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~~2020



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)~~ (330) 490-4000

__________________________________________________

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common shares, $1.25 par value per share	DBD	New 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 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 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 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~~30, 2020 was ~~76,592,453.~~77,642,200.

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

Form 10-Q

Index



Part I - Financial Information	3
Item 1: Financial Statements	3
Condensed Consolidated Balance Sheets -– March 31, ~~2019~~2020 (Unaudited) and December 31, ~~2018~~2019	3
Condensed Consolidated Statements of Operations (Unaudited) – Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019	4
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) – Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019	5
Condensed Consolidated Statements of Cash Flows (Unaudited) – Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019	6
Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations	3639
Item 3: Quantitative and Qualitative Disclosures About Market Risk	4751
Item 4: Controls and Procedures	4852
Part II - Other Information	5053
Item 1: Legal Proceedings	5053
Item 1A: Risk Factors	5053
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds	5054
Item 3: Defaults Upon Senior Securities	5054
Item 4: Mine Safety Disclosures	5054
Item 5: Other Information	5154
Item 6: Exhibits	5155
Signatures	5256

~~Table of Contents~~

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			March 31, 2020			December 31, 2019
	(Unaudited)						(Unaudited)
ASSETS
Current assets
Cash, cash equivalents and restricted cash	$	377.9		$	458.4		$	512.1		$	280.9
Short-term investments	31.5			33.5			13.5			10.0
Trade receivables, less allowances for doubtful accounts of $58.1 and $58.2, respectively	697.7			737.2
Trade receivables, less allowances for doubtful accounts of $44.1 and $42.2, respectively							594.5			619.3
Inventories	663.0			610.1			475.5			466.5
Prepaid expenses	60.9			57.4			44.1			51.3
Current assets held for sale							152.6			233.3
Other current assets	306.3			306.8			253.1			230.7
Total current assets	2,137.3			2,203.4			2,045.4			1,892.0
Securities and other investments	18.7			22.4			18.1			21.4
Property, plant and equipment, net of accumulated depreciation and amortization of $513.5 and $494.1, respectively	294.5			304.1
Property, plant and equipment, net of accumulated depreciation and amortization of $527.9 and $526.9, respectively							216.1			231.5
Goodwill	813.6			827.1			736.2			764.0
Deferred income taxes	208.4			243.9			118.9			120.8
Customer relationships, net	504.6			533.1			418.5			447.7
Other intangible assets, net	84.2			91.5
Right-of-use lease assets	173.3			—
Other assets	92.7			86.4			285.6			313.2
Total assets	$	4,327.3		$	4,311.9		$	3,838.8		$	3,790.6
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Current liabilities
Notes payable	$	47.2		$	49.5		$	103.4		$	32.5
Accounts payable	491.8			509.5			499.2			471.5
Deferred revenue	443.2			378.2			371.4			320.5
Payroll and other benefits liabilities	167.2			184.3			170.3			224.7
Lease liability	61.7			—
Other current liabilities	443.4			446.9			501.4			550.4
Total current liabilities	1,654.5			1,568.4			1,645.7			1,599.6
Long-term debt	2,191.2			2,190.0			2,353.4			2,108.7
Pensions, post-retirement and other benefits	263.8			273.8			221.4			237.7
Long-term lease liability	110.4			—
Deferred income taxes	191.1			221.6			114.6			134.5
Other liabilities	91.2			87.3			193.7			195.5
Commitments and contingencies
Redeemable noncontrolling interests	99.8			130.4			20.6			20.9
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
Common shares, $1.25 par value, 125,000,000 authorized shares, 93,343,980 and 92,208,247 issued shares, 77,518,456 and 76,813,013 outstanding shares, respectively							116.7			115.3
Additional capital	761.0			741.8			776.5			773.9
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 deficit							(565.1		)	(472.3		)
Treasury shares, at cost (15,825,524 and 15,395,234 shares, respectively)							(576.5		)	(571.9		)
Accumulated other comprehensive loss	(304.8		)	(303.7		)	(479.5		)	(375.3		)
Total Diebold Nixdorf, Incorporated shareholders' equity	(301.4		)	(186.4		)	(727.9		)	(530.3		)
Noncontrolling interests	26.7			26.8			17.3			24.0
Total equity	(274.7		)	(159.6		)	(710.6		)	(506.3		)
Total liabilities, redeemable noncontrolling interests and equity	$	4,327.3		$	4,311.9		$	3,838.8		$	3,790.6

See accompanying notes to condensed consolidated financial statements.

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(unaudited)

(in millions, except per share amounts)


	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2019			2018			2020			2019
Net sales
Services	$	628.7		$	690.3		$	587.8		$	628.7
Products	399.4			373.9			322.9			399.4
	1,028.1			1,064.2			910.7			1,028.1
Cost of sales
Services	473.5			523.0			437.5			471.5
Products	310.5			302.8			246.4			310.5
	784.0			825.8			683.9			782.0
Gross profit	244.1			238.4			226.8			246.1
Selling and administrative expense	228.3			227.9			222.1			230.3
Research, development and engineering expense	36.9			41.7			32.5			36.9
Loss (gain) on sale of assets, net	3.4			(7.7		)
(Gain) loss on sale of assets, net							(1.8		)	3.4
	268.6			261.9			252.8			270.6
Operating loss	(24.5		)	(23.5		)
Operating profit (loss)							(26.0		)	(24.5		)
Other income (expense)
Interest income	2.9			3.5			1.1			2.9
Interest expense	(50.9		)	(26.0		)	(48.0		)	(50.9		)
Foreign exchange gain (loss), net	2.8			(1.4		)
Foreign exchange gain, net							0.4			2.8
Miscellaneous, net	(1.4		)	(0.1		)	(0.9		)	(1.4		)
Loss before taxes	(71.1		)	(47.5		)	(73.4		)	(71.1		)
Income tax expense	60.4			19.2			20.0			60.4
Equity in earnings of unconsolidated subsidiaries	(0.4		)	1.1			—			(0.4		)
Net loss	(131.9		)	(65.6		)	(93.4		)	(131.9		)
Net income attributable to noncontrolling interests	0.8			7.6
Net (loss) income attributable to noncontrolling interests							(0.6		)	0.8
Net loss attributable to Diebold Nixdorf, Incorporated	$	(132.7	)	$	(73.2	)	$	(92.8	)	$	(132.7	)

Basic and diluted weighted-average shares outstanding	76.4			75.8			77.2			76.4

Net loss attributable to Diebold Nixdorf, Incorporated
Basic and diluted loss per share	$	(1.74	)	$	(0.97	)	$	(1.20	)	$	(1.74	)

Dividends declared and paid per common share	$	—		$	0.10

See accompanying notes to condensed consolidated financial statements.

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

(in millions)


	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2019			2018			2020			2019
Net loss	$	(131.9	)	$	(65.6	)	$	(93.4	)	$	(131.9	)
Other comprehensive income (loss), net of tax
Adoption of accounting standard	—			(29.0		)
Translation adjustment	4.4			18.2			(96.6		)	3.6
Foreign currency hedges (net of tax of $0.4 and $1.0, respectively)	(0.6		)	(2.8		)
Foreign currency hedges (net of tax of $0.3 and $0.4, respectively)							0.7			(0.6		)
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
Net loss recognized in other comprehensive income (net of tax of $(4.1) and $0.5, respectively)							(19.7		)	(2.3		)
Reclassification adjustment for amounts recognized in net income	0.5			0.4			4.5			0.5
	(1.8		)	2.6			(15.2		)	(1.8		)
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
Net actuarial gain (loss) amortization (net of tax of $3.5, and $(0.3), respectively)							6.8			(0.5		)
Other	0.1			—			(1.2		)	0.1
Other comprehensive loss, net of tax	1.6			(9.2		)
Other comprehensive (loss) income, net of tax							(105.5		)	0.8
Comprehensive loss	(130.3		)	(74.8		)	(198.9		)	(131.1		)
Less: comprehensive income attributable to noncontrolling interests	3.5			7.6
Less: comprehensive (loss) income attributable to noncontrolling interests							(1.9		)	3.5
Comprehensive loss attributable to Diebold Nixdorf, Incorporated	$	(133.8	)	$	(82.4	)	$	(197.0	)	$	(134.6	)

See accompanying notes to condensed consolidated financial statements.

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in millions)


	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2019			2018			2020			2019
Cash flow from operating activities
Net loss	$	(131.9	)	$	(65.6	)	$	(93.4	)	$	(131.9	)
Adjustments to reconcile net loss to cash flow used by operating activities:
Depreciation and amortization	58.4			64.4			53.5			58.4
Share-based compensation	9.3			13.7			4.0			9.3
Loss (gain) on sale of assets, net	3.4			(7.7		)	(1.8		)	3.4
Deferred income taxes	4.2			(17.9		)	(14.1		)	4.2
Other	0.4			(1.9		)	—			0.4
Changes in certain assets and liabilities
Trade receivables	33.2			(17.7		)	(8.0		)	33.2
Inventories	(63.1		)	(90.2		)	(33.9		)	(63.1		)
Accounts payable	(12.4		)	(3.6		)	47.3			(12.4		)
Deferred revenue	66.6			60.3			66.4			66.6
Sales tax and net value added tax	(16.8		)	(29.7		)	(20.4		)	(16.8		)
Income taxes	47.2			28.2			31.8			47.2
Accrued salaries, wages and commissions	(13.3		)	(27.2		)	(46.4		)	(13.3		)
Restructuring	(17.7		)	(7.5		)	(4.8		)	(17.7		)
Warranty liability	(2.3		)	(12.9		)	(3.6		)	(2.3		)
Liabilities held for sale							(13.1		)	(5.5		)
Pension and post retirement benefits							(11.0		)	(7.3		)
Certain other assets and liabilities	(22.3		)	(27.0		)	(32.4		)	(9.5		)
Net cash used by operating activities	(57.1		)	(142.3		)	(79.9		)	(57.1		)
Cash flow from investing activities
Capital expenditures	(14.7		)	(20.2		)	(5.4		)	(14.7		)
Payment for acquisitions	—			(5.8		)
Proceeds from divestitures, net of cash divested							(38.5		)	4.2
Proceeds from maturities of short-term investments	52.7			104.6			40.1			52.7
Payments for purchases of short-term investments	(48.3		)	(45.5		)	(44.5		)	(48.3		)
Proceeds from sale of assets	4.2			9.2
Increase in certain other assets	(5.4		)	(9.1		)	(3.4		)	(5.4		)
Net cash (used) provided by investing activities	(11.5		)	33.2
Net cash used by investing activities							(51.7		)	(11.5		)
Cash flow from financing activities
Dividends paid	—			(7.7		)
Revolving credit facility borrowings (repayments), net	10.0			(75.0		)
Debt issuance costs							(3.8		)	—
Revolving credit facility borrowings							385.9			10.0
Other debt borrowings	5.0			26.0			20.0			5.0
Other debt repayments	(16.8		)	(31.7		)	(83.1		)	(16.8		)
Distributions and payments to noncontrolling interest holders	(11.0		)	(0.5		)	—			(11.0		)
Repurchase of common shares	(1.1		)	(2.5		)
Net cash used by financing activities	(13.9		)	(91.4		)
Other							(5.0		)	(1.1		)
Net cash provided (used) by financing activities							314.0			(13.9		)
Effect of exchange rate changes on cash and cash equivalents	(0.5		)	21.5			(15.6		)	(0.5		)
Decrease in cash, cash equivalents and restricted cash	(83.0		)	(179.0		)
Change in cash, cash equivalents and restricted cash							166.8			(83.0		)
Add: Cash included in assets held for sale at beginning of period	7.3			—			97.2			7.3
Less: Cash included in assets held for sale at end of period	4.8			—			32.8			4.8
Cash, cash equivalents and restricted cash at the beginning of the period	458.4			543.2			280.9			458.4
Cash, cash equivalents and restricted cash at the end of the period	$	377.9		$	364.2		$	512.1		$	377.9

See accompanying notes to condensed consolidated financial statements.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

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.~~2019. 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~~2020 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~~ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement	The standard ~~requires that a lessee recognize on its balance sheet right-of-use (ROU) assets~~is designed to improve the effectiveness of disclosures by removing, modifying and ~~corresponding liabilities resulting from leasing transactions, as well as additional financial statement disclosures.~~adding disclosures related to fair value measurements. 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 provisionsadoption of this ~~update apply to substantially all leased assets.~~ Accounting Standard Update (ASU) did not have a significant impact on the Company's condensed consolidated financial statements.	January 1, ~~2019~~2020
ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606	The amendments in this update provide guidance on whether certain transactions between collaborative arrangement participants should be accounted for under Topic 606. The adoption of this ASU did not have a significant impact on the Company's condensed consolidated financial statements.	January 1, 2020
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments	The amendments in this update replace the incurred loss impairment methodology with the current expected credit loss methodology. This will change the measurement of credit losses on financial instruments and the timing of when such losses are recorded. The adoption of this ASU did not have a significant impact on the Company's condensed consolidated financial statements.	January 1, 2020
ASU 2019-01, Leases (Topic 842): Codification Improvements	The standard is designed to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing essential information about leasing transactions. The adoption of this ASU did not have a significant impact on the Company's condensed consolidated financial statements.	January 1, 2020
ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments	The standard is designed to clarify, correct, and improve various aspects of the guidance in the following ASUs related to financial instruments: ASU 2016-01 - Financial Instruments - Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Liabilities, ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments and ASU 2017-12 - Derivatives and Hedging (Topic 815): Targeted Improvements for Hedging Activities. The adoption of this ASU did not have a significant impact on the Company's condensed consolidated financial statements.	January 1, 2020

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,~~equipment; however, real estate leases constitute a majority of the value of the

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, 2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

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.~~

~~Table of Contents~~

~~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:~~population at:



	March 31, 2020		March 31, 2019
Weighted-average remaining lease terms (in years)
Operating leases	4.1		4.5
Finance leases	3.2		2.8
Weighted-average discount rate
Operating leases	10.6	%	14.3	%
Finance leases	14.6	%	26.7	%



	~~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~~composition. 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~~the Company's lease agreements may contain residual value guarantees. ~~Our~~The Company's 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,~~2020, the Company did not have any material leases that have not yet commenced but that create significant rights and obligations.

~~Table of Contents~~

~~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~~explicit rate, ~~we use our~~the Company uses its 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

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

The following table summarizes the components of lease expense:



	Three Months Ended
	March 31, 2020		March 31, 2019
Lease expense
Operating lease expense	$	24.0	$	20.6
Finance lease expense
Amortization of ROU lease assets	$	0.3	$	0.1
Interest on lease liabilities	$	0.1	$	0.1
Variable lease expense	$	1.8	$	3.2

The following table summarizes the maturities of lease liabilities:



	Operating			Finance
2020 (excluding the three months ended March 31, 2020)	$	58.1		$	1.2
2021	50.3			1.6
2022	29.9			0.7
2023	17.4			0.2
2024	12.7			0.1
Thereafter	23.5			0.1
Total	191.9			3.9
Less: Present value discount	(38.4		)	(0.6		)
Lease liability	$	153.5		$	3.3

The following table summarizes the cash flow information related to leases:



	Three Months Ended
	March 31, 2020		March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating - operating cash flows	$	25.4	$	21.9
Finance - financing cash flows	$	0.3	$	0.1
Finance - operating cash flows	$	0.1	$	0.1
ROU lease assets obtained in the exchange for lease liabilities
Operating leases	$	4.6	$	14.7
Finance leases	$	1.2	$	2.0

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, 2020

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, 2020		December 31, 2019
Assets
Operating	$	151.9	$	167.5
Finance	4.2		2.4
Total leased assets	$	156.1	$	169.9

Current liabilities
Operating	$	57.0	$	62.8
Finance	1.2		0.9
Noncurrent liabilities
Operating	96.5		106.4
Finance	2.1		1.4
Total lease liabilities	$	156.8	$	171.5

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~~Operating and 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~~2020 and ~~2018,~~2019, there were no differences in the earnings (loss) per share amounts calculated under the two methods. Accordingly, the treasury stock method is disclosed ~~below.~~below; however, the weighted-average number of shares used in the computation of diluted earnings (loss) per share are excluded due to the Company's net loss.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

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,
	2020			2019
Numerator
Income (loss) used in basic and diluted loss per share
Net loss	$	(93.4	)	$	(131.9	)
Net (loss) income attributable to noncontrolling interests	(0.6		)	0.8
Net loss attributable to Diebold Nixdorf, Incorporated	$	(92.8	)	$	(132.7	)
Denominator
Weighted-average number of common shares used in basic and diluted loss per share ⁽¹⁾	77.2			76.4
Net loss attributable to Diebold Nixdorf, Incorporated
Basic and diluted loss per share	$	(1.20	)	$	(1.74	)

Anti-dilutive shares
Anti-dilutive shares not used in calculating diluted weighted-average shares	2.8			3.7

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~~3.1 and ~~0.9 shares~~1.2 for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, 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.~~dilutive, but are excluded due to the Company's net loss.

Note 4: Share-Based Compensation

The Company’s share-based compensation ~~payments~~ to employees ~~are~~is 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~~$4.0 and ~~$13.7~~$9.3 for the three months ended March 31, 2020 and 2019, ~~and 2018,~~ respectively. ~~In the first quarter of 2019, the Company changed its accounting estimate from using a forfeiture assumption~~Share-based compensation decreased $5.3 to ~~recording actual forfeitures. The change resulted in an immaterial increase in share-based compensation expense~~$4.0 for the three months ended March 31, 2020 primarily due to a reduction in shares granted. The Company has certain performance and restricted stock units that will be settled in cash and are accounted for as liabilities. The total compensation expense was $3.1 and $2.1 for the three months ended March 31, 2020 and 2019. These awards vest ratably over a three year period.

Options outstanding and exercisable as of March 31, ~~2019~~2020 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~~2020 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



	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value ⁽¹⁾
			(per share)		(in years)
Outstanding at January 1, 2020	2.4		$	14.89
Expired or forfeited	(0.1	)	$	31.25
Granted	0.4		$	12.54
Outstanding at March 31, 2020	2.7		$	14.38	8	$	7.0
Options exercisable at March 31, 2020	1.4		$	19.82	7	$	2.3
Options vested and expected to vest⁽²⁾ at March 31, 2020	2.7		$	14.38	8	$	7.0

⁽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~~2020 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.~~2020. 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.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

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:~~2020:



	Number of Shares		Weighted-Average Grant-Date Fair Value
RSUs:
Non-vested at January 1, 2020	2.2		$	9.99
Forfeited	(0.1	)	$	15.83
Vested	(0.8	)	$	12.26
Granted	0.8		$	11.71
Non-vested at March 31, 2020	2.1		$	9.74
Performance Shares:
Non-vested at January 1, 2020	2.4		$	26.44
Forfeited	(0.8	)	$	34.78
Vested	(0.3	)	$	26.60
Non-vested at March 31, 2020	1.3		$	21.77

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,~~2020, there were 0.1 non-employee director deferred shares vested and outstanding.

On ~~April 25, 2019,~~May 1, 2020, the Company's shareholders approved amendments to the 2017 Plan, which provide for an additional ~~3.0~~1.9 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 the loss from continuing operations was (27.2) percent for the three months ended March 31, 2020. The expense on the loss was primarily due to the tax impacts of the U.S. Tax Cuts and Jobs Act (Tax Act) on the estimated projected tax rate and, more specifically, the impacts related to global intangible low-taxed income (GILTI). In addition, a partial valuation allowance against interest expense carryforwards and the Company’s jurisdictional income (loss) mix at varying statutory rates impacted the estimated projected tax rate.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted providing $2.2 trillion of economic stimulus relief to address the market conditions due to the recent outbreak of the coronavirus (COVID-19). Among other things, the CARES Act provides a package of corporate tax provisions including the ability for companies to carry back to five preceding years net operating loss (NOL) carryforwards generated in tax years starting after December 31, 2017 and before January 1, 2021. Also, the 80 percent taxable income limitation was temporarily removed increasing the amount of NOL carryforwards that can be deducted in 2018, 2019 and 2020, and the CARES Act increased the deduction limitation for business interest expense to 50 percent from 30 percent. The Company evaluated the impact of the CARES Act to its income tax provision and cash flow and does not believe the effects are material.

The effective tax rate on the loss before taxes 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)~~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.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

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, 2020		December 31, 2019
Finished goods	$	153.0	$	157.4
Service parts	162.9		175.4
Raw materials and work in process	159.6		133.7
Total inventories	$	475.5	$	466.5

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~~loss (AOCI). Realized gains and losses are recognized in investment income, ~~and are~~ determined using the specific identification ~~method.~~method, and were minimal. 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~~2020 and ~~2018.~~2019.

