EX-99.1 2 l39505exv99w1.htm EX-99.1 exv99w1
EXHIBIT 99.1
pressrelease
     
(DIEBOLD LOGO)
  (GRAPHIC)
 
    
Media contact:
  Investor contact:
Mike Jacobsen
  Chris Bast
+1 330 490 3796
  +1 330 490 6908
michael.jacobsen@diebold.com
  christopher.bast@diebold.com
FOR IMMEDIATE RELEASE: April, 27, 2010
DIEBOLD REPORTS FIRST QUARTER FINANCIAL RESULTS
Earnings overview presentation available at www.diebold.com/DBD1Q10.pdf
  •   1Q EPS of $0.37, or $0.34 on a non-GAAP basis*
 
  •   Total revenue for 1Q 2010 decreased 6%, including a net positive currency impact of 5%
 
  •   Total gross margin improved by 2.3 percentage points from 1Q 2009, driven by continued improvements in service operations
 
  •   Net debt decreased more than $100 million from March 31, 2009
 
  •   Company reaffirms full-year revenue and non-GAAP earnings guidance
NORTH CANTON, Ohio — Diebold, Incorporated (NYSE: DBD) today reported first quarter 2010 income from continuing operations attributable to Diebold, net of tax, of $24.9 million, or $0.37 per share. These amounts are both up 185%, from the first quarter 2009. First quarter 2010 revenue was $619.0 million, down 6% from first quarter 2009.
Non-GAAP earnings per share* from continuing operations attributable to Diebold, in the first quarter 2010 were $0.34, down 26% from first quarter 2009.
Business Review
Management commentary
“During the first quarter, we delivered solid results despite a challenging comparison to the same period last year, during which the effects of the global recession had yet to impact our results,” said Thomas W. Swidarski, Diebold president and chief executive officer. “We exceeded our internal expectations during the quarter, as some business closed sooner than expected and we benefitted from a more profitable segment mix.
As a result, we have gained more confidence in our full-year outlook and are reaffirming our guidance for both earnings and revenue for 2010.
“Strategically, we will continue to focus on developing emerging solutions and building our infrastructure in key growth markets around the world,” Swidarski continued. “At the same time, the services-related business in our industry remains a key focus for us. In addition to growing service revenue, we continued to improve service profitability during the quarter — and are on track to achieve our goal to improve service gross margin for the third consecutive year. We recognize that our defining competitive advantage lies in Diebold’s unmatched ability to deliver the full range of service, support and software solutions that surround ATM-related technology, make it work reliably, at lower costs and with the flexibility to meet diverse customer demands. That’s the driving force behind our service strategy emphasis — and it’s our key to a successful future.”
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*   See accompanying notes for non-GAAP measures

 

 

PAGE 2/ DIEBOLD REPORTS 2010 FIRST QUARTER FINANCIAL RESULTS
Bradley C. Richardson, executive vice president and chief financial officer, said, “Our balance sheet remains strong, and I am very pleased with the year-over-year working capital improvements we made during the quarter. I am confident that the focus and ongoing initiatives for working capital improvement will continue to generate positive results through the remainder of the year and increase our ability to invest in growth opportunities and return value to shareholders in the form of dividends and modest share repurchases.”
First Quarter Orders (constant currency)
After coming off a particularly strong order period in the fourth quarter 2009, global product and services orders decreased 9% compared with the prior-year period. Global financial self-service orders decreased 10% against a difficult comparison with the first quarter 2009, as well as moderating from growth in excess of 40% in the fourth quarter 2009. Orders in Asia Pacific decreased 26% as that region appears to be returning to a more typical seasonality pattern, and experienced a very strong fourth quarter 2009 in which orders increased more than 50%. These patterns are indicative of the variable nature of orders, particularly in Asia Pacific.
         
