FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from .......... to ..........
Ohio 34-0183970
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(State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number)
5995 Mayfair Road - P. O. Box 3077, North Canton, Ohio 44720-8077
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (330) 489-4000
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Indicate the number of shares outstanding of each of the issuer's classes of Common Shares, as of the latest practicable date.
Class Outstanding at April 26, 1996
----- -----------------------------
Common Shares $1.25 Par Value 45,844,674 Shares
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
INDEX
Page No.
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1996 and December 31, 1995 3
Condensed Consolidated Statements of Income -
Three Months Ended March 31, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders 8
ITEM 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 11
INDEX TO EXHIBITS 12
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
(Unaudited)
March 31, December 31,
1996 1995
------------ ---------------
ASSETS
- -------
Current assets
Cash and cash equivalents $ 35,715 $ 15,698
Short-term investments 36,575 30,989
Trade receivables 218,873 197,145
Inventories 84,591 91,002
Prepaid expenses and other current assets 54,448 41,378
--------- ---------
Total current assets 430,202 376,212
Securities and other investments 147,198 146,741
Property, plant and equipment, at cost 181,108 177,573
Less accumulated depreciation and amortization 96,014 93,501
---------- ----------
85,094 84,072
Lease receivables 48,346 44,614
Other assets 96,941 98,156
---------- ----------
$ 807,781 $ 749,795
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Accounts payable and other current liabilities $ 127,880 $ 127,874
Deferred income 106,540 62,687
---------- ----------
Total current liabilities 234,420 190,561
Pensions 18,433 17,523
Postretirement benefits 21,765 21,739
Minority interest 13,850 13,775
Shareholders' equity
Preferred Shares, no par value, authorized
1,000,000 shares, none issued
Common Shares, par value $1.25, authorized
125,000,000 shares, issued 45,993,461 and
45,893,678 shares, respectively; outstanding 45,874,319
and 45,808,227, respectively 57,492 57,367
Additional capital 55,944 50,937
Retained earnings 422,673 412,432
Treasury shares, at cost (119,142 and 85,451 shares, respectively) (5,694) (3,849)
Other (11,102) (10,690)
--------- ---------
Total shareholders' equity 519,313 506,197
--------- ---------
$ 807,781 $ 749,795
========= =========
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See accompanying notes to condensed consolidated financial statements.
DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
Three Months Ended
March 31,
Net sales 1996 1995
---------- ----------
Products $ 135,255 $ 123,089
Services 80,631 73,958
---------- ----------
215,886 197,047
Cost of sales
Products 82,388 79,121
Services 59,576 53,417
---------- ----------
141,964 132,538
---------- ----------
Gross profit 73,922 64,509
Selling and administrative expense 37,216 33,274
Research, development and engineering expense 12,046 10,106
---------- ----------
49,262 43,380
---------- ----------
Operating profit 24,660 21,129
Investment income 4,035 3,645
Miscellaneous, net (1,494) (1,893)
Minority interest (74) (392)
----------- -----------
Income before taxes 27,127 22,489
Taxes on income 9,088 7,300
---------- ----------
Net income $ 18,039 $ 15,189
========== ==========
Weighted average number of Common Shares outstanding 45,849 45,725
========== ==========
Net income per Common Share $ 0.39 $ 0.33
========== ==========
Cash dividends paid per Common Share $ 0.17 $ 0.16
========== ==========
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See accompanying notes to condensed consolidated financial statements.
DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
Three Months Ended
March 31,
1996 1995
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Cash flow from operating activities:
Net income $ 18,039 $ 15,189
Adjustments to reconcile net income to cash
provided by operating activities:
Minority share of income 74 392
Depreciation and amortization 3,655 3,095
Other charges and amortization 2,597 3,620
Cash used by changes in certain
current assets and liabilities (34,507) (22,683)
Changes in deferred income 43,853 46,095
Other 5,883 (219)
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Total adjustments 21,555 30,300
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Net cash provided by operating activities 39,594 45,489
Cash flow from investing activities:
Proceeds from maturities of investments 8,510 25,306
Payments for purchases of investments (16,067) (4,115)
Capital expenditures (4,828) (6,686)
Increase in certain other assets (1,166) (2,875)
Other 89 78
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Net cash (used) provided by investing activities (13,462) 11,708
Cash flow from financing activities:
Dividends paid (7,798) (7,318)
Proceeds from issuance of Common Shares 1,683 898
Other -- (1,546)
-------- --------
Net cash used in financing activities (6,115) (7,966)
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Increase in cash and cash equivalents 20,017 49,231
Cash and cash equivalents at the beginning of the period 15,698 17,285
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Cash and cash equivalents at the end of the period $ 35,715 $ 66,516
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See accompanying notes to condensed consolidated financial statements.
DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
1. The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of Management, necessary for a fair statement of the results for the interim periods. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto together with management's discussion and analysis of financial condition and results of operations contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. The results of operations for the three month period ended March 31, 1996 are not necessarily indicative of results to be expected for the full year.
2. The Net income per Common Share computations in the condensed consolidated statements of income are based on the weighted average number of shares outstanding during each period reported. On January 26, 1996, the Board of Directors declared a three-for-two stock split effected in the form of a stock dividend, distributed on February 23, 1996, to shareholders of record on February 9, 1996. Accordingly, all numbers of Common Shares, except authorized shares and treasury shares, and all per share data have been restated to reflect this stock split.
3. Inventory detail at: March 31, 1996 December 31, 1995
-------------- -----------------
Finished goods and
service parts $ 23,738 $ 22,683
Work in process 60,710 68,209
Raw materials 143 110
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Total inventory $ 84,591 $ 91,002
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4. The Company follows the provisions of APB Opinion No. 25, "Accounting for Stock Issued to Employees" (Opinion 25), in accounting for stock-based compensation arrangements. Under the guidelines of Opinion 25, compensation cost for fixed and variable stock-based awards is measured by the excess, if any, of the market price of the underlying stock over the amount the employee is required to pay. The Company plans to implement the disclosure requirements of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," in fiscal year 1996 and retain its current accounting method for stock-based employee compensation. The Company does not anticipate the adoption of this Statement to have a material effect on the Company's financial position or results of operations.
5. The Company has reclassified the presentation of certain prior-year information to conform with the current presentation format.
DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 1O-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
As of March 31, 1996
(Unaudited)
(Dollars in thousands except for per share data)
The balance sheet of the Company continued to reflect a strong financial position at March 31, 1996. Cash, cash equivalents and short-term investments increased to $72,290 at March 31, 1996 compared to $46,687 at December 31, 1995. These assets along with securities and other investments accounted for 27% and 26% of total assets at March 31, 1996 and December 31, 1995, respectively. Securities and other investments consist principally of tax-free municipal bonds, preferred stock, and other investments.
Future capital expenditures and increases in working capital are expected to be financed through internally generated funds. The Company's investment portfolio is available for any funding needs if required. External financing is also available if needed through the Company's lines of credit. At March 31, 1996, the Company had unused lines of credit approximating $40,000 and the Company is not restricted as to the use of funds borrowed under these credit agreements. Therefore, such commitments represent an additional and immediate source of liquidity. The Company's strong financial position enhances its ability to obtain additional funds if required.
Shareholders' equity per Common Share at March 31, 1996 improved to $11.32 from $11.05 at December 31, 1995. The first quarter cash dividend of $0.17 per share was paid on March 29, 1996 to shareholders of record on March 8, 1996. On April 3, 1996 the second quarter cash dividend of $0.17 per share was declared payable on June 7, 1996 to shareholders of record on May 17, 1996. Diebold, Incorporated shares are listed on the New York Stock Exchange under the symbol of DBD. The market price during the first three months of 1996 fluctuated within the range of $34.16 and $40.63.
Net sales for the first quarter of 1996 increased from the same period in 1995 by $18,839 or 10%. Total gross profit increased $9,413 or 15% over the first quarter's performance in 1995. Product gross profit accounted for the majority of this increase as the result of increased sales volume of ATMs and continuing cost containment efforts. Operating expenses increased $5,882 or 14% over the same period in 1995 largely due to higher selling expenses resulting from the increases in sales volumes and expenditures related to the continuing research and development of new products. Operating profit increased $3,531 or 17% over first quarter 1995's performance.
DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 1O-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
As of March 31, 1996
(Unaudited / Dollars in thousands except for per share data)
The Company's backlog of unfilled orders was $182,680 at March 31, 1996, compared to $145,906 at March 31, 1995, a $36,774 or 25% increase. The Company believes, however, that order backlog information is not, by itself, a meaningful indicator of future revenue streams. There are numerous factors which influence the amount and timing of revenue recognized in future periods.
