Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
__________________________________________________
Form 10-Q
__________________________________________________ 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2018
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 1-4879 
_________________________________________________
Diebold Nixdorf, Incorporated
(Exact name of registrant as specified in its charter)
_________________________________________________ 
Ohio
 
34-0183970
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification Number)
 
 
 
5995 Mayfair Road, PO Box 3077, North Canton, Ohio
 
44720-8077
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (330) 490-4000
__________________________________________________ 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x     No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  x    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
o
Non-accelerated filer
(Do not check if a smaller reporting company)
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 July 31, 2018 was 76,093,756.




DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Form 10-Q

Index
 


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)
 
 
June 30,
2018

December 31,
2017
 
 
(Unaudited)
 
 
ASSETS
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents

$
299.0


$
535.2

Short-term investments

14.5


81.4

Trade receivables, less allowances for doubtful accounts of $60.6 and $71.7, respectively
 
809.3

 
830.1

Inventories
 
820.9

 
737.0

Prepaid expenses
 
62.0

 
65.7

Income taxes
 
66.5

 
73.4

Other current assets
 
220.0

 
185.6

Total current assets
 
2,292.2

 
2,508.4

Securities and other investments
 
96.9

 
96.8

Property, plant and equipment, net of accumulated depreciation and amortization of $428.5 and $418.8, respectively
 
338.3

 
364.5

Goodwill
 
998.6

 
1,117.1

Deferred income taxes
 
285.1

 
293.8

Customer relationships, net
 
582.4

 
633.3

Other intangible assets, net
 
122.1

 
140.5

Other assets
 
93.0

 
95.8

Total assets
 
$
4,808.6

 
$
5,250.2

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
 
 
 
 
Current liabilities
 
 
 
 
Notes payable
 
$
68.5

 
$
66.7

Accounts payable
 
566.2

 
562.2

Deferred revenue
 
416.1

 
437.5

Payroll and other benefits liabilities
 
168.9

 
198.9

Other current liabilities
 
432.4

 
534.1

Total current liabilities
 
1,652.1

 
1,799.4

Long-term debt
 
1,816.6

 
1,787.1

Pensions, post-retirement and other benefits
 
255.8

 
266.4

Deferred income taxes
 
255.4

 
287.1

Other liabilities
 
99.0

 
111.3

Commitments and contingencies
 


 


Redeemable noncontrolling interests
 
468.6

 
492.1

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, 91,242,389 and 90,524,360 issued shares, 76,092,237 and 75,558,544 outstanding shares, respectively
 
114.1

 
113.2

Additional capital
 
740.9

 
721.5

Retained earnings
 
215.8

 
399.0

Treasury shares, at cost (15,150,152 and 14,965,816 shares, respectively)
 
(570.3
)
 
(567.4
)
Accumulated other comprehensive loss
 
(273.5
)
 
(196.3
)
Total Diebold Nixdorf, Incorporated shareholders' equity
 
227.0

 
470.0

Noncontrolling interests
 
34.1

 
36.8

Total equity
 
261.1

 
506.8

Total liabilities, redeemable noncontrolling interests and equity
 
$
4,808.6

 
$
5,250.2

See accompanying notes to condensed consolidated financial statements.

3

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
(in millions, except per share amounts)
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2018
 
2017
 
2018
 
2017
Net sales
 
 
 
 
 
 
 
Services and software
$
716.3

 
$
687.9

 
$
1,428.0

 
$
1,371.5

Products
389.3

 
446.0

 
741.8

 
865.2

 
1,105.6

 
1,133.9

 
2,169.8


2,236.7

Cost of sales
 
 
 
 
 
 
 
Services and software
559.7

 
536.4

 
1,098.9

 
1,041.9

Products
326.2

 
359.7

 
610.3

 
714.5

 
885.9

 
896.1

 
1,709.2

 
1,756.4

Gross profit
219.7

 
237.8

 
460.6

 
480.3

Selling and administrative expense
219.8


236.8

 
447.7

 
483.8

Research, development and engineering expense
40.6


38.8

 
82.3

 
80.2

Impairment of assets
90.0



 
90.0

 
3.1

(Gain) loss on sale of assets, net
0.8

 
(7.7
)
 
(6.9
)
 
(8.1
)
 
351.2

 
267.9

 
613.1

 
559.0

Operating profit (loss)
(131.5
)
 
(30.1
)
 
(152.5
)

(78.7
)
Other income (expense)
 
 
 
 
 
 
 
Interest income
1.9

 
5.1

 
5.4

 
11.5

Interest expense
(28.4
)
 
(32.2
)
 
(54.4
)
 
(63.0
)
Foreign exchange gain (loss), net
(3.1
)
 
(4.6
)
 
(4.5
)
 
(7.7
)
Miscellaneous, net
(1.9
)
 
1.9

 
(0.9
)
 
3.2

Income (loss) before taxes
(163.0
)
 
(59.9
)
 
(206.9
)
 
(134.7
)
Income tax expense (benefit)
(29.6
)
 
(36.3
)
 
(10.2
)
 
(58.9
)
Net income (loss)
(133.4
)
 
(23.6
)
 
(196.7
)
 
(75.8
)
Net income attributable to noncontrolling interests
5.1

 
7.0

 
12.7

 
13.6

Net income (loss) attributable to Diebold Nixdorf, Incorporated
$
(138.5
)
 
$
(30.6
)
 
$
(209.4
)
 
$
(89.4
)
 
 
 
 
 
 
 
 
Basic weighted-average shares outstanding
76.0

 
75.5

 
75.9

 
75.4

Diluted weighted-average shares outstanding
76.0

 
75.5

 
75.9

 
75.4

 
 
 
 
 
 
 
 
Net income (loss) attributable to Diebold Nixdorf, Incorporated
 
 
 
 
 
 
 
Basic earnings (loss) per share
$
(1.82
)
 
$
(0.41
)
 
$
(2.76
)
 
$
(1.19
)
Diluted earnings (loss) per share
$
(1.82
)
 
$
(0.41
)
 
$
(2.76
)
 
$
(1.19
)
 
 
 
 
 
 
 
 
Dividends declared and paid per common share
$

 
$
0.10

 
$
0.10

 
$
0.20

See accompanying notes to condensed consolidated financial statements.

4

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
(unaudited)
(in millions)
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2018
 
2017
 
2018
 
2017
Net income (loss)
 
$
(133.4
)
 
$
(23.6
)
 
$
(196.7
)
 
$
(75.8
)
Other comprehensive income (loss), net of tax
 
 
 
 
 
 
 
 
Adoption of accounting standard
 

 

 
(29.0
)
 

Translation adjustment
 
(81.3
)
 
79.9

 
(63.1
)
 
129.2

Foreign currency hedges (net of tax of $(2.2), $(2.5), $(1.1) and $(1.3), respectively)
 
8.7

 
5.6

 
5.9

 
3.4

Interest rate hedges
 


 


 


 


Net gain (loss) recognized in other comprehensive income (net of tax of $(0.4), $0.4, $(1.1) and $(0.4), respectively)
 
0.5

 
(0.5
)
 
2.7

 
1.5

Reclassification adjustment for amounts recognized in net income
 
0.8

 
(0.1
)
 
1.2

 
(0.4
)
 
 
1.3

 
(0.6
)
 
3.9

 
1.1

Pension and other post-retirement benefits
 
 
 
 
 
 
 
 
Net actuarial gain (loss) amortization (net of tax of $(0.6), $(0.5), $(0.2) and $1.0, respectively)
 
1.8

 
0.9

 
3.6

 
(3.0
)
Other comprehensive income (loss), net of tax
 
(69.5
)
 
85.8

 
(78.7
)
 
130.7

Comprehensive income (loss)
 
(202.9
)
 
62.2

 
(275.4
)
 
54.9

Less: comprehensive income attributable to noncontrolling interests
 
3.3

 
8.7

 
10.9

 
15.3

Comprehensive income (loss) attributable to Diebold Nixdorf, Incorporated
 
$
(206.2
)
 
$
53.5

 
$
(286.3
)
 
$
39.6

See accompanying notes to condensed consolidated financial statements.