Orders by Solution (Q1 2010 vs. Q1 2009)   % Change
   
Financial self-service solutions
     -10 %
Security solutions
     -3 %
Total FSS & security
     -9 %
Brazil election systems & lottery
     n/m  
 
        
Total World Wide Order Entry
     -9 %
         
Orders by Geography (Q1 2010 vs. Q1 2009)   % Change
   
Diebold North America
     -8 %
Latin America (incl. Brazil)
     5 %
Asia Pacific
     -26 %
Europe, Middle East, and Africa
     -9 %
Total Diebold International
     -10 %
Total World Wide Order Entry
     -9 %
Profit/Loss
Profit/loss summary — 1st quarter comparison (Dollars in millions)
                                                                                                 
Q1 2010       Q1 2009
Rev   Gross Profit   % of Sales   OPEX   OP   % of Sales       Rev   Gross Profit   % of Sales   OPEX   OP   % of Sales
 
$ 619.0     $ 158.0       25.5 %   $ 117.4     $ 40.6       6.6 %  
GAAP Results
   $ 657.3     $ 152.3       23.2 %   $ 107.9     $ 44.5       6.8 %
 
          0.1               (1.0 )     1.1            
Restructuring
             3.1               (1.3 )     4.5          
          —               —       —            
Non-rout. Exp
             —               (1.3 )     1.3          
          —               4.1       (4.1 )          
Non-rout. Inc
             —               10.0       (10.0 )        
 
$ 619.0     $ 158.1       25.5 %   $ 120.5     $ 37.6       6.1 %  
Non-GAAP Results
   $ 657.3     $ 155.5       23.7 %   $ 115.2     $ 40.3       6.1 %
The company’s management believes excluding restructuring charges, and non-routine expenses and income from operating margins is an indication of the company’s baseline performance before gains, losses, or other charges that are considered by management to be outside the company’s core operating results. The exclusion of these items permits evaluation and comparison of results for the company’s core business operations and it is on this basis that the company’s management internally assesses the company’s performance.
Revenue
Total revenue for the first quarter 2010 was down 6%, including a net positive currency impact of 5%, primarily as a result of North America where the completion of large deposit automation deployments by major national banks in 2009 negatively impacted the revenue comparison in the quarter.
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*   See accompanying notes for non-GAAP measures

 

 

PAGE 3/ DIEBOLD REPORTS 2010 FIRST QUARTER FINANCIAL RESULTS
Gross Margin
Total gross margin for the first quarter 2010 was 25.5%, an increase of 2.3 percentage points from the first quarter of 2009. The increase in total gross margin was attributable to continued productivity gains and cost-reduction measures in the company’s service operations.
Operating Expense
Total operating expense as a percentage of revenue for the first quarter 2010 was 19.0%, an increase of 2.6 percentage points from the first quarter of 2009. Operating expense as a percentage of revenue was negatively impacted by lower revenue in the quarter, increased investment in research and development, and certain costs associated with the previously announced job eliminations in the company’s North America operations and corporate functions.
Operating Profit
Operating profit was 6.6% of net sales in the first quarter 2010, a decrease of 0.2 percentage points from the first quarter 2009.
Income from Continuing Operations, net of tax (attributable to Diebold)
Income from continuing operations, net of tax, was $24.9 million or 4.0% of revenue in the first quarter 2010, an increase of 185%, or 2.7 percentage points from the first quarter 2009. Included in the 2010 results are non-routine income of $3.2 million in expense recovery and reimbursement from the company’s D&O insurance carriers, as well as restructuring charges of $0.9 million. Income from continuing operations in the first quarter of 2009 includes the $25 million reserve related to the agreement in principle with the staff of the SEC, non-routine income of $7.2 million in expense recovery and reimbursement from the company’s D&O insurance carriers, as well as restructuring charges of $3.2 million and $1.0 million in non-routine expenses.
Taxes on Income from continuing operations attributable to Diebold
First quarter taxes on income from continuing operations attributable to Diebold were $9.6 million, resulting in a first quarter tax rate of 27.9%.
Balance Sheet, Cash Flow and Liquidity
The company’s net debt* was $178.0 million at March 31, 2010, an increase of $112.7 million from December 31, 2009 and a reduction of $108.1 million from March 31, 2009. The company’s net debt to capital ratio was 15% at March 31, 2010, 6% at December 31, 2009, and 24% at March 31, 2009. Net cash used in operating activities was $55.5 million in the first quarter 2010, compared with net cash provided by operating activities of $19.5 million in the first quarter 2009. Free cash use* in the first quarter 2010 was $66.6 million, compared with free cash flow* of $7.0 million in the first quarter 2009.
In the first quarter 2010, Diebold repurchased 337,000 of the company’s common shares for approximately $10 million under its repurchase plan. The company has approximately 2.6 million shares remaining under its existing board authorization.
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*   See accompanying notes for non-GAAP measures.

