment Agreement with Wesley B. Vance
56
21
Subsidiaries of the Registrant
57
23
Consent of Independent Auditors
58
24
Power of Attorney
59
EXHIBIT 10.2
SCHEDULE OF CERTAIN OFFICERS WHO ARE
PARTIES TO EMPLOYMENT AGREEMENTS
Charles J. Bechtel
David Bucci
James L. M. Chen
Warren W. Dettinger
Reinoud G. J. Drenth
Charles E. Ducey, Jr.
Donald E. Eagon, Jr.
Jack E. Finefrock
Charee Francis-Vogelsang
Bartholomew J. Frazzitta
Gregory T. Geswein
Michael J. Hillock
Larry D. Ingram
Dennis M. Moriarty
Walden W. O'Dell
Anthony J. Rusciano
Charles B. Scheurer
Ernesto R. Unanue
Wesley B. Vance
Robert J. Warren
EXHIBIT 10.11
DESCRIPTION OF ANNUAL INCENTIVE PLAN
This plan recognizes the performance of the chief executive officer, other executive officers and key managers who contribute to the Registrant's success. The performance criteria reflect a combination of earnings per share, excluding extraordinary items, and specific individual goals and objectives. The Registrant's goals include a threshold, plan and maximum amounts for achievement, with the plan being 100%. The plan is generally weighted 50% on Registrant achieving its goal, and 50% on the achievement of the individual goals and objectives. At the beginning of each year, the Compensation and Organization Committee of the Board of Directors establishes annual performance goals for Registrant and reviews, amends and approves individual goals and objectives for the named executive officers. At the end of each year, the Compensation and Organization Committee reviews the performance of Registrant and achievement of the personal goals and objectives by the named executive officers before making recommendations to the Board of Directors.
EXHIBIT 10.17 (ii)
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT, dated as of November 1, 2000 (this "Amendment"), is among DIEBOLD, INCORPORATED, an Ohio corporation (the "Company"), the SUBSIDIARY BORROWERS (as defined in the Loan Agreement referred to below) (together with the Company, the "Borrowers"), the lenders set forth on the signature pages hereof (the "Lenders"), and BANK ONE, MICHIGAN, a Michigan banking corporation, as agent for the Lenders (in such capacity, the "Agent").
RECITALS
A. The Borrowers, the Lenders and the Agent are parties to a Loan Agreement dated December 1, 1999 (the "LOAN AGREEMENT").
B. The Borrowers desire to amend the Loan Agreement as set forth herein, and the Agent and the Lenders are willing to do so in accordance with the terms hereof.
TERMS
In consideration of the premises and of the mutual agreements herein contained, the parties agree as follows:
ARTICLE I. AMENDMENTS. Upon fulfillment of the conditions set forth in Article III hereof, the Loan Agreement shall be amended as follows:
1.1 Section 1.1 is amended as follows:
(a) The definitions of "FACILITY TERMINATION DATE" and "MATURITY DATE" are restated as follows:
"FACILITY TERMINATION DATE" means the earlier to occur of (a) February 28, 2001 or (b) the date on which the Revolving Credit Commitments are terminated pursuant to Article VIII.
"MATURITY DATE" means the earlier to occur of (a) the date two years after the Facility Termination Date or (b) the date on which the maturity of the Term Loans are accelerated pursuant to Article VIII.
(b) The definition of "INTEREST PERIOD" is amended by restating clause
(ii) of the proviso to such definition as follows:
(ii) any Interest Period applicable to a Fixed Rate Loan that would otherwise extend beyond (A) with respect to any Term Loan, the Maturity Date, shall end on the Maturity Date or (B) with respect to any other Loan, the Facility Termination Date, may be elected but shall end on the Facility Termination Date (and such Loan shall be due and payable on the Facility Termination Date and any amounts due under Section 3.4 shall be payable) unless the Facility Termination Date is extended on or before the last day of such Interest Period to a date beyond the end of such Interest Period; and
ARTICLE II. REPRESENTATIONS. Each of the Borrowers represents and warrants to the Agent and the Lenders that:
2.1 The execution, delivery and performance of this Amendment are within its powers, have been duly authorized and is not in contravention of any statute, law or regulation or of any terms of its Articles of Incorporation or By-laws, or of any material agreement or undertaking to which it is a party or by which it is bound.
2.2 This Amendment is the legal, valid and binding obligation of it, enforceable against it in accordance with the terms hereof.
2.3 After giving effect to the amendments contained herein, the representations and warranties contained in Article V of the Loan Agreement are true on and as of the date hereof with the same force and effect as if made on and as of the date hereof except for representations and warranties made only as of a certain date, which representations and warranties were true on the date made, and no Default or Unmatured Default exists or has occurred and is continuing on the date hereof.
ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective as of the date hereof when each of the following conditions is satisfied:
3.1 The Borrowers, the Lenders, the Swing Lender and the Agent shall have signed this Amendment.
3.2 The Guarantors shall have signed the consent and agreement to this Amendment.
ARTICLE IV. MISCELLANEOUS.
4.1 References in the Loan Agreement or in any other Loan Document to the Loan Agreement shall be deemed to be references to the Loan Agreement as amended hereby and as further amended from time to time.
4.2 Except as expressly amended hereby, each of the Borrowers agrees that the Loan Agreement and the other Loan Documents are ratified and confirmed, as amended hereby, and shall remain in full force and effect in accordance with their terms and that they are not aware of any set off, counterclaim, defense or other claim or dispute with respect to any of the foregoing. Terms used but not defined herein shall have the respective meanings ascribed thereto in the Loan Agreement. This Amendment may be signed upon any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument, and telecopied signatures shall be effective as originals.
IN WITNESS WHEREOF, the parties signing this Amendment have caused this Amendment to be executed and delivered as of the day and year first above written.
DIEBOLD, INCORPORATED
By: /s/ Walden W. O'Dell ---------------------------------------- Title: Chairman, President & CEO |
DIEBOLD INTERNATIONAL LIMITED
By: /s/ Timothy J. McDannold ---------------------------------------- Title: Designated Financial Officer |
DIEBOLD SELF-SERVICE SOLUTIONS S.a.r.l.,
GRANGES-PACCOT
By: /s/ Timothy J. McDannold ---------------------------------------- Title: Designated Financial Officer |
BANK ONE, MICHIGAN, as Agent, Swing Lender, Issuer and Lender
By: /s/ Paul R. DeMelo ---------------------------------------- Title: Managing Director |
ABN AMRO BANK N.V.
By: /s/ Mary L. Honda ---------------------------------------- Title: Group Vice President |
BANK OF AMERICA, N.A.
By: /s/ Raju Patel ---------------------------------------- Title: Principal |
THE CHASE MANHATTAN BANK
By: /s/ Henry W. Centa ---------------------------------------- Title: Vice President |
KEYBANK NATIONAL ASSOCIATION
By: /s/ Marianne T. Meil ---------------------------------------- Title: Vice President |
NATIONAL CITY BANK
By: /s/ Davis R. Bonner ---------------------------------------- Title: Senior Vice President |
THE BANK OF NEW YORK
By: /s/ Kenneth R. McDonnell ---------------------------------------- Title: Assistant Vice President |
CONSENT AND AGREEMENT
As of the date and year first above written, each of the undersigned hereby:
(a) fully consents to the terms and provisions of the above Amendment and the consummation of the transactions contemplated thereby;
(b) agrees that the Guaranty to which it is a party and each other Loan Document to which it is a party are hereby ratified and confirmed and shall remain in full force and effect in accordance with the terms thereof, acknowledges and agrees that it has no setoff, counterclaim, defense or other claim or dispute with respect to the Guaranty and each other Loan Document to which it is a party; and
(c) represents and warrants to the Agent and the Lenders that the execution, delivery and performance of this Consent and Agreement are within its powers, have been duly authorized and are not in contravention of any statute, law or regulation or of any terms of its organizational documents or of any material agreement or undertaking to which it is a party or by which it is bound, and this Consent and Agreement is the legal, valid and binding obligations of it, enforceable against it in accordance with the terms hereof and thereof. Terms used but not defined herein shall have the respective meanings ascribed thereto in the Credit Agreement.
DIEBOLD INVESTMENT COMPANY
By: /s/ Margaret Pulgini ---------------------------------- Title: Vice President/Treasurer |
DIEBOLD FINANCE COMPANY, INC.
By: /s/ Margaret Pulgini ---------------------------------- Title: Vice President/Treasurer |
DIEBOLD CREDIT CORPORATION
By: /s/ Charee Francis-Vogelsang ---------------------------------- Title: Vice President and Secretary |
DIEBOLD SST HOLDING COMPANY, INC.
By: /s/ Charee Francis-Vogelsang ---------------------------------- Title: Vice President and Secretary |
DIEBOLD SELF-SERVICE SYSTEMS
By: /s/ Charee Francis-Vogelsang ---------------------------------- Title: Secretary |
DIEBOLD HOLDING COMPANY, INC.
DIEBOLD MEXICO HOLDING COMPANY, INC.
By: /s/ Charee Francis-Vogelsang ---------------------------------- Title: Secretary |
DIEBOLD LATIN AMERICA HOLDING COMPANY, INC.
By: /s/ Charee Francis-Vogelsang ---------------------------------- Title: Secretary |
EXHIBIT 10.17 (iii)
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT, dated as of February 14, 2001 (this "Amendment"), is among DIEBOLD, INCORPORATED, an Ohio corporation (the "COMPANY"), the SUBSIDIARY BORROWERS (as defined in the Loan Agreement referred to below) (together with the Company, the "BORROWERS"), the lenders set forth on the signature pages hereof (the "LENDERS"), and BANK ONE, MICHIGAN, a Michigan banking corporation, as agent for the Lenders (in such capacity, the "AGENT").
RECITALS
A. The Borrowers, the Lenders party thereto and the Agent are parties to a Loan Agreement dated December 1, 1999, as amended (the "LOAN AGREEMENT").
B. The Borrowers desire to amend the Loan Agreement as set forth herein, and the Agent and the Lenders are willing to do so in accordance with the terms hereof.
TERMS
In consideration of the premises and of the mutual agreements herein contained, the parties agree as follows:
ARTICLE I. AMENDMENTS. Upon fulfillment of the conditions set forth in Article III hereof, the Loan Agreement and the other Loan Documents shall be amended as follows:
1.1 Section 1.1 is amended as follows:
(a) Each of the definitions of "AGGREGATE EURO REVOLVING CREDIT OUTSTANDINGS", "AGGREGATE U.S. REVOLVING CREDIT OUTSTANDINGS", "MULTICURRENCY LOANS", "PRO RATA SHARE" and "SWING LOANS" are restated as follows:
"AGGREGATE EURO REVOLVING CREDIT OUTSTANDINGS" means as at any date of determination with respect to any Euro Revolving Credit Lender, the sum of the aggregate unpaid principal amount of such Lender's Euro Revolving Credit Loans on such date and the amount of such Lender's Pro Rata Share of the Euro Facility Letter of Credit Obligations and Euro Swing Loans on such date, both stated in Euro based on the Euro Equivalent Amount.
