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:
July 23, 2003
DIEBOLD ANNOUNCES SECOND QUARTER RESULTS; RAISES FULL-YEAR EPS GUIDANCE
Achieves EPS expectations and delivers strong cash flow
NORTH CANTON, Ohio - Diebold, Incorporated (NYSE: DBD) today reported second
quarter 2003 net income of $41,344,000 on revenue of $480,870,000, or diluted
earnings per share of $.57, which was within the company's guidance of $.54 to
$.59 and in line with expectations. This compares to second quarter 2002 net
income of $39,789,000 on revenue of $483,489,000, or diluted EPS of $.55.
SECOND QUARTER HIGHLIGHTS
- -------------------------
- Free cash flow* improved by $28.0 million during the quarter, moving
from free cash flow of $9.2 million during the second quarter of 2002
to $37.2 million in the current quarter
- Moved from a net debt* position of $13.3 million at the end of the
first quarter to a NET INVESTMENT position of $12.4 million at the end
of the current quarter
- Days sales outstanding (DSO) improved by 9 days, moving from 83 days
at the end of the second quarter of 2002 to 74 days at the end of the
current quarter
- Inventory turns improved to 5.1 from 4.9 at the end of the second
quarter of 2002
- Security solutions revenue grew 21.9 percent as a result of market
share gains and growth in the financial industry, government, and
retail markets
- Total Asia-Pacific revenue increased 25.4 percent and 19.9 percent on
a fixed exchange rate basis*
- Total Europe, the Middle East and Africa (EMEA) revenue increased 25.1
percent and 7.0 percent on a fixed exchange rate basis
- Total revenue for the Americas, excluding voting, grew by 2.8 percent
on a fixed exchange rate basis
- In India, one of the fastest growing self-service markets in the
world, we completed the acquisition of our joint venture establishing
direct presence with headquarters in Mumbai, India
*See accompanying notes for non-GAAP measures.
(more)
PAGE 2/DIEBOLD ANNOUNCES SECOND QUARTER RESULTS
FINANCIAL RESULTS
- -----------------
"We once again delivered strong earnings per share, even with a challenging
global economic environment. EPS grew in the current quarter despite the voting
business having a dilutive effect of $.03 compared to $.05 accretion in the
second quarter 2002. By the end of June, we had expected to recognize revenue of
approximately $30 million on a voting contract with the state of Maryland.
However, the contract was delayed as the state expanded the project, increasing
its size to $55.6 million," said Walden W. O'Dell, Diebold chairman, president
and chief executive officer. "We will now recognize revenue of $30 million from
this order during the third quarter. We remain confident in our full-year
guidance for voting revenue growth of 15 to 25 percent and believe that the
voting business will be significantly more accretive on a full-year basis than
in 2002.
"I am also encouraged by the strength in overall orders and increased demand for
branch and self-service equipment and the high acceptance level of our new
Opteva ATM line around the world," O'Dell continued. "Our security business
continues to experience strong growth as demand remains strong in the financial,
retail and government markets.
"Based on these encouraging results and our current forecasts for the remainder
of the year, we are raising our full-year earnings per share guidance to
$2.35-$2.45 compared to our previous guidance of $2.32-$2.42," said O'Dell.
FIXED EXCHANGE RATE SECOND QUARTER ORDERS
- -----------------------------------------
Despite a challenging global economic environment, total orders for product and
service, excluding voting, increased in the low double-digit range. Financial
self-service orders in the Americas and Asia-Pacific both increased in the
double-digit range, while EMEA orders decreased in the low double-digits.
Security orders remain strong, increasing more than 20 percent.
The voting business is driven by a small number of large orders in any given
quarter, making quarter to quarter comparisons difficult. Voting orders in the
second quarter 2002 included a $54 million order with the state of Georgia.
While in the third quarter of 2003 the company received a $55.6 million order
from the state of Maryland, which had been expected to close during the second
quarter.
