Diebold Inc. (NYSE:DBD) said it will take a $29 million pre-tax charge for the third quarter of 2001 due to the shuttering of financial services kiosk distributor InnoVentry. But the company still expects to record pre-charge earnings of 46 cents to 51 cents per share for the quarter and $1.95 to $2 per share for fiscal year 2001.
InnoVentry closed down on Sept. 21 when its board decided that it could not raise additional financing to stay in business. Offering machines that features check-cashing along with traditional ATM functions, InnoVentry deployed about 1,000 machines in 24 states before going out of business according to an ATMmarketplace.com story (See story: InnoVentry is out of business).
The $29 million charge represents Diebold's equity investment and certain receivables with InnoVentry. Diebold became exclusive supplier of InnoVentry's RPM branded automated financial service kiosks on Feb. 20. The agreement was to last for three years or until InnoVentry had purchased at least $100 million of Diebold equipment. InnoVentry had signed a lease agreement for 1,400 Diebold machines late last year.
Despite InnoVentry's shutdown, Diebold officials expressed confidence in the concept of advanced ATM functionality.
"We believe that despite InnoVentry's depletion of its capital resources, a strong consumer demand remains for automated check cashing services," Wesley Vance, Diebold North America president, said in a news release. "Diebold will continue to develop and deploy self-service check-cashing technology for customers in this market."
Diebold spokesperson Michelle Griggy reaffirmed that market demand would drive the check-cashing sector.
"All the research we've seen and done on the consumer end says it's a strong market," Griggy said. "We're seeing consumer demand for this."
In fiscal year 2000, Diebold reported net income of $136.9 million on net sales of $1.74 billion. Earnings were $1.92 per share. Diebold had earnings of 49 cents per share for the third quarter that year, reporting net income of $34.9 million on net sales of $480 million.
In early trading on Sept. 26, Diebold was up 97 cents to $36.40 per share. The stock has traded as high as $40.50 and as low as $22.93 in the past 52 weeks.