 

 

PAGE 4/ DIEBOLD REPORTS 2010 FIRST QUARTER FINANCIAL RESULTS
Restructuring charges and discontinued operations
The company incurred pre-tax restructuring charges of $1.1 million, or $0.01 per share, in the first quarter of 2010. These charges were largely related to severance costs from the previously announced reorganization of the company’s North America and corporate functions.
All results from operations reported today, including prior periods, reflect Premier Election Solutions and the company’s EMEA-based enterprise security operations as discontinued operations. The company recorded a first quarter 2010 loss from discontinued operations of $1.0 million, net of tax. This compares to a loss from discontinued operations of $7.1 million, net of tax, in the first quarter 2009.
Venezuelan currency devaluation
On January 8, 2010, the Venezuelan government announced the devaluation of its currency, the bolivar, and the establishment of a two-tier exchange structure. Management has determined that it is unlikely that the company will be able to transact business under the two-tier exchange structure. As a result, the company is remeasuring its balance sheet and statement of operations using a parallel market rate. The impact of this adjustment was a decrease of $6.5 million to the company’s cash balance. Earnings for the first quarter were negatively impacted by approximately $0.04 per share.
All gains and losses resulting from the remeasurement of our financial statements are recorded in the statement of income. In the future, if we convert bolivares at a rate other than the parallel market rate, we may realize gains that would be recorded in the statement of income.
Full-year 2010 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 acquisitions, disposals or other business combinations.
Expectations for continuing operations for the full year 2010 include:
•   Revenue
         
    Previous Guidance   Current Guidance
Total revenue
   4% to 9%   4% to 9%
Financial self-service
   2% to 6%   2% to 6%
Security
   -1% to -6%   -1% to -6%
Brazilian Election systems / lottery
   $105 million to $115 million   $105 million to $115 million
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*   See accompanying notes for non-GAAP measures.

 

 

PAGE 5/ DIEBOLD REPORTS 2010 FIRST QUARTER FINANCIAL RESULTS
•   Earnings per share
         
    Previous Guidance   Current Guidance
2010 EPS (GAAP)
   $1.87 - $2.10   $1.87 - $2.10
Restructuring charges
   .03 - .05   .03 - .05
2010 EPS (non-GAAP*)
   $1.90 - $2.15   $1.90 - $2.15
Overview presentation and conference call
More information on Diebold’s quarterly earnings, including additional financial analysis and an earnings overview presentation, is available on Diebold’s Investor Relations website. Thomas W. Swidarski and Bradley C. Richardson will discuss the company’s financial performance during a conference call today at 10:00 a.m. (ET). Both the presentation and access to the call are available at http://investors.diebold.com. The replay can also be accessed on the site for up to three months after the call.
Revenue Summary by Product, Service and Geographic Area
Revenue Summary by Product and Service Solutions
(In Thousands)
                         
    Q1 2010     Q1 2009     % Change  
Financial Self-Service
                        
Products
   $ 203,700     $ 239,962       -15 %
Services
     267,808       258,840       3 %
 