5

Table of Contents

DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in millions)
 
 
Six Months Ended
 
 
June 30,
 
 
2018
 
2017
Cash flow from operating activities
 
 
 
 
Net income (loss)
 
$
(196.7
)
 
$
(75.8
)
Adjustments to reconcile net income (loss) to cash flow used by operating activities:
 
 
 
 
Depreciation and amortization
 
130.7

 
116.6

Share-based compensation
 
20.3

 
15.0

Gain on sale of assets, net
 
(6.9
)
 
(8.1
)
Impairment of assets
 
90.0

 
3.1

Deferred income taxes
 
(66.2
)
 
(63.4
)
Other
 
(1.7
)
 
2.7

Changes in certain assets and liabilities, net of the effects of acquisitions
 
 
 
 
Trade receivables
 
(5.0
)
 
(85.6
)
Inventories
 
(111.9
)
 
(32.0
)
Accounts payable
 
15.4

 
36.4

Income taxes
 
(8.2
)
 
(23.3
)
Prepaid and other current assets
 
(40.2
)
 
(39.5
)
Deferred revenue
 
(10.9
)
 
15.9

Accrued salaries, wages and commissions
 
(23.8
)
 
21.3

Warranty liability
 
(18.0
)
 
(15.3
)
Certain other assets and liabilities
 
(23.5
)
 
(53.8
)
Net cash provided (used) by operating activities
 
(256.6
)
 
(185.8
)
Cash flow from investing activities
 
 
 
 
Capital expenditures
 
(30.6
)
 
(26.4
)
Payment for acquisitions
 
(5.8
)
 
(2.4
)
Proceeds from maturities of investments
 
158.5

 
145.0

Payments for purchases of investments
 
(91.1
)
 
(173.7
)
Proceeds from sale of assets
 
10.5

 
11.4

Increase in certain other assets
 
(11.3
)
 
(17.6
)
Net cash provided (used) by investing activities
 
30.2

 
(63.7
)
Cash flow from financing activities
 
 
 
 
Dividends paid
 
(7.7
)
 
(15.3
)
Debt issuance costs
 
(0.9
)
 
(1.1
)
Revolving credit facility (repayments) borrowings, net
 
65.0

 
119.1

Other debt borrowings
 
34.2

 
370.3

Other debt repayments
 
(57.6
)
 
(416.5
)
Distributions and payments to noncontrolling interest holders
 
(29.1
)
 
(16.3
)
Issuance of common shares
 

 
0.3

Repurchase of common shares
 
(2.9
)
 
(4.5
)
Net cash provided (used) by financing activities
 
1.0

 
36.0

Effect of exchange rate changes on cash and cash equivalents
 
(10.8
)
 
12.1

Increase (decrease) in cash and cash equivalents
 
(236.2
)
 
(201.4
)
Cash and cash equivalents at the beginning of the period
 
535.2

 
652.7

Cash and cash equivalents at the end of the period
 
$
299.0

 
$
451.3

See accompanying notes to condensed consolidated financial statements.

6

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
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, 2017. In addition, some of the Company’s statements in this quarterly report on Form 10-Q may involve risks and uncertainties that could significantly impact expected future results. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of results to be expected for the full year.

In connection with recent changes in the Company's leadership, beginning with the second quarter of 2018, the Company's reportable operating segments are be 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 included finance lease receivables of $12.8 and $14.4 in other assets as of June 30, 2018 and December 31, 2017, respectively, in the condensed consolidated balance sheets.


7

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


Recently Adopted Accounting Guidance
Standards Adopted
 
Description
 
Effective
Date
Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers
 
The standard replaced the most recent previously existing revenue recognition guidance in U.S. GAAP and required additional financial statement disclosures. The standard requires revenue to be recognized when the Company expects to be entitled in exchange for the transfer of promised goods or services to customers. The standard was adopted using a modified retrospective approach to open contracts as of the effective date, January 1, 2018. The standard is intended to reduce potential for diversity in practice at initial application and reducing the cost and complexity of applying Topic 606 both at transition and prospectively. As a result of the adoption, the cumulative increase to the Company's retained earnings at January 1, 2018 was $4.6.
 
January 1, 2018
ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
 
The standard was issued to address the net presentation of the components of net benefit cost. The standard requires that service cost be presented in the same line item as other current employee compensation costs and that the remaining components of net benefit cost be presented in a separate line item outside of any subtotal for income from operations. The adoption of this update did not have a material impact on the financial statements of the Company.

 
January 1, 2018
ASU 2017-12, Derivatives and Hedging: Target Improvements to Accounting for Hedging Activities
 
The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. For existing hedges as of the date of the adoption, the Company eliminated a minimal amount of ineffectiveness by means of a cumulative-effect adjustment to accumulated other comprehensive income (AOCI) with a corresponding adjustment to retained earnings. As a result of the standard, $0.2 and $2.8 was included in net sales for the three and six months ended June 30, 2018, respectively, and $0.1 in cost of sales for the six months ended June 30, 2018.

 
Early adopted January 1, 2018
ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
 
The standard allows for reclassification of stranded tax effects on items resulting from the Tax Cuts and Jobs Act (the Tax Act) from AOCI to retained earnings. Tax effects unrelated to the Tax Act are released from AOCI using either the specific identification approach or the portfolio approach based on the nature of the underlying item. As a result of the adoption, during the first quarter of 2018, the Company recorded an adjustment to retained earnings resulting in a increase of $29.0, with a corresponding decrease to AOCI due to the reduction in the corporate tax rate.

 
Early adopted January 1, 2018
ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment
 
The standard simplifies the measurement of goodwill by eliminating step 2 from the goodwill impairment test. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The adoption of this update did not have an impact on the financial statements of the Company and only simplifies the procedure for the goodwill impairment test.
 
Early adopted January 1, 2018



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Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


Recently Issued Accounting Guidance
Standards Pending Adoption
 
Description
 
Effective/Adoption Date
 
Anticipated Impact
ASU 2016-02, Leases
 
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. Currently, U.S. GAAP only requires balance sheet recognition for leases classified as capital leases. The provisions of this update apply to substantially all leased assets.