"AGGREGATE U.S. REVOLVING CREDIT OUTSTANDINGS" means as at any date of determination with respect to any Revolving Credit Lender, the sum of the aggregate unpaid principal amount of such Lender's U.S. Revolving Credit Loans on such date and the amount of such Lender's Pro Rata Share of the U.S. Facility Letter of Credit Obligations and U.S. Swing Loans on such date, both stated in U.S. Dollars.
"MULTICURRENCY LOANS" means, Euro Loans and any Swing Loans denominated in currencies other than U.S. Dollars.
"PRO RATA SHARE" means, for each Lender, the ratio of such
Lender's Commitment (calculated using the U.S. Dollar Equivalent
thereof) to the Aggregate Commitment (calculated using the U.S. Dollar
Equivalent thereof), PROVIDED that (a) with respect to U.S. Revolving
Credit Loans, U.S. Facility Letters of Credit, U.S. Swing Loans and
facility fees with respect to the U.S. Revolving Credit Commitment, Pro
Rata Share means, for each Lender, the ratio such Lender's U.S.
Revolving Credit Commitment bears to the Aggregate U.S. Revolving
Credit Commitments, (b) with respect to Euro Revolving Credit Loans,
Euro Facility Letters of Credit, Euro Swing Loans and facility fees
with respect to the Euro Revolving Credit Commitment, Pro Rata Share
means, for each Lender, the ratio such Lender's Euro Revolving Credit
Commitment bears to the Aggregate Euro Revolving Credit Commitments,
(c) with respect to the U.S. Term Loan, Pro Rata Share means, for each
Lender, the ratio such Lender's U.S. Term Loan Commitment bears to the
Aggregate U.S. Term Loan Commitment, and (d) with respect to the Euro
Term Loan, Pro Rata Share means, for each Lender, the ratio such
Lender's Euro Term Loan Commitment bears to the Aggregate Euro Term
Loan Commitment. If at any time the Commitments have been terminated,
the amount of any Commitment for the purposes of this definition of
"Pro Rata Share" only shall be deemed equal to the amount of such
Commitment immediately prior to its termination.
"Swing Loans" means U.S. Swing Loans and Euro Swing Loans.
(b) The definitions of "FACILITY TERMINATION DATE" and "Maturity Date" are restated as follows:
"FACILITY TERMINATION DATE" means the earlier to occur of (a) February 13, 2002 or (b) the date on which the Revolving Credit Commitments are terminated pursuant to Article VIII.
"MATURITY DATE" means the earlier to occur of (a) the date two years after the Facility Termination Date or (b) the date on which the maturity of the Term Loans is accelerated pursuant to Article VIII.
(c) The definition of "Loan" is amended by deleting the reference therein to "Agent" and inserting "Swing Lender" in place thereof.
(d) The following definitions are added to Section 1.1 in appropriate alphabetical order:
"EURO SWING LOAN" is defined in Section 2.16.
"SECOND AMENDMENT" shall mean the Second Amendment to this Agreement dated February 14, 2001 among the Borrowers, the Lenders and the Agent.
"SECOND AMENDMENT EFFECTIVE DATE" shall mean the date as of which the Second Amendment is effective.
"SWING LENDER" means Bank One, together with its Lending Installations.
"U.S. SWING LOAN" is defined in Section 2.16.
"TOTAL NET DEBT" means, at any time, Total Debt minus all cash and Cash Equivalents with maturities of less than one year of the Company and its Subsidiaries calculated on a consolidated basis, as calculated in accordance with Agreement Accounting Principles.
"TOTAL NET DEBT TO CAPITALIZATION RATIO" means the ratio of Total Net Debt to the sum of (a) Total Net Debt plus (b) Net Worth, as calculated in accordance with Agreement Accounting Principles.
(e) The definition of "TOTAL DEBT" is amended by adding the following to the end thereof: "and Indebtedness consisting of avals by any of the Company's Brazilian Subsidiaries for the benefit of, and with respect to obligations of, any of the Company's other Brazilian Subsidiaries and which are entered into in the ordinary course of business and consistent with past practices in Brazil shall not be considered part of Total Debt."
(f) The definitions of "YEAR 2000 ISSUES", "YEAR 2000 PROGRAM" and "TOTAL DEBT TO CAPITALIZATION RATIO" are deleted.
1.2 Section 2.6.3 is deleted in its entirety and the following shall be inserted in place thereof:
2.6.3 (i) If the Aggregate Euro Revolving Credit Outstandings exceed the Aggregate Euro Revolving Credit Commitments at any time the Foreign Subsidiary Borrowers shall promptly prepay the Aggregate Euro Revolving Credit Outstandings or cash collateralize Facility Letters of Credit in the amount of such excess and (ii) if the Aggregate U.S. Revolving Credit Outstandings exceed the Aggregate U.S. Revolving Credit Commitments at any time the Company shall promptly prepay the Aggregate U.S. Revolving Credit Outstandings or cash collateralize Facility Letters of Credit in the amount of such excess.
1.3 Section 2.16 is restated as follows:
Section 2.16. SWING LOANS.
(a) MAKING OF SWING LOANS. The Swing Lender may elect in its sole discretion to make Swing Loans to any Borrower solely for the Swing Lender's own account, from time to time prior to the Facility Termination Date up to an aggregate principal amount at any one time outstanding not to exceed (i) in the case of Swing Loans to any Borrower under the U.S. Revolving Credit Commitment, the lesser of (A) $20,000,000 or the Dollar Equivalent Amount thereof and (B) the unused amount of the Aggregate U.S. Revolving Credit Commitments ("U.S. SWING LOANS"), and (ii) in the case of Swing Loans to any Borrower under the Euro Revolving Credit Commitment, the lesser of (A) EUR10,000,000 or the Equivalent Amount thereof and (B) the unused amount of the Aggregate Euro Revolving Credit Commitments ("EURO SWING LOANS"). The Swing Lender may make Swing Loans (subject to the conditions precedent set forth in Article IV), PROVIDED that the Swing Lender has received a request in writing or via telephone from an Authorized Officer of such Borrower for funding of a Swing Loan no later than such time required by the Swing Lender, on the Business Day on which such Swing Loan is requested to be made. The Swing Lender shall not make any Swing Loan in the period commencing one Business Day after the Swing Lender becomes aware that one or more of the conditions precedent contained in Section 4.2 are not satisfied and ending upon the satisfaction or waiver of such condition(s). Swing Loans may be made by the Swing Lender in any freely traded currency requested by such Borrower and agreed to by the Swing Lender. The Swing Lender agrees with the Borrowers that all Swing Loans denominated in Australian Dollars will be funded out of the Swing Lender's Lending Installation in Australia unless the Swing Lender provides prior notice to the Borrowers, in which case the Borrower requesting such Loan may withdraw its request for such Swing Loan. Each outstanding Swing Loan shall be payable on the Business Day following demand therefor, with interest at such rate as the Swing Lender and such Borrower shall agree, and shall be subject to all the terms and conditions applicable to Loans, except that all interest thereon shall be payable to the Swing Lender solely for its own account. Notwithstanding provisions to the contrary in this Agreement, each U.S. Lender acknowledges and agrees that U.S. Swing Loans may be made under the U.S. Revolving Credit Commitment to Foreign Subsidiary Borrowers, each Euro Lender acknowledges and agrees that Euro Swing Loans may be made under the Euro Revolving Credit Commitment to the Company and Domestic Subsidiary Borrowers and each Borrower acknowledges and agrees that the availablity under Section 2.1.1 and 2.1.2 may also be blocked by the Agent in an amount equal to the approximate anticipated Swing Loan usage reasonably determined by the Agent with the consent of the Company.
(b) SWING LOAN BORROWING REQUESTS. Each Borrower agrees to deliver promptly to the Swing Lender a written confirmation of each telephonic notice for Swing Loans signed by an Authorized Officer. If the written confirmation differs in any material respect from the action taken by the Swing Lender, the records of the Swing Lender shall govern, absent manifest error.
(c) REPAYMENT OF SWING LOANS. At any time after making a Swing Loan, the Swing Lender may request the recipient Borrower to, and upon request by the Swing Lender the recipient Borrower shall, promptly request an Advance from all U.S. Revolving Credit Lenders, with respect to any U.S. Swing Loan, and all Euro Revolving Credit Lenders, with respect to any Euro Swing Loan, and apply the proceeds of such Advance to the repayment of such Swing Loan not later than the Business Day following the Swing
Lender's request. Notwithstanding the foregoing, upon the earlier to
occur of (a) three Business Days after demand is made by the Swing
Lender, and (b) the Facility Termination Date, the Borrower agrees that
each U.S. Swing Loan outstanding in any currency other than Dollars
shall be immediately and automatically converted to and redenominated
in Dollars equal to the Dollar Equivalent Amount of each such U.S.
Swing Loan determined as of the date of such conversion and each Euro
Swing Loan outstanding in any currency other than Euros shall be
immediately and automatically converted to and redenominated in Euros
equal to the Euro Equivalent Amount of each such Euro Swing Loan
determined as of the date of such conversion, and each U.S. Revolving
Credit Lender, in the case of any U.S. Swing Loan, and each Euro
Revolving Credit Lender, in the case of any Euro Swing Loan (other
than, in each case, the Swing Lender), shall irrevocably and
unconditionally purchase from the Swing Lender, without recourse or
warranty, an undivided interest and participation in such Swing Loan in
an amount equal to such Lender's Pro Rata Share of the Swing Loan and
promptly pay such amount to such Swing Lender in immediately available
funds (or, in the case of participations in Swing Loans denominated in
an Available Foreign Currency, same day funds). Such payment shall be
made by the other Lenders whether or not a Default is then continuing
or any other condition precedent set forth in Section 4.2 is then met
and whether or not such Borrower has then requested an Advance in such
amount. If any Lender fails to make available to such requesting Swing
Lender any amounts due to the Swing Lender from such Lender pursuant to
this Section, the Swing Lender shall be entitled to recover such
amount, together with interest thereon at the Federal Funds Effective
Rate or such other local cost of funds rate determined by the Swing
Lender with respect to any Swing Loan denominated in any Available
Foreign Currency for the first three Business Days after such Lender
receives notice of such required purchase and thereafter, at the rate
applicable to such Loan, payable (i) on demand, (ii) by setoff against
any payments made to the Swing Lender for the account of such Lender or
(iii) by payment to the Swing Lender by the Agent of amounts otherwise
payable to such Lender under this Agreement. The failure of any Lender
to make available to such Swing Lender its Pro Rata Share of any unpaid
Swing Loan shall not relieve any other Lender of its obligation
hereunder to make available to the Swing Lender its Pro Rata Share of
any unpaid Swing Loan on the date such payment is to be made, but no
Lender shall be responsible for the failure of any other Lender to make
available to the Swing Lender its Pro Rata Share of any unpaid Swing
Loan.
