Diebold Reports Fourth Quarter Financial Results

Diluted earnings per share were $.87, an increase of 7.4 percent and within the previous guidance of $.87 to $.92. Net cash provided by operating activities was $160.7 million, up 127.9 percent from the prior year, while free cash flow* improved $142.3 million or 139.6 percent. For the full year 2004, the company reported net revenue of $2,380.9 million, up 12.9 percent from 2003, diluted earnings per share of $2.54, an increase of 5.8 percent from 2003. Full-year net cash provided by operating activities was $232.6 million, up 14.3 percent from the prior year, while free cash flow* was $171.4 million, up 31.2 percent from 2003. Diluted earnings per share in the fourth quarter grew 7.4 percent driven by strong performance in the financial self service and security businesses. Earnings were adversely affected by the election systems business which was dilutive by $.03 per share in the fourth quarter of 2004, including charges of approximately $.02 per share associated with previously disclosed election systems product recertification, legal and other costs related to concluding the civil action in the state of California. Election systems business was $.03 per share accretive in the fourth quarter of 2003. Fourth Quarter Highlights Total product orders, excluding election systems, grew in the double- digit range. Security solutions revenue grew 23.8 percent, and 23.3 percent on a fixed exchange-rate basis. Asia Pacific total revenue increased 29.8 percent, and 28.2 on a fixed exchange-rate basis, while total revenue in the Americas, excluding election systems, grew 15.4 percent, and 14.5 percent on a fixed exchange-rate basis. Diluted earnings per share would have increased by 15.4 percent, excluding the election systems business. Free cash flow improved $82.9 million; while accounts receivable days sales outstanding improved 20 days, moving from 83 days at September 30, 2004 to 63 days at December 31, 2004. Full Year Highlights Total product orders grew well into the double-digit range. Total financial self-service revenue grew 13.1 percent and 10.1 percent on a fixed exchange-rate basis. Security solutions revenue grew 16.8 percent and 16.5 percent on a fixed exchange-rate basis. Diluted earnings per share increased by 5.8 percent, and grew 12.8 percent excluding the impact of the election systems business. Free cash flow improved $40.7 million, or 31.2 percent, moving from $130.7 million in 2003 to $171.4 million in 2004. The company repurchased 1,534,181 shares of Diebold stock. Diebold managed to maintain operating margin in the financial self-service business by controlling operating expenses and improving manufacturing efficiencies to offset price erosion in the market, especially in Western Europe. Security solution margins declined slightly primarily because of increased fuel and steel costs. Election systems generated operating losses in 2004 as a result of lower revenue as well as product recertification, legal and other costs related to concluding the civil action in the state of California.