Company Quick10K Filing
Quick10K
Diebold Nixdorf
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$10.85 77 $831
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-04-30 Earnings, Exhibits
8-K 2019-04-25 Officers, Shareholder Vote
8-K 2019-04-14 Officers
8-K 2019-02-22 Enter Agreement, Exhibits
8-K 2019-02-13 Earnings, Exhibits
8-K 2019-01-28 Officers, Exhibits
8-K 2019-01-14 Regulation FD
8-K 2019-01-03 Officers, Regulation FD, Exhibits
8-K 2018-10-31 Other Events, Exhibits
8-K 2018-10-31 Earnings, Exhibits
8-K 2018-09-30 Officers, Regulation FD, Exhibits
8-K 2018-09-09 Officers, Regulation FD, Exhibits
8-K 2018-08-30 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-08-27 Regulation FD, Exhibits
8-K 2018-08-01 Earnings, Exhibits
8-K 2018-08-01 Earnings
8-K 2018-05-22 Officers, Regulation FD, Exhibits
8-K 2018-04-24 Officers, Shareholder Vote, Exhibits
8-K 2018-04-17 Enter Agreement, Exhibits
8-K 2018-03-21 Officers
8-K 2018-02-21 Officers, Exhibits
8-K 2018-02-13 Earnings, Exhibits
8-K 2018-02-06 Officers
APA Apache 11,680
STOR Store Capital 7,530
RNST Renasant 2,130
ALEX Alexander & Baldwin 1,720
GLOG Gaslog 1,200
RARX RA Pharmaceuticals 1,010
CAMT Camtek 359
UFPT UFP Technologies 276
NODC Nodechain 0
EFSH 1847 Holdings 0
DBD 2019-03-31
Part I - Financial Information
Item 1: Financial Statements
Note 1: Basis of Presentation
Note 2: Leases
Note 3: Earnings (Loss) per Share
Note 4: Share-Based Compensation
Note 5: Income Taxes
Note 6: Inventories
Note 7: Investments
Note 8: Goodwill and Other Assets
Note 9: Guarantees and Product Warranties
Note 10: Restructuring
Note 11: Debt
Note 12: Redeemable Noncontrolling Interests
Note 13: Equity
Note 14: Accumulated Other Comprehensive Income (Loss)
Note 15: Acquisitions and Divestitures
Note 16: Benefit Plans
Note 17: Derivative Instruments and Hedging Activities
Note 18: Fair Value of Assets and Liabilities
Note 19: Commitments and Contingencies
Note 20: Segment Information
Note 21: Supplemental Guarantor Information
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3: Quantitative and Qualitative Disclosures About Market Risk
Item 4: Controls and Procedures
Part II - Other Information
Item 1: Legal Proceedings
Item 1A: Risk Factors
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
Item 3: Defaults Upon Senior Securities
Item 4: Mine Safety Disclosures
Item 5: Other Information
Item 6: Exhibits
EX-31.1 dbd3312019ex311.htm
EX-31.2 dbd3312019ex312.htm
EX-32.1 dbd3312019ex321.htm
EX-32.2 dbd3312019ex322.htm

Diebold Nixdorf Earnings 2019-03-31

DBD 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 dbd331201910q.htm 10-Q Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
__________________________________________________
Form 10-Q
__________________________________________________ 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 1-4879 
_________________________________________________
Diebold Nixdorf, Incorporated
(Exact name of registrant as specified in its charter)
_________________________________________________ 
Ohio
 
34-0183970
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification Number)
 
 
 
5995 Mayfair Road, PO Box 3077, North Canton, Ohio
 
44720-8077
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (330) 490-4000
__________________________________________________ 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x     No  o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
o
Non-accelerated filer

o
Smaller reporting company
o
Emerging growth company
o
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  x
Number of shares of common stock outstanding as of April 25, 2019 was 76,592,453.




DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Form 10-Q

Index
 



Part I – Financial Information
Item 1: Financial Statements
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in millions, except share and per share amounts)
 
 
March 31,
2019

December 31,
2018
 
 
(Unaudited)
 
 
ASSETS
 
 
 
 
Current assets
 
 
 
 
Cash, cash equivalents and restricted cash

$
377.9


$
458.4

Short-term investments

31.5


33.5

Trade receivables, less allowances for doubtful accounts of $58.1 and $58.2, respectively
 
697.7

 
737.2

Inventories
 
663.0

 
610.1

Prepaid expenses
 
60.9

 
57.4

Other current assets
 
306.3

 
306.8

Total current assets
 
2,137.3

 
2,203.4

Securities and other investments
 
18.7

 
22.4

Property, plant and equipment, net of accumulated depreciation and amortization of $513.5 and $494.1, respectively
 
294.5

 
304.1

Goodwill
 
813.6

 
827.1

Deferred income taxes
 
208.4

 
243.9

Customer relationships, net
 
504.6

 
533.1

Other intangible assets, net
 
84.2

 
91.5

Right-of-use lease assets
 
173.3

 

Other assets
 
92.7

 
86.4

Total assets
 
$
4,327.3

 
$
4,311.9

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
 
 
 
 
Current liabilities
 
 
 
 
Notes payable
 
$
47.2

 
$
49.5

Accounts payable
 
491.8

 
509.5

Deferred revenue
 
443.2

 
378.2

Payroll and other benefits liabilities
 
167.2

 
184.3

Lease liability
 
61.7

 

Other current liabilities
 
443.4

 
446.9

Total current liabilities
 
1,654.5

 
1,568.4

Long-term debt
 
2,191.2

 
2,190.0

Pensions, post-retirement and other benefits
 
263.8

 
273.8

Long-term lease liability
 
110.4

 

Deferred income taxes
 
191.1

 
221.6

Other liabilities
 
91.2

 
87.3

Commitments and contingencies
 


 


Redeemable noncontrolling interests
 
99.8

 
130.4

Equity
 
 
 
 
Diebold Nixdorf, Incorporated shareholders' equity
 
 
 
 
Preferred shares, no par value, 1,000,000 authorized shares, none issued
 

 

Common shares, $1.25 par value, 125,000,000 authorized shares, 91,937,394 and 91,345,451 issued shares, 76,572,467 and 76,174,025 outstanding shares, respectively
 
114.9

 
114.2

Additional capital
 
761.0

 
741.8

Retained earnings (accumulated deficit)
 
(301.0
)
 
(168.3
)
Treasury shares, at cost (15,364,927 and 15,171,426 shares, respectively)
 
(571.5
)
 
(570.4
)
Accumulated other comprehensive loss
 
(304.8
)
 
(303.7
)
Total Diebold Nixdorf, Incorporated shareholders' equity
 
(301.4
)
 
(186.4
)
Noncontrolling interests
 
26.7

 
26.8

Total equity
 
(274.7
)
 
(159.6
)
Total liabilities, redeemable noncontrolling interests and equity
 
$
4,327.3

 
$
4,311.9

See accompanying notes to condensed consolidated financial statements.

3


DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
(in millions, except per share amounts)
 
Three Months Ended
 
March 31,
 
2019
 
2018
Net sales
 
 
 
Services
$
628.7

 
$
690.3

Products
399.4

 
373.9

 
1,028.1


1,064.2

Cost of sales
 
 
 
Services
473.5

 
523.0

Products
310.5

 
302.8

 
784.0

 
825.8

Gross profit
244.1

 
238.4

Selling and administrative expense
228.3

 
227.9

Research, development and engineering expense
36.9

 
41.7

Loss (gain) on sale of assets, net
3.4

 
(7.7
)
 
268.6

 
261.9

Operating loss
(24.5
)

(23.5
)
Other income (expense)
 
 
 
Interest income
2.9

 
3.5

Interest expense
(50.9
)
 
(26.0
)
Foreign exchange gain (loss), net
2.8

 
(1.4
)
Miscellaneous, net
(1.4
)
 
(0.1
)
Loss before taxes
(71.1
)
 
(47.5
)
Income tax expense
60.4

 
19.2

Equity in earnings of unconsolidated subsidiaries
(0.4
)
 
1.1

Net loss
(131.9
)
 
(65.6
)
Net income attributable to noncontrolling interests
0.8

 
7.6

Net loss attributable to Diebold Nixdorf, Incorporated
$
(132.7
)
 
$
(73.2
)
 
 
 
 
Basic and diluted weighted-average shares outstanding
76.4

 
75.8

 
 
 
 
Net loss attributable to Diebold Nixdorf, Incorporated
 
 
 
Basic and diluted loss per share
$
(1.74
)
 
$
(0.97
)
 
 
 
 
Dividends declared and paid per common share
$

 
$
0.10

See accompanying notes to condensed consolidated financial statements.