Significant orders for the quarter included:
- Orders totaling $11 million for self-service and branch equipment from
a large bank in California and self-service orders totaling $4.5
million from another large bank in California
- Self-service equipment orders totaling $9.9 million from two customers
in Belgium
- An order for self-service equipment valued at $8.7 million from a bank
in Brazil
- Two self-service orders from a bank in China totaling $8.6 million
- Orders totaling $5.2 million for self-service and branch equipment
from two regional banks in the Midwestern United States
- Orders for branch equipment from a bank in the Southeast United States
valued at $3.5 million
- A self-service order from a customer in France for $3.2 million
- An order from a large bank in New York for self-service equipment
totaling $3.2 million
- An electronic security order from a bank in Mexico valued at $3.0
million
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PAGE 3/DIEBOLD ANNOUNCES SECOND QUARTER RESULTS
REVENUE
- -------
Total revenue for the quarter was $480.9 million, down $2.6 million, or 0.5
percent and 1.1 percent on a fixed exchange rate basis. Voting revenue declined
significantly due to the delay of a large previously announced voting contract,
which closed in the third quarter. Total financial self-service revenue
increased 0.4 percent and decreased 0.4 percent on a fixed exchange rate basis.
Security solutions revenue grew 21.9 percent as a result of revenue growth in
the financial industry, government and retail markets. Total financial
self-service & security revenue increased by 5.2 percent and increased by 4.6
percent on a fixed exchange rate basis.
REVENUE SUMMARY BY PRODUCT AND SERVICE SOLUTIONS
(IN THOUSANDS -- QUARTER ENDED JUNE 30)
% CHANGE % CHANGE
2003 2002 GAAP FIXED RATE
-------- -------- -------- ----------
Financial Self-Service
- ----------------------
Products $165,924 $169,649 -2.2% -1.5%
Services 184,201 179,127 2.8% 0.7%
-------- -------- ----- -----
Total Fin. self-service 350,125 348,776 0.4% -0.4%
Security
- --------
Products 59,484 44,725 33.0% 33.0%
Services 63,566 56,210 13.1% 13.1%
-------- -------- ---- ----
Total Security 123,050 100,935 21.9% 21.9%
-------- -------- ---- ----
Total Fin. self-service & security 473,175 449,711 5.2% 4.6%
Voting solutions 7,695 33,778 -77.2% -77.2%
-------- -------- ----- -----
Total Revenue $480,870 $483,489 -0.5% -1.1%
======== ======== ===== =====
REVENUE SUMMARY BY GEOGRAPHIC AREA
(IN THOUSANDS -- QUARTER ENDED JUNE 30)
% CHANGE % CHANGE
2003 2002 GAAP FIXED RATE
-------- -------- -------- ----------
The Americas
- ------------
Financial self-service solutions $233,395 $255,948 -8.8% -5.2%
Security solutions 122,506 100,113 22.4% 22.4%
-------- -------- ------ ------
Subtotal 355,901 356,061 0.0% 2.8%
Voting Solutions 7,695 33,778 -77.2% -77.2%
-------- -------- ------ ------
Total Americas 363,596 389,839 -6.7% -4.3%
Asia-Pacific
- ------------
Financial self-service solutions 34,540 27,140 27.3% 21.5%
Security solutions 508 805 -36.9% -36.9%
-------- -------- ------ ------
Total Asia Pacific 35,048 27,945 25.4% 19.9%
Europe, Middle East, Africa
- ---------------------------
Financial self-service solutions 82,190 65,688 25.1% 7.0%
security solutions 36 17 N/A N/A
-------- -------- ------ ------
Total Europe, Middle East, Africa 82,226 65,705 25.1% 7.0%
-------- -------- ------ ------
Total Revenue $480,870 $483,489 -0.5% -1.1%
======== ======== ====== ======
(more)
PAGE 4/DIEBOLD ANNOUNCES SECOND QUARTER RESULTS
CURRENCY IMPACT
- ---------------
During the quarter, revenue continued to be negatively impacted by the
year-over-year devaluation of the Brazilian real, but this devaluation was more
than offset by the strengthening of the euro and certain other currencies. The
positive currency impact in the second quarter was approximately $2.6 million or
0.6 percent versus the prior year.
