EX-99.1 3 l00280aexv99w1.txt EX-99.1 PRESS RELEASE EXHIBIT 99.1 Media contact: Investor contact: Michelle Griggy John Kristoff +1 330 490 3773 +1 330 490 5900 griggym@diebold.com kristoj@diebold.com FOR IMMEDIATE RELEASE: April 22, 2003 DIEBOLD ANNOUNCES FIRST QUARTER RESULTS NORTH CANTON, Ohio - Diebold, Incorporated (NYSE: DBD) today reported first quarter 2003 net income of $25,900,000, or diluted earnings per share of $.36, on revenue of $410,154,000, which was within the company's guidance of $.34 to $.39. This compares to first quarter 2002 net loss of ($6,646,000), or diluted loss per share of ($.09), after a cumulative effect of a change in accounting principle (SFAS 142, Goodwill and Other Intangible Assets) on revenue of $401,046,000. Before the cumulative effect of a change in accounting principle, 2002 first quarter income was $26,501,000, or diluted earnings per share of $.37, on revenue of $401,046,000. FIRST QUARTER HIGHLIGHTS - Total revenue grew 2.3 percent and on a fixed exchange rate basis* increased 3.7 percent. - Security solutions revenue grew 22.8 percent as a result of revenue growth in the financial industry, government and retail markets. - Total Asia-Pacific revenue increased 32.0 percent and 27.2 percent fixed exchange rate. - Total revenue for the Americas grew by 5.3 percent on a fixed exchange rate basis. - Free cash flow* was $74.4 million compared to negative free cash flow of ($8.1) million during the first quarter 2002. - Net debt* was reduced to $13.3 million from $62.5 million at the end of 2002. - Inventory turns improved to 5.5 from 4.9 at the end of the first quarter of 2002. *See accompanying notes for non-GAAP measures. (more) PAGE 2/DIEBOLD ANNOUNCES FIRST QUARTER RESULTS FINANCIAL RESULTS "Our results during the first quarter demonstrate that once again we delivered on our commitment by reporting earnings that were within our previously announced guidance. We were particularly pleased to have generated free cash flow of more than $74 million," said Walden W. O'Dell, Diebold chairman, president and chief executive officer. "Our security business remained very strong, growing by 22.8 percent, which represents true organic growth and significant market share gains. Voting solutions revenue was weaker than expected during the first quarter due to the timing of product shipments. We still expect to achieve our 2003 voting growth target." Overall, our fixed exchange rate financial self-service revenue increased slightly. Europe remained weak; the Americas region was up slightly, and Asia-Pacific increased significantly. We see global demand for new self-service products strengthening during the second half of the year as we roll out our new Opteva self-service hardware platform, which was unveiled on March 11 of this year," added O'Dell. FIXED EXCHANGE RATE FIRST QUARTER ORDERS Despite a challenging global economic environment, total orders for product and service increased in the high single-digit range. The Americas increased in the high single-digit range, led by strong North America orders and Asia-Pacific orders increased in the high double-digit range, while Europe, the Middle East and Africa (EMEA) orders decreased in the high single-digit range. Security orders remain strong, increasing well into the double digits. Significant orders for the quarter included: - Five significant self-service orders totaling more than $24 million from large financial institutions in Europe. - Orders for 700 new automated teller machines from two banks in India. - An $8 million order for the new Opteva and other self-service solutions from a large bank in the United States. - Orders valued at more than $8 million from three financial institutions in Brazil. - A self-service order for nearly $5 million from a large bank in China. - A voting solution order valued at more than $4 million from one county in California. - Electronic security orders valued at more than $5 million for two government facilities and a large U.S. bank. - Physical security branch orders totaling more than $3 million from three banks in the United States. (more) PAGE 3/DIEBOLD ANNOUNCES FIRST QUARTER RESULTS REVENUE Total revenue for the quarter was $410.2 million, up $9.1 million, or 2.3 percent and 3.7 percent on a fixed exchange rate basis. Total financial self-service revenue decreased 1.1 percent but increased 0.7 percent on a fixed exchange rate basis. Security solutions revenue grew 22.8 percent as a result of revenue growth in the financial industry, government and retail markets. REVENUE SUMMARY BY PRODUCT AND SERVICE SOLUTIONS (In Thousands -- Quarter Ended March 31)