 
January 1, 2019
 
The Company is currently evaluating the impact the standard will have on its financial information and related disclosures. The standard requires a modified retrospective transition method with the option to elect a package of practical expedients, which the Company anticipates utilizing and will continue to evaluate. The Company anticipates a material balance sheet gross-up for the right-of-use assets and corresponding liabilities, with no anticipated impact to debt covenants.

ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs pursuant to SEC Staff Accounting Bulleting No. 118
 
This guidance amends SEC paragraphs in Topic 740, Income Taxes, to reflect SAB 118, which provides guidance for companies that are not able to complete their accounting for the income tax effects of the Tax Act in the period of enactment.

 
January 1, 2021
 
This guidance also includes amendments to the XBRL Taxonomy. For public business entities, the amendments in ASU 2018-05 are effective for fiscal years ending after December 15, 2020 and early adoption is permitted. The Company does not expect adoption of this guidance to have a significant impact on its condensed consolidated financial statements.


Note 2: Revenue

Revenue is measured based on consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.

The Company's payment terms vary depending on the individual contracts and are generally fixed fee. The Company recognizes advance payments and billings in excess of revenue recognized as deferred revenue. In certain contracts where services are provided prior to billing, the Company recognizes a contract asset within trade receivables and other current assets.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

The Company recognizes shipping and handling fees billed when products are shipped or delivered to a customer and includes such amounts in net sales. Although infrequent, shipping and handling associated with outbound freight after control over a product has transferred to a customer is not a separate performance obligation, rather is accounted for as a fulfillment cost. Third-party freight payments are recorded in cost of sales.

The Company includes a warranty in connection with certain contracts with customers, which are not considered to be separate performance obligations. 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. For additional information on product warranty refer to note 9. The Company also has extended warranty and service contracts available for its customers, which are recognized as separate performance obligations. Revenue is recognized on these contracts ratably as the Company has a stand-ready obligation to provide services when or as needed by the customer. This input method is the most accurate assessment of progress toward completion the Company can apply.

Nature of goods and services

The following is a description of principal solutions offered within the Company's two main industry segments that generate the Company's revenue. For more detailed information about reportable operating segments, see note 20.


9

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


The Company provides its banking customers product-related services which include proactive monitoring and rapid resolution of incidents through remote service capabilities or an on-site visit. First and second line maintenance, preventive maintenance and on-demand services keep the distributed assets of the Company's customers up and running through a standardized incident management process. Managed services and outsourcing consists of the end-to-end business processes, solution management, upgrades and transaction processing. The Company also provides a full array of cash management services, which optimizes the availability and cost of physical currency across the enterprise through efficient forecasting, inventory and replenishment processes.

Banking and retail services may be sold separately or in bundled packages. The typical contract length for service is generally one year and is billed and paid in advance except for installations, among others.

The Company's hardware-agnostic software applications facilitate millions of transactions via automated teller machines (ATMs), point of sale (POS) terminals, kiosks, and other self-service devices. The Company provides its banking customers front-end applications for consumer connection points and back-end platforms that manage channel transactions, operations and integration. For retail customers, the Company provides a comprehensive, modular solution capable of enabling the most advanced omnichannel retail use cases. The Company's platform software is installed within bank and retail data centers to facilitate omnichannel transactions, endpoint monitoring, remote asset management, customer marketing, merchandise management and analytics. These offerings include highly configurable, application program interface (API) enabled software that automates legacy banking transactions across channels.

The Company’s software solution includes its professional services team, who provides systems integration, customization, consulting and project management. The Company’s advisory services team collaborates with its customers to help define optimal user experience, improve business processes, refine existing staffing models and deploy technology to meet branch and store automation objectives.

Software licenses and professional services may be sold separately or in bundled packages. Software licenses when bundled with professional services, where the service is modifying the intellectual property (IP), is non-distinct from the professional service. The consideration (including any discounts) is allocated between distinct obligations in a bundle based on their stand-alone selling prices. For items that are not sold separately, the Company estimates stand-alone selling prices using the cost plus expected margin approach or in the case of the software license the residual approach may be used. The Company’s software licenses are functional in nature (the IP has significant stand-alone functionality); as such, the revenue recognition of distinct software license sales is at the point in time that the customer obtains control of the rights granted by the license. Revenue from professional services are recognized over time, because the customer simultaneously receives and consumes the benefits of the Company’s performance as the services are performed or when the Company’s performance creates an asset with no alternative use to the Company and the Company has an enforceable right to payment for performance completed to date. Generally revenue will be recognized using an input measure, typically costs incurred.

Products for banking customers consists of cash recyclers and dispensers, intelligent deposit terminals, teller automation tools and kiosk technologies, as well as physical security solutions. The retail product portfolio includes modular, integrated and mobile POS and self-checkout (SCO) terminals that meet evolving automation and omnichannel requirements of consumers. 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. Also in the portfolio, the Company provides self-checkout terminals and ordering kiosks which facilitate an efficient and user-friendly purchasing experience. The Company’s hybrid product line can alternate from an attended operator to self-checkout with the press of a button as traffic conditions warrant throughout the business day.

For bundled packages, the Company accounts for individual services separately if they are distinct. A distinct service is separately identifiable from other items in the bundled package if a customer can benefit from it on its own or with other resources that are readily available to the customer. The consideration (including any discounts) is allocated between separate services or distinct obligations in a bundle based on their stand-alone selling prices. The stand-alone selling prices are determined based on the prices at which the Company separately sells the products or services. For items that are not sold separately, the Company estimates stand-alone selling prices using the cost plus expected margin approach. Revenue on service contracts is recognized ratably over time, generally using an input measure, as the customer simultaneously receives and consumes the benefits of the Company’s performance as the services are performed. In some circumstances, when global service supply chain services are not included in a term contract and rather billed as they occur, revenue on these billed work services are recognized at a point in time as transfer

10

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


of control occurs. Product revenue is recognized at the point in time that the customer obtains control of the product, which could be upon delivery or upon completion of installation services, depending on contract terms.

Disaggregation of revenue

For additional information related to revenue disaggregation by reportable segment, refer to note 20.

The following table presents information regarding the Company’s revenue by geographic region:
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2018
 
2017
 
2018
 
2017
Eurasia Banking
 
 
 
 
 
 
 
 
Services and software
 
$
285.0

 
$
281.4

 
$
572.9

 
$
552.0

Products
 
152.5

 
192.1

 
299.7

 
359.5

Total Eurasia Banking
 
437.5

 
473.5

 
872.6

 
911.5

 
 
 
 
 
 
 
 
 
Americas Banking
 
 
 
 
 
 
 
 
Services and software
 
269.0

 
259.6

 
530.0

 
535.1

Products
 
101.6

 
110.8

 
174.3

 
216.9

Total Banking Americas
 
370.6

 
370.4

 
704.3

 
752.0

 
 
 
 
 
 
 
 
 
Retail
 
 
 
 
 
 
 
 
Services and software
 
162.3

 
146.9

 
325.1

 
284.4

Products
 
135.2

 
143.1

 
267.8

 
288.8

Total Retail
 
297.5

 
290.0

 
592.9

 
573.2

 
 
 
 
 
 
 
 
 
Total net sales
 
$
1,105.6

 
$
1,133.9

 
$
2,169.8

 
$
2,236.7


In the following table, revenue is disaggregated by timing of revenue recognition:
 
 
Three Months Ended
 
Six Months Ended
June 30,
 
June 30,
Timing of revenue recognition
 
2018
 
2017
 
2018
 
2017
Products transferred at a point in time
 
37%
 
41%
 
36%
 
41%
Products and services transferred over time
 
63%
 
59%
 
64%
 
59%
Net sales
 
100%
 
100%
 
100%
 
100%

Contract balances

The following table provides 2018 information about receivables and deferred revenue, which represent contract liabilities from contracts with customers:
Contract balance information
 
Trade Receivable
 
Contract liabilities
Balance at January 1
 
$
830.1

 
$
437.5

Balance at June 30
 
$
809.3

 
$
416.1


Contract assets are minimal for the periods presented. The amount of revenue recognized in 2018 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 $2.1 and $5.0 during the three months ended June 30, 2018 and 2017, respectively, and $10.9 and $14.8 during the six months ended June 30, 2018 and 2017, respectively, of impairment losses recognized as bad debt related to receivables or contract assets arising from the Company's contracts with customers.