GROSS MARGIN
- ------------
Total gross margin for the second quarter was 29.6 percent, down from 30.5
percent in the second quarter 2002. Product gross margin increased slightly to
33.1 percent from 33.0 percent in the second quarter 2002. Service gross margin
decreased to 26.4 percent from 27.8 percent in the second quarter 2002, but was
flat sequentially. The decrease in service gross margins was largely due to
unusually high service gross margins in the prior year quarter, primarily in
Europe.
OPERATING EXPENSES
- ------------------
Total operating expenses for the quarter were 17.8 percent of revenue, versus
18.1 percent for the second quarter of 2002. The decrease in the operating
expense percentage was a result of tight cost controls and was realized despite
lower voting revenue in the current quarter and higher year over year pension
cost. Change in pension assumptions and the market downturn resulted in pension
expense in the second quarter of 2003 compared to pension income in the second
quarter of 2002. This change in pension cost adversely impacted the second
quarter 2003 by approximately $2 million.
OPERATING PROFIT
- ----------------
Operating profit was 11.9 percent of revenue, down from 12.4 percent from 2002.
This was primarily driven by lower voting revenue and associated operating loss
in the second quarter 2003 as compared to the second quarter 2002.
OTHER INCOME/(EXPENSE) AND MINORITY INTEREST
- --------------------------------------------
Other income/(expense) and minority interest improved by $5.2 million, moving
from net expense of $1.5 million in the second quarter of 2002 to net income of
$3.7 million in the current quarter. This improvement was the result of reduced
interest expense, due to lower debt levels and reduced interest rates, as well
as a gain in the current quarter of approximately $.03 per share from the early
buy-out of leased ATM equipment by a major customer.
NET INCOME
- ----------
Net income was 8.6 percent of revenue compared to 8.2 percent in the second
quarter 2002. The improvement in net income was a result of lower operating
expenses and the positive swing in other income/(expense) and minority interest,
net.
(more)
PAGE 5/DIEBOLD ANNOUNCES SECOND QUARTER RESULTS
BALANCE SHEET AND CASH FLOW HIGHLIGHTS
- --------------------------------------
Diebold's balance sheet is exceptionally solid. As a result of strong positive
cash flow, the company improved its net (debt)/investment position by $74.9
million in the first six months of 2003, moving from a net debt position of
$62.5 million at the end of 2002 to a net investment position of $12.4 million
at the end of the current quarter.
Free cash flow in the six months of 2003 was $111.5 million, an improvement of
$110.4 million compared to the first six months of 2002. This improvement was a
result of better management of working capital. DSO improved by nine days,
moving from 83 days at the end of the second quarter of 2002 to 74 days at the
end of the current quarter. Inventory turns also improved to 5.1 turns from 4.9
turns at the end of the second quarter 2002.
STOCK OPTION EXPENSE
- --------------------
As permitted under SFAS No. 123, Accounting for Stock-Based Compensation, the
company provides quarterly and annual disclosures 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 $.06 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 third quarter and
the year 2003 include:
- Third quarter revenue is expected to grow 2-5 percent vs. prior year.
- Depreciation and amortization will be approximately $16 million for
the third quarter.
- Pension expense of approximately $.01 per share in the third quarter
of 2003 compared to pension income of $.01 per share in the third
quarter of 2002.
- Third quarter EPS to be in the range of $.62 to $.67.
- Full year revenue growth of 5-8 percent.
- Financial self-service revenue growth of 1-4 percent.
- Security revenue growth of approximately 15-20 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 $200-$225 million
during 2003.
- Full year earnings per share guidance of $2.35 to $2.45.
