EXHIBIT 99.1
Media contact: Investor contact:
Michelle Griggy John Kristoff
+1 330 490 3773 +1 330 490 5900
griggym@diebold.com kristoj@diebold.com
FOR IMMEDIATE RELEASE:
April 22, 2003
DIEBOLD ANNOUNCES FIRST QUARTER RESULTS
NORTH CANTON, Ohio - Diebold, Incorporated (NYSE: DBD) today reported first
quarter 2003 net income of $25,900,000, or diluted earnings per share of $.36,
on revenue of $410,154,000, which was within the company's guidance of $.34 to
$.39. This compares to first quarter 2002 net loss of ($6,646,000), or diluted
loss per share of ($.09), after a cumulative effect of a change in accounting
principle (SFAS 142, Goodwill and Other Intangible Assets) on revenue of
$401,046,000. Before the cumulative effect of a change in accounting principle,
2002 first quarter income was $26,501,000, or diluted earnings per share of
$.37, on revenue of $401,046,000.
FIRST QUARTER HIGHLIGHTS
- Total revenue grew 2.3 percent and on a fixed exchange rate basis*
increased 3.7 percent.
- Security solutions revenue grew 22.8 percent as a result of revenue
growth in the financial industry, government and retail markets.
- Total Asia-Pacific revenue increased 32.0 percent and 27.2 percent
fixed exchange rate.
- Total revenue for the Americas grew by 5.3 percent on a fixed exchange
rate basis.
- Free cash flow* was $74.4 million compared to negative free cash flow
of ($8.1) million during the first quarter 2002.
- Net debt* was reduced to $13.3 million from $62.5 million at the end
of 2002.
- Inventory turns improved to 5.5 from 4.9 at the end of the first
quarter of 2002.
*See accompanying notes for non-GAAP measures.
(more)
PAGE 2/DIEBOLD ANNOUNCES FIRST QUARTER RESULTS
FINANCIAL RESULTS
"Our results during the first quarter demonstrate that once again we delivered
on our commitment by reporting earnings that were within our previously
announced guidance. We were particularly pleased to have generated free cash
flow of more than $74 million," said Walden W. O'Dell, Diebold chairman,
president and chief executive officer.
"Our security business remained very strong, growing by 22.8 percent, which
represents true organic growth and significant market share gains. Voting
solutions revenue was weaker than expected during the first quarter due to the
timing of product shipments. We still expect to achieve our 2003 voting growth
target."
Overall, our fixed exchange rate financial self-service revenue increased
slightly. Europe remained weak; the Americas region was up slightly, and
Asia-Pacific increased significantly. We see global demand for new self-service
products strengthening during the second half of the year as we roll out our new
Opteva self-service hardware platform, which was unveiled on March 11 of this
year," added O'Dell.
FIXED EXCHANGE RATE FIRST QUARTER ORDERS
Despite a challenging global economic environment, total orders for product and
service increased in the high single-digit range. The Americas increased in the
high single-digit range, led by strong North America orders and Asia-Pacific
orders increased in the high double-digit range, while Europe, the Middle East
and Africa (EMEA) orders decreased in the high single-digit range. Security
orders remain strong, increasing well into the double digits.
Significant orders for the quarter included:
- Five significant self-service orders totaling more than $24 million
from large financial institutions in Europe.
- Orders for 700 new automated teller machines from two banks in India.
- An $8 million order for the new Opteva and other self-service
solutions from a large bank in the United States.
- Orders valued at more than $8 million from three financial
institutions in Brazil.
- A self-service order for nearly $5 million from a large bank in China.
- A voting solution order valued at more than $4 million from one county
in California.
- Electronic security orders valued at more than $5 million for two
government facilities and a large U.S. bank.
- Physical security branch orders totaling more than $3 million from
three banks in the United States.
(more)
PAGE 3/DIEBOLD ANNOUNCES FIRST QUARTER RESULTS
REVENUE
Total revenue for the quarter was $410.2 million, up $9.1 million, or 2.3
percent and 3.7 percent on a fixed exchange rate basis. Total financial
self-service revenue decreased 1.1 percent but increased 0.7 percent on a fixed
exchange rate basis. Security solutions revenue grew 22.8 percent as a result of
revenue growth in the financial industry, government and retail markets.