% Change % Change 2003 2002 GAAP fixed rate -------- -------- ------ ---------- FINANCIAL SELF-SERVICE Products $126,028 $131,381 -4.1% 0.7% Services 170,089 168,104 1.2% 0.8% -------- -------- ------ ------ Total Fin. self-service 296,117 299,485 -1.1% 0.7% SECURITY Products 48,411 35,450 36.6% 36.6% Services 58,594 51,689 13.4% 13.4% -------- -------- ------ ------ Total Security 107,005 87,139 22.8% 22.8% -------- -------- ------ ------ Total Fin. self-service & security 403,122 386,624 4.3% 5.8% Voting solutions 7,032 14,422 -51.2% -51.2% -------- -------- ------ ------ Total Revenue $410,154 $401,046 2.3% 3.7% ======== ======== ====== ======
REVENUE SUMMARY BY GEOGRAPHIC AREA (In Thousands -- Quarter Ended March 31)
% Change % Change 2003 2002 GAAP fixed rate -------- -------- -------- ---------- THE AMERICAS Financial self-service solutions $208,087 $221,024 -5.9% 1.8% security solutions 106,805 86,772 23.1% 23.1% -------- -------- ---- ---- subtotal 314,892 307,796 2.3% 8.1% Voting solutions 7,032 14,422 -51.2% -51.2% -------- -------- ---- ---- Total Americas 321,924 322,218 -0.1% 5.3% ASIA-PACIFIC Financial self-service solutions 31,481 23,734 32.6% 27.8% Security solutions 176 248 -29.0% -29.0% -------- -------- ---- ---- Total Asia Pacific 31,657 23,982 32.0% 27.2% EUROPE, MIDDLE EAST, AFRICA Financial self-service solutions 56,549 54,727 3.3% -12.8% security solutions 24 119 N/A N/A -------- -------- ---- ---- Total Europe, Middle East, Africa 56,573 54,846 3.1% -12.9% -------- -------- ---- ---- Total Revenue $410,154 $401,046 2.3% 3.7% ======== ======== ==== ====
PAGE 4/DIEBOLD ANNOUNCES FIRST QUARTER RESULTS CURRENCY IMPACT During the quarter, revenue was impacted negatively by the year-over-year devaluation of the Brazilian real, offset in part by the strengthening euro and certain Asian currencies. The impact in the first quarter was approximately ($5.6) million versus the prior year. Given current exchange rates and assuming a 1 percent per month devaluation of the Brazilian real for the remainder of the year, exchange rate impacts would be slightly negative in the second quarter and positive in the third and fourth quarters, with the total year slightly positive. GROSS MARGIN Total gross margin for the first quarter was 30.3 percent, up from 29.4 percent in the first quarter 2002. The increase resulted from higher margins in product and service. Product gross margin increased to 35.3 percent from 33.5 percent in the first quarter 2002, with higher margins in each of our three business units and also a lower mix of voting business. Service gross margin increased to 26.4 percent from 26.0 percent in the first quarter 2002, continuing the trend of improvement. OPERATING EXPENSES Total operating expenses for the quarter were 20.1 percent, versus 19.4 percent for the first quarter of 2002. The increase in the operating expense percentage was due entirely to change in pension expense and inclusion of the voting business for a full quarter. Lower pension assumptions and the market downturn caused a net pension expense in the first quarter of 2003 compared to pension income in the first quarter of 2002. This resulted in an adverse impact of approximately $2 million in the first quarter of 2003. Research and development was up slightly due to expenses related to the launch of our new ATM product line. OPERATING PROFIT Operating profit was 10.2 percent of revenue, up from 10.0 percent in 2002. This was driven by improved gross margin offset in part by higher operating expenses. We again held operating margin in the financial self-service business, while overcoming the impact of pension expense. NET INCOME Net income was 6.3 percent of revenue compared to net loss of 1.7 percent in the first quarter 2002. Net income in the first quarter of 2002 before the cumulative effect of a change in accounting principle was 6.6 percent of revenue. In 2002, the company benefited from a $1.9 million gain on securitization of lease receivables, which did not reoccur. (more) PAGE 5/DIEBOLD ANNOUNCES FIRST QUARTER RESULTS BALANCE SHEET AND CASH FLOW HIGHLIGHTS Diebold's balance sheet remains one of the strongest in any industry with a net debt to total capital ratio of approximately 1 percent, down from 6 percent at year end and down from 8 percent at the end of the first quarter 2002. Free cash flow improved dramatically from the prior year first quarter, improving from ($8.1) million in the first quarter of 2002 to $74.4 million in the current quarter. This improvement was a result of increased collection of receivables related to deferred revenue and better management of working capital. Inventory turns improved to 5.5 from 4.9 at the end of the first quarter 2002, while days sales outstanding (DSO) remained constant at approximately 90 days. DSO was impacted by delayed international collections and is expected to improve throughout the remainder of the year. In the current quarter, the company reduced net debt by $49.3 million from the end of 2002. STOCK OPTION EXPENSE As permitted under SFAS No. 123, Accounting for Stock-Based Compensation, the company continues to provide annual disclosure of the impact to