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, 1998
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 (IRS Employer
incorporation or organization) 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)
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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.
Indicate the number of shares outstanding of each of the issuer's classes of Common Shares, as of the latest practicable date.
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, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Income -
Three Months Ended March 31, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders 9
ITEM 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 12
INDEX TO EXHIBITS 13
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
(Unaudited)
March 31, December 31,
1998 1997
----------- ------------
ASSETS
------
Current assets
Cash and cash equivalents $ 30,607 $ 20,296
Short-term investments 29,169 36,473
Trade receivables 291,136 302,885
Inventories 141,533 128,082
Prepaid expenses and other current assets 68,272 62,101
----------- -----------
Total current assets 560,717 549,837
Securities and other investments 145,804 137,862
Property, plant and equipment, at cost 269,317 259,634
Less accumulated depreciation and amortization 118,597 115,733
----------- -----------
150,720 143,901
Finance receivables 65,799 60,970
Other assets 96,885 98,480
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$ 1,019,925 $ 991,050
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable and other current liabilities $ 170,050 $ 181,189
Deferred income 97,667 60,891
----------- -----------
Total current liabilities 267,717 242,080
Bonds payable 20,800 20,800
Pensions 21,078 20,615
Postretirement benefits 22,141 22,033
Minority interest 2,131 16,941
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 69,368,815 and
69,275,714 shares, respectively; outstanding 69,075,061
and 69,004,838 shares, respectively 86,711 86,595
Additional capital 39,774 38,247
Retained earnings 583,890 566,710
Treasury shares, at cost (293,754 and 270,876 shares, respectively) (14,047) (12,882)
Accumulated other comprehensive income (9,454) (9,706)
Other (816) (383)
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Total shareholders' equity 686,058 668,581
----------- -----------
$ 1,019,925 $ 991,050
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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 1998 1997
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Products $ 193,130 $ 171,760
Services 102,609 92,848
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295,739 264,608
Cost of sales
Products 118,063 102,746
Services 75,541 69,503
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193,604 172,249
--------- ---------
Gross profit 102,135 92,359
Selling and administrative expense 49,746 43,553
Research, development and engineering expense 14,930 12,901
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64,676 56,454
--------- ---------
Operating profit 37,459 35,905
Investment income 4,713 4,507
Miscellaneous, net (946) (1,670)
Minority interest (233) (2,783)
--------- ---------
Income before taxes 40,993 35,959
Taxes on income 14,143 12,226
--------- ---------
Net income $ 26,850 $ 23,733
========= =========
Weighted average number of Common Shares outstanding:
Basic Shares 69,045 68,881
Diluted Shares 69,647 69,436
Basic earnings per share $ 0.39 $ 0.34
Diluted earnings per share $ 0.39 $ 0.34
Cash dividends paid per Common Share $ 0.1400 $ 0.1250
========= =========
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See accompanying notes to condensed consolidated financial statements.
DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
Three Months Ended
March 31,
1998 1997
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Cash flow from operating activities:
Net income $ 26,850 $ 23,733
Adjustments to reconcile net income to cash
provided by operating activities:
Minority share of income 233 2,783
Depreciation and amortization 4,507 4,323
Other charges and amortization 2,961 3,362
Cash used by changes in certain
current assets and liabilities (18,564) (41,729)
Changes in deferred income 36,776 42,354
Other 3,990 7,798
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Total adjustments 29,903 18,891
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Net cash provided by operating activities 56,753 42,624
Cash flow from investing activities:
Proceeds from maturities and sales of investments 16,450 11,697
Payments for purchases of investments (16,338) (19,022)
Capital expenditures (11,361) (19,907)
Increase in certain other assets (1,989) (1,178)
Investment in customer financing (7,809) (128)
Other (63) (1)
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Net cash used by investing activities (21,110) (28,539)
Cash flow from financing activities:
Dividends paid (9,669) (8,613)
Proceeds from issuance of Common Shares 478 450
Distribution for purchase of IBM's share of
minority interest in InterBold (16,141) --
Proceeds from long-term borrowings -- 5,800
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Net cash used by financing activities (25,332) (2,363)
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Increase in cash and cash equivalents 10,311 11,722
Cash and cash equivalents at the beginning of the period 20,296 21,885
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Cash and cash equivalents at the end of the period $ 30,607 $ 33,607
======== ========
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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 Registrant's Annual Report on Form 10-K for the year ended December 31, 1997. In addition, the Registrant's statements in this Form 10-Q report may be considered forward-looking and involve risks and uncertainties that could significantly impact expected results. A discussion of these risks and uncertainties is contained in the Registrant's Annual Report on Form 10-K for the year ended December 31, 1997. The results of operations for the three month period ended March 31, 1998 are not necessarily indicative of results to be expected for the full year.
