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Diebold: Filing Hinges on SEC Guidance

The voting-machine maker delays another filing, and says it needs SEC guidance on revenue-recognition issues before it can rework its financial res...
Stephen TaubAugust 10, 2007

Diebold’s revenue-recognition problems seem to be mounting. The company, which develops and manufactures automated teller machines, security systems, and voting machines, said in a regulatory filing that it will delay the filing of its second-quarter financial report because it is seeking guidance from the office of the chief accountant (OCA) of the Securities and Exchange Commission regarding revenue-recognition policies.

As a result, Diebold will be unable to complete its financial statements for the June quarter. “The delays could not be eliminated without unreasonable effort or expense,” the company added in a regulatory filing. It expects to file its quarterly report “as practicable after it receives a response from the OCA.”

In May Diebold disclosed that it had received a subpoena from the SEC seeking documents in connection with a previously disclosed investigation into the company’s revenue-recognition practices. In a regulatory filing issued at the time, Diebold said it would continue to cooperate with the SEC, but it could not predict the length, scope, or results of the investigation — or any impact on the company’s financial results. The SEC opened an informal inquiry into Diebold’s practices in May 2006.

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At the time, company spokesman Mike Jacobsen told the Associated Press that the inquiry apparently involves two occasions on which the company restated revenue. Both situations seem to involve the company’s voting-machine operations, although the probe covers all Diebold business. Jacobsen elaborated that the company shipped voting machines in Ohio in the second quarter of 2005, but then revised its reports to record the revenue in the third quarter. Diebold made the change, he reportedly added, because memory cards for the voting devices were not sent until July.

He told the wire service that the other change involved how the company reported revenue from service contracts for electronic-voting systems. In March 2006, the company disclosed that $7 million in fourth-quarter 2005 revenue — linked to sales of election systems — and $4.2 million in net income would need to be recognized in future periods.