earnings per share if stock options were expensed. The company estimates that if stock options were expensed in accordance with SFAS 123, the full year impact in 2003 would be approximately $.05 per share compared to $.04 per share in 2002. OUTLOOK The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially. These statements do not include the potential impact of any future mergers, acquisitions, disposals or other business combinations. Taking these factors into consideration, expectations for the second quarter and the year 2003 include: - Second quarter revenue will increase in the mid single-digit range vs. prior year. - Depreciation and amortization will be approximately $16 million for the second quarter. - Pension expense of approximately $.01 per share in the second quarter of 2003 compared to pension income of $.01 per share in the second quarter of 2002. - Second quarter EPS to be in the range of $.54 to $.59. - Full year fixed exchange rate revenue growth of 5-8 percent. - Financial self-service revenue growth of 2-4 percent. - Security growth of approximately 10-20 percent. - Voting business growth of approximately 15-25 percent. - A full year effective tax rate of approximately 32.0 percent. - Free cash flow is expected to be in the range of $175-$200 million during 2003. - Full year earnings per share guidance of $2.32 to $2.42. (more) PAGE 6/DIEBOLD ANNOUNCES FIRST QUARTER RESULTS NOTES FOR NON-GAAP MEASURES 1. Fixed exchange rate is used to depict order and GAAP revenue growth in local currency without the benefit or detriment occurring from currency fluctuations. 2. Free cash flow is calculated as follows:
Q1 2003 Q1 2002 ------- ------- Net cash provided by operating activities (GAAP measure) $ 98,479 $ 349 Capital expenditures (14,022) (6,974) Rotable spares expenditures (10,092) (1,452) -------- ------- Free cash flow (non-GAAP measure) $ 74,365 $(8,077) ======== =======
The company believes that free cash flow is a meaningful indicator of cash generated for discretionary purposes. 3. Net debt is calculated as follows:
Q1 2003 YEAR-END 2002 ------- ------------- Notes payable (GAAP measure) $ 159,333 $226,259 Industrial development revenue bonds and other 21,100 21,100 Less cash, cash equivalents and other investments (167,175) (184,815) --------- -------- Net debt (non-GAAP measure) $ 13,258 $ 62,544 ========= ========
Given the significant cash, cash equivalents and other investments on the balance sheet, a meaningful debt calculation is to net cash against outstanding debt. FINANCIAL INFORMATION Walden W. O'Dell and Senior Vice President and Chief Financial Officer Gregory T. Geswein will discuss the company's financial performance during a conference call today at 10:00 a.m. (EDT). Access is available from Diebold's Web site at www.diebold.com. The replay can also be accessed on the site after the call. FORWARD-LOOKING STATEMENT In the company's written or oral statements, the use of the words "believes," "anticipates," "expects" and similar expressions is intended to identify forward-looking statements that have been made and may in the future be made by or on behalf of the company, including statements concerning future operating performance, the company's share of new and existing markets, and the company's short- and long-term revenue and earnings growth rates. Although the company believes that its outlook is based upon reasonable assumptions regarding the economy, its knowledge of its business, and on key performance indicators, which impact the company, there can be no assurance that the company's goals will be realized. The company is not obligated to report changes to its outlook. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The company's uncertainties could cause actual results to differ materially from those anticipated in forward-looking statements. These include, but are not limited to: - competitive pressures, including pricing pressures and technological developments; - changes in the company's relationships with customers, suppliers, distributors and/or partners in its business ventures; - changes in political, economic or other factors such as currency exchange rates, inflation rates, recessionary or expansive trends, taxes and regulations and laws affecting the worldwide business in each of the company's operations, including Brazil, where a significant portion of the company's revenue is derived; - acceptance of the company's product and technology introductions in the marketplace; - unanticipated litigation, claims or assessments; - ability to reduce costs and expenses and improve internal operating efficiencies; and - variation in consumer demand for self-service technologies, products and services. Diebold, Incorporated is a global leader in providing integrated self-service delivery systems and services. Diebold employs more than 13,000 associates with representation in more than 88 countries worldwide and headquarters in Canton, Ohio, USA. Diebold reported revenue of $1.940 billion in 2002 and is publicly traded on the New York Stock Exchange under the symbol `DBD.' For more information, visit the company's Web site at www.diebold.com. # # # PR/XXXX DIEBOLD, INCORPORATED (IN THOUSANDS EXCEPT EARNINGS PER SHARE)
