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Diebold lowers earnings estimates due to beleaguered voting machine unit

October 10, 2004

NORTH CANTON, Ohio - Diebold Inc., has reduced its third-quarter and full-year earnings forecasts, primarily due to costs its Diebold Election Systems (DESI) subsidiary will incur for recertifying its electronic voting machines in California.

Diebold also cited expenses related to a pending civil action in that state.

The manufacturer now expects to earn 67 cents a share in 2004's third quarter, down from its previous forecast of 70 cents to 74 cents a share.

Because the company anticipates additional costs of approximately one cent per share in the fourth quarter, Diebold said it expects to earn $2.54 to $2.59 a share for the full year, an amount which falls short of the average analysts' estimate of $2.64 a share.

Diebold Chairman and Chief Executive Walden O'Dell said in a statement that the company experienced "record order levels" for its ATMs and security products during the quarter. Because of strong demand for those products, Diebold expects earnings per share to grow 18 percent to 20 percent next year.

According to the statement, DESI's AccuVote-TS and OS products have been certified for use in the November election in California, and the subsidiary continues to make progress on certification of its TSx product, featuring a voter-verifiable audit printer to address California requirements for use by 2006.

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