REVENUE SUMMARY BY PRODUCT AND SERVICE SOLUTIONS
(In Thousands -- Quarter Ended March 31)
% Change % Change
2003 2002 GAAP fixed rate
-------- -------- ------ ----------
FINANCIAL SELF-SERVICE
Products $126,028 $131,381 -4.1% 0.7%
Services 170,089 168,104 1.2% 0.8%
-------- -------- ------ ------
Total Fin. self-service 296,117 299,485 -1.1% 0.7%
SECURITY
Products 48,411 35,450 36.6% 36.6%
Services 58,594 51,689 13.4% 13.4%
-------- -------- ------ ------
Total Security 107,005 87,139 22.8% 22.8%
-------- -------- ------ ------
Total Fin. self-service & security 403,122 386,624 4.3% 5.8%
Voting solutions 7,032 14,422 -51.2% -51.2%
-------- -------- ------ ------
Total Revenue $410,154 $401,046 2.3% 3.7%
======== ======== ====== ======
REVENUE SUMMARY BY GEOGRAPHIC AREA
(In Thousands -- Quarter Ended March 31)
% Change % Change
2003 2002 GAAP fixed rate
-------- -------- -------- ----------
THE AMERICAS
Financial self-service solutions $208,087 $221,024 -5.9% 1.8%
security solutions 106,805 86,772 23.1% 23.1%
-------- -------- ---- ----
subtotal 314,892 307,796 2.3% 8.1%
Voting solutions 7,032 14,422 -51.2% -51.2%
-------- -------- ---- ----
Total Americas 321,924 322,218 -0.1% 5.3%
ASIA-PACIFIC
Financial self-service solutions 31,481 23,734 32.6% 27.8%
Security solutions 176 248 -29.0% -29.0%
-------- -------- ---- ----
Total Asia Pacific 31,657 23,982 32.0% 27.2%
EUROPE, MIDDLE EAST, AFRICA
Financial self-service solutions 56,549 54,727 3.3% -12.8%
security solutions 24 119 N/A N/A
-------- -------- ---- ----
Total Europe, Middle East, Africa 56,573 54,846 3.1% -12.9%
-------- -------- ---- ----
Total Revenue $410,154 $401,046 2.3% 3.7%
======== ======== ==== ====
PAGE 4/DIEBOLD ANNOUNCES FIRST QUARTER RESULTS
CURRENCY IMPACT
During the quarter, revenue was impacted negatively by the year-over-year
devaluation of the Brazilian real, offset in part by the strengthening euro and
certain Asian currencies. The impact in the first quarter was approximately
($5.6) million versus the prior year. Given current exchange rates and assuming
a 1 percent per month devaluation of the Brazilian real for the remainder of the
year, exchange rate impacts would be slightly negative in the second quarter and
positive in the third and fourth quarters, with the total year slightly
positive.
GROSS MARGIN
Total gross margin for the first quarter was 30.3 percent, up from 29.4 percent
in the first quarter 2002. The increase resulted from higher margins in product
and service. Product gross margin increased to 35.3 percent from 33.5 percent in
the first quarter 2002, with higher margins in each of our three business units
and also a lower mix of voting business. Service gross margin increased to 26.4
percent from 26.0 percent in the first quarter 2002, continuing the trend of
improvement.
OPERATING EXPENSES
Total operating expenses for the quarter were 20.1 percent, versus 19.4 percent
for the first quarter of 2002. The increase in the operating expense percentage
was due entirely to change in pension expense and inclusion of the voting
business for a full quarter. Lower pension assumptions and the market downturn
caused a net pension expense in the first quarter of 2003 compared to pension
income in the first quarter of 2002. This resulted in an adverse impact of
approximately $2 million in the first quarter of 2003. Research and development
was up slightly due to expenses related to the launch of our new ATM product
line.
OPERATING PROFIT
Operating profit was 10.2 percent of revenue, up from 10.0 percent in 2002. This
was driven by improved gross margin offset in part by higher operating expenses.
We again held operating margin in the financial self-service business, while
overcoming the impact of pension expense.
NET INCOME
Net income was 6.3 percent of revenue compared to net loss of 1.7 percent in the
first quarter 2002. Net income in the first quarter of 2002 before the
cumulative effect of a change in accounting principle was 6.6 percent of
revenue. In 2002, the company benefited from a $1.9 million gain on
securitization of lease receivables, which did not reoccur.
(more)
PAGE 5/DIEBOLD ANNOUNCES FIRST QUARTER RESULTS
BALANCE SHEET AND CASH FLOW HIGHLIGHTS
Diebold's balance sheet remains one of the strongest in any industry with a net
debt to total capital ratio of approximately 1 percent, down from 6 percent at
year end and down from 8 percent at the end of the first quarter 2002. Free cash
flow improved dramatically from the prior year first quarter, improving from
($8.1) million in the first quarter of 2002 to $74.4 million in the current
quarter. This improvement was a result of increased collection of receivables
related to deferred revenue and better management of working capital. Inventory
turns improved to 5.5 from 4.9 at the end of the first quarter 2002, while days
sales outstanding (DSO) remained constant at approximately 90 days. DSO was
impacted by delayed international collections and is expected to improve
throughout the remainder of the year. In the current quarter, the company
reduced net debt by $49.3 million from the end of 2002.
