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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
__________________________________________________
Form 10-Q
__________________________________________________ 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
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)
50 Executive Parkway, P.O. Box 2520HudsonOhio 44236
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (330490-4000
__________________________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common shares, $1.25 par value per shareDBDNew York Stock Exchange
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  ☒     No  ☐
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  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an 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 filerAccelerated filerNon-accelerated filer
Smaller reporting companyEmerging growth company
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
Number of shares of common stock outstanding as of August 5, 2022 was 79,062,032.



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)
June 30, 2022December 31, 2021
 (Unaudited) 
ASSETS
Current assets
Cash, cash equivalents, and restricted cash$249.9 $388.9 
Short-term investments31.4 34.3 
Trade receivables, less allowances for doubtful accounts of $33.5 and $35.3, respectively
563.1 595.2 
Inventories642.2 544.2 
Prepaid expenses48.1 48.2 
Current assets held for sale61.5 73.4 
Other current assets252.4 203.1 
Total current assets1,848.6 1,887.3 
Securities and other investments8.2 11.0 
Property, plant and equipment, net of accumulated depreciation and amortization of $466.6 and $494.3, respectively
117.2 138.1 
Goodwill688.9 743.6 
Deferred income taxes 95.7 
Customer relationships, net242.3 301.7 
Other assets276.9 329.8 
Total assets$3,182.1 $3,507.2 
LIABILITIES AND EQUITY
Current liabilities
Notes payable$10.8 $47.1 
Accounts payable718.1 706.3 
Deferred revenue335.0 322.4 
Payroll and other benefits liabilities135.2 186.5 
Current liabilities held for sale10.4 20.3 
Other current liabilities446.8 466.8 
Total current liabilities1,656.3 1,749.4 
Long-term debt2,411.7 2,245.6 
Pensions, post-retirement and other benefits92.0 104.2 
Deferred income taxes136.0 105.5 
Other liabilities133.3 139.5 
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, 95,687,758 and 94,599,742 issued shares, 79,043,588 and 78,352,333 outstanding shares, respectively
119.6 118.3 
Additional capital825.0 819.6 
Retained earnings (accumulated deficit)(1,204.7)(822.4)
Treasury shares, at cost (16,644,170 and 16,247,409 shares, respectively)
(585.4)(582.1)
Accumulated other comprehensive loss(412.2)(378.5)
Total Diebold Nixdorf, Incorporated shareholders' equity(1,257.7)(845.1)
Noncontrolling interests10.5 8.1 
Total equity(1,247.2)(837.0)
Total liabilities and equity$3,182.1 $3,507.2 
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 endedSix months ended
June 30June 30
 2022202120222021
Net sales
Services$525.4 $586.7 $1,051.6 $1,160.3 
Products326.3 356.8 629.9 727.1 
851.7 943.5 1,681.5 1,887.4 
Cost of sales
Services375.1 409.9 749.3 799.5 
Products315.8 281.7 586.1 562.8 
690.9 691.6 1,335.4 1,362.3 
Gross profit160.8 251.9 346.1 525.1 
Selling and administrative expense213.8 204.8 394.8 408.2 
Research, development and engineering expense33.1 35.6 65.4 69.7 
(Gain) loss on sale of assets, net (1.4)0.2 (1.9)
Impairment of assets5.4  60.6  
252.3 239.0 521.0 476.0 
Operating profit (loss)(91.5)12.9 (174.9)49.1 
Other income (expense)
Interest income1.0 2.3 2.3 4.0 
Interest expense(49.6)(49.7)(97.7)(98.4)
Foreign exchange gain (loss), net2.3 (9.2)(2.4)(3.5)
Miscellaneous, net4.6 2.7 7.2 2.0 
Loss before taxes(133.2)(41.0)(265.5)(46.8)
Income tax expense (benefit)64.2 (11.2)115.1 (10.0)
Equity in loss of unconsolidated subsidiaries(1.7)(0.5)(2.4)(1.6)
Net loss(199.1)(30.3)(383.0)(38.4)
Net income (loss) attributable to noncontrolling interests0.1  (0.7) 
Net loss attributable to Diebold Nixdorf, Incorporated$(199.2)$(30.3)$(382.3)$(38.4)
Basic and diluted weighted-average shares outstanding79.0 78.3 78.9 78.2 
Net loss attributable to Diebold Nixdorf, Incorporated
Basic and diluted loss per share$(2.52)$(0.39)$(4.85)$(0.49)
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 endedSix months ended
June 30June 30
 2022202120222021
Net loss$(199.1)$(30.3)$(383.0)$(38.4)
Other comprehensive income (loss), net of tax
Translation adjustment(47.3)21.8 (36.1)(13.5)
Foreign currency hedges (net of tax of $0.0, $0.0, $0.0, and $0.0, respectively)
0.9 (1.3)(0.1)0.3 
Interest rate hedges
Net income (loss) recognized in other comprehensive income (net of tax of $0.0, $0.4, $0.6, and $0.8, respectively)
1.8 2.0 4.7 4.1 
Reclassification adjustment for amounts recognized in net income (0.3)(0.6)(0.8)
1.8 1.7 4.1 3.3 
Pension and other post-retirement benefits
Net actuarial loss amortized (net of tax of $(0.7), $0.4, $(0.4), and $0.9 respectively)
0.1 1.2 0.8 3.8 
Other  0.7 (0.9)
Other comprehensive loss, net of tax(44.5)23.4 (30.6)(7.0)
Comprehensive loss(243.6)(6.9)(413.6)(45.4)
Less: Comprehensive income (loss) attributable to noncontrolling interests2.4 0.1 2.4 0.6 
Comprehensive loss attributable to Diebold Nixdorf, Incorporated$(246.0)$(7.0)$(416.0)$(46.0)
See accompanying notes to condensed consolidated financial statements.
5