2. The basic and diluted earnings per share computations in the condensed consolidated statements of income are based on the weighted-average number of shares outstanding during each period reported. The following data show the amounts used in computing earnings per share and the effect on the weighted-average number of shares of dilutive potential common stock.
Three Months Ended
March 31,
1998 1997
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Numerator:
Income used in basic and
diluted earnings per share $26,850 $23,733
Denominator:
Basic weighted-average shares 69,045 68,881
Effect of dilutive fixed stock options 602 555
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Diluted weighted-average shares 69,647 69,436
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Basic earnings per share $ 0.39 $ 0.34
Diluted earnings per share $ 0.39 $ 0.34
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DIEBOLD, INCORPORATED AND SUBSIDIARIES
FORM 10-Q
3. Inventory detail at: March 31, 1998 December 31, 1997
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Finished goods and
service parts $ 56,045 $ 44,776
Work in process 85,283 82,985
Raw materials 205 321
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Total inventory $ 141,533 $ 128,082
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4. The Registrant has reclassified the presentation of certain prior-year information to conform with the current presentation format.
5. The Registrant adopted Financial Accounting Standards No. 130, "Reporting Comprehensive Income," on January 1, 1998. As required by the Statement, the Registrant displays the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of the Balance Sheet. Items considered to be other comprehensive income include adjustments made for foreign currency translation (under Statement 52), pensions (under Statement 87) and unrealized holding gains and losses on available-for-sale securities (under Statement 115). Comprehensive income for the three months ended March 31, 1998 and 1997 was $27,102 and $23,467, respectively.
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, 1998
(Unaudited)
(Dollars in thousands except for per share data)
The balance sheet of the Registrant continued to reflect a strong financial position at March 31, 1998. Cash, cash equivalents and short-term investments increased to $59,776 at March 31, 1998 compared to $56,769 at December 31, 1997. These assets along with securities and other investments accounted for 20% of total assets at March 31, 1998 and December 31, 1997, 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 primarily through internally generated funds. The Registrant's investment portfolio is available for any funding needs if required. External financing is also available if needed through the Registrant's lines of credit. At March 31, 1998, the Registrant had unused lines of credit approximating $140,000 and the Registrant 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. During the first quarter of 1998, the Registrant had outstanding $20,800 in Industrial Development Revenue Bonds used to finance the construction of new manufacturing facilities. The Company's strong financial position enhances its ability to obtain additional funds if required.
Shareholders' equity per Common Share at March 31, 1998 improved to $9.93 from $9.69 at December 31, 1997. The first quarter cash dividend of $0.14 per share was paid on March 27, 1998 to shareholders of record on March 6, 1998. On April 15, 1998 the second quarter cash dividend of $0.14 per share was declared payable on June 5, 1998 to shareholders of record on May 15, 1998. 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 1998 fluctuated within the range of $41.688 and $55.313.
Net sales for the first quarter of 1998 increased from the same period in 1997 by $31,131 or 12%. Total gross profit increased $9,776 or 11% over the first quarter's performance in 1997. Product gross profit accounted for the majority of this increase as the result of increased sales volume of self-service terminals both domestically and internationally. Operating expenses increased $8,222 or 15% over the same period in 1997 largely due to higher selling expenses resulting from the increases in sales volumes, expanding global operations, expenditures from various new marketing programs and expenditures related to the continuing research and development of new products. Operating profit increased $1,554 or 4% over first quarter 1997'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, 1998
(Unaudited / Dollars in thousands except for per share data)
The Registrant's backlog of unfilled orders was $250,133 at March 31, 1998, compared to $232,558 at March 31, 1997, a $17,575 or 8% increase. The Registrant 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 15, 1998. Each matter voted upon at such meeting and the number of shares cast for, against or withheld, and abstained are as follows:
For Withheld
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Louis V. Bockius III 61,861,000 304,524
Daniel T. Carroll 61,789,438 376,086
Richard L. Crandall 61,840,195 325,329
Donald R. Gant 61,810,646 354,878
L. Lindsey Halstead 61,846,214 319,310
Phillip B. Lassiter 61,857,438 308,086
John N. Lauer 61,860,181 305,343
Robert W. Mahoney 61,863,950 301,574
William F. Massy 61,858,572 306,952
Gregg A. Searle 61,833,763 331,761
W. R. Timken, Jr 61,840,590 324,934
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For: 61,774,191 Against: 170,000 Abstain: 221,333 |
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.
