Good day, everyone. Welcome to Diebold Incorporated’s Fourth Quarter Financial Results Conference Call. At this time for opening remarks and introductions, I would like to turn the call over to the Vice President and Chief Communications Officer, Mr. John Kristoff. Please go ahead, sir

Thank you, Jennifer. Good morning and thank you for joining us for Diebold’s Fourth Quarter Conference Call. Joining me today are Henry Wallace, Executive Chairman; George Mayes, Executive Vice President and Chief Operating Officer; and Brad Richardson, Executive Vice President and Chief Financial Officer. Also with us in the room today and available to answer questions is Mychal Kempt, Vice President, North America Operations. Just a few notes before we get started. In addition to the earnings release, we’ve provided a supplementary presentation on the Investor page of our website. Henry, George and Brad will be walking through this presentation as part of their opening comments today, and we encourage you to follow along. Before we discuss our results, as with past calls, it’s important to note that we have restructuring, non-routine expenses and impairment charges in our financials. We believe that excluding these items gives an indication of the company’s baseline operational performance. As a result, many of the remarks this morning will focus on non-GAAP financial information. For a reconciliation of our GAAP to non-GAAP numbers, please refer to the supplemental material at the end of the presentation. In addition, all results of operations reported today, including prior periods, exclude discontinued operations. Finally, a replay of this conference call will be available later today from our website. And as a reminder, some of the comments today may be considered forward-looking statements. Internal and/or external factors could significantly impact financial results. As a precaution, please refer to the more detailed risk factors that have previously been filed with the SEC. And now with opening remarks, I’ll turn it over to Henry.

Thank you, John, and good morning, everyone. And thanks for joining our call today. I want to express my appreciation to our investors, our customers, and our associates for your patient engagement, and ongoing commitment to Diebold during this time of transition. To be frank, the 2012 results and the present outlook for 2013 are disappointing, and we need to improve. I’m sure, you’re anxious to understand how we’re going to get this great company back on a more positive trajectory to drive shareholder value. While we are dissatisfied with our recent performance, we have significant opportunities in the marketplace and we have good strategies for growth. Diebold is far from being a broken company, but it is an underperforming company. Despite the difficult challenges we have faced, we have seen progress on several fronts. We continued to enhance our Financial Self-service offering, with more capable terminals and software that improve efficiency and availability. We’ve expanded our integrated service capabilities and infrastructure, evidenced by our expanded systems implementation by our largest IS customer, Toronto-Dominion, and we intend to leverage that infrastructure to continue to grow the business. And we’ve strengthened the organization and competencies required to grow our Electronic Security business through both organic and acquisitive means. Whilst these were all positive developments, the operational performance has not met the company’s expectations, nor those of our Board of Directors and our shareholders. While we’ve experienced reasonable revenue growth, our margins have continued to erode. To strengthen our performance, we must drive immediate major organizational change, and structural cost reductions, and accelerate our investment in growth. Our first task was to realign the organization to more rapidly seize marketplace opportunities and to reduce our cost structure. By establishing a Chief Operating Officer position, we have also created a global model for…

Thank you, Henry. First, let me say that I’m honored to assume the responsibility for operations here at Diebold, and I’m extremely optimistic about our future. As Henry mentioned, there is a critical need to focus on our operational improvements. An increased sense of urgency is imperative in order to extract greater value from our company. There is opportunity in the markets we serve, especially as we consider the strategies we’ve established in important areas such as integrated services and electronic security. However, we need to improve the execution of our strategies and, critically, the speed with which we execute. The new reporting relationships we have put in place are designed to rapidly drive the changes required to improve our results. We are focusing on execution, performance improvement, and cost reduction. We will continue to provide the outstanding service our customers expect and we will provide our associates with the essential tools and services necessary to be effective and properly supported in the organization. In order to improve our financial performance, we must address our cost structure. We will engage the organization and review and evaluate all current activities and costs, based on customer value, best practices and necessity. As we seek to improve our performance, we cannot and will not jeopardize our ability to maintain our core business, grow revenues in new products and markets, pursue new alternative business areas or adhere to governance requirements. This will require a deliberate approach. We will create a new data-driven business operating model across the Diebold’s entire operation around the globe, with execution, accountability and, most importantly, a culture of discipline, a new culture where delivering on our commitments is the foundation for everything we do. I firmly believe in our long-term strategies. I believe the fundamentals of Diebold’s businesses are sound.…