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in millions)
 Six months ended
June 30
 20222021
Cash flow from operating activities
Net loss$(383.0)$(38.4)
Adjustments to reconcile net loss to cash flow used by operating activities:
Depreciation and amortization29.1 38.5 
Amortization of Wincor Nixdorf purchase accounting intangible assets36.1 39.8 
Amortization of deferred financing costs into interest expense8.3 8.7 
Share-based compensation6.9 8.0 
(Gain) loss on sale of assets, net0.1 (1.9)
Impairment of assets60.6  
Deferred income taxes130.4 (3.9)
Other1.7  
Changes in certain assets and liabilities
Trade receivables(4.3)(2.3)
Inventories(136.0)(96.0)
Accounts payable46.0 70.4 
Deferred revenue24.0 (40.6)
Sales tax and net value added tax(26.0)(34.7)
Income taxes(45.1)(34.2)
Accrued salaries, wages and commissions(45.0)(11.5)
Restructuring accrual40.1 (10.1)
Warranty liability(2.8)(0.2)
Pension and post retirement benefits(9.9)(2.7)
Certain other assets and liabilities(37.8)(32.6)
Net cash used by operating activities(306.6)(143.7)
Cash flow from investing activities
Capital expenditures(8.1)(6.2)
Capitalized software development(17.4)(11.2)
Proceeds from divestitures, net of cash divested10.5 5.8 
Proceeds from maturities of investments235.0 177.3 
Payments for purchases of investments(226.9)(150.3)
Proceeds from sale of assets 1.7 
Net cash provided (used) by investing activities(6.9)17.1 
Cash flow from financing activities
Revolving credit facility borrowings (repayments), net192.0 20.9 
Other debt borrowings1.9 7.4 
Other debt repayments(7.9)(5.2)
Contributions from noncontrolling interest holders 12.7 
Other(5.7)(6.3)
Net cash provided by financing activities180.3 29.5 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(5.5)(0.6)
Change in cash, cash equivalents and restricted cash(138.7)(97.7)
Add: Cash included in assets held for sale at beginning of period3.1 2.7 
Less: Cash included in assets held for sale at end of period3.4 5.2 
Cash, cash equivalents and restricted cash at the beginning of the period388.9 324.5 
Cash, cash equivalents and restricted cash at the end of the period$249.9 $224.3 
See accompanying notes to condensed consolidated financial statements.
6

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2022
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 presented.

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, 2021. 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 and six months ended June 30, 2022 are not necessarily indicative of results to be expected for the full year.

The Company has reclassified the presentation of certain prior-year information to conform to the current presentation.

Recently Issued Accounting Guidance

The Company considers the applicability and impact of all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB).