11

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


As of January 1, 2018, the Company had $437.5 of unrecognized deferred revenue constituting the remaining performance obligations that are either unsatisfied (or partially unsatisfied). In 2018, the Company recognized revenue of $179.7 related to the Company's deferred revenue balance at January 1, 2018.

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 and variable consideration
 
The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. This consideration can include fixed and variable amounts and is determined at contract inception and updated each reporting period for any changes in circumstances. The transaction price also considers variable consideration, time value of money and the measurement of any non-cash consideration, all of which are estimated at contract inception and updated at each reporting date for any changes in circumstances.

The Company also applies the ‘as invoiced’ practical expedient in paragraph 606-10-55-18 related to performance obligations satisfied over time, which permits the Company to recognize revenue in the amount to which it has a right to invoice the customer if that amount corresponds directly with the value to the customer of the Company’s performance completed to date.

Transaction price allocated to the remaining performance obligations

As of June 30, 2018, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $2,600. The Company 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 paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

The Company also applies the ‘as invoiced’ practical expedient in paragraph 606-10-55-18 related to performance obligations satisfied over time which permits the Company to recognize revenue in the amount to which it has a right to invoice the customer if that amount corresponds directly with the value to the customer of the Company’s performance completed to date.

Cost to obtain and cost to fulfill a contract

The Company has minimal cost to obtain or fulfill contracts for customers for the periods presented. The Company pays commissions to the sales force based on multiple factors including but not limited to order entry, revenue recognition and portfolio growth. These incremental commission fees paid to the sales force meet the criteria to be considered a cost to obtain a contract, as they are directly attributable to a contract, incremental and management expects the fees are recoverable. The Company applies the practical expedient and recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. The costs that are not capitalized are included in cost of sales. The costs related to contracts with greater than a one-year term are immaterial and continue to be recognized in cost of sales.

Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of sales. The Company has minimal cost for shipping and handling costs for the periods presented.


12

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


Changes in accounting policies

Except for the changes below, the Company has consistently applied the accounting policies to all periods presented in these condensed consolidated financial statements.

The Company adopted Topic 606, Revenue from Contracts with Customers, with a date of initial application of January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below.

The Company applied Topic 606 using the cumulative effect method - i.e., by recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of equity at January 1, 2018. Therefore, the comparative information has not been adjusted and continues to be reported under Topic 605. The Company applied the practical expedient related to assessment of contract modifications, whereby the Company is essentially allowed to use hindsight when assessing the effect of a modification and accounting for the modified contract as if it existed from the beginning of the original contract.

The details of the significant changes and quantitative impact of the changes are set out below.

Professional service contracts

Previously, the Company recognized revenue for professional services contracts either on a milestone method or completed contract basis. Under Topic 606, the Company recognizes revenue when control transfers to a customer. As professional services can be highly customized for each customer, there is no alternative use for the services. When there is an enforceable right to payment for service completed combined with no alternative use of the services, the services meet criteria for over time revenue recognition. Revenue is recognized as the services are provided and as the customer benefits from the service. Revenue is recognized progressively based on the costs incurred method. When the professional services are not highly customized as in basic software installation services, customers do not take control of the services until they are completed. Therefore, the Company continues to recognize revenue for such contracts when the services are completed and customers formally accept them.

Impacts on financial statements

The following tables summarize the impacts of adopting Topic 606 on the Company’s condensed consolidated financial statements as of and for the period ended June 30, 2018 as if the Company continued to follow its accounting policies under the previous revenue recognition guidance.
 
 
Impact of changes in accounting policy for the six months ended June 30, 2018 (unaudited)
 
 
As Reported
 
Adjustments
 
Balances without adoption of Topic 606
Trade receivables, less allowances for doubtful accounts of $60.6 and $71.7, respectively
 
$
809.3

 
$
(6.8
)
 
$
802.5

Inventories
 
$
820.9

 
$
18.8

 
$
839.7

Deferred revenue
 
$
416.1

 
$
23.6

 
$
439.7

Deferred income taxes
 
$
255.4

 
$
(2.8
)
 
$
252.6

Retained earnings
 
$
215.8

 
$
(8.8
)
 
$
207.0


The impact to net sales and cost of sales would have been decreases of $14.7 and $8.2, respectively, for the three months ended June 30, 2018 and $13.8 and $8.6, respectively, for the six months ended June 30, 2018. The impact after tax was $(4.6) and $(3.6) for the three and six months ended June 30, 2018, respectively, and was primarily a result of timing of deferred revenue related to products and software for certain amounts being recognized that would have previously been deferred, and certain amounts being deferred that would have previously been recognized.


13

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


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 and six months ended June 30, 2018 and 2017, there were no differences in the earnings (loss) per share amounts calculated under the two methods. Accordingly, the treasury stock method is disclosed below.

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
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2018
 
2017
 
2018
 
2017
Numerator
 
 
 
 
 
 
 
 
Income (loss) used in basic and diluted earnings (loss) per share
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(133.4
)
 
$
(23.6
)
 
$
(196.7
)
 
$
(75.8
)
Net income attributable to noncontrolling interests
 
5.1

 
7.0

 
12.7

 
13.6

Net income (loss) attributable to Diebold Nixdorf, Incorporated
 
$
(138.5
)
 
$
(30.6
)
 
$
(209.4
)
 
$
(89.4
)
Denominator
 
 
 
 
 
 
 
 
Weighted-average number of common shares used in basic earnings (loss) per share
 
76.0

 
75.5

 
75.9

 
75.4

Weighted-average number of shares used in diluted earnings (loss) per share (1)
 
76.0

 
75.5

 
75.9

 
75.4

Net income (loss) attributable to Diebold Nixdorf, Incorporated
 
 
 
 
 
 
 
 
Basic earnings (loss) per share
 
$
(1.82
)
 
$
(0.41
)
 
$
(2.76
)
 
$
(1.19
)
Diluted earnings (loss) per share
 
$
(1.82
)
 
$
(0.41
)
 
$
(2.76
)
 
$
(1.19
)
 
 
 
 
 
 
 
 
 
Anti-dilutive shares
 
 
 
 
 
 
 
 
Anti-dilutive shares not used in calculating diluted weighted-average shares
 
5.0

 
2.9

 
4.4

 
2.6

(1) 
Incremental shares of 0.7 and 1.0 shares for the three months ended June 30, 2018 and 2017, respectively, and 0.8 and 0.9 shares for the six months ended June 30, 2018 and 2017, 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.

