EXHIBIT 99.1
[DIEBOLD LOGO]
NEWSRELEASE
Media contact: Investor contact:
Mike Jacobsen John Kristoff
+1 330 490 3796 +1 330 490 5900
jacobsm1@diebold.com kristoj@diebold.com
FOR IMMEDIATE RELEASE:
July 27, 2005
DIEBOLD REPORTS SECOND QUARTER FINANCIAL RESULTS
NORTH CANTON, Ohio -- Diebold, Incorporated (NYSE: DBD) today reported second
quarter 2005 revenue from continuing operations of $629.2 million, up 15.3
percent from the second quarter of 2004. The company reported second quarter net
income of $33.3 million, compared to net income of $43.6 million in the second
quarter of 2004. Diluted earnings per share were $.47, a decline of 21.7 percent
from $.60 per share in the second quarter of 2004 and within the most recent
guidance of $.47 to $.50 per share.
Included in the second quarter 2005 reported results are restructuring charges
of approximately $.03 per share and European Opteva manufacturing startup costs
and related issues* of $.04 per share. Excluding the impact of the restructuring
charges and the European startup costs and related issues*, diluted earnings per
share in the second quarter would have been $.54 per share, consistent with
previous guidance.
As previously announced on July 5, 2005, the company sold its campus card
systems division. As a result, the financial results from this business have
been classified as a discontinued operation.
SECOND QUARTER HIGHLIGHTS
- Total product orders, excluding election systems and the Brazilian
lottery business, grew in the high single-digit range led by
double-digit growth in the Europe, Middle East and Africa (EMEA)
region.
- The company secured a large order for lottery machines in Brazil for
approximately $52 million.
- Total Opteva orders were approximately $131 million, an increase of
more than 58 percent from the second quarter 2004.
- Security solutions revenue grew 25.0 percent and 24.1 percent on a
fixed exchange-rate basis*.
- Asia Pacific total revenue increased 49.9 percent, and 45.4 percent on
a fixed exchange-rate basis*.
- EMEA financial self-service revenue increased 14.2 percent, and 10.8
percent on a fixed exchange-rate basis*.
- Receivable days sales outstanding improved 18 days, moving from 92
days at June 30, 2004 to 74 days at June 30, 2005.
*See accompanying notes for non-GAAP measures.
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PAGE 2/ DIEBOLD ANNOUNCES SECOND QUARTER RESULTS
FINANCIAL RESULTS
"We are clearly disappointed with our profitability during the quarter," said
Walden W. O'Dell, Diebold chairman and chief executive officer. "As we
previously indicated, most of the markets in which we compete remain healthy and
we once again experienced strong growth in orders and backlog during the
quarter. However, slower than anticipated upgrade and replacement activity in
the North America regional bank segment, cost challenges in our transition to a
single global product platform, a higher mix of lower-margin revenue and
negative foreign currency exchange impact due to the strengthening of the dollar
in the quarter are negatively impacting our profit margins."
O'Dell added, "We are focused on improving the profitability of our business. In
addition to previously disclosed cost-reduction actions, we are initiating some
strategic changes within our organization. These changes are aimed at increasing
the effectiveness of the functions across Diebold to better support our global
efforts. The most sweeping of these changes is the establishment of a single
Global Marketing organization, formed through consolidating several
channel-based marketing functions. These changes will streamline our operations
and drive improved efficiency and knowledge management throughout the company.
Also, we have restructured our Global Software & Services organization by
integrating all its functions into other existing organizations to better
leverage resources and combine similar knowledge bases within the company.
"As a result of these and other actions, we anticipate cost reductions of
approximately $20 million on an annual basis. I am confident that these
structural changes to our organization, as well as our other cost-saving
initiatives, will significantly improve our profitability and competitiveness in
the marketplace."