4


DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(unaudited)
(in millions)
 
 
Three Months Ended
 
 
March 31,
 
 
2019
 
2018
Net loss
 
$
(131.9
)
 
$
(65.6
)
Other comprehensive income (loss), net of tax
 
 
 
 
Adoption of accounting standard
 

 
(29.0
)
Translation adjustment
 
4.4

 
18.2

Foreign currency hedges (net of tax of $0.4 and $1.0, respectively)
 
(0.6
)
 
(2.8
)
Interest rate hedges
 
 
 
 
Net (loss) gain recognized in other comprehensive income (net of tax of $0.5 and $(0.6), respectively)
 
(2.3
)
 
2.2

Reclassification adjustment for amounts recognized in net income
 
0.5

 
0.4

 
 
(1.8
)
 
2.6

Pension and other post-retirement benefits
 
 
 
 
Net actuarial (loss) gain amortization (net of tax of $(0.3) and $(0.4), respectively)
 
(0.5
)
 
1.8

Other
 
0.1

 

Other comprehensive loss, net of tax
 
1.6

 
(9.2
)
Comprehensive loss
 
(130.3
)
 
(74.8
)
Less: comprehensive income attributable to noncontrolling interests
 
3.5

 
7.6

Comprehensive loss attributable to Diebold Nixdorf, Incorporated
 
$
(133.8
)
 
$
(82.4
)
See accompanying notes to condensed consolidated financial statements.

5


DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in millions)
 
 
Three Months Ended
 
 
March 31,
 
 
2019
 
2018
Cash flow from operating activities
 
 
 
 
Net loss
 
$
(131.9
)
 
$
(65.6
)
Adjustments to reconcile net loss to cash flow used by operating activities:
 
 
 
 
Depreciation and amortization
 
58.4

 
64.4

Share-based compensation
 
9.3

 
13.7

Loss (gain) on sale of assets, net
 
3.4

 
(7.7
)
Deferred income taxes
 
4.2

 
(17.9
)
Other
 
0.4

 
(1.9
)
Changes in certain assets and liabilities
 
 
 
 
Trade receivables
 
33.2

 
(17.7
)
Inventories
 
(63.1
)
 
(90.2
)
Accounts payable
 
(12.4
)
 
(3.6
)
Deferred revenue
 
66.6

 
60.3

Sales tax and net value added tax
 
(16.8
)
 
(29.7
)
Income taxes
 
47.2

 
28.2

Accrued salaries, wages and commissions
 
(13.3
)
 
(27.2
)
Restructuring
 
(17.7
)
 
(7.5
)
Warranty liability
 
(2.3
)
 
(12.9
)
Certain other assets and liabilities
 
(22.3
)
 
(27.0
)
Net cash used by operating activities
 
(57.1
)
 
(142.3
)
Cash flow from investing activities
 
 
 
 
Capital expenditures
 
(14.7
)
 
(20.2
)
Payment for acquisitions
 

 
(5.8
)
Proceeds from maturities of short-term investments
 
52.7

 
104.6

Payments for purchases of short-term investments
 
(48.3
)
 
(45.5
)
Proceeds from sale of assets
 
4.2

 
9.2

Increase in certain other assets
 
(5.4
)
 
(9.1
)
Net cash (used) provided by investing activities
 
(11.5
)
 
33.2

Cash flow from financing activities
 
 
 
 
Dividends paid
 

 
(7.7
)
Revolving credit facility borrowings (repayments), net
 
10.0

 
(75.0
)
Other debt borrowings
 
5.0

 
26.0

Other debt repayments
 
(16.8
)
 
(31.7
)
Distributions and payments to noncontrolling interest holders
 
(11.0
)
 
(0.5
)
Repurchase of common shares
 
(1.1
)
 
(2.5
)
Net cash used by financing activities
 
(13.9
)
 
(91.4
)
Effect of exchange rate changes on cash and cash equivalents
 
(0.5
)
 
21.5

Decrease in cash, cash equivalents and restricted cash
 
(83.0
)
 
(179.0
)
Add: Cash included in assets held for sale at beginning of period
 
7.3

 

Less: Cash included in assets held for sale at end of period
 
4.8

 

Cash, cash equivalents and restricted cash at the beginning of the period
 
458.4

 
543.2

Cash, cash equivalents and restricted cash at the end of the period
 
$
377.9

 
$
364.2

See accompanying notes to condensed consolidated financial statements.

6

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except per share amounts)

Note 1: Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Diebold Nixdorf, Incorporated and its subsidiaries (collectively, the Company) have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (U.S. GAAP); however, such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair statement of the results for the interim periods.

The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in the Company’s annual report on Form 10-K for the year ended December 31, 2018. In addition, some of the Company’s statements in this quarterly report on Form 10-Q may involve risks and uncertainties that could significantly impact expected future results. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of results to be expected for the full year.

Reclassification

In connection with changes in the Company's leadership, beginning with the second quarter of 2018, the Company's reportable operating segments are based on the following solutions: Eurasia Banking, Americas Banking and Retail. As a result, the Company reclassified comparative periods for consistency. The Company has reclassified the presentation of certain prior-year information to conform to the current presentation. The Company reclassified an immaterial amount of $2.7 for the three months ended March, 31, 2018, within the operating activities of the condensed consolidated statements of cash flows between depreciation and amortization and certain other assets and liabilities to correct the presentation.

Recently Adopted Accounting Guidance
Standards Adopted
 
Description
 
Effective
Date
Accounting Standards Update (ASU) 2016-02, Leases
 
The standard requires that a lessee recognize on its balance sheet right-of-use (ROU) assets and corresponding liabilities resulting from leasing transactions, as well as additional financial statement disclosures. The Company elected the option to apply the transition requirements in Accounting Standards Codification (ASC) 842 at the effective date of January 1, 2019. The effects of initially applying ASC 842 resulted in no cumulative adjustment to retained earnings in the period of adoption. The provisions of this update apply to substantially all leased assets.
 
January 1, 2019

Note 2: Leases

The Company utilizes lease agreements to meet its operating needs. These leases support global staff via the use of office space, warehouses, vehicles for technicians and information technology (IT) equipment. The Company utilizes both operating and finance leases in its portfolio of leased assets, however, the majority of these leases are classified as operating. A significant portion of the volume of the lease portfolio is in fleet vehicles and IT office equipment, however, real estate leases constitute a majority of the value of the ROU assets. Lease agreements are utilized worldwide, with the largest location concentration in the United States, Germany and India.

The Company has made the following elections related to the adoption of ASU No. 2016-02 Leases (Topic 842):
The Company elected the option to apply the transition requirements in ASC 842 at the effective date of January 1, 2019. The effects of initially applying ASC 842 resulted in no cumulative adjustment to retained earnings in the period of adoption.
The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company to carry forward its ASC 840 assessment regarding definition of a lease, lease classification, and initial direct costs.
The practical expedient related to land easements is not applicable as the Company currently does not utilize any easements.