In March 2020, the FASB issued guidance that provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by the transition away from reference rates expected to be discontinued to alternative reference rates. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2022. The standard does not materially impact the Company's consolidated financial statements.

Although there are other new accounting pronouncements issued by the FASB, the Company does not believe these will have a materially impact on its consolidated financial statements.

Note 2: 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 vested but were 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 and six months ended June 30, 2022 and 2021, there were no differences in the earnings (loss) per share amounts calculated using the two methods. Accordingly, the treasury stock method is disclosed below; however, because the Company is in a net loss position, dilutive shares of 2.2 and 1.3 for the three months ended June 30, 2022 and 2021, respectively, and 1.5 and 1.3 for the six months ended June 30, 2022 and 2021, respectively, are excluded from the shares used in the computation of diluted earnings (loss) per share.

7

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2022
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 endedSix months ended
June 30June 30
2022202120222021
Numerator
Income (loss) used in basic and diluted loss per share
Net loss$(199.1)$(30.3)$(383.0)$(38.4)
Net income (loss) attributable to noncontrolling interests0.1  (0.7) 
Net loss attributable to Diebold Nixdorf, Incorporated$(199.2)$(30.3)$(382.3)$(38.4)
Denominator
Weighted-average number of common shares used in basic and diluted loss per share (1)
79.0 78.3 78.9 78.2 
Net loss attributable to Diebold Nixdorf, Incorporated
Basic and diluted loss per share$(2.52)$(0.39)$(4.85)$(0.49)
(1)Shares of 5.0 and 1.6 for the three months ended June 30, 2022 and 2021, respectively, and 4.5 and 1.6 for the six months ended June 30, 2022 and 2021, respectively, are excluded from the computation of diluted earnings per share because the effects are anti-dilutive, irrespective of the net loss position.

Note 3: Income Taxes

The effective tax rate on the loss from continuing operations was (48.2) percent and (43.4) percent for the three and six months ended June 30, 2022. The tax provision for the three months ended June 30, 2022 was attributable to current quarter pre-tax losses and a current quarter discrete tax adjustment relating to a change in judgment on valuation allowance due to the Company’s current quarter going concern assessment. In conjunction with this change in judgment on valuation allowance, the Company has also changed its approach in calculating its income tax expense by using its actual effective tax rate year to date, as opposed to its annual effective tax rate as in the past, as provided in Accounting Standards Codification (ASC) Topic 740-270-30-18. See Note 9 for further details. Similarly, the tax provision for the six months ended June 30, 2022 was attributable to the jurisdictional mix of year to date income and loss, in addition to the change in valuation allowance referenced above.

The effective tax rate on the loss from continuing operations was 27.0 percent and 20.7 percent for the three and six months ended June 30, 2021. The tax benefit for the three months ended June 30, 2021 was attributable to current quarter pre-tax losses. The tax benefit for the six months ended June 30, 2021 was primarily attributable to the jurisdictional mix of income and loss, valuation allowance on certain interest expense carryforwards, partially offset by discrete tax adjustments for uncertain tax positions, tax return to provision differences and expired stock compensation.

Note 4: Inventories

Major classes of inventories are summarized as follows:
June 30, 2022December 31, 2021
Raw materials and work in process$240.9 $194.1 
Finished goods234.6 180.3 
Total product inventories475.5 374.4 
Service parts166.7 169.8 
Total inventories$642.2 $544.2 

8

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2022
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)

Note 5: Investments

The Company’s investments, primarily in Brazil, consist of certificates of deposit that are recorded at fair value based upon quoted market prices. Changes in fair value are recognized in interest income, determined using the specific identification method, and were minimal. There were no gains from the sale of securities or proceeds from the sale of securities prior to the maturity date for the three and six months ended June 30, 2022 and 2021.

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 enable 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 15), 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 BasisUnrealized
Gain / (Loss)
Fair Value
As of June 30, 2022
Short-term investments
Certificates of deposit$31.4 $ $31.4 
Long-term investments
Assets held in a rabbi trust$4.9 $0.2 $5.1 
As of December 31, 2021
Short-term investments
Certificates of deposit$34.3 $ $34.3 
Long-term investments
Assets held in a rabbi trust$5.4 $1.6 $7.0 
Securities and other investments also includes cash surrender value of insurance contracts of $3.1 and $4.0 as of June 30, 2022 and December 31, 2021, respectively.