1.4 Section 5.23 is deleted.
1.5 The parenthetical in Section 6.3 is deleted.
1.6 Section 6.11(iii) is restated as follows: "(iii) Investments in existence on December 31, 2000."
1.7 Section 6.12(vii) is restated as follows: "(vii) Liens not otherwise permitted by the foregoing provisions of this Section 6.12, provided that the aggregate outstanding amount secured by all such Liens shall not at any time exceed 10% of Tangible Net Worth."
1.8 Section 6.13 is restated to read as follows: "[Intentionally deleted]".
1.9 Section 6.15 is amended by restating clause (ii) thereof as follows: "(ii) Indebtedness outstanding on the date of this Agreement, but no increase in the principal amount thereof, and Indebtedness consisting of avals by any of the Company's Brazilian Subsidiaries for the benefit of, and with respect to obligations of, any of the Company's other Brazilian
Subsidiaries and which are entered into in the ordinary course of business and consistent with past practices in Brazil."
1.10 Section 6.18 is restated as follows:
6.18 TOTAL NET DEBT TO CAPITALIZATION RATIO. The Company shall not permit its Total Net Debt to Capitalization Ratio to exceed 50%.
1.11 (a) The Pricing Schedule attached as Exhibit A to the Loan Agreement is replaced with the Pricing Schedule attached as Exhibit A hereto, and (b) Schedule 1.1(a) attached to the Loan Agreement is replaced with Schedule 1.1(a) attached hereto. All outstandings under the Loan Agreement shall be re-allocated among Lenders on the Second Amendment Effective Date to give effect to the new Commitment levels established hereunder, and the Agent and the Lenders shall make all appropriate adjustments among themselves.
1.12 Firstar Bank, HSBC Bank USA and Bank of Ireland (the "NEW
LENDERS") are each hereby added as a Lender to the Loan Agreement and each shall
for all purposes be a Lender party to the Loan Agreement and any other Loan
Document executed by the Lenders and shall have all the rights and obligations
of a Lender under the Loan Agreement and the other Loan Documents to the same
extent as if it were an original party hereto. Each New Lender hereby assumes an
interest in and to all of the rights and obligations of a Lender under the Loan
Agreement and the other Loan Documents as of the date hereof with Commitments
equal to the amount set forth on Schedule 1.1(a) hereto. Neither the Agent nor
any of the Lenders: (a) makes any representation or warranty to the New Lenders
and assumes no responsibility to the New Lenders with respect to any statements,
warranties or representations made in or in connection with the Loan Agreement
or the other Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Agreement, any
other Loan Document or any other instrument or document furnished pursuant
thereto; or (b) makes any representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or any of
its Subsidiaries or the performance or observance by any Borrower or Guarantor
of any of its obligations under the Loan Agreement, any other Loan Documents or
any other instrument or document furnished pursuant thereto. Each New Lender:
(i) confirms that it has received a copy of the Loan Agreement and the other
Loan Documents, together with copies of all financial statements and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Amendment; (ii) agrees that it will,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Agreement and the other Loan Documents; (iii) appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such powers
and discretion under the Loan Agreement and the other Loan Documents as are
delegated to the Agent by the terms thereof, together with such powers and
discretion as are reasonably incidental thereto; (iv) agrees that it will
perform in accordance with their terms all of the obligations that by the terms
of the Loan Agreement and the other Loan Documents are required to be performed
by it as a Lender and (v) makes all representations and warranties of an
assignee/purchaser under the Notice of Assignment and Assignment forms attached
to the Loan Agreement. Each New Lender's address for notices is as set forth
below its signature on this Amendment.
ARTICLE II. REPRESENTATIONS. Each of the Borrowers represents and warrants to the Agent and the Lenders that:
2.1 The execution, delivery and performance of this Amendment are within its powers, have been duly authorized by existing board resolutions or other necessary corporate action and are not in contravention of any statute, law or regulation or of any terms of its Articles of Incorporation, Certificate of Incorporation or By-laws, or of any material agreement or undertaking to which it is a party or by which it is bound.
2.2 This Amendment is the legal, valid and binding obligation of it, enforceable against it in accordance with the terms hereof, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and by general principles of equity.
2.3 After giving effect to the amendments contained herein, the representations and warranties contained in Article V of the Loan Agreement are true on and as of the date hereof with the same force and effect as if made on and as of the date hereof, except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall be true and correct on and as of such earlier date.
2.4 After giving effect to the amendments contained herein, no Default or Unmatured Default exists or has occurred and is continuing on the date hereof.
ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective as of the date hereof when each of the following conditions is satisfied:
3.1 The Borrowers, the Lenders, the Swing Lender and the Agent shall have signed this Amendment.
3.2 The Guarantors shall have signed the consent and agreement to this Amendment.
3.3 The Borrowers shall have paid such amendment fees to the Agent for the benefit of the Lenders in such amounts as separately agreed upon.
ARTICLE IV. MISCELLANEOUS.
4.1 References in the Loan Agreement or in any other Loan Document to the Loan Agreement shall be deemed to be references to the Loan Agreement as amended hereby and as further amended from time to time.
4.2 Except as expressly amended hereby, each of the Borrowers agrees that the Loan Agreement and the other Loan Documents are ratified and confirmed, as amended hereby, and shall remain in full force and effect in accordance with their terms and that they are not aware of any set off, counterclaim, defense or other claim or dispute with respect to any of the foregoing. Terms used but not defined herein shall have the respective meanings ascribed thereto in the Loan Agreement. This Amendment may be signed upon any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument, and telecopied signatures shall be effective as originals.
IN WITNESS WHEREOF, the parties signing this Amendment have caused this Amendment to be executed and delivered as of the day and year first above written.
DIEBOLD, INCORPORATED
By: /s/ Gregory T. Geswein Title: Senior Vice President and CFO |
DIEBOLD INTERNATIONAL LIMITED
By: /s/ Timothy J. McDannold Title: Designated Financial Officer |
DIEBOLD SELF-SERVICE SOLUTIONS S.a.r.l.,
GRANGES-PACCOT
By: /s/ Timothy J. McDannold Title: Designated Financial Officer |
DIEBOLD AUSTRALIA PTY LTD
By: /s/ Timothy J. McDannold Title: Designated Financial Officer |
BANK ONE, MICHIGAN, as Agent, Swing Lender, Issuer and Lender
By: /s/ Gary C. Wilson Title: Senior Vice President |
KEYBANK NATIONAL ASSOCIATION
By: /s/ Marianne T. Meil Title: Vice President |
NATIONAL CITY BANK
By: /s/ Terri L. Cable Title: Senior Vice President |
ABN AMRO BANK N.V.
By: /s/ Mary L. Honda Title: Group Vice President By: /s/ John L. Church Title: Senior Vice President |
BANK OF AMERICA, N.A.
By: /s/ Raju Patel Title: Principal |
THE CHASE MANHATTAN BANK
By: /s/ Henry W. Centa Title: Vice President |
THE BANK OF NEW YORK
By: /s/ Kenneth R. McDonnell Title: Assistant Vice President |
FIRSTAR BANK
By: /s/ David Dannemiller Title: Vice President |
1350 Euclid Avenue, Eighth Floor Cleveland, Ohio 44115
Attention: David Dannemiller Phone: 216-623-9233 Fax: 216-623-9208
HSBC BANK USA
By: /s/ Christopher M. Samms Title: Vice President |
200 South Wacker Drive, Suite 770 Chicago, Illinois 60606
Attention: Chris Samms Phone: 312-575-1314 Fax: 312-575-1331
BANK OF IRELAND
By: /s/ Louise Molloy /s/ Padraig Rushe Title: Authorised Signatories |
LaTouche House, Int'l Financial Services Custom House Docks Dublin, Ireland 1
Attention: John Goggin Phone: 011-35-31-609-3482 Fax: 011-35-31-670-1079
CONSENT AND AGREEMENT
As of the date and year first above written, each of the undersigned hereby:
(a) fully consents to the terms and provisions of the above Amendment and the consummation of the transactions contemplated thereby;
(b) agrees that the Guaranty to which it is a party and each other Loan Document to which it is a party are hereby ratified and confirmed and shall remain in full force and effect, acknowledges and agrees that it has no setoff, counterclaim, defense or other claim or dispute with respect the Guaranty to which it is a party and each other Loan Document to which it is a party; and
(c) represents and warrants to the Agent and the Lenders that the execution, delivery and performance of this Consent and Agreement are within its powers, have been duly authorized and are not in contravention of any statute, law or regulation or of any terms of its organizational documents or of any material agreement or undertaking to which it is a party or by which it is bound, and this Consent and Agreement is the legal, valid and binding obligations of it, enforceable against it in accordance with the terms hereof and thereof. Terms used but not defined herein shall have the respective meanings ascribed thereto in the Loan Agreement.
DIEBOLD INVESTMENT COMPANY
By: /s/ Margaret Pulgini
Title: Vice President/Treasurer
|
DIEBOLD FINANCE COMPANY, INC.
By: /s/ Margaret Pulgini
Title: Vice President/Treasurer
|
DIEBOLD CREDIT CORPORATION
By: /s/ Charee Francis-Vogelsang
Title: Vice President and Secretary
|
DIEBOLD SST HOLDING COMPANY, INC.
By: /s/ Charee Francis-Vogelsang
Title: Vice President and Secretary
|
DIEBOLD SELF-SERVICE SYSTEMS
By: /s/ Charee Francis-Vogelsang
Title: Secretary
|
DIEBOLD HOLDING COMPANY, INC.
By: /s/ Charee Francis-Vogelsang
Title: Assistant Secretary
|
DIEBOLD MEXICO HOLDING COMPANY, INC.
By: /s/ Charee Francis-Vogelsang
Title: Secretary
|
DIEBOLD LATIN AMERICA HOLDING COMPANY,
INC.
By: /s/ Charee Francis-Vogelsang
Title: Secretary
|
EXHIBIT A
PRICING SCHEDULE
The Applicable Margin for Floating Rate Loans, Eurodollar Loans and Multicurrency Loans, the Facility Fee payable pursuant to Section 2.5 and the Letter of Credit Fee payable pursuant to Section 2.15.6 shall, subject to the last sentence of this Exhibit A, be determined in accordance with the Pricing Matrix set forth below based on the Company's Total Net Debt to Capitalization Ratio in effect from time to time.
Pricing Matrix (in basis points)
-------------------------------------------------------------------------------------------
Level Total Net Debt to Facility Fee Floating Rate Applicable Eurodollar/
Capitalization Margin for Eurocurrency Margin for
Ratio Revolving Revolving Credit Loans,
Credit Loans Multicurrency Loans and
Letter of Credit Fees
-------------------------------------------------------------------------------------------
I Less than 25% 8.0 b.p. 0.0 b.p. 32.0 b.p.
