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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2023
OR
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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
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Diebold Nixdorf, Incorporated
(Exact name of registrant as specified in its charter)
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| Ohio |
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34-0183970 |
(State or other jurisdiction of
incorporation or organization) |
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(IRS Employer
Identification Number) |
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50 Executive Parkway, P.O. Box 2520 |
Hudson |
Ohio |
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44236 |
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(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code:
(330) 490-4000
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Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
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Common shares, $1.25 par value per share |
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DBD |
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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 ☒
No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and "emerging growth company" in Rule
12b-2 of the Exchange Act.
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Large Accelerated Filer |
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Accelerated Filer |
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Non-accelerated Filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No ☒
Number of shares of common stock outstanding as of May 24,
2023 was 80,037,406.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Form 10-Q
Index
Part I – Financial Information
Item 1: Financial Statements
`
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in millions, except share and per share amounts)
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March 31, 2023 |
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December 31, 2022 |
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(Unaudited) |
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ASSETS |
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Current assets |
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Cash, cash equivalents, and restricted cash |
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$ |
246.4 |
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$ |
319.1 |
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Short-term investments |
|
16.6 |
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24.6 |
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Trade receivables, less allowances for doubtful accounts of $32.4
and $34.5, respectively
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627.1 |
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612.2 |
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Inventories |
|
639.5 |
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588.1 |
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Prepaid expenses |
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53.2 |
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50.5 |
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Current assets held for sale |
|
6.9 |
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7.9 |
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Other current assets |
|
219.5 |
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168.5 |
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Total current assets |
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1,809.2 |
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1,770.9 |
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Securities and other investments |
|
7.4 |
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7.6 |
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Property, plant and equipment, net of accumulated depreciation and
amortization of $490.1 and $479.4, respectively
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120.1 |
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120.7 |
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Goodwill |
|
702.2 |
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702.3 |
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Customer relationships, net |
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199.9 |
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213.6 |
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Other assets |
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251.9 |
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249.9 |
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Total assets |
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$ |
3,090.7 |
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$ |
3,065.0 |
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LIABILITIES AND EQUITY |
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Current liabilities |
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Notes payable |
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$ |
83.7 |
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$ |
24.0 |
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Accounts payable |
|
636.4 |
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611.6 |
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Deferred revenue |
|
486.7 |
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453.2 |
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Payroll and other benefits liabilities |
|
121.9 |
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107.9 |
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Current liabilities held for sale |
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8.5 |
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6.8 |
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Other current liabilities |
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405.7 |
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401.4 |
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Total current liabilities |
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1,742.9 |
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1,604.9 |
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Long-term debt |
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2,571.7 |
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2,585.8 |
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Pensions, post-retirement and other benefits |
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41.9 |
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40.6 |
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Deferred income taxes |
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100.7 |
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96.6 |
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Other liabilities |
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107.1 |
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108.2 |
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Equity |
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Diebold Nixdorf, Incorporated shareholders' equity |
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Preferred shares, no par value, 1,000,000 authorized shares, none
issued
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— |
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— |
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Common shares, $1.25 par value, 125,000,000 authorized shares,
96,563,247 and 95,779,719 issued shares, 79,609,121 and 79,103,450
outstanding shares, respectively
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120.8 |
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119.8 |
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Additional capital |
|
831.8 |
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831.5 |
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Retained earnings (accumulated deficit) |
|
(1,517.8) |
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|
(1,406.7) |
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Treasury shares, at cost (16,954,126 and 16,676,269 shares,
respectively)
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|
(586.4) |
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|
(585.6) |
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Accumulated other comprehensive loss |
|
(353.7) |
|
|
(360.0) |
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Equity warrants |
|
20.1 |
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20.1 |
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Total Diebold Nixdorf, Incorporated shareholders'
equity |
|
(1,485.2) |
|
|
(1,380.9) |
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Noncontrolling interests |
|
11.6 |
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9.8 |
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Total equity |
|
(1,473.6) |
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(1,371.1) |
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Total liabilities and equity |
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$ |
3,090.7 |
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$ |
3,065.0 |
|
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)
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Three months ended |
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March 31, |
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2023 |
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2022 |
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Net sales |
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Services |
$ |
516.4 |
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$ |
526.2 |
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Products |
341.7 |
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303.6 |
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858.1 |
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829.8 |
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Cost of sales |
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Services |
363.0 |
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374.2 |
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Products |
285.8 |
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270.3 |
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648.8 |
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644.5 |
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Gross profit |
209.3 |
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185.3 |
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Selling and administrative expense |
183.8 |
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181.0 |
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Research, development and engineering expense |
26.4 |
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32.3 |
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Loss on sale of assets, net |
0.3 |
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0.2 |
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Impairment of assets |
0.9 |
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55.2 |
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211.4 |
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268.7 |
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Operating loss |
(2.1) |
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(83.4) |
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Other income (expense) |
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Interest income |
1.7 |
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1.3 |
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Interest expense |
(81.9) |