In May 2018, the Company announced its decision to reallocate future dividend funds towards debt reduction and other capital resource needs.

Note 4: Share-Based Compensation

The Company’s share-based compensation payments to employees are recognized based on their grant-date fair values during the period in which the employee is required to provide services in exchange for the award. Share-based compensation is primarily recognized as a component of selling and administrative expense. Total share-based compensation expense was $6.6 and $8.2 for the three months ended June 30, 2018 and 2017, respectively, and was $20.3 and $15.0 for the six months ended June 30, 2018 and 2017, respectively.


14

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


Options outstanding and exercisable as of June 30, 2018 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). In conjunction with the appointment of the Chief Executive Officer on February 21, 2018, the board approved the grant of options, performance share units and RSUs outside of the the 2017 Plan. Changes during the six months ended June 30, 2018 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, 2018
 
2.3

 
$
29.68

 
 
 
 
Granted
 
0.5

 
$
17.54

 
 
 
 
Outstanding at June 30, 2018
 
2.8

 
$
27.28

 
7
 
$

Options exercisable at June 30, 2018
 
1.6

 
$
30.51

 
6
 
$

Options vested and expected to vest(2) at June 30, 2018
 
2.7

 
$
27.46

 
7
 
$

(1) 
The aggregate intrinsic value (the difference between the closing price of the Company’s common shares on the last trading day of the second quarter of 2018 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 June 30, 2018. 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.

The following table summarizes information on non-vested RSUs and performance shares relating to employees and non-employee directors for the six months ended June 30, 2018:
 
 
Number of
Shares
 
Weighted-Average
Grant-Date Fair
Value
 
 
 
 
 
RSUs:
 
 
 
 
Non-vested at January 1, 2018
 
1.3

 
$
27.76

Forfeited
 
(0.1
)
 
$
22.38

Vested
 
(0.7
)
 
$
28.49

Granted
 
1.3

 
$
17.82

Non-vested at June 30, 2018
 
1.8

 
$
20.59

Performance Shares:
 
 
 
 
Non-vested at January 1, 2018
 
2.5

 
$
31.37

Forfeited
 
(0.6
)
 
$
29.68

Vested
 
(0.2
)
 
$
32.38

Granted
 
1.6

 
$
22.64

Non-vested at June 30, 2018
 
3.3

 
$
26.93


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 June 30, 2018, there were 0.1 non-employee director deferred shares vested and outstanding.

On April 25, 2018, the Company's shareholders approved amendments to the 2017 Plan, which provide for an additional 1.2  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.


15

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


Note 5: Income Taxes

The effective tax rate on loss from continuing operations was 18.2 percent for the three months ended June 30, 2018 and 4.9 percent for the six months ended June 30, 2018. The benefit on the losses for these periods was decreased primarily due to nondeductible permanent discrete adjustment associated with the $90.0 of goodwill impairment charge and the impacts of the Tax Act, more specifically, impacts related to the global intangible low-taxed income (GILTI) on the estimated annual tax rate. The effective tax rate could vary in future periods based on the Company’s earnings before taxes and clarifications around the Tax Act.

The effective tax rate on loss from continuing operations was 60.6 percent for the three months ended June 30, 2017 and 43.7 percent for the six months ended June 30, 2017. The tax rate on the loss for the three and six months ended June 30, 2017 was increased due to the jurisdictional income (loss) mix and varying statutory rates in the Company’s global footprint. These increases to the overall tax rate for these periods was offset in part by additional discrete expense items recognized in the quarter related to uncertain tax positions.

Note 6: Inventories

Major classes of inventories are summarized as follows:
 
 
June 30, 2018
 
December 31, 2017
Finished goods
 
$
349.4

 
$
301.9

Service parts
 
266.4

 
270.6

Raw materials and work in process
 
205.1

 
164.5

Total inventories
 
$
820.9

 
$
737.0

 
The increase in finished goods inventory was primarily attributable to increased inventory in Germany, India and Philippines to satisfy various customer projects and favorable buying opportunities. Raw materials and work in process inventory increased primarily due to a build up of inventory in the U.S. to satisfy a recent large retail customer and certain supply chain issues.

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 AOCI. Realized gains and losses are recognized in investment income and are determined using the specific identification method. There were no realized gains from the sale of securities or proceeds from the sale of available-for-sale securities for the three and six months ended June 30, 2018 and 2017.

The Company’s investments subject to fair value measurement consist of the following:
 
 
Cost Basis
 
Unrealized Gain
 
Fair Value
As of June 30, 2018
 
 
 
 
 
 
Short-term investments
 
 
 
 
 
 
Certificates of deposit
 
$
14.5

 
$

 
$
14.5

Long-term investments
 
 
 
 
 
 
Assets held in a rabbi trust
 
$
6.7

 
$
0.8

 
$
7.5

 
 
 
 
 
 
 
As of December 31, 2017
 
 
 
 
 
 
Short-term investments
 
 
 
 
 
 
Certificates of deposit
 
$
81.4

 
$

 
$
81.4

Long-term investments
 
 
 
 
 
 
Assets held in a rabbi trust
 
$
8.3

 
$
1.1

 
$
9.4


The Company has certain strategic alliances that are not consolidated. The Company tests these strategic alliances annually, individually and in 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

16

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


are not significant subsidiaries and are accounted for under the equity method of investments. As of June 30, 2018 and December 31, 2017, the Company had accounts receivable with these affiliates of $12.2 and $15.6, respectively, which are included in trade receivables, less allowances for doubtful accounts on the condensed consolidated balance sheets. As of June 30, 2018 and December 31, 2017, the Company had accounts payable balances with these affiliates of $17.2 and $17.8, respectively, which are included in 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. The Company acquired a minority equity stake in Kony, which is accounted for using the cost method of accounting. As of June 30, 2018, the Company's carrying value in Kony was $14.0 and the fair value was not estimated as there were no events or changes in circumstances in the investment.

Securities and other investments also includes a cash surrender value of insurance contracts of $79.9 and $79.8 as of June 30, 2018 and December 31, 2017, respectively. In addition, it includes an interest rate swap asset carrying value of $9.5 and $7.6 as of June 30, 2018 and December 31, 2017, respectively, which also represents fair value (refer to note 18).

The Company has finance lease receivables of $12.8 and $14.4 in other assets as of June 30, 2018 and December 31, 2017, respectively, in the condensed consolidated balance sheets.

There were no significant changes in provision for credit losses, recoveries and write-offs during the six months ended June 30, 2018 and 2017. As of June 30, 2018, finance leases and notes receivable individually evaluated for impairment were $25.1 and $10.6, respectively, with no provision recorded. As of June 30, 2017, finance leases and notes receivable individually evaluated for impairment were $43.2 and $20.8, respectively.