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.
4. Rights Agreement dated as of February 10, 1989 between Diebold,
Incorporated and The Bank of New York as successor Rights Agent to
Key Bank, N.A. -- incorporated by reference to Exhibit 2.1 to
Registrant's Registration Statement of Form 8-A dated February 10,
1989.
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* 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, 1997.
* 10.3 (i) 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.
* 10.3 (ii) Consulting Agreement with William T. Blair -- incorporated by reference to Exhibit 10.3(ii) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1996.
* 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.
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 (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.
* Reflects management contract or other compensatory arrangement.
* 10.8 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.
* 10.9 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.
* 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.
* 10.13 (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).
27. Financial Data Schedule.
* Reflects management contract or other compensatory arrangement.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the first quarter of 1998.
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 30, 1998 By: /s/ Robert W. Mahoney
--------------- --------------------------------------
Robert W. Mahoney
Chairman of the Board and
Chief Executive Officer
Date: April 30, 1998 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.
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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. --
4. Rights Agreement dated as of February 10, 1989 between Diebold,
Incorporated and The Bank of New York as successor Rights
Agent to Key Bank, N.A. -- 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, 1997. --
10.3 (i) 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. --
10.3 (ii) Consulting Agreement with William T. Blair --
incorporated by reference to Exhibit 10.3(ii) to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1996. --
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EXHIBIT NO. PAGE NO.
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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. 15
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(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. 16
10.8 1991 Equity and Performance Incentive Plan as Amended and Restated. --
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. 17
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. --
10.13(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). 18
27. Financial Data Schedule. 19
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Diebold, Incorporated hereby amends the Amended and Restated Supplemental Employee Retirement Plan (which was last amended and restated effective January 1, 1994) (the "Plan") as hereinafter set forth. Words and phrases used herein with initial capital letters that are defined in the Plan are used herein as so defined.
I.
Section (a) of Article XIII of the Plan is hereby amended to read as follows:
(a) FUNDING. The obligation of the Employers to pay Supplemental Retirement Benefits under the Plan constitutes the unsecured promise of the Employers to make payments from their general assets, and no Participant, Spouse or Beneficiary shall have any interest in, or a lien or prior claim upon, any property of the Employers. With respect to the Supplemental Retirement Benefits under the Plan, each Participant, Spouse or Beneficiary shall have the status of a general unsecured creditor of the Participant's Employer. The Company shall establish a so-called "rabbi trust" to hold funds, stock or other securities to be used in payment of the obligations of the Employers under the Plan, and may fund such trust; provided, however, that any funds contained therein shall remain subject to the claims of the general creditors of the Company or any other Employer for which the Participant performs services. It is the intention of the Employers that the Plan be unfunded for tax purposes and for purposes of Title I of ERISA. No liability for the payment of benefits under the Plan shall be imposed upon any officer, director, employee or stockholder of the Company or any other Employer, or upon the Board, the Committee or any member thereof.
II.