7

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


The Company declined the hindsight practical expedient to determine the lease term and ROU asset impairment for existing leases. The decision to decline the hindsight practical expedient resulted in relying on assessments made under ASC 840 during transition and re-assessing under ASC 842 going forward.
The Company declined the short-term lease exception, therefore recognizing all leases in the ROU asset and lease liability balances. Consistent with ASC 842 requirements, leases that are one month or less are not included in the balance.
The Company elected to not separate non-lease components from lease components and, instead, to account for each separate lease component and the non-lease components associated with it as a single lease component, recognized on the balance sheet. This election has been made for all classes of underlying assets.
The Company elected to use a grouping/portfolio approach on applying discount rates to leases at transition, for certain groups of leases where it was determined that using this approach would not differ materially from a lease-by-lease approach.

The Company's lease population has initial lease terms ranging from less than one year to approximately ten years. Some leases include one or more options to renew, with renewal terms that can extend the lease term from six months to 15 years. We assess these renewal/extension options using a threshold of reasonably certain, which is a high threshold and, therefore, the majority of our lease terms for accounting purposes do not include renewal periods. For leases where the Company is reasonably certain to renew, those optional periods are included within the lease term and, therefore, the measurement of the ROU asset and lease liability. Some of the vehicle and IT equipment leases also include options to purchase the leased asset, typically at end of term at fair market value. Some of our leases include options to terminate the lease early. This allows the contract parties to terminate their obligations under the lease contract, sometimes in return for an agreed upon financial consideration. The terms and conditions of the termination options vary by contract, and for those leases where the Company is reasonably certain to use these options, the term and payments recognized in the measurement of ROU assets and lease liabilities has been updated accordingly. Additionally, there are several open-ended lease arrangements where the Company controls the option to continue or terminate the arrangement at any time after the first year. For these arrangements, the Company has used analysis of a mix of historical use and future economic incentive to determine the reasonable expected holding period. This term is used for measurement of ROU assets and lease liabilities.

The following table summarizes the weighted-average remaining lease terms and discount rates related to the Company's lease population:
 
Three Months Ended
 
March 31, 2019
Weighted-average remaining lease terms (in years)
 
      Operating leases
4.5

      Finance leases
2.8

Weighted-average discount rate
 
      Operating leases
14.3
%
      Finance leases
26.7
%

The weighted-average discount rates used for operating and finance leases varies due to the jurisdictional composition, whereas the Company has an immaterial amount of finance leases that are primarily comprised of leases in Turkey which have higher interest rates.

Certain lease agreements include payments based on a variety of global indexes or rates. These payment amounts have been projected using the index or rate as of lease commencement or the transition date and measured in ROU assets and lease liabilities. Other leases contain variable payments that are based on actual usage of the underlying assets and therefore are not measured in assets or liabilities as the variable payments are not based on an index or a rate. For real estate leases, these payments are most often tied to non-committed maintenance or utilities charges, and for equipment leases, to actual output or hours in operation. These amounts typically become known when the invoice is received, which is when expense is recognized. In rare circumstances, our lease agreements may contain residual value guarantees. Our lease agreements do not contain any restrictions or covenants, such as those relating to dividends or incurring additional financial obligations.

As of March 31, 2019, the Company did not have any leases that have not yet commenced but that create significant rights and obligations.

8

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)



The Company determines whether an arrangement is or includes a lease at contract inception. All contracts containing the right to use an underlying asset are reviewed to confirm that the contract meets the definition of a lease. ROU assets and liabilities are recognized at commencement date and initially measured based on the present value of lease payments over the defined lease term.

As most leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. In order to apply the incremental borrowing rate, a rate table was developed to assign the appropriate rate to each lease based on lease term and currency of payments. For leases with large numbers of underlying assets, a portfolio approach with a collateralized rate was utilized. Assets were grouped based on similar lease terms and economic environments in a manner whereby the Company reasonably expects that the application does not differ materially from a lease-by-lease approach.

The following table summarizes the components of lease expense:
 
Three Months Ended
 
March 31, 2019
Lease expense
 
Operating lease expense
$
20.6

Finance lease expense
 
      Amortization of ROU lease assets
$
0.1

      Interest on lease liabilities
$
0.1

Variable lease expense
$
3.2


The following table summarizes the maturities of lease liabilities:
 
Operating
 
Finance
2019 (excluding the three months ended March 31, 2019)
$
67.2

 
$
0.8

2020
58.1

 
1.0

2021
36.8

 
1.0

2022
23.0

 

2023
14.7

 

Thereafter
25.3

 

Total
225.1

 
2.8

Less: Present value discount
(53.0
)
 
(0.7
)
Lease liability
$
172.1

 
$
2.1



The following table summarizes the cash flow information related to leases:
 
Three Months Ended
 
March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
 
Operating - operating cash flows
$
21.9

Finance - financing cash flows
$
0.1

Finance - operating cash flows
$
0.1

ROU lease assets obtained in the exchange for lease liabilities
 
Operating leases
$
14.7

Finance leases
$
2.0



9

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


The following table summarizes the balance sheet information related to leases:
 
March 31, 2019
Assets
 
Operating
$
173.3

Finance
2.0

Total leased assets
$
175.3

 
 
Current liabilities
 
Operating
$
61.7

Finance
0.6

Noncurrent liabilities
 
Operating
110.4

Finance
1.5

Total lease liabilities
$
174.2


Finance leases are included in other assets, other current liabilities and other liabilities on the condensed consolidated balance sheets.

Note 3: Earnings (Loss) Per Share

Basic earnings (loss) per share is based on the weighted-average number of common shares outstanding. Diluted earnings (loss) per share includes the dilutive effect of potential common shares outstanding. Under the two-class method of computing earnings (loss) per share, non-vested share-based payment awards that contain rights to receive non-forfeitable dividends are considered participating securities. The Company’s participating securities include restricted stock units (RSUs), director deferred shares and shares that were vested but deferred by employees. The Company calculated basic and diluted earnings (loss) per share under both the treasury stock method and the two-class method. For the three months ended March 31, 2019 and 2018, there were no differences in the earnings (loss) per share amounts calculated under the two methods. Accordingly, the treasury stock method is disclosed below.


10

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


The following table represents amounts used in computing earnings (loss) per share and the effect on the weighted-average number of shares of dilutive potential common shares:
 
 
Three Months Ended
 
 
March 31,
 
 
2019
 
2018
Numerator
 
 
 
 
Income (loss) used in basic and diluted loss per share
 
 
 
 
Net loss
 
$
(131.9
)
 
$
(65.6
)
Net income attributable to noncontrolling interests
 
0.8

 
7.6

Net loss attributable to Diebold Nixdorf, Incorporated
 
$
(132.7
)
 
$
(73.2
)
Denominator
 
 
 
 
Weighted-average number of common shares used in basic and diluted loss per share (1)
 
76.4

 
75.8

Net loss attributable to Diebold Nixdorf, Incorporated
 
 
 
 
Basic and diluted loss per share
 
$
(1.74
)
 
$
(0.97
)
 
 
 
 
 
Anti-dilutive shares
 
 
 
 
Anti-dilutive shares not used in calculating diluted weighted-average shares
 
3.7

 
4.3

(1) 
Incremental shares of 1.2 and 0.9 shares for the three months ended March 31, 2019 and 2018, respectively, would have been included in the weighted-average number of shares used in diluted earnings (loss) per share used in the computation of diluted earnings (loss) per share because their effects are dilutive.

Note 4: Share-Based Compensation

The Company’s share-based compensation payments to employees are recognized based on their grant-date fair values during the period in which the employee is required to provide services in exchange for the award. Share-based compensation is primarily recognized as a component of selling and administrative expense. Total share-based compensation expense was $9.3 and $13.7 for the three months ended March 31, 2019 and 2018, respectively. In the first quarter of 2019, the Company changed its accounting estimate from using a forfeiture assumption to recording actual forfeitures. The change resulted in an immaterial increase in share-based compensation expense for the three months ended March 31, 2019.