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(48.1) |
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Foreign exchange loss, net |
(10.6) |
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(4.7) |
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Miscellaneous, net |
2.6 |
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2.6 |
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Loss before taxes |
(90.3) |
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(132.3) |
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Income tax expense |
21.1 |
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50.9 |
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Equity in loss of unconsolidated subsidiaries |
(0.1) |
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(0.7) |
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Net loss |
(111.5) |
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(183.9) |
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Net loss attributable to noncontrolling interests |
(0.4) |
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(0.8) |
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Net loss attributable to Diebold Nixdorf, Incorporated |
$ |
(111.1) |
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$ |
(183.1) |
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Basic and diluted weighted-average shares outstanding |
79.3 |
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78.7 |
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Net loss attributable to Diebold Nixdorf, Incorporated |
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Basic and diluted loss per share |
$ |
(1.40) |
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$ |
(2.33) |
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See accompanying notes to condensed consolidated financial
statements.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(Loss)
(unaudited)
(in millions)
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Three months ended |
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March 31, |
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2023 |
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2022 |
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Net loss |
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$ |
(111.5) |
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$ |
(183.9) |
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Other comprehensive loss, net of tax |
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Translation adjustment |
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6.9 |
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11.2 |
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Foreign currency hedges (net of tax of $0.0 and $0.0,
respectively)
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— |
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(1.0) |
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Interest rate hedges |
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Net income recognized in other comprehensive income (net of tax of
$0.0 and $0.6, respectively)
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0.3 |
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2.9 |
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Reclassification adjustment for amounts recognized in net
income |
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— |
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(0.6) |
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0.3 |
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2.3 |
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Pension and other post-retirement benefits |
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Net actuarial gain amortized (net of tax of $0.5 and $0.3,
respectively)
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1.3 |
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0.7 |
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Other |
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— |
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0.7 |
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Other comprehensive loss, net of tax |
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8.5 |
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13.9 |
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Comprehensive loss |
|
(103.0) |
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(170.0) |
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Less: Comprehensive loss attributable to noncontrolling
interests |
|
1.8 |
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— |
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Comprehensive loss attributable to Diebold Nixdorf,
Incorporated |
|
$ |
(104.8) |
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$ |
(170.0) |
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See accompanying notes to condensed consolidated financial
statements.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in millions)
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Three months ended |
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March 31, |
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2023 |
|
2022 |
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Cash flow from operating activities |
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Net loss |
|
$ |
(111.5) |
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$ |
(183.9) |
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Adjustments to reconcile net loss to cash flow used by operating
activities: |
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Depreciation and amortization |
|
11.7 |
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14.5 |
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Amortization of Wincor Nixdorf purchase accounting intangible
assets |
|
17.7 |
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18.5 |
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Amortization of deferred financing costs into interest
expense |
|
13.6 |
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4.3 |
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Share-based compensation |
|
1.3 |
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1.7 |
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Loss on sale of assets, net |
|
0.3 |
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0.2 |
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Impairment of assets |
|
0.9 |
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55.2 |
|
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Deferred income taxes |
|
2.9 |
|
|
— |
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Other |
|
0.8 |
|
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— |
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Changes in certain assets and liabilities |
|
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Trade receivables |
|
(4.4) |
|
|
35.2 |
|
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Inventories |
|
(39.6) |
|
|
(83.0) |
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Accounts payable |
|
15.4 |
|
|
(77.7) |
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Deferred revenue |
|
25.5 |
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54.2 |
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Sales tax and net value added tax |
|
(24.3) |
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(24.8) |
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Income taxes |
|
(2.8) |
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38.1 |
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Accrued salaries, wages and commissions |
|
11.3 |
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(21.3) |
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Restructuring accrual |
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(23.4) |
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(11.5) |
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Warranty liability |
|
(1.1) |
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(0.4) |
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Pension and post retirement benefits |
|
3.0 |
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(22.5) |
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Certain other assets and liabilities |
|
6.8 |
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(23.0) |
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Net cash used by operating activities |
|
(95.9) |
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(226.2) |
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Cash flow from investing activities |
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Capital expenditures |
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(5.7) |
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(4.0) |
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Capitalized software development |
|
(5.4) |
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(7.6) |
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Proceeds from divestitures, net of cash divested |
|
— |
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5.8 |
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Proceeds from maturities of investments |
|
71.9 |
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|
126.8 |
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Payments for purchases of investments |
|
(62.5) |
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|
(126.8) |
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Net cash used by investing activities |
|
(1.7) |
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(5.8) |
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Cash flow from financing activities |
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Revolving credit facility borrowings, net |
|
22.7 |
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75.0 |
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Other debt borrowings |
|
2.3 |
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0.3 |
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Other debt repayments |
|
(2.1) |
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(4.7) |
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Other |
|
(1.8) |
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(5.0) |
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Net cash provided by financing activities |
|
21.1 |
|
|
65.6 |
|
|
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
|
1.9 |
|
|
1.5 |
|
|
Change in cash, cash equivalents and restricted cash |
|
(74.6) |
|
|
(164.9) |
|
|
Add: Cash included in assets held for sale at beginning of
period |
|
2.8 |
|
|
3.1 |
|
|
Less: Cash included in assets held for sale at end of
period |
|
0.9 |
|
|
2.4 |
|
|
Cash, cash equivalents and restricted cash at the beginning of the
period |
|
319.1 |
|
|
388.9 |
|
|
Cash, cash equivalents and restricted cash at the end of the
period |
|
$ |
246.4 |
|
|
$ |
224.7 |
|
See accompanying notes to condensed consolidated financial
statements.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(unaudited)
(in millions, except share and per share amounts)
Note 1: Basis of Presentation
The accompanying unaudited condensed consolidated financial
statements of Diebold Nixdorf, Incorporated and its subsidiaries
(collectively, the Company) have been prepared in accordance with
the instructions to Form 10-Q and therefore do not include all
information and footnotes necessary for a fair presentation of
financial position, results of operations and cash flows in
conformity with accounting principles generally accepted in the
United States (U.S. GAAP); however, such information reflects all
adjustments (consisting solely of normal recurring adjustments)
that are, in the opinion of management, necessary for a fair
statement of the results for the interim periods
presented.
The condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes
contained in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2022. 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, 2023 are not necessarily indicative of results to be expected
for the full year.
The Company has reclassified the presentation of certain prior-year
information to conform to the current presentation.
Going Concern Assessment
The Company's condensed consolidated financial statements included
herein have been prepared using the going concern basis of
accounting, which contemplates continuity of operations,
realization of assets, and satisfaction of liabilities in the
normal course of business. Pursuant to the requirements of ASC
Topic 205-40, Disclosure of Uncertainties about an Entity’s Ability
to Continue as a Going Concern, management must evaluate whether
there are conditions or events, considered in the aggregate, that
raise substantial doubt about the Company’s ability to continue as
a going concern for one year from the date the consolidated
financial statements are issued. As part of this assessment, based
on conditions that are known and reasonably knowable to us, the
Company considers various scenarios, forecasts, projections, and
estimates, and makes certain key assumptions, including the timing
and nature of projected cash expenditures or programs, and the
Company’s ability to delay or curtail those expenditures or
programs, if necessary, among other factors. This evaluation does
not take into consideration the potential mitigating effect of
management’s plans that have not been fully implemented or are not
within control of the Company as of the date the condensed
consolidated financial statements are issued.
As previously disclosed, the Company is currently working to
improve its operating performance and its cash, liquidity and
financial position. In addition, the Company has been in
discussions with its lenders with respect to a long-term solution
for the Company’s capital structure, leverage ratio and liquidity
needs. As a result of these discussions, on May 30, 2023, the
Company and certain of its direct and indirect subsidiaries
(collectively, the Company Parties) entered into a Restructuring
Support Agreement (the Restructuring Support Agreement) with
certain holders (collectively, the Consenting Creditors) of: (i)
obligations under the Superpriority Credit Agreement (as defined in
Note 9); (ii) term loan obligations under the New Term Loan Credit
Agreement (as defined in Note 9); (iii) the 2025 Senior Notes (as
defined in Note 9); and (iv) the 2L Notes (as defined in Note 9).
The Consenting Creditors collectively hold the following
approximate amounts of the Company’s outstanding secured debt
obligations: (a) approximately 80% of the Company’s Superpriority
Credit Agreement obligations; (b) approximately 79% of the
Company’s New Term Loan Credit Agreement obligations; (c)
approximately 78% of the Company’s 2025 Senior Notes obligations;
and (d) approximately 59% of the Company’s 2L Notes
obligations.
The Company’s ability to continue as a going concern is contingent
upon, among other things, successful implementation of the
Restructuring Transactions (as defined in Note 9) contemplated in
the Restructuring Support Agreement, subject to the approval of the
Bankruptcy Court (as defined in Note 9) and the Dutch Court (as
defined in Note 9). There can be no certainty that the
Restructuring Transactions will be effected or that disruption from
the Chapter 11 Cases (as defined in Note 9) and Dutch Scheme
Proceedings (as defined in Note 9) contemplated by the
Restructuring Support Agreement (as defined below) will not
interfere with the Company’s business. As of March 31, 2023
substantial doubt exists regarding our ability to continue as a
going concern.
The inclusion of the “going concern” uncertainty paragraph in the
independent registered public accounting firm’s report in the
Company's annual report on Form 10-K for the year ended December
31, 2023, covering the Company's audited consolidated
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
financial statements would have constituted a default under the
agreements governing the ABL Facility (as defined in Note 9), the
Superpriority Facility (as defined in Note 9) and the New Term
Loans (as defined in Note 9); however, the requisite lenders under
each of these facilities have waived such default.
The consolidated financial statements do not include any
adjustments to the carrying amounts and classification of assets,
liabilities, and reported expenses that may be necessary if the
Company were unable to continue as a going concern.
Recently Issued Accounting Guidance
The Company considers the applicability and impact of all
Accounting Standards Updates (ASUs) issued by the Financial
Accounting Standards Board (FASB).