FIXED EXCHANGE-RATE SECOND QUARTER ORDERS
Total orders for products and services increased in the high single-digit range,
excluding election systems and Brazilian lottery equipment business during the
second quarter. Financial self-service orders increased in the mid single-digit
range, led by double-digit growth in EMEA. Security orders remain strong,
increasing in the double-digit range. Orders in election systems increased
significantly due to the previously disclosed equipment order in Ohio.
*See accompanying notes for non-GAAP measures.
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PAGE 3/ DIEBOLD ANNOUNCES SECOND QUARTER RESULTS
REVENUE
Total revenue from continuing operations for the quarter was $629.2 million, up
$83.5 million, or 15.3 percent and 12.4 percent on a fixed exchange-rate basis*.
Total financial self-service revenue increased 11.7 percent and 8.0 percent on a
fixed exchange-rate basis*. Security solutions revenue grew 25.0 percent and
24.1 percent on a fixed exchange-rate basis*. Total financial self-service and
security revenue increased by 15.0 percent and 12.0 percent on a fixed
exchange-rate basis*.
REVENUE SUMMARY BY PRODUCT AND SERVICE SOLUTIONS
(In Thousands -- Quarter Ended June 30, 2005)
% Change % Change
2005 2004 GAAP fixed rate*
-------- -------- ---- -----------
FINANCIAL SELF-SERVICE
Products $212,690 $178,630 19.1% 16.3%
Services 221,000 209,645 5.4% 1.1%
-------- -------- ---- ----
Total Fin. self-service 433,690 388,275 11.7% 8.0%
SECURITY SOLUTIONS
Products 66,807 61,736 8.2% 6.9%
Services 96,042 68,590 40.0% 39.7%
-------- -------- ---- ----
Total Security 162,849 130,326 25.0% 24.1%
-------- -------- ---- ----
Total Fin. self-service & security 596,539 518,601 15.0% 12.0%
Election systems 32,684 27,128 20.5% 20.5%
-------- -------- ---- ----
Total Revenue from Continuing Operations $629,223 $545,729 15.3% 12.4%
======== ======== ==== ====
REVENUE SUMMARY BY GEOGRAPHIC AREA
(In Thousands -- Quarter Ended June 30, 2005 )
% Change % Change
2005 2004 GAAP fixed rate*
-------- -------- ---- -----------
THE AMERICAS
Financial self-service solutions $288,859 $275,411 4.9% 1.2%
Security solutions 150,356 122,769 22.5% 22.2%
-------- -------- ---- ----
subtotal 439,215 398,180 10.3% 7.5%
Election systems 32,684 27,128 20.5% 20.5%
-------- -------- ---- ----
Total Americas 471,899 425,308 11.0% 8.3%
ASIA PACIFIC
Financial self-service solutions 57,539 36,446 57.9% 54.7%
Security solutions 8,371 7,535 11.1% 3.0%
-------- -------- ---- ----
Total Asia Pacific 65,910 43,981 49.9% 45.4%
EUROPE, MIDDLE EAST, AFRICA
Financial self-service solutions 87,292 76,418 14.2% 10.8%
Security solutions 4,122 22 N/A N/A
-------- -------- ---- ----
Total Europe, Middle East, Africa 91,414 76,440 19.6% 16.0%
-------- -------- ---- ----
Total Revenue from Continuing Operations $629,223 $545,729 15.3% 12.4%
======== ======== ==== ====
*See accompanying notes for non-GAAP measures.
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PAGE 4/ DIEBOLD ANNOUNCES SECOND QUARTER RESULTS
CURRENCY IMPACT
During the quarter, revenue was positively impacted by the year-over-year
strengthening of the real, euro and certain other currencies. The positive
currency impact in the second quarter was approximately $14.1 million or 2.6
percent versus the prior year reported results.
GROSS MARGIN
Total gross margin for the second quarter was 25.4 percent, compared to a strong
29.8 percent in the second quarter 2004. Included in total cost of sales in the
second quarter 2005 was approximately $3.1 million of restructuring costs and
$3.0 million of European Opteva manufacturing startup costs and related issues,
which adversely impacted total gross margins by 1.0 percentage point.