Options outstanding and exercisable as of March 31, 2019 are included under the Company’s 1991 Equity and Performance Incentive Plan (as Amended and Restated as of February 12, 2014) (the 1991 Plan) and the Company's 2017 Equity and Performance Incentive Plan (the 2017 Plan). Changes during the three months ended March 31, 2019 were as follows:
 
 
Number of
Shares
 
Weighted-
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual
Term
 
Aggregate
Intrinsic
Value
(1)
 
 
 
 
(per share)
 
(in years)
 
 
Outstanding at January 1, 2019
 
2.5

 
$
27.05

 
 
 
 
Expired or forfeited
 
(0.1
)
 
$
29.76

 
 
 
 
Granted
 
1.1

 
$
4.33

 
 
 
 
Outstanding at March 31, 2019
 
3.5

 
$
19.83

 
6
 
$
12.1

Options exercisable at March 31, 2019
 
1.9

 
$
28.67

 
9
 
$
15.4

Options vested and expected to vest(2) at March 31, 2019
 
3.5

 
$
19.83

 
8
 
$
27.5

(1) 
The aggregate intrinsic value (the difference between the closing price of the Company’s common shares on the last trading day of the first quarter of 2019 and the exercise price, multiplied by the number of “in-the-money” options) that would have been received by the option holders had all option holders exercised their options on March 31, 2019. The amount of aggregate intrinsic value will change based on the fair market value of the Company’s common shares.
(2) 
The options expected to vest are the result of applying the pre-vesting forfeiture rate assumption to total outstanding non-vested options.


11

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


The following table summarizes information on non-vested RSUs and performance shares relating to employees and non-employee directors for the three months ended March 31, 2019:
 
 
Number of
Shares
 
Weighted-Average
Grant-Date Fair
Value
 
 
 
 
 
RSUs:
 
 
 
 
Non-vested at January 1, 2019
 
1.6

 
$
19.66

Vested
 
(0.6
)
 
$
21.57

Granted
 
1.2

 
$
4.08

Non-vested at March 31, 2019
 
2.2

 
$
10.62

Performance Shares:
 
 
 
 
Non-vested at January 1, 2019
 
3.0

 
$
26.90

Forfeited
 
(0.5
)
 
$
26.78

Vested
 
(0.2
)
 
$
26.60

Non-vested at March 31, 2019
 
2.3

 
$
26.90


Performance shares are granted to employees and vest based on the achievement of certain performance objectives, as determined by the board of directors each year. Each performance share earned entitles the holder to one common share of the Company. The Company's performance shares include performance objectives that are assessed after a three-year period as well as performance objectives that are assessed annually over a three-year period. No shares are vested unless certain performance threshold objectives are met.

As of March 31, 2019, there were 0.1 non-employee director deferred shares vested and outstanding.

On April 25, 2019, the Company's shareholders approved amendments to the 2017 Plan, which provide for an additional 3.0  common shares available for award. The 2017 Plan is expected to attract and retain directors, officers and employees of the Company by providing incentives and rewards for performance.

Note 5: Income Taxes

The effective tax rate on loss from continuing operations was (85.0) percent for the three months ended March 31, 2019. The expense on the loss is due primarily to the tax impacts of the the U.S. Tax Cuts and Jobs Act (the Tax Act) on the estimated projected tax rate. More specifically, the impacts of the global intangible low-taxed income (GILTI) and base erosion and anti-abuse tax (BEAT). In addition, the Company collapsed its Barbados structure to meet the debt covenant requirements from our lenders during the quarter which resulted in additional discrete tax expense which is being offset in part by the valuation allowance release relating to the Company’s nondeductible interest expense resulting in no additional cash taxes. The above items noted as well as the Company’s jurisdictional income (loss) mix and varying respective statutory rates are the primary drivers of the quarterly tax rate.

The effective tax rate on the net loss was (40.4) percent for the three months ended March 31, 2018. The expense on the loss is due primarily from impacts related to GILTI on the estimated annual tax rate.


12

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


Note 6: Inventories

Major classes of inventories are summarized as follows:
 
 
March 31, 2019
 
December 31, 2018
Finished goods
 
$
261.4

 
$
211.2

Service parts
 
222.2

 
221.6

Raw materials and work in process
 
179.4

 
177.3

Total inventories
 
$
663.0

 
$
610.1

 
The increase in finished goods inventory was primarily attributable to increased in transit inventory to meet customer orders in Brazil, Thailand and Europe, Middle East and Africa (EMEA).

Note 7: Investments

The Company’s investments, primarily in Brazil, consist of certificates of deposit that are classified as available-for-sale and stated at fair value based upon quoted market prices. Unrealized gains and losses are recorded in accumulated other comprehensive income (AOCI). Realized gains and losses are recognized in investment income and are determined using the specific identification method. There were no realized gains from the sale of securities or proceeds from the sale of available-for-sale securities for the three months ended March 31, 2019 and 2018.

The Company has deferred compensation plans that enable certain employees to defer receipt of a portion of their cash, 401(k) or share-based compensation and non-employee directors to defer receipt of director fees at the participants’ discretion. For deferred cash-based compensation, the Company established rabbi trusts (refer to note 18), which are recorded at fair value of the underlying securities within securities and other investments. The related deferred compensation liability is recorded at fair value within other long-term liabilities. Realized and unrealized gains and losses on marketable securities in the rabbi trusts are recognized in interest income.

The Company’s investments subject to fair value measurement consist of the following:
 
 
Cost Basis
 
Unrealized Gain
 
Fair Value
As of March 31, 2019
 
 
 
 
 
 
Short-term investments
 
 
 
 
 
 
Certificates of deposit
 
$
31.5

 
$

 
$
31.5

Long-term investments
 
 
 
 
 
 
Assets held in a rabbi trust
 
$
6.1

 
$
0.5

 
$
6.6

 
 
 
 
 
 
 
As of December 31, 2018
 
 
 
 
 
 
Short-term investments
 
 
 
 
 
 
Certificates of deposit
 
$
33.5

 
$

 
$
33.5

Long-term investments
 
 
 
 
 
 
Assets held in a rabbi trust
 
$
6.5

 
$
(0.2
)
 
$
6.3


Securities and other investments also includes a cash surrender value of insurance contracts of $9.3 and $11.1 as of March 31, 2019 and December 31, 2018, respectively. The decrease is primarily due to death benefits paid. In addition, it includes an interest rate swap asset carrying value of $2.8 and $4.8 as of March 31, 2019 and December 31, 2018, respectively, which also represents fair value (refer to note 18).

The Company has certain strategic alliances that are not consolidated. The Company tests these strategic alliances annually, individually and in the aggregate, to determine materiality. The Company owns 40.0 percent of Inspur (Suzhou) Financial Technology Service Co. Ltd. (Inspur JV) and 43.6 percent of Aisino-Wincor Retail & Banking Systems (Shanghai) Co., Ltd. (Aisino JV). The Company engages in transactions in the ordinary course of business with its strategic alliances. The Company's strategic alliances are not significant subsidiaries and are accounted for under the equity method of investments. As of March 31, 2019 , the Company had accounts receivable and accounts payable balances with these strategic alliances of $14.2 and $9.8,

13

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


respectively, which are included in trade receivables, less allowances for doubtful accounts accounts payables on the condensed consolidated balance sheets.

In May 2017, the Company announced a strategic partnership with Kony, a leading enterprise mobility and application company, to offer white label mobile application solutions for financial institutions and retailers. As of March 31, 2019, the Company's carrying value in Kony was $14.0 and the fair value was not estimated as there were no events or changes in circumstances in the investment.

There were no significant changes in provision for credit losses, recoveries and write-offs during the three months ended March 31, 2019 and 2018. As of March 31, 2019, finance leases and notes receivable individually evaluated for impairment were $36.6 and $4.8, respectively, with no provision recorded. As of March 31, 2018, finance leases and notes receivable individually evaluated for impairment were $32.4 and $15.0, respectively. There have been no material changes to the balances on the finance lease receivables maturity schedule since December 31, 2018. The income related to the finance lease receivables was minimal for the three months ended March 31, 2019.