In March 2020, the FASB issued guidance that provides optional
expedients and exceptions for applying generally accepted
accounting principles to contracts, hedging relationships, and
other transactions affected by the transition away from reference
rates expected to be discontinued to alternative reference rates.
The guidance was effective upon issuance and may be applied
prospectively to contract modifications made and hedging
relationships entered into on or before December 31, 2024. The
standard does not materially impact the Company's consolidated
financial statements.
Although there are other new accounting pronouncements issued by
the FASB, the Company does not believe these pronouncements will
have a material impact on its consolidated financial
statements.
Note 2: Loss Per Share
Basic loss per share is based on the weighted-average number of
common shares outstanding. Diluted loss per share includes the
dilutive effect of potential common shares outstanding. Under the
two-class method of computing loss per share, non-vested
share-based payment awards that contain rights to receive
non-forfeitable dividends are considered participating securities.
The Company’s participating securities include restricted stock
units (RSUs), director deferred shares and shares that vested but
were deferred by employees. The Company calculated basic and
diluted loss per share under both the treasury stock method and the
two-class method. For the three months ended March 31, 2023 and
2022, there were no differences in the loss per share amounts
calculated using the two methods. Accordingly, the treasury stock
method is disclosed below; however, because the Company is in a net
loss position, dilutive shares of 2.1 and 1.4 for the three months
ended March 31, 2023 and 2022, respectively, are excluded from the
shares used in the computation of diluted loss per
share.
The following table represents amounts used in computing loss per
share and the effect on the weighted-average number of shares of
dilutive potential common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
March 31, |
|
|
|
|
2023 |
|
2022 |
|
|
|
|
|
Numerator |
|
|
|
|
|
|
|
|
|
Loss used in basic and diluted loss per share |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(111.5) |
|
|
$ |
(183.9) |
|
|
|
|
|
|
Net loss attributable to noncontrolling interests |
|
(0.4) |
|
|
(0.8) |
|
|
|
|
|
|
Net loss attributable to Diebold Nixdorf, Incorporated |
|
$ |
(111.1) |
|
|
$ |
(183.1) |
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares used in basic and diluted
loss per share
(1)
|
|
79.3 |
|
|
78.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Diebold Nixdorf, Incorporated |
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share |
|
$ |
(1.40) |
|
|
$ |
(2.33) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Shares
of 2.2 and 4.0 for the three months ended March 31, 2023 and 2022,
respectively, are excluded from the computation of diluted loss per
share because the effects are anti-dilutive, irrespective of the
net loss position.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
Note 3: Income Taxes
The effective tax rate on the loss from continuing operations was
(23.4) percent for the three months ended March 31, 2023. The tax
provision for the three months ended March 31, 2023 was
attributable to the jurisdictional mix of pre-tax income and
losses, discrete tax adjustments for current tax expense related to
tax return to provision differences and changes in permanent
reinvestment assertions. The Company calculated its income tax
expense for the three months ended March 31, 2023 using the actual
effective tax rate year to date, as opposed to the estimated annual
effective tax rate, as provided in Accounting Standards
Codification (ASC) 740-270-30-18. See Note 9 for further details
regarding the refinancing and going concern
assessment.
The effective tax rate on the loss from continuing operations was
(38.3) percent for the three months ended March 31, 2022. The tax
provision for the three months ended March 31, 2022 was primarily
attributable to the jurisdictional mix of income and loss, in
addition to various discrete tax adjustments for uncertain tax
positions, expired and forfeited stock compensation, state tax rate
benefit, and a change in valuation allowance.
Note 4: Inventories
Major classes of inventories are summarized as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|
December 31, 2022 |
|
Raw materials and work in process |
|
$ |
220.0 |
|
|
$ |
200.6 |
|
|
Finished goods |
|
247.9 |
|
|
229.4 |
|
|
Total product inventories |
|
467.9 |
|
|
430.0 |
|
|
|
|
|
|
|
|
Service parts |
|
171.6 |
|
|
158.1 |
|
|
Total inventories |
|
$ |
639.5 |
|
|
$ |
588.1 |
|
Note 5: Investments
The Company’s investments, primarily held by our subsidiaries in
Brazil, consist of certificates of deposit that are recorded at
fair value based upon quoted market prices. Changes in fair value
are recognized in interest income, determined using the specific
identification method, and were minimal. There were no sales of
securities or proceeds from the sale of securities prior to the
maturity date for the three months ended March 31, 2023 and
2022.
The Company has deferred compensation plans that enable certain
employees to defer receipt of a portion of their cash, 401(k) or
share-based compensation and enable non-employee directors to defer
receipt of director fees at the participants’
discretion.