                  
Total Fin. self-service
     471,508       498,802       -5 %
 
                        
Security solutions
                        
Products
     51,450       58,450       -12 %
Services
     93,441       99,172       -6 %
 
                  
Total Security
     144,891       157,622       -8 %
 
                  
Total Fin. self-service & security
     616,399       656,424       -6 %
 
                        
Election Systems & Lottery
                        
Products
     2,595       827       n/m  
Services
     5       —       n/m  
 
                  
Total Election Systems & Lottery
     2,600       827       n/m  
 
                  
 
                        
Total Revenue
   $ 618,999     $ 657,251       -6 %
 
                  
Revenue Summary by Geography
                         
    Q1 2010     Q1 2009     % Change  
Diebold North America
   $ 296,200     $ 355,683       -17 %
 
Latin America (incl. Brazil)
     149,527       131,666       14 %
Asia Pacific
     98,442       98,937       -1 %
Europe, Middle East, Africa
     74,830       70,965       5 %
 
                  
Total Diebold International
     322,799       301,568       7 %
 
                  
 
                        
Total Revenue
   $ 618,999     $ 657,251       -6 %
 
                  
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*   See accompanying notes for non-GAAP measures.

 

 

PAGE 6/ DIEBOLD REPORTS 2010 FIRST QUARTER FINANCIAL RESULTS
Notes for Non-GAAP Measures
1.   Reconciliation of diluted GAAP EPS to non-GAAP EPS from continuing operations measures:
                 
    Q1 2010   Q1 2009
Total EPS from continuing operations (GAAP measure)
   $ 0.37     $ 0.13  
Restructuring charges
     0.01       0.05  
Non-routine expenses
     —       0.39  
Non-routine income
     (0.04 )     (0.11 )
Total EPS (non-GAAP measure)
   $ 0.34     $ 0.46  
    The company’s management believes excluding restructuring charges, and non-routine expenses and income is useful to investors because it provides an overall understanding of the company’s historical financial performance and future prospects. Management believes EPS (non-GAAP) from continuing operations is an indication of the company’s base-line performance before gains, losses or other charges that are considered by management to be outside the company’s core operating results. Exclusion of these items permits evaluation and comparison of results for the company’s core business operations, and it is on this basis that management internally assesses the company’s performance.
 
2.   Free cash flow is calculated as follows:
                 
    Q1 2010   Q1 2009
Net cash (used in) provided by operating activities (GAAP measure)
   $ (55,470 )   $ 19,537  
Capital expenditures
     (11,103 )     (12,544 )
Free cash (use) flow (non-GAAP measure)
   $ (66,573 )   $ 6,993  
    The company’s management believes that free cash flow is useful to investors because it is a meaningful indicator of cash generated from operating activities that is available for the execution of its business strategy, including service of debt principal, dividends, share repurchase and acquisitions. Free cash flow is utilized to fund our dividends, as well as mandatory debt payments and other investment opportunities. Free cash flow is not an indicator of residual cash available for discretionary spending, because it does not take into account mandatory debt service or other non-discretionary spending requirements that are deducted in the calculation of free cash flow.
 
3.   Other income/(expense), net summary:
                 
    Q1 2010   Q1 2009
Other income/(expense)
   $ 2,298     $ (24,471 )
Foreign exchange gain/(loss)
     (4,641 )     (1,209 )
Interest expense
     (9,055 )     (9,958 )
Interest income
     5,882       5,823  
Other income/(expense), net
   $ (5,516 )   $ (29,815 )
    First quarter 2010 foreign exchange losses were largely related to the Venezuela currency devaluation. First quarter of 2009 other income/(expense) includes the $25 million reserve related to the agreement in principle with the staff of the SEC.
 
