As I mentioned, we believe the financial self-service business continues to offer significant potential for Diebold. While the factors stimulating demand can vary by region and country, there are important common elements underlying our opportunities in this business. First, financial institutions are investing in their retail and self-service networks for strategic, competitive and performance reasons. And second, our offerings are differentiated in terms of their feature functionality, lower cost of ownership and our superior service capabilities.

In the larger, more mature banking markets, including the United States and Western Europe, we're capitalizing on upgrade and replacement opportunities, as well as the trend toward deposit automation, including check-imaging and envelope-free currency acceptance solutions.

In faster-growing, emerging markets, such as China, India, Russia and Brazil, financial institutions are expanding their networks as they strive to better capture, serve and compete for customers and to improve their efficiency and productivity.

A case in point: Bank of China, widely regarded as one of the country's most successful banks, and the second largest state-run commercial bank in China, has announced plans to transfer about 40 percent of its traditional teller transactions to its self-service delivery channel by 2008. We are proud that the bank selected us as one of its major ATM suppliers, purchasing more than 600 Opteva ATMs and nearly 300 bulk cash recycle machines, as well as our Agilis software and related services.

The breadth and depth of our service offerings, which comprise more than 50 percent of our financial self-service revenue, continue to provide a competitive advantage for Diebold. Going forward, we're focused on capitalizing on the trend toward integrated services, in which customers entrust us with the monitoring, maintenance, operation, and in some cases ownership, of their self-service networks.

Security Solutions: Strong Market Dynamics

Through a combination of organic growth and strategic acquisitions, our Security Solutions business now generates more than $660 million a year in revenue. We continue to believe the market for our integrated security offerings is both global and growing, and we're taking action to capture this potential.

Over the past two years we have made a number of strategic acquisitions in support of our commitment to enhance and grow our security business. These acquisitions have strengthened our global presence and provided expertise in digital security and enterprise level security systems integration. Today's successful security providers will be defined by their ability to blend traditional security knowledge and business practice with emerging technology. And, with our history in the security business and extended services capability, we are a thought leader in this industry.

Election Systems: Unparalleled Accuracy and Reliability

With more than 100,000 installed touch-screen and optical scan units in the United States, our Election Systems business has grown relatively quickly. This reflects the fact that electronic voting offers unparalleled accuracy and reliability, and improves accessibility. Our focus here is on introducing new products that respond to emerging market needs and developing services to help automate and simplify the election process, while building recurring revenue streams.

Focused on Our Future

As I mentioned at the outset, getting down to business means focusing on improving what we do today and preparing to capture new opportunities tomorrow. While we have a lot of work to do, we have many, many strengths - strengths that we can build on in 2006 and beyond.

In closing, I would like to express my gratitude to our employees around the world. I deeply appreciate their hard work, passion and commitment. Together, we will continue to take this great company forward and work to realize our promise and potential.

Sincerely,

Thomas W. Swidarski
President and Chief Executive Officer