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 / (Loss)			Fair Value
As of March 31, 2020
Short-term investments
Certificates of deposit	$	13.5	$	—		$	13.5
Long-term investments
Assets held in a rabbi trust	$	5.4	$	(0.5	)	$	4.9

As of December 31, 2019
Short-term investments
Certificates of deposit	$	10.0	$	—		$	10.0
Long-term investments
Assets held in a rabbi trust	$	5.5	$	0.7		$	6.2

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~~$13.2 and ~~$11.1~~$15.2 as of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, 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.~~accounting. As of March 31, ~~2019 ,~~2020, the Company had accounts receivable and accounts payable balances with these strategic alliances of ~~$14.2~~$8.8 and ~~$9.8~~,$17.6, respectively, which are included in trade receivables, less allowances for doubtful accounts and accounts payable on the condensed consolidated balance sheets. The Company continues to assess these strategic alliances as part of the optimization of its portfolio

of businesses, which may include the exit or restructuring of these businesses.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

~~respectively, which~~The Company provides financing arrangements to customers purchasing its products. These financing arrangements are ~~included in trade~~largely classified and accounted for as sales-type leases.

The following table presents the components of finance lease 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. Asas of March 31, ~~2019, the Company's carrying value in Kony was~~ ~~$14.0~~2020 and ~~the fair value was not estimated~~December 31, 2019:



	March 31, 2020			December 31, 2019
Gross minimum lease receivables	39.4			41.8
Allowance for credit losses	(0.2		)	(0.3		)
Estimated unguaranteed residual values	0.2			0.2
	39.4			41.7
Less:
Unearned interest income	(2.0		)	(2.8		)
Unearned residuals	(0.2		)	—
	(2.2		)	(2.8		)
Total	$	37.2		$	38.9

Future minimum payments due from customers under finance lease receivables as ~~there were no events or changes in circumstances in the investment.~~of March 31, 2020 are as follows:



2020	10.2
2021	6.2
2022	7.2
2023	7.2
2024	6.2
Thereafter	2.4
	$	39.4

There were no significant changes in provision for credit losses, recoveries and write-offs during the three months ended March 31, ~~2019~~2020 and ~~2018.~~2019. As of March 31, 2020, finance leases and notes receivable individually evaluated for impairment were $37.6 and $4.6, respectively, with no provision recorded. 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~~maturities on the finance lease receivables ~~maturity schedule~~ since December 31, ~~2018.~~2019. The income related to the finance lease receivables was minimal for the three months ended March 31, ~~2019.~~2020.

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.~~lease. 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.

AsOn March 11, 2020, the World Health Organization characterized the outbreak of COVID-19 as a global pandemic and recommended actions for containment and mitigation. The Company is actively monitoring the impact of the COVID-19 pandemic, which will likely impact the global economy including our business and results of operations for the rest of 2020, and the extent of the impact cannot be reasonably estimated at this time. The extent of the COVID-19 impact to our operations will depend largely on future developments, along with any new information that may emerge regarding the severity of the pandemic and the actions taken by government authorities to mitigate the spread of the virus, among other factors, all of which are highly uncertain and cannot be accurately predicted.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

As a result of the disruption and ~~December 31, 2018,~~uncertainty related to the ~~recorded investment in past-due financing receivables was minimal~~COVID-19 pandemic, the Company continues to assess the impacts on its investments and ~~no recorded investment in the finance receivables was past due 90 days or more and still accruing interest.~~credit losses.

Note 8: Goodwill and Other Assets

The Company’s ~~three~~3 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	$	598.6		$	437.3		$	233.2		$	1,269.1
Accumulated impairment	(291.7		)	(122.0		)	(57.2		)	(470.9		)
Balance at January 1, 2019	$	306.9		$	315.3		$	176.0		$	798.2
Transferred to assets held for sale	(11.7		)	—			—			(11.7		)
Divestitures	(0.4		)	—			(3.9		)	(4.3		)
Currency translation adjustment	(7.3		)	(6.0		)	(4.9		)	(18.2		)
Goodwill	$	579.2		$	431.3		$	224.4		$	1,234.9
Accumulated impairment	(291.7		)	(122.0		)	(57.2		)	(470.9		)
Balance at December 31, 2019	$	287.5		$	309.3		$	167.2		$	764.0
Transferred to assets held for sale	(6.4		)	—			—			(6.4		)
Currency translation adjustment	(8.5		)	(7.1		)	(5.8		)	(21.4		)
Goodwill	$	564.3		$	424.2		$	218.6		$	1,207.1
Accumulated impairment	(291.7		)	(122.0		)	(57.2		)	(470.9		)
Balance at March 31, 2020	$	272.6		$	302.2		$	161.4		$	736.2

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

~~Table of Contents~~

~~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~~In accordance with the Company's ~~reporting units exceed their carrying values except~~accounting policy, goodwill is tested for ~~the Services-Asia Pacific (AP) and Software-EMEA reporting units which resulted in a non-cash~~ impairment ~~loss of $83.1~~annually during the ~~second quarter 2018.~~fourth quarter.

The Company identified four reporting units, which are Eurasia Banking, Americas Banking, EMEA Retail and Rest of World Retail. ~~Management determined that~~The Company considered there to be a triggering event and as a result of analysis performed during the first quarter of 2020, the Eurasia Banking, Americas Banking and EMEA Retail reporting ~~unit~~units had asufficient cushion of ~~approximately 20 percent and 10 percent, respectively, when compared to their carrying amounts. The Eurasia Banking had minimal excess~~estimated fair value ~~or cushion when compared to their~~in excess of 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.~~value as of March 31, 2020. Rest of World Retail had ~~no carrying value~~0 goodwill as of March 31, 2020 and December 31, ~~2018.~~2019. Changes in certain assumptions or the Company's ~~failure~~inability 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 uncertainty related to the COVID-19 pandemic, the Company ~~performed an interim impairment test of goodwill for its four reporting units during the third quarter of 2018. Based on~~could experience unfavorable impacts in the results of the ~~impairment testing, the Company recorded a non-cash goodwill impairment loss of $134.4 related~~reporting units and to the ~~Eurasia Banking, EMEA Retail~~various assumptions used in the analysis of goodwill and ~~Rest~~will continue to assess potential triggering events.

Table of ~~World Retail reporting units during the third quarter~~Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of ~~2018.~~March 31, 2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

The following summarizes information on intangible assets by major category:



		March 31, 2020							December 31, 2019
	Weighted-average remaining useful lives	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer relationships, net	5.9 years	$	681.5	$	(263.0	)	$	418.5	$	698.7	$	(251.0	)	$	447.7

Internally-developed software	3.1 years	181.8		(138.5		)	43.3		178.2		(132.2		)	46.0
Development costs non-software	1.9 years	50.1		(48.4		)	1.7		51.5		(47.5		)	4.0
Other intangibles	2.7 years	75.8		(71.8		)	4.0		79.3		(74.7		)	4.6
Other intangible assets, net		307.7		(258.7		)	49.0		309.0		(254.4		)	54.6
Total		$	989.2	$	(521.7	)	$	467.5	$	1,007.7	$	(505.4	)	$	502.3

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~~$7.2 and ~~$8.8~~$8.6 was included in service and software cost of sales for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. The Company's total amortization expense, including deferred financing costs, was ~~$37.1~~$33.2 and ~~$39.9~~$37.1 for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, 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,~~2020, the maximum future payment obligations related to these various guarantees totaled ~~$220.3,~~$91.5, of which ~~$27.5~~$26.6 represented standby letters of credit to insurance providers, and no associated liability was recorded. At December 31, ~~2018,~~2019, the maximum future payment obligations relative to these various guarantees totaled ~~$135.2,~~$108.2, of which ~~$27.5~~$25.2 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

~~Table of Contents~~

~~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:



	2020			2019
Balance at January 1	$	36.9		$	40.1
Current period accruals	5.0			3.9
Current period settlements	(8.6		)	(6.0		)
Currency translation adjustment	(2.0		)	(0.3		)
Balance at March 31	$	31.3		$	37.7

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,
	2020		2019
Cost of sales – services	$	0.9	$	1.5
Selling and administrative expense	7.6		2.2
Research, development and engineering expense	1.5		0.1
Total	$	10.0	$	3.8

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, 2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

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				Three Months Ended
	March 31,				March 31,
	2019		2018		2020		2019
Severance
Eurasia Banking	$	1.5	$	2.5	$	2.3	$	1.5
Americas Banking	0.4		0.1		0.4		0.4
Retail	0.8		0.5		5.4		0.8
Corporate	1.1		0.8		1.9		1.1
Total severance	$	3.8	$	3.9	$	10.0	$	3.8

DN Now

During the second quarter of 2018, the Company began implementing DN Now to deliver greater, more sustainable profitability. The ~~plan~~gross annualized savings target for DN Now is ~~anticipating~~approximately $440 through 2021. In order to achieve these savings, ~~of approximately~~ ~~$160~~ ~~for 2019, of which $130 is related~~the Company has and will continue to restructure the ~~restructuring actions in connection with the new customer centric operating model with clear role charters~~workforce, integrate and ~~a global workforce aligned with market demand~~optimize systems and ~~the remainder is related~~processes, transition workloads to ~~other initiatives.~~lower cost locations and consolidate real estate holdings. Additional ~~near term~~near-term activities include ~~divesting~~continuation of ~~non-core and/or non-accretive businesses, initiating a~~the services modernization plan, ~~and~~ rationalizing of the Company's product ~~portfolio.~~portfolio and further reducing the Company's selling and administrative expense. The Company incurred restructuring charges of $10.0 and $3.8 for the three months ended March 31, 2020 and 2019, respectively, related to DN Now. The Company anticipates additional restructuring costs of approximately ~~$170~~$40 to ~~$200~~$60 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.

~~Table of Contents~~

~~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:~~2020:



	DN Now
	Severance		Other		Total
Eurasia Banking	$	49.1	$	—	$	49.1
Americas Banking	10.8		0.1		10.9
Retail	27.6		—		27.6
Corporate	31.5		—		31.5
Total	$	119.0	$	0.1	$	119.1

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:



	2020			2019
Balance at January 1	$	42.6		$	56.9
Liabilities incurred	10.0			3.8
Liabilities paid/settled	(15.5		)	(22.1		)
Balance at March 31	$	37.1		$	38.6

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, 2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

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, 2020			December 31, 2019
Notes payable
Uncommitted lines of credit	$	7.2		$	5.0
Revolving Facility	68.8			—
Term Loan A-1 Facility	16.3			16.3
Term Loan B Facility - USD	4.8			4.8
Term Loan B Facility - Euro	4.5			4.7
Other	1.8			1.7
	$	103.4		$	32.5
Long-term debt
Revolving Facility	$	317.1		$	—
2022 Term Loan A Facility	358.1			370.3
Term Loan A-1 Facility	578.1			602.6
Term Loan B Facility - USD	389.3			404.0
Term Loan B Facility - Euro	371.3			395.1
2024 Senior Notes	400.0			400.0
Other	2.3			1.3
	2,416.2			2,173.3
Long-term deferred financing fees	(62.8		)	(64.6		)
	$	2,353.4		$	2,108.7

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,~~2020, the Company had various international short-term uncommitted lines of credit with borrowing limits of ~~$50.8.~~$40.3. The weighted-average interest rate on outstanding borrowings on the short-term uncommitted lines of credit as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019 was ~~8.83~~6.71 percent and ~~8.80~~9.03 percent, respectively, and primarily relate to higher interest rate, short-term uncommitted lines of credit in ~~India~~Turkey 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~~2020 was ~~$32.4.~~$33.1.

~~Table of Contents~~

~~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,
	2020			2019
Revolving credit facility borrowings	$	385.9		$	10.0

Other debt borrowings
International short-term uncommitted lines of credit borrowings	$	20.0		$	5.0

Other debt repayments
Payments on 2022 Term Loan A Facility under the Credit Agreement	$	(12.2	)	$	—
Payments Term Loan A-1 Facility under the Credit Agreement	(24.5		)	(4.0		)
Payments on Term Loan B Facility - USD under the Credit Agreement	(14.7		)	(1.2		)
Payments on Term Loan B Facility - Euro under the Credit Agreement	(14.0		)	(1.2		)
International short-term uncommitted lines of credit and other repayments	(17.7		)	(10.4		)
	$	(83.1	)	$	(16.8	)

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~~$412.5 (the Revolving Facility). On December 23, 2020, ~~the Term Loan A Facility will mature and~~$68.8 of the Revolving Facility will ~~automatically terminate.~~mature. The weighted-average interest rate on outstanding Revolving Facility borrowings as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019 was ~~6.00~~4.95 percent and ~~5.97~~6.01 percent,

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, 2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

respectively, which is variable based on the London Interbank Offered Rate (LIBOR). ~~The~~There is no additional amount available under the Revolving Facility as of March 31, ~~2019 was $337.5,~~2020, after excluding ~~$27.5~~$26.6 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 Sixth 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.

~~Table of Contents~~

~~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.

On August 7, 2019, the Company entered into a seventh amendment (the Seventh Amendment) to its Credit Agreement. The Seventh Amendment amends and extends certain of the Term A Loans, Revolving Credit Commitments and Revolving Credit Loans maturing on December 23, 2020 (collectively, the 2020 Facilities), to April 30, 2022, to be effected by an exchange of 2020 Term A Loans, 2020 Revolving Credit Commitments and 2020 Revolving Credit Loans for 2022 Term A Loans, 2022 Revolving Credit Commitments and 2022 Revolving Credit Loans, respectively.

Additionally, the Company also raised $116.7of new 2022 Term A Loan financing to fund commitment reduction of the 2020 Revolving Credit Commitments, paydown of the 2020 Revolving Credit Loans and payoff of the remaining 2020 Term A Loans. As a result, the Company has $343.7 and $68.8 in 2022 and 2020 Revolving Credit Commitments, respectively, as well as $358.1 in outstanding principal amount of 2022 Term A Loan.

The interest rates with respect to the 2022 Facilities are based on, at the Company’s option, adjusted LIBOR or an alternative base rate, in each case plus an applicable margin tied to the Company’s then applicable total net leverage ratio. Such applicable margins range from, for LIBOR-based 2022 Term A Loans, 1.25 percent to 4.75 percent, for LIBOR-based 2022 Revolving Loans, 1.25 percent to 4.25 percent, and for base-rate 2022 Term A Loans and 2022 Revolving Loans, 1.00 percent less than in the case of LIBOR-based loans.

The Credit Agreement financial ratios at March 31, ~~2019~~2020 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~~2019 (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.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, 2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

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
2020 Revolving Facility⁽ⁱ⁾	LIBOR + 3.50%	December 2020	5
2022 Revolving Facility⁽ⁱ⁾	LIBOR + 4.25%	April 2022	2.5
2022 Term Loan A Facility⁽ⁱ⁾	LIBOR + 4.75%	April 2022	2.5
Term Loan A-1 Facility⁽ⁱ⁾	LIBOR + 9.25%	August 2022	4
Term Loan B Facility - USD⁽ⁱ⁾	LIBOR + 2.75%	November 2023	7.5
Term Loan B Facility - Euro⁽ⁱⁱ⁾	EURIBOR + 3.00%	November 2023	7.5
2024 Senior Notes	8.5%	April 2024	8

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,~~2020, 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:



	2020			2019
Balance at January 1	$	20.9		$	130.4
Other comprehensive income	—			(1.7		)
Redemption value adjustment	(0.3		)	(18.6		)
Redemption of shares	—			(10.3		)
Balance at March 31	$	20.6		$	99.8

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

~~Table of Contents~~

~~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 andAt 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~~$99.1. In May 2019, the ~~redemption~~Company announced that the merger/squeeze-out of ~~0.2~~ Diebold Nixdorf AG ~~ordinary shares in~~was completed, streamlining and simplifying the ~~three months ended March 31, 2019. The~~Company's corporate structure. In the second quarter of 2019, the Company increased its ownership stake in Diebold Nixdorf AG to ~~28.4~~29.8 ordinary shares, ~~or approximately 95.3~~100.0 percent ownership. With the completion of the merger/squeeze-out, only Diebold Nixdorf, Incorporated remains publicly-listed and no longer has subsidiary shares traded in Germany.

The remaining balance of $20.6 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~~2020 relates to a certain noncontrolling ~~interests with~~interest in Europe, which has put right redemption features ~~that include put rights that are~~ not within the control of the ~~issuer, which~~Company that are ~~considered~~included in 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.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

Note 13: Equity

The following ~~table presents~~tables present 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 )



												Accumulated Other Comprehensive Income (Loss)			Total Diebold Nixdorf, Incorporated Shareholders' Equity
	Common Shares		Additional Capital			Accumulated Deficit			Treasury Shares			Accumulated Other Comprehensive Income (Loss)			Total Diebold Nixdorf, Incorporated Shareholders' Equity			Non-controlling Interests			Total Equity
Balance, December 31, 2019	$	115.3	$	773.9		$	(472.3	)	$	(571.9	)	$	(375.3	)	$	(530.3	)	$	24.0		$	(506.3	)
Net loss						(92.8		)							(92.8		)	(0.6		)	(93.4		)
Other comprehensive loss												(104.2		)	(104.2		)	(1.3		)	(105.5		)
Share-based compensation issued	1.4		(1.4		)										—						—
Share-based compensation expense			4.0												4.0						4.0
Treasury shares									(4.6		)				(4.6		)				(4.6		)
Divestitures, net															—			(4.8		)	(4.8		)
Balance, March 31, 2020	116.7		776.5			(565.1		)	(576.5		)	(479.5		)	(727.9		)	17.3			(710.6		)



												Accumulated Other Comprehensive Income (Loss)			Total Diebold Nixdorf, Incorporated Shareholders' Equity
	Common Shares		Additional Capital			Accumulated Deficit			Treasury Shares			Accumulated Other Comprehensive Income (Loss)			Total Diebold Nixdorf, Incorporated Shareholders' Equity			Non-controlling Interests			Total Equity
Balance, December 31, 2018	$	114.2	$	741.8		$	(131.0	)	$	(570.4	)	$	(304.3	)	$	(149.7	)	$	26.8		$	(122.9	)
Net income (loss)						(132.7		)							(132.7		)	0.8			(131.9		)
Other comprehensive income (loss)												(1.9		)	(1.9		)	2.7			0.8
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
Divestitures, net															—			(3.0		)	(3.0		)
Balance, March 31, 2019	$	114.9	$	761.0		$	(263.7	)	$	(571.5	)	$	(306.2	)	$	(265.5	)	$	26.7		$	(238.8	)

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

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, 2020:



	Translation			Foreign Currency Hedges			Interest Rate Hedges			Pension and Other Post-retirement Benefits			Other			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2020	$	(231.5	)	$	(2.6	)	$	5.2		$	(146.6	)	$	0.2		$	(375.3	)
Other comprehensive income (loss) before reclassifications ⁽¹⁾	(95.3		)	0.7			(19.7		)				(1.2		)	(115.5		)
Amounts reclassified from AOCI	—			—			4.5			6.8			—			11.3
Net current-period other comprehensive income (loss)	(95.3		)	0.7			(15.2		)	6.8			(1.2		)	(104.2		)
Balance at March 31, 2020	$	(326.8	)	$	(1.9	)	$	(10.0	)	$	(139.8	)	$	(1.0	)	$	(479.5	)

⁽¹⁾ Other comprehensive income (loss) before reclassifications within the translation component excludes $(1.3) 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, 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	$	(192.1	)	$	(1.9	)	$	10.6		$	(121.0	)	$	0.1	$	(304.3	)
Other comprehensive income (loss) before reclassifications ⁽¹⁾	0.9			(0.6		)	(2.3		)	—			0.1		(1.9		)
Amounts reclassified from AOCI	—			—			0.5			(0.5		)	—		—
Net current-period other comprehensive income (loss)	0.9			(0.6		)	(1.8		)	(0.5		)	0.1		(1.9		)
Balance at March 31, 2019	$	(191.2	)	$	(2.5	)	$	8.8		$	(121.5	)	$	0.2	$	(306.2	)

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	Three Months Ended					Affected Line Item in the Statement of Operations
	2019			2018		Affected Line Item in the Statement of Operations	2020		2019			Affected Line Item in the Statement of Operations
Interest rate hedges	$	0.5		$	0.4	Interest expense	$	4.5	$	0.5		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⁾
Net actuarial gain (loss) amortization (net of tax of $3.5, and $(0.3), respectively)							6.8		(0.5		)	⁽¹⁾
Total reclassifications for the period	$	—		$	2.2		$	11.3	$	—


⁽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

Divestitures

In the first quarter of 2020, the Company divested Portavis GmbH, a non-core, Eurasia Banking consulting business, which resulted in a gain of $1.8 and cash consideration received of $10.1, excluding cash divested.

In 2019, the Company exited and divested certain non-core, non-accretive business which resulted in a gain of $3.4 for the three months ended March 31, 2019, respectively. 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 included in Eurasia Banking operating segment, for $4.2 in proceeds, net of cash transferred resulting in a loss $2.8. During the first quarter of ~~$2.8. The~~2019, 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.~~

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

loss of $4.1 on the divestiture of its Venezuela business included in the Americas Banking operating segment and a gain of $3.5 related to the Company’s exit activities of certain entities in the Netherlands, related to the SecurCash B.V., included in the Retail operating segment. During the second quarter of 2019, the Company identified an immaterial error in the first quarter of 2019 for the loss (gain) on sale of assets, net related to this divestiture. Management determined this error was not material to the prior period and recorded the correction in the three months ended June 30, 2019 resulting in a $9.5 charge in the loss (gain) on the sale of assets, net.