Thanks, George, and good morning, everyone. Before I get into the details of our fourth quarter and full-year financial results, I’d like to address the more significant challenges we faced during the quarter. While we hit our revenue targets, we missed our prior full-year earnings guidance by approximately 10% or $0.20 per share. This was primarily due to a $25 million operating profit miss in our North America business during the quarter. In addition, our free cash flow was $86 million, well below our previous expectations. Again, our lower-than-expected earnings were primarily driven by profit deterioration in North America during the quarter. The deterioration was related to a number of factors, a decline in maintenance revenue, including billed-work services due to a tightening of discretionary spending from regional banks led to a $0.06 decline in EPS from our prior full-year guidance. Our regional business experienced lower-than-expected volume due to certain installation delays, compounded by a more competitive price environment. This resulted in an additional $0.06 adverse impact. Finally, the U.S. Service business incurred higher costs, partially due to an unexpected increase in an auto liability insurance reserve and non-recoverable costs related to Hurricane Sandy, which had a negative impact on EPS of $0.05 and $0.03, respectively. Our free cash flow was also negatively impacted by a number of factors. Net income, adjusted for non-cash items, fell short of our expectations causing an adverse impact of approximately $15 million. In addition, our year-end cash collections were negatively impacted by approximately $60 million due to a shift in business mix from regional banks, which tend to pay early or in some cases prepay, to a stronger concentration of national accounts, which typically have a longer payment cycle. However, as shown on Slide 15 on a positive note, we were in line with…

Thank you, Brad. Before we head to questions, in the interest of giving everyone on the call an opportunity to ask a question, I would ask you to respectfully limit yourself to one question and one follow-up and then get back in queue and we’ll take as many questions as time allows. So with that Jennifer, can we open it up to the first question?

Yes. Thank you, sir. (Operator Instructions) Our first question will come from Ryan Augustitus with Northcoast Research. Ryan Augustitus – Northcoast Research: Hi. Good morning. Have there been any retention programs put in place to keep key management personnel?

Ryan, this is Henry Wallace. I’ll answer that. The answer is no. Our view is on retention that the best way to retain our people is to get the business moving forward and upwards and that’s what we’re focused on as a team. That doesn’t mean to say we might not lose one or two people, that’s always a risk, but paying people to stay when their mindset is to go because they’re unhappy with the company isn’t a good strategy. So, our aim is clearly to get this business moving upwards and onwards, a place where people get up in the morning and want to come and work because it’s a company that’s going places and that’s our real focus here. Ryan Augustitus – Northcoast Research: Okay. And then one more question, what is the current environment like for acquiring electronic security businesses?

Ryan, it’s Brad here. Certainly, as you are aware, I mean, we’ve looked at several opportunities. We’ve gotten very far along in those opportunities. In one particular, we ran in to a valuation issue. So, I think the point being is there are lots of opportunities out there. We are focused clearly on looking in the electronic security space to acquire a beachhead. Again, there are multiple opportunities and these are tucked away in private equity portfolios or their family-owned and we see good opportunity to acquire a beachhead, and then have several bolt-ons thereafter. So, again, there’s lots of opportunities out there. And I would just also make the point that, again, as Henry mentioned, as I mentioned, I mean, we have strong balance sheet capacity. This is a core strategy that’s been reviewed with the board. And so this is something that we’ll move forward with ahead of a CEO coming onboard, as the opportunities come to fruition.

Thank you. And next we’ll move to a question from Gil Luria with Wedbush Securities. Gil Luria – Wedbush Securities: Thanks for taking my question. So I think you went through the fact that last year, you actually gained share on a global basis. Going forward, especially as you think of the emerging markets, Middle East, Africa, Asia-Pacific, do you have an opportunity to gain share? You went through some issues a couple of years ago around FCPA and divesting and strategically realigning the European business. Going forward, into the next couple of years, do you now have an opportunity to possibly gain some shares as your big U.S.-based competitor’s going through the same issues?

Yes, this is George. I think when you look at our ability to gain share, we’re very excited about our new next-generation ATM. We believe that we will be able to differentiate ourselves in the market based on total cost of ownership, reliability, and some of our advanced security features, as well as if you look at the success that we’re having with our Flex ATM units around the globe, we think there’s additional runway there as well as emerging markets move towards deposit automation. Gil Luria – Wedbush Securities: Got it. And then in terms of electronic security giving you more of a recurring revenue, of your service component within Security, what portion of that is recurring maintenance/monitoring type revenue versus the one-time oriented installation professional services type revenue?

