"Who, or what, am I really investing in?" People all over the world have been asking that question often during the past three years, the most uncertain period for investors in recent memory. Time and again, we've seen what happens when companies lose sight of the answer. At the same time, we've witnessed what the best companies are really made of during the most challenging of times.
     In last year's annual report, we talked about what Diebold is made of when we debuted our brand commitment -- We won't rest -- and outlined our relentless drive for success in order to build value for our shareholders and associates.
     Our results during the past year demonstrate that we're keeping this commitment. Despite a difficult economic environment, we substantially outperformed our competition and the overall markets in which we do business. We delivered sustainable, superior results. And we did so by executing the strategic initiatives that we have consistently communicated to you:

• We grew our financial self-service revenue faster than our competitors globally, and we did so while maintaining our operating margins for that business at approximately 14 percent. This is especially noteworthy given the increasingly competitive environment we face.
• We leveraged our core competency in self-service technology and integrated a strategic acquisition to achieve success in an important new business -- electronic voting systems.
• We continued to expand our services and software offerings; they now represent nearly half of our revenue.
• We expanded our security business, which grew more than 30 percent in 2002, by effectively integrating the Mosler asset acquisition, obtaining new customers and successfully penetrating new markets.
• We continued to streamline our internal processes by implementing new technology and training our associates on continuous improvement techniques.

     With these successes, Diebold has been able to add value for our shareholders while rapidly becoming a global leader in providing integrated technology solutions that enable our customers to maximize their self-service capabilities. In fact, for the three-year period ended 2002, we generated an 86 percent total return, including dividends, which significantly outperformed the S&P 500 in each of those years. In addition to providing a positive return for our shareholders in each of the three years, 2002 marked our 49th consecutive year of dividend increases.
     That's why this year's annual report addresses the question, "Who Are You Investing In?" It is designed to communicate what Diebold is today and what we are driving to be tomorrow. It reflects our continuing evolution from a hardware manufacturer to a solutions provider, and from a U.S. company to a global one.
     Just as importantly, it underscores our commitment to providing shareholders with clear information regarding our goals, our strategy, our operations and our progress. Today's environment demands that companies not just deliver performance, but provide a higher level of transparency as to how they achieved that performance. It's a challenge we welcome, and it's one we are committed to meeting.

     OUR GROWTH STRATEGY
     As we have often stated, our growth strategy begins with our vision: We won't rest until we measurably improve the extent to which our customers' customers are delighted with our self-service and security solutions; and we measurably improve the effectiveness and profitability of our customers' business.
     The road to achieving this vision is filled with opportunities for Diebold -- opportunities to provide flexible, best-in-class solutions, including hardware, software and services. This is particularly important as the industry continues to migrate toward an open standards model in which customers can mix and match components from different suppliers to select only those that provide the best value.
     We have many opportunities to broaden our service offerings by creating new state-of-the-art solutions and by expanding into new geographic locations. For example, during 2002 we acquired Sersi Italia, a company specializing in multivendor customer service and closed-circuit television monitoring of automated teller machines (ATMs) for banks and post offices throughout Italy.

     BUILDING OUR CORE BUSINESS
     Our core financial self-service business remains our top priority, and we still have plenty of room to grow.
     Our plan to expand our market leadership is based on changing industry dynamics and evolving customer needs. Early on, we recognized the potential that ATMs offer as key points of customer contact and important marketing and distribution channels for financial institutions. We understood that the value was not just in the hardware, but in the software that enables customization and innovation within the network. We also saw that customers needed a broader range of value-added services to help them manage those networks more efficiently.
     Integrated solutions, based on our hardware, software and services, are driving our growth in this core business. These solutions also are expanding our leadership in security systems, another important contributor to our growth during 2002.
     Diebold's leadership in security dates back to 1859, when the company was founded. Today, of course, the functionality and sophistication of our security offerings go way beyond safes and vaults. But the underlying premise is the same, and the need to protect employees, customers and assets is as strong as ever. This is why we apply our core security expertise across all of our business lines.
     The purchase of certain assets of Mosler, Inc., a long-time competitor, set the stage for our success in this segment of the business last year. It enabled us to broaden our offerings and strengthen our presence in key markets, including the government and retail sectors.
     The relatively small investment played a key role in helping to grow security revenue by $102 million in 2002. Just as importantly, we demonstrated how effectively we integrate acquisitions. This is an important element of our overall growth strategy -- our ability to add a capability within our core area of expertise and provide it with a stronger business platform and the necessary financial resources, so that the sum is truly greater than the individual parts.

     CAPITALIZING ON NEW OPPORTUNITIES
     Our success in another key business -- electronic voting systems -- also illustrates this key capability at work. We completed the acquisition of Global Election Systems, now known as Diebold Election Systems, in early 2002. Over the course of the year, the unit cemented its position as an industry leader in North America, with major new contracts in Maryland, Georgia and many other locations. More than 30,000 of our state-of-the-art voting systems were at work on Election Day in November 2002, performing to the highest standards of accuracy, security and efficiency.
     Diebold Election Systems contributed more than $110 million in revenue during its first year, far exceeding our initial goal of $60 million and moving Diebold from third place to market leader in the electronic voting industry. We remain very excited about the tremendous potential in the voting industry.

     IMPROVING OUR PROCESSES
     In recent years, we have globalized and standardized key aspects of our operations, including product development and engineering; manufacturing and quality; and procurement. This past year, we initiated new forums and feedback mechanisms to help us further integrate customer input into our decision-making processes. We also rolled out several major internal initiatives designed to enable associates to identify and implement best practices, and to standardize and improve such processes as order entry, inventory management, billing and purchasing.
     Today, with increasing economic and competitive pressures, our customers face their greatest challenges. Our focus remains on understanding their challenges and opportunities. We know it's the only way we can stay flexible and responsive to their needs.
     That is why we continually strive to improve the way we do business. Our goal is to work faster, better and smarter in order to truly differentiate Diebold from the competition.

     MOVING FORWARD
     Diebold faces the future with confidence even though it remains difficult to predict what lies ahead for the economy and financial markets. However, we continue to target long-term revenue growth in the 8 to 10 percent range, and we continue to target long-term earnings growth of 10 percent or more.
     We base our confidence on Diebold's clear strategy and vision: achieving market leadership in our core business; leveraging our core competencies to create new growth opportunities; and becoming a faster, more efficient and flexible company. We also base it on our demonstrated success in achieving sustainable, superior performance as we execute our strategy, integrate new capabilities and progress toward our vision.
     In summary, this is who you are investing in: We know where we are headed, we know what we do best, and how we are going to build value for our shareholders and associates. And we won't rest until we accomplish what we have set out to do. This is who we are.

     Sincerely,

     Walden W. O'Dell
     Chairman, President and Chief Executive Officer