-------------------------------------------------------------------------------------------
II Greater than 25% 10.0 b.p. 0.0 b.p. 40.0 b.p
but less than 35%
-------------------------------------------------------------------------------------------
III Greater tahn 35% 15.0 b.p. 0.0 b.p. 50.0 b.p.
but less than 45%
-------------------------------------------------------------------------------------------
IV Greater than 45% 20.0 b.p. 0.0 b.p. 70.0 b.p.
-------------------------------------------------------------------------------------------
|
If the Aggregate Total Outstandings of all Lenders equals or exceeds 33% of the Aggregate Commitments of all Lenders, the Eurodollar, Eurocurrency and Letter of Credit Fee Applicable Margin will increase by 10 basis points at every level on the Pricing Matrix.
Such Applicable Margin shall be determined in accordance with the foregoing Pricing Matrix based on the Company's level as reflected in the most recent financial statements of the Company delivered pursuant to Section 6.1(i) and (ii) of the Loan Agreement. Adjustments, if any, to the Applicable Margin shall be effective 50 days after the end of each of the first three fiscal quarters of each fiscal year of he Company and 95 days after the end of each fiscal year of the Company, commencing with the first such day after the Effective Date. If the Borrower fails to deliver the financials statements required pursuant to Section 6.1(i) or (ii) at the time required or any other Default has occurred and is continuing, then the Applicable Margin shall be the highest Applicable Margin set forth in the foregoing Pricing Matrix until such Default is cured or waived under the Agreement. Notwithstanding the foregoing, the Applicable Margin for the period from and including the Second Amendment Effective Date until it shall be adjusted for the first time after the Second Amendment Effective Date shall be the Level II Applicable Margin described above.
SCHEDULE 1.1(a)
COMMITMENTS
TITLE U.S. DOLLARS EUROS
----- ------------ -----
Bank One, Michigan Administrative Agent 38,333,335.00 24,350,875.00
(17.04 %) (19.48%)
Key Bank National Association Syndication Agent 32,000,000.00 16,000,000.00
(14.22%) (12.80%)
National City Bank Documentation Agent 29,333,333.00 15,666,667.00
(13.04%) (12.53%)
The Chase Manhattan Bank 21,333,333.00 10,666,667.00
(9.48%) (8.53%)
The Bank of New York 21,333,333.00 10,666,667.00
(9.48%) (8.53%)
ABN Amro Bank, N.V. 21,333,333.00 10,666,667.00
(9.48%) (8.53%)
Bank of America, N.A. 21,333,333.00 10,666,667.00
(9.48%) (8.53%)
Firstar Bank 25,000,000.00
(11.11%) -
HSBC Bank USA 15,000,000.00 10,526,316.00
(6.67%) (8.42%)
Bank of Ireland - 15,789,474.00
(12.63%)
TOTAL $225,000,000 125,000,000
============ ===========
|
EXHIBIT 10.18
RETIREMENT AND CONSULTING AGREEMENT
THIS RETIREMENT AND CONSULTING AGREEMENT (this "Agreement"), is made, entered into and effective as of April 19, 2000 (the "Transition Date"), by and between DIEBOLD, INCORPORATED (the "Company"), located at 5995 Mayfair Road, North Canton, Ohio 44720 and ROBERT W. MAHONEY ("Mahoney"), residing at 5291 St. Andrews Drive NW, Canton, Ohio 44708.
WITNESSETH:
WHEREAS, Mahoney has given nearly twenty years of dedicated, faithful and valued service to the Company, and has served the Company well and dutifully in numerous capacities including Chief Executive Officer and, most recently, as the Chairman of the Board of Directors of the Company; and
WHEREAS, Mahoney has determined that, effective July 1, 2000, he wishes to retire from his employment with the Company to pursue various charitable and other interests; and
WHEREAS, the Company desires to retain Mahoney, because of his vast experience and knowledge of the Company's business, markets and products, after his retirement to provide consulting services, and Mahoney agrees to provide such consulting services as described more fully herein; and
WHEREAS, Mahoney has determined that, effective on the Transition Date, he shall resign from any and all offices of the Company, and any other position, office or directorship of any other entity for which he was serving at the request of the Company, and, in addition, shall resign and retire from his employment with the Company at the conclusion of a severance period; and
WHEREAS, the Company and Mahoney desire to set forth the payments and benefits that Mahoney will be entitled to receive from the Company in connection with the cessation of his employment with the Company and for his valuable services as a consultant;
NOW, THEREFORE, in consideration of the promises and agreements contained herein and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and intending to be legally bound, the Company and Mahoney hereby agree as follows:
1. RESIGNATION AND RETIREMENT. Mahoney hereby resigns, effective on the Transition Date, his position as Chairman of the Board of the Company. Mahoney further resigns, effective on the Transition Date: (a) from all other offices of the Company to which he has been elected by the Board of Directors of the Company (or to which he has otherwise been appointed), (b) from all offices of any entity that is a subsidiary of, or is otherwise related to or affiliated with, the Company, (c) from all administrative, fiduciary or other positions he may hold with
respect to arrangements or plans for, of or relating to the Company, and (d) from any other directorship, office, or position of any corporation, partnership, joint venture, trust or other enterprise (each, an "Other Entity") insofar as Mahoney is serving in the directorship, office, or position of the Other Entity at the request of the Company. Mahoney further resigns and retires, effective July 1, 2000 (the "Retirement Date"), from his employment with the Company, and its subsidiaries and related or affiliated companies. The Company hereby consents to and accepts said resignations.
2. CONSULTING SERVICES.
A. CONSULTING OBLIGATIONS. From the Retirement Date through June 30, 2002 (the "Consulting Period"), the Company agrees to retain Mahoney as a consultant and Mahoney agrees to provide consulting services to the Company as the Company shall reasonably request from time to time. The specific consulting services that Mahoney will perform, including the time and duration thereof, shall be as reasonably specified by the Company. In the event that (i) specific consulting services are not requested by the Company, (ii) Mahoney is occasionally unavailable to perform specific consulting services, or (iii) Mahoney becomes disabled and is unable to perform any further consulting services pursuant to this Paragraph 2, it is expressly acknowledged and agreed that no portion of the compensation or benefits provided in Paragraphs 2 or 3 shall be refundable and that all other terms and conditions of this Agreement shall remain in full force and effect.
B. COMPENSATION.
(I) As consideration for the consulting services pursuant to this Paragraph 2, the Company agrees to pay Mahoney an annual consulting fee of $200,000, payable in semi-monthly installments. Mahoney also shall be reimbursed for all reasonable out-of-pocket costs, including costs for travel, that he incurs in the course of performing the consulting services.
(II) In addition, as part of his compensation for the consulting services pursuant to this Paragraph 2, Mahoney shall be eligible for certain benefits and perquisites on the terms and conditions specified in Paragraph 3 and to be compensated for the cost of such benefits to him.
C. FULL BENEFIT OF SERVICES. It is the intent of the Company to obtain from Mahoney and the intent of Mahoney to deliver to the Company the full and complete benefit of Mahoney's services under this Paragraph 2. In furtherance thereof, and to protect and secure to the Company its proprietary rights, Mahoney covenants and agrees as follows:
(I) Mahoney agrees to, and hereby does, assign to the Company all copyrights, trade secrets and patents of all inventions, improvements and other innovations of any kind (collectively, "Works") developed by Mahoney in the course of performing the consulting services pursuant to this Paragraph 2, whether or not such Works are eligible for patent, copyright, trademark, trade secret or other legal protection. Mahoney agrees to reasonably assist and cooperate with the Company in all respects in confirmation of the assignment to the Company of all rights in and to the Works. Mahoney will, during the Consulting Period and thereafter, execute such documents and assignments as are necessary for this purpose.
(II) The physical embodiment of Mahoney's services pursuant to this Paragraph 2, including without limitation any writings and reports produced while performing the consulting services, shall, at all times, become the sole and exclusive property of the Company.
D. INDEPENDENT CONTRACTOR. In performing the consulting services pursuant to this Paragraph 2, Mahoney shall be acting at all times as an independent contractor, and nothing contained herein shall be deemed or construed to create any employer/employee relationship or any partnership or joint venture between Mahoney and the Company.
E. CONFIDENTIALITY. The provisions of Paragraph 7 shall apply to Mahoney's performance of consulting services pursuant to this Paragraph 2.
3. ADDITIONAL COMPENSATION AND BENEFITS. In consideration of the promises made by Mahoney in this Agreement and subject to the conditions hereof, the Company agrees to the following:
A. CONTINUED SALARY. For the time period (the "Severance Period") beginning on the Transition Date and ending on the Retirement Date, Mahoney shall be paid his regular monthly salary in semi-monthly payments, via direct deposit account, subject to normal payroll deductions. The payment of these amounts during the Severance Period shall be deemed to include any vacation pay otherwise due Mahoney. During the Severance Period, Mahoney shall perform such duties and provide such services as the Company shall reasonably request.
B. DEFERRED COMPENSATION. Any amounts held for and on behalf of Mahoney under the Amended and Restated 1992 Deferred Incentive Compensation Plan for Diebold, Incorporated shall be distributed according to the terms and conditions of said Plan and shall be based on the termination of his employment as of the Retirement Date. Any amounts paid hereunder shall be subject to applicable payroll tax deductions.
C. ANNUAL BONUS PLAN. Mahoney shall be eligible to receive an amount equal to one-half of a full year's annual bonus for 2000 under the terms and conditions of the Annual Incentive Plan applicable to him. The percentage to be paid under such plan (threshold, target, plan or maximum) will be determined by the Company's performance for fiscal year end 2000. Mahoney shall not be eligible for annual bonus participation after the 2000 bonus period. Any amounts paid hereunder shall be subject to applicable payroll tax deductions.
D. LONG TERM EXECUTIVE INCENTIVE PLAN. Mahoney shall be eligible to receive additional compensation under the Company's Long Term Executive Incentive Plan ("LTIP") as follows: (i) he shall be eligible for 83.3% of that amount that would be payable to him for the Performance Period 1998-2000; and (ii) he shall be eligible for 50% of that amount that would be payable to him for the Performance Period 1999-2001. Any amounts paid hereunder shall be subject to applicable payroll tax deductions.
E. STOCK OPTIONS. Mahoney shall not be eligible for any additional grants of stock options after the Retirement Date. Mahoney's rights with respect to stock options granted to him prior to the Retirement Date under certain nonqualified stock option plans of the Company shall be governed by the terms and conditions of those stock option plans based on his retirement as of the Retirement Date; provided, however, that with respect to that certain Nonqualified Stock Option Agreement dated October 15, 1996 (the "1996 Agreement") pursuant to which Mahoney was granted an option to purchase 75,000 shares of the Company's stock
(which number subsequently was adjusted due to a stock split to 112,500 shares), Mahoney's rights under the 1996 Agreement shall be based on the terms and conditions of the 1996 Agreement with the exception that the 1996 Agreement shall be, and hereby is, modified to extend the term of such option until the end of the Consulting Period by amending Paragraph 4(C) of the 1996 Agreement to replace the words "Five (5) years from the Date of Grant" with the words "July 1, 2002." Any compensation paid to Mahoney with respect to stock options will be subject to applicable payroll tax deductions.
