Diebold pays $25m to settle SEC charges as Q1 profit tumbles

Diebold pays $25m to settle SEC charges as Q1 profit tumbles

Diebold has agreed to pay $25 million to settle a Securities and Exchange Commission (SEC) fraud investigation into how the US cash machine manufacturer recognises its revenue.

The agreement comes as Diebold lowers 2009 guidance and outlines plans to axe 300 jobs in the wake of woeful first quarter results.

The SEC launched a formal investigation into how Diebold recognised revenues in 2006. The vendor says it has now agreed in principal to pay a $25 million penalty but will neither admit nor deny civil securities fraud charges.

In addition, the US Department of Justice will not bring criminal charges related to the transactions and accounting issues involved in the SEC investigation.

The firm has recorded a $25 million charge for the deal in the first quarter.

For the first quarter, net income attributable to Diebold plummeted 88% to $1.65 million, or $0.02 a share, compared to $13.80 million, or $0.21 a share, a year earlier.

Revenue was $663.2 million, down four per cent on the same period in 2008. However, revenue for financial self-service products and services actually rose one per cent to $493.5 million.

The company has lowered full year earnings per share non-Gaap guidance to $1.40 - $2, down from $2.10 - $2.40. Revenue is now expected to be between 13% and six per cent down on the previous year.

President and CEO, Thomas Swidarski, says Diebold will accelerate existing cost cutting initiatives and implement "headcount reductions through hiring restrictions, attrition and job eliminations - representing an overall reduction of approximately 300 full-time positions".

The latest measures come a year after the company disclosed plans to eliminate $100 million in costs by shutting down two of its four global Opteva ATM manufacturing facilities and restructuring its supply chain and distribution network.

That was on top of 800 job cuts announced that February and a $100 million cost-reduction programme that Diebold introduced in January 2006.

Diebold shares were down 12.15% to $23.71 in trading today.

Comments: (0)