For deferred cash-based compensation, the Company established rabbi
trusts (refer to Note 13), which are recorded at fair value of the
underlying securities and presented within securities and other
investments. The related deferred compensation liability is
recorded at fair value and presented within other long-term
liabilities. Realized and unrealized gains and losses on marketable
securities in the rabbi trusts are recognized in interest
income.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
The Company’s investments subject to fair value measurement consist
of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost Basis |
|
Unrealized
Gain |
|
Fair Value |
|
As of March 31, 2023 |
|
|
|
|
|
|
|
Short-term investments |
|
|
|
|
|
|
|
Certificates of deposit |
|
$ |
16.6 |
|
|
$ |
— |
|
|
$ |
16.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term investments |
|
|
|
|
|
|
|
Assets held in a rabbi trust |
|
$ |
3.8 |
|
|
$ |
0.4 |
|
|
$ |
4.2 |
|
|
|
|
|
|
|
|
|
|
As of December 31, 2022 |
|
|
|
|
|
|
|
Short-term investments |
|
|
|
|
|
|
|
Certificates of deposit |
|
$ |
24.6 |
|
|
$ |
— |
|
|
$ |
24.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term investments |
|
|
|
|
|
|
|
Assets held in a rabbi trust |
|
$ |
4.3 |
|
|
$ |
0.1 |
|
|
$ |
4.4 |
|
Securities and other investments also includes cash surrender value
of insurance contracts of $3.2 as of March 31, 2023 and
December 31, 2022.
The Company has certain non-consolidated joint ventures that are
not significant subsidiaries and are accounted for under the equity
method of accounting. The Company owns 48.1
percent of Inspur Financial Information System Co.,
Ltd. (Inspur JV) and 49.0
percent of Aisino-Wincor Retail & Banking Systems
(Shanghai) Co., Ltd. (Aisino JV). The Company engages in
transactions in the ordinary course of business with these joint
ventures. As of March 31, 2023, the Company had accounts
receivable and accounts payable balances with these joint ventures
of $16.9
and $32.0,
respectively. As of December 31, 2022, the Company had accounts
receivable and accounts payable balances with these joint ventures
of $18.9
and $25.7.
These joint venture related balances are included in trade
receivables, less allowances for doubtful accounts and accounts
payable on the condensed consolidated balance sheets.
Note 6: Goodwill and Other Assets
The Company has the following reportable operating segments:
Banking and Retail. This is described in further detail in Note 17,
and is consistent with how the Chief Executive Officer, the chief
operating decision maker (CODM), makes key operating decisions,
allocates resources, and assesses the performance of the
business.
The sustained decline in the Company’s stock price and its market
capitalization, in addition to the continuing substantial doubt
about the Company's ability to continue as a going concern (refer
to Note 9) were in combination considered a triggering event
indicating that it was possible that the fair value of the
reporting units could be less than their carrying amounts,
including goodwill. Thus, the Company performed an interim
quantitative goodwill impairment test as of March 31, 2023 using a
combination of the income valuation and market approach
methodologies. The determination of the fair value of the reporting
units requires significant estimates and assumptions, including
significant unobservable inputs. The key inputs included, but were
not limited to, discount rates, terminal growth rates, market
multiple data from selected guideline public companies,
management’s internal forecasts which include numerous assumptions
such as projected net sales, gross profit, sales mix, operating and
capital expenditures and earnings before interest and taxes
margins, among others.
No impairment resulted from the interim quantitative goodwill
impairment test. As of our interim impairment testing date of March
31, 2023, the indicated fair value was in excess of carrying value
for both the Banking and Retail segments by approximately 43
percent and 34 percent, respectively.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
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.
The changes in the carrying amount of goodwill for the three months
ended March 31, 2023 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking |
|
Retail |
|
Total |
|
Goodwill |
|
$ |
903.6 |
|
|
$ |
269.6 |
|
|
$ |
1,173.2 |
|
|
Accumulated impairment |
|
(413.7) |
|
|
(57.2) |
|
|
(470.9) |
|
|
Balance at January 1, 2023 |
|
$ |
489.9 |
|
|
$ |
212.4 |
|
|
$ |
702.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustment |
|
(0.1) |
|
|
— |
|
|
(0.1) |
|
|
Goodwill |
|
$ |
903.5 |
|
|
$ |
269.6 |
|
|
$ |
1,173.1 |
|
|
|
|
|
|
|
|
|
Accumulated impairment |
|
(413.7) |
|
|
(57.2) |
|
|
(470.9) |
|
|
Balance at March 31, 2023 |
|
$ |
489.8 |
|
|
$ |
212.4 |
|
|
$ |
702.2 |
|
The following summarizes information on intangible assets by major
category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|
December 31, 2022 |
|
Weighted-average remaining useful lives |
Gross
Carrying
Amount |
|
Accumulated
Amortization |
|
Net
Carrying
Amount |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying
Amount |
|
Customer relationships, net |
3.0 years |
$ |
675.3 |
|
|
$ |
(475.4) |
|
|
$ |
199.9 |
|
|
$ |
662.3 |
|
|
$ |
(448.7) |
|
|
$ |
213.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized Software Development |
2.4 years |
253.3 |
|
|
(209.6) |
|
|
43.7 |
|
|
245.2 |
|
|
(202.7) |
|
|
42.5 |
|
|
Development costs non-software |
0.4 years |
49.7 |
|
|
(49.6) |
|
|
0.1 |
|
|
48.7 |
|
|
(48.7) |
|
|
— |
|
|
Other intangibles |
4.7 years |
49.3 |
|
|
(47.9) |
|
|
1.4 |
|
|
48.7 |
|
|
(47.2) |
|
|
1.5 |
|
|
Other intangible assets, net |
|
352.3 |
|
|
(307.1) |
|
|
45.2 |
|
|
342.6 |
|
|
(298.6) |
|
|
44.0 |
|
|
Total |
|
$ |
1,027.6 |
|
|
$ |
(782.5) |
|
|
$ |
245.1 |
|
|
$ |
1,004.9 |
|
|
$ |
(747.3) |
|
|
$ |
257.6 |
|
Costs incurred for the development of external-use software that
will be sold, leased or otherwise marketed are capitalized when
technological feasibility has been established. These costs are
included within other assets and are amortized on a straight-line
basis over the estimated useful lives ranging from three to five
years. Amortization begins when the product is available for
general release. Costs capitalized include direct labor and related
overhead costs. Costs incurred prior to technological feasibility
or after general release are expensed as incurred. The Company
performs periodic reviews to ensure that unamortized program costs
remain recoverable from future revenue. If future revenue does not
support the unamortized program costs, the amount by which the
unamortized capitalized cost of a software product exceeds the net
realizable value is impaired.