STOCK OPTION EXPENSE
As permitted under SFAS No. 123, Accounting for Stock-Based Compensation, the
company continues to provide annual disclosure of the impact to earnings per
share if stock options were expensed. The company estimates that if stock
options were expensed in accordance with SFAS 123, the full year impact in 2003
would be approximately $.05 per share compared to $.04 per share in 2002.
OUTLOOK
The following statements are based on current expectations. These statements are
forward-looking and actual results may differ materially. These statements do
not include the potential impact of any future mergers, acquisitions, disposals
or other business combinations.
Taking these factors into consideration, expectations for the second quarter and
the year 2003 include:
- Second quarter revenue will increase in the mid single-digit range vs.
prior year.
- Depreciation and amortization will be approximately $16 million for
the second quarter.
- Pension expense of approximately $.01 per share in the second quarter
of 2003 compared to pension income of $.01 per share in the second
quarter of 2002.
- Second quarter EPS to be in the range of $.54 to $.59.
- Full year fixed exchange rate revenue growth of 5-8 percent.
- Financial self-service revenue growth of 2-4 percent.
- Security growth of approximately 10-20 percent.
- Voting business growth of approximately 15-25 percent.
- A full year effective tax rate of approximately 32.0 percent.
- Free cash flow is expected to be in the range of $175-$200 million
during 2003.
- Full year earnings per share guidance of $2.32 to $2.42.
(more)
PAGE 6/DIEBOLD ANNOUNCES FIRST QUARTER RESULTS
NOTES FOR NON-GAAP MEASURES
1. Fixed exchange rate is used to depict order and GAAP revenue growth in
local currency without the benefit or detriment occurring from currency
fluctuations.
2. Free cash flow is calculated as follows:
Q1 2003 Q1 2002
------- -------
Net cash provided by operating activities (GAAP measure) $ 98,479 $ 349
Capital expenditures (14,022) (6,974)
Rotable spares expenditures (10,092) (1,452)
-------- -------
Free cash flow (non-GAAP measure) $ 74,365 $(8,077)
======== =======
The company believes that free cash flow is a meaningful indicator of
cash generated for discretionary purposes.
3. Net debt is calculated as follows:
Q1 2003 YEAR-END 2002
------- -------------
Notes payable (GAAP measure) $ 159,333 $226,259
Industrial development revenue bonds and other 21,100 21,100
Less cash, cash equivalents and other investments (167,175) (184,815)
--------- --------
Net debt (non-GAAP measure) $ 13,258 $ 62,544
========= ========
Given the significant cash, cash equivalents and other investments on
the balance sheet, a meaningful debt calculation is to net cash against
outstanding debt.
FINANCIAL INFORMATION
Walden W. O'Dell and Senior Vice President and Chief Financial Officer Gregory
T. Geswein will discuss the company's financial performance during a conference
call today at 10:00 a.m. (EDT). Access is available from Diebold's Web site at
www.diebold.com. The replay can also be accessed on the site after the call.
FORWARD-LOOKING STATEMENT
In the company's written or oral statements, the use of the words "believes,"
"anticipates," "expects" and similar expressions is intended to identify
forward-looking statements that have been made and may in the future be made by
or on behalf of the company, including statements concerning future operating
performance, the company's share of new and existing markets, and the company's
short- and long-term revenue and earnings growth rates. Although the company
believes that its outlook is based upon reasonable assumptions regarding the
economy, its knowledge of its business, and on key performance indicators, which
impact the company, there can be no assurance that the company's goals will be
realized. The company is not obligated to report changes to its outlook. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. The company's uncertainties could cause
actual results to differ materially from those anticipated in forward-looking
statements. These include, but are not limited to:
- competitive pressures, including pricing pressures and technological
developments;
- changes in the company's relationships with customers, suppliers,
distributors and/or partners in its business ventures;
- changes in political, economic or other factors such as currency
exchange rates, inflation rates, recessionary or expansive trends,
taxes and regulations and laws affecting the worldwide business in
each of the company's operations, including Brazil, where a
significant portion of the company's revenue is derived;
- acceptance of the company's product and technology introductions in
the marketplace;
- unanticipated litigation, claims or assessments;
- ability to reduce costs and expenses and improve internal operating
efficiencies; and
- variation in consumer demand for self-service technologies, products
and services.
Diebold, Incorporated is a global leader in providing integrated self-service
delivery systems and services. Diebold employs more than 13,000 associates with
representation in more than 88 countries worldwide and headquarters in Canton,
Ohio, USA. Diebold reported revenue of $1.940 billion in 2002 and is publicly
traded on the New York Stock Exchange under the symbol `DBD.' For more
information, visit the company's Web site at www.diebold.com.