Yeah Gil. It’s Brad. I mean, the electronic security business profile that we have is very similar to the total company, with about half of the revenues of the total security business being services locked up under typical type maintenance type agreements and monitoring agreements.

Okay. Next we’ll take a question from Michael Kim with Imperial Capital. Michael Kim – Imperial Capital: Hi, good morning, guys. Yeah, just again on electronic security, with the pending leadership change, does that change the timing of any potential activity to grow that business strategically at least until you have a permanent CEO?

No, I don’t think it’s going to change it at all. Essentially, we set up our new organization in security over the last couple of years. We’re building our muscle there and we intend to go grow the business. And so, as and when we get the opportunity to acquire the right companies, we’ll do that. It’ll depend obviously on are they bringing the right capabilities to us and can we make the right investments that will pay off and grow the business going forward. But it isn’t dependent upon a CEO being here or not. The board has endorsed this strategy and we’re committed to investing in that space. Michael Kim – Imperial Capital: Okay. Great. And then just on the electronic security business itself, one of your larger competitors in this sector recently talked about expanding their focus on the financial and banking vertical. They had made a fairly acquisition and expanded in North America. Are you seeing any increasing competition for new projects and more generally on the environment?

Yeah. Michael, it’s Brad. I mean, again, as we pointed out in the fourth quarter, our total security business grew by about 11% and certainly the growth in the electronic security business was even stronger. Our targeted market, as you know, is focused on the financial institutions. And we’ve seen very good success in that marketplace.

And we’ll now hear from Matt Summerville with KeyBanc. Matt Summerville – KeyBanc: Good morning. George, I’m curious to hear what your thoughts are behind Diebold’s sort of general inability to forecast revenue profit and cash flow over the last few quarters? And how quickly that can be remedied? And how you’re attacking that?

Well, clearly, I think that there’s room for improvement in terms of our forecasting. There is significant unpredictability in our business, given our concentrated nature of our end markets in the U.S. and Brazil specifically. And I think if you look at the opportunities in Brazil and the opportunities we have with the public tenders as we go forward in 2013, timing and the outcome of those tenders will really give us ability to improve our forecasting as we go forward. Matt Summerville – KeyBanc: And then just, one follow-up. Henry, maybe you can comment. Early on in your prepared remarks, you mentioned that how displeased the board has been with the level of execution in this company. I guess what gives you the confidence to move forward with this M&A strategy and potentially do what I would imagine would be the biggest acquisition Diebold’s done in its history?

Well, I don’t know what you mean by the biggest acquisition that Diebold has done in its history. But let me take it one step at a time. Our issue is we’re concerned about the short-term performance of the company. And I think we’ve got strategies in place to rebuild that and to refocus our energies, and basically harvest the capabilities of our global organization so that we can generate more cash in the business, which is more cash for investing into growth areas. In terms of what we buy, we’re still looking at those. I haven’t seen anything that that makes me feel as though it’s the biggest investment that we’ve ever seen. But we will be obviously looking in electronic security to find a platform that we can really build the business around. And then I would imagine it would be a series of small acquisitions to bolt onto that, because this is a very fragmented business throughout the U.S. And, therefore, this – once we’ve got the platform established and what we need to do, it will then be how quickly we want to invest and ratchet up those smaller acquisition capabilities.

Thank you. (Operator Instructions) And now, we’ll hear from Paul Coster with JP Morgan. Paul Coster – JP Morgan: Thank you for taking the question. Obviously, the regional bank business, the comps have gotten pretty tough and it sounds out of your control, but it sounds like it disappointed nonetheless. What do you attribute the disappointment to? Is it products? Is it sales? Is it the assessment of the pipeline? And what do you think you can do about it?

Yeah. This is George. I think from my view, as in the U.S. market, as in all of our markets, we continue to face some pretty significant competitive pressures, along with pricing pressures. And, clearly, the mix change between the national and regional space had a lot to do with our performance as well in 2012. I’d like to ask, Mychal to add some color there.

Thanks, George. As Brad stated previously, we have seen in our regional bank segment a reset to more – to a more normalized rate coming off of this big 88 PCI upgrade cycle in 2011 and 2012. We do still see, though, deposit automation is driving incremental improvements to our normal core business run rate, but it’s just at a much slower adoption rate than we had previously expected in the segment. Paul Coster – JP Morgan: Okay. So, the implication is that – it’s just the customers faded away, it wasn’t that your pipeline was sort of overstated or that the – the sales team was so overly optimistic?