In the second quarter of 2019, the Company divested its remaining SecurCash B.V. entity included in the Eurasia Banking operating segment resulting in a loss of $1.1. In the third quarter of 2019, the Company divested a Eurasia Banking business for proceeds of $0.6 resulting in a loss of $0.1. Additionally during the third quarter of 2019, the Company sold its interest in Kony for cash proceeds of $21.3. The Company's carrying value in Kony was $14.0, resulting in a gain of $7.3 during the third quarter of 2019.

Acquisitions

During the first six months of 2019, the Company acquired the remaining shares of Diebold Nixdorf AG for $97.5, inclusive of the redemption of shares and the proportionate recurring compensation pursuant to the DPLTA.

Note 16: Benefit Plans

Qualified Retirement Benefits. 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 anthe employee’s compensation during the ten years before the date of the plan freeze or the date of ~~the employee's~~their 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. RetiredCompany's non-U.S. cover 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~~located predominately in Germany, Switzerland, Belgium, the U.K. and ~~Switzerland, among others. In Germany, post-employment benefit~~France. Benefits for these plans are ~~set up as~~based primarily on each employee's final salary, with annual adjustments for inflation. The obligations in Germany consist of employer funded pension plans and deferred compensation plans. The employer funded pension ~~commitments in Germany~~plans 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 for these plans are primarily disability, death and reaching of retirement age.

The Company has other defined benefit plans outside the U.S., which have not been mentioned here due to their insignificance.

Supplemental Executive Retirement Benefits. The Company has non-qualified pension plans in the U.S. to provide supplemental retirement benefits to certain officers, which were also frozen since December 2013. Benefits are payable at retirement based upon a percentage of the participant’s compensation, as defined.

Other Benefits. In addition to providing retirement benefits, the Company provides post-retirement healthcare and life insurance benefits (referred to as other benefits) for certain retired employees. Retired eligible employees in the U.S. 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-retirement 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.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, 2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

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
	2020			2019			2020			2019			2020		2019
Components of net periodic benefit cost
Service cost	$	1.0		$	0.9		$	2.5		$	2.5		$	—	$	—
Interest cost	4.7			5.5			1.0			1.6			0.1		0.1
Expected return on plan assets	(6.3		)	(6.2		)	(3.3		)	(3.1		)	—		—
Recognized net actuarial loss	1.9			1.3			(0.1		)	(0.4		)	—		—
Other	—			—			0.1			—			—		—
Net periodic pension benefit cost	$	1.3		$	1.5		$	0.2		$	0.6		$	0.1	$	0.1

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
0.1
Expected return on plan assets (6.2 ) (6.2 ) (3.1 ) (2.7 ) —
—
Recognized net actuarial loss 1.3
1.6
(0.4 ) (0.2 ) —
—
Net periodic pension benefit cost $ 1.5
$ 1.6
$ 0.6
$ 1.5
$ 0.1
$ 0.1

Contributions

There have been no significant changes to the expected ~~2019~~2020 plan year contribution amounts previously disclosed. For the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, contributions of ~~$11.9~~$13.7 and ~~$22.6,~~$11.9, respectively, were made to the qualified and non-qualified pension plans. The Company anticipates reimbursement of approximately $13 for certain benefits ~~paid~~ from its non-U.S. plan trustee in ~~2019. In March 2018, the~~2020. The Company received a ~~$13.8~~ reimbursement of $12.2 for certain benefits paid from its ~~trustees.~~non-U.S. plan trustee in June 2019.

The Company expects that pension benefit costs and financial position will fluctuate year-over-year, along with contribution requirements, due to the performance of plan assets and changes in interest rates, among others. As a result, the Company may not be able to reasonably estimate impact due to the uncertainty and extent of the COVID-19 pandemic and related macroeconomic implications along with actions taken by government authorities.

~~Table of Contents~~

~~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 17: Derivative Instruments and Hedging Activities

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate and foreign exchange rate risk, through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business or financing activities. The Company’s ~~derivative~~ foreign currency derivative instruments are used to manage differences in the amount of the Company’s known or expected cash receipts and cash payments principally related to the Company’s ~~non functional~~non-functional currency assets and liabilities. The Company's interest rate derivatives are used to manage ~~the differences~~exposures to changes in ~~amount due to variable rate~~ interest ~~rate~~rates on our variable-rate borrowings.

The Company uses derivatives to mitigate the economic consequences associated with fluctuations in currencies and interest rates. The following table summarizes the gain (loss) recognized on derivative instruments:



Derivative instrument	Classification on condensed consolidated statements of operations	Three Months Ended
		March 31,
		2020			2019
Non-designated hedges and interest rate swaps	Interest expense	$	(1.5	)	$	(1.1	)
Foreign exchange forward contracts and cash flow hedges	Net sales	0.3			(0.1		)
Foreign exchange forward contracts and cash flow hedges	Foreign exchange gain (loss), net	(13.6		)	0.2
Total		$	(14.8	)	$	(1.0	)

Derivative instrument Classification on condensed consolidated statements of operations Three Months Ended
March 31,
2019 2018
Non-designated hedges and interest rate swaps Interest expense $ 1.1
$ (0.3 )
Foreign exchange forward contracts and cash flow hedges Net sales (0.1 ) 2.6
Foreign exchange forward contracts and cash flow hedges Cost of sales —
(0.1 )
Foreign exchange forward contracts and cash flow hedges Foreign exchange gain (loss), net 0.2
(0.2 )
Total $ 1.2
$ 2.0

Foreign Exchange

Non-Designated Hedges A substantial portion of the Company’s operations and revenues are international. As a result, changes in foreign exchange rates can create substantial foreign exchange gains and losses from the revaluation of non-functional currency monetary assets and liabilities. The Company's policy allows the use of foreign exchange forward contracts with maturities of up

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, 2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

to 24 months to mitigate the impact of currency fluctuations on those foreign currency asset and liability balances. The Company elected not to apply hedge accounting to certain of its foreign exchange forward ~~contracts and therefore,~~contracts. Thus, spot-based gains/losses offset revaluation gains/losses within foreign exchange loss, net and forward-based gains/losses represent interest expense or income. The fair value of the Company’s non-designated foreign exchange forward contracts was ~~$1.0~~$(3.9) and ~~$0.5~~$(0.4) as of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

Cash Flow Hedges The Company is exposed to fluctuations in various foreign currencies against its functional currency. ~~The Company's~~At the Company, both sales and purchases are transacted in foreign currencies. Wincor Nixdorf International GmbH (WNI) is the Diebold Nixdorf AG currency management center. Currency risks in the aggregate are identified, quantified, and controlled at the WNI treasury center, and furthermore, it provides foreign currencies if necessary. The Diebold Nixdorf AG subsidiaries are primarily exposed to the GBP as the EUR is its functional currency. This risk is considerably reduced by natural hedging (i.e. management of sales and purchases by choice location and suppliers). For the remainder of the risk that is not naturally hedged, foreign currency forwards are used to manage the exposure between EUR-GBP.

Derivative instruments are recorded on the balance sheet at fair value. For transactions designated as cash flow hedges, the effective portion of changes in the fair value are recorded in AOCI and are subsequently reclassified into earnings in the period that the hedged forecasted transactions impact earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. As of March 31, ~~2019,~~2020, the Company had the following outstanding foreign currency derivatives that were used to hedge its foreign exchange risks:



Foreign Currency Derivative	Number of Instruments	Notional Sold		Notional Purchased
Currency forward agreements (EUR-GBP)	12	24.0	GBP	27.1	EUR

Foreign Currency Derivative Number of Instruments Notional Sold Notional Purchased
Currency forward agreements (EUR-GBP) 12
27.5
GBP 30.9
EUR

Interest Rate

Cash Flow Hedges The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

In March 2020 and September 2019, the Company entered into multiple pay-fixed receive-variable interest rate swaps with aggregate notional amounts of $250.0 and $500.0, respectively. The ~~Company estimates~~effective portion of changes in the fair value of derivatives designated and that ~~a minimal amount will be~~qualify as cash flow hedges is recorded in AOCI and is subsequently reclassified ~~as a decrease to interest expense over~~into earnings in the ~~next year.~~period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings.

In November 2016, the Company entered into multiple pay-fixed receive-variable interest rate swaps with an aggregate notional amount of $400.0. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in AOCI and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings.

The Company has an interest rate swap for a nominal sum of €50.0, which was entered into in May 2010, with a ten-year term from October 1, 2010 until September 30, 2020. This interest rate swap mitigated the interest rate risk associated with the European Investment Bank debt, which was paid in full during 2017. For this interest swap, the three-month EURIBOR is received and a fixed interest rate of 2.97 percent is paid. The interest rate swap is not designated and changes in the fair value of ~~non-~~

~~Table of Contents~~

~~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)~~

~~designated~~non-designated interest rate swap agreements are recognized in ~~miscellaneous,~~Miscellaneous, net in the condensed consolidated statements of operations. The Company recognized $0.5 ~~in interest~~of expense relating to the interest rate swap for both the three months ended March 31, ~~2019~~2020 and ~~2018.~~2019.

Additionally, the Company does not use derivatives for trading or speculative purposes and currently does not have any additional derivatives that are not designated as hedges.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, 2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

Note 18: Fair Value of Assets and Liabilities

Assets and Liabilities Recorded at Fair Value

As a result of the disruption and uncertainty related to the COVID-19 pandemic, fair values may experience volatile movements that cannot be reasonably estimated.

Assets and liabilities subject to fair value measurement are as follows:



		March 31, 2020						December 31, 2019
				Fair Value Measurements Using						Fair Value Measurements Using
	Classification on condensed consolidated Balance Sheets	Fair Value		Level 1		Level 2		Fair Value		Level 1		Level 2
Assets
Short-term investments
Certificates of deposit	Short-term investments	$	13.5	$	13.5	$	—	$	10.0	$	10.0	$	—
Assets held in rabbi trusts	Securities and other investments	4.9		4.9		—		6.2		6.2		—
Foreign exchange forward contracts	Other current assets	3.4		—		3.4		2.9		—		2.9
Interest rate swaps	Other current assets	—		—		—		1.7		—		1.7
Interest rate swaps	Securities and other investments	—		—		—		0.1		—		0.1
Total		$	21.8	$	18.4	$	3.4	$	20.9	$	16.2	$	4.7
Liabilities
Foreign exchange forward contracts	Other current liabilities	$	18.8	$	—	$	18.8	$	2.9	$	—	$	2.9
Interest rate swaps	Other liabilities	20.3		—		20.3		2.3		—		2.3
Deferred compensation	Other liabilities	4.9		4.9		—		6.2		6.2		—
Total		$	44.0	$	4.9	$	39.1	$	11.4	$	6.2	$	5.2

March 31, 2019 December 31, 2018
Fair Value Measurements Using Fair Value Measurements Using
Classification on condensed consolidated Balance Sheets Fair Value Level 1 Level 2 Fair Value Level 1 Level 2
Assets
Short-term investments
Certificates of deposit Short-term investments $ 31.5
$ 31.5
$ —
$ 33.5
$ 33.5
$ —
Assets held in rabbi trusts Securities and other investments 6.6
6.6
—
6.3
6.3
—
Foreign exchange forward contracts Other current assets 1.7
—
1.7
3.4
—
3.4
Interest rate swaps Other current assets 4.6
—
4.6
5.3
—
5.3
Interest rate swaps Securities and other investments 2.8
—
2.8
4.8
—
4.8
Total $ 47.2
$ 38.1
$ 9.1
$ 53.3
$ 39.8
$ 13.5
Liabilities
Foreign exchange forward contracts Other current liabilities $ 5.3
$ —
$ 5.3
$ 3.1
$ —
$ 3.1
Interest rate swaps Other current liabilities 3.6
—
3.6
3.6
—
3.6
Deferred compensation Other liabilities 6.6
6.6
—
6.3
6.3
—
Total $ 15.5
$ 6.6
$ 8.9
$ 13.0
$ 6.3
$ 6.7

The Company uses the end of period when determining the timing of transfers between levels. During each of the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, there were no0 transfers between levels.

The carrying amount of the Company's debt instruments approximates fair value except for the 2024 Senior Notes. The fair value and carrying value of the 2024 Senior Notes are summarized as follows:



	March 31, 2020				December 31, 2019
	Fair Value		Carrying Value		Fair Value		Carrying Value
2024 Senior Notes	$	266.0	$	400.0	$	387.0	$	400.0

March 31, 2019 December 31, 2018
Fair Value Carrying
Value Fair Value Carrying
Value
2024 Senior Notes 358.0
400.0
242.0
400.0

Refer to note 11 for further details surrounding the Company's long-term debt as of March 31, ~~2019~~2020 compared to December 31, ~~2018.~~2019. Additionally, the Company remeasures certain assets to fair value, using Level 3 measurements, as a result of the occurrence of triggering events. In the second and third quarters of 2018, in connection with certain triggering events, the Company performed impairment tests of goodwill for all of its reporting units, refer to note 8 for further details. Besides goodwill from certain reporting units noted above, thereThere were no significant assets or liabilities that were remeasured at fair value on a non-recurring basis during the ~~period~~periods presented.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, 2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

Note 19: Commitments and Contingencies

~~Contractual Obligation~~

At March 31, 2019, the Company had purchase commitments due within one year totaling $0.1 for materials and services through contract manufacturing agreements at negotiated prices. The Company guarantees a fixed cost of certain products used in production to its China strategic partners.

Indirect Tax Contingencies

The Company accrues non-income-tax liabilities for indirect tax matters when management believes that a loss is probable and the amounts can be reasonably estimated, while contingent gains are recognized only when realized. In the event any losses are sustained in excess of accruals, they are charged against income. In evaluating indirect tax matters, management takes into consideration factors such as historical experience with matters of similar nature, specific facts and circumstances and the likelihood of prevailing. Management evaluates and updates accruals as matters progress over time. It is reasonably possible that some of the matters for which accruals have not been established could be decided unfavorably to the Company and could require recognizing future expenditures. Also, statutes of limitations could expire without the Company paying the taxes for matters for which accruals have been established, which could result in the recognition of future gains upon reversal of these accruals at that time.

At March 31, ~~2019,~~2020, the Company was a party to several routine indirect tax claims from various taxing authorities globally that were incurred in the normal course of business, which neither individually nor in the aggregate are considered material by management in relation to the Company’s financial position or results of operations. In management’s opinion, the condensed consolidated financial statements would not be materially affected by the outcome of these indirect tax claims and/or proceedings or asserted claims.

In addition to these routine indirect tax matters, the Company was a party to the proceedings described below:

The Company has challenged multiple customs rulings in Thailand seeking to retroactively collect customs duties on previous imports of ~~automatic~~automated teller machines (ATMs). In August 2017, March 2019 and ~~March~~August 2019, the Supreme Court of Thailand ruled in the Company's favor in ~~two~~three of the matters, finding each time that Customs' attempt to collect duties for importation of ATMs was improper. The surviving matters remain at various stages of the appeals process and the Company will use the Supreme Court's decisions in support of its position in those matters. Management remains confident that the Company has a valid legal position in these appeals. Accordingly, the Company does not have any amount accrued for this contingency.

A loss contingency is reasonably possible if it has a more than remote but less than probable chance of occurring. Although management believes the Company has valid defenses with respect to its indirect tax positions, it is reasonably possible that a loss could occur in excess of the estimated accrual. The Company estimated the aggregate risk at March 31, ~~2019~~2020 to be up to ~~$118.7~~$89.1 for its material indirect tax matters, of which ~~$27.0~~$30.4 related to the Thailand customs matter disclosed above. The aggregate risk related to indirect taxes is adjusted as the applicable statutes of limitations expire.

Legal Contingencies

At ~~December~~March 31, ~~2018,~~2020, the Company was a party to several lawsuits that were incurred in the normal course of business, which neither individually nor in the aggregate were considered material by management in relation to the Company’s financial position or results of operations. In management’s opinion, the Company's condensed consolidated financial statements would not be materially affected by the outcome of these legal proceedings, commitments or asserted claims.

In addition to these normal course of business litigation matters, the Company ~~was~~is a party to the proceedings described below:

Diebold KGaA is a party to two separate appraisal proceedings (Spruchverfahren) ~~relating to~~in connection with the ~~DPLTA entered into by Diebold KGaA and~~purchase of all shares in its former listed subsidiary, Diebold Nixdorf ~~AG on September 26, 2016,~~AG. Both proceedings are pending at the same Chamber for Commercial Matters (Kammer für Handelssachen) at the District Court (Landgericht) of Dortmund (Germany). The first appraisal ~~proceedings were~~proceeding relates to the Domination and Profit and Loss Transfer Agreement, dated September 26, 2016 (the DPLTA) entered into by Diebold KGaA and former Diebold Nixdorf AG, which became effective on February 17, 2017. The DPLTA appraisal proceeding was filed by minority shareholders of Diebold Nixdorf AG challenging the adequacy of both the cash exit compensation of €55.02 per Diebold Nixdorf AG share (of which 6.9 shares were then outstanding) and the annual recurring compensation of €2.82 per Diebold Nixdorf AG share offered in connection with the DPLTA. ~~A ruling by~~

The second appraisal proceeding relates to the ~~court would apply to all~~cash merger squeeze-out of minority shareholders of Diebold Nixdorf AG ~~shares outstanding at~~in 2019. The squeeze-out appraisal proceeding was filed by minority shareholders of Diebold Nixdorf AG challenging the ~~time~~adequacy of the ~~DPLTA became effective. While the Company believes that the compensation offered in connection with the DPLTA~~

2527

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

~~was fair~~cash exit compensation of €54.80 per Diebold Nixdorf AG share (of which 1.4 shares were then outstanding) in connection with the merger squeeze-out.

In both appraisal proceedings, a court ruling would apply to all Diebold Nixdorf AG shares outstanding at the time when the DPLTA or the merger squeeze-out, respectively, became effective. Any cash compensation received by former Diebold Nixdorf AG shareholders in connection with the merger squeeze-out would be netted with any higher cash compensation such shareholder may still claim in connection with the DPLTA appraisal proceeding. While the Company believes that the compensation offered in connection with the DPLTA and the ~~claims lack merit,~~merger squeeze-out was in both cases fair, it notes that German courts often adjudicate increases of the cash compensation to plaintiffs in varying amounts in connection with German appraisal proceedings. Therefore, the Company cannot rule out that the first instance court or an appellate court may increase the cash compensation also in these appraisal proceedings. The Company, however, is convinced that its defense in both appraisal proceedings which are still at preliminary stages is supported by strong sets of facts and the Company will continue to vigorously defend itself in these matters.

In July and August 2019, shareholders filed putative class action lawsuits alleging violations of federal securities laws in the United States District Court for the Southern District of New York and the Northern District of Ohio. The lawsuits collectively assert that the Company and three former officers made material misstatements regarding the Company’s business and operations, causing the Company’s common stock to be overvalued from February 14, 2017 to August 1, 2018. The lawsuits have been consolidated before a single judge in the United States District Court for the Southern District of New York and lead plaintiffs appointed. The Company intends to vigorously defend itself in this matter ~~is still at a preliminary stage~~ and ~~the outcome is uncertain.~~management remains confident that it has valid defenses to these claims. As ~~a result,~~with any pending litigation, the Company is unable to ~~reasonably estimate~~predict the ~~possible loss or range~~final outcome of ~~losses, if any, arising~~this matter.

In January 2020, the Company's Board of Directors received a demand letter from ~~this~~alleged shareholders to investigate and pursue claims for breach of fiduciary duty against certain current and former directors and officers based on the Company's statements regarding its business and operations, which are substantially similar to those challenged in the federal securities litigation. The Board has not yet responded to the demand.

Note 20: Segment and Revenue Information

The Company's accounting policies ~~derive segment results~~result in segments that are the same as those the Chief Operating Decision Maker (CODM) regularly reviews and uses to make decisions, allocate resources and assess performance. The Company continually considers its operating structure and the information subject to regular review by its Chief Executive Officer, who is the CODM, to identify reportable operating segments. The Company’s operating structure is based on a number of factors that management uses to evaluate, view and run its business operations, which currently includes, but is not limited to, product, service and solution. The Company's reportable operating segments are based on the following solutions: Eurasia Banking, Americas Banking and Retail.

Segment revenue represents revenues from sales to external customers. Segment operating profit is defined as revenues less expenses ~~identifiable~~direct and allocated to those segments. The Company does not allocate to its segments certain operating expenses, managed at the corporate level; that are not routinely used in the management of the segments; or information that is impractical to allocate. These unallocated costs include certain corporate costs and amortization of acquired intangible assets, ~~and deferred revenue,~~ restructuring charges, impairment charges, legal, indemnification and professional fees related to acquisition and divestiture expenses, along with other income (expenses). Segment operating profit reconciles to consolidated income (loss) before income taxes by deducting corporate costs and other income or expense items that are not attributed to the segments. Corporate charges not allocated to segments include headquarter-based costs associated with procurement, human resources, compensation and benefits, finance and accounting, global development/engineering, global strategy/mergers and acquisitions, global IT, tax, treasury and legal. Assets are not allocated to segments, and thus are not included in the assessment of segment performance, and consequently, we do not disclose total assets and depreciation and amortization expense by reportable operating segment.

