Diebold Concludes Discussions with OCA; Resolves Revenue Recognition Methodology

NORTH CANTON, Ohio, Jan. 15 /PRNewswire-FirstCall/ -- Diebold,
Incorporated (NYSE: DBD) announced today that it has concluded its
discussions with the Office of the Chief Accountant (OCA) of the Securities
and Exchange Commission (SEC) regarding the company's prior practice of
recognizing certain revenue on a "bill and hold" basis and has established a
revised revenue recognition method.
Revised revenue recognition
On October 2, 2007, the company announced it was discontinuing the use of
bill and hold as a method of revenue recognition in both its North America and
International businesses. Based upon further discussions with the OCA,
Diebold has decided to change its revenue recognition policy. For revenue
previously recognized on a bill and hold basis, the company will now recognize
revenue upon customer acceptance of products at a customer location. Within
the North America business segment, when the company is contractually
responsible for installation, acceptance will be upon completion of the
installation of all of the items at a job site and Diebold's demonstration
that the items are in operable condition. In those instances when Diebold is
not contractually responsible for the installation, the company will continue
to recognize revenue upon shipment of the products to a customer location.
The company's revised method of recognizing revenue will be adopted
immediately and comes after an in-depth analysis and review with its external
auditors, the audit committee of the company's Board of Directors and the OCA.
Following this in-depth analysis and review, the company has also concluded
that its financial statements for the fiscal years ended December 31, 2006,
2005, 2004 and 2003; the quarterly data in each of the quarters for the years
ended December 31, 2006 and 2005; and the quarter ended March 31, 2007 must be
restated to reflect the company's revised accounting method and should no
longer be relied upon. On January 14, the company discussed this conclusion
with its audit committee. In addition, management's report on internal
control over financial reporting contained in Form 10-K for the fiscal year
ended December 31, 2006 should no longer be relied upon.
As noted above, revenue previously recognized under the company's prior
bill and hold practice will be deferred until customer acceptance of the
products at a customer location. This change should not, however, impact the
timing of related billing and collection activity, and therefore is not
expected to impact total cash flow from operating activities.
Once Diebold has reviewed the impact of this accounting change on its 2006
and 2007 revenue with its external auditors, it will provide updated revenue
estimates for these periods. The company anticipates that the review of the
impact of the accounting change will be completed by the end of January 2008.
On December 21, 2007, it was announced that as a result of the SEC's
ongoing investigation, the company and its audit committee, in consultation
with their outside advisors, have been reviewing other accounting items.
While this review is not complete, any adjustments identified will be included
in amendments to the company's financial statements. The company anticipates
the review of other accounting items will be completed in the first quarter of
2008. After this review has been completed, Diebold will file, as soon as
possible, the necessary amended financial statements. After filing these
amendments, the company will then file its quarterly reports on Form 10-Q for
the quarters ended June 30, 2007 and September 30, 2007 and its annual report
on Form 10-K for the year ended December 31, 2007. While any amended
financial statements will address all the issues identified in the review, the
government investigations remain ongoing and there can be no assurance that
the results of these investigations will not impact previously reported
financial statements.
Prior to filing its amended financial statements, and as soon as is
feasible following the completion of the review of the other accounting items,
Diebold will also provide preliminary financial results for the second, third
and fourth quarters of 2007.
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
completion of the company's financial statements for the quarters ended June
30, 2007, September 30, 2007 and the year ended December 31, 2007, the
completion of the company's amended financial statements, the ongoing SEC and
Department of Justice investigations and the completion of the company's
internal review. 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, 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:
-- the finalization of the impact on the company's financial statements of
its change in its revenue recognition practices for its North America
business segment and any other business segment;
-- the results of the SEC and Department of Justice investigations and the
company's review;
-- the completion of the company's financial statements for the quarters
ended June 30, 2007, September 30, 2007 and the year ended December 31,
2007, and the completion of the restatement of the company's financial
statements;
-- 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;
-- the timely completion of the company's new manufacturing operation for
financial self-service terminals and related components in the Eastern
European region;
-- costs and benefits associated with the closure of the company's Cassis
production facility, including the timing of related restructuring
charges and any tax benefits associated with such charges;
-- the completion of the company's implementation of its ERP system and
other IT-related functions;
-- the company's ability to reduce costs and expenses and improve internal
operating efficiencies, including the optimization of the company's
manufacturing capacity;
-- the company's ability to successfully implement measures to improve
pricing;
-- variations in consumer demand for financial self-service technologies,
products and services;
-- challenges raised about reliability and security of the company's
election systems products, including the risk that such products will
not be certified for use or will be decertified;
-- changes in laws regarding the company's election systems products and
services;
-- potential security violations to the company's information technology
systems;
-- the company's ability to successfully execute its strategy related to
the election systems 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
17,000 associates with representation in nearly 90 countries worldwide and is
headquartered in Canton, Ohio, USA. Diebold reported revenue of $2.9 billion
in 2006 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.
SOURCE Diebold, Incorporated

Media, Mike Jacobsen, +1-330-490-3796, michael.jacobsen@diebold.com, or
Investors, John Kristoff, +1-330-490-5900, john.kristoff@diebold.com, both of
Diebold, Incorporated