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
The Registrant's annual meeting of shareholders was held on April 3, 1996. Each matter voted upon at such meeting and the number of shares cast for, against or withheld, and abstained are as follows:
For Withheld
------------ --------
Louis V. Bockius III 39,029,952 206,363
Daniel T. Carroll 39,019,326 216,989
Donald R. Gant 38,588,441 647,874
L. Lindsey Halstead 39,039,454 196,861
Phillip B. Lassiter 39,038,872 197,443
John N. Lauer 39,042,281 194,034
Robert W. Mahoney 39,033,588 202,727
William F. Massy 39,040,165 196,150
W. R. Timken, Jr. 39,022,631 213,684
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For: 33,368,361 Against: 5,659,545 Abstain: 208,409
For: 38,988,395 Against: 111,198 Abstain: 136,722
There were no broker non-votes.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1(i) Amended and Restated Articles of Incorporation of Diebold,
Incorporated -- incorporated by reference to Exhibit 3.1(i) of
Registrant's Annual Report on Form 10-K for the year ended December
31, 1994.
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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.
4. Rights Agreement dated as of February 10, 1989 between Diebold, Incorporated and Ameritrust Company National Association -- incorporated by reference to Exhibit 2.1 to Registrant's Registration Statement on Form 8-A dated February 10, 1989.
* 10.1 Form of Employment Agreement as amended and restated as of September 13, 1990 -- incorporated by reference to Exhibit 10.1 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1990.
* 10.2 Schedule of Certain Officers who are Parties to Employment Agreements in the form of Exhibit 10.1 -- incorporated by reference to Exhibit 10.2 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995.
* 10.3 Supplemental Retirement Benefit Agreement with William T. Blair -- incorporated by reference to Exhibit 10.3 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995.
* 10.5 Supplemental Employee Retirement Plan (as amended January 1, 1994) -- incorporated by reference to Exhibit 10.5 of Registrant's Annual Report on Form 10-K for the year ended December 31, 1994.
10.6 Amended and Restated Partnership Agreement dated as of September 12, 1990 -- incorporated by reference to Exhibit 10 to Registrant's Form 8-K dated September 26, 1990.
* 10.7 1985 Deferred Compensation Plan for Directors of Diebold, Incorporated -- incorporated by reference to Exhibit 10.7 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992.
* 10.8 1991 Equity and Performance Incentive Plan -- incorporated by reference to Exhibit 4(a) to Registrant's Form S-8 Registration Statement No. 33-39988.
* 10.9 Long-Term Executive Incentive Plan -- incorporated by reference to Exhibit 10.9 of Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.
* 10.10 1992 Deferred Incentive Compensation Plan (as amended and restated as of July 1, 1993) -- incorporated by reference to Exhibit 10.10 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993.
* Reflects management contract or other compensatory arrangement.
* 10.11 Annual Incentive Plan -- incorporated by reference to Exhibit 10.11 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1992.
* 10.12 Employment Agreement with Robert P. Barone -- incorporated by reference to Exhibit 10.12 to Registrant's Form 10-Q for the quarter ended September 30, 1994.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
No reports have been filed by the Registrant on Form 8-K during the period covered by this report.
* Reflects management contract or other compensatory arrangement.
DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: April 29, 1996 By: /s/Robert W. Mahoney
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Robert W. Mahoney
Chairman of the Board, President
and Chief Executive Officer
Date: April 29, 1996 By: /s/Gerald F. Morris
--------------- -------------------
Gerald F. Morris
Executive Vice President and
Chief Financial Officer
(Principal Accounting and
Financial Officer)
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DIEBOLD, INCORPORATED
FORM 10-Q
INDEX TO EXHIBITS
EXHIBIT NO. PAGE NO.
- ----------- --------
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. 14
4. Rights Agreement dated as of February 10, 1989 between Diebold,
Incorporated and Ameritrust Company National Association --
incorporated by reference to Exhibit 2.1 to Registrant's
Registration Statement on Form 8-A dated February 10, 1989. --
10.1 Form of Employment Agreement as amended and restated as of
September 13, 1990 -- incorporated by reference to Exhibit 10.1
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1990. --
10.2 Schedule of Certain Officers who are Parties to Employment
Agreements in the form of Exhibit 10.1 -- incorporated by reference
to Exhibit 10.2 to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1995. --
10.3 Supplemental Retirement Benefit Agreement with William T. Blair --
incorporated by reference to Exhibit 10.3 to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1995. --
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EXHIBIT NO. PAGE NO.