2628

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

The following tables ~~represent~~present information regarding the Company’s segment ~~information~~performance and ~~provides~~provide a reconciliation between segment operating profit and the consolidated income (loss) before income taxes:


	Three Months Ended							Three Months Ended
	March 31,							March 31,
	2019				2018			2020			2019
Net sales summary by segment
Eurasia Banking	$	382.6			$	435.1		$	310.5		$	382.6
Americas Banking	362.7				333.7			344.7			362.7
Retail	282.8				295.4			255.5			282.8
Total revenue	$	1,028.1			$	1,064.2		$	910.7		$	1,028.1

Intersegment revenue
Eurasia Banking	$	55.2			$	31.0		$	21.4		$	55.2
Americas Banking	2.2				5.5			1.3			2.2
Total intersegment revenue	$	57.4			$	36.5		$	22.7		$	57.4

Segment gross profit
Eurasia Banking								$	89.8		$	109.0
Americas Banking								104.5			82.2
Retail								59.9			55.8
Total segment gross profit								254.2			247.0

Segment selling and administrative expense
Eurasia Banking								46.1			61.9
Americas Banking								39.7			50.3
Retail								36.7			37.8
Total segment selling and administrative expense								122.5			150.0

Segment research, development and engineering expense
Eurasia Banking								12.0			13.4
Americas Banking								11.1			13.4
Retail								7.9			9.9
Total segment research, development and engineering expense								31.0			36.7

Segment operating profit				��
Eurasia Banking	$	33.7			$	19.5		31.7			33.7
Americas Banking	18.5				5.0			53.7			18.5
Retail	8.1				10.2			15.3			8.1
Total segment operating profit	60.3				34.7			100.7			60.3

Corporate charges not allocated to segments ⁽¹⁾	(33.2		)		(17.1		)	(37.7		)	(33.2		)
Restructuring charges	(3.8		)		(3.9		)
Restructuring and DN Now transformation expenses								(41.6		)	(15.2		)
Net non-routine expense	(47.8		)		(37.2		)	(47.4		)	(36.4		)
	(84.8		)		(58.2		)	(126.7		)	(84.8		)
Operating loss	(24.5		)		(23.5		)
Operating profit (loss)								(26.0		)	(24.5		)
Other income (expense)	(46.6		)		(24.0		)	(47.4		)	(46.6		)
Loss before taxes	$	(71.1	)		$	(47.5	)	$	(73.4	)	$	(71.1	)


⁽¹⁾	Corporate charges not allocated to segments include headquarter-based costs associated with procurement, human resources, compensation and benefits, finance and accounting, global development/engineering, global strategy/mergers and acquisitions, global IT, tax, treasury and legal.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, 2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

Net non-routine expense consists of items that the Company has determined are non-routine in nature and not allocated to the reportable operating segments. Net non-routine expense of ~~$47.8~~$47.4 for the three months ended March 31, ~~2019~~2020 primarily consisted of purchase accounting pre-tax charges for amortization of acquired intangibles, ~~of $24.6 and~~ legal, consulting and deal expense ~~of $20.7.~~and a charge related to a certain onerous services contract. Net non-routine expense of ~~$37.2~~$36.4 for the three months ended March 31, ~~2018~~2019 was primarily due ~~to acquisition integration expenses of $15.2, primarily within selling and administrative expense, and~~ purchase accounting pre-tax charges for amortization of acquired intangibles, ~~of $31.2.~~and legal, consulting and deal expense.

~~Table of Contents~~

~~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 presents information regarding the Company’s segment net sales by service and product solution:



	Three Months Ended
	March 31,
	2020		2019
Segments
Eurasia Banking
Services	$	206.0	$	247.0
Products	104.5		135.6
Total Eurasia Banking	310.5		382.6

Americas Banking
Services	239.5		240.8
Products	105.2		121.9
Total Americas Banking	344.7		362.7

Retail
Services	142.3		140.9
Products	113.2		141.9
Total Retail	255.5		282.8

Total net sales	$	910.7	$	1,028.1

Three Months Ended
March 31,
2019 2018
Segments
Eurasia Banking
Services $ 247.0
$ 279.2
Products 135.6
155.9
Total Eurasia Banking 382.6
435.1

Americas Banking
Services 240.8
251.2
Products 121.9
82.5
Total Americas Banking 362.7
333.7

Retail
Services 140.9
159.9
Products 141.9
135.5
Total Retail 282.8
295.4

Total net sales $ 1,028.1
$ 1,064.2

In the following table, revenue is disaggregated by timing of revenue recognition at March 31:



Timing of revenue recognition	2020		2019
Products transferred at a point in time	35	%	39	%
Products and services transferred over time	65	%	61	%
Net sales	100	%	100	%

Timing of revenue recognition 2019 2018
Products transferred at a point in time 39 % 35 %
Products and services transferred over time 61 % 65 %
Net sales 100 % 100 %

Contract balances

The following table provides 2020 information about receivables and deferred revenue, which represent contract liabilities from contracts with customers:



Contract balance information	Trade Receivables		Contract liabilities
Balance at December 31	$	619.3	$	320.5
Balance at March 31	$	594.5	$	371.4

Contract assets are minimal for the periods presented. The amount of revenue recognized during the three months ended March 31, 2020 and 2019 from performance obligations satisfied (or partially satisfied) in previous periods, mainly due to the changes in the estimate of variable consideration and contract modifications was de minimis. There have been $4.8 and $3.4 during the three months ended March 31, 2020 and 2019, respectively, of impairment losses recognized as bad debt related to receivables or contract assets arising from the Company's contracts with customers.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

As of December 31, 2019, the Company had $320.5 of unrecognized deferred revenue constituting the remaining performance obligations that are unsatisfied (or partially unsatisfied). During the three months ended March 31, 2020, the Company recognized revenue of $138.3 related to the Company's deferred revenue balance at December 31, 2019.

Contract assets are the rights to consideration in exchange for goods or services that the Company has transferred to a customer when that right is conditional on something other than the passage of time. Contract assets of the Company primarily relate to the Company's rights to consideration for goods shipped and services provided but not contractually billable at the reporting date.

The contract assets are reclassified into the receivables balance when the rights to receive payment become unconditional. Contract liabilities are recorded for any services billed to customers and not yet recognizable if the contract period has commenced or for the amount collected from customers in advance of the contract period commencing. In addition, contract liabilities are recorded as advanced payments for products and other deliverables that are billed to and collected from customers prior to revenue being recognizable.

Transaction price allocated to the remaining performance obligations

As of March 31, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $1,500. The Company generally expects to recognize revenue on the remaining performance obligations over the next twelve months. The Company enters into service agreements with cancellable terms after a certain period without penalty. Unsatisfied obligations reflect only the obligation during the initial term. The Company applies the practical expedient in ASC paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, 2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

Note 21: Supplemental Guarantor Information

The Company issued the 2024 Senior Notes in an offering exempt from the registration requirements of the Securities Act of 1933. The 2024 Senior Notes are and will be guaranteed by certain of the Company's existing and future domestic subsidiaries. In addition, the 2024 Senior Notes are guaranteed by a foreign subsidiary of the Company. The following presents the condensed consolidating financial information separately for:


(i)	Diebold Nixdorf, Incorporated (the Parent Company), the issuer of the guaranteed obligations;


(ii)	Domestic guarantor subsidiaries, on a combined basis, as specified in the indenture governing the Company's obligations under the 2024 Senior Notes;


(iii)	~~Foreign guarantor subsidiary, as specified in the indenture governing the Company's obligations under the 2024 Senior Notes;~~


~~(iv)~~	Non-guarantor subsidiaries, on a combined basis;


~~(v)~~(iv)	Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between the Parent Company, the guarantor subsidiaries, ~~the foreign guarantor subsidiary~~ and the non-guarantor subsidiaries, (b) eliminate the investments in its subsidiaries, and (c) record consolidating entries; and


~~(vi)~~(v)	Diebold Nixdorf, Incorporated and ~~Subsidiaries~~subsidiaries on a consolidated basis.

Each guarantor subsidiary is 100 percent owned by the Parent Company at the date of each balance sheet presented. The 2024 Senior Notes are fully and unconditionally guaranteed on a joint and several basis by each guarantor subsidiary. The guarantees of the guarantor subsidiaries are subject to release in limited circumstances only upon the occurrence of certain conditions. Each entity in the consolidating financial information follows the same accounting policies as described in the condensed consolidated financial statements, except for the use by the Parent Company and the guarantor subsidiaries of the equity method of accounting to reflect ownership interests in subsidiaries which are eliminated upon consolidation. Changes in intercompany receivables and payables related to operations, such as intercompany sales or service charges, are included in cash flows from operating activities. Intercompany transactions reported as investing or financing activities include the sale of capital stock of various subsidiaries, loans and other capital transactions between members of the consolidated group.

Certain non-guarantor subsidiaries of the Parent Company are limited in their ability to remit funds to it by means of dividends, advances or loans due to required foreign government and/or currency exchange board approvals or limitations in credit agreements or other debt instruments of those subsidiaries.

The Company also reclassified certain assets and liabilities for inclusion of an additional wholly-owned domestic subsidiary from its non-guarantor subsidiaries to the combined guarantor subsidiaries and a wholly-owned foreign subsidiary from its non-guarantor subsidiaries to the foreign guarantor subsidiary as a result of changes included in the Sixth Amendment.

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Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

Condensed Consolidating Balance Sheet

As of March 31, ~~2019~~2020


	Parent			Domestic Guarantor Subsidiaries			Foreign Guarantor Subsidiary		Non- Guarantor Subsidiaries		Consolidating Entries and Eliminations			Consolidated			Parent			Domestic Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Consolidating Entries and Eliminations			Consolidated
ASSETS
Current assets
Cash, cash equivalents and restricted cash	$	14.1		$	3.0		$	—	$	360.8	$	—		$	377.9		$	312.4		$	2.7	$	197.0	$	—		$	512.1
Short-term investments	—			—			—		31.5		—			31.5			—			—		13.5		—			13.5
Trade receivables, net	117.2			—			—		580.5		—			697.7			123.1			—		471.4		—			594.5
Intercompany receivables	660.3			589.3			—		724.4		(1,974.0		)	—			587.1			554.1		715.4		(1,856.6		)	—
Inventories	161.7			—			—		505.4		(4.1		)	663.0			117.6			—		359.4		(1.5		)	475.5
Prepaid, income taxes and other current assets	32.8			12.6			—		334.0		(12.2		)	367.2			31.1			8.0		418.5		(7.8		)	449.8
Total current assets	986.1			604.9			—		2,536.6		(1,990.3		)	2,137.3			1,171.3			564.8		2,175.2		(1,865.9		)	2,045.4
Securities and other investments	18.7			—			—		—		—			18.7			18.1			—		—		—			18.1
Property, plant and equipment, net	75.5			0.7			—		218.3		—			294.5			56.7			0.1		159.3		—			216.1
Goodwill	55.5			—			—		758.1		—			813.6			55.5			—		680.7		—			736.2
Deferred income taxes	106.5			6.2			—		95.7		—			208.4			53.5			6.4		59.0		—			118.9
Intangible assets, net	28.9			—			—		559.9		—			588.8
Customer relationships, net																	—			—		418.5		—			418.5
Investment in subsidiary	1,738.7			(1.6		)	419.7		—		(2,156.8		)	—			1,580.5			—		—		(1,580.5		)	—
Long-term intercompany receivables	617.9			—			—		—		(617.9		)	—			602.6			—		—		(602.6		)	—
Other assets	53.5			0.3			—		212.2		—			266.0			57.0			1.6		227.0		—			285.6
Total assets	$	3,681.3		$	610.5		$	419.7	$	4,380.8	$	(4,765.0	)	$	4,327.3		$	3,595.2		$	572.9	$	3,719.7	$	(4,049.0	)	$	3,838.8

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Current liabilities
Notes payable	$	26.9		$	—		$	—	$	20.3	$	—		$	47.2		$	93.3		$	—	$	10.1	$	—		$	103.4
Accounts payable	79.6			0.1			—		412.1		—			491.8			106.0			—		393.2		—			499.2
Intercompany payable	1,192.2			59.8			122.5		599.5		(1,974.0		)	—			1,269.5			48.8		538.3		(1,856.6		)	—
Deferred revenue	124.6			—			—		318.6		—			443.2			128.0			—		243.4		—			371.4
Payroll and other benefits liabilities	25.0			0.5			—		141.7		—			167.2			34.9			—		135.4		—			170.3
Other current liabilities	151.6			0.1			—		365.6		(12.2		)	505.1			141.9			0.8		366.5		(7.8		)	501.4
Total current liabilities	1,599.9			60.5			122.5		1,857.8		(1,986.2		)	1,654.5			1,773.6			49.6		1,686.9		(1,864.4		)	1,645.7
Long-term debt	2,164.5			—			—		26.7		—			2,191.2			2,342.9			—		10.5		—			2,353.4
Long-term intercompany payable	—			—			—		617.9		(617.9		)	—			—			—		602.6		(602.6		)	—
Other long-term liabilities	218.3			—			—		438.2		—			656.5			206.6			—		323.1		—			529.7
Commitments and contingencies														—
Redeemable noncontrolling interests	—			—			—		99.8		—			99.8			—			—		20.6		—			20.6
Total Diebold Nixdorf, Incorporated shareholders' equity	(301.4		)	550.0			297.2		1,313.7		(2,160.9		)	(301.4		)	(727.9		)	523.3		1,058.7		(1,582.0		)	(727.9		)
Noncontrolling interests	—			—			—		26.7		—			26.7			—			—		17.3		—			17.3
Total liabilities, redeemable noncontrolling interests and equity	$	3,681.3		$	610.5		$	419.7	$	4,380.8	$	(4,765.0	)	$	4,327.3		$	3,595.2		$	572.9	$	3,719.7	$	(4,049.0	)	$	3,838.8

3033

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

Condensed Consolidating Balance Sheet

As of December 31, ~~2018~~2019



	Parent			Domestic Guarantor Subsidiaries		Non- Guarantor Subsidiaries		Consolidating Entries and Eliminations			Consolidated
ASSETS
Current assets
Cash, cash equivalents and restricted cash	$	3.6		$	1.8	$	275.5	$	—		$	280.9
Short-term investments	—			—		10.0		—			10.0
Trade receivables, net	109.0			—		510.3		—			619.3
Intercompany receivables	632.6			559.3		747.6		(1,939.5		)	—
Inventories	122.4			—		346.4		(2.3		)	466.5
Prepaid, income taxes and other current assets	42.1			7.8		473.2		(7.8		)	515.3
Total current assets	909.7			568.9		2,363.0		(1,949.6		)	1,892.0
Securities and other investments	21.4			—		—		—			21.4
Property, plant and equipment, net	61.9			0.5		169.1		—			231.5
Goodwill	55.5			—		708.5		—			764.0
Deferred income taxes	51.1			6.4		63.3		—			120.8
Customer relationships, net	—			—		447.7		—			447.7
Investment in subsidiary	1,676.8			—		—		(1,676.8		)	—
Long-term intercompany receivables	617.9			—		—		(617.9		)	—
Other assets	64.3			0.1		248.8		—			313.2
Total assets	$	3,458.6		$	575.9	$	4,000.4	$	(4,244.3	)	$	3,790.6

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Current liabilities
Notes payable	$	26.6		$	—	$	5.9	$	—		$	32.5
Accounts payable	55.3			—		416.2		—			471.5
Intercompany payable	1,302.3			46.7		590.5		(1,939.5		)	—
Deferred revenue	133.7			—		186.8		—			320.5
Payroll and other benefits liabilities	49.4			2.1		173.2		—			224.7
Other current liabilities	109.5			1.0		447.7		(7.8		)	550.4
Total current liabilities	1,676.8			49.8		1,820.3		(1,947.3		)	1,599.6
Long-term debt	2,107.4			—		1.3		—			2,108.7
Pensions, post-retirement and other benefits	160.3			—		77.4		—			237.7
Long-term intercompany payable	—			—		617.9		(617.9		)	—
Other long-term liabilities	42.7			—		287.3		—			330.0
Redeemable noncontrolling interests	—			—		20.9		—			20.9
Total Diebold Nixdorf, Incorporated shareholders' equity	(528.6		)	526.1		1,151.3		(1,679.1		)	(530.3		)
Noncontrolling interests	—			—		24.0		—			24.0
Total liabilities, redeemable noncontrolling interests and equity	$	3,458.6		$	575.9	$	4,000.4	$	(4,244.3	)	$	3,790.6

Parent Domestic
Guarantor
Subsidiaries Foreign Guarantor Subsidiary Non-
Guarantor
Subsidiaries Consolidating
Entries and
Eliminations Consolidated
ASSETS
Current assets
Cash, cash equivalents and restricted cash $ 17.3
$ 2.7
$ —
$ 438.4
$ —
$ 458.4
Short-term investments —
—
—
33.5
—
33.5
Trade receivables, net 105.7
0.1
—
631.4
—
737.2
Intercompany receivables 205.3
606.3
—
536.5
(1,348.1 ) —
Inventories 164.8
—
—
447.5
(2.2 ) 610.1
Prepaid, income taxes and other current assets 36.8
12.7
—
340.5
(25.8 ) 364.2
Total current assets 529.9
621.8
—
2,427.8
(1,376.1 ) 2,203.4
Securities and other investments 22.4
—
—
—
—
22.4
Property, plant and equipment, net 76.9
0.8
—
226.4
—
304.1
Deferred income taxes 139.9
6.2
—
97.8
—
243.9
Goodwill 58.1
—
—
769.0
—
827.1
Intangible assets, net 30.8
—
—
593.8
—
624.6
Investment in subsidiary 2,702.1
(0.6 ) 1,129.0
—
(3,830.5 ) —
Other assets 30.2
0.4
—
69.3
(13.5 ) 86.4
Total assets $ 3,590.3
$ 628.6
$ 1,129.0
$ 4,184.1
$ (5,220.1 ) $ 4,311.9

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Current liabilities
Notes payable $ 25.7
$ 0.1
$ —
$ 23.7
$ —
$ 49.5
Accounts payable 88.1
—
—
421.4
—
509.5
Intercompany payable 1,030.8
60.8
120.1
136.4
(1,348.1 ) —
Deferred revenue 116.6
0.1
—
261.5
—
378.2
Payroll and other benefits liabilities 26.7
1.3
—
156.3
—
184.3
Other current liabilities 114.2
1.5
—
352.4
(21.2 ) 446.9
Total current liabilities 1,402.1
63.8
120.1
1,351.7
(1,369.3 ) 1,568.4
Long-term debt 2,172.5
—
—
17.5
—
2,190.0
Other long-term liabilities 202.1
—
—
398.6
(18.0 ) 582.7
Redeemable noncontrolling interests —
—
—
130.4
—
130.4
Total Diebold Nixdorf, Incorporated shareholders' equity (186.4 ) 564.8
1,008.9
2,259.1
(3,832.8 ) (186.4 )
Noncontrolling interests —
—
—
26.8
—
26.8
Total liabilities, redeemable noncontrolling interests and equity $ 3,590.3
$ 628.6
$ 1,129.0
$ 4,184.1
$ (5,220.1 ) $ 4,311.9

3134

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three Months Ended March 31, ~~2019~~2020