A new Article XIV is hereby added to the Plan to read as follows:
LUMP SUM PAYMENTS
(a) Notwithstanding any other provision of the Plan, but subject to the
approval of the Committee as described in Section (b) of this
Article, a Participant may elect to receive the benefits payable to
him under the Plan, other than benefits payable pursuant to Article
IX, in the form of a single lump sum payment. The lump sum payment
described in the preceding sentence shall be calculated by converting
the benefits otherwise payable to the Participant at the time such
benefits are to commence into a lump sum amount of equivalent
actuarial value when computed using the actuarial factors described
in Section (c)(4) of Article XI of the Plan. A Participant who elects
to receive a single lump sum payment pursuant to the second preceding
sentence may further elect that, in the event that the Participant
dies before receiving the single lump sum payment, benefits payable
as a result of the Participant's death, other than benefits payable
pursuant to Section (c)(1), (c)(2) or (c)(3) of Article XI of the
Plan, shall be paid to the Participant's Spouse without taking into
account the election made under the second preceding sentence. Any
election by a Participant to receive benefits under the Plan in the
form of a single lump sum payment shall be in writing on a form
provided by the Company, which form shall be filed with the Company
(a) prior to the Participant's termination of employment with the
Employers because of involuntary termination of employment (including
by reason of disability) or death or (b) at least 180 days prior to
the Participant's voluntary termination of employment with the
Employers. Subject to the approval of the Committee, any such
election may be changed or revoked by the Participant at any time and
from time to time by the filing of a later written election with the
Company; provided that any election made less than 180 days prior to
a Participant's voluntary termination of employment shall not be
valid, and in such case, payment shall be made in accordance with the
latest valid election of the Participant. The payment by the
Employers of a lump sum amount to a Participant (or his or her
Spouse, Beneficiary or estate) pursuant to this Section shall
discharge all obligations of the Employers to such Participant (or
his or her Spouse, Beneficiary or estate) under the Plan.
(b) Payment of benefits in the form of a single lump sum payment pursuant to the election of a Participant under this Article is subject to the approval of the Committee, which may, in its sole and absolute discretion, approve or withdraw its prior approval of such election at any time prior to the date the lump sum payment is actually paid to the Participant and instead require that benefits be paid in such other form as is permitted by the Plan.
Executed at North Canton, Ohio on this 9th day of April, 1998.
DIEBOLD, INCORPORATED
By:________________________________
Gerald F. Morris
Executive Vice President and
Chief Financial Officer
Diebold, Incorporated hereby amends the Amended and Restated 1985 Deferred Compensation Plan for Directors (which was last amended and restated effective January 1, 1995) (the "Plan") as hereinafter set forth. Words and phrases used herein with initial capital letters that are defined in the Plan are used herein as so defined.
I.
Section 7 of Article I of the Plan is hereby amended to read as follows:
7. "Account" shall mean the bookkeeping account on which the amount of the fees which are deferred by a Participant shall be recorded and on which gains, losses and earnings shall be credited in accordance with the Plan.
II.
A new Section 9 is hereby added to the end of Article I of the Plan to read as follows:
9. "Committee" shall mean the Compensation Committee of the Board of Directors of the Corporation or such other Committee as may be authorized by the Board of Directors of the Corporation to administer the Plan.
III.
Section 4 of Article II of the Plan is hereby amended to read as follows:
4. ACCOUNT; EARNINGS. The percentage of Fees which a Participant elects to defer shall be treated as if it were set aside in an Account on the date the Fees would otherwise have been paid to the Participant. A Participant's Account shall be credited with gains, losses and earnings based on hypothetical investment directions made by the Participant, in accordance with investment deferral crediting options and procedures adopted by the Committee from time to time. A Participant may change such hypothetical investment directions pursuant to such
procedures adopted by the Committee from time to time. The Corporation specifically retains the right in its sole discretion to change the investment deferral crediting options and procedures from time to time. By electing to defer any amount pursuant to the Plan, each Participant shall thereby acknowledge and agree that the Corporation is not and shall not be required to make any investment in connection with the Plan, nor is it required to follow the Participant's hypothetical investment directions in any actual investment it may make or acquire in connection with the Plan or in determining the amount of any actual or contingent liability or obligation of the Corporation thereunder or relating thereto. Any amounts credited to a Participant's Account with respect to which a Participant does not provide investment direction shall be credited with earnings in an amount determined by the Committee in its sole discretion or, if an amount is not so determined, such amounts shall bear interest at Moody's Seasoned Bond Rate plus 3% until further ordered by the Committee or the Board of Directors. A Participant's Account shall be adjusted as of each business day, except that interest, if any, for a calendar quarter shall be credited on the first day of the following quarter.
IV.