F. MEDICAL COVERAGE.
(I) Mahoney shall be allowed to continue on an individual basis as a plan participant in the Diebold, Incorporated Associate Health Care Plan during the Severance Period.
(II) During the Consulting Period, Mahoney may continue, at his cost, his participation in the Diebold, Incorporated Health Care Plan, pursuant as applicable to the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended ("COBRA"). During the Consulting Period, for administrative convenience, Mahoney hereby elects to pay the cost of such medical coverage by hereby authorizing the Company to subtract the actual cost of his individual medical coverage from the amounts otherwise payable to him under Paragraph 2.b, and to remit on his behalf that subtracted amount to the appropriate entity as a payment for the medical coverage.
G. SPLIT DOLLAR AGREEMENT. Mahoney's eligibility for the Split Dollar Executive Benefit Plan shall continue after the Transition Date. The Company, however, shall make no further premium payments for this benefit. In the event that Mahoney cashes in the policy he has obtained under said Plan, he shall repay to the Company the amount of the Company's premium contribution toward said policy. Due to his continued receipt of coverage under the Split Dollar Executive Benefit Plan after the Retirement Date, Mahoney shall from time to time be deemed to have received income from the Company. Any such imputed income shall be calculated and reported to Mahoney in accordance with the Company's usual practices and policies for retired executives, and shall be subject to applicable payroll tax deductions.
H. MOTOR VEHICLE PROGRAM. The Company shall continue to pay to Mahoney his current monthly Motor Vehicle Allowance during the Severance Period, less normal payroll deductions. During his Consulting Period Mahoney shall participate in the Company's leased vehicle program at his own expense. During the Consulting Period, for administrative convenience, Mahoney hereby elects to pay the cost of any such leased vehicle by hereby authorizing the Company to subtract the actual cost of the leased vehicle from the amounts otherwise payable to him under Paragraph 2.b, and to remit on his behalf that subtracted amount to the appropriate entity as a payment for the leased vehicle.
I. OFFICE SPACE/SECRETARIAL SUPPORT. During the Severance Period and the Consulting Period, the Company shall provide Mahoney with reasonable and appropriate office space, which may be off of the Company's premises. In addition, during the Severance Period and the Consulting Period, the Company shall provide Mahoney with reasonable and appropriate secretarial support.
J. COUNTRY CLUB MEMBERSHIP.
(I) BROOKSIDE COUNTRY CLUB. The Company's payment of Mahoney's membership at Brookside Country Club shall be continued during the Severance Period subject to normal payroll deductions. As of the Retirement Date, Mahoney's membership at Brookside Country Club (i.e., the stock certificate) shall revert to him, and the value of that membership shall constitute taxable income to Mahoney at that time and shall be factored into the amount of payroll taxes withheld from the Continued Salary payments made to Mahoney pursuant to Paragraph 3.a. After the Retirement Date, Mahoney shall bear the costs of membership at Brookside Country Club.
(II) GLENMOOR COUNTRY CLUB. Mahoney's Company-sponsored membership at Glenmoor Country Club shall also continue through the Severance Period subject to normal payroll deductions. During the Consulting Period, Mahoney shall continue to be eligible to utilize the Company-sponsored membership at Glenmoor at his own expense. At the conclusion of the Consulting Period, Mahoney agrees to transfer his Company-sponsored membership at Glenmoor to a designee named by the Company, and the Company agrees to pay any costs related to such transfer.
K. PROFESSIONAL FEES. The Company and Mahoney acknowledge and agree that each shall be responsible for the payment of their respective legal fees and costs (and related disbursements) incurred in connection with Mahoney's resignation and all matters relating to the negotiation and execution of the releases, employment terms and all other matters covered by this Agreement.
L. FINANCIAL SERVICES. During the Severance Period, Mahoney shall continue to receive those financial advisory and taxation services that, prior to the Transition Date, were provided to him by IMG at the Company's expense, subject to normal payroll deductions. Mahoney shall have access to these same financial services during his Consulting Period at his own cost. During the Consulting Period, for administrative convenience, Mahoney hereby elects to pay the cost of such financial services by hereby authorizing the Company to subtract his actual cost for such services from the amounts otherwise payable to him under Paragraph 2.b, and to remit on his behalf that subtracted amount to the appropriate entity as a payment for such services.
M. RETIREMENT AND 401(K) PLANS. During the Severance Period, Mahoney shall continue to participate in the Company's Retirement Plan for Salaried Employees, 401(k) Savings Plan, and Supplemental Employee Retirement Plan (collectively, "Retirement Plans"). Mahoney's post-Retirement Date eligibility for benefits, if any, as a past employee of the Company under the Retirement Plans shall be as set forth in the respective Plan documents and shall be based on the termination of his employment as of the Retirement Date.
N. BUSINESS EXPENSES. At the conclusion of the Severance Period, Mahoney will promptly pay any balance due on any Company credit card or other account used by him. The Company will either (i) reimburse Mahoney for any pending, reasonable business-related credit card charge for which Mahoney has not already been reimbursed provided Mahoney files a proper Travel and Expense Report, or (ii) pay such charge directly to the card-issuing bank. Mahoney hereby authorizes the Company to deduct from monies due Mahoney under this Agreement any balance remaining on Mahoney's Company credit card account after such (i) reimbursement or (ii) direct payment.
O. OTHER COMPENSATION AND BENEFITS. Except as specifically set forth herein, no other compensation or benefits are due Mahoney.
4. NON-COMPETITION.
A. From the Transition Date and continuing until thirty-six
months after the end of the Consulting Period, Mahoney shall not, directly or
indirectly, do or suffer to be done any of the following (collectively, "Covered
Activities"): own, manage, control or participate in the ownership, management,
or control of, or be employed or engaged by or otherwise affiliated or
associated as a consultant, independent contractor or otherwise with any other
corporation, partnership, proprietorship, firm, association, or other business
entity, or otherwise engage in any business, which is in competition with the
Company's business; provided, however, that the ownership of not more than one
percent of any class of publicly-traded securities of any entity shall not be
deemed a violation of this Paragraph 4. For purposes of this Agreement, the
"Company's business" shall mean any business in which the Company actively
engages now or until the end of the Consulting Period, and any business in which
the Company has actively engaged in the two (2) year period prior to the date
hereof, including, without limitation, the design, manufacture, assembly,
distribution, sale, service or maintenance of those products listed in Exhibit
A.
B. In the event Mahoney shall violate any provision of this Paragraph 4 as to which there is a specific time period during which he is prohibited from taking certain actions or from engaging in certain activities as set forth in such provision, then, in such event, such violation shall toll the running of such time period from the date of such violation until such violation shall cease. The foregoing shall in no way limit the Company's rights under Paragraph 9 of this Agreement.
C. Mahoney has carefully considered the nature and extent of the restrictions upon him and the rights and remedies conferred upon the Company under this Paragraph 4 and this Agreement, and hereby acknowledges and agrees that the same are reasonable in time and territory, are designed to eliminate competition which otherwise would be unfair to the Company, do not stifle the inherent skill and experience of Mahoney, would not operate as a bar to Mahoney's sole means of support, are fully required to protect the legitimate interests of the Company and do not confer a benefit upon the Company disproportionate to the detriment to Mahoney. Mahoney further acknowledges that his obligations in this Paragraph 4 are made in consideration of, and are adequately supported by the payments by the Company to Mahoney described herein.
D. Notwithstanding the other provisions of this Paragraph 4, Mahoney may undertake Covered Activities if he first obtains the written consent of theCompany's Chief Executive Officer, which consent shall not be unreasonably withheld.
5. NO SOLICITATION OF EMPLOYEES. Mahoney agrees that he will not: (i) employ, assist in employing, or otherwise associate in business with any person who is, or has been in the 12 month period prior to such individual's association with Mahoney an employee, officer or agent of the Company, or any of its affiliated, related or subsidiary entities, unless such employee was involuntarily terminated by the Company; or (ii) induce any person who is an employee, officer or agent of the Company, or any of its affiliated, related, or subsidiary entities to terminate such relationship.
6. RELEASE BY MAHONEY.
A. Mahoney for himself and his dependents, successors, assigns, heirs, executors and administrators (and his and their legal representatives of every kind), hereby releases, dismisses, and forever discharges the Company from, and agrees to indemnify the Company against, any and all arbitrations, claims (including claims for attorney's fees), demands, damages, suits, proceedings, actions and/or causes of action of any kind and every description, whether known or unknown, which Mahoney now has or may have had for, upon, or by reason of any cause whatsoever (except that this release shall not apply to the obligations of the Company arising under this Agreement), against the Company ("Claims"), including but not limited to:
(I) any and all Claims, directly or indirectly, arising out of or relating to: (A) Mahoney's employment with or consulting services for the Company; and (B) Mahoney's resignation as Chairman of the Board and any other position described in Paragraph 1 of this Agreement.
(II) any and all claims of discrimination, including but not limited to claims of discrimination on the basis of sex, race, age, national origin, marital status, religion or disability, including, specifically, but without limiting the generality of the foregoing, any claims under the Age Discrimination in Employment Act, as amended (the "ADEA"), Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993 and Ohio Revised Code Chapter 4112;
(III) any and all claims of wrongful or unjust discharge or breach of any contract or promise, express or implied; and
(IV) any and all claims under or relating to any and all employee compensation, employee benefit, employee severance or employee incentive bonus plans and arrangements; provided that he shall remain entitled to the amounts and benefits specified in Paragraph 3 above. Mahoney agrees that he intends to release any and all worker compensation claims he may have against the Company by this Agreement, and further agrees to execute any documentation as may be reasonably required to perfect such release when presented to him by the Company.
B. Mahoney understands and acknowledges that the Company does not admit any violation of law, liability or invasion of any of his rights and that any such violation, liability or invasion is expressly denied. The consideration provided under this Agreement is made for the purpose of settling and extinguishing all claims and rights (and every other similar or dissimilar matter) that Mahoney ever had or now may have or ever will have against the Company to the extent provided in this Paragraph 6. Mahoney further agrees and acknowledges that no representations, promises or inducements have been made by the Company other than as appear in this Agreement.
C. Mahoney further understands and acknowledges that:
(I) The release provided for in this Paragraph 6, including claims under the ADEA to and including the date of this Agreement, is in exchange for the additional consideration provided for in this Agreement, to which consideration he was not heretofore entitled;
(II) He has been advised by the Company to consult with legal counsel prior to executing this Agreement and the release provided for in this Paragraph 6, has had an opportunity to consult with and to be advised by legal counsel of his choice, fully understands the terms of this Agreement, and enters into this Agreement freely, voluntarily and intending to be bound;
(III) He has been given a period of twenty-one days to review and consider the terms of this Agreement, and the release contained herein, prior to its execution and that he may use as much of the twenty-one day period as he desires; and
(IV) He may, within seven days after execution, revoke this Agreement. Revocation shall be made by delivering a written notice of revocation to the Vice President, Human Resources at the Company. For such revocation to be effective, written notice must be actually received by the Vice President, Human Resources at the Company no later than the close of business on the seventh day after Mahoney executes this Agreement. If Mahoney does exercise his right to revoke this Agreement, all of the terms and conditions of the Agreement shall be of no force and effect and the Company shall have no obligation to satisfy the terms or make any payment to Mahoney as set forth in Paragraphs 2 or 3 of this Agreement.