	Parent			Domestic Guarantor Subsidiaries			Foreign Guarantor Subsidiary			Non- Guarantor Subsidiaries			Consolidating Entries and Eliminations			Consolidated
																			Parent			Domestic Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Entries and Eliminations			Consolidated
Net sales	$	295.5		$	0.1		$	—		$	851.3		$	(118.8	)	$	1,028.1		$	269.4		$	—		$	701.8		$	(60.5	)	$	910.7
Cost of sales	243.0			0.2			—			650.9			(110.1		)	784.0			188.4			—			549.0			(53.5		)	683.9
Gross profit (loss)	52.5			(0.1		)	—			200.4			(8.7		)	244.1			81.0			—			152.8			(7.0		)	226.8
Selling and administrative expense	84.0			1.1			—			143.2			—			228.3			111.5			0.2			110.4			—			222.1
Research, development and engineering expense	1.2			8.8			—			31.5			(4.6		)	36.9			5.1			2.8			30.0			(5.4		)	32.5
Loss on sale of assets, net	—			—			—			3.4			—			3.4
(Gain) loss on sale of assets, net																			—			—			(1.8		)	—			(1.8		)
	85.2			9.9			—			178.1			(4.6		)	268.6			116.6			3.0			138.6			(5.4		)	252.8
Operating (loss) income	(32.7		)	(10.0		)	—			22.3			(4.1		)	(24.5		)	(35.6		)	(3.0		)	14.2			(1.6		)	(26.0		)
Other income (expense)
Interest income	0.9			—			—			2.0			—			2.9			—			—			1.1			—			1.1
Interest expense	(47.5		)	—			—			(3.4		)	—			(50.9		)	(45.6		)	—			(2.4		)	—			(48.0		)
Foreign exchange (loss) gain, net	(1.4		)	—			—			4.2			—			2.8			(4.8		)	—			5.2			—			0.4
Miscellaneous, net	12.6			0.3			(1.7		)	(9.8		)	(2.8		)	(1.4		)	21.7			0.2			(23.4		)	0.6			(0.9		)
(Loss) income before taxes	(68.1		)	(9.7		)	(1.7		)	15.3			(6.9		)	(71.1		)	(64.3		)	(2.8		)	(5.3		)	(1.0		)	(73.4		)
Income tax expense	41.0			(6.4		)	0.7			25.1			—			60.4			4.4			(2.0		)	17.6			—			20.0
Equity in earnings of subsidiaries	(23.6		)	(1.0		)	19.8			(0.4		)	4.8			(0.4		)	(24.1		)	—			—			24.1			—
Net (loss) income	(132.7		)	(4.3		)	17.4			(10.2		)	(2.1		)	(131.9		)	(92.8		)	(0.8		)	(22.9		)	23.1			(93.4		)
Net income attributable to noncontrolling interests	—			—			—			0.8			—			0.8
Net (loss) income attributable to noncontrolling interests																			—			—			(0.6		)	—			(0.6		)
Net (loss) income attributable to Diebold Nixdorf, Incorporated	$	(132.7	)	$	(4.3	)	$	17.4		$	(11.0	)	$	(2.1	)	$	(132.7	)	$	(92.8	)	$	(0.8	)	$	(22.3	)	$	23.1		$	(92.8	)
Comprehensive (loss) income	$	(133.8	)	$	(4.3	)	$	19.5		$	(40.6	)	$	28.9		$	(130.3	)	$	(197.0	)	$	(0.8	)	$	(95.7	)	$	94.6		$	(198.9	)
Less: comprehensive income attributable to noncontrolling interests	—			—			—			3.5			—			3.5
Less: comprehensive (loss) income attributable to noncontrolling interests																			—			—			(1.9		)	—			(1.9		)
Comprehensive (loss) income attributable to Diebold Nixdorf, Incorporated	$	(133.8	)	$	(4.3	)	$	19.5		$	(44.1	)	$	28.9		$	(133.8	)	$	(197.0	)	$	(0.8	)	$	(93.8	)	$	94.6		$	(197.0	)

3235

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three Months Ended March 31, ~~2018~~2019



	Parent			Domestic Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Entries and Eliminations			Consolidated
Net sales	$	295.5		$	0.1		$	851.3		$	(118.8	)	$	1,028.1
Cost of sales	243.0			0.2			648.9			(110.1		)	782.0
Gross profit (loss)	52.5			(0.1		)	202.4			(8.7		)	246.1
Selling and administrative expense	84.0			1.1			145.2			—			230.3
Research, development and engineering expense	1.2			8.8			31.5			(4.6		)	36.9
Gain on sale of assets, net	—			—			3.4			—			3.4
	85.2			9.9			180.1			(4.6		)	270.6
Operating loss	(32.7		)	(10.0		)	22.3			(4.1		)	(24.5		)
Other income (expense)
Interest income	0.9			—			2.0			—			2.9
Interest expense	(47.5		)	—			(3.4		)	—			(50.9		)
Foreign exchange (loss) gain, net	(1.4		)	—			4.2			—			2.8
Miscellaneous, net	12.6			0.3			(11.5		)	(2.8		)	(1.4		)
Loss before taxes	(68.1		)	(9.7		)	13.6			(6.9		)	(71.1		)
Income tax expense	41.0			(6.4		)	25.8			—			60.4
Equity in earnings of subsidiaries	(23.6		)	(1.0		)	(0.4		)	24.6			(0.4		)
Net (loss) income	(132.7		)	(4.3		)	(12.6		)	17.7			(131.9		)
Net (loss) income attributable to noncontrolling interests	—			—			0.8			—			0.8
Net (loss) income attributable to Diebold Nixdorf, Incorporated	$	(132.7	)	$	(4.3	)	$	(13.4	)	$	17.7		$	(132.7	)
Comprehensive (loss) income	$	(133.8	)	$	(4.3	)	$	(21.9	)	$	28.9		$	(131.1	)
Less: comprehensive (loss) income attributable to noncontrolling interests	—			—			3.5			—			3.5
Comprehensive (loss) income attributable to Diebold Nixdorf, Incorporated	$	(133.8	)	$	(4.3	)	$	(25.4	)	$	28.9		$	(134.6	)

Parent Domestic
Guarantor
Subsidiaries Foreign Guarantor Subsidiary Non-
Guarantor
Subsidiaries Consolidating
Entries and
Eliminations Consolidated

Net sales $ 252.5
$ 0.2
$ —
$ 864.6
$ (53.1 ) $ 1,064.2
Cost of sales 208.9
0.4
—
658.4
(41.9 ) 825.8
Gross profit (loss) 43.6
(0.2 ) —
206.2
(11.2 ) 238.4
Selling and administrative expense 75.7
1.2
0.2
150.8
—
227.9
Research, development and engineering expense 0.7
11.3
—
35.3
(5.6 ) 41.7
Gain on sale of assets, net (4.4 ) —
—
(3.3 ) —
(7.7 )
72.0
12.5
0.2
182.8
(5.6 ) 261.9
Operating (loss) income (28.4 ) (12.7 ) (0.2 ) 23.4
(5.6 ) (23.5 )
Other income (expense)
Interest income 0.2
—
—
3.3
—
3.5
Interest expense (24.8 ) —
—
(1.2 ) —
(26.0 )
Foreign exchange (loss) gain, net (3.0 ) —
—
1.6
—
(1.4 )
Miscellaneous, net (1.3 ) 1.5
(0.9 ) 0.6
—
(0.1 )
Loss before taxes (57.3 ) (11.2 ) (1.1 ) 27.7
(5.6 ) (47.5 )
Income tax expense (28.6 ) (20.6 ) 1.9
66.5
—
19.2
Equity in earnings of subsidiaries (44.5 ) —
8.7
1.1
35.8
1.1
Net (loss) income (73.2 ) 9.4
5.7
(37.7 ) 30.2
(65.6 )
Net income attributable to noncontrolling interests —
—
—
7.6
—
7.6
Net (loss) income attributable to Diebold Nixdorf, Incorporated $ (73.2 ) $ 9.4
$ 5.7
$ (45.3 ) $ 30.2
$ (73.2 )
Comprehensive (loss) income $ (82.4 ) $ 9.4
$ 5.7
$ (7.6 ) $ 0.1
$ (74.8 )
Less: comprehensive income attributable to noncontrolling interests —
—
—
7.6
—
7.6
Comprehensive (loss) income attributable to Diebold Nixdorf, Incorporated $ (82.4 ) $ 9.4
$ 5.7
$ (15.2 ) $ 0.1
$ (82.4 )

3336

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, ~~2019~~2020


	Parent			Domestic Guarantor Subsidiaries			Foreign Guarantor Subsidiary		Non- Guarantor Subsidiaries			Consolidating Entries and Eliminations			Consolidated			Parent			Domestic Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Entries and Eliminations			Consolidated
Net cash provided (used) by operating activities	$	15.3		$	(12.5	)	$	—	$	(59.9	)	$	—		$	(57.1	)	$	10.8		$	(7.7	)	$	(83.0	)	$	—		$	(79.9	)

Cash flow from investing activities
Capital expenditures	(1.1		)	—			—		(13.6		)	—			(14.7		)	(1.1		)	—			(4.3		)	—			(5.4		)
Proceeds from divestitures, net of cash divested																		—			—			(38.5		)	—			(38.5		)
Proceeds from maturities of investments	2.0			—			—		50.7			—			52.7			—			—			40.1			—			40.1
Payments for purchases of investments	—			—			—		(48.3		)	—			(48.3		)	—			—			(44.5		)	—			(44.5		)
Proceeds from sale of assets	—			—			—		4.2			—			4.2
Increase in certain other assets	(1.6		)	—			—		(3.8		)	—			(5.4		)	(2.5		)	3.5			(4.4		)	—			(3.4		)
Capital contributions and loans paid	(16.5		)	—			—		—			16.5			—			(5.8		)	—			—			5.8			—
Proceeds from intercompany loans	6.4			—			—		—			(6.4		)	—			6.3			—			—			(6.3		)	—
Net cash provided (used) by investing activities	(10.8		)	—			—		(10.8		)	10.1			(11.5		)	(3.1		)	3.5			(51.6		)	(0.5		)	(51.7		)

Cash flow from financing activities
Revolving credit facility (repayments) borrowings, net	—			—			—		10.0			—			10.0
Debt issuance costs																		(3.8		)	—			—			—			(3.8		)
Revolving credit facility borrowings																		375.9			—			10.0			—			385.9
Other debt borrowings	—			—			—		5.0			—			5.0			6.0			—			14.0			—			20.0
Other debt repayments	(6.6		)	—			—		(10.2		)	—			(16.8		)	(72.4		)	—			(10.7		)	—			(83.1		)
Distributions and payments to noncontrolling interest holders	—			—			—		(11.0		)	—			(11.0		)
Repurchase of common shares	(1.1		)	—			—		—			—			(1.1		)
Other																		(4.6		)	—			(0.4		)	—			(5.0		)
Capital contributions received and loans incurred	—			16.1			—		0.4			(16.5		)	—			—			5.8			—			(5.8		)	—
Payments on intercompany loans	—			(3.3		)	—		(3.1		)	6.4			—			—			(0.7		)	(5.6		)	6.3			—
Net cash provided (used) by financing activities	(7.7		)	12.8			—		(8.9		)	(10.1		)	(13.9		)	301.1			5.1			7.3			0.5			314.0
Effect of exchange rate changes on cash and cash equivalents	—			—			—		(0.5		)	—			(0.5		)	—			—			(15.6		)	—			(15.6		)
Increase (decrease) in cash, cash equivalents and restricted cash	(3.2		)	0.3			—		(80.1		)	—			(83.0		)
Decrease in cash, cash equivalents and restricted cash																		308.8			0.9			(142.9		)	—			166.8
Add: Cash included in assets held for sale at beginning of period	—			—			—		7.3			—			7.3			—			—			97.2			—			97.2
Less: Cash included in assets held for sale at end of period	—			—			—		4.8			—			4.8			—			—			32.8			—			32.8
Cash, cash equivalents and restricted cash at the beginning of the period	17.3			2.7			—		438.4			—			458.4			3.6			1.8			275.5			—			280.9
Cash, cash equivalents and restricted cash at the end of the period	$	14.1		$	3.0		$	—	$	360.8		$	—		$	377.9		$	312.4		$	2.7		$	197.0		$	—		$	512.1

3437

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (continued)

(unaudited)

(in millions, except per share amounts)

Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, ~~2018~~2019



	Parent			Domestic Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Entries and Eliminations			Consolidated
Net cash used by operating activities	$	15.3		$	(12.5	)	$	(59.9	)	$	—		$	(57.1	)

Cash flow from investing activities
Capital expenditures	(1.1		)	—			(13.6		)	—			(14.7		)
Proceeds from maturities of investments	2.0			—			50.7			—			52.7
Payments for purchases of investments	—			—			(48.3		)	—			(48.3		)
Proceeds from sale of assets	—			—			4.2			—			4.2
Increase in certain other assets	(1.6		)	—			(3.8		)	—			(5.4		)
Capital contributions and loans paid	(16.5		)	—			—			16.5			—
Proceeds from intercompany loans	6.4			—			—			(6.4		)	—
Net cash provided (used) by investing activities	(10.8		)	—			(10.8		)	10.1			(11.5		)

Cash flow from financing activities
Revolving credit facility (repayments) borrowings, net	—			—			10.0			—			10.0
Other debt borrowings	—			—			5.0			—			5.0
Other debt repayments	(6.6		)	—			(10.2		)	—			(16.8		)
Distributions and payments to noncontrolling interest holders	—			—			(11.0		)	—			(11.0		)
Other	(1.1		)	—			—			—			(1.1		)
Capital contributions received and loans incurred	—			16.1			0.4			(16.5		)	—
Payments on intercompany loans	—			(3.3		)	(3.1		)	6.4			—
Net cash provided (used) by financing activities	(7.7		)	12.8			(8.9		)	(10.1		)	(13.9		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(0.5		)	—			(0.5		)
Increase (decrease) in cash, cash equivalents and restricted cash	(3.2		)	0.3			(80.1		)	—			(83.0		)
Add: Cash included in assets held for sale at beginning of period	—			—			7.3			—			7.3
Less: Cash included in assets held for sale at end of period	—			—			4.8			—			4.8
Cash, cash equivalents and restricted cash at the beginning of the period	17.3			2.7			438.4			—			458.4
Cash, cash equivalents and restricted cash at the end of the period	$	14.1		$	3.0		$	360.8		$	—		$	377.9

Parent Domestic
Guarantor
Subsidiaries Foreign Guarantor Subsidiary Non-
Guarantor
Subsidiaries Consolidating
Entries and
Eliminations Consolidated
Net cash used by operating activities $ (31.8 ) $ (3.0 ) $ (0.2 ) $ (107.3 ) $ —
$ (142.3 )

Cash flow from investing activities
Capital expenditures (2.3 ) (0.1 ) —
(17.8 ) —
(20.2 )
Payments for acquisitions —
—
—
(5.8 ) —
(5.8 )
Proceeds from maturities of investments 1.0
—
—
103.6
—
104.6
Payments for purchases of investments —
—
—
(45.5 ) —
(45.5 )
Proceeds from sale of assets 8.6
—
—
0.6
—
9.2
Increase in certain other assets (2.5 ) 0.8
—
(7.4 ) —
(9.1 )
Capital contributions and loans paid (12.1 ) —
—
—
12.1
—
Proceeds from intercompany loans 9.3
—
—
—
(9.3 ) —
Net cash provided by investing activities 2.0
0.7
—
27.7
2.8
33.2

Cash flow from financing activities
Dividends paid (7.7 ) —
—
—
—
(7.7 )
Revolving credit facility (repayments) borrowings, net —
—
—
(75.0 ) —
(75.0 )
Other debt borrowings —
—
—
26.0
—
26.0
Other debt repayments (11.3 ) (0.1 ) —
(20.3 ) —
(31.7 )
Distributions and payments to noncontrolling interest holders —
—
—
(0.5 ) —
(0.5 )
Repurchase of common shares (2.5 ) —
—
—
—
(2.5 )
Capital contributions received and loans incurred —
12.1
—
—
(12.1 ) —
Payments on intercompany loans —
(9.3 ) —
—
9.3
—
Net cash provided (used) by financing activities (21.5 ) 2.7
—
(69.8 ) (2.8 ) (91.4 )
Effect of exchange rate changes on cash and cash equivalents —
—
—
21.5
—
21.5
Increase (decrease) in cash, cash equivalents and restricted cash (51.3 ) 0.4
(0.2 ) (127.9 ) —
(179.0 )
Cash, cash equivalents and restricted cash at the beginning of the period 58.5
2.3
0.2
482.2
—
543.2
Cash, cash equivalents and restricted cash at the end of the period $ 7.2
$ 2.7
$ —
$ 354.3
$ —
$ 364.2

3538

Table of Contents

Management's Discussion and Analysis of

Financial Condition and Results of Operations as of March 31, ~~2019~~2020

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations

Significant Highlights

During the first quarter of ~~2019,~~2020, Diebold Nixdorf:

~~Elected four new independent members~~Proactively managed the risks and impacts of the COVID-19 global pandemic, including:

The Company has delivered outstanding service to customers, even in hard-hit areas around the world, and has received positive feedback from its large and small customers alike in how effectively it has responded to the ~~Company's Board of Directors, continuing to refresh the Board to align with the Company's strategy and opportunities~~pandemic

~~Executed a five-year agreement valued at more than $60 with~~The Company was one of the ~~world’s largest fuel~~first in its industry to activate a pandemic crisis management plan, with its team of service engineers adhering to strict hygiene protocols, using gloves and ~~convenience retailers~~masks when and where appropriate and sanitizing equipment during servicing

The Company’s global manufacturing and production facilities have remained operational throughout the pandemic and continue to ~~deploy~~ship products to customers in a ~~new, centralized card acceptance platform.~~ timely manner

The ~~contract includes software licenses, professional~~Company was recognized as providing essential critical infrastructure service by the U.S. Department of Homeland Security and ~~maintenance services for stores in 10 European markets~~other government agencies around the world

~~Agreed~~The Company is leveraging its DN Now transformation program to ~~an $18~~further reduce costs and realize net working capital efficiencies

Signed a multi-year ATM as-a-service contract with large financial institutions in Germany and Austria (Bank99 of the Austrian Post)

Won sizable cash recycler deals with a ~~French retailers' supermarket cooperative for 600 self-checkout (SCO) systems~~top financial institution in Brazil (Tecban) and ~~a four-year services contract~~Ecuador (Banco Pichincha)


•	Won ~~Windows 10 ATM product upgrades with several~~new orders for more than 3,000 DN Series^TM ATMs and expanded its certification program to more than 450 financial institutions ~~including an agreement with KeyBank to digitally transform more than 1,400 self-service devices with DN Vynamic~~^TM ~~software~~


•	~~Expanded a partnership with a major Belgian bank to upgrade more than 2,400 devices and cash recyclers to Windows 10, leveraging DN AllConnect Services~~^SM ~~and the DN Vynamic software suite~~

~~Renewed two multi-year~~Signed a new contract encompassing technical safety equipment, software and maintenance services ~~contracts, valued~~for approximately 1,500 quick-service restaurants in Germany. These solutions are being required by a number of European regulatory authorities as they seek to increase income tax compliance

Secured a new customer with a large French fashion company to modernize its point-of-sale experience with all-in-one Beetle POS devices and maintenance services at more than ~~$90,~~500 stores in France and Benelux countries

Signed a comprehensive product, Vymanic software and multi-year AllConnect Services contract with ~~a top-three financial institution in~~Italian retailer Iper Montebello, part of Finiper Group, to enhance the ~~U.S. and a top-tier bank in Western Europe~~

~~Secured a systems and services agreement with Halkbank in Turkey, including 250 cash recyclers, to expand its ATM fleet and improve the customer~~checkout experience

~~Awarded a project with Bank Pekao in Poland valued~~ at more than ~~$4, which includes nearly 230 cash recyclers~~200 supermarkets in Italy

Won a new, five-year Managed Services contract with Delhaize, the second largest food retailer in Belgium, for monitoring, help-desk and incident follow-up

Overview

Management’s discussion and analysis of financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and accompanying notes that appear within this quarterly report on Form 10-Q.

Introduction

The Company is a world leader in enabling Connected Commerce. The Company automates, digitizes and transforms the way people bank and shop. The Company’s integrated solutions connect digital and physical channels conveniently, securely and efficiently for millions of consumers every day. As an innovation partner for nearly all of the world's top 100 financial institutions and a majority of the top 25 global retailers, the Company delivers unparalleled services and technology that power the daily operations and consumer experience of banks and retailers around the world. The Company has a presence in more than 100 countries with approximately ~~23,000~~22,000 employees worldwide.

Strategy

The Company seeks to continually enhance the consumer experience at bank and retail locations while simultaneously streamlining cost structures and business processes through the smart integration of hardware, software and services. The Company partners with other leading technology companies and regularly refines its research and development (R&D) spend to ~~advance its portfolio strategy~~support a better transaction experience for consumers.

Table of Contents

Management's Discussion and ~~product road maps.~~Analysis of

Financial Condition and Results of Operations as of March 31, 2020

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

DN Now Transformation Activities

Commensurate with its strategy, the Company ~~has evolved~~is executing its multi-year transformation program called DN Now to relentlessly focus on its customers ~~and improve~~while improving operational excellence. Key activities ~~underway~~ include:

Transitioning to a streamlined and customer-centric operating model

Implementing a services modernization plan which focuses on upgrading certain customer touchpoints, automating incident reporting and response, and standardizing service offerings and internal processes

Streamlining the product range of ATMs and manufacturing footprint

Improving working capital management through greater focus and efficiency of payables, receivables and inventory

Reducing administrative expenses, including finance, IT and real estate

Increasing sales productivity through improved ~~solution selling,~~ coverage and compensation arrangements

Standardizing back-office processes to automate reporting and better manage risks

Optimizing the portfolio of businesses to improve overall profitability

~~Table of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations as of March 31, 2019~~

~~DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES~~

~~(unaudited)~~

~~(in millions, except per share amounts)~~

These work streams are designed to improve the Company’s profitability and net leverage ratio while establishing a foundation for future growth. The gross annualized savings target for DN Now is approximately ~~$400~~$440 through ~~2021, of which $160 is anticipated to be realized during 2019.~~2021. In order to achieve these savings, the Company has and will continue to restructure the workforce globally, integrate and optimize systems and processes, transition workloads to lower cost locations, renegotiate and consolidate supplier agreements and streamline real estate holdings. By executing on these and other operational improvement activities, the Company expects to increase customer intimacy and satisfaction, while providing career enrichment opportunities for employees and enhancing value for shareholders. In 2019, the Company achieved approximately $175 in annualized gross run rate savings. The cost to achieve these savings was approximately $115 and was largely due to restructuring and the implementation of DN Now transformational programs.