Section 5 of Article II of the Plan is hereby amended to read as follows:
5. PAYMENT OF ACCOUNT. The amount of a Participant's Account shall be paid to the Participant in a lump sum or in a number of approximately equal quarterly installments (not to exceed 40), as designated by the Participant on the Election Agreement. The amount of the Account remaining unpaid shall continue to be credited with gains, losses and earnings, as provided in Section 4 of this Article. The lump sum payment or the first quarterly installment, as the case may be, shall be made on the first day of the calendar quarter following the end of the period of deferral as specified in Section 3 of this Article. Notwithstanding the terms as originally designated by a Participant on the Election Agreement, but subject to the approval of the Committee as described below in this Section, a Participant may elect to receive, upon the Participant's ceasing to be a Director with the Corporation, payment of any remaining amount in the Participant's Account in a single lump sum payable at termination of service or in a number of approximately equal quarterly installments (not to exceed 40), provided such election shall be in writing on a form provided by the Corporation, which form shall be filed with the Corporation (a) prior to the Participant's involuntary cessation of service with the Corporation (including by
reason of disability) or death or (b) at least 180 days prior to the Participant's voluntary retirement. Subject to the approval of the Committee, any such election may be changed or revoked by the Participant at any time and from time to time without the consent of any other person by the filing of a later written election with the Corporation; provided that any election made less than 180 days prior to a Participant's voluntary retirement shall not be valid, and in such case, payment shall be made in accordance with the latest valid election of the Participant. Payment of benefits in the form of a single lump sum payment or installments pursuant to the election of a Participant under this Section is subject to the approval of the Committee, which may, in its discretion, approve or withdraw its prior approval of such election at any time prior to the date the lump sum payment is actually paid to the Participant or the first installment is actually paid to the Participant, as the case may be, and instead require that benefits be paid in accordance with the latest valid election of the Participant.
V.
Section 8 of Article II of the Plan is hereby amended to read as follows:
8. ACCELERATION. Notwithstanding the foregoing, (i) the entire amount of a Participant's Account will be paid in a lump sum to the Participant or his Beneficiary in the event of the acquisition of substantially all of the assets of the Corporation or more than fifty percent (50%) of its stock by any person, firm, corporation or group of related corporations, in a transaction or transactions not approved by the Board of Directors of the Corporation; and (ii) the Committee may, in its sole discretion, accelerate the making of payment of the amount of the Account of a Participant who is no longer a Director in the event of financial hardship of the Participant due to causes not within the control of the Participant.
VI.
Article III of the Plan is hereby amended to read as follows:
ADMINISTRATION
The Corporation, through its Board of Directors, shall be responsible for the general administration of the Plan and for carrying out the provisions hereof. The Board of Directors may delegate any or all of its authority under the Plan to the Committee. The Corporation shall have all such powers as may be necessary to carry out the provisions of the Plan, including the power to determine all questions relating to eligibility for and the amount in
the Account and all questions pertaining to claims for benefits and procedures
for claim review; to resolve all other questions arising under the Plan,
including any questions of construction; and to take such further action as the
Corporation shall deem advisable in the administration of the Plan. The actions
taken and the decisions made by the Corporation hereunder shall be final and
binding upon all interested parties. In accordance with the provisions of
Section 503 of the Employee Income Retirement Security Act of 1974, the
Corporation shall provide a procedure for handling claims of Participants or
their Beneficiaries under this Plan. Such procedure shall be in accordance with
regulations issued by the Secretary of Labor and shall provide adequate written
notice within a reasonable period of time with respect to the denial of any such
claim as well as a reasonable opportunity for a full and fair review by the
Corporation of any such denial.
VII.
Section 2 of Article V of the Plan is hereby amended to read as follows:
2. INTEREST OF DIRECTOR. The obligation of the Corporation under the Plan to make payment of amounts reflected on an Account merely constitutes the unsecured promise of only the Corporation to make payments from its general assets as provided herein, and no Participant or Beneficiary shall have any interest in, or a lien or prior claim upon, any property of the Corporation. Further, no Participant or Beneficiary shall have any claim whatsoever against any Subsidiary for amounts reflected on an Account. The Corporation shall establish a so-called "rabbi trust" to hold funds, stock or other securities to be used in payment of its obligations under the Plan, and may fund such trust; provided, however, that any funds contained therein shall remain subject to the claims of the Corporation's general creditors.
