Accounting & Tax

Bill-and-Hold Moves Stall Diebold Report

The voting-machine maker will seek guidance from the SEC on how to book revenue.
Stephen TaubJuly 25, 2007

Diebold Inc. will delay the release of its second-quarter earnings results and the conference call explaining them because of questions that the Securities and Exchange Commission has raised concerning the company’s accounting for bill-and-hold revenue.

Diebold reported that it has decided to seek guidance from the SEC’s Office of the Chief Accountant concerning the company’s revenue-recognition policy. The maker of automated-teller machines, security systems, and voting machines will issue its second-quarter earnings results, which were originally scheduled for July 31, as soon as possible after it gets an answer from OCA.

The company may also have to delay filing a 10-Q for the quarter ended June 30, depending on when it gets its answer from the regulator. The regular deadline for its 10-Q for that quarter is August 9.

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Diebold isn’t the first company to get into hot water resulting from the use of bill-and-hold accounting, under which the seller of goods bills customers for the products but doesn’t ship them until later. While the method may prove beneficial to both buyer and seller, establishing that ownership of the goods has been transferred can be a sticky wicket. Companies like Raytheon, Gateway, and—notoriously—Sunbeam, have run into problems with bill-and-hold.

Diebold said the delay in its second-quarter filing concerns its long-standing practice of recognizing certain revenue on a bill-and-hold basis within its North America business segment.

While the percentage of that revenue may vary from period to period at Diebold, it represented less than 10 percent of the company’s total consolidated revenue in 2006, according to the company.

Diebold had planned to release its second-quarter results on July 31. It said it would issue its second quarter earnings results as soon as possible following a response from the OCA.

The company said it believes that the SEC’s response would potentially affect only the timing of the recognition of certain revenue. It doesn’t expect those timing issues to have any effect on its operating cash or its net cash position.

“We regret the delay in our ability to report results for the second quarter,” said Thomas Swidarski, Diebold’s president and CEO. “We take our responsibility to provide complete and accurate financial information seriously and are taking proactive steps that we believe are appropriate under these circumstances.”