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Diebold sees revenue rise, net income fall

July 24, 2006

NORTH CANTON, Ohio – Diebold Inc. July 25 reported second-quarter revenue of $726.4 million, a 17.4 percent increase from the same period last year. Net income for the quarter came in at $17.2 million, 26 cents per share, down $14.8 million from $32 million, 45 cents per share, last year.

Included in 2Q '06 earnings per share were restructuring charges - resulting primarily from the termination of the IT outsourcing agreement and product-development rationalization - of 10 cents per share.

The company said total orders for financial self-service and security products and services were down from last year. Financial self-service orders in the Americas saw double-digit declines, which offset strong order growth in Asia Pacific.

Financial self-service revenue came in at $474.5 million, up from $433.7 million in 2Q '05. Security revenue was $187.5 million, up from $162.8 million last year.

Similar to trends the company reported last quarter, Europe, Middle East and Africa saw the greatest increase in financial self-service revenue, pulling in $108.6 million compared to $87.3 million in 2Q '05. Financial self-service revenue for the Americas came in at $307.8 million, up 6.5 percent from $288.9 million last year. And financial self-service revenue in Asia Pacific hit $58.2 million, up from $57.5 million in 2Q '05.

"We continue to focus on a number of key improvement initiatives, and we've made significant progress toward returning the company to long-term, profitable growth," said Diebold president and chief executive Thomas W. Swidarski. "While we are still early in this process, we remain on target to meet our multiyear profit improvement goals as well as our 2006 earnings guidance."

The process of realigning global manufacturing operations, including the closure of the production facility in Cassis, France, continues to present a number of challenges, the company said. Production levels in Europe are lower than expected, resulting in more exports to Europe from North America and Asia. The company expects low European-production levels to continue through the end of 2006, which will have an adverse effect on manufacturing costs.

Diebold said contingency plans are in place to meet high customer demand for Optevas in Europe. And the planned production facility in Hungary is expected to be operating by the fourth quarter.

"While realigning our manufacturing operations in Europe presents significant near-term challenges, it is a necessary step toward efficiently meeting customer demand in the region, restoring the competitiveness of our European operations and achieving our long-term, total company margin goals," Swidarski said.

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Diebold Nixdorf

As a global technology leader and innovative services provider, Diebold Nixdorf delivers the solutions that enable financial institutions to improve efficiencies, protect assets and better serve consumers.

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