Executed at North Canton, Ohio on this 9th day of April 1998.
DIEBOLD, INCORPORATED
By:_____________________________________
Gerald F. Morris
Executive Vice President and
Chief Financial Officer
EXHIBIT 10.10 (ii)
Diebold, Incorporated hereby amends the Amended and Restated 1992 Deferred Incentive Compensation Plan (which was last amended and restated effective January 1, 1995) (the "Plan") as hereinafter set forth. Words and phrases used herein with initial capital letters that are defined in the Plan are used herein as so defined.
I.
Section 1 of Article I of the Plan is hereby amended to read as follows:
1. "Account" shall mean a bookkeeping account in which Incentive Compensation which is deferred by a Participant shall be recorded and to which gains, losses, earnings, dividends, distributions and interest may be credited in accordance with the Plan.
II.
Section 10 of Article I of the Plan is hereby amended to read as follows:
10. "Incentive Compensation" shall mean (i) cash incentive
compensation earned as an associate pursuant to an incentive compensation plan
now in effect or hereafter established by the Company, including, without
limitation, the Annual Incentive Plan and the 1991 Plan, (ii) incentive
compensation payable in the form of Common Shares pursuant to the 1991 Plan or
any similar plan approved by the Board for purposes of this Plan, and (iii)
compensation payable in either cash or Common Shares that is deferred under
Section 162(m) Deferred Compensation Agreements between the Company and
individual Participants.
III.
Section 3 of Article II of the Plan is hereby amended to read as follows:
3. Amount Deferred: Period of Deferral. (i) Except in the case of Incentive Compensation described in Section 10(iii) of Article I of the Plan, a Participant shall designate on the Election Agreement the percentage of his or her Incentive Compensation that is to be
deferred. A Participant may specify in the Election Agreement that different percentages shall apply to different Incentive Compensation plans or different forms of payment, i.e., cash or Common Shares. The applicable percentage or percentages of Incentive Compensation shall be deferred until the earlier to occur of (a) the date the Participant ceases to be an associate by death, retirement or otherwise or (b) the date specified by the Participant in the Election Agreement.
(ii) In the case of Incentive Compensation described in Section 10(iii) of the Plan, Participant shall specify in the Election Agreement whether the period of deferral will be until (a) December 31 of the first succeeding tax year in which such amount, when added to all other compensation received or to be received by the Participant in such year, would not be non-deductible by the Company by reason of Section 162(m) of the Internal Revenue Code of 1986, as amended, (b) the date the Participant ceases to be an associate of the Company by reason of death, retirement or otherwise (or 90 days thereafter in the event the Executive ceases to be an associate on December 31 of a year) or (c) a period of time following the date the Participant ceases to be an associate by reason of death, retirement or otherwise, as specified by the Executive in the Election Agreement.
IV.
Section 4 of Article II of the Plan is hereby amended to read as follows:
4. ACCOUNTS. (i) Cash Incentive Compensation that a Participant elects to defer shall be treated as if it were set aside in an Account on the date the Incentive Compensation would otherwise have been paid to the Participant. A Participant's Account shall be credited with gains, losses and earnings based on hypothetical investment directions made by the Participant, in accordance with investment deferral crediting options and procedures adopted by the Committee from time to time. A Participant may change such hypothetical investment directions pursuant to such procedures adopted by the Committee from time to time. The Company specifically retains the right in its sole discretion to change the investment deferral crediting options and procedures from time to time. By electing to defer any amount pursuant to the Plan, each Participant shall thereby acknowledge and agree that the Company is not and shall not be required to make any investment in connection with the Plan, nor is it required to follow the Participant's hypothetical investment directions in any actual investment it may make or acquire in connection with the Plan or in determining the amount of any actual or contingent liability or obligation of the Company thereunder or relating thereto. Any amounts credited to a
Participant's Account with respect to which a Participant does not provide investment direction shall be credited with earnings in an amount determined by the Committee in its sole discretion or, if an amount is not so determined, such amounts shall bear interest at Moody's Seasoned Bond Rate plus 3% until further ordered by the Committee or the Board of Directors. A Participant's Account shall be adjusted as of each business day, except that interest, if any, for a calendar quarter shall be credited on the first day of the following quarter.