The Company has certain non-consolidated joint ventures that are not significant subsidiaries and are accounted for under the equity method of accounting. The Company owns 48.1 percent of Inspur Financial Information System Co., Ltd. (Inspur JV) and 49.0 percent of Aisino-Wincor Retail & Banking Systems (Shanghai) Co., Ltd. (Aisino JV). The Company engages in transactions in the ordinary course of business with the respective joint ventures. As of June 30, 2022, the Company had accounts receivable and accounts payable balances with these joint ventures of $2.7 and $25.1, respectively, which are included in trade receivables, less allowances for doubtful accounts and accounts payable on the condensed consolidated balance sheets.


Note 6: Goodwill and Other Assets

In the second quarter of 2022, the Company reorganized its reportable segments in connection with the a new and simplified operating model implemented by the recently appointed chief executive officer. This organizational change is described in further detail in Note 19, and is consistent with how the chief executive officer, the chief operating decision maker (CODM), makes key operating decisions, allocates resources, and assesses the performance of the business.

Prior to reorganization, the Company had four reporting units: Eurasia Banking, Americas Banking, EMEA Retail, and Rest of World Retail. The Company's new reporting units, determined in accordance with ASC 350, "Intangibles - goodwill and other", are the same as the operating and reportable segments, which are global Banking and global Retail. The Banking reporting unit is the summation of the legacy Eurasia Banking and Americas Banking reporting units and Retail is the summation of the legacy EMEA Retail and Rest of World Retail reporting units.
9

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2022
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


The new segmentation aligns with the Company's focus on standard and centralized global product and service offerings that support our customer base, which is largely comprised of global financial institutions and retailers. Further the simplified organization does not have regional leaders reporting to the CODM, and operating metrics other than net sales will not be allocated or analyzed on a regional basis largely due to the centralization of our manufacturing and procurement functions.

As of April 30, 2022 and as a result of the reporting unit change, we performed an interim quantitative goodwill impairment test for both our old and new reporting units using a combination of the income valuation and market approach methodology. The determination of the fair value of the 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. No impairment resulted from the quantitative interim goodwill impairment test under either the legacy or new reporting unit structure.

Management determined that the fair value of Eurasia Banking had a cushion of approximately 10 percent when compared to its carrying amounts prior to the change. The other legacy reporting units had significant excess fair value or cushion when compared to its carrying amount. Under the new reporting unit structure, Banking had a cushion of approximately 130 percent and Retail had a cushion of approximately 110 percent.

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.

In addition to the quantitative goodwill impairment test, the Company also performed a reassignment of the goodwill to the new reporting units using a relative fair value allocation approach required by ASC 350. The results of that reassignment are included in the summary below.

Legacy Reporting UnitsNew Reporting Unit
Eurasia BankingAmericas BankingBankingRetailTotal
Goodwill$590.4 $444.7 $— $236.2 $1,271.3 
Accumulated impairment(291.7)(122.0)— (57.2)(470.9)
Balance at January 1, 2021$298.7 $322.7 $— $179.0 $800.4 
Divestitures  — (3.3)(3.3)
Currency translation adjustment(29.0)(4.6)— (19.9)(53.5)
Goodwill$561.4 $440.1 $— $213.0 $1,214.5 
Accumulated impairment(291.7)(122.0)— (57.2)(470.9)
Balance at December 31, 2021$269.7 $318.1 $— $155.8 $743.6 
Currency translation adjustment(6.3)(1.0)— (4.4)(11.7)
Goodwill$555.1 $439.1 $— $208.6 $1,202.8 
Accumulated impairment(291.7)(122.0)— (57.2)(470.9)
Balance at March 31, 2022$263.4 $317.1 $— $151.4 $731.9 
Currency translation adjustment  (28.0)(15.0)(43.0)
Goodwill reassignment(555.1)(439.1)922.2 72.0  
Goodwill$ $ $894.2 $265.6 $1,159.8 
Accumulated impairment reassignment291.7 122.0 (413.7)  
Accumulated impairment$ $ $(413.7)$(57.2)$(470.9)
Balance at June 30, 2022$ $ $480.5 $208.4 $688.9 

10

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2022
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)