(more)
PAGE 6/DIEBOLD ANNOUNCES SECOND 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:
SIX MONTHS SIX MONTHS
Q2 2003 Q2 2002 ENDED 2003 ENDED 2002
------- ------- ---------- ----------
Net cash provided by operating activities (GAAP $64,124 $ 16,944 $162,603 $ 17,293
measure)
Capital expenditures (18,456) (3,273) (32,478) (10,247)
Rotable spares expenditures (8,492) (4,467) (18,584) (5,919)
------- ------- -------- ------
Free cash flow (non-GAAP measure) $37,176 $ 9,204 $ 111,541 $1,127
======= ======= ========= ======
The company believes that free cash flow is a meaningful indicator of
cash generated for discretionary purposes.
3. Net (debt)/investment is calculated as follows:
JUNE 30 MARCH 31 DECEMBER 31
2003 2003 2002
---- ---- ----
Cash, cash equivalents and other investments (GAAP measure) $ 161,000 $ 167,175 $ 184,815
Less Industrial development revenue bonds and other (13,600) (21,100) (21,100)
Less Notes payable (134,972) (159,333) (226,259)
--------- --------- ---------
Net (debt)/investment (non-GAAP measure) $ 12,428 $ (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 for up to three
months 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 and security 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 June 30
2003 2002
--------- ---------
Net Sales
Product $ 231,211 $ 247,085
Service 249,659 236,404
--------- ---------
Total 480,870 483,489
Cost of goods
Product 154,723 165,457
Service 183,667 170,590
--------- ---------
Total 338,390 336,047
Gross Profit 142,480 147,442
Percent of net sales 29.6% 30.5%
Operating expenses
Selling, general and administrative 70,530 72,506
Research, development and engineering 14,835 15,171
--------- ---------
Total 85,365 87,677
Percent of net sales 17.8% 18.1%
Operating profit 57,115 59,765
Percent of net sales 11.9% 12.4%
Other income / (expense) and minority interest, net 3,686 (1,540)
--------- ---------
Income before taxes 60,801 58,225
Percent of net sales 12.6% 12.0%
Taxes on income (19,457) (18,436)
Effective tax rate 32.0% 31.7%
--------- ---------
Income before cumulative effect of a change in accounting principle 41,344 39,789
--------- ---------
Percent of net sales 8.6% 8.2%
Cumulative effect of a change in accounting principle, net of taxes -- --
--------- ---------
Net Income $ 41,344 $ 39,789
--------- ---------
Percent of net sales 8.6% 8.2%
Basic weighted average shares outstanding 72,294 71,994
Diluted weighted average shares outstanding 72,679 72,350
Basic Earnings Per Share:
- -------------------------
Income before cumulative effect of a change in accounting principle ............ $0.57 $0.55
Cumulative effect of a change in accounting principle, net of taxes ............ $0.00 $0.00
Net Income ..................................................................... $0.57 $0.55
Diluted Earnings Per Share:
- ---------------------------
Income before cumulative effect of a change in accounting principle ............ $0.57 $0.55
Cumulative effect of a change in accounting principle, net of taxes ............ $0.00 $0.00
Net Income ..................................................................... $0.57 $0.55
DIEBOLD, INCORPORATED
(IN THOUSANDS EXCEPT EARNINGS PER SHARE)
Six Months Ended June 30
2003 2002
--------- ---------
Net Sales
Product $ 410,320 $ 428,131
Service 480,704 456,404
--------- ---------
Total 891,024 884,535
Cost of goods
Product 270,656 285,808
Service 353,695 333,438
--------- ---------
Total 624,351 619,246
Gross Profit 266,673 265,289
Percent of net sales 29.9% 30.0%
Operating expenses
Selling, general and administrative 138,600 136,218
Research, development and engineering 29,202 29,112
--------- ---------
Total 167,802 165,330
Percent of net sales 18.8% 18.7%
Operating profit 98,871 99,959
Percent of net sales 11.1% 11.3%
Other income / (expense) and minority interest, net 18 (2,473)
--------- ---------
Income before taxes 98,889 97,486