COVID-19 Response

As a result of the global COVID-19 pandemic, the Company’s priorities have been the health and safety of its employees, continuing to serve the Company's customers as an essential service, and taking steps to protect its operational foundation. The Company has taken multiple measures to protect its employees, and it continues to evolve those measures based on input from various health authorities. The Company is equipping its service technicians with the appropriate protective gear and training them on evolving hygiene practices and social distancing rules. For employees in manufacturing facilities, the Company has segmented its workers and has implemented daily temperature checks. The Company is providing the proper tools, resources and guidance for its support functions to safely and productively work from home during the crisis, including establishing an employee crisis reserve fund which is available for employees who need support. The Company has also focused on the stability of its suppliers and supply chain, as borders have shut and logistics have become more challenging.

The Company has been designated as providing “critical infrastructure” services by the majority of government entities including the United States Department of Homeland Security in order to promote public health and safety, as well as economic and national security during the COVID-19 outbreak. These designations recognize the vital role Diebold Nixdorf plays in allowing consumers to reliably and safely access financial services and essential retailers across more than 60 countries.

In taking measures to strengthen its operations during this period of uncertainty, the Company continues to execute its DN Now transformation program, and is accelerating certain elements of the program. It has also added additional cost measures that are in the midst of execution — such as reducing the annual bonus plan, deferring merit pay increases and instating a hiring freeze. Certain internal projects have been suspended, including some investments in IT systems. With so many employees working remotely, the Company is accelerating plans to consolidate its real estate footprint. In selected areas, the Company will participate in government relief programs which facilitate labor and payroll tax savings. Taken together, Diebold Nixdorf is targeting an incremental $80 - $100 of annualized savings. Furthermore, the Company continues to carefully manage net working capital with the same discipline and governance put in place during 2019. During the first quarter of 2020, the Company also took actions to enhance liquidity and ensure it has adequate financial flexibility during what is expected to be a more challenging near-term environment. During the first quarter of 2020, the Company fully borrowed its revolving credit facility, consistent with the practices of many large companies. This action was done out of an abundance of caution. The Company believes it has sufficient liquidity to fund its operations.

Table of Contents

Management's Discussion and Analysis of

Financial Condition and Results of Operations as of March 31, 2020

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

Segments

The Company’s operating structure is focused on its two customer segments -— Banking and Retail. Leveraging a broad portfolio of solutions, the Company offers customers the flexibility to purchase the combination of services, software and systems that drive the most value to their business.

For example, the Company offers end-to-end branch and store automation solutions that consist of the complete value chain of consult, design, build and operate. Branch and store automation helps financial institutions and retailers grow revenue, reduce costs, and increase convenience and security for their customers by migrating routine transactions, typically done inside the branch or store, to lower-cost automated channels. The Company’s advisory services team collaborates with its clients to define the ideal customer experience, modify processes, refine existing staffing models and deploy technologies that meet business objectives.

Banking

The Company provides integrated solutions for financial institutions of all sizes designed to help drive operational efficiencies, differentiate the consumer experience, grow revenue and manage risk. Banking operations are managed within two geographic regions. The Eurasia region includes the ~~developed~~ economies of Western Europe, ~~as well as the emerging economies of~~ Eastern Europe, Asia, the Middle East and Africa. The Americas region encompasses the United States (U.S.), Canada, Mexico and Latin America.

For banking clients, services represents the largest operational component of the Company. Diebold Nixdorf AllConnect Services^® was launched in 2018 to power the business operations of financial institutions of all sizes. This as-a-service offering provides financial institutions with the capabilities and technology needed to make physical distribution channels as agile, integrated, efficient and differentiated as their digital counterparts by leveraging a data-driven Internet of Things (IoT) infrastructure.

The Company’s product-related services resolve incidents through remote service capabilities or an on-site visit. The portfolio includes first and second line maintenance, preventive maintenance, “on-demand” and total implementation services.

Managed services and outsourcing consists of managing the end-to-end business processes, technology integration and day-to-day operation of the self-service channel and the bank branch. Our integrated business solutions include self-service fleet management, branch life-cycle management and ATM as-a-service capabilities.

From a product perspective, the banking portfolio consists of cash recyclers and dispensers, intelligent deposit terminals, teller automation and kiosk technologies, as well as physical security solutions. The Company assists financial institutions to increase the functionality, availability and security within their ATM fleet.

In 2019, the Company introduced DN Series, a family of self-service solutions designed to meet the needs of a progressively transforming industry. These holistic, digitally-connected solutions are built upon an integrated software and services model and provide a modern and personalized experience for consumers, while delivering maximum efficiency and reliability for financial institutions.

DN Series is the culmination of several years of investment in consumer research, design and engineering resources. Key benefits and features of DN Series include:

Improved ATM availability and performance through intelligent design, the use of sensor technology and machine learning via the AllConnect Data Engine

Higher note capacity and processing power with next-generation cash recycling technology

Improved security in a smaller footprint

Full integration with the DN Vynamic software suite

Technological capability that facilitates a streamlined, simplified product portfolio

Modular and upgradeable design, enabling a simplified and streamlined internal supply chain

The Company’s software encompasses front-end applications for consumer connection points as well as back-end platforms which manage channel transactions, operations and channel integration. These hardware-agnostic software applications facilitate millions of transactions via ATMs, kiosks, and other self-service devices, as well as via online and mobile digital channels.

~~In 2017, the Company introduced~~The Company's DN ~~Vynamic™ Software,~~Vynamic software is the first end-to-end Connected Commerce software portfolio in the banking marketplace designed to simplify and enhance the consumer experience. In addition, DN Vynamic suite's open application program interface (API) architecture is built to simplify operations by eliminating the traditional focus on internal silos and enabling tomorrow's inter-connected partnerships between financial institutions and payment providers. In addition,

Table of Contents

Management's Discussion and Analysis of

Financial Condition and Results of Operations as of March 31, 2020

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

with a shared analytic and transaction engine, the DN Vynamic platform can generate new insights to enhance operations across any channel - putting ~~consumer~~customer preferences, not the technology, at the heart of the experience.

~~Table of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations as of March 31, 2019~~

~~DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES~~

~~(unaudited)~~

~~(in millions, except per share amounts)~~

An important enabler of the Company’s software offerings is the professional service employees who provide systems integration, customization, project management and consulting. The Company's advisory services team collaborates with customers to refine the end-user experience, improve business processes, refine existing staffing models and deploy technology to automate both branches and stores.

Retail

The Company’s comprehensive portfolio of retail solutions, software and services improves the checkout process for retailers while enhancing shopping experiences for consumers.

The DN Vynamic software suite for retailers provides a comprehensive, modular and open solution ~~capable of enabling Connected Commerce~~ranging from the in-store check-out solution to solutions across multiple channels ~~improving~~that improve end-to-end store processes and ~~facilitating~~facilitate continuous consumer engagements in support of a digital ecosystem. This includes click & collect, reserve & collect, in-store ordering and return-to-store processes across the retailers' physical and digital sales channels. Operational data from a number of sources, such as enterprise resource planning (ERP), point of sale (POS), store systems and customer relationship management systems (CRM), may be integrated across all customer connection points to create seamless and differentiated consumer experiences.

Diebold Nixdorf AllConnect Services for retailers include maintenance and availability services to continuously ~~improve~~optimize the performance and total cost of ownership of retail touchpoints, such as checkout, self-service ~~fleet availability~~ and ~~performance. These include: total~~mobile devices, as well as critical store infrastructure. The solutions portfolio includes: implementation services to ~~support both current and new~~expand, modernize or upgrade store concepts; ~~managed mobility~~maintenance services ~~to centralize asset management~~for on-site incident resolution and ~~ensure effective, tailored~~restoration of multivendor solutions; support services for on-demand service desk support; operations services for remote monitoring of stationary and mobile ~~capability;~~endpoint hardware; as well as application services for remote monitoring of multivendor software and ~~advanced analytics providing operational insights to support new growth opportunities;~~planned software deployments and ~~store life-cycle management to proactively monitor store IT endpoints~~data moves. As a single point of contact, service personnel plan and ~~enable improved management of internal and external suppliers and delivery organizations.~~

~~Service personnel~~ supervise store openings, renewals and transformation projects, with attention to local details and customers’ global IT infrastructure.

The retail systems portfolio includes modular and integrated, ~~and mobile~~“all-in-one” POS and ~~SCO~~self-service terminals that meet evolving consumer shopping journeys, as well as retailers’ and store staff’s automation ~~and omnichannel requirements of consumers.~~requirements. The ~~Company also provides SCO terminals~~Company’s self-checkout (SCO) systems and ordering kiosks ~~that~~ facilitate ana seamless and efficient ~~and user-friendly purchasing~~transaction experience. The BEETLE ~~/iSCAN~~^®/iSCAN EASY ~~eXpress,~~eXpress™, hybrid products, can alternate from attended operation to ~~self-checkout~~SCO with the press of a ~~button as customer conditions warrant.~~button. The ~~K-Two~~K-two Kiosk automates routine tasks and in-store transactions, offers order-taking abilities, particularly at quick service restaurants (QSRs) and fast casual restaurants ~~displays product information, sells tickets~~ and presents functionality that furthers store automation and digitalization. Supplementing the POS system is a broad range of peripherals, including printers, scales and mobile scanners, as well as the cash management portfolio, which offers a wide range of banknote and coin processing systems.

Business Drivers

The business drivers of the Company's future performance include, but are not limited to:

Demand for services on distributed IT assets such as ATMs, POS and SCO, including managed services and professional ~~services;~~services

Timing of system upgrades and/or replacement cycles for ATMs, POS and ~~SCO;~~SCO

Demand for software products and professional ~~services;~~services

Demand for security products and services for the financial, retail and commercial ~~sectors;~~sectors

Demand for innovative technology in connection with the Company's Connected Commerce ~~strategy;~~strategy

Integration of sales force, business processes, procurement, and internal IT ~~systems;~~systems

Execution and risk management associated with DN Now transformational activities

Realization of cost reductions, which leverage the Company's global scale, reduce overlap and improve operating ~~efficiencies.~~efficiencies

3842

Table of Contents

Management's Discussion and Analysis of

Financial Condition and Results of Operations as of March 31, ~~2019~~2020

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

Results of Operations

The following discussion of the Company’s financial condition and results of operations provides information that will assist in understanding the financial statements and the changes in certain key items in those financial statements. The recent COVID-19 pandemic did not have a material adverse effect on the Company's reported results for the first quarter of 2020. The Company is actively monitoring the impact of the COVID-19 pandemic, which will likely impact our business and results of operations for the rest of 2020, and the extent of the impact cannot be reasonably estimated at this time. The extent of the COVID-19 impact to our operations will depend largely on future developments, along with any new information that may emerge regarding the severity of the pandemic and the actions taken by government authorities to mitigate the spread of the virus, among other factors, all of which are highly uncertain and cannot be accurately predicted.

The following discussion should be read in conjunction with the condensed consolidated financial statements and the accompanying notes that appear elsewhere in this quarterly report on Form 10-Q.

Net Sales

The following table represents information regarding the Company's net sales:


	Three Months Ended								Percent of Total Net Sales for the Three Months Ended		Three Months Ended								Percent of Total Net Sales for the Three Months Ended
	March 31,								March 31,		March 31,								March 31,
	2019		2018		% Change		% Change in CC ⁽¹⁾		2019	2018	2020		2019		% Change		% Change in CC ⁽¹⁾		2020	2019
Segments
Eurasia Banking
Services	$	247.0	$	279.2	(11.5	)	(4.0	)	24.0	26.2	$	206.0	$	247.0	(16.6	)	(14.6	)	22.6	24.0
Products	135.6		155.9		(13.0	)	(4.6	)	13.2	14.7	104.5		135.6		(22.9	)	(20.7	)	11.5	13.2
Total Eurasia Banking	382.6		435.1		(12.1	)	(4.2	)	37.2	40.9	310.5		382.6		(18.8	)	(16.8	)	34.1	37.2

Americas Banking
Services	240.8		251.2		(4.1	)	(2.7	)	23.4	23.6	239.5		240.8		(0.5	)	0.8		26.3	23.4
Products	121.9		82.5		47.8		51.6		11.9	7.8	105.2		121.9		(13.7	)	(11.4	)	11.6	11.9
Total Americas Banking	362.7		333.7		8.7		10.6		35.3	31.4	344.7		362.7		(5.0	)	(3.3	)	37.9	35.3

Retail
Services	140.9		159.9		(11.9	)	(4.0	)	13.7	15.0	142.3		140.9		1.0		3.9		15.6	13.7
Products	141.9		135.5		4.7		13.8		13.8	12.7	113.2		141.9		(20.2	)	(18.2	)	12.4	13.8
Total Retail	282.8		295.4		(4.3	)	4.2		27.5	27.7	255.5		282.8		(9.7	)	(7.2	)	28.0	27.5

Total net sales	$	1,028.1	$	1,064.2	(3.4	)	3.0		100.0	100.0	$	910.7	$	1,028.1	(11.4	)	(9.3	)	100.0	100.0

(1) The Company calculates constant currency by translating the prior-year period results at the current year exchange rate.

Three months ended March 31, ~~2019~~2020 compared with three months ended March 31, ~~2018~~2019

Net sales decreased ~~$36.1~~$117.4, or ~~3.4 percent~~11.4 percent, including a net unfavorable currency impact of ~~$65.6~~$23.5 primarily related to the euro and Brazil real, resulting in a constant currency ~~increase~~decrease of ~~$29.5.~~$93.9. The following results include the impact of foreign currency:

Segments

Eurasia Banking net sales decreased ~~$52.5~~$72.1, including a net unfavorable currency impact of ~~$35.7~~$9.6, related primarily to the ~~euro.~~euro, and divestitures of $13.4. Excluding currency and the impact of divestitures, net sales decreased ~~$16.8 as services revenue decreased primarily from a maintenance contract roll off with a particular~~$49.1 driven by customer in India as well as lower products volume in various Asia Pacific countries, most notably in Taiwan from prior-year non-recurring project volume. Additionally, software revenue decreased slightly due to the divestiture of a non-core business as well as lower professional services activity in Germany. These decreases were partially offset by increased unit replacements in Germany related to Windows 10 upgrades.

Americas Banking net sales increased $29.0 including a net unfavorable currency impact of $5.9 related to the Brazil real. Excluding currency, net sales increased $34.9 primarily due to increased installation volume in Canada and ~~the U.S. as well as improved~~ supply chain ~~management in North America. Increased products volume in the Latin America distributor business, Chile~~challenges from COVID-19, non-recurring prior year refresh projects and ~~Ecuador drove higher revenue as well as software license volume in Brazil. Partially offsetting these increases,~~reducing low margin services ~~revenue declined from lower billed work activity and maintenance contract volume in the U.S.~~business.

3943

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Management's Discussion and Analysis of

Financial Condition and Results of Operations as of March 31, ~~2019~~2020

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

~~Retail~~Americas Banking net sales decreased ~~$12.6~~$18.0, including a net unfavorable currency impact of ~~$24.0~~$6.4, related primarily to the Brazil real. Excluding the impact of currency, net sales decreased $11.6 mostly from large non-recurring product refresh projects in Canada and U.S. National accounts as well as reducing lower margin services business. This decrease was partially offset by increased U.S. regional Windows 10 upgrades and software growth.

Retail net sales decreased $27.3, including a net unfavorable currency impact of $7.5 mostly related to the euro. Excluding the impact of currency, net sales ~~increased $11.4~~decreased $19.8 primarily from ~~large~~prior year non-recurring POS ~~system roll outs~~roll-outs in ~~Germany and the United Kingdom (U.K.) in addition to increased kiosk volume in North America,~~Europe, partially offset by ~~lower software and service~~higher professional services volume ~~across the EMEA region.~~in northern Europe. Additionally, overall revenue was unfavorably impacted by delays related to COVID-19.

Gross Profit

The following table represents information regarding the Company's gross profit:


	Three Months Ended								Three Months Ended
	March 31,								March 31,
	2019			2018			% Change		2020			2019			% Change
Gross profit - services	$	155.2		$	167.3		(7.2	)	$	150.3		$	157.2		(4.4	)
Gross profit - products	88.9			71.1			25.0		76.5			88.9			(13.9	)
Total gross profit	$	244.1		$	238.4		2.4		$	226.8		$	246.1		(7.8	)

Gross margin - services	24.7		%	24.2		%			25.6		%	25.0		%
Gross margin - products	22.3		%	19.0		%			23.7		%	22.3		%

Total gross margin	23.7		%	22.4		%			24.9		%	23.9		%

Services gross margin increased ~~0.5~~0.6 percent in three months ended March 31, 2020 including $19.4 higher non-routine charges consisting primarily of a $12.0 onerous contracts provision, $3.3 spare parts inventory provision, and $1.8 of incremental payments to essential service technicians for their contributions during the COVID-19 pandemic. Restructuring decreased $0.7. Excluding the impact of non-routine and restructuring expense, services gross margin increased 3.8 percent due primarily to the Company's service modernization plan as well as reducing low margin maintenance contracts, and lower professional services cost in the Americas Banking and Retail segments. Additionally, lower cost from the associate incentive plan (AIP), favorably impacted the first quarter of 2020.

Product gross margin increased 1.4 percent in the three months ended March 31, ~~2019, favorably impacted by lower restructuring charges of $0.5 and lower~~2020 including $7.1 higher non-routine charges primarily consisting of ~~$2.2 primarily related to~~ a ~~gain on~~$4.8 indemnification costs of a ~~spare parts~~previously divested business in Germany and $3.4 inventory provision in 2019 and integration costs in 2018. Excluding restructuring and non-routine charges, services gross margin was relatively flat as services margin increases in the Eurasia banking segment related to the favorable impact of the services modernization initiatives and favorable customer mix were offset by higher software cost in both the Americas banking and retail segments.

Product gross margin increased 3.3 percent in the three months ended March 31, 2019, favorably impacted by lower restructuring charges of $0.6 and lower non-routine charges of $4.6 primarily related to lower purchase accounting adjustments of amortization and gain on a product inventory provision, partially offset by the reversal ~~of the Brazil indirect tax~~ in the prior year. Excluding ~~the impact of restructuring and~~ non-routine charges, products gross ~~margin~~profit increased ~~1.9~~3.6 percent due primarily to ~~higher volume and~~ a ~~more~~ favorable solution and geography mix in ~~North America. Additionally, product gross margin improved from a favorable banking customer mix~~the Americas and Eurasia Banking segments as well as lower Americas Banking and Retail software amortization tied to capitalized software that was impaired in ~~Eurasia and Latin America, partially offset by increased software cost throughout the segments.~~December 2019.

Operating Expenses

The following table represents information regarding the Company's operating expenses:


	Three Months Ended								Three Months Ended
	March 31,								March 31,
	2019			2018			% Change		2020			2019			% Change
Selling and administrative expense	$	228.3		$	227.9		0.2		$	222.1		$	230.3		(3.6	)
Research, development and engineering expense	36.9			41.7			(11.5	)	32.5			36.9			(11.9	)
Loss (gain) on sale of assets, net	3.4			(7.7		)	N/M
(Gain) loss on sale of assets, net									(1.8		)	3.4			N/M
Total operating expenses	$	268.6		$	261.9		2.6		$	252.8		$	270.6		(6.6	)

Percent of net sales	26.1		%	24.6		%			27.8		%	26.3		%

^{N/M = Not Meaningful}

Selling and administrative expense in the three months ended March 31, 2019 increased $0.4 including higher incremental restructuring of $0.9 and non-routine charges of $6.1. Excluding the impact of restructuring, non-routine charges and a net favorable currency impact of $8.9, mostly related to the euro, selling and administrative expense increased $2.3, primarily from higher

4044

Table of Contents

Management's Discussion and Analysis of

Financial Condition and Results of Operations as of March 31, ~~2019~~2020

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

^{N/M = Not Meaningful}

Selling and administrative expense in the three months ended March 31, 2020 decreased $8.2, or $19.9 excluding a $3.5 favorable currency impact and $15.2 incremental non-routine and restructuring adjustments. Lower selling and administrative expense was due primarily to the Company's DN Now actions as well as lower expense related to ~~the mark-to-market adjustment of~~ the legacy Wincor Nixdorf stock option program ~~of $6.4 in addition to higher U.S. based associate related expense. These increases are mostly offset by cost reduction initiatives~~ and ~~restructuring programs across the segments tied to the DN Now program.~~decreased stock and cash bonus compensation.