(ii) Incentive Compensation payable in the form of Common Shares that
a Participant elects to defer shall be reflected in a separate Account, which
shall be credited with the number of Common Shares that would otherwise have
been issued or transferred and delivered to the Participant. Such Account shall
be credited from time to time with amounts equal to dividends or other
distributions paid on the number of Common Shares reflected in such Account, and
such Account shall be credited with gains, losses and earnings on cash amounts
credited to such Account from time to time in the manner provided in Subsection
(i) above with respect to Cash Incentive Compensation.
(iii) Until such time that the Committee adopts the investment deferral crediting options and procedures described in Subsection (i) above, all incentive compensation added in the form of cash to a Participant's Account shall bear interest in the manner described in Subsection (i) above, except that a Participant may direct, unless otherwise determined by the Secretary of the Company, that all or any portion of his or her Account attributable to Cash Incentive Compensation be deemed invested in Common Shares and treated in a manner similar to that prescribed in Subsection (ii) above.
V.
Section 5(i) of Article II of the Plan is hereby amended to read as follows:
(i) The amount of a Participant's Account attributable to deferral of cash Incentive Compensation shall be paid to the Participant in a lump sum or in a number of approximately equal quarterly installments (not to exceed 40), as designated by the Participant in the Election Agreement. The amount of such Account remaining unpaid shall continue to be credited with gains, losses and earnings as provided in Section 4 of this Article. The lump sum payment or the first quarterly installment, as the case may be, shall be made as soon as practicable following the end of the period of deferral as specified in Section 3 of this Article.
VI.
Section 5(ii) of Article II of the Plan is hereby amended to read as follows:
(ii) The number of Common Shares in a Participant's Account attributable to deferral of Incentive Compensation payable in the form of Common Shares shall be issued or transferred to the Participant as soon as practicable following the end of the period of deferral as specified in Section 3 of this Article. All amounts credited to such Account in respect of dividends and distributions, and the gains, losses and earnings thereon as provided in Subsection (ii) of Section 4 of this Article shall likewise be paid to the Participant at such time. Upon application of an Eligible Associate prior to his or her election to defer Incentive Compensation payable in the form of Common Shares, the Committee may authorize payment in installments of the amounts in his or her Account attributable to such Incentive Compensation.
VII.
A new Section 5(iii) is hereby added immediately following Section 5(ii) of Article II of the Plan to read as follows:
(iii) Notwithstanding the terms as originally designated by a
Participant on the Election Agreement, but subject to the approval of the
Committee as described below in this Section, a Participant may elect to
receive, upon the Participant's termination of employment with the Company,
payment of any remaining amount in the Participant's Account in a single lump
sum payable at termination of employment or in a number of approximately equal
quarterly installments (not to exceed 40). Such election shall be in writing on
a form provided by the Company, which form shall be filed with the Company (a)
prior to the Participant's termination of employment with the Company because of
involuntary termination of employment (including by reason of disability) or
death or (b) at least 180 days prior to the Participant's voluntary retirement.
Subject to the approval of the Committee, any such election may be changed or
revoked by the Participant at any time and from time to time by the filing of a
later written election with the Company; provided that any election made less
than 180 days prior to a Participant's voluntary retirement shall not be valid,
and in such case, payment shall be made in accordance with the latest valid
election of the Participant. Payment of benefits in the form of a single lump
sum payment or installments pursuant to the election of a Participant under this
Section is subject to the approval of the Committee, which may, in its
discretion, approve or withdraw its prior approval of such election at any time
prior to the date the lump sum payment
is actually paid to the Participant or the first installment is actually paid to the Participant, as the case may be, and instead require that benefits be paid in accordance with the latest valid election of the Participant.
VIII.