Product gross margin was 27.4 percent, compared to 35.4 percent in the second
quarter 2004. Included in product cost of sales in the second quarter of 2005
was approximately $2.5 million in restructuring charges and one-time special
items of approximately $2.8 million, which adversely impacted product gross
margins by 1.7 percentage points. Additionally, the decrease in product gross
margins was attributable to a heavier mix of revenue derived from lower-margin
businesses for the second quarter versus 2004. This includes a higher percentage
of national account revenue in the United States, a greater mix of lower-margin
international revenue, particularly from India and Thailand, and increased
revenue from the security and election systems businesses.
Service gross margin was 23.4 percent, compared to 24.6 percent in the second
quarter 2004. This decline was primarily the result of increased fuel costs.
Included in the service cost of sales in the second quarter of 2005 was
approximately $0.6 million in restructuring charges and $0.2 million in one-time
special items, which adversely impacted service gross margins by 0.3 percentage
points.
OPERATING EXPENSES
Total operating expenses for the quarter as a percent of revenue improved by 1.3
percentage points, moving to 16.6 percent from 17.9 percent in the second
quarter 2004. Reduced selling, general and administrative expenses as a
percentage of revenue accounted for 0.9 percentage points of the overall
improvement to operating expenses. The improved leveraging of selling, general
and administrative expenses was achieved due to aggressive controls on personnel
costs and implementing a corporate-wide efficiency program. Reduced R&D expense
resulting from ongoing product rationalization created by the Opteva rollout
accounted for the balance of the improvement.
OPERATING PROFIT
Operating profit was 8.8 percent of revenue, down 3.1 percentage points from
11.9 percent in the second quarter of 2004. Included in the financial results
was $3.5 million of restructuring costs and $3.2 million of European Opteva
manufacturing startup costs and related issues, which adversely impacted
operating profits by 1.1 percentage points. Excluding the impact of these
charges*, operating profit margin would have been 9.9 percent in the second
quarter 2005, a decrease of 2.0 percentage points from the second quarter 2004.
*See accompanying notes for non-GAAP measures
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PAGE 5/ DIEBOLD ANNOUNCES SECOND QUARTER RESULTS
OTHER EXPENSE AND MINORITY INTEREST
Other expense and minority interest increased to $7.6 million in expense for the
quarter from $2.1 million in expense in the second quarter of 2004. This
increase was due mainly to the impact of higher foreign exchange losses of $2.7
million in the quarter and higher interest expense.
NET INCOME FROM CONTINUING OPERATIONS
Net income from continuing operations was 5.2 percent of revenue compared to 7.9
percent in the second quarter 2004. The decline in net income as a percent of
revenue was partially the result of restructuring charges of $3.5 million and
$3.9 million in special charges. Excluding the impact of these special charges
net income from continuing operations would have been 6.0 percent. This decline
from the prior year was attributable to unfavorable revenue mix from less
profitable geographies and accounts.
BALANCE SHEET AND CASH FLOW HIGHLIGHTS
The company's net debt* was $142.2 million at June 30, 2005 compared to $167.1
million at June 30, 2004. The $24.9 million decrease in net debt* over the last
12 months was principally due to the positive impact of $225.7 million in free
cash flow*, partially offset by $74.5 million spent to repurchase company stock,
$55.6 million in dividend payments, $45.0 million invested in acquisitions,
$14.2 million in foreign exchange impact and $11.5 million invested in other
assets.
In the second quarter, free cash use* increased by $5.4 million, moving from a
free cash use* of $18.8 million in the second quarter of 2004 to $24.2 million
in the second quarter of 2005. The increase in free cash use* was due
principally to higher capital expenditures, which increased by $5.6 million. DSO
was 74 days at June 30, 2005, an 18-day improvement from 92 days at June 30,
2004. Inventory turns improved slightly from 5.0 at June 30, 2004 to 5.3 turns
at June 30, 2005.