Non-routine cost in selling and administrative expense was ~~$44.5~~$54.4 in the three months ended March 31, ~~2019,~~2020, an increase of ~~$6.1~~$9.8 related primarily to $20.3 higher DN Now consulting and related items, partially offset by $7.0 lower legal and deal expense, $3.0 lower purchase accounting adjustments, and $0.5 of other items. Restructuring expense was $7.6, an increase of $5.4 compared to the prior year. Higher non-routine cost consisted of increased legal and consulting expense of $20.5 inclusive of $5.6 related to the squeeze out real estate tax, and $3.0 related to a one-time non-cash accounts receivable discount in Brazil. These increases were partially offset by lower integration expense of $14.6 and purchase accounting adjustments of $2.6. Selling and administrative expense included restructuring charges of $2.2, or $0.9 higher than the prior year related to ~~the~~ workforce alignment under the DN Now plan.

Research, development and engineering expense in the three months ended March 31, ~~2019~~2020 decreased ~~$4.8~~$4.4 including a net favorable currency impact of ~~$2.3,~~$0.9, primarily related to the ~~euro.~~euro and Brazil real. Excluding ~~the impact~~currency and higher restructuring expense of ~~currency, Research,~~$1.4, research, development and engineering expense decreased ~~$2.5 due~~$4.9 primarily from ~~streamlining ATM portfolio as well as~~ lower ~~headcount tied to the Company’s DN Now restructuring program, partially offset by increased~~AIP expense, lower product development cost and software ~~development cost.~~cost management actions.

~~Loss of $3.4 on sale of assets recorded in~~In the three months ended March 31, ~~2019 includes~~2020, the Company recorded a gain on sale of assets of $1.8 related primarily to the sale of Portavis GmbH. The prior year quarter's loss on sale of assets was primarily related to the divestitures of the Venezuela business of $4.1 and ~~a Eurasia non-core business~~Projective NV of $2.8, partially offset by a gain ~~on the liquidation~~ of ~~a separate Eurasia non-core business of $3.5. The gain of $7.7 in the prior year was primarily~~$3.5 related to the ~~sale~~Company's exit activities of ~~a building~~certain entities in ~~North America of $4.5 and~~ the ~~liquidation of~~Netherlands included in the ~~Barbados~~Retail operating ~~entity of $3.3.~~segment.

Operating expense as a percent of net sales in the three months ended March 31, ~~2019~~2020 increased 1.5 percent to ~~26.1~~27.8 percent compared to the same period in ~~2018 due in part to gains on sale~~2019 primarily from a mix of ~~a building in North America~~higher non-routine and ~~the impact of divestitures~~restructuring cost as well as lower ~~net sales, partially offset by lower hardware development expense.~~revenue.

Operating ~~Loss~~Profit (Loss)

The following table represents information regarding the Company's operating ~~loss:~~profit (loss):


	Three Months Ended								Three Months Ended
	March 31,								March 31,
	2019			2018			% Change		2020			2019			% Change
Operating loss	$	(24.5	)	$	(23.5	)	(4.3	)
Operating profit (loss)									$	(26.0	)	$	(24.5	)	(6.1	)
Operating margin	(2.4		)%	(2.2		)%			(2.9		)%	(2.4		)%

The operating loss increased in the three months ended March 31, ~~2019~~2020 compared to the ~~same period in 2018 including an unfavorable currency impact of $0.8, related~~prior year. The change is primarily due to higher non-routine and restructuring charges offsetting lower operating expense tied to the ~~euro~~DN Now plan and ~~higher non-routine charges. Excluding the impact of currency and non-routine charges, operating profit increased $13.0 primarily related to higher product~~improved gross ~~profit in the Americas and Eurasia banking segments from large roll out and upgrade projects.~~margin.

Other Income (Expense)

The following table represents information regarding the Company's other income (expense), net:


	Three Months Ended								Three Months Ended
	March 31,								March 31,
	2019			2018			% Change		2020			2019			% Change
Interest income	$	2.9		$	3.5		(17.1	)	$	1.1		$	2.9		(62.1	)
Interest expense	(50.9		)	(26.0		)	(95.8	)	(48.0		)	(50.9		)	5.7
Foreign exchange gain (loss), net	2.8			(1.4		)	N/M
Foreign exchange gain, net									0.4			2.8			(85.7	)
Miscellaneous, net	(1.4		)	(0.1		)	N/M		(0.9		)	(1.4		)	35.7
Other income (expense), net	$	(46.6	)	$	(24.0	)	(94.2	)	$	(47.4	)	$	(46.6	)	(1.7	)

^{N/M = Not Meaningful}

Interest income in the three months ended March 31, ~~2019~~2020, decreased ~~$0.6 compared with the same period~~$1.8 mostly from lower market returns on non-qualified plans, in ~~2018, primarily as a result of overall~~addition to lower ~~average investment~~cash balances in Brazil. Interest expense ~~increased $24.9 compared~~decreased $2.9 from the pay down of debt and reduced interest rates. Foreign exchange gain decreased $2.4 as a result of the prior year quarter's gain primarily tied to the ~~same prior-year~~currency devaluation in the Venezuela operating entity.

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Management's Discussion and Analysis of

Financial Condition and Results of Operations as of March 31, ~~2019~~2020

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

period due to the acquisition of the additional $650.0 of Term Loan A-1 Facility debt with higher incremental interest rates and related fee amortization. Foreign exchange gain increased $4.2 primarily as a result of the currency devaluation in Venezuela operating entity in the current year. Miscellaneous net, decreased $1.3 in the three months ended March 31, 2019, unfavorably impacted by higher costs and lower benefits associated with the company owned life insurance.

Net Loss

The following table represents information regarding the Company's net income loss:


	Three Months Ended							Three Months Ended
	March 31,							March 31,
	2019			2018			% Change	2020			2019			% Change
Net loss	$	(131.9	)	$	(65.6	)	N/M	$	(93.4	)	$	(131.9	)	29.2
Percent of net sales	(12.8		)%	(6.2		)%		(10.3		)%	(12.8		)%
Effective tax rate	(85.0		)%	(40.4		)%		(27.2		)%	(85.0		)%

^{N/M = Not Meaningful}

The loss before taxes and net loss ~~increased~~decreased primarily due to the reasons described above. Net loss was also impacted by the change in the income tax expense.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted providing $2.2 trillion of economic stimulus relief to address the market conditions due to the recent outbreak of COVID-19. Among other things, the CARES Act provides a package of corporate tax provisions including the ability for companies to carry back to five preceding years net operating loss (NOL) carryforwards generated in tax years starting after December 31, 2017 and before January 1, 2021. Also, the 80 percent taxable income limitation was temporarily removed increasing the amount of NOL carryforwards that can be deducted in 2018, 2019 and 2020, and the CARES Act increased the deduction limitation for business interest expense to 50 percent from 30 percent. The Company evaluated the impact of the CARES Act to its income tax provision and cash flow and does not believe the effects are material.

The effective tax rate on the loss before taxes 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 Tax Act on the estimated projected tax rate. More specifically, the impacts of the GILTI and ~~BEAT.~~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.

Segment Net Sales and Operating Profit Summary

The following tables represent information regarding the segment operating profit metrics excluding the impact of restructuring and non-routine charges, by reporting segment. Refer to note 20 of the condensed consolidated financial statements for further details of net sales and segment operating profit:


	Three Months Ended								Three Months Ended
	March 31,								March 31,
Eurasia Banking:	2019			2018			% Change		2020			2019			% Change
Net sales	$	382.6		$	435.1		(12.1	)	$	310.5		$	382.6		(18.8	)
Segment gross profit									$	89.8		$	109.0		(17.6	)
Segment selling and administrative expense									46.1			61.9			(25.5	)
Segment research, development and engineering expense									12.0			13.4			(10.4	)
Segment operating profit	$	33.7		$	19.5		72.8		$	31.7		$	33.7		(5.9	)
Segment operating profit margin	8.8		%	4.5		%			10.2		%	8.8		%

Eurasia Banking net sales decreased $52.5 including a net unfavorable currency impact of $35.7 related primarily to the euro. Excluding currency, net sales decreased $16.8 as services revenue decreased primarily from a maintenance contract roll off with a particular customer in India as well as lower products volume in various Asia Pacific countries, most notably in Taiwan from prior year non-recurring project volume. Additionally, software revenue decreased slightly from a non-core business and in Germany. These decreases were partially offset by increased unit replacements in Germany related to Windows 10 upgrades.

Segment operating profit increased $14.2 in the three months ended March 31, 2019, including a net unfavorable currency impact of $4.5, primarily due to the euro. Excluding the impact of currency, operating profit increased $18.7 due in part to higher gross profit on services and products margin improvements. The favorable services margin was primarily attributable to the services modernization program which benefited numerous countries in Europe and Asia, while products margin also benefited from DN

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Management's Discussion and Analysis of

Financial Condition and Results of Operations as of March 31, ~~2019~~2020

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

~~Now initiatives as well as higher volume in Germany. Additionally, segment~~Eurasia Banking net sales decreased $72.1, including a net unfavorable currency impact of $9.6, related primarily to the euro, and divestitures of $13.4. Excluding currency and the impact of divestitures, net sales decreased $49.1 driven by customer and supply chain challenges from COVID-19, non-recurring prior year refresh projects and reducing low margin services business.

Segment operating profit ~~benefited from~~decreased $2.0 in the three months ended March 31, 2020 including a net unfavorable currency impact of $2.4. Excluding the impact of currency, operating profit was relatively flat as lower operating ~~expenses~~expense tied to DN Now initiatives, restructuring programs and ~~the phase out of non-profitable service contracts in India.~~lower incentive program expense, more than offset lower product and services volume.

Segment operating profit margin increased ~~4.3~~2.4 percent mostly from lower operating expense as ~~well as higher services and products gross margin, primarily attributable to DN Now initiatives.~~noted above.


	Three Months Ended							Three Months Ended
	March 31,							March 31,
Americas Banking:	2019			2018			% Change	2020			2019			% Change
Net sales	$	362.7		$	333.7		8.7	$	344.7		$	362.7		(5.0	)
Segment gross profit								$	104.5		$	82.2		27.1
Segment selling and administrative expense								39.7			50.3			(21.1	)
Segment research, development and engineering expense								11.1			13.4			(17.2	)
Segment operating profit	$	18.5		$	5.0		270.0	$	53.7		$	18.5		N/M
Segment operating profit margin	5.1		%	1.5		%		15.6		%	5.1		%

^{N/M = Not Meaningful}

Americas Banking net sales ~~increased $29.0~~decreased $18.0, including a net unfavorable currency impact of ~~$5.9~~$6.4, related primarily to the Brazil real. Excluding the impact of currency, net sales increased $34.9 primarily due to increased installation volume in Canada and the U.S. as well as improved supply chain management in North America. Increased products volume in the Latin America distributor business, Chile and Ecuador drove higher revenue as well as software license volume in Brazil. Partially offsetting these increases, services revenue declined from lower billed work activity and maintenance contract volume in the U.S.

~~Segment operating profit increased $13.5~~decreased $11.6 mostly from ~~DN Now initiatives favorably impacting both operating expense and gross profit. Additionally, gross profit was favorably impacted by current~~ large non-recurring product refresh projects in Canada and ~~higher volume in Latin America~~U.S. National accounts as well as reducing lower margin services business. This decrease was partially offset by increased ~~volume~~U.S. regional Windows 10 upgrades and software growth.

Segment operating profit increased $35.2 in the three months ended March 31, 2020 including a nominal unfavorable net currency impact. Higher operating profit was driven primarily by increased service margin tied to the service modernization program and lower AIP. Additionally, improved product solution mix in the U.S.~~, as~~ and lower software cost drove higher products gross profit, partially offset by non-recurring prior year refresh projects. Incremental benefits tied to DN Now initiatives drove favorable operating expense compared to the prior ~~year was unfavorably impacted by supply chain delays. Higher software cost in 2019 partially offset these increases.~~year.

Segment operating profit margin increased ~~3.6~~10.5 percent three months ended March 31, 2020, primarily as a result of higher ~~product~~products and services gross margin, in addition to lower cost related to the DN Now ~~initiatives.~~initiatives and reduced AIP expense.


	Three Months Ended								Three Months Ended
	March 31,								March 31,
Retail:	2019			2018			% Change		2020			2019			% Change
Net sales	$	282.8		$	295.4		(4.3	)	$	255.5		$	282.8		(9.7	)
Segment gross profit									$	59.9		$	55.8		7.3
Segment selling and administrative expense									36.7			37.8			(2.9	)
Segment research, development and engineering expense									7.9			9.9			(20.2	)
Segment operating profit	$	8.1		$	10.2		(20.6	)	$	15.3		$	8.1		88.9
Segment operating profit margin	2.9		%	3.5		%			6.0		%	2.9		%

Retail net sales decreased ~~$12.6~~$27.3, including a net unfavorable currency impact of ~~$24.0~~$7.5 mostly related to the euro. Excluding the impact of currency, net sales ~~increased $11.4~~decreased $19.8 primarily from ~~large~~prior year non-recurring POS ~~system roll outs~~roll-outs in ~~Germany and the U.K. in addition to increased kiosk volume in North America,~~Europe, partially offset by ~~lower software and service~~higher professional services volume ~~across the EMEA region.~~in northern Europe. Additionally, overall revenue was unfavorably impacted by delays related to COVID-19.

Segment operating profit ~~decreased $2.1~~increased $7.2 for the three months ended March 31, 2020, including a ~~net~~nominal unfavorable currency impact, ~~of $1.6. Excluding the impact of currency, segment operating~~due primarily to higher gross profit ~~decreased $0.5 as lower operating expense tied to DN Now initiatives were more than offset by lower software volume~~mostly from a favorable services solution and ~~unfavorable software solutions~~country mix in EMEA as well as ~~under-performance of the Eurasia non-core business. Additionally, products gross profit was relatively flat from increased volume to an unfavorable solution mix in North America~~lower AIP and ~~EMEA.~~decreased software cost.

Segment operating profit margin ~~decreased 0.6~~increased 3.1 percent ~~as lower operating expense tied to~~for the ~~DN Now initiatives, was more than offset by lower software and product~~three months ended March 31, 2020 primarily from higher gross margin on ~~an unfavorable solution mix.~~favorable mix and lower software amortization and operating expense.

4347

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Management's Discussion and Analysis of

Financial Condition and Results of Operations as of March 31, ~~2019~~2020

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

Liquidity and Capital Resources

The Company's total cash and cash availability as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019 was as follows:


	March 31, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Cash and cash equivalents (excluding restricted cash)	$	284.4	$	353.1	$	508.5	$	277.3
Additional cash availability from
Cash included in assets held for sale					32.8		97.2
Uncommitted lines of credit	32.4		28.0		33.1		36.7
Revolving Facility	337.5		347.5		—		387.3
Short-term investments	31.5		33.5		13.5		10.0
Total cash and cash availability	$	685.8	$	762.1	$	587.9	$	808.5

Capital resources are obtained from income retained in the business, borrowings under the Company’s committed and uncommitted credit facilities and operating and capital leasing arrangements. Management expects that the Company’s capital resources will be sufficient to finance planned working capital needs, R&D activities, investments in facilities or equipment, pension contributions and any repurchases of the Company’s common shares for at least the next 12 months. While the Company believes it has sufficient liquidity, it has increased its cash position out of an abundance of caution in light of the evolving COVID-19 pandemic and related macroeconomic implications. The Company is enhancing its financial flexibility as a critical provider of Connected Commerce solutions to financial institutions, supermarkets, pharmacies and fuel stations through its industry-leading ATMs, AllConnect Services, retail SCO and POS solutions. The additional borrowings under the Revolving Facility may be used for general corporate purposes. The Company cannot predict or reasonably estimate the duration or extent of the COVID-19 pandemic, its impact on our customers and suppliers and the negative impact it will cause on our results of operations and financial position. The Company is actively managing the business to maintain sufficient liquidity. The Company had ~~$93.5 and $105.3~~$3.6 of restricted cash at March 31, ~~2019~~2020 and December 31, ~~2018, respectively, primarily related to the acquisition of the remaining shares in Diebold Nixdorf AG.~~2019. As of March 31, ~~2019, $298.7~~2020, $196.9 or ~~94.6~~38.4 percent of the Company's cash and cash equivalents and short-term investments reside in international tax jurisdictions. Repatriation of certain international funds could be negatively impacted by potential payments for foreign taxes. The Company has approximately ~~$1,300~~$1,550 of earnings that are available for repatriation with no additional tax expense. ~~The Company estimates it will pay approximately $60 of cash income taxes in 2019.~~ The Company has made acquisitions in the past and may make acquisitions in the future. Part of the Company’s strategy is to optimize the business portfolio through divestitures and complementary acquisitions. The Company intends to finance any future acquisitions with cash and short-term investments, cash provided from operations, borrowings under available credit facilities, proceeds from debt or equity offerings and/or the issuance of common shares.

The following table summarizes the results of the Company's condensed consolidated statement of cash flows for the three months ended March 31:


Summary of cash flows:	2019			2018			2020			2019
Net cash used by operating activities	$	(57.1	)	$	(142.3	)	$	(79.9	)	$	(57.1	)
Net cash (used) provided by investing activities	(11.5		)	33.2
Net cash used by financing activities	(13.9		)	(91.4		)
Net cash used by investing activities							(51.7		)	(11.5		)
Net cash provided (used) by financing activities							314.0			(13.9		)
Effect of exchange rate changes on cash and cash equivalents	(0.5		)	21.5			(15.6		)	(0.5		)
Decrease in cash, cash equivalents and restricted cash	$	(83.0	)	$	(179.0	)
Change in cash, cash equivalents and restricted cash							$	166.8		$	(83.0	)

Operating Activities

Cash flows from operating activities can fluctuate significantly from period to period as working capital needs and the timing of payments for income taxes, restructuring and integration activities, pension funding and other items impact reported cash flows. Net cash used by operating activities was ~~$57.1~~$79.9 for the three months ended March 31, ~~2019, a decrease~~2020, an increase in use of ~~$85.2~~$22.8 from ~~$142.3~~$57.1 for the same period in ~~2018.~~2019.

Cash flows from operating activities during the three months ended March 31, ~~2019~~2020 compared to the same period in ~~2018~~2019 were primarily impacted by a ~~$66.3 increase~~$38.5 decrease in net ~~loss.~~loss as a result of DN Now cost saving initiatives. Refer to the Results of Operations discussed above for further discussion of the Company's net loss.

The net aggregate of trade receivables, inventories and accounts payable used $42.3 and $111.5 in operating cash flows during the three months ended March 31, 2019 and 2018, respectively. Trade receivables cash provided $33.2 for the three months ended March 31, 2019 compared to an usage of $17.7 for the same period in the prior-year primarily due to improvement in collections in EMEA. Inventory cash use decreased $27.1 compared to the same period in the prior year primarily in EMEA and North America related to management's initiative of streamlining the product portfolio and harvesting inventory. Cash used by accounts payable decreased primarily related to reduced spending in the Americas.

4448

Table of Contents

Management's Discussion and Analysis of

Financial Condition and Results of Operations as of March 31, ~~2019~~2020

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

The net aggregate of trade receivables, inventories and accounts payable provided $5.4 and used $42.3 in operating cash flows during the three months ended March 31, 2020 and 2019, respectively. Trade receivables cash used $8.0 for the three months ended March 31, 2020 compared to $33.2 provided for the same period in the prior-year primarily due to improvement in collections in 2019 as a result of the Company's working capital improvement initiatives and normal operational spending during the first quarter of 2020. For the three months ended March 31, 2020, inventory cash use improved $29.2 compared to the same period in the prior year primarily due to improved inventory management and focus as a result of streamlining the product portfolio and improved governance. Accounts payable provided $47.3 for the three months ended March 31, 2020 compared to a usage of $12.4 for the same period in the prior-year primarily related to DN Now initiatives.

In the aggregate, the other combined certain assets and liabilities ~~provided $41.4~~used $9.4 for the three months ended March 31, ~~2019~~2020 compared to ~~a use of $15.8 of operating cash~~$54.2 provided during the same period in ~~2018.~~2019. The ~~increase~~change was primarily due to ~~a reduction~~increased cash bonuses paid, along with cash usage by assets held for sale in ~~prepayments, an increase in~~the first quarter of 2020 and decreased non-cash deferred ~~revenue cash provided by~~income taxes due to the ~~collection~~results of ~~customer prepayments, mainly in Brazil and Canada, and lower net value added tax payments as a result of improved refundable utilization.~~operations.

Depreciation and amortization expense decreased ~~$6.0~~$4.9 to ~~$58.4~~$53.5 during the three months ended March 31, ~~2019~~2020 compared to ~~$64.4~~$58.4 during the same period in ~~2018~~2019 primarily due to reduction in amortization related to acquired intangibles and capitalized software, along with a reduction in capital spend. Changes in deferred income taxes during the three months ended March 31, 2020 compared to the same period in 2019 resulted in increased usage of $18.3 primarily related to the tax effects of the 2019 Barbados structure collapse partially offset by a reduction in the deferred liabilities released on certain acquired intangible assets. Share-based compensation decreased ~~$4.4~~$5.3 to ~~$9.3~~$4.0 for the three months ended March 31, 2020 compared to the same period in 2019 primarily due to a reduction in shares ~~awarded in~~awarded. The loss (gain) on sale of assets, net were primarily a result of the Portavis GmbH divestiture during the first quarter of 2020 and the divestiture of non-core businesses during the first quarter of 2019.