Section 3 of Article V of the Plan is hereby amended to read as follows:
3. INTEREST OF ASSOCIATE. The obligation of the Company under the Plan to make payment of amounts reflected in an Account merely constitutes the unsecured promise of the Company to make payments from its general assets or in the form of its Common Shares, as the case may be, as provided herein, and no Participant or Beneficiary shall have any interest in, or a lien or prior claim upon, any property of the Company. Further, no Participant or Beneficiary shall have any claim whatsoever against any Subsidiary for amounts reflected in an Account. The Company shall establish a so-called "rabbi trust" to hold funds, Common Shares or other securities to be used in payment of its obligations under the Plan, and may fund such trust; provided, however, that any funds contained therein shall remain subject to the claims of the general creditors of the Company or the Subsidiary for which the Eligible Associate performs services. Nothing in this Plan shall be construed as guaranteeing future employment to Eligible Associates. It is the intention of the Company that the Plan be unfunded for tax purposes and for purposes of Title I of ERISA.
Executed at North Canton, Ohio on this 9th day of April, 1998.
DIEBOLD, INCORPORATED
By:__________________________________
Gerald F. Morris
Executive Vice President and
Chief Financial Officer
EXHIBIT 10.13(ii)
SECTION 162(m) DEFERRED COMPENSATION AGREEMENT
(as amended and restated January 29, 1998)
THIS AGREEMENT dated as of April 9, 1998 between Diebold, Incorporated, an Ohio corporation (the "Company"), and _______ ("Executive") amends and restates the Deferred Compensation Agreement dated as of _________ and Amendment No. 1 to Deferred Compensation Agreement dated __________ between the Company and the Executive.
The Omnibus Budget Reconciliation Act of 1993 included a new provision, Section 162(m) of the Internal Revenue Code (the "Code"), which generally disallows a tax deduction to public companies for compensation over $1 million paid to persons named in the Summary Compensation Table for proxy statement purposes and employed by the Company at the end of the applicable year.
Executive and the Company desire to take action to ensure that the Company is not denied a tax deduction for any compensation paid to Executive owing to the limitation set forth in Section 162(m) of the Code.
NOW, THEREFORE, in consideration of the premises, the parties hereto have agreed, and do agree, as follows:
1. DEFERRAL OF COMPENSATION. If, but for the application of this Agreement, the Company's deduction of a portion of the compensation due to Executive in a tax year would, in the reasonable judgment of the Company, be disallowed pursuant to Section 162(m) of the Code, then the Company shall defer payment of that portion of the compensation due to Executive.
2. 1992 DEFERRED INCENTIVE COMPENSATION PLAN. Any amounts deferred under this Agreement shall be subject to the terms and provisions of the Amended and Restated 1992 Deferred Incentive Compensation Plan (which was last amended and restated effective January 1, 1995), as amended from time to time.
IN WITNESS WHEREOF, and the Company, by a duly authorized officer, have executed this Agreement as of the day and year first above written.
Attest: DIEBOLD, INCORPORATED
By:
----------------------------- -----------------------------
Charee Francis-Vogelsang Robert W. Mahoney
Chairman and Chief Executive Officer
----------------------------------------
,Executive
--------------------
|
| ARTICLE 5 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 1998 AND CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE QUARTER ENDED MARCH 31, 1998 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| MULTIPLIER: 1,000 |
| CURRENCY: U.S. DOLLARS |
| PERIOD TYPE | 3 MOS |
| FISCAL YEAR END | DEC 31 1998 |
| PERIOD START | JAN 01 1998 |
| PERIOD END | MAR 31 1998 |
| EXCHANGE RATE | 1 |
| CASH | 30,607 |
| SECURITIES | 29,169 |
| RECEIVABLES | 291,136 |
| ALLOWANCES | 0 |
| INVENTORY | 141,533 |
| CURRENT ASSETS | 560,717 |
| PP&E | 269,317 |
| DEPRECIATION | 118,597 |
| TOTAL ASSETS | 1,019,925 |
| CURRENT LIABILITIES | 267,717 |
| BONDS | 20,800 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 86,711 |
| OTHER SE | 599,347 |
| TOTAL LIABILITY AND EQUITY | 1,019,925 |
| SALES | 193,130 |
| TOTAL REVENUES | 295,739 |
| CGS | 118,063 |
| TOTAL COSTS | 193,604 |
| OTHER EXPENSES | 64,676 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 0 |
| INCOME PRETAX | 40,993 |
| INCOME TAX | 14,143 |
| INCOME CONTINUING | 26,850 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 26,850 |
| EPS PRIMARY | 0.39 |
| EPS DILUTED | 0.39 |