The following summarizes information on intangible assets by major category:
June 30, 2022December 31, 2021
Weighted-average remaining useful livesGross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying Amount
Accumulated
Amortization
Net
Carrying
Amount
Customer relationships, net3.7 years$645.0 $(402.7)$242.3 $703.3 $(401.6)$301.7 
Capitalized Software Development1.7 years232.5 (186.9)45.6 228.1 (184.9)43.2 
Development costs non-software0.8 years46.9 (46.8)0.1 51.8 (51.6)0.2 
Other intangibles5.4 years47.9 (45.7)2.2 50.8 (48.4)2.4 
Other intangible assets, net327.3 (279.4)47.9 330.7 (284.9)45.8 
Total$972.3 $(682.1)$290.2 $1,034.0 $(686.5)$347.5 

Costs incurred for the development of external-use software that will be sold, leased or otherwise marketed are capitalized when technological feasibility has been established. These costs are included within other assets and are amortized on a straight-line basis over the estimated useful lives ranging from three to five years. Amortization begins when the product is available for general release. Costs capitalized include direct labor and related overhead costs. Costs incurred prior to technological feasibility or after general release are expensed as incurred. The Company performs periodic reviews to ensure that unamortized program costs remain recoverable from future revenue. If future revenue does not support the unamortized program costs, the amount by which the unamortized capitalized cost of a software product exceeds the net realizable value is impaired.

The following table identifies the activity relating to total capitalized software development:

20222021
Beginning balance as of January 1$43.2 $38.0 
Capitalization17.4 11.2 
Amortization(10.1)(12.5)
CTA, transferred to held-for-sale, other(4.9)1.5 
Ending balance as of June 30$45.6 $38.2 

The Company's total amortization expense, excluding that related to deferred financing costs, was $48.9 and $52.1 for the six months ended June 30, 2022 and 2021, respectively. The Company's total amortization expense, excluding that related to deferred financing costs, was $24.6 and $26.0 for the three months ended June 30, 2022 and 2021, respectively.

Note 7: Product Warranties

The Company provides its customers a standard 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 as labor rates, average repair time, travel time, number of service calls per machine and cost of replacement parts.

Changes in the Company’s warranty liability balance are illustrated in the following table:
20222021
Beginning balance as of January 1$36.3 $38.6 
Current period accruals4.6 11.0 
Current period settlements(6.8)(11.4)
Currency translation adjustment(1.4)(0.6)
Ending balance as of June 30$32.7 $37.6 

11

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2022
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)

Note 8: Restructuring

In the fourth quarter of 2021, the Company completed the execution of a multi-year restructuring and transformation program called DN Now. On a cumulative basis, $218.9 of expenses were incurred through December 31, 2021. These costs consisted primarily of severance charges, costs of personnel transitioning out of the organization, and consulting fees paid to third-party organizations who assisted with our transition to a shared service model.

On May 10, 2022, the Company announced a new initiative to streamline operations, drive efficiencies and digitize processes, targeting annualized cost savings of more than $150.0 by the end of 2023. During both the three and six month periods ended June 30, 2022, the Company incurred $78.3 of restructuring and transformation costs. The most significant of these costs was $54.9 that was accrued for future severance payments under an ongoing severance benefit program. Consistent with DN Now, the remainder of the expenses incurred primarily relate to transitioning personnel and consultants.

In connection with the latest restructuring initiative, several facilities have been identified for closure, which resulted in a $5.4 impairment of right-of-use assets and related leasehold improvements and furniture and fixtures recorded during the three months ended June 30, 2022.

The following table summarizes the impact of the Company’s restructuring and transformation charges on the consolidated statements of operations:
Three months endedSix months ended
June 30June 30
 2022202120222021
Cost of sales – services$4.4 $10.1 $4.4 $10.1 
Cost of sales – products8.7 1.1 8.7 1.6 
Selling and administrative expense57.9 6.5 57.9 11.7 
Research, development and engineering expense7.3 (0.6)7.3 (0.3)
Total$78.3 $17.1 $78.3 $23.1 


The following table summarizes the Company’s severance accrual balance and related activity:
20222021
Beginning balance as of January 1$35.3 $62.9 
Severance Accruals54.9 10.3 
Payouts/Settlements(16.0)(18.5)
Other (2.8)
Ending balance as of June 30$74.2 $51.9 

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