Three Months Ended March 31 2003 2002 --------- --------- Net Sales Product $ 179,109 $ 181,046 Service 231,045 220,000 --------- --------- Total 410,154 401,046 Cost of goods Product 115,933 120,351 Service 170,028 162,848 --------- --------- Total 285,961 283,199 Gross Profit 124,193 117,847 Percent of net sales 30.3% 29.4% Operating expenses Selling, general and administrative 68,070 63,712 Research, development and engineering 14,367 13,941 --------- --------- Total 82,437 77,653 Percent of net sales 20.1% 19.4% Operating profit 41,756 40,194 Percent of net sales 10.2% 10.0% Other income / (expense) and minority interest, net (3,668) (933) --------- --------- Income before taxes 38,088 39,261 Percent of net sales 9.3% 9.8% Taxes on income (12,188) (12,760) Effective tax rate 32.0% 32.5% --------- --------- Income before cumulative effect of a change in accounting principle 25,900 26,501 --------- --------- Percent of net sales 6.3% 6.6% Cumulative effect of a change in accounting principle $38,859, net of taxes of $5,712 -- (33,147) --------- --------- Net Income $ 25,900 $ (6,646) --------- --------- Percent of net sales 6.3% -1.7% Basic weighted average shares outstanding 72,199 71,807 Diluted weighted average shares outstanding 72,475 72,170 Basic Earnings Per Share: Income before cumulative effect of a change in accounting principle ...... $0.36 $0.37 Cumulative effect of a change in accounting principle, net of taxes ...... $0.00 ($0.46) Net Income ............................................................... $0.36 ($0.09) Diluted Earnings Per Share: Income before cumulative effect of a change in accounting principle ...... $0.36 $0.37 Cumulative effect of a change in accounting principle, net of taxes ...... $0.00 ($0.46) Net Income ............................................................... $0.36 ($0.09)
DIEBOLD, INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
MARCH 31, 2003 DECEMBER 31, 2002 -------------- ----------------- ASSETS Current assets Cash and cash equivalents $ 138,750 $ 155,446 Short-term investments 6,785 7,909 Trade receivables, net 413,540 403,498 Inventories 247,541 236,614 Other current assets 113,682 121,421 ---------- ---------- Total current assets 920,298 924,888 Securities and other investments 66,232 66,151 Property, plant and equipment, net 232,963 219,633 Goodwill 283,182 268,606 Other assets 146,418 145,803 ---------- ---------- $1,649,093 $1,625,081 ---------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes payable $ 159,333 $ 226,259 Accounts payable 87,008 90,713 Other current liabilities 310,528 245,179 ---------- ---------- Total current liabilities 556,869 562,151 Other long-term liabilities 127,779 122,107 Total shareholders' equity 964,445 940,823 ---------- ---------- $1,649,093 $1,625,081 ---------- ----------
DIEBOLD, INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS EXCEPT)
Three Months Ending MARCH 31, 2003 MARCH 31, 2002 -------------- -------------- Cash Flow from operating activities: Net Income (loss) $ 25,900 $ (6,646) Adjustments to reconcile net income to cash provided by operating activities Depreciation and amortization 15,425 13,139 Deferred income taxes 100 (760) Loss (gain) on disposal of assets 883 (311) Cumulative effect of change in accounting principle -- 38,859 Minority share of income 1,699 920 Cash provided (used) by changes in certain assets and liabilities: Trade receivables (3,411) (4,928) Inventories (7,192) (16,875) Accounts payable (6,502) (25,906) Certain other assets and liabilities 71,577 2,857 --------- --------- Net cash provided by operating activities 98,479 349 Cash flow from investing activities: Payments for acquisitions, net of cash acquired -- (3,682) Net investment activity 1,397 11,820 Capital expenditures (14,022) (6,974) Rotable spares expenditures (10,092) (1,452) Decrease (increase) in certain other assets (5,903) 11,204 --------- --------- Net cash provided (used) by investing activities (28,620) 10,916 Cash flow from financing activities: Dividends paid (12,285) (11,872) Short term borrowings, net (70,625) (13,008) Net (payments) proceeds from securitization (3,705) 9,200 Other financing activities (1,176) 2,599 --------- --------- Net cash used by financing activities (87,791) (13,081) Effect of exchange rate changes on cash 1,236 (6,598) --------- --------- Decrease in cash and cash equivalents (16,696) (8,414) Cash and cash equivalents at the beginning of the period 155,446 73,768 --------- --------- Cash and cash equivalents at the end of the period $ 138,750 $ 65,354 ========= =========