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

As of June 30, 2018 and December 31, 2017, the recorded investment in past due financing receivables on nonaccrual status was $0.5 and $0.6, respectively, and there were no recorded investments in finance receivables past due 90 days or more and still accruing interest. The recorded investment in impaired notes receivable was $4.1 as of June 30, 2018 and December 31, 2017 and was fully reserved and as of June 30, 2018 are all greater than 89 days past due.


17

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


Note 8: Goodwill and Other Assets

As of June 30, 2018, the Company’s three reportable operating segments are Eurasia Banking, Americas Banking and Retail. The Company has allocated goodwill to its Eurasia Banking, Americas Banking and Retail reportable operating segments. The changes in carrying amounts of goodwill within the Company's segments are summarized as follows:
 
Eurasia Banking
 
Americas Banking
 
Retail
 
Total
Goodwill
$
513.0

 
$
425.4

 
$
350.6

 
$
1,289.0

Accumulated impairment losses
(168.7
)
 
(122.0
)
 

 
(290.7
)
Balance at January 1, 2017
$
344.3

 
$
303.4

 
$
350.6

 
$
998.3

Goodwill acquired
1.6

 

 
4.0

 
5.6

Goodwill adjustment
(1.1
)
 
(1.0
)
 
(0.8
)
 
(2.9
)
Currency translation adjustment
71.8

 
2.2

 
42.1

 
116.1

Goodwill
$
585.3

 
$
426.6

 
$
395.9

 
$
1,407.8

Accumulated impairment losses
(168.7
)
 
(122.0
)
 

 
(290.7
)
Balance at December 31, 2017
$
416.6

 
$
304.6

 
$
395.9

 
$
1,117.1

Currency translation adjustment
(14.9
)
 
(4.5
)
 
(9.1
)
 
(28.5
)
Goodwill
$
570.4

 
$
422.1

 
$
386.8

 
$
1,379.3

Impairment
(53.5
)
 

 
(36.5
)
 
(90.0
)
Accumulated impairment losses
(222.2
)
 
(122.0
)
 
(36.5
)
 
(380.7
)
Balance at June 30, 2018
$
348.2

 
$
300.1

 
$
350.3

 
$
998.6


In 2018, the Company acquired the remaining portion of the noncontrolling interest in its China operations for $5.8 for which no goodwill was recorded. In 2017, the $5.6 acquired goodwill from Moxx Group B.V. (Moxx) and Visio Objekt GmbH (Visio) primarily relates to anticipated synergies achieved through increased scale and higher utilization of the service organization.

The Company has identified four reporting units, which are Eurasia Banking, Americas Banking, Europe, Middle East and Africa (EMEA) Retail and Rest of World Retail. Management determined that the Eurasia Banking, Rest of World Retail and EMEA Retail reporting units had excess fair value of $64.2 or 5.2 percent, $20.5 or 18.8 percent and $134.6 or 21.4 percent, respectively, when compared to their carrying amounts. The Americas Banking reporting unit had excess fair value of greater than 80 percent cushion when compared to its carrying amount. Changes in certain assumptions or the Company's failure to execute on the current plan could have a significant impact to the estimated fair value of the reporting units.

During the second quarter of 2018, the Company performed an impairment test of goodwill for all of its line of businesses (LoB) reporting units due to the change in its reportable operating segments. The Company estimated the fair value of its nine LoB reporting unit using a combination of the income valuation and market approach in valuation methodology. The determination of the fair value of the reporting unit requires significant estimates and assumptions, including significant unobservable inputs.  The determination of the fair value of the reporting unit requires significant estimates and assumptions, including significant unobservable inputs. The key inputs included, but were not limited to, discount rates, terminal growth rates, market multiple data from selected guideline public companies, management’s internal forecasts which include numerous assumptions such as projected net sales, gross profit, sales mix, operating and capital expenditures and earnings before interest and taxes margins, among others. Based on the results of the LoB testing, the fair values of each of the Company's reporting units exceed their carrying values except for the Services-Asia Pacific (AP) and Software-EMEA reporting units. Therefore, the Company recognized a non-cash goodwill impairment loss of $90.0 during the second quarter of 2018. In 2017, the Company recorded impairments totaling $3.1 related to information technology (IT) transformation and integration activities.


18

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


The following summarizes information on intangible assets by major category:
 
 
June 30, 2018
 
December 31, 2017
 
Weighted-average remaining useful lives
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Customer relationships, net
7.2 years
$
726.7

 
$
(144.3
)
 
$
582.4

 
$
741.5

 
$
(108.2
)
 
$
633.3

 
 
 
 
 
 
 
 
 
 
 
 
 
Internally-developed software
2.1 years
203.3

 
(113.0
)
 
90.3

 
192.9

 
(99.8
)
 
93.1

Development costs non-software
0.9 years
53.5

 
(40.5
)
 
13.0

 
55.3

 
(35.1
)
 
20.2

Other intangibles
1.2 years
75.5

 
(56.7
)
 
18.8

 
84.5

 
(57.3
)
 
27.2

Other intangible assets, net
 
332.3

 
(210.2
)
 
122.1

 
332.7

 
(192.2
)
 
140.5

Total
 
$
1,059.0

 
$
(354.5
)
 
$
704.5

 
$
1,074.2

 
$
(300.4
)
 
$
773.8


Amortization expense on capitalized software of $8.0 and $9.7 was included in service and software cost of sales for the three months ended June 30, 2018 and 2017, respectively. Amortization expense on capitalized software of $16.8 and $19.3 was included in service and software cost of sales for the six months ended June 30, 2018 and 2017, respectively. The Company's total amortization expense, including deferred financing costs, was $36.7 and $39.5 the three months ended June 30, 2018 and 2017, respectively. The Company's total amortization expense, including deferred financing costs, was $76.6 and $78.9 for the six months ended June 30, 2018 and 2017, 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 June 30, 2018, the maximum future payment obligations related to these various guarantees totaled $168.5, of which $28.0 represented standby letters of credit to insurance providers, and no associated liability was recorded. At December 31, 2017, the maximum future payment obligations relative to these various guarantees totaled $195.1, of which $28.0 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 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.

Changes in the Company’s warranty liability balance are illustrated in the following table:
 
 
2018
 
2017
Balance at January 1
 
$
76.7

 
$
101.6

Current period accruals
 
5.9

 
10.3

Current period settlements
 
(23.2
)
 
(21.9
)
Currency translation adjustment
 
(3.6
)
 
(1.3
)
Balance at June 30
 
$
55.8

 
$
88.7



19

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


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
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2018
 
2017
 
2018
 
2017
Cost of sales – services and software
 
$
(0.3
)
 
$
12.6

 
$
1.7

 
$
15.6

Cost of sales – products
 
(0.5
)
 
1.0

 
0.1

 
1.6

Selling and administrative expense
 
3.1

 
2.4

 
4.4

 
10.8

Research, development and engineering expense
 
(0.1
)
 
(1.6
)
 
(0.1
)
 
(0.7
)
Total
 
$
2.2

 
$
14.4

 
$
6.1

 
$
27.3


The following table summarizes the Company’s type of restructuring charges by reportable operating segment:
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2018
 
2017
 
2018
 
2017
Severance
 
 
 
 
 
 
 
 
Eurasia Banking
 
$
1.2

 
$
3.1

 
$
3.7

 
$
9.1

Americas Banking
 
0.2

 
4.0

 
0.3

 
3.4

Retail
 
0.3

 
8.5

 
0.8

 
9.7

Corporate
 
0.5

 
(1.2
)
 
1.3

 
5.1

Total severance
 
$
2.2

 
$
14.4

 
$
6.1

 
$
27.3


DN Now

During the second quarter of 2018, The Company began implementing DN Now to deliver greater, more sustainable profitability. The plan is anticipating savings of approximately $100 from the new customer centric operating model with clear role charters and a global workforce aligned with market demand. Additional near term activities include divesting of non-core businesses, improving service delivery and investing in solutions. The Company anticipates additional restructuring costs of approximately $130 to $150 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.

