EXHIBIT 99.1
CONTACTS:
Media Relations Investor Relations
Mike Jacobsen John Kristoff
(330) 490-3796 (330) 490-5900
jacobsm1@diebold.com kristoj@diebold.com
FOR IMMEDIATE RELEASE:
June 30, 2005
DIEBOLD REDUCES 2005 SECOND QUARTER AND YEAR-END EARNINGS OUTLOOK
Investor conference call scheduled for today at 10:00 a.m. ET
NORTH CANTON, Ohio - Diebold, Incorporated (NYSE: DBD) today announced
it has lowered its second quarter and full-year earnings per share guidance for
2005, as its North America growth outlook has been revised downward and is now
in line with current expectations of customer demand.
Additionally, the company has identified a reconciliation issue in its
North America sales commission accrual account, as of December 31, 2004, with
the impact on specific prior years yet to be determined. As a result of this
reconciliation, the company has determined the commission account was under
accrued by approximately $13 million at the end of 2004. This is a preliminary
estimate and the final amount could vary. A thorough review is currently
underway and is expected to be completed shortly. This amount is excluded from
earnings estimates provided throughout the remainder of this outlook.
Revised Second Quarter and Full-Year Expectations
The company now expects second quarter earnings to be $.47 to $.50.
Included in this earnings estimate are restructuring charges of $.04 per share
and European Opteva manufacturing start-up costs and related issues of
approximately $.03 per share. Excluding these one-time items, second quarter
earnings per share are expected to be $.54 to $.57.
Full-year 2005 operating earnings are now expected to be $2.60 to
$2.70. This range excludes manufacturing start-up costs and related issues of
approximately $.04 per share, and restructuring charges of $.15 to $.30. The
company has defined and is reviewing various options for restructuring and will
provide a more definitive review of its anticipated restructuring costs in its
second quarter earnings announcement. This revised earnings guidance compares to
2004 full-year earnings per share of $2.54.
Factors contributing to the lowered earnings expectations are:
o Growth in the company's North America business is lower than
its previous expectations as upgrade/replacement activity in
the regional bank segment has developed at a slower than
expected rate.
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o A proportionately higher mix of revenue from the company's
international operations and election systems businesses,
which carry lower margins
o A negative foreign currency exchange impact due to the
strengthening of the dollar, particularly against the Euro
which moved from approximately $1.30 to $1.20 during the
second quarter
o Continuing cost challenges in the transition to a single,
global product platform
Cost Reduction Initiatives
To further strengthen its competitiveness, the company is initiating
several actions now and for the remainder of 2005:
o The elimination of approximately 300 full-time positions in
North America and Western Europe. This action includes jobs
affected by the recently announced closing of the Danville,
Va., manufacturing facility
o Further global manufacturing realignment and facility
consolidation
o Acceleration of the consolidation of research and development
operations and service functions
o Further product cost reductions through procurement,
manufacturing and design improvements
"We are disappointed with our financial performance during the quarter
and with our revised outlook for the year," said Walden W. O'Dell, Diebold
chairman and chief executive officer. "Our global markets remain healthy as we
once again experienced strong growth in orders and backlog during the quarter.
However, our North America revenue outlook is lower than previously expected,
resulting in a lower profit outlook. In addition, we continue to face challenges
on the cost side as we transition to a global product platform. We are moving
quickly and decisively to improve our performance by accelerating our
cost-reduction initiatives."
O'Dell added, "There is tremendous value in Diebold, from the strength
of our brand to our world-class technology and product solutions. We are
confident that by taking these aggressive cost actions now, we will be able to
leverage our leadership position in the marketplace and ensure long-term,
profitable growth."
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Investor call information
A special investor conference call with Walden W. O'Dell, chairman and
chief executive officer, and Gregory T. Geswein, senior vice president and chief
financial officer, will be held today at 10 a.m. (ET). This conference call will
last approximately 30 minutes. Participants should plan to dial in 15 minutes
prior to the session. Details on the call are as follows:
Call-in numbers Passcode Time/Date
Conference call (913) 981-5525 5854588 10 a.m. (ET), 6/30/05
Call replay (719) 457-0820 5854588 Begins: 1 p.m. (ET), 6/30/05
Ends: 5 p.m. (ET), 7/7/05
Also, Diebold will release second quarter financial results on July 27,
before trading begins on the New York Stock Exchange. Walden W. O'Dell and
Gregory T. Geswein will discuss the results during a conference call scheduled
to begin at 10 a.m. (ET) that day. The conference call will last approximately
one hour. Participants should plan to dial in 15 minutes prior to the session.
Details on the call are as follows:
Call-in numbers Passcode Time/Date
Conference call (913) 981-4912 276504 10 a.m. (ET), 7/27/05
Call replay (719) 457-0820 276504 Begins: 1 p.m. (ET), 7/27/05
Ends: 5 p.m. (ET), 8/3/05
Live access to both calls is also available on Diebold's Web site at
www.diebold.com. The replays can be accessed on the site for three months after
the calls. Detailed financial information regarding Diebold's second quarter
results will be available on the company's Web site.
FORWARD-LOOKING STATEMENTS
In this press release, statements that are not reported, financial
results or other historical information are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements give current expectations or forecasts of future
events and are not guarantees of future performance. These forward-looking
statements relate to, among other things, the company's future operating
performance, the company's share of new and existing markets, the company's
short- and long-term revenue and earnings growth rates, results of the review of
the company's North American sales commission accrual account and the company's
implementation of cost-reduction initiatives. The use of the words "believes,"
"anticipates," "expects," "intends" 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. Although the company believes that these
forward-looking statements are based upon reasonable assumptions regarding,
among other things, the economy, its knowledge of its business, and on key
performance indicators that impact the company, these forward-looking statements
involve risks, uncertainties and other factors that may cause actual results to
differ materially from those
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expressed in or implied by the forward-looking statements. The company is not
obligated to update forward-looking statements, whether as a result of new
information, future events or otherwise.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. Some of the risks,
uncertainties and other factors that could cause actual results to differ
materially from those expressed in or implied by the forward-looking statements
include, but are not limited to:
o competitive pressures, including pricing pressures and technological
developments;
o changes in the company's relationships with customers, suppliers,
distributors and/or partners in its business ventures;
o 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;
o acceptance of the company's product and technology introductions in the
marketplace;
o unanticipated litigation, claims or assessments;
o the company's ability to reduce costs and expenses and improve internal
operating efficiencies;
o variations in consumer demand for financial self-service technologies,
products and services;
o challenges raised about reliability and security of the company's election
systems products, including the risk that such products will not be
certified for use or will be decertified;
o changes in laws regarding the company's election systems products and
services;
o potential security violations to the company's information technology
systems; and
o the company's ability to achieve benefits from its cost-reduction
initiatives.
Diebold, Incorporated is a global leader in providing integrated
self-service delivery and security systems and services. Diebold employs more
than 14,000 associates with representation in nearly 90 countries worldwide and
is headquartered in North Canton, Ohio, USA. Diebold reported revenue of $2.4
billion in 2004 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.
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