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

Thank you, Cecilia. Good morning and thank you for joining us for Diebold’s fourth quarter conference call. Joining me today are Tom Swidarski, President and CEO, and Brad Richardson, Executive Vice President and CFO. Just a few notes before we get started. In addition to the earning release, we’ve provided a supplementary presentation on the Investor page of our website. Tom and Brad will be walking through this presentation as part of their comments today, and we encourage you to follow along. Before we discuss our fourth quarter results, as with past calls it’s important to note that we have restructuring, impairment charges, and non-routine income and expense 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 actual 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 Tom.

Thanks, John. Good morning everyone. Thank you for joining our call today. As you see in our release this morning, revenue, earnings and cash flow all improved during the quarter. While there are a number of atypical items outlined in our release that we will explain during the call, from my point of view there are five key takeaways: first, the global financial self-service market is showing signs of recovery. I’m seeing a continued and significant ramp-up in orders in North America, particularly in the regional bank space. Second, we have reevaluated our strategy in EMEA and put plans in place to restructure the business to better focus on our core markets in the region. This will be a top priority for us in 2011. Third, we have remediated our two remaining material weaknesses in our financial control environment. Fourth, we continue to generate a significant amount of cash flow and are confident in our ability to continue that trend moving forward. Finally, given its confidence in the market’s recovery, our Board of Directors has authorized the Company to repurchase up to 4 million of its shares. We intend to execute this plan in 2011. In terms of our performance during the quarter, we saw a number of positive trends. For example, global orders increased 7% in the period, excluding Brazil, where a voting equipment order and a large ATM order from Bradesco created a very difficult comparison to the prior year period. This growth in orders positions us well as we look to 2011. We also recorded a lower tax rate as we benefited from positive income mix and an improved outlook in Brazil, and we successfully completed a number of tax planning projects. Across our organization, Diebold associates had many impressive achievements in 2010. We secured significant new…

Thanks, Tom, and good morning everyone. There are a number of key topics I’ll discuss this morning. As Tom alluded, we have a lot of moving parts in the quarter that we will discuss later in my remarks; but like many of you, I view the ability to generate sustainable free cash flow as the vital measure of a company’s strength and stability, ultimately providing the capacity to invest in growth and return monies to shareholders. Given our continued strong performance in that area, I am confident in our future prospects and our ability to deliver shareholder value; and our Board of Director’s confidence is reflected in their recent authorization to increase our share repurchase program to 4 million shares. Barring any developments on the acquisition front or dramatic changes in the business environment, we intend to execute on the full authorization in 2011. We’ve made aggressive efforts to change our culture and drive decision-making focused on improving on capital employed, providing me with the confidence that our free cash flow generation is sustainable. Before we move into the quarterly financial results, let me spend a few moments updating you on our progress on our financial remediation efforts and our ongoing FCPA review; then I’ll spend some time on the impairment in EMEA. Turning to Slide 15, I am very pleased to report that we have followed through on our commitment to remediate our remaining two material weaknesses by year-end as we made significant improvement in our financial control environment. The remediation has been tested and confirmed by our internal audit team as well as our external auditors. I’m confident we have taken the right steps to not only address our current material weaknesses but to elevate our financial control environment to best-in-class levels. Now to Slide 16. As you…

Thanks, Brad. Cecilia, let’s open it up for our first question, please.

Thank you. If you would like to ask a question, you may do so by pressing the star key followed by the digit one on your touchtone telephone; and as a reminder, if you are using a speakerphone today, please make sure that your mute function is turned off to allow your signal to reach our equipment. Once again, that’s star, one to signal. We’ll go first to Kartik Mehta Northcoast Research. Kartik Mehta – Northcoast Research: Good morning. Tom, in your prepared remarks you talked about Europe and you talked about focusing on the core markets. I’m wondering if you could maybe elaborate on that. How many markets in Europe would you consider core?