STOCK OPTION AND RESTRICTED STOCK 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 No. 123 for the full year 2005,
the impact would be approximately $.07 per share.
On December 15, 2004, the Financial Accounting Standards Board (FASB) issued
Statement 123R, "Share-Based Payment," which now requires companies to measure
compensation costs for all share-based payments (including employee stock
options) at fair value. The deadline for adoption of Statement 123R is the first
annual period beginning after June 15, 2005. The company has not yet quantified
the impact of adoption of Statement 123R. The company intends to implement this
standard in the first quarter 2006.
*See accompanying notes for non-GAAP measures.
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PAGE 6/DIEBOLD ANNOUNCES SECOND QUARTER RESULTS
COMPANY TO FILE 10-Q/A AND 10-K/A
As previously announced, the company identified a reconciliation issue in its
North America sales commission accrual account. A detailed analysis of this
reconciliation has been performed and the company has determined the commission
account was under-accrued by $13.2 million at December 31, 2004 and $11.4
million at March 31, 2005. First quarter 2005 commission expense was overstated
by $1.8 million. Commission expense in 2004 was understated by $0.3 million,
with the first and second quarters of 2004 each understated by less than $0.1
million. Commission expense was understated by $2.7 million and $1.5 million in
2003 and 2002, respectively. The remaining $8.7 million understatement of
commission expense was related to periods prior to fiscal year 2002. As a
result, the company intends to file an amendment to its first quarter 2005 Form
10-Q and an amendment to its 2004 Form 10-K. All prior financial information
presented in this release reflects the changes from the correction of the North
America sales commission accrual account.
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, or the effect of expensing stock options under
the new accounting standard, SFAS Statement No. 123R "Share-Based Payment".
RESTRUCTURING
The company previously announced it anticipates full-year 2005 restructuring
charges of $.15 to $.30, including the elimination of 300 full-time positions in
North America and Western Europe, further global manufacturing realignment and
facility consolidation and the consolidation of research and development
operations and service functions.
At the end of the second quarter, the company had reported year-to-date
restructuring charges of approximately $.10 per share. These charges include
realignment of the company's operations in Western Europe and North America.
The company has identified a number of cost-reduction actions and now
anticipates restructuring charges near the top end of the previously reported
restructuring range, with charges of approximately $.20 identified for the
remainder of 2005. These actions include:
- Additional global manufacturing realignment and facility consolidation
to speed production and reduce costs
- Consolidation of research and development efforts to better serve key
markets
- Merging software operations and combining various service functions to
better leverage resources and expertise throughout the company
While the company will continue to realign operations, minimize operating costs
and maximize existing resources, the planned elimination of the 300 full-time
positions is nearly complete.
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PAGE 7/DIEBOLD ANNOUNCES SECOND QUARTER RESULTS
THIRD QUARTER 2005 OUTLOOK
Expectations for the third quarter 2005 include:
- Third quarter revenue is expected to increase 9 to 11 percent on a
fixed exchange-rate basis*.
- Financial self-service revenue growth of 7 to 9 percent*.
- Security revenue growth of 10 to 12 percent*.
- Election systems revenue is expected to be $35 to $45
million.
- The company anticipates manufacturing start-up and restructuring total
charges in the range of $.07 to $.10 per share related to the
continued realignment of its operations.
- Currency exchange is anticipated to impact revenue favorably by
approximately 1.5 percent versus prior year.
- Depreciation and amortization to be approximately $20 million.
- An effective tax rate of approximately 32 percent.
- An increase in pension expense of approximately $.01 per share versus
prior year.
- EPS in the range of $.72 to $.77 per share, including the anticipated
manufacturing start-up costs and restructuring charges, and the
one-time gain of approximately $.18 per share on the sale of the
campus card systems business. Excluding manufacturing start-up costs
and related issues as well as restructuring charges and the gain from
the sale of the campus systems business, EPS is expected to be in the
range of $.62 to $.67* per share.