4.   Net (debt) is calculated as follows:
                         
    3/31/2010   12/31/2009   3/31/2009
Cash, cash equivalents and short-term investments (GAAP measure)
   $ 427,570     $ 505,868     $ 325,269  
Debt instruments
     (605,591 )     (571,204 )     (611,375 )
Net (debt) (non-GAAP measure)
   $ (178,021 )   $ (65,336 )   $ (286,106 )
    The company’s management believes that given the net debt, the significant cash, cash equivalents and other investments on its balance sheet, that net cash against outstanding debt is a meaningful debt calculation.
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PAGE 7/ DIEBOLD REPORTS 2010 FIRST QUARTER FINANCIAL RESULTS
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 and measures to improve pricing, including the optimization of the company’s manufacturing capacity.
The use of the words “will,” “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:
•   ability to reach definitive agreements with the SEC and DOJ regarding their respective investigations;
•   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;
•   the company’s ability to take actions to mitigate the effect of the Venezuelan currency devaluation, further devaluation, actions of the Venezuelan government, and economic conditions in Venezuela;
•   the continuing effects of the recent economic downturn and the disruptions in the financial markets, including the bankruptcies, restructurings or consolidations of financial institutions, which could reduce our customer base and/or adversely affect our customers’ ability to make capital expenditures, as well as adversely impact the availability and cost of credit;
•   acceptance of the company’s product and technology introductions in the marketplace;
•   the amount of cash and non-cash charges in connection with the restructuring of the company’s North America operations and corporate functions, and the closure of both the company’s Newark, Ohio facility and its EMEA-based enterprise security operations;
•   unanticipated litigation, claims or assessments;
•   variations in consumer demand for financial self-service technologies, products and services;
•   potential security violations to the company’s information technology systems;
•   the investment performance of our pension plan assets, which could require us to increase our pension contributions, and significant changes in health care costs, including those that may result from government action such as the recently enacted U.S. health care legislation;
•   the company’s ability to successfully defend challenges raised to the sale of U.S. elections business; and
•   the company’s ability to achieve benefits from its cost-reduction initiatives and other strategic changes.
About Diebold
Diebold, Incorporated is a global leader in providing integrated self-service delivery and security systems and services. Diebold employs more than 16,000 associates with representation in nearly 90 countries worldwide and is headquartered in Canton, Ohio, USA. Diebold 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, or visit www.diebold.com/150 to learn more about Diebold’s 150-year history.
###
PR/xxxx

 

 

DIEBOLD, INCORPORATED
CONDENSED CONSOLIDATED INCOME STATEMENTS — UNAUDITED
(IN THOUSANDS EXCEPT EARNINGS PER SHARE)
                 
    Three months ended  
    March 31,  
    2010     2009  
Net Sales
                
Product
   $ 257,745     $ 299,239  
Service
     361,254       358,012  
 
            
Total
     618,999       657,251  
Cost of goods
                
Product
     192,277       224,663  
Service
     268,712       280,261  
 
            
Total
     460,989       504,924  
Gross Profit
     158,010       152,327  
Percent of net sales
     25.5 %     23.2 %
Operating expenses
                
Selling, general and administrative
     98,977       92,013  
Research, development and engineering
     18,448       15,838  
 
            
Total
     117,425       107,851  
Percent of net sales
     19.0 %     16.4 %
Operating profit
     40,585       44,476  
Percent of net sales
     6.6 %     6.8 %
Other income/(expense), net
     (5,516 )     (29,815 )
 
            
Income from continuing operations before taxes
     35,069       14,661  
Taxes on income
     (9,877 )     (3,823 )
 
            
Income from continuing operations
     25,192       10,838  
Loss from discontinued operations — net of tax
     (970 )     (7,081 )
 
            
Net income
     24,222       3,757  
Less: Net income attrib to noncontrol interest
     (298 )     (2,109 )
 
            
Net income attributable to Diebold, Inc.
   $ 23,924     $ 1,648  
 
            
 
                
Basic weighted average shares outstanding
     66,298       66,176  
Diluted weighted average shares outstanding
     66,776       66,586  
 
                
Basic Earnings Per Share:
                
Income from continuing operations
   $ 0.38     $ 0.13  
Loss from discontinued operations
     (0.02 )     (0.11 )
 
            
Net income
   $ 0.36     $ 0.02  
 
            
 
                
Diluted Earnings Per Share:
                
Income from continuing operations
   $ 0.37     $ 0.13  
Loss from discontinued operations
     (0.01 )     (0.11 )
 
            
Net income
   $ 0.36     $ 0.02  
 
            
 
                
Amounts Attributable to Diebold, Inc.
                