Yeah, Kartik, I think the places we look at is where the global banks are resident; so there are global banks that have a big impact on what happens in a number of markets outside of EMEA that are important to us. So if you look at Spain, for instance, you’ve got two major players there that have a big impact on Latin America and our operations there; thus, to us that’s very strategic and core. And as we start looking at some of the outlying countries where we’re more dependent upon distributors, I think we’ll be evaluating those more closely from a profitability standpoint. So that’s how I think you should look at the EMEA marketplace. Kartik Mehta – Northcoast Research: So Tom, as far as Europe is concerned, do you think this is a market share issue at all or is it just a profitability issue in your estimation?

Well it’s all about profitability from our standpoint, so revenue for the sake of revenue, we discussed that a while ago wasn’t our objective here. So some of it comes to—you know, from a profitability standpoint there is a number of factors that lead into those decision points, but at the end of the day if we can’t have a profitable operation, we need to reevaluate what we’re doing and how we’re doing it, which is what we’re doing in the EMEA space. Kartik Mehta – Northcoast Research: And then as you look at just Asia, your expectations for Asia going into 2011 – would you expect that market to be again somewhere in the 7 to 10% growth, or would you expect that to be a little bit lower?

I think a little bit lower for us in 2011. We obviously are working through the issues with the FCPA, which distracts a little bit as you go through that country by country, region by region. While we feel like we’re in very good position there, we think a little bit lower than this year is kind of the sights we’ve set for AP. Kartik Mehta – Northcoast Research: And then just last question, Tom – you talked about share repurchase and hopefully executing that in 2011. Obviously the only thing that would hamper that would be, I imagine, an acquisition of size. I’m wondering if there is anything right now that you’re looking at that would prevent you from repurchasing all the shares.

Kartik, I would say that as we outlined in the prepared remarks, probably the two areas of most importance to us from an acquisition standpoint that might be of the kind of size would be on the security front and also in the services space – you know, whether it’s traditional service or other services. I can’t point to anything at this time, but we certainly are very focused in those spaces. Kartik Mehta – Northcoast Research: Thank you very much.

You’re welcome.

Our next question comes from Paul Coster of JP Morgan. Paul Coster – JP Morgan : Yeah, thank you. Good morning. Your FSS business, you’re looking for it to grow at about single digit growth year on year, and yet you saw a 26% increase in orders. Can you just sort of help us reconcile that? I realize that some of it’s to do with Europe, but how quickly do orders translate into revenues, and are they very lumpy?

So Paul, good question. I want to reflect back – when I mentioned the growth, the 26%, that’s on the product side, so obviously we have a very large service operation and services operation as well. And when you kind of mix it together and take a look at the impact we see in the EMEA region that impacts us, Asia being down a little bit compared to this year, that where we come to the 5 to 8%. Paul Coster – JP Morgan: Okay. Can you just talk a little about the time line for orders to translate into revenues, and it is 100% close rate on the order book?

Well, two things I would mention there. First of all, it takes generally in the neighborhood of around six months – you know, four to six months. The second thing I would say is more of our orders move into the integrated services space. A lot of that has to do with these contracts. The one I mentioned in Colombia was seven years, so it’s actually spread out over seven years. We’ve doubled the size of the integrated services business in 2010 from 2009. That is spread mostly out over a five-year period, so what that does is lengthen the amount of time it takes to take the order and recognize it from a revenue standpoint. But general rule of thumb, in the neighborhood of six months but a lot of these services are stretching out over multi-years, which is good in the outlying years. It’s recurring revenue. In the up-years, you don’t get all the revenue you would have in a traditional business contract. Paul Coster – JP Morgan: But are you seeing any impact from the so-called Age of Austerity in terms of its impact on security projects with state, local and federal government agencies?

No. From our standpoint, in Asia we do very little on the security front, so it’s a very small piece of the overall business in Asia, unlike in the United States. Paul Coster – JP Morgan: Domestically there is no impact from budget constraints?