That’s correct. We just – we’re really seeing a reset in the business back to kind of our core run rate, that would set up for pre-ADA PCI levels.

Yeah, Paul, just, again, just to support Mychal’s point, again, I mean, we’ve got – as we forecast what happened in the fourth quarter, we had very good kind of visibility to what was going to be scheduled and delivered. But we did see in the fourth quarter some customer delays where they pushed installation into 2013. So, we are seeing, again, that’s driven by the overall softness in the marketplace.

And, now we’ll take a follow-up question from Matt Summerville with KeyBanc. Matt Summerville – KeyBanc: Just two follow-ups, maybe to help illustrate some of the margin pressure you’ve seen, Brad, can you give any detail around what your mix was in North American Product revenue in the first quarter of 2012 versus where you see it right now?

Yeah. Let me just, I won’t answer your question exactly, but I think it’s helpful to look at kind of the mix between regionals and nationals in total and, again, there’s Product and Service component to that. But as it relates to kind of the Product side, I mean, in the first quarter 80% of our revenues were into that regional space. When we concluded 2012, the fourth quarter, we were at 60%, so we saw a very significant mix shift as we’ve talked about on this call from the regionals back to the national throughout the year. Matt Summerville – KeyBanc: And then, George, as you’ve done a lot of work in tackling sort of the product related cost of goods sold, I guess what’s sort of left in the gas tank there as you’ve kind of realigned manufacturing? You’ve done a lot with supply chain and yet the product margins are still under pressure and I get the whole mix thing, but at the end of the day margins need to move up not down. And then what’s your sort of initial impression on the cost structure of the Service business and what you can bring to the table there?

Well, I think the most important part of our restructuring here, our reorganization is that by creating the global functional organization, it allows us to have a single focus, a single owner, a clear sight of ownership and responsibility, accountability to drive results. And so, in the past I think we’ve made significant improvements, but those improvements often stopped at – between the functional boundaries of the organizations. And so, with the new organizational structure in place, I’m very excited about our opportunities to drive additional cost savings throughout the company, especially in the Services area.

And we will hear from Julio Quinteros with Goldman Sachs. Julio Quinteros – Goldman Sachs: Great. Hey, guys. Good morning. Maybe one quick one with a quick follow-up. On the – the visibility that you guys have into the capital expenditure budgets or the IT budgets of your bank customers in the U.S., do you guys have a good sense right now on what that’s trending like? Are budgets up, flat or any color that you guys can provide there in terms of the expectations would be helpful?

Yeah, thank you. This is Mychal Kempt. I would say right now there’s been a bit of a pause coming off of this ADA PCI run and that as we look out into 2013, right now, it’s a little bit soft in terms of the feedback we’re getting from our customers. So, as they’re starting to look out, there is a tremendous amount of work to be done. And they don’t have great clarity on their capital budgets, but it’s – see a fairly soft start and each month as we move forward, I gain a little bit better clarity as to how the year’s going to shape up. Julio Quinteros – Goldman Sachs: Okay. And then, secondly, on Brazil, I think we’re two or three quarters now into this order that keeps getting delayed. At what point do you guys just sort of write it off and say, it’s just not going to happen? Or is there something that essentially guarantees that eventually that work turns to revenue for you guys?

No, I mean, we feel like ultimately, I mean, these units need to be replaced. They need to be upgraded. So we do believe that those ultimately will come to fruition. Again, the two orders that we spoke to we won those outright. They got cancelled for various reasons. And we do expect those orders to come back for public tender here in the first half of the year, with assuming that we win – which, again, we’ve had a very, very good track record -but assuming we win then those would be delivered in the second half of this year. But, again, pointing out that there are many variables here. And this is why we talked about the variation in the earnings. One is, as you point out, Julio, the auction has to take place. It has to take place in a timely manner, such that then we have the opportunity to win it, and then execute on it in the second half. So, again there’s a lot of variables here that we’re watching very, very closely.

Thank you. And at this time, I would like to turn the call back over to Mr. John Kristoff for any additional or closing remarks.

Thank you, Jennifer. And I’d just like to thank everyone for joining us on the call this morning. And as always, if you have any follow-up questions, please feel free to contact me directly or Nick Codispoti. Thank you very much.

Thank you, sir. That does conclude today’s conference call. We do thank you all for your participation.