DN2020 Plan

During 2016, the Company launched a multi-year integration and transformation program, known as DN2020. The DN2020 plan focused on the utilization of cost efficiencies and synergy opportunities that result from the transformational acquisition of Wincor Nixdorf AG (Diebold Nixdorf AG), which aligned employee activities with the Company's goal of delivering cost reductions of approximately $240 by the year 2020. The Company incurred restructuring charges of $2.2 and $14.4 for the three months ended June 30, 2018 and 2017, respectively, and $6.0 and $27.3 for the six months ended June 30, 2018 and 2017, respectively, related to DN2020. As of June 30, 2018, the Company has suspended this plan and does not anticipate additional DN2020 restructuring costs.

Delta Program

At the beginning of the 2015, Diebold Nixdorf AG initiated the Delta Program related to restructuring and realignment. As part of a change process that has spanned several years, the Delta Program is designed to hasten the expansion of software and professional services operations and to further enhance profitability in the services business. This program includes expansion in the high-end fields of managed services and outsourcing. It also involves capacity adjustments on the hardware side, enabling the Company to respond more effectively to market volatility while maintaining its abilities with innovation. There were no charges during the periods presented. As of the date of the acquisition of Diebold Nixdorf AG, the restructuring accrual balance acquired was $45.5 and consisted of severance activities. During the third quarter of 2017, the Company recorded a measurement period

20

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


adjustment of $8.2 to the acquired restructuring accrual resulting in a final fair value of $37.3. As of June 30, 2018, the Company concluded this plan and no additional restructuring costs will be incurred.

Strategic Alliance Plan

During 2016, the Company entered into a strategic alliance plan with the Inspur Group, a Chinese cloud computing and data center company, to develop, manufacture and distribute banking solutions in China. The Company incurred $0.1 restructuring charges during the six months ended June 30, 2018 related to this plan. There were no charges during 2017. The Company anticipates minimal additional restructuring costs to be incurred through the end of the plan.

The following table summarizes the Company's cumulative total restructuring costs by plan as of June 30, 2018:
 
DN2020 Plan
 
Delta Program
 
Strategic Alliance
 
Total

 
 
 
 
 
 
 
Eurasia Banking
$
51.5

 
$
0.5

 
$
8.2

 
$
60.2

Americas Banking
13.6

 
0.2

 

 
13.8

Retail
15.6

 
0.7

 

 
16.3

Corporate
15.1

 
1.8

 

 
16.9

Total
$
95.8

 
$
3.2

 
$
8.2

 
$
107.2


The following table summarizes the Company’s restructuring accrual balances and related activity for the six months ended June 30:
 
 
2018
 
2017
Balance at January 1
 
$
54.0

 
$
89.9

Liabilities incurred
 
6.1

 
27.3

Liabilities paid/settled
 
(23.2
)
 
(37.7
)
Balance at June 30
 
$
36.9

 
$
79.5


Note 11: Debt

Outstanding debt balances were as follows:
 
 
June 30, 2018
 
December 31, 2017
Notes payable
 
 
 
 
Uncommitted lines of credit
 
$
9.6

 
$
16.2

Term Loan A Facility
 
25.9

 
23.0

Delayed Draw Term Loan A Facility
 
18.8

 
17.2

Term Loan B Facility - USD
 
4.8

 
4.8

Term Loan B Facility - Euro
 
4.8

 
5.0

Other
 
4.6

 
0.5

 
 
$
68.5

 
$
66.7

Long-term debt
 
 
 
 
Revolving Facility
 
$
140.0

 
$
75.0

Term Loan A Facility
 
163.9

 
178.3

Delayed Draw Term Loan A Facility
 
218.8

 
226.6

Term Loan B Facility - USD
 
464.3

 
466.7

Term Loan B Facility - Euro
 
474.0

 
489.5

2024 Senior Notes
 
400.0

 
400.0

Other
 
1.7

 
1.4

 
 
1,862.7

 
1,837.5

Long-term deferred financing fees
 
(46.1
)
 
(50.4
)
 
 
$
1,816.6

 
$
1,787.1


As of June 30, 2018, the Company had various international short-term uncommitted lines of credit with borrowing limits of $198.3. The weighted-average interest rate on outstanding borrowings on the short-term uncommitted lines of credit as of June 30,

21

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


2018 and December 31, 2017 was 8.25 percent and 9.17 percent, respectively, and primarily relate to short-term uncommitted lines of credit in India. Short-term uncommitted lines mature in less than one year. The amount available under the short-term uncommitted lines at June 30, 2018 was $188.7.

The cash flows related to debt borrowings and repayments were as follows:
 
 
Six Months Ended
 
 
June 30,
 
 
2018
 
2017
Revolving credit facility (repayments) borrowings, net
 
$
65.0

 
$
119.1

 
 
 
 
 
Other debt borrowings
 
 
 
 
Proceeds from Delayed Draw Term Loan A Facility under the Credit Agreement
 
$

 
$
250.0

Proceeds from Term Loan B Facility - Euro under the Credit Agreement
 

 
73.3

International short-term uncommitted lines of credit borrowings
 
34.2

 
47.0

 
 
$
34.2

 
$
370.3

 
 
 
 
 
Other debt repayments
 
 
 
 
Payments on Term Loan A Facility under the Credit Agreement
 
$
(11.5
)
 
$
(8.6
)
Payments on Delayed Draw Term Loan A Facility under the Credit Agreement
 
(6.3
)
 

Payments on Term Loan B Facility - USD under the Credit Agreement
 
(2.4
)
 
(323.7
)
Payments on Term Loan B Facility - Euro under the Credit Agreement
 
(2.5
)
 
(2.1
)
Payments on European Investment Bank
 

 
(63.1
)
International short-term uncommitted lines of credit and other repayments
 
(34.9
)
 
(19.0
)
 
 
$
(57.6
)
 
$
(416.5
)

The Company has a revolving and term loan credit agreement (the Credit Agreement), with a revolving facility of up to $520.0 (the Revolving Facility) and a secured term loan A facility (the Term Loan A Facility) in the amount of up to $230.0. On December 23, 2020, the Term Loan A Facility will mature and the Revolving Facility will automatically terminate. The weighted-average interest rate on outstanding Revolving Facility borrowings as of June 30, 2018 and December 31, 2017 was 4.13 percent and 3.63 percent, respectively, which is variable based on the London Interbank Offered Rate (LIBOR). The amount available under the Revolving Facility as of June 30, 2018 was $380.0.