No, as a matter of fact we’re seeing ourselves now gaining some credibility with winning Tower 4 and winning the transportation hub which were, I think, the biggest contract let—you know, one single site is over $30 million in order entry from those contracts, that we’ve got ourselves in a good position to bid on other significant complex projects. Again, for us it’s two things – one is not just the size of the project, it’s can we generate recurring revenue; and number two, it’s the embedded profitability that we think we can yield from those. So we work very hard at both those pieces and we’ll continue to use those as a guiding principle as we have more opportunities in that space. Paul Coster – JP Morgan: Okay, got it. Last question – Brad, it looks like you’ve done a fantastic job on cash collections, cash cycle. It sounded like from your prepared remarks that working capital eventually turns DSOs are unlikely to get much better from here, but you think you can hold these levels. Is that a fair statement?

Yeah, Paul, I think that’s a fair statement on the DSOs. Certainly there is more work to be done on the inventory. You saw we made some progress this year but there is more work to do there. We’ve got specific projects underway. And then you’ll probably also—Paul, if you look at the balance sheet, you’ll see what we’ve done on the DPO, or the payables, which I’m very, very pleased with the progress that we’ve made there, and certainly there is more opportunity there. But as we go forward, certainly as the business continues to grow, all the progress that we make on the metrics will be somewhat negated by simply the growth in the working capital required to support the business growth. Paul Coster – JP Morgan: Got it. Thank you very much.

And our next question comes from Matt Summerville with Keybanc. Matt Summerville – Keybanc Capital Markets: First, I apologize if you guys gave this out – ATM orders were down 12% in total year-over-year. If you back out Bradesco, or that big deal you got from Bradesco, what would that number have been?

We were—let’s see. I think we’re up 7% if you back out—Matt we don’t have that broken out. We’ll have to get back to you on that one.

Yeah, we’ll get back to you on that to make sure we get the right number.

But it would be similar, though. It’s going to be in the 7% range, but I’ll get you the specific number after the call. Matt Summerville – Keybanc Capital Markets: That’s perfect. That’s the number I was looking for. I just missed it in your prepared remarks. As we think about 4Q10 versus 4Q09, I want to make sure we appreciate the magnitude, I think, of challenges you guys are facing in Europe right now. I mean, I have a hard time seeing—you know, you guys did 45 million in non-GAAP operating profit versus a similar number last year, yet your revenue was up 67, $70 million. Help me close the loop on how unprofitable Europe is, or why you didn’t get operating leverage in the quarter on that incremental revenue.

Okay, so if you look back at 2009, we opened up operations in Turkey. We’ll use that as an example. So right out of the gate, the profitability in that country and that region nowhere approximated what we would get in other regions of the world. So while we got revenue there, we still don’t have our service operations running at the level we do everywhere else. So we don’t get the leverage out of the orders we have within the region. Second, I would say across the board because of Russia and eastern Europe, it’s taken us an awful lot of work in that region; we have a ways to go. So the business we have through distributors in the Russia and eastern Europe, which were pretty profitable, we didn’t have within the mix this past year. So I’d say it’s profitability overall; second, in places like Turkey and other, the business we won was at very low margin; and third, our service operation isn’t performing at the level we are everywhere else in the world. And Brad, I don’t know if there’s anything else you’d comment?

Yeah, let me just give you one kind of other piece of information that, again, I think would help you understand the importance of the priority that Tom laid out, which is Europe represents about 10% of our revenue but nevertheless it is a key priority in order to address the overall profitability. And just simply getting Europe up to—you know, call it comparable levels of operating profit for other businesses adds about 70 basis points to the overall Company operating profit margin. So you can see how much leverage we have by getting that business significantly repositioned in 2011. Matt Summerville – Keybanc Capital Markets: Appreciate the additional color, Brad. Just one follow-up to that – since Diebold made those acquisitions in EMEA, I believe it was in April of 2000, has that business ever achieved a mid-teens return on capital employed? And then I guess to that point, Brad, what’s Diebold doing differently this time around?