FULL-YEAR 2005 OUTLOOK
Expectations for the full-year 2005 include:
- Revenue growth of 10 to 12 percent, on a fixed exchange-rate basis*.
- Financial self-service revenue growth of 6 to 8 percent*.
- Security revenue growth of 17 to 19 percent*.
- Election systems revenue is anticipated to be in the range
of $115 to $125 million.
- Brazilian lottery systems revenue of $10 to $20 million.
- Currency expected to impact revenue favorably by approximately 1.2
percent versus prior year.
- Depreciation and amortization in the range of $75 to $80 million.
- An effective tax rate of approximately 32 percent.
- Pension expense is expected to be $.03 per share higher in 2005,
moving from $.05 per share in 2004 to $.08 per share in 2005.
- Research and development expense will be approximately 2.5 percent of
revenue, consistent with prior year.
- EPS to be $2.60 to $2.70*. This range excludes restructuring charges
of approximately $.30, manufacturing start-up costs and related issues
of approximately $.04 per share, and the one-time gain of
approximately $.18 per share on the sale of the campus card systems
business.
- Free cash flow* is expected to be in the range of $185 to $225
million.
*See accompanying notes for non-GAAP measures.
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PAGE 8/DIEBOLD ANNOUNCES SECOND QUARTER RESULTS
NOTES FOR NON-GAAP MEASURES
1. Reconciliation of GAAP EPS to non-GAAP measures:
Q1 Q1 Q2 Q2 GUIDANCE Q3 2005 GUIDANCE FULL-YEAR
2005 2004 2005 2004 2005
----- ----- ----- ----- ---------------- -----------------
EPS Continuing $0.37 $0.40 $0.46 $0.59 $0.72 $0.77 $2.42 $2.52
Operations
EPS Discontinued 0.00 0.00 0.01 0.01 0.00 0.00 0.01 0.01
Operations
Restatement of 0.01 0.00 0.00 0.00 0.00 0.00 0.01 0.01
Commission Expense
Total EPS (GAAP) $0.38 $0.40 $0.47 $0.60 $0.72 $0.77 $2.44 $2.54
----- ----- ----- ----- ----- ----- ----- -----
Gain on Sale of 0.00 0.00 0.00 0.00 (0.18) (0.18) (0.18) (0.18)
Discontinued Operations
Restructuring Charges 0.07 0.00 0.03 0.00 0.08 0.08 0.30 0.30
Other Special Items 0.00 0.00 0.04 0.00 0.00 0.00 0.04 0.04
Operating EPS $0.45 $0.40 $0.54 $0.60 $0.62 $0.67 $2.60 $2.70
(Non-GAAP) ===== ===== ===== ===== ===== ===== ===== =====
The company believes excluding these items provides meaningful insight into
the ongoing performance of its operations.
2. Fixed exchange-rate is used to depict order and GAAP revenue growth in local
currency without the benefit or detriment occurring from currency
fluctuations.
3. Free cash flow/(use) is calculated as follows:
SIX MONTHS SIX MONTHS
Q2 2005 Q2 2004 ENDED 2005 ENDED 2004
------- ------- ---------- ----------
Net cash provided by operating activities $ (7,005) $ (7,653) $ 71,425 $ 8,401
(GAAP measure)
Capital expenditures (16,112) (10,510) (29,824) (23,295)
Rotable spares expenditures (1,060) (634) (7,382) (5,140)
-------- -------- -------- --------
Free cash flow/(use) (non-GAAP measure) $(24,177) $(18,797) $ 34,219 $(20,034)
======== ======== ======== ========
The company believes that free cash flow is a meaningful indicator of cash
generated for discretionary purposes.
