Department of Justice investigates Diebold
21 December 2007 | 4252 views | 0
As announced on October 2, 2007, Diebold, Incorporated (NYSE: DBD) has been engaged in an ongoing discussion with the Office of the Chief Accountant (OCA) of the Securities and Exchange Commission (SEC) regarding the company's prior, discontinued practice of recognizing certain revenue on a "bill and hold" basis.
Bill and hold is when ownership of a product contractually passes to the customer and revenue is recognized by the supplier prior to delivery of the products to the customer.
Diebold is continuing its dialogue with the OCA so that it can determine the most appropriate revenue recognition method to replace its bill and hold practice, and will provide further information once it has received sufficient guidance. Upon receiving this guidance, Diebold will be in a position to communicate a new method of revenue recognition. The company will also then provide revenue estimates for the full-year 2007.
This change in the company's bill and hold revenue recognition practice would only affect the timing of recognition of certain revenue. Diebold does not anticipate that the change in the timing of revenue recognition would impact previously reported cash provided by operating activities or the company's net cash position.
Also, as previously disclosed, the SEC's formal, non-public investigation is still in process. Additionally, the company recently learned that the U.S. Department of Justice is conducting a parallel investigation. Diebold continues to cooperate with the SEC, and will cooperate with the Department of Justice if requested, in connection with these investigations and cannot predict the length, scope or results of the investigations, or the impact they may have on the results of the company's operations.
As a result of the SEC's ongoing investigation, the company and its audit committee, with the assistance of their outside advisors, are reviewing these issues. The company anticipates this review will be completed in the first quarter of 2008. Any material adjustments identified as a result of this review will be included in amendments to the company's financial statements. While any amended financial statements would address all the issues identified in the review, the government investigations remain ongoing and there can be no assurance that the results of these investigations will not impact previously reported financial statements.