D. Mahoney will never file a lawsuit or other action asserting any claim that is released in this Paragraph 6. In the event Mahoney breaches this Paragraph 6.d, he agrees to indemnify the Company against any costs or expenses, including attorney fees, that the Company may incur in connection with such breach.
E. Mahoney and the Company acknowledge that his resignation is by mutual agreement between the Company and Mahoney, and that Mahoney waives and releases any claim that he has or may have to reemployment.
F. For purposes of the above provisions of this Paragraph 6, the "Company" shall include its predecessors, subsidiaries, divisions, related or affiliated companies, officers, directors, stockholders, members, employees, heirs, successors, assigns, representatives, agents and counsel.
7. CONFIDENTIAL INFORMATION.
A. Mahoney acknowledges and agrees that in the performance of
his duties as an officer and employee of the Company, as well as in the
performance of consulting services pursuant to Paragraph 2, he was or may be
brought into frequent contact with, had or may have access to, and/or became or
may become informed of confidential and proprietary information of the Company
and/or information that is a competitive asset of the Company (collectively,
"Confidential Information") and the disclosure of which would be harmful to the
interests of the Company or its subsidiaries. Confidential Information shall
include, without limitation: (i) customer and distributor information such as
names, addresses, sales histories, purchasing habits, credit status, pricing
levels, etc., (ii) certain prospective customer and distributor information
lists, etc., (iii) product and systems specifications, schematics, designs,
concepts for new or improved products and services and other products and
services data, (iv) product and material costs, (v) suppliers' and prospective
suppliers' names, addresses and contracts, (vi) future corporate planning data,
(vii) production methods and equipment, (viii) marketing strategies, (ix) the
Company's financial results and business condition, (x) any of the foregoing
which belong to
any other person or company but to which Mahoney has had access by reason of his employment with the Company, and (xi) any other information which constitutes a "trade secret" under federal or state law. Such Confidential Information is more fully described in Subparagraph 7.b. Mahoney acknowledges that the Confidential Information of the Company gained by Mahoney during his association with the Company was developed by and/or for the Company through substantial expenditure of time, effort and money and constitutes valuable and unique property of the Company.
B. Mahoney will keep in strict confidence, and will not,
directly or indirectly, at any time, disclose, furnish, disseminate, make
available, use or suffer to be used in any manner any Confidential Information
of the Company without limitation as to when or how Mahoney may have acquired
such Confidential Information. Mahoney specifically acknowledges that
Confidential Information includes any and all information, whether reduced to
writing (or in a form from which information can be obtained, translated, or
derived into reasonably usable form), or maintained in the mind or memory of
Mahoney and whether compiled or created by the Company, which derives
independent economic value from not being readily known to or ascertainable by
proper means by others who can obtain economic value from the disclosure or use
of such information, that reasonable efforts have been put forth by the Company
to maintain the secrecy of confidential or proprietary or trade secret
information, that such information is and will remain the sole property of the
Company, and that any retention or use by Mahoney of confidential or proprietary
or trade secret information after the termination of Mahoney's employment with,
and performance of services (including consulting services pursuant to Paragraph
2) for, the Company shall constitute a misappropriation of the Company's
Confidential Information.
C. At the conclusion of the Consulting Period, Mahoney will immediately return to the Company (to the extent he has not already returned), equipment, software, electronic files, computers, including any laptop, in good condition, all property of the Company, including, without limitation, property, documents and/or all other materials (including copies, reproductions, summaries and/or analyses) which constitute, refer or relate to Confidential Information of the Company.
D. Mahoney further acknowledges that his obligation of confidentiality shall survive, regardless of any other breach of this Agreement or any other agreement, by any party hereto, until and unless such Confidential Information of the Company shall have become, through no fault of Mahoney generally known to the public or Mahoney is required by law (after providing the Company with notice and opportunity to contest such requirement) to make disclosure. Mahoney's obligations under this Paragraph 7 are in addition to, and not in limitation or preemption of, all other obligations of confidentiality which Mahoney may have to the Company under general legal or equitable principles or statutes.
8. DISCLOSURE. From the date of this Agreement through the end of the
Consulting Period, Mahoney will communicate the contents of Paragraphs 4, 5, 7,
9.b, 10, and 12 of this Agreement to any person, firm, association, or
corporation other than Diebold which he intends to be employed by, associated in
business with, or represent.
9. BREACH; ARBITRATION.
A. If Mahoney breaches any of the provisions of this Agreement, then the Company may immediately terminate all remaining payments and benefits described in this Agreement, and in addition, the Company shall be entitled to obtain reimbursement from
Mahoney of all payments and benefits already provided pursuant to Paragraphs 2 or 3 of this Agreement, plus any expenses and damages incurred as a result of the breach (including, without limitation, reasonable attorneys' fees), with the remainder of this Agreement, and all promises and covenants herein, remaining in full force and effect.
(I) The Company will not terminate pursuant to Paragraph 9.a any benefits in which Mahoney had vested as of the Transition Date under the Retirement Plans. Mahoney's COBRA rights, if any, will not be reduced by any action taken by the Company under Paragraph 9.a.
(II) Mahoney may challenge any Company action under Paragraph 9.a.
B. The parties agree that any disputes, controversies, or claims of whatever nature arising out of or relating to this Agreement or breach thereof shall be resolved through binding arbitration before a mutually agreeable arbitrator or arbitrators, in accordance with the applicable rules of the American Arbitration Association; provided, however, that the parties agree that in the event of any alleged breach by Mahoney of any of his obligations under Paragraphs 4, 5 and 7 of the Agreement, the arbitration requirements of this Paragraph 9.b shall not apply, and that instead, the Company may elect, in its sole discretion, to seek relief in a court of general jurisdiction in the State of Ohio, and the parties hereby consent to the exclusive jurisdiction of such court. In addition, in connection with any such court action. Mahoney acknowledges and agrees that the remedy at law available to the Company for breach by Mahoney of any of his obligations under Paragraphs 4, 5, and 7 of this Agreement would be inadequate and that damages flowing from such a breach would not readily be susceptible to being measured in monetary terms. Accordingly, Mahoney acknowledges, consents and agrees that, in addition to any other rights or remedies which the Company may have at law, in equity or under this Agreement, upon adequate proof of Mahoney's violation of any provision of Paragraphs 4, 5 or 7 of this Agreement, the Company shall be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened or further breach, without the necessity of proof of actual damage.
10. CONTINUED AVAILABILITY AND COOPERATION.
A. Mahoney shall cooperate fully with the Company and with the Company's counsel in connection with any present and future actual or threatened litigation or administrative proceeding involving the Company that relates to events, occurrences or conduct occurring (or claimed to have occurred) during the period of Mahoney's employment by the Company or during the Severance Period or the Consulting Period. This cooperation by Mahoney shall include, but not be limited to:
(I) making himself reasonably available for interviews and discussions with the Company's counsel as well as for depositions and trial testimony;
(II) if depositions or trial testimony are to occur, making himself reasonably available and cooperating in the preparation therefor as and to the extent that the Company or the Company's counsel reasonably requests;
(III) refraining from impeding in any way the Company's prosecution or defense of such litigation or administrative proceeding; and
(IV) cooperating fully in the development and presentation of the Company's prosecution or defense of such litigation or administrative proceeding.
B. Mahoney shall be reimbursed by the Company for reasonable travel, lodging, telephone and similar expenses incurred in connection with such cooperation, which the Company shall reasonably endeavor to schedule at times not conflicting with the reasonable requirements of any employer of Mahoney, or with the requirements of any third party with whom Mahoney has a business relationship permitted hereunder that provides remuneration to Mahoney. Mahoney shall not unreasonably withhold his availability for such cooperation.
C. Upon the Transition Date, Mahoney will update the Company as to the status of all pending matters for which he was responsible or otherwise involved. During the Severance Period, Mahoney will perform such services and provide such consultations as the Company shall reasonably request.
D. The Company agrees to release Mahoney and indemnify and hold him harmless against all liability or loss, and against all claims or actions, arising from or connected with his past activities as an employee of the Company or his activities in the performance of consulting services pursuant to Paragraph 2, including but not limited to those claims or actions based upon or arising out of negligent or wrongful acts to persons or property and the defense of any such claims or actions. Notwithstanding the foregoing, the Company will have no obligation to release, indemnify, hold harmless or defend Mahoney for any conduct by Mahoney alleged to be intentional or willful or that arises from a violation of any statutory prohibition unless such conduct was specifically requested by the Company. Mahoney warrants that he has disclosed to the Company all claims and circumstances and potential claims and circumstances that may exist or could reasonably be brought against him concerning his past activities as an employee.
11. SUCCESSORS AND BINDING AGREEMENT.
A. This Agreement shall be binding upon and inure to the benefit of the Company and any successor of or to the Company, including, without limitation, any persons acquiring, directly or indirectly, all or substantially all of the business and/or assets of the Company whether by purchase, merger, consolidation, reorganization, or otherwise (and such successor shall thereafter be deemed included in the definition of "the Company" for purposes of this Agreement), but shall not otherwise be assignable or delegable by the Company.
B. This Agreement shall inure to the benefit of and be enforceable by Mahoney's personal or legal representatives, executors, administrators, successors, heirs, distributees, and/or legatees.
C. This Agreement is personal in nature and none of the parties hereto shall, without the consent of the other parties, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Subparagraphs (a) and (b) of this Paragraph 11.
D. This Agreement is intended to be for the exclusive benefit of the parties hereto, and except as provided in Subparagraphs (a) and (b) of this Paragraph 11, no third party shall have any rights hereunder.
12. NON-DISCLOSURE; STATEMENTS TO THIRD PARTIES.
A. All provisions of this Agreement and the circumstances giving rise hereto are and shall remain confidential and shall not be disclosed to any person not a party hereto (other than (i) Mahoney's spouse, if any, (ii) each party's attorney, financial advisor and/or tax advisor to the extent necessary for such advisor to render appropriate legal, financial and tax advice, and (iii) persons or entities that fall within the scope of Paragraphs 4 and 5 of this Agreement, but only to the extent required thereby), except as necessary to carry out the provisions of this Agreement, and except as may be required by law. Notwithstanding the foregoing, this Agreement may be filed with or provided to the Securities and Exchange Commission or any other governmental instrumentality or agency, including the Internal Revenue Service, if the Company deems such filing or provision to be necessary.