Well, I think in answer to your question, I think it’s fair to say that there were—there was a period in the 2007 – 2008 period where we were getting up to an acceptable level of profitability; but I think full-cycle, Matt, we haven’t achieved the overall return on capital objective from that acquisition, as now reflected in our financial results with the impairment. I think as Tom mentioned and certainly in our prepared remarks, we really kind of pointed to three elements of our multi-point plan that we’re auctioning on in 2011, and certainly that’s around looking at our supply chain and looking at our manufacturing operation for further efficiencies. Certainly on the administrative cost, we have a shared service center in Leeds, England that we need to fully leverage and we will fully leverage in order to drive further administrative costs out of the various countries in which we operate. And then third, again, as Tom mentioned just a few minutes ago but to reinforce, we’re really looking at a core country focus and really looking at the potential of where we have a strong base to build from and putting our resources in those specific countries, versus being spread across multiple countries. Matt Summerville – Keybanc Capital Markets: Thanks, guys.

And again, that’s star, one to signal for any questions at this time. We’ll go next to Gil Luria of Wedbush Securities. Gil Luria – Wedbush Securities: Good morning. You already gave us a little bit of a sense for guidance for Asia for this year. Can you also help us, even directionally, with the guidance for the U.S., the rest of Americas, and Europe in terms of what direction the revenue is going to go?

Sure. Gil, when we think of EMEA given the kind of activities we have going on over in that region, we view that at this point about flat year-over-year, or maybe up slightly, but basically flat. If you look at the United States, you would say United States with the kind of order volume we’re seeing, with the kind of activity we’re seeing, that would be up maybe in the neighborhood of 5 to 9%, somewhere in that range. And then Latin America and Brazil are going to be up, and maybe that would be the mid-single digits. So when you mix that together with Asia Pacific, that’s where we get the financial self-service and the 5 to 8% range. Gil Luria – Wedbush Securities: Got it. So a lot of the growth coming from the U.S. And in the U.S., can you characterize where we are in terms of competition and market share? Is NCR the only one you have to share market share with for banks, you know, for through 16,000, or is Wincor still a major participant there? Are you seeing any of the Asian competitors become a major participant, or is it really going to be you sharing the wealth with NCR where you’ve traditionally had that?

I think there’s a couple dimensions that I would answer that along the line of, and I won’t presume that no one can get there. But first thing you need to deal with in the United States is software and the software infrastructure. So you have a lot of technology players around the world who may have terrific technology for Asia, but if you’re not able to run that in the software environment here in the United States, you can’t bring that to the market no matter how good the technology is. So I would say software is a barrier to entry for a lot of folks. Second is the service infrastructure. If you don’t have the service infrastructure in the United States because of the advanced dependency on reliability and availability, it’s going to be difficult for anyone to get there. And we’ve seen different players come in the market, concentrate maybe on one or two customers—you know, penetrate a customer with pricing kind of approach; but at the end of the day, if you can’t spread that across 50 states into every small county and community, that’s where the real opportunity is. And for us, we’ve got a very high standard that we set relative to the service operation, the availability, as well as the back-end system to be able to manage this. So it’s one thing to deploy technology, and someone may have the greatest technology since sliced bread; but if you can’t understand on the back end the statuses, the reliability, the availability, speed—you know, all those factors come into consideration. So software, service and back-end systems really rule out of a lot of players that may have the ability to compete in Asia or in another region. So in that sense, I would say that you have two players, or two significant players in the United States that have a lot of competitive advantage from all of the investments we’ve made over the years, and then with other folks trying to continue to penetrate here, we’ve got to work hard every day. But the service level and requirements and the standards that we’ve set are very high, and if you’re unable to maintain those or reach those, when they come around for the second time looking at purchasing, it tends to go back to more historic norms. So we’ve put a lot of effort on the service and back-end services capabilities, and plan on continuing to differentiate ourselves there. Gil Luria – Wedbush Securities: So do you expect more than 50% market share, more than two-thirds percent market share in the U.S. this year?