The following table identifies the activity relating to total
capitalized software development:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
Beginning balance as of January 1 |
|
$ |
42.5 |
|
|
$ |
43.2 |
|
|
Capitalization |
|
5.4 |
|
|
7.6 |
|
|
Amortization |
|
(4.7) |
|
|
(5.3) |
|
|
Other |
|
0.5 |
|
|
(0.9) |
|
|
|
|
|
|
|
Ending balance as of March 31 |
|
$ |
43.7 |
|
|
$ |
44.6 |
|
The Company's total amortization expense, excluding amounts related
to deferred financing costs, was $23.3 and $24.3 for the three
months ended March 31, 2023 and 2022, respectively.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
Note 7: Product Warranties
The Company provides its customers a standard manufacturer’s
warranty and records, at the time of the sale, a corresponding
estimated liability for potential warranty costs. Estimated future
obligations due to warranty claims are based upon historical
factors such as labor rates, average repair time, travel time,
number of service calls per machine and cost of replacement
parts.
Changes in the Company’s warranty liability balance are illustrated
in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
Beginning balance as of January 1 |
|
$ |
28.3 |
|
|
$ |
37.2 |
|
|
Current period accruals |
|
9.1 |
|
|
4.9 |
|
|
Current period settlements |
|
(10.2) |
|
|
(5.3) |
|
|
|
|
|
|
|
Currency translation adjustment |
|
0.7 |
|
|
0.5 |
|
|
Ending balance as of March 31 |
|
$ |
27.9 |
|
|
$ |
37.3 |
|
Note 8: Restructuring
In the second quarter of 2022, the Company announced a new
initiative to streamline operations, drive efficiencies and
digitize processes, targeting annualized cost savings of more than
$150.0 by the end of 2023. During the three months ended March 31,
2023, the Company incurred $15.0 of restructuring and
transformation costs. During the quarter $4.8 that was accrued for
future severance payments under an ongoing severance benefit
program, while the remainder of the expenses incurred primarily
relates to transitioning personnel and consultant fees in relation
to the transformation process.
The following table summarizes the impact of the Company’s
restructuring and transformation charges on the consolidated
statements of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
|
March 31, |
|
|
|
|
|
2023 |
|
2022 |
|
|
|
|
|
Cost of sales – services |
|
$ |
0.6 |
|
|
$ |
— |
|
|
|
|
|
|
Cost of sales – products |
|
0.3 |
|
|
— |
|
|
|
|
|
|
Selling and administrative expense |
|
13.0 |
|
|
— |
|
|
|
|
|
|
Research, development and engineering expense |
|
0.6 |
|
|
— |
|
|
|
|
|
|
Loss on sale of assets, net |
|
0.5 |
|
|
— |
|
|
|
|
|
|
Total |
|
$ |
15.0 |
|
|
$ |
— |
|
|
|
|
|
The following table summarizes the Company’s severance accrual
balance and related activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
|
|
|
Beginning balance as of January 1 |
|
$ |
44.2 |
|
|
$ |
35.3 |
|
|
|
|
Severance accruals |
|
4.8 |
|
|
— |
|
|
|
|
Liabilities acquired |
|
— |
|
|
— |
|
|
|
|
Payouts/Settlements |
|
(28.2) |
|
|
(11.6) |
|
|
|
|
Other |
|
0.3 |
|
|
(0.3) |
|
|
|
|
Ending balance as of March 31 |
|
$ |
21.1 |
|
|
$ |
23.4 |
|
|
|
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
Note 9: Debt
Outstanding debt balances were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|
December 31, 2022 |
|
Notes payable – current |
|
|
|
|
|
Uncommitted lines of credit |
|
$ |
3.9 |
|
|
$ |
0.9 |
|
|
FILO Facility |
|
58.9 |
|
|
— |
|
|
2023 Term Loan B Facility - USD |
|
12.8 |
|
|
12.9 |
|
|
2023 Term Loan B Facility - Euro |
|
5.2 |
|
|
5.1 |
|
|
2025 New Term Loan B Facility - USD |
|
5.3 |
|
|
5.3 |
|
|
2025 New Term Loan B Facility - EUR |
|
1.1 |
|
|
1.1 |
|
|
Other |
|
0.3 |
|
|
1.7 |
|
|
|
|
$ |
87.5 |
|
|
$ |
27.0 |
|
|
Short-term deferred financing fees |
|
(3.8) |
|
|
(3.0) |
|
|
|
|
$ |
83.7 |
|
|
$ |
24.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
2024 Senior Notes |
|
72.1 |
|
|
72.1 |
|
|