The Company records interest income and any fees or costs related to financing receivables using the effective interest method over the term of the lease or loan. The Company reviews the aging of its financing receivables to determine past due and delinquent accounts. Credit quality is reviewed at inception and is re-evaluated as needed based on customer-specific circumstances. Receivable balances 60 days to 89 days past due are reviewed and may be placed on nonaccrual status based on customer-specific circumstances. Receivable balances are placed on nonaccrual status upon reaching greater than 89 days past due. Upon receipt of payment on nonaccrual financing receivables, interest income is recognized and accrual of interest is resumed once the account has been made current or the specific circumstances have been resolved.

As of March 31, 2019 and December 31, 2018, the recorded investment in past-due financing receivables was minimal and no recorded investment in the finance receivables was past due 90 days or more and still accruing interest.

Note 8: Goodwill and Other Assets

The Company’s three reportable operating segments are Eurasia Banking, Americas Banking and Retail. The Company has allocated goodwill to its Eurasia Banking, Americas Banking and Retail reportable operating segments. The changes in carrying amounts of goodwill within the Company's segments are summarized as follows:
 
Eurasia Banking
 
Americas Banking
 
Retail
 
Total
Goodwill
$
639.4

 
$
462.9

 
$
305.5

 
$
1,407.8

Accumulated impairment losses
(168.7
)
 
(122.0
)
 

 
(290.7
)
Balance at January 1, 2018
$
470.7

 
$
340.9

 
$
305.5

 
$
1,117.1

Transferred to assets held for sale
(0.8
)
 
(0.3
)
 
(45.9
)
 
(47.0
)
Currency translation adjustment
(10.0
)
 
(8.3
)
 
(7.2
)
 
(25.5
)
Goodwill
$
628.6

 
$
454.3

 
$
252.4

 
$
1,335.3

Impairment
(153.0
)
 

 
(64.5
)
 
(217.5
)
Accumulated impairment losses
(321.7
)
 
(122.0
)
 
(64.5
)
 
(508.2
)
Balance at December 31, 2018
$
306.9

 
$
332.3

 
$
187.9

 
$
827.1

Divestitures

 

 
(3.0
)
 
(3.0
)
Currency translation adjustment
(4.2
)
 
(3.5
)
 
(2.8
)
 
(10.5
)
Goodwill
$
624.4

 
$
450.8

 
$
246.6

 
$
1,321.8

Accumulated impairment losses
(321.7
)
 
(122.0
)
 
(64.5
)
 
(508.2
)
Balance at March 31, 2019
$
302.7

 
$
328.8

 
$
182.1

 
$
813.6


During the second quarter of 2018, the Company performed an impairment test of goodwill for all of its line of business (LoB) reporting units due to the change in its reportable operating segments. Based on the results of the LoB testing, the fair values of

14

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


each of the Company's reporting units exceed their carrying values except for the Services-Asia Pacific (AP) and Software-EMEA reporting units which resulted in a non-cash impairment loss of $83.1 during the second quarter 2018.

The Company identified four reporting units, which are Eurasia Banking, Americas Banking, EMEA Retail and Rest of World Retail. Management determined that the Americas Banking and EMEA Retail reporting unit had a cushion of approximately 20 percent and 10 percent, respectively, when compared to their carrying amounts. The Eurasia Banking had minimal excess fair value or cushion when compared to their carrying amounts, but primarily due to the reporting unit's improved performance, it did not indicate any impairment during the qualitative annual goodwill impairment test. Rest of World Retail had no carrying value as of December 31, 2018. Changes in certain assumptions or the Company's failure to execute on the current plan could have a significant impact to the estimated fair value of the reporting units.

During the second and third quarters 2018, the Company estimated the fair value of its reporting units using a combination of the income valuation and market approach methodologies. The determination of the fair value of a reporting unit requires significant estimates and assumptions, including significant unobservable inputs. The key inputs included, but were not limited to, discount rates, terminal growth rates, market multiple data from selected guideline public companies, management’s internal forecasts which include numerous assumptions such as projected net sales, gross profit, sales mix, operating and capital expenditures and earnings before interest and taxes margins, among others.

As a result of certain impairment triggering events, the Company performed an interim impairment test of goodwill for its four reporting units during the third quarter of 2018. Based on the results of the impairment testing, the Company recorded a non-cash goodwill impairment loss of $134.4 related to the Eurasia Banking, EMEA Retail and Rest of World Retail reporting units during the third quarter of 2018.

The following summarizes information on intangible assets by major category:
 
 
March 31, 2019
 
December 31, 2018
 
Weighted-average remaining useful lives
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Customer relationships, net
6.4 years
$
698.8

 
$
(194.2
)
 
$
504.6

 
$
712.2

 
$
(179.1
)
 
$
533.1

 
 
 
 
 
 
 
 
 
 
 
 
 
Internally-developed software
1.3 years
192.5

 
(126.2
)
 
66.3

 
189.6

 
(118.9
)
 
70.7

Development costs non-software
1.6 years
51.5

 
(43.0
)
 
8.5

 
52.5

 
(44.3
)
 
8.2

Other intangibles
0.4 years
78.9

 
(69.5
)
 
9.4

 
79.5

 
(66.9
)
 
12.6

Other intangible assets, net
 
322.9

 
(238.7
)
 
84.2

 
321.6

 
(230.1
)
 
91.5

Total
 
$
1,021.7

 
$
(432.9
)
 
$
588.8

 
$
1,033.8

 
$
(409.2
)
 
$
624.6


Amortization expense on capitalized software of $8.6 and $8.8 was included in service and software cost of sales for the three months ended March 31, 2019 and 2018, respectively. The Company's total amortization expense, including deferred financing costs, was $37.1 and $39.9 for the three months ended March 31, 2019 and 2018, respectively.

Note 9: Guarantees and Product Warranties

The Company provides its global operations guarantees and standby letters of credit through various financial institutions for suppliers, customers, regulatory agencies and insurance providers. If the Company is not able to make payments or fulfill contractual obligations, the suppliers, customers, regulatory agencies and insurance providers may draw on the pertinent bank. At March 31, 2019, the maximum future payment obligations related to these various guarantees totaled $220.3, of which $27.5 represented standby letters of credit to insurance providers, and no associated liability was recorded. At December 31, 2018, the maximum future payment obligations relative to these various guarantees totaled $135.2, of which $27.5 represented standby letters of credit to insurance providers, and no associated liability was recorded.

The Company provides its customers a manufacturer’s warranty and records, at the time of the sale, a corresponding estimated liability for potential warranty costs. Estimated future obligations due to warranty claims are based upon historical factors such

15

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


as labor rates, average repair time, travel time, number of service calls per machine and cost of replacement parts. The decrease in the liability was primarily due to warranties expiring in Brazil and Germany.

Changes in the Company’s warranty liability balance are illustrated in the following table:
 
 
2019
 
2018
Balance at January 1
 
$
40.1

 
$
76.7

Current period accruals
 
3.9

 
7.5

Current period settlements
 
(6.0
)
 
(19.0
)
Currency translation adjustment
 
(0.3
)
 
1.5

Balance at March 31
 
$
37.7

 
$
66.7


Note 10: Restructuring

The following table summarizes the impact of the Company’s restructuring charges on the condensed consolidated statements of operations:
 
 
Three Months Ended
 
 
March 31,
 
 
2019
 
2018
Cost of sales – services
 
$
1.5

 
$
2.0

Cost of sales – products
 

 
0.6

Selling and administrative expense
 
2.2

 
1.3

Research, development and engineering expense
 
0.1

 

Total
 
$
3.8

 
$
3.9


The following table summarizes the Company’s type of restructuring charges by reportable operating segment:
 
 
Three Months Ended
 
 
March 31,
 
 
2019
 
2018
Severance
 
 
 
 
Eurasia Banking
 
$
1.5

 
$
2.5

Americas Banking
 
0.4

 
0.1

Retail
 
0.8

 
0.5

Corporate
 
1.1

 
0.8

Total severance
 
$
3.8

 
$
3.9


DN Now

During the second quarter of 2018, the Company began implementing DN Now to deliver greater, more sustainable profitability. The plan is anticipating savings of approximately $160 for 2019, of which $130 is related to the restructuring actions in connection with the new customer centric operating model with clear role charters and a global workforce aligned with market demand and the remainder is related to other initiatives. Additional near term activities include divesting of non-core and/or non-accretive businesses, initiating a services modernization plan and rationalizing of the Company's product portfolio. The Company incurred restructuring charges of $3.8 for the three months ended March 31, 2019 related to DN Now. The Company anticipates additional restructuring costs of approximately $170 to $200 through the end of the plan primarily related to severance anticipated for completion of the Company's transformation throughout the three solution segments and corporate.