Percent of net sales 11.1% 11.0%
Taxes on income (31,645) (31,196)
Effective tax rate 32.0% 32.0%
--------- ---------
Income before cumulative effect of a change in accounting principle 67,244 66,290
--------- ---------
Percent of net sales 7.5% 7.5%
Cumulative effect of a change in accounting principle
$38,859, net of taxes of $5,712 -- (33,147)
--------- ---------
Net Income $ 67,244 $ 33,143
--------- ---------
Percent of net sales 7.5% 3.7%
Basic weighted average shares outstanding 72,247 71,901
Diluted weighted average shares outstanding 72,576 72,261
Basic Earnings Per Share:
- -------------------------
Income before cumulative effect of a change in accounting principle ........... $0.93 $0.92
Cumulative effect of a change in accounting principle, net of taxes ........... $0.00 ($0.46)
Net Income .................................................................... $0.93 $0.46
Diluted Earnings Per Share:
- ---------------------------
Income before cumulative effect of a change in accounting principle ........... $0.93 $0.92
Cumulative effect of a change in accounting principle, net of taxes ........... $0.00 ($0.46)
Net Income .................................................................... $0.93 $0.46
DIEBOLD, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, 2003 DECEMBER 31, 2002
------------- -----------------
ASSETS
- ------
Current assets
Cash and cash equivalents $ 120,504 $ 155,446
Short-term investments 18,171 7,909
Trade receivables, net 422,754 403,498
Inventories 269,847 236,614
Other current assets 106,365 121,421
----------- -----------
Total current assets 937,641 924,888
Securities and other investments 69,244 66,151
Property, plant and equipment, net 251,884 219,633
Goodwill 302,593 268,606
Other assets 149,603 145,803
----------- -----------
$ 1,710,965 $ 1,625,081
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Notes payable $ 134,972 $ 226,259
Accounts payable 105,478 90,713
Other current liabilities 301,958 245,179
----------- -----------
Total current liabilities 542,408 562,151
Long-term liabilities 133,278 122,107
Total shareholders' equity 1,035,279 940,823
----------- -----------
$ 1,710,965 $ 1,625,081
=========== ===========
DIEBOLD, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Six Months Ending
JUNE 30, 2003 JUNE 30, 2002
---------------------- ----------------------
Cash Flow from operating activities:
Net Income $ 67,244 $ 33,143
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 31,132 29,838
Deferred income taxes 25 (3,510)
Loss (gain) on sale of assets, net 758 (267)
Cumulative effect of change in accounting principle -- 38,859
Minority share of income 3,054 2,292
Cash provided (used) by changes in certain assets
and liabilities:
Trade receivables (1,630) (64,429)
Inventories (22,413) (24,568)
Accounts payable 9,170 (22,043)
Certain other assets and liabilities 75,263 27,978
--------- ---------
Net cash provided by operating activities 162,603 17,293
Cash flow from investing activities:
Payments for acquisitions, net of cash acquired (6,090) (3,682)
Net investment activity (7,600) 24,192
Capital expenditures (32,478) (10,247)
Rotable spares expenditures (18,584) (5,919)
(Increase) decrease in certain other assets (8,097) 11,049
--------- ---------
Net cash (used) provided by investing activities (72,849) 15,393
Cash flow from financing activities:
Dividends paid (24,568) (23,749)
Net (payments) on short term borrowings (101,594) (25,297)
Net (payments) proceeds from securitization (7,815) 3,620
Other financing activities 5,296 5,041
--------- ---------
Net cash used by financing activities (128,681) (40,385)
Effect of exchange rate changes on cash 3,985 1,361
--------- ---------
Decrease in cash and cash equivalents (34,942) (6,338)
Cash and cash equivalents at the beginning of the period 155,446 73,768
--------- ---------
Cash and cash equivalents at the end of the period $ 120,504 $ 67,430
========= =========