2025 Senior Secured Notes - USD |
|
2.7 |
|
|
2.7 |
|
|
2025 Senior Secured Notes - EUR |
|
4.8 |
|
|
4.7 |
|
|
2026 Asset Backed Loan (ABL) |
|
151.7 |
|
|
182.0 |
|
|
2025 New Term Loan B Facility - USD |
|
528.1 |
|
|
529.5 |
|
|
2025 New Term Loan B Facility - EUR |
|
96.7 |
|
|
95.5 |
|
|
2026 2L Notes |
|
333.6 |
|
|
333.6 |
|
|
2025 New Senior Secured Notes - USD |
|
718.1 |
|
|
718.1 |
|
|
2025 New Senior Secured Notes - EUR |
|
387.1 |
|
|
379.7 |
|
|
2025 Superpriority Term Loans |
|
400.6 |
|
|
400.6 |
|
|
Other |
|
5.3 |
|
|
6.3 |
|
|
|
|
$ |
2,700.8 |
|
|
$ |
2,724.8 |
|
|
Long-term deferred financing fees |
|
(129.1) |
|
|
(139.0) |
|
|
|
|
$ |
2,571.7 |
|
|
$ |
2,585.8 |
|
On December 29, 2022 (the Settlement Date), the Company completed a
series of transactions with certain key financial stakeholders to
refinance certain debt with near-term maturities and provide the
Company with new capital. The transactions and related material
definitive agreements entered into by the Company are described
below.
2024 Senior Notes
On the Settlement Date, the Company completed a private exchange
offer and consent solicitation with respect to the outstanding
8.50% Senior Notes due 2024, which included (i) a private offer to
certain eligible holders to exchange any and all 2024 Senior Notes
for units (the Units) consisting of (a) new 8.50%/12.50% Senior
Secured PIK Toggle Notes due 2026 issued by the Company (the 2L
Notes) and (b) a number of warrants (the New Warrants and, together
with the Units and the New Notes, the New Securities) to purchase
common shares, par value $1.25 per share, of the Company (Common
Shares) and (ii) a related consent solicitation to adopt certain
proposed amendments to the indenture governing the 2024 Senior
Notes (the 2024 Senior Notes Indenture) to eliminate certain of the
covenants, restrictive provisions and events of default intended to
protect holders, among other things, from such indenture
(collectively, the 2024 Exchange Offer and Consent
Solicitation).
Pursuant to the 2024 Exchange Offer and Consent Solicitation, the
Company accepted $327.9 in aggregate principal amount of the 2024
Senior Notes (representing 81.97% of the aggregate principal amount
outstanding of the 2024 Senior Notes) tendered
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
for exchange and issued $333.6 in aggregate principal amount of
Units consisting of $333.6 in aggregate principal amount of 2L
Notes and 15,813,847 New Warrants to purchase up to 15,813,847
Common Shares. After consummation of the 2024 Exchange Offer and
Consent Solicitation, $72.1 of 2024 Senior Notes remained
outstanding. The Company is required to raise equity capital prior
to the maturity date of the 2024 Senior Notes in an amount
necessary to repurchase, redeem, prepay or pay in full any
outstanding 2024 Senior Notes in excess of $20.0 (such 2024 Senior
Notes in excess of $20.0 the Excess Stub Notes).
Each New Warrant will initially represent the right to purchase one
Common Share, at an exercise price of $0.01 per share. The New
Warrants will, in the aggregate and upon exercise, be exercisable
for up to 15,813,847 Common Shares (representing 19.99% of the
Common Shares outstanding on the business day immediately preceding
the Settlement Date), subject to adjustment. Unless earlier
cancelled in accordance with their terms, New Warrants can be
exercised at any time on and after April 1, 2024 and prior to
December 30, 2027 (or, if such day is not a business day, the next
succeeding day that is a business day). No cash will be payable by
a warrantholder in respect of the exercise price for a New Warrant
upon exercise.
If a Termination Event (as defined in the agreement governing the
Units) occurs with respect to any Units prior to April 1, 2024, the
New Warrants forming part of such Units will automatically
terminate and become void without further legal effect and will be
cancelled for no further consideration.
