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Diebold in legal battle with union over closure of French ATM facility

30 January 2007  |  31905 views  |  0 Diebold

US ATM manufactuer Diebold is facing a legal challenge from a workers union in France over its decision to sack staff and shut down a manufacturing facility in the country under a major overhaul of its European operations.

Diebold said in April last year that it was shutting its ATM production factory in Cassis, France, and shifting the work a new operation in in Budapest, Hungary.

In its financial results statement today the vendor says its Budapest facility is now operational and has produced 1000 Opteva ATMs so far.

Diebold says it has now ended all production at the Cassis plant and has fired 101 of the 122 plant employees. The remaining staff have been retained to facilitate the closure of the facility.

But the vendor says one of the French unions is legally challenging the process and the court is expected to rule on this challenge in the first quarter of 2007.

Diebold says it has officially ceased production at the plant and has also identified a potential buyer for the building and is in the final stages of negotiating the sale.

The restructuring costs associated with the closure of the facility are now expected to be incurred in the first quarter of 2007, and are estimated to be $.25 to $.30 per share, which include cash charges of approximately $18 million to $22 million.

However the manufacturing overhaul, along with rising service revenues, helped Diebold more than double its fourth quarter net income to $27.1 million, compared to $10.4 million in Q4 2005. Fourth quarter revenue reached $825.4 million, up from $810.6 a year ago.

As of year-end 2006, Diebold says it has eliminated $12 million in expense from its 2007 cost structure and identified an additional $23 million in costs that it intends to eliminate by year end.

Diebold president and CEO Thomas Swidarski says: "2006 was a year of transition at Diebold, where we focused primarily on addressing operational issues. Our focus in 2007 will expand to include enhancing and broadening our product and service solutions to bolster our competitive position."

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