<p style= text-align: justify; >According to a press release dated August 25, 2008, a judge has dismissed a proposed securities class action against automated teller machine maker Diebold Inc., saying the plaintiffs didn’t plead their case adequately enough for the lawsuit to proceed. In a ruling Friday, Judge Peter C. Economus of the U.S. District Court for the Northern District of Ohio said that the plaintiffs failed to meet their burden of pleading specific facts. Judge Economus said Friday that the plaintiffs had failed to adequately plead scienter. The facts alleged, when viewed cumulatively, persuaded the judge that the most plausible conclusion is that defendants must or should have known about Diebold’s problems. The plaintiffs, though, failed to show as required that the defendants acted at least recklessly, the judge said.</p> <p style= text-align: justify; > </p>
<p style= text-align: justify; >On October 20, 2006 the judge entered a consolidation order for three classes 1) Securities Actions, 2) Derivative Actions and 3) ERISA Actions. On April 27, 2007 a consolidated complaint was filed by the plaintiffs and plaintiffs filed their motions to dismiss on July 13, 2007.</p>
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<p style= text-align: justify; >The plaintiffs in the cases which allege violations of the federal securities laws have filed motions to consolidate these actions into a single proceeding and for the court to name a lead plaintiff and lead plaintiffs’ counsel.</p>
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<p style= text-align: justify; >According to a press release dated December 13, 2005, the complaint alleges that Diebold Inc. and individual defendants violated provisions of the United States securities laws causing artificial inflation of the Company’s stock price. Specifically, the complaint alleges that during the Class Period, the Company lacked a credible state of internal controls and corporate compliance and remained unable to assure the quality and working order of its voting machine products. It is further alleged that the Company’s false and misleading statements served to conceal the dimensions and scope of internal problems at the Company, impacting product quality, strategic planning, forecasting and guidance and culminating in false representations of astonishingly low and incredibly inaccurate restructuring charges for the 2005 fiscal year, which grossly understated the true costs and problems defendants faced to restructure the Company. The complaint also alleges over $2.7 million of insider trading proceeds obtained by individual defendants during the Class Period.</p>
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<p style= text-align: justify; >The complaint further alleges that investors finally learned the truth about the adverse impact of the Company’s alleged defective and deficient inventory-related controls and systems on Diebold’s financial performance. As a result of defendants’ shocking news and disclosures of September 21, 2005, the price of Diebold shares plunged 15.5% on unusually high volume, falling from $44.37 per share on September 20, 2005, to $37.47 per share on September 21, 2005, for a one- day drop of $6.90 per share on volume of 6.1 million shares — nearly eight times the average daily trading volume.</p>