For Diebold? Gil Luria – Wedbush Securities: Yes.

Over 50%. Gil Luria – Wedbush Securities: And then Brad, for your guidance, a couple of moving pieces. What tax rate are you implying? Are you including the 4 million shares bought back in the EPS calculation, and how much longer do you have the FCPA continuing to be a drag in your $0.30 non-GAAP adjustment?

Okay. We’re assuming, Gil, 28% tax rate for all the line items that you see in our reconciliation. So it’s 28% tax rate. Down in the—and I’m looking at Slide 31, down in the net other category there is the assumption of, call it $0.05 per share benefit from the share buyback. So that is included in our guidance. Your last question was on the FCPA expense, and what we have assumed—and again, in our prepared remarks, is that that spending will occur in 2011, and our expectation is if everything goes right, would be to finish this up in 2011. Gil Luria – Wedbush Securities: Great. Thank you.

Our next question comes from Zahid Saddique of Gabelli & Company. Zahid Saddique – Gabelli & Company: Hi, good morning. I have a couple of questions, the first on one—going back to the market share, your competitor NCR on their call indicated that they actually gained market share both globally and in the U.S. in Q4. I wanted to get your thoughts on that.

Zahid, I would just say—I mean, I just look at our growth rates and look at kind of the performance, and for us—market share is a dicey subject because for us it’s not market share for market share’s sake; it’s market share at the right level of profitability. So we balance both of those, and because of the size of the U.S. market and our expectations going forward, I think we have backed out of certain opportunities but we still find ourselves in a very good competitive position there at the right spot. So I’m not too worried about where we stand from a market share standpoint. We took a look at our growth rates compared to everyone else’s around the world. It looks like we’re actually growing faster. But again, you can argue that stuff all day long. Zahid Saddique – Gabelli & Company: Okay. My next question is on competitive dynamics. I think you touched briefly on it. Within the security, particularly, we are seeing companies like Brinks that are getting more involved on the actual security side, more higher margin solutions-type businesses and securities businesses. I wanted to see your view on that and how do you see that evolve, and what’s your response to that kind of competitive dynamics?

Yeah, Zahid, I would take a careful look at what the conversation we had in the release relative to BofA. The back-end intelligence of these systems and the level of sophistication there is in essence what we’re building on the securities side as well. So we see ourselves in a very advantaged situation as end customers start recognizing it’s not about the price of deploying the technology; it’s all about the cost of operation and the intelligence you gain from there and the analytics, and the compliance and the audit. So the back-end systems that we’ve invested a lot from a software and services standpoint, I think become really critical going forward. We like where we’re situated there. We know how to manage and run recurring revenue stream businesses through our service operations and our performer resource, and we like the kind of movement that’s taking place there. And as such, you’ve seen us win some significant contracts in 2010 as well as in the fourth quarter with some other agencies that are federal agencies that prefer we don’t use their name. But all you have to take a look at is all the bidders that were involved in Tower 4 at the World Trade Center, look at the transportation hub, and recognize that we got selected from the best of the best from a securities standpoint. It gives us a lot of hope that as we perform and, again, establish credibility in this space, there’s a lot of runway for us as we manage our security business more effectively going forward. Big markets, we think profitable markets, and we think we’ve got the opportunity within select niches within that market to really drive improved profitability in the next few years. Zahid Saddique – Gabelli & Company: Okay. And then on newer products, when you guys announced back in September, you talked about cash recycling in some of your ATM machines. Where is that, and are you selling those products in the U.S. and Europe now?