Income from continuing operations — net of tax
   $ 24,894     $ 8,729  
Loss from discontinued operations — net of tax
     (970 )     (7,081 )
 
            
Net income attributable to Diebold, Inc.
   $ 23,924     $ 1,648  
 
            

 

 

DIEBOLD, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
                 
    March 31,     December 31,  
    2010     2009  
      (Unaudited)  
ASSETS
                
Current assets
                
Cash and cash equivalents
   $ 265,873     $ 328,426  
Short-term investments
     161,697       177,442  
Trade receivables, net
     393,327       330,982  
Inventories
     439,077       448,243  
Other current assets
     307,758       302,992  
 
            
Total current assets
     1,567,732       1,588,085  
 
                
Securities and other investments
     73,365       73,989  
Property, plant and equipment, net
     199,364       204,820  
Goodwill
     439,099       450,937  
Other assets
     240,001       237,034  
 
            
Total assets
   $ 2,519,561     $ 2,554,865  
 
            
 
                
LIABILITIES AND EQUITY
                
Current liabilities
                
Notes payable
   $ 8,891     $ 16,915  
Accounts payable
     140,336       147,496  
Other current liabilities
     540,781       578,680  
 
            
Total current liabilities
     690,008       743,091  
 
                
Long-term debt
     595,268       553,008  
Long-term liabilities
     170,119       186,740  
Total equity
     1,064,166       1,072,026  
 
            
Total liabilities and equity
   $ 2,519,561     $ 2,554,865  
 
            

 

 

DIEBOLD, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED
(IN THOUSANDS)
                 
    Three months ended March 31  
    2010     2009  
Cash flow from operating activities:
                
Net income
   $ 24,222     $ 3,757  
Adjustments to reconcile net income to cash provided by operating activities:
                
Devaluation on Venezuelan balance sheet
     5,968       -  
Depreciation and amortization
     19,587       18,973  
Other
     2,330       1,603  
 
                
Cash provided by (used in) changes in certain assets and liabilities:
                
Trade receivables
     (66,657 )     4,920  
Inventories
     3,573       (10,489 )
Accounts payable
     (5,283 )     (31,921 )
Certain other assets and liabilities
     (39,210 )     32,694  
 
            
 
                
Net cash (used in) / provided by operating activities
     (55,470 )     19,537  
 
                
Cash flow from investing activities:
                
Proceeds from sale of discontinued operations
     1,202       -  
Payments for acquisitions, net of cash acquired
     —       (4,014 )
Net investment activity
     13,033       14,267  
Capital expenditures
     (11,103 )     (12,544 )
Increase in certain other assets & other
     (6,617 )     (7,053 )
 
            
 
                
Net cash used in investing activities
     (3,485 )     (9,344 )
 
                
Cash flow from financing activities:
                
Dividends paid
     (18,095 )     (17,346 )
Net borrowings/(repayments)
     34,208       (8,019 )
Repurchase of treasury shares
     (10,241 )     -  
Other
     (368 )     (426 )
 
            
 
                
Net cash provided by/(used in) financing activities
     5,504       (25,791 )
 
                
Effect of exchange rate changes on cash
     (9,102 )     (4,084 )
 
            
 
Decrease in cash and cash equivalents
     (62,553 )     (19,682 )
Cash and cash equivalents at the beginning of the period
     328,426       241,436  
 
            
 
                
Cash and cash equivalents at the end of the period
   $ 265,873     $ 221,754