Investing Activities

~~The~~Cash flows from investing activities during the three months ended March 31, 2020 compared to the same period in 2019 were primarily impacted by a $42.7 decrease in proceeds from divestitures, net of cash divested as a result of the Portavis GmbH divestiture during the first quarter of 2020 and the Projective NV divestiture during the first quarter of 2019. Additionally, the maturities and purchases of investments primarily relate to short-term investment activity in ~~Brazil.~~Brazil resulted in an $8.8 increase in cash usage. The ~~$44.7 change was primarily due to a reduction in utilization of short-term~~Company also reduced its capital expenditures and investments in ~~Brazil for cash needs.~~certain other assets primarily related to software to be sold when compared to prior year.

Financing Activities

Net cash ~~used~~provided by financing activities was ~~$13.9 and $91.4~~$314.0 for the three months ended March 31, 2020 compared to the $13.9 usage for the same period in 2019, ~~and 2018, respectively, a decrease~~which resulted in an increase of ~~$77.5.~~$327.9. The change was primarily ~~due~~ a ~~decrease~~result of the Company drawing down its entire availability under the Revolving Facility in response to the uncertainty of the circumstances surrounding the COVID-19 pandemic. The Company also had $7.7 net borrowings ~~(repayments) under~~from uncommitted lines of credit in connection with international projects. During the ~~Company's revolving facility and~~first quarter of 2020, the ~~reduction~~Company paid $65.4 towards its term loans primarily due to certain mandatory repayment provisions pursuant to the Credit Agreement compared to the $6.4 during the same period in ~~dividend payments. The decreases in use were partially offset by $10.5 in higher cash distributions related to~~the prior year. During the first quarter of 2019, the Company paid $11.0 for the redemption of shares and cash compensation to Diebold Nixdorf AG minority ~~shareholders of $11.0 for the three months ended March 31, 2019 compared to $0.5 in the prior-year period.~~shareholders.

Refer to note 11 for additional information regarding the Company's debt obligations. The Company paid cash for interest related to its debt of $34.0 and $39.5 for the three months ended March 31, 2020 and 2019, respectively. As defined by the Company's credit agreement, the ratio of net debt to trailing 12 months adjusted EBITDA was ~~5.7~~4.2 times as of March 31, ~~2019.~~2020. As of March 31, 2020, the Company was in compliance with the financial and other covenants in its debt agreements.

Refer to note 17 for additional information regarding the Company's hedging and derivative instruments.

~~Dividends~~ The Company paid dividends of $7.7 in the three months ended March 31, 2018. In May 2018, the Company announced its decision to reallocate future dividend funds towards debt reduction and other capital resource needs. As a result, there was no quarterly dividend for the three months ended March 31, 2019. The quarterly dividend was $0.10 per share for the three months ended March 31, 2018.

Contractual Obligations ~~In the first quarter of 2019,~~ During 2020, the Company entered into purchase commitments due within one year for materials through contract manufacturing agreements for a total negotiated price. At March 31, ~~2019,~~2020, the Company had minimal purchase commitments due within one year ~~totaling $0.1~~ for materials through contract manufacturing agreements at negotiated prices.

Table of Contents

Management's Discussion and Analysis of

Financial Condition and Results of Operations as of March 31, 2020

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

During the first quarter of 2020, the Company drew down its entire availability under the Revolving Facility and as a result, $68.8 included in notes payable mature on December 23, 2020.

Except for the items noted above, all contractual cash obligations with initial and remaining terms in excess of one year and contingent liabilities remained generally unchanged at March 31, ~~2019~~2020 compared to December 31, ~~2018.~~2019.

Off-Balance Sheet Arrangements The Company enters into various arrangements not recognized in the condensed consolidated balance sheets that have or could have an effect on its financial condition, results of operations, liquidity, capital expenditures or capital resources. The principal off-balance sheet arrangements that the Company enters into are guarantees, operating leases and sales of finance receivables. The Company provides its global operations guarantees and standby letters of credit through various financial institutions to suppliers, customers, regulatory agencies and insurance providers. If the Company is not able to make payment, the suppliers, customers, regulatory agencies and insurance providers may draw on the pertinent bank. Refer to note 9 for further details of guarantees. The Company has sold finance receivables to financial institutions while continuing to service the receivables. The Company records these sales by removing finance receivables from the condensed consolidated balance sheets and recording gains and losses in the condensed consolidated statements of operations.

~~Table of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations as of March 31, 2019~~

~~DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES~~

~~(unaudited)~~

~~(in millions, except per share amounts)~~

Critical Accounting Policies and Estimates

Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s condensed consolidated financial statements. The preparation of these financial statements requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenues and expenses. Such estimates include revenue recognition, the valuation of trade, finance lease receivables, inventories, goodwill, intangible assets, other long-lived assets, legal contingencies, guarantee obligations and assumptions used in the calculation of income taxes, pension and post-retirement benefits and customer incentives, among others. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors. Management monitors the economic conditions and other factors and will adjust such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

~~In addition~~The recent COVID-19 pandemic did not have a material adverse effect on the Company's reported results for the first quarter of 2020. The Company is actively monitoring the impact of the COVID-19 pandemic, which will likely impact our business and results of operations for the rest of 2020, and the extent of the impact cannot be reasonably estimated at this time. The extent of the COVID-19 impact to our operations will depend largely on future developments, along with any new information that may emerge regarding the severity of the pandemic and the actions taken by government authorities to mitigate the spread of the virus, among other factors, all of which are highly uncertain and cannot be accurately predicted.

Management believes there have been no other significant changes during the three months ended March 31, 2020 to the items that the Company disclosed as its critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s annual report on Form 10-K for the year ended December 31, 2018, the company adopted ASU 2016-02 and its subsequent amendments related to lease accounting. The standard requires that a lessee recognize on its balance sheet right-of-use assets and corresponding liabilities resulting from leasing transactions, as well as additional financial statement disclosures. Previously, U.S. GAAP only required balance sheet recognition for leases classified as capital leases. The provisions of this update apply to substantially all leased assets. Subsequent ASUs related to this standard are updates, which prescribe a practical expedient for implementation and narrow-scope improvements for lessors. For more information regarding the implementation of this standard, refer to note 2.2019.

Forward-Looking Statement Disclosure

In this quarterly report on Form 10-Q, statements that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give current expectations or forecasts of future events and are not guarantees of future performance. These forward-looking statements relate to, among other things, the Company's future operating performance, the Company's share of new and existing markets, the Company's short- and long-term revenue and earnings growth rates, and the Company's implementation of cost-reduction initiatives and measures to improve pricing, including the optimization of the Company's manufacturing capacity.

The use of the words “will,” “believes,” “anticipates,” “expects,” “intends” and similar expressions is intended to identify forward-looking statements that have been made and may in the future be made by or on behalf of the Company. Although the Company believes that these forward-looking statements are based upon reasonable assumptions regarding, among other things, the economy, its knowledge of its business, and on key performance indicators that impact the Company, these forward-looking statements involve risks, uncertainties and other factors that may cause actual results to differ materially from those expressed in or implied

Table of Contents

Management's Discussion and Analysis of

Financial Condition and Results of Operations as of March 31, 2020

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

(unaudited)

(in millions, except per share amounts)

by the forward-looking statements. The Company is not obligated to update forward-looking statements, whether as a result of new information, future events or otherwise.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Some of the risks, uncertainties and other factors that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements include, but are not limited to:

the ultimate impact of the ~~DPLTA with Diebold Nixdorf AG and~~ ongoing COVID-19 pandemic;

the outcome of the appraisal proceedings initiated in connection with the implementation of the ~~DPLTA;~~

DPLTA with the ~~ultimate outcome and results of integrating the operations of the Company and~~former Diebold Nixdorf ~~AG;~~AG and the merger/squeeze-out;

the Company's ability to achieve benefits from its cost-reduction initiatives and other strategic initiatives, such as DN Now, including its planned restructuring actions, as well as its business process outsourcing initiative;

the success of the Company’s new products, including its DN Series line;

the Company's ability to comply with the covenants contained in the agreements governing its debt;

the Company's ability to successfully refinance its debt when necessary or desirable;

the ultimate outcome of the Company’s pricing, operating and tax strategies applied to former Diebold Nixdorf AG and the ultimate ability to realize cost reductions and synergies;

~~the Company's ability to successfully operate its strategic alliances in China;~~

changes in political, economic or other factors such as currency exchange rates, inflation rates, recessionary or expansive trends, taxes and regulations and laws affecting the worldwide business in each of the Company's operations;

the Company’s reliance on suppliers and any potential disruption to the Company’s global supply chain;

the impact of market and ~~economic conditions~~ economic conditions, including any additional deterioration and disruption in the financial and service markets, including the bankruptcies, restructurings or consolidations of financial institutions, which could reduce our customer base and/or adversely affect our customers' ability to make capital expenditures, as well as adversely impact the availability and cost of credit;

interest rate and foreign currency exchange rate fluctuations, including the impact of possible currency devaluations in countries experiencing high inflation rates;

the acceptance of the Company's product and technology introductions in the marketplace;

competitive pressures, including pricing pressures and technological developments;

changes in the Company's relationships with customers, suppliers, distributors and/or partners in its business ventures;

the effect of legislative and regulatory actions in the U.S. and internationally and the Company’s ability to comply with government regulations;

the impact of a security breach or operational failure on the Company's business;

the Company's ability to successfully integrate other acquisitions into its operations;

the Company's success in divesting, reorganizing or exiting non-core and/or non-accretive businesses;

the Company's ability to maintain effective internal controls;

changes in the Company's intention to further repatriate cash and cash equivalents and short-term investments residing in international tax jurisdictions, which could negatively impact foreign and domestic taxes;

unanticipated litigation, claims or assessments, as well as the outcome/impact of any current/pending litigation, claims or assessments;

the investment performance of the Company's pension plan assets, which could require the Company to increase its pension contributions, and significant changes in healthcare costs, including those that may result from government action; and

~~Table of Contents~~

~~Management's Discussion and Analysis of~~

~~Financial Condition and Results of Operations as of March 31, 2019~~

~~DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES~~

~~(unaudited)~~

~~(in millions, except per share amounts)~~

the amount and timing of repurchases of the Company's common shares, if any.

Except to the extent required by applicable law or regulation, the Company undertakes no obligation to update these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.

Item 3: Quantitative and Qualitative Disclosures About Market Risk

Refer to the Company’s annual report on Form 10-K for the year ended December 31, ~~2018~~2019 for a discussion of market risk exposures. As discussed elsewhere in this report, COVID-19 will negatively impact our business and results of operations. As the Company cannot predict the duration or extent of the pandemic, the future impact on the results of operations, financial position and cash flows, among others, cannot be reasonably estimated, but could be material. There have been no other material changes in this information since December 31, ~~2018.~~2019.

4751

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

(in millions, except share and per share amounts)

Item 4: Controls and Procedures

This quarterly report on Form 10-Q includes the certifications of the Company's Chief Executive Officer (CEO) and Chief Financial Officer (CFO) required by Rule 13a-14 of the Securities Exchange Act of 1934 (the Exchange Act). See Exhibits 31.1 and 31.2. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.

Based on the performance of procedures by management, designed to ensure the reliability of financial reporting, management believes that the unaudited condensed consolidated financial statements fairly present, in all material respects, the Company's financial position, results of operations and cash flows as of the dates, and for the periods presented.

Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's (SEC) rules and forms and that such information is accumulated and communicated to management, including the CEO and CFO as appropriate, to allow timely decisions regarding required disclosures.

In connection with the preparation of this quarterly report on Form 10-Q, the Company's management, under the supervision and with the participation of the CEO and CFO, conducted an evaluation of disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, the CEO and CFO have concluded that such disclosure controls and procedures were ~~not~~ effective as of March 31, ~~2019 due to~~2020.

Change in Internal Controls

During the ~~material weaknesses~~first quarter ended March 31, 2020, there have been no changes in the Company's internal control over financial reporting ~~as described below.~~

~~A material weakness in~~that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management identified the following material weaknesses in our internal control over financial reporting as of December 31, 2018 and notes that the material weaknesses were not remediated as of March 31, 2019.reporting.

The Company’s risk assessment process was not effective in considering changes to the business operations, personnel and other factors affecting certain financial reporting processes and design of related controls on a timely basis. Accordingly,

The Company had ineffective information technology general controls (ITGCs) related to IT systems used for financial reporting by certain entities throughout the organization. The Company did not established effective IT and financial user access controls commensurate with certain job responsibilities. Consequently, automated and manual process level controls over financial reporting which were dependent upon these ITGCs were also ineffective.

The Company had ineffective implementation and operation of controls over inventory valuation related to spare parts and finished goods from canceled orders as the Company did not effectively communicate information to certain locations to allow for the effective operations or implementation of these controls.

The Company had ineffective controls over non-routine transactions as certain controls were not designed at the appropriate level of precision to ensure calculations supporting non-routine transactions were calculated correctly.

Because of the material weaknesses identified above, a reasonable possibility exists that a material misstatement in the Company’s condensed consolidated financial statements will not be prevented or detected on a timely basis.

4852

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, ~~2019~~2020

(in millions, except share and per share amounts)

~~The Company is implementing the following remediation plan in order to remediate the three material weaknesses described above:~~

~~Improving our continuous risk assessment process to be responsive to changes in the business operations, personnel and IT developments affecting our financial reporting and related controls;~~

~~Improving our timely written communication of changes in financial reporting and related controls affecting both business and financial users;~~

~~Revoking the access to IT systems of those individuals that were identified as inappropriate;~~

Implementing more frequent and improved periodic access reviews that include: all sensitive access and the identification of additional business process owners to be part of the review process and providing the owners with guidance on the key data elements of the review to enhance the precision of the review process;

~~Implementing consistent inventory valuation controls at all locations and communicate the requirements for effectively operating such controls to all businesses; and~~

~~Implementing controls over calculations associated with non-routine transactions at a more precise level of operation.~~

~~Change in Internal Controls~~

Other than the material weaknesses described above that occurred in earlier periods of fiscal 2018, there have been no other changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2019 that have materially affective, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Table of Contents~~

~~DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES~~

~~FORM 10-Q as of March 31, 2019~~

~~(in millions, except share and per share amounts)~~

Part II – Other Information

Item 1: Legal Proceedings

At March 31, ~~2019,~~2020, the Company was a party to several lawsuits that were incurred in the normal course of business, which neither individually nor in the aggregate are considered material by management in relation to the Company’s financial position or results of operations. In management’s opinion, the Company's condensed consolidated financial statements would not be materially affected by the outcome of these legal proceedings, commitments or asserted claims.

For more information regarding legal proceedings, please refer to Part I, Item 3 of the Company's annual report on Form 10-K for the year ended December 31, ~~2018.~~2019. There have been no material developments with respect to the legal proceedings reported in the Company's annual report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Item 1A: Risk Factors

The COVID-19 pandemic has disrupted the Company's operations and could have a material adverse effect on our business.

Our business could be materially and adversely affected by the outbreak of a widespread health epidemic. The present COVID-19 pandemic has disrupted the Company's operations and will affect our business, including as government authorities impose mandatory closures, work-from-home orders and social distancing protocols, and seek voluntary facility closures or impose other restrictions that could materially adversely affect our ability to adequately staff and maintain our operations. Specifically, we have experienced, and expect to experience in the future, temporary facility closures in response to government mandates in certain jurisdictions in which we operate and in response to positive diagnoses for COVID-19 in certain facilities for the safety of our associates. The COVID-19 pandemic could also disrupt our supply chain and materially adversely impact our ability to secure supplies for our facilities and to provide personal protective equipment for our employees, which could materially adversely affect our operations. There may also be long-term effects on our customers and the economies of affected countries. Even if a virus or other illness does not spread significantly, the perceived risk of infection or health risk may materially adversely affect our business. Any of the foregoing within the countries in which the Company, our customers and suppliers operate would severely disrupt our operations and could have a material adverse effect on our business, results of operations, cash flows and financial position. As we cannot predict the duration or scope of the COVID-19 pandemic, the negative financial impact to our results cannot be reasonably estimated, but could be material.

Refer to the Company’s annual report on Form 10-K for the year ended December 31, ~~2018.~~2019. There has been no other material change to this information since December 31, ~~2018.~~2019.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, 2020

(in millions, except share and per share amounts)

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

Information concerning the Company’s share repurchases made during the ~~first~~second quarter of ~~2019:~~2020:


Period	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans ⁽²⁾	Maximum Number of Shares that May Yet Be Purchased Under the Plans (2)	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans ⁽²⁾	Maximum Number of Shares that May Yet Be Purchased Under the Plans (2)
January	771	$	3.61	—	2,426,177	2,060	$	9.58	—	2,426,177
February	188,775	$	5.92	—	2,426,177	369	$	12.55	—	2,426,177
March	3,955	$	6.06	—	2,426,177	1,292	$	9.39	—	2,426,177
Total	193,501	$	5.91	—		3,721	$	9.81	—


⁽¹⁾	All shares were surrendered or deemed surrendered to the Company in connection with the Company’s share-based compensation plans.

⁽²⁾

The total number of shares repurchased as part of the publicly announced share repurchase plan since its inception was 13,450,772 as of March 31, ~~2019.~~2020. The plan was approved by the Board of Directors in 1997. The Company may purchase shares from time to time in open market purchases or privately negotiated transactions. The Company may make all or part of the purchases pursuant to accelerated share repurchases or Rule 10b5-1 plans. The plan has no expiration date. The following table provides a summary of Board of Directors approvals to repurchase the Company’s outstanding common shares:



	Total Number of Shares Approved for Repurchase
1997	2,000,000
2004	2,000,000
2005	6,000,000
2007	2,000,000
2011	1,876,949
2012	2,000,000
	15,876,949

Item 3: Defaults Upon Senior Securities

None.

Item 4: Mine Safety Disclosures

Not applicable.

~~Table of Contents~~

~~DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES~~

~~FORM 10-Q as of March 31, 2019~~

~~(in millions, except share and per share amounts)~~

Item 5: Other Information

None.

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES

FORM 10-Q as of March 31, 2020

(in millions, except share and per share amounts)

Item 6: Exhibits



3.1(i)		Amended and Restated Articles of Incorporation of Diebold, Incorporated – incorporated by reference to Exhibit 3.1(i) to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1994 (Commission File No. 1-4879)

3.1(ii)		Amended and Restated Code of Regulations – incorporated by reference to Exhibit 3.1(ii) to Registrant’s Current Report on Form 8-K filed on February 17, 2017 (Commission File No. 1-4879)

3.2		Certificate of Amendment by Shareholders to Amended Articles of Incorporation of Diebold, Incorporated – incorporated by reference to Exhibit 3.2 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 (Commission File No. 1-4879)

3.3		Certificate of Amendment to Amended Articles of Incorporation of Diebold, Incorporated – incorporated by reference to Exhibit 3.3 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 1998 (Commission File No. 1-4879)

3.4		Certificate of Amendment to Amended Articles of Incorporation of Diebold Nixdorf, Incorporated – incorporated by reference to Exhibit 3.1(i) to Registrant’s Current Report on Form 8-K filed on December 12, 2016 (Commission File No. 1-4879)

3.5		Certificate of Amendment to Amended Articles of Incorporation of Diebold Nixdorf, Incorporated, effective April 26, 2017 – incorporated by reference to Exhibit 3.5 to Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (Commission File No. 1-4879)

10.1		~~Form~~Eighth Amendment to Credit Agreement, dated as of ~~Performance Cash Award Agreement - incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on~~ February ~~1, 2019~~27, 2020, among Diebold Nixdorf, Incorporated, the subsidiary borrowers thereto, the guarantor party thereto, the lenders party thereto and JP Morgan Chase Bank, N.A., as administrative agent (Commission File No. 1-4879)

~~10.2~~		Nomination and Standstill Agreement, dated February 22, 2019, by and among the Registrant and the individuals and entities listed on Schedule I thereto - incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on February 25, 2019 (Commission File No. 1-4879)

~~10.3~~		Diebold Nixdorf, Incorporated 2017 Equity and Performance Incentive Plan, as amended April 25, 2019 - incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on 8-K filed on April 26, 2019 (Commission File No. 1-4879)

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

32.2		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

101.INS		Inline XBRL Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



			DIEBOLD NIXDORF, INCORPORATED


Date:	~~April 30, 2019~~May 5, 2020		/s/ Gerrard B. Schmid
		By:	Gerrard B. Schmid
			President and Chief Executive Officer
			(Principal Executive Officer)

Date:	~~April 30, 2019~~May 5, 2020		/s/ Jeffrey Rutherford
		By:	Jeffrey Rutherford
			Senior Vice President and Chief Financial Officer
			(Principal Financial Officer)

5256



	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



	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



	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



	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