- ----------- --------
10.5 Supplemental Employee Retirement Plan (as amended January 1,
1994) -- incorporated by reference to Exhibit 10.5 of
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994. --
10.6 Amended and Restated Partnership Agreement dated as of September 12,
1990 -- incorporated by reference to Exhibit 10 to Registrant's Form 8-K
dated September 26, 1990. --
10.7 1985 Deferred Compensation Plan for Directors of Diebold,
Incorporated -- incorporated by reference to Exhibit 10.7
to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1992. --
10.8 1991 Equity and Performance Incentive Plan -- incorporated by
reference to Exhibit 4(a) to Registrant's Form S-8 Registration
Statement No. 33-39988. --
10.9 Long-Term Executive Incentive Plan -- incorporated by reference to
Exhibit 10.9 of Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993. --
10.10 1992 Deferred Incentive Compensation Plan (as amended and restated
as of July 1, 1993) -- incorporated by reference to Exhibit 10.10
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993. --
10.11 Annual Incentive Plan -- incorporated by reference to Exhibit 10.11
to Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992. --
10.12 Employment Agreement with Robert P. Barone -- incorporated by
reference to Exhibit 10.12 to Registrant's Form 10-Q for the
quarter ended September 30, 1994. --
27. Financial Data Schedule. 15
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[OHIO SEAL]
CERTIFICATE OF AMENDMENT
BY SHAREHOLDERS TO THE ARTICLES OF INCORPORATION OF
and
[X] a meeting of the shareholders was duly called for the purpose of adopting this amendment and held on April 3, 1996 at which meeting a quorum of the shareholders was present in person or by proxy, and by the affirmative vote of the holders of shares entitling them to exercise 66-2/3% of the voting power of the corporation.
[ ] in a writing signed by all of the shareholders who would be entitled to notice of a meeting held for that purpose, the following resolution to amend the articles was adopted:
RESOLVED, that Article Fourth of the Amended Articles of Incorporation be amended, effective April 3, 1996, to read as follows:
"FOURTH: The number of shares which the Corporation is authorized to have outstanding is 126,000,000 consisting of 1,000,000 Serial Preferred Shares without par value (hereinafter called "Serial Preferrred Shares") and 125,000,000 Common Shares of the par value of $1.25 each (hereinafter called "Common Shares")."
IN WITNESS WHEREOF, the above named officers, acting for and on the behalf of the corporation, have hereto subscribed their names this 23rd day of April, 1996.
By /s/ Robert W. Mahoney
----------------------------------------
(Chairman, President, Vice President)
By /s/ Charee Francis-Vogelsang
----------------------------------------
(Secretary, Assistant Secretary)
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(OHIO - 613 - 3/4/91)
NOTE: Ohio law does not permit one officer to sign in two capacities. Two separate signatures are required, even if this necessitates the election of a second officer before the filing can be made.
| ARTICLE 5 |
| MULTIPLIER: 1,000 |
| CURRENCY: U.S. DOLLARS |
| PERIOD TYPE | 3 MOS |
| FISCAL YEAR END | DEC 31 1996 |
| PERIOD START | JAN 01 1996 |
| PERIOD END | MAR 31 1996 |
| EXCHANGE RATE | 1 |
| CASH | 35,715 |
| SECURITIES | 36,575 |
| RECEIVABLES | 218,873 |
| ALLOWANCES | 0 |
| INVENTORY | 84,591 |
| CURRENT ASSETS | 430,202 |
| PP&E | 181,108 |
| DEPRECIATION | 96,014 |
| TOTAL ASSETS | 807,781 |
| CURRENT LIABILITIES | 234,420 |
| BONDS | 0 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 57,492 |
| OTHER SE | 478,617 |
| TOTAL LIABILITY AND EQUITY | 807,781 |
| SALES | 135,255 |
| TOTAL REVENUES | 215,886 |
| CGS | 82,388 |
| TOTAL COSTS | 141,964 |
| OTHER EXPENSES | 49,262 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 0 |
| INCOME PRETAX | 27,127 |
| INCOME TAX | 9,088 |
| INCOME CONTINUING | 18,039 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 18,039 |
| EPS PRIMARY | 0.39 |
| EPS DILUTED | 0.39 |