4. Net (debt) is calculated as follows:
JUNE 30, DECEMBER 31, JUNE 30,
2005 2004 2004
--------- --------- ---------
Cash, cash equivalents and other investments (GAAP measure) $ 178,358 $ 215,699 $ 123,579
Less Industrial development revenue bonds and other (13,500) (13,500) (13,550)
Less Notes payable (307,107) (289,510) (277,164)
--------- --------- ---------
Net (debt) (non-GAAP measure) $(142,249) $ (87,311) $(167,135)
========= ========= =========
Given the significant cash, cash equivalents and other investments on the
balance sheet, a meaningful debt calculation is to net cash against
outstanding debt.
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PAGE 9/DIEBOLD ANNOUNCES SECOND QUARTER RESULTS
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. (ET). 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 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 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 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:
- - 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;
- - the company's ability to reduce costs and expenses and improve internal
operating efficiencies;
- - variations in consumer demand for financial self-service technologies,
products and services;
- - 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;
- - changes in laws regarding the company's election systems products and
services;
- - potential security violations to the company's information technology
systems; and
- - the company's ability to achieve benefits from its cost-reduction
initiatives and other strategic changes.
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 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.
# # #
PR/xxxx
DIEBOLD, INCORPORATED
CONDENSED CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS EXCEPT EARNINGS PER SHARE)
THREE MONTHS ENDED JUNE 30
----------------------------
RESTATED
2005 2004
--------- ---------
Net Sales
Product $ 307,974 $ 263,322
Service 321,249 282,407
--------- ---------
Total 629,223 545,729
Cost of goods
Product 223,589 170,140
Service 246,041 212,912
--------- ---------
Total 469,630 383,052
Gross Profit 159,593 162,677
Percent of net sales 25.4% 29.8%
Operating expenses
Selling, general and administrative 90,224 83,013
Research, development and engineering 14,054 14,540
--------- ---------
Total 104,278 97,553
Percent of net sales 16.6% 17.9%
Operating profit 55,315 65,124
Percent of net sales 8.8% 11.9%
Other expense and minority interest, net (7,571) (2,062)
--------- ---------
Income from continuing operations before taxes 47,744 63,062
Percent of net sales 7.6% 11.6%
Taxes on income (15,266) (20,125)
Effective tax rate 32.0% 31.9%
Net Income from continuing operations $ 32,478 $ 42,937
--------- ---------
Percent of net sales 5.2% 7.9%
Discontinued operations
Income from discontinued operations $ 1,228 $ 1,091
Taxes on income (408) (401)
--------- ---------
Net income from discontinued operations $ 820 $ 690
--------- ---------
Net income $ 33,298 $ 43,627
========= =========
Basic weighted average shares outstanding 71,031 72,176
Diluted weighted average shares outstanding 71,511 72,680
Basic Earnings Per Share from continuing operations $ 0.46 $ 0.59
Basic Earnings Per Share from discontinued operations 0.01 0.01
--------- ---------
Total Basic Earnings Per Share $ 0.47 $ 0.60
Diluted Earnings Per Share from continuing operations $ 0.46 $ 0.59
Diluted Earnings Per Share from discontinued operations 0.01 0.01
--------- ---------
Total Diluted Earnings Per Share $ 0.47 $ 0.60
DIEBOLD, INCORPORATED
CONDENSED CONSOLIDATED INCOME STATEMENTS
(IN THOUSANDS EXCEPT EARNINGS PER SHARE)
SIX MONTHS ENDED JUNE 30
--------------------------------
RESTATED
2005 2004
----------- -----------
Net Sales
Product $ 544,246 $ 480,619
Service 620,127 558,739
----------- -----------
Total 1,164,373 1,039,358
Cost of goods
Product 391,678 316,893
Service 474,234 421,267
----------- -----------
Total 865,912 738,160
Gross Profit 298,461 301,198
Percent of net sales 25.6% 29.0%
Operating expenses
Selling, general and administrative 172,232 162,450
Research, development and engineering 28,319 29,769
----------- -----------
Total 200,551 192,219
Percent of net sales 17.2% 18.5%