Yeah, we have a full family that includes recycling. We’ve got –from a deposit automation standpoint, when I talk about that, that includes top-end recycling all the way to handling checks, all the way to handling cash, and then the ability to handle cash and checks within that environment. Some of the projects we won in Europe clearly were including recycling. I would have to say when you look at recycling around the world, it’s at the very infancy in the Americas—you know, the United States and Latin America and Brazil; and while there’s pilots in back offices happening relative to recycling, it took off much more in Asia and Europe because you had a lot more currency coming in as well as going out, and the business model worked a little differently. But we have a family of products that include recycling. We think we’ve got exceedingly high level of performance with that, and in markets like Saudi Arabia or Belgium, or places where that’s a critical component, we like our competitive situation in those scenarios and we hope to bring it to the United States, and that will be the next growth engine once you get to deposit automation here in the United States. Recycling then is going to feed right on top of that, but that’s probably—you know, the real battle there is going to take place in the next three to four years out. Zahid Saddique – Gabelli & Company: Okay. And then finally, real quick – CAPEX for 2011?

Yeah, Zahid, we’re expecting CAPEX in line with our 2010 of between 50 and $55 million. Zahid Saddique – Gabelli & Company: Thank you so much.

Our next question comes from Ted Wheeler of Buckingham Research. Ted Wheeler – Buckingham Research: Hi, good morning, everyone. I wanted to circle back a little bit on the regional bank activity that’s picking up. If you look at your guidance or expectation for 2011 for the regional bank market, where would that revenue base be in relation to where it peaked before we went down?

Yeah, so Ted, it would clearly still be below where it was back in, say, 2008 and some of the years prior to that. So as I mentioned from a deposit automation standpoint, we’re seeing a lot of activity. We have 400-plus customers, as I mentioned, that have deposit-enabled ATMs. But the interesting thing for me is there are now 400 customers that have deposit-enabled ATMs. We have 150 that have five or more, so you’re starting to see the volumes begin to roll out even to the small players that may only have five, 10 or 20 ATMs. So we’re starting to see that take place. I would expect over the next two to three years that is going to really populate the entire United States. So I still view it, because we’re very centric to the regional banks, as just the beginning of the rollout. We have the big three players lead the charge, but really the rest of the folks are at the very early stages. Ted Wheeler – Buckingham Research: I’m just trying to figure out maybe how far below ’08 ’11 is. I mean, is it 10% below or more?

I don’t know that number offhand, but I’d say it’s still significantly below. Ted Wheeler – Buckingham Research: Okay. And how about the large bank market? Will that be pretty flat this year, or how do you track that?

Yeah, for us depending on how you define large banks, we have a group of about 20 that fit in there that would be the biggest banks in the U.S. And for us, despite the big three maybe not doing the same levels that they have in the past when you looked at them in aggregate, for us year-over-year they’ll still be pretty strong because you’ve still got so many other players that are now coming into the market. So for us, that’s fairly flat to maybe slightly up. Ted Wheeler – Buckingham Research: Great. Thanks very much for the color.

And our final question is a follow-up from Matt Summerville with Keybanc. Matt Summerville – Keybanc Capital Markets: Yeah, I know you guys don’t provide specific quarterly guidance, but I want to try and get a sense of how you expect seasonality, if you will, in Diebold’s earnings in 2011 versus the last few years. You know, typically if you go back in history, the fourth quarter used to be the strongest for Diebold. A year or two ago was the third or second; so you’ve had that move around a little bit, is what I’m trying to say. How should we be thinking about 2011 in that regard?

Yeah Matt, I would again—as you caveated, we don’t give out quarterly guidance, but I would say again as we look at our business, I think it is typically back-end loaded. Third and fourth quarter will be our stronger quarters. Matt Summerville – Keybanc Capital Markets: Thanks.

And I’d like to turn the conference back over to John Kristoff for any additional or closing remarks.

Thank you, Cecilia, and thank you everyone for joining us this morning. As always, if you have follow-up questions please don’t hesitate to reach out to me directly or Chris Bast. Thanks again.

And that does conclude today’s conference ladies and gentlemen. Again, we appreciate everyone’s participation today.