B. Because the purpose of this Agreement is to settle amicably any and all potential disputes or claims among the parties, neither Mahoney nor the Company shall, directly or indirectly, make or cause to be made any statements to any third parties criticizing or disparaging the other or commenting on the character or business reputation of the other. Mahoney further hereby agrees not: (i) to comment to others concerning the status, plans or prospects of the business of the Company, or (ii) to engage in any act or omission that would be detrimental, financially or otherwise, to the Company, or that would subject the Company to public disrespect, scandal, or ridicule. For purposes of this Subparagraph 12.b, the "Company" shall mean Diebold, Incorporated and its directors, officers, predecessors, parents, subsidiaries, divisions, and related or affiliated companies.
13. NOTICES. For all purposes of this Agreement, all communications provided for herein shall be in writing and shall be deemed to have been duly given when delivered, addressed to the Company (to the attention of the CEO) at its principal executive offices and to Mahoney at his principal residence, 5291 St. Andrews Drive NW, Canton, Ohio 44708, or to such other address as any party may have furnished to the other in writing and in accordance herewith. Notices of change of address shall be effective only upon receipt.
14. MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by Mahoney and the Company. No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, expressed or implied with respect to the subject matter hereof have been made by any of the parties that are not set forth expressly in this Agreement and every one of them (if, in fact, there have been any) is hereby terminated without liability or any other legal effect whatsoever.
15. ENTIRE AGREEMENT. This Agreement shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof and shall supersede all prior verbal or written agreements, covenants, communications, understandings, commitments, representations or warranties, whether oral or written, by any party hereto or any of its representatives pertaining to such subject matter.
16. GOVERNING LAW. Any dispute, controversy, or claim of whatever nature arising out of or relating to this Agreement or breach thereof shall be governed by and under the laws of the State of Ohio.
17. VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall nevertheless remain in full force and effect.
18. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same Agreement.
19. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings used herein are for convenience and are not part of this Agreement and shall not be used in construing it.
20. FURTHER ASSURANCES. Each party hereto shall execute such additional documents, and do such additional things, as may reasonably be requested by the other party to effectuate the purposes and provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first set forth above.
DIEBOLD, INCORPORATED
By: /s/ Charles B. Scheurer
Title: Vice President, Human Resources
Date: May 23, 2000
Witness: /s/ Maryann Hoover /s/ Robert W. Mahoney
---------------------- ---------------------------
Robert W. Mahoney
Date: 5/23/00
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EXHIBIT A
Automated Teller Machines
Teller Assist Devices
Physical Security Devices
(including, without limitation, Vault Doors and Chests)
Electronics Funds Transfer Equipment
Point of Sale Equipment and Systems
Safe Deposit Boxes
Access Control Devices and Systems
Integrated Campus Access Management Devices and Systems
Surveillance Equipment and Systems
(including, without limitation, Surveillance Cameras)
Remote Monitoring Systems
(including, without limitation, Burglary, Robbery and Fire)
Automated Monitoring, Dispensing and Reporting
Devices and Systems for the Health Care Industry
Software Systems for the Above
Transaction Processing
Service and Maintenance of the Above
(including, without limitation, First and Second Line Service)
The above list of products in this Exhibit A does not apply to general purpose computer hardware or peripherals such as mainframe computers, personal computers, printers, or application software such as spreadsheet, word processing and data base programs for general business or office use.
EXHIBIT 10.19
August 16, 2000
Mr. Wesley B. Vance
895 Baywood Court
Columbus, Indiana 47201
Dear Wes:
This letter sets forth the terms of our offer to you of employment by Diebold, Incorporated (the "Company"). If our offer is acceptable to you, please so indicate by signing and returning a copy of this letter to me.
1. POSITION AND TERM. Effective October 1, 2000, you will serve as President, Diebold, North America, reporting directly to the Chief Executive Officer of the Company. The term of your employment will continue for two years until October 1, 2002, with automatic one-year renewals thereafter, unless either you or the Company notifies the other in writing at least 90 days before a scheduled expiration date that the term is not to be renewed.
2. COMPENSATION. Your initial base salary will be at an annual rate of $370,000 ("Base Salary"). Commencing in 2001, you will be eligible to participate in the Company's Annual Incentive Plan with a maximum payout on an annual level of not less than 100% of Base Salary, subject to achievement of applicable performance measures and the terms and conditions of the plan.
3. BENEFITS. You will be eligible to participate in the Company's employee benefit and executive compensation plans in which senior executives of the Company participate, including, without limitation, retirement, health care (medical, life, disability and dental), 401(k) savings and supplemental executive retirement plans. Your participation will be subject to the terms and conditions of the applicable plans, including their eligibility rules. In addition, you will be provided with the opportunity to participate in a split-dollar life insurance arrangement at a level of not less than two times Base Salary, provided that you are insurable by the insurance carrier selected to provide insurance under such arrangement.
4. VACATION AND ADDITIONAL BENEFITS. You will be entitled to 20 days of paid vacation annually upon your employment. You will also be entitled to reimbursement for reasonable business expenses. You will also be provided a luxury class car, dues and initiation fees at one country club, and reimbursement for the costs of financial counseling up to $7,500 per year.
5. RELOCATION. You will be entitled to relocation benefits, including without limitation, a temporary housing allowance, in accordance with the Company's relocation policy applicable to senior executives. The Company will purchase or arrange to have purchased your existing home in Columbus, Indiana at a price equal to the average of the fair market values as reported in two appraisals submitted by appraisers jointly agreed to by you and the Company.
Mr. Wesley B. Vance page -2- August 16, 2000
6. SIGN-ON EQUITY AWARDS. As of the commencement date of your employment, you will be granted under the Company's 1991 Equity and Performance Incentive Plan, as amended and restated as of January 30, 1997 (the "Equity Incentive Plan") the following awards which shall be subject to the terms and conditions of the Equity Incentive Plan and the applicable standard grant agreements in use thereunder:
a. Nonqualified stock option for 40,000 shares of the Company's common stock. Such option will become exercisable in equal installments on the first, second, third and fourth anniversaries of your employment commencement date.
b. 8,300 restricted shares of the Company's common stock. Such shares shall vest in full on the third anniversary of your employment commencement date.
c. 20,000 restricted shares of the Company's common stock. Fifty percent of such shares shall vest upon a 50% increase for a period of at least twenty-consecutive trading days in the closing price in the Company's common stock over that on your employment commencement date (or on the next preceding trading date if your employment commencement date is not a trading date), and an additional 50% vesting upon a 100% increase for a period of at least twenty-consecutive trading days. In any event, all shares will vest on the seventh anniversary of your employment commencement date.
7. SEVERANCE BENEFITS. You agree that your employment is on an at-will basis. If the Company terminates your employment other than by reason of death, disability or cause (meaning an intentional act of fraud, embezzlement, theft, damage to property, disclosure of confidential information or engagement in competitive activity or your gross negligence or misconduct, any of which is materially harmful to the Company, or your intentional and repeated failure to carry out your duties and responsibilities) prior to the end of your employment term, you will as your sole severance payment be entitled to continue to receive your Base Salary for 24 months following your termination and will be provided with health (including medical/hospital and dental) and life insurance benefits for 24 months following your termination on the same terms and conditions you were entitled to participate in such benefits prior to your termination. Such health and life insurance benefits, however, will be reduced by any comparable benefits you receive from another employer during such period. You will also be entitled to receive up to one year of outplacement services.
8. NON-COMPETITION AND NONSOLICITATION. You agree that during your employment and for a period of two years thereafter you will not, without prior written consent of the Company, be employed or otherwise engaged by or in any other business which is in competition with the Company's business (meaning any business which Company now or until the end of the two-year period following the termination of your employment actively engages, including without limitation, the design, manufacture, assembly, distribution, sale, service, or maintenance of the products listed in Exhibit A). You also agree that during your term of employment and for a period of two years thereafter not to induce or assist others in inducing any employee of the Company or its affiliates to gave up employment with the Company or its affiliates. In the event that the scope of these restrictions on you in this paragraph are found overly broad, you agree that a court should reform the restrictions by limiting them to the maximum reasonable scope.
Mr. Wesley B. Vance page -3- August 16, 2000
9. PROPRIETARY INFORMATION AND INVENTIONS. You realize that as an employee of the Company, you may create or have access to information, trade secrets, substances and inventions including confidential information relating to the business or interests of persons with whom the Company or its affiliated companies may have commercial, technical or scientific relationships ("Information") which is valuable to the Company or its affiliated companies and may lose its value if disclosed to third parties. Therefore, you agree to treat all such Information as confidential and belonging to the Company and will take all actions reasonably requested to confirm such ownership. You will not, without the prior written consent of the Company, disclose or use the same otherwise than in the course of your employment with the Company; this obligation shall continue until such Information becomes public knowledge through no fault on your part, regardless of whether you continue to be employed by the Company.
10. CHANGE IN CONTROL. You will be entitled to enter into an Employment Agreement providing for certain terms and conditions of your employment following a "Change in Control" of the Company as defined therein. After entering into such agreement, if there is an occurrence of a "Change in Control" as so defined, the terms of that agreement will control the terms and conditions of your employment rather than this letter.
11. STOCK OWNERSHIP GUIDELINES. You agree to comply during your employment with the Company's stock ownership guidelines, as amended from time to time, applicable to executives of the Company.
12. GOVERNING LAW. You agree that this letter agreement will be governed by the substantive laws of Ohio, without regard to conflict of laws principles.
Sincerely yours,
DIEBOLD, INCORPORATED
/s/Charles B. Scheurer Charles B. Scheurer Vice President Human Resources Accepted and Agreed: /s/Wesley B. Vance 8/20/00 ----------------------------- --------------- Wesley B. Vance Date |
EXHIBIT A
Automated Teller Machines
Teller Assist Devices
Physical Security Devices
(including, without limitation, Vault Doors and Chests)
Electronics Funds Transfer Equipment
Point of Sale Equipment and Systems
Safe Deposit Boxes
Access Control Devices and Systems
Integrated Campus Access Management Devices and Systems
Surveillance Equipment and Systems
(including, without limitation, Surveillance Cameras)
Remote Monitoring Systems
(including, without limitation, Burglary, Robbery and Fire)
Automated Monitoring, Dispensing and Reporting
Devices and Systems for the Health Care Industry
Software Systems for the Above
Service and Maintenance of the Above
(including, without limitation, First and Second Line Service)
The above list of products in this Exhibit A does not apply to general purpose computer hardware or peripherals such as mainframe computers, personal computers, printers, or application software such as spreadsheet, word processing and data base programs for general business or office use.
EXHIBIT 21
LIST OF SIGNIFICANT SUBSIDIARIES
The following are the subsidiaries of the Registrant included in the Registrant's consolidated financial statements at December 31, 2000. Other subsidiaries are not listed because such subsidiaries are inactive. Subsidiaries are listed alphabetically under either the domestic or international categories.