Completed Plans

DN2020 Plan. As of August 15, 2016, the date of the acquisition of Wincor Nixdorf Aktiengesellschaft (now known as Diebold Nixdorf AG) (the Acquisition), the Company launched a multi-year integration and transformation program, known as DN2020. The Company incurred restructuring charges of $3.8 for the three months ended March 31, 2018 related to this plan.


16

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


Strategic Alliance Plan. On November 10, 2016, the Company entered into a strategic alliance with the Inspur Group, a Chinese cloud computing and data center company, to develop, manufacture and distribute Systems solutions in China. The Company incurred $0.1 restructuring charges during the three months ended March 31, 2018 related to this plan.

The following table summarizes the Company's cumulative total restructuring costs by plan as of March 31, 2019:
 
Severance
 
DN Now
 
DN2020 Plan
 
Strategic Alliance
 
Total

 
 
 
 
 
 
 
Eurasia Banking
$
34.8

 
$
51.5

 
$
8.2

 
$
94.5

Americas Banking
9.0

 
13.6

 

 
22.6

Retail
13.3

 
15.6

 

 
28.9

Corporate
5.6

 
15.1

 

 
20.7

Total
$
62.7

 
$
95.8

 
$
8.2

 
$
166.7


The following table summarizes the Company’s restructuring accrual balances and related activity for the three months ended March 31:
 
 
2019
 
2018
Balance at January 1
 
$
56.9

 
$
54.0

Liabilities incurred
 
3.8

 
3.9

Liabilities paid/settled
 
(22.1
)
 
(10.2
)
Balance at March 31
 
$
38.6

 
$
47.7


Note 11: Debt

Outstanding debt balances were as follows:
 
 
March 31, 2019
 
December 31, 2018
Notes payable
 
 
 
 
Uncommitted lines of credit
 
$
18.4

 
$
20.9

Term Loan A-1 Facility
 
16.3

 
16.3

Term Loan B Facility - USD
 
4.8

 
4.8

Term Loan B Facility - Euro
 
4.7

 
4.8

Other
 
3.0

 
2.7

 
 
$
47.2

 
$
49.5

Long-term debt
 
 
 
 
Revolving Facility
 
$
135.0

 
$
125.0

Term Loan A Facility
 
126.3

 
126.3

Delayed Draw Term Loan A Facility
 
160.5

 
160.5

Term Loan A-1 Facility
 
621.6

 
625.6

Term Loan B Facility - USD
 
412.0

 
413.2

Term Loan B Facility - Euro
 
402.9

 
411.9

2024 Senior Notes
 
400.0

 
400.0

Other
 
2.6

 
2.4

 
 
2,260.9

 
2,264.9

Long-term deferred financing fees
 
(69.7
)
 
(74.9
)
 
 
$
2,191.2

 
$
2,190.0


As of March 31, 2019, the Company had various international short-term uncommitted lines of credit with borrowing limits of $50.8. The weighted-average interest rate on outstanding borrowings on the short-term uncommitted lines of credit as of March 31, 2019 and December 31, 2018 was 8.83 percent and 8.80 percent, respectively, and primarily relate to short-term uncommitted lines of credit in India and Brazil. Short-term uncommitted lines mature in less than one year. The amount available under the short-term uncommitted lines at March 31, 2019 was $32.4.


17

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


The cash flows related to debt borrowings and repayments were as follows:
 
 
Three Months Ended
 
 
March 31,
 
 
2019
 
2018
Revolving credit facility borrowings (repayments), net
 
$
10.0

 
$
(75.0
)
 
 
 
 
 
Other debt borrowings
 
 
 
 
International short-term uncommitted lines of credit borrowings
 
$
5.0

 
$
26.0

 
 
 
 
 
Other debt repayments
 
 
 
 
Payments on Term Loan A Facility under the Credit Agreement
 
$

 
$
(5.8
)
Payments on Delayed Draw Term Loan A Facility under the Credit Agreement
 

 
(3.1
)
Payments Term Loan A-1 Facility under the Credit Agreement
 
(4.0
)
 

Payments on Term Loan B Facility - USD under the Credit Agreement
 
(1.2
)
 
(1.2
)
Payments on Term Loan B Facility - Euro under the Credit Agreement
 
(1.2
)
 
(1.3
)
International short-term uncommitted lines of credit and other repayments
 
(10.4
)
 
(20.3
)
 
 
$
(16.8
)
 
$
(31.7
)

The Company has a revolving and term loan credit agreement (the Credit Agreement), with a revolving facility of up to $500.0 (the Revolving Facility). On December 23, 2020, the Term Loan A Facility will mature and the Revolving Facility will automatically terminate. The weighted-average interest rate on outstanding Revolving Facility borrowings as of March 31, 2019 and December 31, 2018 was 6.00 percent and 5.97 percent, respectively, which is variable based on the London Interbank Offered Rate (LIBOR). The amount available under the Revolving Facility as of March 31, 2019 was $337.5, after excluding $27.5 in letters of credit.

On May 9, 2017, the Company entered into an incremental amendment to its Credit Agreement (the Incremental Agreement) which reduced the initial term loan B facility (the Term Loan B Facility) of a $1,000.0 U.S. dollar-denominated tranche to $475.0. The reduction was funded using the $250.0 proceeds drawn from the Delayed Draw Term Loan A Facility, a replacement of $70.0 with Term Loan B Facility - Euro and previous principal payments.

The Incremental Amendment also renewed the repricing premium of 1.00 percent in relation to the Term Loan B Facility to the date that is six months after the Incremental Effective Date, removed the requirements to prepay the repriced Dollar Term Loan and the repriced Euro Term Loan upon any asset sale or casualty event if the Company is below a total net leverage ratio of 2.5:1.0 on a pro forma basis for such asset sale or casualty event and provides additional restricted payments and investment carveouts in regards to assets acquired with the Acquisition. All other material provisions under the Credit Agreement were unchanged.

On August 30, 2018, the Company entered into a sixth amendment and incremental amendment (the Sixth Amendment) to its Credit Agreement. The Amendment amended the financial covenants and established a new senior secured incremental term A-1 facility in an aggregate principal amount of $650.0 (Term Loan A-1 Facility) and makes certain other changes to the Credit Agreement. Following the execution of the Sixth Amendment, the Company has executed, and has caused certain of its subsidiaries to execute, certain foreign security and guaranty documents for the benefit of the secured parties under the Credit Agreement that provide for guarantees by, and additional security with respect to the equity interests in and the the stock of certain foreign subsidiaries.

A portion of the proceeds of the Term Loan A-1 Facility are restricted to fund the purchase of the remaining shares of Diebold Nixdorf AG not owned by the Company. The proceeds were used to make optional prepayments of existing term A loans in the amount of $130.0 and to permanently reduce revolving credit commitments in an amount of $20.0 and to make a purchase pursuant to an offer open to all term B lenders on a pro rata basis for $100.0 in face principal amount of term B loans. Any remaining proceeds were used for general corporate and working capital purposes.