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 domestic subsidiaries and mature in April 2024.

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 interest rate with respect to the Term Loan B Facility - USD is based on, at the Company’s option, adjusted LIBOR plus 2.75 percent (with a floor of 0.00 percent) or Alternate Base Rate (ABR) plus 1.75 percent (with an ABR floor of 1.00 percent) and the interest rate with respect to the Term Loan B Facility - Euro is based on adjusted Euro Interbank Offered Rate (EURIBOR) plus 3.00 percent (with a floor of 0.00 percent).

The Incremental Agreement also renewed the repricing premium of 1.00 percent in relation to the Term Loan B Facility, removed the requirement 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

22

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


provides additional restricted payments and investment carveouts in regards to certain assets acquired. All other material provisions under the Credit Agreement were unchanged.

On April 17, 2018, the Company entered into an amendment to its Credit Agreement which modified its calculation of total net debt and its maximum allowable total net debt to the trailing twelve month's adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) leverage ratio (Leverage Ratio). The Credit Agreement financial covenant ratios at June 30, 2018 are as follows:

a maximum leverage ratio of 4.75 to 1.00 as of June 30, 2018 (reducing to 4.50 on December 31, 2018, and then further reduced to 4.25 on December 31, 2019); and
a minimum adjusted EBITDA to net interest expense coverage ratio (Coverage Ratio) of not less than 3.00 to 1.00

Below is a summary of financing and replacement facilities information:
Financing and Replacement Facilities
 
Interest Rate
Index and Margin
 
Maturity/Termination Dates
 
Initial Term (Years)
Credit Agreement facilities
 
 
 
 
 
 
Revolving Facility
 
LIBOR + 2.00%
 
December 2020
 
5
Term Loan A Facility
 
LIBOR + 2.00%
 
December 2020
 
5
Delayed Draw Term Loan A Facility
 
LIBOR + 2.00%
 
December 2020
 
5
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. As of June 30, 2018, the Company was in compliance with the financial and other covenants in its debt agreements. However, the Company’s current operating performance has been below expectations that existed at the time that the financial covenant levels were established, and if financial performance does not improve, we anticipate noncompliance with the net debt to EBITDA financial covenant at the end of the third quarter of 2018. The Company is in process of seeking an amendment to that covenant or obtaining a waiver thereof from our lenders. There can be no assurance that the Company will be successful in obtaining an amendment or waiver on commercially reasonable terms or at all.

Note 12: Redeemable Noncontrolling Interests

Changes in the Company's redeemable noncontrolling interests balance are illustrated in the following table:
 
 
2018
 
2017
Balance at January 1
 
$
492.1

 
$
44.1

Other comprehensive income
 
(12.1
)
 
(18.6
)
Redemption value adjustment
 
(8.1
)
 
39.4

Redemption of shares
 
(3.3
)
 
(2.6
)
Reclassification of noncontrolling interest
 

 
386.7

Balance at June 30
 
$
468.6

 
$
449.0


The Domination and Profit and Loss Transfer Agreement between Diebold Holding Germany Inc. & Co. KGaA (Diebold KGaA), a wholly-owned subsidiary of the Company, and Diebold Nixdorf AG (the DPLTA) became effective by entry in the commercial register at the local court of Paderborn (Germany) on February 14, 2017, at which time, the carrying value of the noncontrolling interest related to the Diebold Nixdorf AG ordinary shares the Company did not acquire of $386.7 and was reclassified to redeemable

23

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


noncontrolling interest during the first quarter of 2017. For the period of time that the DPLTA is effective, the noncontrolling interest related to the Diebold Nixdorf AG ordinary shares the Company did not acquire will remain in redeemable noncontrolling interest and presented outside of equity in the condensed consolidated balance sheets of the Company. As of June 30, 2018 and December 31, 2017, the balance related to the redeemable noncontrolling interest related to the Diebold Nixdorf AG ordinary shares the Company did not acquire was $439.2 and $454.6, respectively. The change in the balance is related to the euro weakening.

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. In early August 2018, Diebold Nixdorf AG shareholders have requested redemption of approximately 2.4 shares with a value of $160. The Company expects to utilize cash on hand and borrowings under its Revolving Facility to fund the obligations. The ultimate timing and amount of any future cash payments related to the DPLTA are uncertain.

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


24

Table of Contents
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of June 30, 2018
Notes to Condensed Consolidated Financial Statements (continued)
(unaudited)
(in millions, except per share amounts)


Note 13: Equity

The following table presents changes in shareholders' equity attributable to Diebold Nixdorf, Incorporated and the noncontrolling
interests:
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2018
 
2017
 
2018
 
2017
Diebold Nixdorf, Incorporated shareholders' equity
 
 
 
 
 
 
 
 
Balance at beginning of period
 
$
426.9

 
$
533.1

 
$
470.0

 
$
591.4

Comprehensive income (loss) attributable to Diebold Nixdorf, Incorporated
 
(206.2
)
 
53.5

 
(286.3
)
 
39.6

Common shares
 
0.3

 
0.1

 
0.9

 
0.7

Additional capital (1)
 
6.4

 
8.1

 
19.4

 
(24.7
)
Treasury shares
 
(0.4
)
 
0.1

 
(2.9
)
 
(4.5
)
Dividends paid
 

 
(7.7
)
 
(7.7
)
 
(15.3
)
Adoption of accounting standards
 

 

 
33.6

 

Balance at end of period
 
$
227.0

 
$
587.2

 
$
227.0

 
$
587.2

 
 
 
 
 
 
 
 
 
Noncontrolling interests
 
 
 
 
 
 
 
 
Balance at beginning of period
 
$
36.2

 
$
34.8

 
$
36.8

 
$
433.4

Comprehensive income attributable to noncontrolling interests, net
 
3.3

 
8.7

 
10.9

 
15.3

Reclassification to redeemable noncontrolling interest
 

 

 

 
(386.7
)
Reclassification of guaranteed dividend to accrued liabilities
 
(3.9
)
 
(6.0
)
 
(8.3
)
 
(11.7
)
Distributions to noncontrolling interest holders
 

 

 
(0.5
)
 
(12.8
)
Liquidation of noncontrolling interests
 
(1.5
)
 

 
(4.8
)
 

Balance at end of period
 
$
34.1

 
$
37.5

 
$
34.1

 
$
37.5

(1) 
The decrease for the six months ended June 30, 2017 is primarily attributable to the redemption value adjustment to the redeemable noncontrolling interest.

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 June 30, 2018:
 
 
Translation
 
Foreign Currency Hedges
 
Interest Rate Hedges
 
Pension and Other Post-retirement Benefits
 
Other
 
Accumulated Other Comprehensive Income (Loss)
Balance at March 31, 2018
 
$
(107.7
)
 
$
(8.9
)
 
$
12.0

 
$
(101.0
)
 
$
0.1

 
$
(205.5
)
Other comprehensive income (loss) before reclassifications (1)
 
(79.8
)
 
8.7

 
0.5

 

 

 
(70.6
)
Amounts reclassified from AOCI
 

 

 
0.8

 
1.8

 

 
2.6

Net current-period other comprehensive income (loss) (1)
 
(79.8
)
 
8.7

 
1.3

 
1.8