# # #
PR/XXXX
DIEBOLD, INCORPORATED
(IN THOUSANDS EXCEPT EARNINGS PER SHARE)
Three Months Ended March 31
2003 2002
--------- ---------
Net Sales
Product $ 179,109 $ 181,046
Service 231,045 220,000
--------- ---------
Total 410,154 401,046
Cost of goods
Product 115,933 120,351
Service 170,028 162,848
--------- ---------
Total 285,961 283,199
Gross Profit 124,193 117,847
Percent of net sales 30.3% 29.4%
Operating expenses
Selling, general and administrative 68,070 63,712
Research, development and engineering 14,367 13,941
--------- ---------
Total 82,437 77,653
Percent of net sales 20.1% 19.4%
Operating profit 41,756 40,194
Percent of net sales 10.2% 10.0%
Other income / (expense) and minority interest, net (3,668) (933)
--------- ---------
Income before taxes 38,088 39,261
Percent of net sales 9.3% 9.8%
Taxes on income (12,188) (12,760)
Effective tax rate 32.0% 32.5%
--------- ---------
Income before cumulative effect of a change in accounting principle 25,900 26,501
--------- ---------
Percent of net sales 6.3% 6.6%
Cumulative effect of a change in accounting principle
$38,859, net of taxes of $5,712 -- (33,147)
--------- ---------
Net Income $ 25,900 $ (6,646)
--------- ---------
Percent of net sales 6.3% -1.7%
Basic weighted average shares outstanding 72,199 71,807
Diluted weighted average shares outstanding 72,475 72,170
Basic Earnings Per Share:
Income before cumulative effect of a change in accounting principle ...... $0.36 $0.37
Cumulative effect of a change in accounting principle, net of taxes ...... $0.00 ($0.46)
Net Income ............................................................... $0.36 ($0.09)
Diluted Earnings Per Share:
Income before cumulative effect of a change in accounting principle ...... $0.36 $0.37
Cumulative effect of a change in accounting principle, net of taxes ...... $0.00 ($0.46)
Net Income ............................................................... $0.36 ($0.09)
DIEBOLD, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
MARCH 31, 2003 DECEMBER 31, 2002
-------------- -----------------
ASSETS
Current assets
Cash and cash equivalents $ 138,750 $ 155,446
Short-term investments 6,785 7,909
Trade receivables, net 413,540 403,498
Inventories 247,541 236,614
Other current assets 113,682 121,421
---------- ----------
Total current assets 920,298 924,888
Securities and other investments 66,232 66,151
Property, plant and equipment, net 232,963 219,633
Goodwill 283,182 268,606
Other assets 146,418 145,803
---------- ----------
$1,649,093 $1,625,081
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 159,333 $ 226,259
Accounts payable 87,008 90,713
Other current liabilities 310,528 245,179
---------- ----------
Total current liabilities 556,869 562,151
Other long-term liabilities 127,779 122,107
Total shareholders' equity 964,445 940,823
---------- ----------
$1,649,093 $1,625,081
---------- ----------
DIEBOLD, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS EXCEPT)
Three Months Ending
MARCH 31, 2003 MARCH 31, 2002
-------------- --------------
Cash Flow from operating activities:
Net Income (loss) $ 25,900 $ (6,646)
Adjustments to reconcile net income to cash
provided by operating activities
Depreciation and amortization 15,425 13,139
Deferred income taxes 100 (760)
Loss (gain) on disposal of assets 883 (311)
Cumulative effect of change in accounting principle -- 38,859
Minority share of income 1,699 920
Cash provided (used) by changes in certain assets
and liabilities:
Trade receivables (3,411) (4,928)
Inventories (7,192) (16,875)
Accounts payable (6,502) (25,906)
Certain other assets and liabilities 71,577 2,857
--------- ---------
Net cash provided by operating activities 98,479 349
Cash flow from investing activities:
Payments for acquisitions, net of cash acquired -- (3,682)
Net investment activity 1,397 11,820
Capital expenditures (14,022) (6,974)
Rotable spares expenditures (10,092) (1,452)
Decrease (increase) in certain other assets (5,903) 11,204
--------- ---------
Net cash provided (used) by investing activities (28,620) 10,916
Cash flow from financing activities:
Dividends paid (12,285) (11,872)
Short term borrowings, net (70,625) (13,008)
Net (payments) proceeds from securitization (3,705) 9,200
Other financing activities (1,176) 2,599
--------- ---------
Net cash used by financing activities (87,791) (13,081)
Effect of exchange rate changes on cash 1,236 (6,598)
--------- ---------
Decrease in cash and cash equivalents (16,696) (8,414)
Cash and cash equivalents at the beginning of the period 155,446 73,768
--------- ---------
Cash and cash equivalents at the end of the period $ 138,750 $ 65,354
========= =========