18

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


The interest rate with respect to the Term Loan A-1 Facility is based on, at the Company’s option, either the alternative base rate (ABR) plus 8.25 percent or a eurocurrency rate plus 9.25 percent. The Term A-1 Facility will mature in August 2022, the fourth anniversary of the Sixth Amendment. The Term Loan A-1 Facility is subject to a maximum consolidated net leverage ratio, a minimum consolidated interest coverage ratio and certain covenant reset triggers (Covenant Reset Triggers) as described in the Sixth Amendment. Upon the occurrence of any Covenant Reset Trigger, the financial covenant levels will automatically revert to previous financial covenant levels in effect prior to the Sixth Amendment.

The Credit Agreement financial ratios at March 31, 2019 were as follows:

a maximum allowable total net debt to adjusted EBITDA leverage ratio of 7.00 to 1.00 as of December 31, 2018 (reducing to 6.50 on June 30, 2020, 6.25 on December 31, 2020, 6.00 on June 30, 2021, and 5.75 on December 31, 2021); and
a minimum adjusted EBITDA to net interest expense coverage ratio of not less than 1.38 to 1.00 (increasing to 1.50 on December 31, 2020, and 1.63 on December 31, 2021).

The Company has $400.0 aggregate principal amount of senior notes due 2024 (the 2024 Senior Notes), which are and will be guaranteed by certain of the Company’s existing and future subsidiaries and mature in April 2024.

Below is a summary of financing and replacement facilities information:
Financing and Replacement Facilities
 
Interest Rate
Index and Margin
 
Maturity/Termination Dates
 
Initial Term (Years)
Credit Agreement facilities
 
 
 
 
 
 
Revolving Facility
 
LIBOR + 3.50%
 
December 2020
 
5
Term Loan A Facility
 
LIBOR + 3.50%
 
December 2020
 
5
Delayed Draw Term Loan A Facility
 
LIBOR + 3.50%
 
December 2020
 
5
Term Loan A-1 Facility
 
LIBOR + 9.25%
 
August 2022
 
4
Term Loan B Facility - USD
 
LIBOR(i) + 2.75%
 
November 2023
 
7.5
Term Loan B Facility - Euro
 
EURIBOR(ii) + 3.00%
 
November 2023
 
7.5
2024 Senior Notes
 
8.5%
 
April 2024
 
8
(i) 
LIBOR with a floor of 0.0%.
(ii) 
EURIBOR with a floor of 0.0%.

The debt facilities under the Credit Agreement are secured by substantially all assets of the Company and its domestic subsidiaries that are borrowers or guarantors under the Credit Agreement, subject to certain exceptions and permitted liens.

The Company's financing agreements contain various financial covenants, including net debt to capitalization, net debt to EBITDA and net interest coverage ratio, along with certain negative covenants that, among other things, limit dividends, acquisitions and the use of proceeds from divestitures. Under the Sixth Amendment, the Term Loan A-1 Facility is under a covenant holiday period until the earlier of any covenant reset trigger or April 1, 2019. As of March 31, 2019, the Company was in compliance with the financial and other covenants in its debt agreements.

Note 12: Redeemable Noncontrolling Interests

Changes in the Company's redeemable noncontrolling interests balance are illustrated in the following table:
 
 
2019
 
2018
Balance at January 1
 
$
130.4

 
$
492.1

Other comprehensive income
 
(1.7
)
 

Redemption value adjustment
 
(18.6
)
 
17.5

Redemption of shares
 
(10.3
)
 

Balance at March 31
 
$
99.8

 
$
509.6


On February 14, 2017, the date of effectiveness of the Domination and Profit and Loss Transfer Agreement, dated September 26, 2016 (the DPLTA), between Diebold Holding Germany Inc. & Co. KGaA (Diebold KGaA), a wholly-owned subsidiary of Diebold

19

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


Nixdorf, Incorporated, and Diebold Nixdorf AG, the carrying value of the noncontrolling interest related to the Diebold Nixdorf AG of $386.7 was reclassified to redeemable noncontrolling interest. For the period of time that the DPLTA is effective, this interest in Diebold Nixdorf AG will remain in redeemable noncontrolling interest and presented outside of equity in the consolidated balance sheets of the Company. As of March 31, 2019 and December 31, 2018, the balance related to the redeemable noncontrolling interest related to the Diebold Nixdorf AG ordinary shares the Company did not acquire was $87.4 and $99.1, respectively. The change is primarily related to currency fluctuations and the redemption of 0.2 Diebold Nixdorf AG ordinary shares in the three months ended March 31, 2019. The Company increased its ownership stake in Diebold Nixdorf AG to 28.4 ordinary shares, or approximately 95.3 percent, as of March 31, 2019. In March 2019, at a Diebold Nixdorf AG shareholder meeting, a merger squeeze-out was approved and, as a result, Diebold Nixdorf AG and Diebold KGaA will continue to execute the squeeze-out procedures.

The DPLTA offers the Diebold Nixdorf AG minority shareholders, at their election, (i) the ability to put their Diebold Nixdorf AG ordinary shares to Diebold KGaA in exchange for cash compensation of €55.02 per Diebold Nixdorf AG ordinary share or (ii) to remain Diebold Nixdorf AG minority shareholders and receive a recurring compensation in cash of €2.82 per Diebold Nixdorf AG ordinary share for each full fiscal year of Diebold Nixdorf AG. The redemption value adjustment includes the updated cash compensation pursuant to the DPLTA. A portion of the proceeds of the Term Loan A-1 Facility are restricted to fund the purchase of the remaining shares of Diebold Nixdorf AG not owned by the Company. The Company classified the proceeds set aside to purchase the remaining shares in restricted cash in the condensed consolidated balance sheets.

The remaining balance relates to certain noncontrolling interests with redemption features, that include put rights that are not within the control of the issuer, which are considered redeemable noncontrolling interests. The redeemable noncontrolling interests were recorded at fair value as by applying the income approach using unobservable inputs for projected cash flows, including but not limited, to net sales and operating profit, and a discount rate, which are considered Level 3 inputs. The results of operations for these redeemable noncontrolling interests were not significant. The ultimate amount and timing of any future cash payments related to the put rights are uncertain.


20

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


Note 13: Equity

The following table presents changes in shareholders' equity attributable to Diebold Nixdorf, Incorporated and the noncontrolling
interests:
 
 
 
 
 
 
 
 
 
 
Accumulated Other Comprehensive Income (Loss)
 
Total Diebold Nixdorf, Incorporated Shareholders' Equity
 
 
 
 
 
 
Common Shares
 
Additional
Capital
 
Retained
Earnings
 
Treasury
Shares
 
 
 
Non-controlling
Interests
 
Total
Equity
Balance, December 31, 2017
 
$
113.2

 
$
721.5

 
$
374.5

 
$
(567.4
)
 
$
(196.3
)
 
$
445.5

 
$
36.8

 
$
482.3

Net income (loss)
 
 
 
 
 
(73.2
)
 
 
 
 
 
(73.2
)
 
7.6

 
(65.6
)
Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
(9.2
)
 
(9.2
)
 

 
(9.2
)
Share-based compensation issued
 
0.6

 
(0.6
)
 
 
 
 
 
 
 

 
 
 

Share-based compensation expense
 
 
 
13.7

 
 
 
 
 
 
 
13.7

 
 
 
13.7

Dividends paid
 
 
 
 
 
(7.7
)
 
 
 
 
 
(7.7
)
 
 
 
(7.7
)
Accounting principle change
 
 
 
 
 
33.6

 
 
 
 
 
33.6

 
 
 
33.6

Treasury shares
 
 
 
 
 
 
 
(2.5
)
 
 
 
(2.5
)
 
 
 
(2.5
)
Reclassification of guaranteed dividend to accrued liabilities
 
 
 
 
 
 
 
 
 
 
 

 
(4.4
)
 
(4.4
)
Distribution noncontrolling interest holders, net
 
 
 
 
 
 
 
 
 
 
 

 
(0.5
)
 