Percent of voting
Jurisdiction under securities owned
Domestic which organized by Registrant
-------- ---------------- ----------------
ATM Finance, Inc. Ohio 100%
Central Security Systems, Inc. Hawaii 100%
DBD Investment Management Company Delaware 100%
Diebold Australia Holding Company, Inc. Delaware 100%
Diebold China Security Holding Company, Inc. Delaware 100%
Diebold Credit Corporation Delaware 100%
Diebold Finance Company, Inc. Delaware 100% (1)
Diebold Foreign Sales Corporation St. Thomas, U.S. Virgin Islands 100% (1)
Diebold Holding Company, Inc. Delaware 100%
Diebold Investment Company Delaware 100%
Diebold Latin America Holding Company, Inc. Delaware 100%
Diebold Mexico Holding Company, Inc. Delaware 100%
Diebold Midwest Manufacturing, Inc. Delaware 100%
Diebold of Nevada, Inc. Nevada 100%
Diebold Self-Service Systems New York 100% (2)
Diebold Southeast Manufacturing, Inc. Delaware 100% (3)
Diebold SST Holding Company, Inc. Delaware 100%
Diebold Texas, Incorporated Texas 100%
Diebold Transaction Services, Inc. Delaware 100%
Griffin Technology Incorporated New York 100%
InterBold Technologies, Inc. Delaware 100% (4)
Mayfair Software Distribution, Inc. Delaware 100%
Nexus Software, Incorporated Delaware 100%
Pioneer Systems, Inc. Pennsylvania 100%
R. D. Products, Inc. New York 100% (5)
VDM Holding Company, Inc. Delaware 100%
Verdi & Associates, Inc. New York 100%
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(1) 100% of voting securities are owned by Diebold Investment Company which is 100% owned by the Registrant.
(2) 70% of partnership interest is owned by Diebold Holding Company, Inc., which is 100% owned by the Registrant and 30% is owned by Diebold SST Holding Company, Inc., which is 100% owned by the Registrant.
(3) 100% of voting securities are owned by Diebold Midwest Manufacturing, Inc., which is 100% owned by the Registrant.
(4) 100% of voting securities are owned by Diebold Self-Service Systems, which is 70% owned by Diebold Holding Company, Inc. and 30% owned by Diebold SST Holding Company, Inc., which are 100% owned by the Registrant.
(5) 100% of voting securities are owned by Griffin Technology Incorporated which is 100% owned by the Registrant.
EXHIBIT 21
LIST OF SIGNIFICANT SUBSIDIARIES (CONTINUED)
Percent of voting
Jurisdiction under securities owned
International which organized by Registrant
------------- ---------------- ----------------
Cable Print N.V. Belgium 100%
China Diebold Financial Equipment Company LTD. Peoples Republic of China 71%
DBD Asset Management S.A. de C.V. Mexico 100% (6)
DCHC, S.A. Panama 100% (17)
Diebold ATM Cihazlari Sanayi Ve Ticaret A.S. Turkey 100% (22)
Diebold Argentina, S.A. Argentina 100% (17)
Diebold Australia Pty. Ltd. Australia 100% (7)
Diebold Belgium S.P.R.L. Belgium 90% (19)
Diebold Brasil LTDA Brazil 100% (17)
Diebold Colombia S.A. Colombia 55% (20)
The Diebold Company of Canada Limited Canada 100%
Diebold Denmark A.p.S. Denmark 100% (9)
Diebold EMEA B.V. Netherlands 100%
Diebold EMEA Processing Centre Limited United Kingdom 100%
Diebold Estonia O.U. Estonia 100%
Diebold France SARL France 100% (9)
Diebold Germany GmbH Germany 100% (9)
Diebold HMA Private Limited India 50%
Diebold Hungary Ltd. Hungary 100% (9)
Diebold International Limited United Kingdom 100% (9)
Diebold Italy S.r.l. Italy 100% (19)
Diebold Mexico, S.A. de C.V. Mexico 100% (8)
Diebold Netherlands B.V. Netherlands 100% (9)
Diebold OLTP Systems, A.V.V. Aruba, Dutch West Indies 50%
Diebold OLTP Systems, C.A. Venezuela 50% (15)
Diebold Pacific, Limited Hong Kong 100%
Diebold Panama, Inc. Panama 100% (17)
Diebold Paraguay S.A. Paraguay 100% (17)
Diebold Poland S.p. z.o.o. Poland 100% (9)
Diebold Portugal - Solucoes Informaticas, S.A. Portugal 100% (21)
Diebold (Romania) S.R.L. Romania 100%
Diebold Safetell International Security Limited Australia 100% (11)
Diebold Security and Services Pty. Australia 100% (11)
Diebold Osterreich Selbstbedienungssysteme GmbH Austria 100% (9)
Diebold Selbstbedienyngssysteme (Schweiz) GmbH Switzerland 100% (9)
Diebold Self Service Solutions Limited Liability Company Switzerland 100%
Diebold Services S.A. France 51%
Diebold Singapore Pte. Ltd Singapore 100%
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EXHIBIT 21
LIST OF SIGNIFICANT SUBSIDIARIES (CONTINUED)
Percent of voting
Jurisdiction under securities owned
International which organized by Registrant
------------- ---------------- ----------------
Diebold South Africa (PTY) LTD South Africa 100%
Diebold Spain, S.L. Spain 100% (9)
Diebold (Thailand) Company Limited Thailand 100%
Diebold Uruguay S.A. Uruguay 100% (17)
DPB S.A. Argentina 50% (15)
DSSS Panama, S.A. Panama 55% (16)
InterBold Singapore Pte Ltd Singapore 100% (10)
Mecaf Impressoras S.A. Brazil 100% (18)
Nexus Software UK LTD. United Kingdom 100% (14)
P.T. Getronics Indonesia Indonesia 100%
Procomp Amazonia Industria Eletronica S.A. Brazil 100% (18)
Procomp Comercio e Servicos LTDA Brazil 100% (18)
Procomp Industria Eletronica S.A. Brazil 100% (18)
RLM Monitoring Pty. Ltd. Australia 100% (11)
Safequip Automated Systems Pty. Ltd. Australia 50% (12)
Safetell Cash Handling Pty. Ltd. Australia 100% (13)
Safetell International Services Pty. Ltd. Australia 100% (13)
Siab (HK) Limited Hong Kong 100% (9)
Shanghai Diebold King Safe Company, Limited China 50% (24)
Shanghai Diebold Security Products Company, Limited China 50% (24)
Siab S.A. France 100%
Starbuck Computer Empire, A.V.V. Aruba, Dutch West Indies 50%
Tecron Security Pty. Ltd. Australia 70% (23)
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(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., which is 100% owned by the Registrant.
(7) 100% of voting securities are owned by Diebold Australia Holding Company, Inc. which is 100% owned by the Registrant.
(8) 100% of voting securities are owned by Diebold Mexico Holding Company, Inc. which is 100% owned by the Registrant.
(9) 100% of voting securities are owned by Diebold Self-Service Solutions Limited Liability Company which is 100% owned by the Registrant.
(10) 100% of voting securities are owned by Siab (HK) Limited, which is 100% owned by Diebold Self-Service Systems which is 70% owned by Diebold Holding Company, Inc. and 30% owned by Diebold SST Holding Company, Inc., which are 100% owned by the Registrant.
(11) 100% of voting securities are owned by Diebold Australia Pty. Ltd., which is 100% owned by Diebold Australia Holding Company, Inc., which is 100% owned by the Registrant.
(12) 50% of voting securities are owned by Safetell Cash Handling Pty. Ltd., which is 100% owned by Diebold Safetell International Security Limited, which is 100% owned by Diebold Australia Pty. Ltd., which is 100% owned by Diebold Australia Holding Company, Inc. which is 100% owned by the Registrant.
(13) 100% of voting securities are owned by Diebold Safetell International Security Limited, which is 100% owned by Diebold Australia Pty. Ltd., which is 100% owned by Diebold Australia Holding Company, Inc. which is 100% owned by the Registrant.
(14) 100% of voting securities are owned by Nexus Software, Incorporated, which is 100% owned by the Registrant.
(15) 50% of voting securities are owned by Diebold Latin America Holding Company, Inc., which is 100% owned by the Registrant.
(16) 55% of voting securities are owned by Diebold Latin America Holding Company, Inc., which is 100% owned by the Registrant.
EXHIBIT 21
LIST OF SIGNIFICANT SUBSIDIARIES (CONTINUED)
(17) 100% of voting securities are owned by Diebold Latin America Holding Company, Inc., which is 100% owned by the Registrant.
(18) 100% of voting securities are owned by Diebold Brasil LTDA, which is 100% owned by Diebold Latin America Holding Company, Inc., which is 100% owned by the Registrant.
(19) 90% of voting securities are owned by the Registrant, while 10% of the voting securities are owned by Diebold Holding Company which is 100% owned by Diebold Self Service Solutions Limited Liability Company, which is 100% owned by the Registrant.
(20) 21.44% of voting securities are owned by Diebold Latin America Holding Company, Inc., 16.78 % of voting securities are owned by Diebold Panama, Inc. which is 100% owned by Diebold Latin America Holding Company, Inc., 16.78% of voting securities are owned by DCHC SA, which is 100% owned by Diebold Latin America Holding Company, Inc., which is 100% owned by the Registrant.
(21) 1% of voting securities are owned by the Registrant, while 99% of the voting securities are owned by Diebold Self Service Solutions Limited Liability Company, which is 100% owned by the Registrant.
(22) 50% of voting securities are owned by Diebold Netherlands B.V., 50% of voting securities are owned by Diebold Denmark A.p.S., both of which are 100% owned by Diebold Self Service Solutions Limited Liability Company which is 100% owned by the Registrant.
(23) 70% of voting securities are owned by Diebold Australia Pty. Ltd., which is owned 100% by Diebold Australia Holding Company, Inc. which is 100% owned by Registrant.
(24) 50% of voting securities owned by Diebold China Security Holding Company, Inc., which is 100% owned by Registrant.
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Diebold, Incorporated
We consent to incorporation by reference in the Registration Statements (Nos. 33-32960, 33-39988, 33-55452, 33-54677, 33-54675, 333-32187 and 333-31993) on Form S-8 of Diebold, Incorporated of our report dated January 23, 2001 relating to the consolidated balance sheets of Diebold, Incorporated and subsidiaries as of December 31, 2000, and 1999, 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, 2000, and related schedule.
/s/KPMG LLP KPMG LLP Cleveland, Ohio March 9, 2001 |
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, Gregory T. Geswein, 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, 2000, 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 attorneys 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.
Signed in the presence of: SIGNATURE DATE
/s/Charee Francis-Vogelsang /s/Donald R. Gant March 13, 2001
Donald R. Gant, Director
/s/Charee Francis-Vogelsang /s/Phillip B. Lassiter March 13, 2001
Phillip B. Lassiter, Director
/s/Charee Francis-Vogelsang /s/John N. Lauer March 13, 2001
John N. Lauer, Director
/s/Charee Francis-Vogelsang /s/William F. Massy March 13, 2001
William F. Massy, Director
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