Operating profit 97,910 108,979
Percent of net sales 8.4% 10.5%
Other expense and minority interest, net (8,823) (2,996)
----------- -----------
Income from continuing operations before taxes 89,087 105,983
Percent of net sales 7.7% 10.2%
Taxes on income (28,757) (33,821)
Effective tax rate 32.3% 31.9%
Net Income from continuing operations $ 60,330 $ 72,162
----------- -----------
Percent of net sales 5.2% 6.9%
Discontinued operations
Income from discontinued operations $ 1,370 $ 990
Taxes on income (461) (403)
----------- -----------
Net income from discontinued operations $ 909 $ 587
----------- -----------
Net income $ 61,239 $ 72,749
=========== ===========
Basic weighted average shares outstanding 71,344 72,477
Diluted weighted average shares outstanding 71,874 73,026
Basic Earnings Per Share from continuing operations $ 0.85 $ 0.99
Basic Earnings Per Share from discontinued operations 0.01 0.01
----------- -----------
Total Basic Earnings Per Share $ 0.86 $ 1.00
Diluted Earnings Per Share from continuing operations $ 0.84 $ 0.99
Diluted Earnings Per Share from discontinued operations 0.01 0.01
----------- -----------
Total Diluted Earnings Per Share $ 0.85 $ 1.00
DIEBOLD, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
RESTATED
JUNE 30, 2005 DECEMBER 31, 2004
------------- -----------------
ASSETS
Current assets
Cash and cash equivalents $ 143,172 $ 184,045
Short-term investments 35,186 31,654
Trade receivables, net 576,835 583,658
Inventories 344,431 322,293
Other current assets 135,876 112,982
---------- ----------
Total current assets 1,235,500 1,234,632
Securities and other investments 49,730 52,248
Property, plant and equipment, net 281,283 268,090
Goodwill 400,852 412,625
Other assets 193,738 167,957
---------- ----------
$2,161,103 $2,135,552
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable $ 31,906 $ 289,510
Accounts payable 127,310 140,324
Other current liabilities 359,762 310,356
---------- ----------
Total current liabilities 518,978 740,190
Long-term notes payable 275,201 --
Long-term liabilities 150,606 146,454
Total shareholders' equity 1,216,318 1,248,908
---------- ----------
$2,161,103 $2,135,552
---------- ----------
DIEBOLD, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
SIX MONTHS ENDED
-------------------------------
RESTATED
JUNE 30, 2005 JUNE 30, 2004
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Cash Flow from operating activities:
Net Income from continuing operations $ 60,330 $ 72,162
Adjustments to reconcile net income to cash
provided by operating activities:
Net income from discontinued operations 909 587
Depreciation and amortization 39,699 33,359
Deferred income taxes 3,907 (365)
Loss on sale of assets, net 378 46
Minority share of income 2,463 2,584
Cash provided (used) by changes in certain assets
and liabilities:
Trade receivables 11,323 (22,050)
Inventories (24,428) (60,360)
Accounts payable (14,948) (12,952)
Certain other assets and liabilities (8,208) (4,610)
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Net cash provided by operating activities 71,425 8,401
Cash flow from investing activities:
Payments for acquisitions, net of cash acquired (18,241) (35,429)
Net investment activity 4,656 2,809
Capital expenditures (29,824) (23,295)
Rotable spares expenditures (7,382) (5,140)
Increase in certain other assets (13,590) (10,054)
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Net cash used by investing activities (64,381) (71,109)
Cash flow from financing activities:
Dividends paid (29,171) (26,807)
Net (payments) borrowings on short term borrowings 36,796 94,405
Repurchase treasury shares (56,031) (53,432)
Other financing activities 2,926 3,744
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Net cash (used)/provided by financing activities (45,480) 17,910
Effect of exchange rate changes on cash (2,437) (1,848)
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Decrease in cash and cash equivalents (40,873) (46,646)
Cash and cash equivalents at the beginning of the period 184,045 169,951
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Cash and cash equivalents at the end of the period $ 143,172 $ 123,305
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