(0.5
)
Acquisitions and divestitures, net
 
 
 
 
 
 
 
 
 
 
 

 
(3.3
)
 
(3.3
)
Balance, March 31, 2018
 
$
113.8

 
$
734.6

 
$
327.2

 
$
(569.9
)
 
$
(205.5
)
 
$
400.2

 
$
36.2

 
$
436.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2018
 
$
114.2

 
$
741.8

 
$
(168.3
)
 
$
(570.4
)
 
$
(303.7
)
 
$
(186.4
)
 
$
26.8

 
$
(159.6
)
Net income (loss)
 
 
 
 
 
(132.7
)
 
 
 
 
 
(132.7
)
 
0.8

 
(131.9
)
Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
(1.1
)
 
(1.1
)
 
2.7

 
1.6

Share-based compensation issued
 
0.7

 
(0.7
)
 
 
 
 
 
 
 

 
 
 

Share-based compensation expense
 
 
 
9.3

 
 
 
 
 
 
 
9.3

 
 
 
9.3

Treasury shares
 
 
 
 
 
 
 
(1.1
)
 
 
 
(1.1
)
 
 
 
(1.1
)
 Reclassification of guaranteed dividend to accrued liabilities
 
 
 
 
 
 
 
 
 
 
 

 
(0.6
)
 
(0.6
)
Reclassifications of redeemable noncontrolling interest
 
 
 
10.6

 
 
 
 
 
 
 
10.6

 

 
10.6

Acquisitions and divestitures, net
 
 
 
 
 
 
 
 
 
 
 

 
(3.0
)
 
(3.0
)
Balance, March 31, 2019
 
$
114.9

 
$
761.0

 
$
(301.0
)
 
$
(571.5
)
 
$
(304.8
)
 
$
(301.4
)
 
$
26.7

 
$
(274.7
)


21

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


Note 14: Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in the Company’s AOCI, net of tax, by component for the three months ended March 31, 2019:

 
Translation
 
Foreign Currency Hedges
 
Interest Rate Hedges
 
Pension and Other Post-retirement Benefits
 
Other
 
Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2019
 
$
(191.5
)
 
$
(1.9
)
 
$
10.6

 
$
(121.0
)
 
$
0.1

 
$
(303.7
)
Other comprehensive income (loss) before reclassifications (1)
 
1.7

 
(0.6
)
 
(2.3
)
 

 
0.1

 
(1.1
)
Amounts reclassified from AOCI
 

 

 
0.5

 
(0.5
)
 

 

Net current-period other comprehensive income (loss)
 
1.7

 
(0.6
)
 
(1.8
)
 
(0.5
)
 
0.1

 
(1.1
)
Balance at March 31, 2019
 
$
(189.8
)
 
$
(2.5
)
 
$
8.8

 
$
(121.5
)
 
$
0.2

 
$
(304.8
)
(1) Other comprehensive income (loss) before reclassifications within the translation component excludes $2.7 of translation attributable to noncontrolling interests.

The following table summarizes the changes in the Company’s AOCI, net of tax, by component for the three months ended March 31, 2018:
 
 
Translation
 
Foreign Currency Hedges
 
Interest Rate Hedges
 
Pension and Other Post-retirement Benefits
 
Other
 
Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2018
 
$
(116.8
)
 
$
(5.1
)
 
$
8.1

 
$
(82.6
)
 
$
0.1

 
$
(196.3
)
Adoption of accounting standards (1)
 
(9.1
)
 
(1.0
)
 
1.3

 
(20.2
)
 

 
$
(29.0
)
Other comprehensive income (loss) before reclassifications
 
18.2

 
(2.8
)
 
2.2

 

 

 
17.6

Amounts reclassified from AOCI
 

 

 
0.4

 
1.8

 

 
2.2

Net current-period other comprehensive income (loss)
 
9.1

 
(3.8
)
 
3.9

 
(18.4
)
 

 
(9.2
)
Balance at March 31, 2018
 
$
(107.7
)

$
(8.9
)

$
12.0


$
(101.0
)

$
0.1

 
$
(205.5
)
(1)Stranded tax effects reclassified from AOCI to retained earnings from the adoption of ASU 2018-02.

The following table summarizes the details about amounts reclassified from AOCI:
 
 
Three Months Ended
 
Affected Line Item in the Statement of Operations
 
 
2019
 
2018
 
Interest rate hedges
 
$
0.5

 
$
0.4

 
Interest expense
Pension and post-retirement benefits:
 
 
 
 
 
 
Net actuarial (loss) gain amortization (net of tax of $(0.3) and $(0.4), respectively)
 
(0.5
)
 
1.8

 
(1) 
Total reclassifications for the period
 
$

 
$
2.2

 
 
(1) 
Pension and other post-retirement benefits AOCI components are included in the computation of net periodic benefit cost (refer to note 16).

Note 15: Acquisitions and Divestitures

In the first quarter of 2019, the Company liquidated its SecurCash B.V. Netherlands entity, a cash transportation services business, Diebold Hungary Manufacturing, a manufacturing business and three Barbados holding companies resulting in a gain of $3.5. The Company divested its interest in Projective NV, a program and project management services business for financial institutions, for $4.2 in proceeds, net of cash transferred resulting in a loss of $2.8. The Company also recorded a loss of $4.1 on the divestiture of its Venezuela business.

In the first quarter of 2018, the Company acquired the remaining portion of its noncontrolling interest in its China operations for $5.8 in the aggregate.


22

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2019
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


Note 16: Benefit Plans

The Company has qualified retirement plans covering certain U.S. employees that have been closed to new participants since 2003 and frozen since December 2013. Plans that cover salaried employees provide retirement benefits based on an employee’s compensation during the ten years before the date of the plan freeze or the date of the employee's actual separation from service, if earlier. The Company’s funding policy for salaried plans is to contribute annually based on actuarial projections and applicable regulations. Plans covering hourly employees generally provide benefits of stated amounts for each year of service. The Company’s funding policy for hourly plans is to make at least the minimum annual contributions required by applicable regulations.

The Company has non-qualified pension plans to provide supplemental retirement benefits to certain officers, which have also been frozen since December 2013. Benefits are payable at retirement based upon a percentage of the participant’s compensation, as defined. In addition to providing retirement benefits, the Company provides post-employment healthcare and life insurance benefits (referred to as other benefits) for certain retired employees. Retired eligible employees in the United States may be entitled to these benefits based upon years of service with the Company, age at retirement and collective bargaining agreements. There are no plan assets and the Company funds the benefits as the claims are paid. The post-employment benefit obligation was determined by application of the terms of medical and life insurance plans together with relevant actuarial assumptions and healthcare cost trend rates.

The Company also has defined benefit plans in Germany and Switzerland, among others. In Germany, post-employment benefit plans are set up as employer funded pension plans and deferred compensation plans. The employer funded pension commitments in Germany are based upon direct performance-related commitments in terms of defined contribution plans. Each beneficiary receives, depending on individual pay-scale grouping, contractual classification or income level, different yearly contributions. The contribution is multiplied by an age factor appropriate to the respective pension plan and credited to the individual retirement account of the employee. The retirement accounts may be used up at retirement by either a one-time lump-sum payout or payments of up to ten years. Insured events include disability, death and reaching of retirement age. In Switzerland, the post-employment benefit plan is required due to statutory provisions. The employees receive their pension payments as a function of contributions paid, a fixed interest rate and annuity factors. Insured events are disability, death and reaching of retirement age.

The following table sets forth the net periodic benefit cost for the Company’s defined benefit pension plans and other benefits for the three months ended March 31:
 
 
Pension Benefits
 
 
 
 
U.S.Plans
 
Non-U.S. Plans
 
Other Benefits
 
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Components of net periodic benefit cost
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
 
$
0.9

 
$
1.0

 
$
2.5

 
$
2.8

 
$

 
$

Interest cost
 
5.5

 
5.2

 
1.6

 
1.6

 
0.1