The 2L Notes are the Company’s senior secured obligations and are
guaranteed by the Company’s material subsidiaries in the United
States, Belgium, Canada, Germany, France, Italy, the Netherlands,
Poland, Spain, Sweden and the United Kingdom (the Specified
Jurisdictions), in each case, subject to agreed guaranty and
security principles and certain exclusions. The obligations of the
Company and the guarantors are secured (i) on a second-priority
basis by certain Non-ABL Priority Collateral (as defined below)
held by the Company and those guarantors that are organized in the
United States, (ii) on a third-priority basis by certain other
Non-ABL Priority Collateral held by the Company and the guarantors
and (iii) on a fourth-priority basis by the ABL Priority Collateral
(as defined below).
The 2L Notes will mature on October 15, 2026 and bear interest at a
fixed rate of 8.50% per annum through July 15, 2025, after which
interest will accrue at the rate of 8.50% (if paid in cash) or
12.50% (if paid in the form of PIK Interest (as defined in the
Indenture governing the 2L Notes (the 2L Notes Indenture)), subject
to the applicable interest period determination election made for
each applicable interest period after such date.
Interest on the 2L Notes will be payable on January 15 and July 15
of each year, commencing on July 15, 2023. Interest will accrue
from the Settlement Date.
The 2L Notes will be redeemable at the Company’s option, in whole
or in part, at any time at 100% of their principal amount, together
with accrued and unpaid interest, subject to certain
restrictions.
Upon the occurrence of specific kinds of changes of control, the
Company will be required to make an offer to repurchase some or all
of the 2L Notes at 101% of their principal amount, plus accrued and
unpaid interest to, but excluding, the repurchase date, subject to
certain restrictions. Further, if the Company or its subsidiaries
sell assets, under certain circumstances, the Company will be
required to use the net proceeds from such sales to make an offer
to purchase 2L Notes at an offer price in cash in an amount equal
to 100% of the principal amount of the 2L Notes plus accrued and
unpaid interest to, but excluding, the repurchase date, subject to
certain restrictions.
The 2L Notes Indenture contains covenants that, among other things,
restrict the ability of the Company and its subsidiaries to incur
additional indebtedness and guarantee indebtedness, pay dividends,
prepay, redeem or repurchase certain debt, incur liens and to
merge, consolidate or sell assets.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
2025 Senior Secured Notes
On the Settlement Date, the Company also completed the private
exchange offers and consent solicitations with respect to the
outstanding 9.375% Senior Secured Notes due 2025 issued by the
Company (the 2025 USD Senior Notes) and the outstanding 9.000%
Senior Secured Notes due 2025 issued by Diebold Nixdorf Dutch
Holding B.V. (the Dutch Issuer), a direct and wholly owned
subsidiary of the Company (the 2025 EUR Senior Notes, and together
with the 2025 USD Senior Notes, the 2025 Senior Notes), which
included (i) private offers to certain eligible holders to exchange
(a) any and all 2025 USD Senior Notes for new senior secured notes
(the New 2025 USD Senior Notes) having the same terms as the 2025
USD Senior Notes, other than the issue date, the first interest
payment date, the first date from which interest will accrue and
other than with respect to CUSIP and ISIN numbers, and (b) any and
all 2025 EUR Senior Notes for new senior secured notes (the New
2025 EUR Senior Notes and, together with the New 2025 USD Senior
Notes, the New 2025 Notes) having the same terms as the 2025 EUR
Senior Notes, other than the issue date, the first interest payment
date, the first date from which interest will accrue and other than
with respect to ISIN numbers and common codes, and (ii) related
consent solicitations to enter into supplemental indentures with
respect to (a) the indenture governing the 2025 USD Senior Notes,
dated as of July 20, 2020 (the 2025 USD Senior Notes Indenture),
and (b) the indenture governing the 2025 EUR Senior Notes, dated as
of July 20, 2020 (the 2025 EUR Senior Notes Indenture and, together
with the 2025 USD Senior Notes Indenture, the 2025 Senior Notes
Indentures), in order to amend certain provisions of the 2025
Senior Notes Indentures to, among other things, permit the December
2022 Refinancing Transactions (defined below) set forth in the
Transaction Support Agreement, dated as of October 20, 2022 (as
amended, the Transaction Support Agreement), among the Company,
certain of its subsidiaries and certain creditors (collectively,
the 2025 Exchange Offers and Consent Solicitations and, together
with the 2024 Exchange Offer and Consent Solicitation, the Exchange
Offers and Consent Solicitations).
The 2025 Exchange Offers and Consent Solicitations were completed
on the terms and subject to the conditions set forth in the
Offering Memorandum and Consent Solicitation Statement, dated as of
November 28, 2022 (as amended, the 2025 Offering Memorandum), and
the related eligibility letter. Pursuant to the 2025 Exchange
Offers and Consent Solicitations, the Company accepted $697.3 in
aggregate principal amount of the 2025 USD Senior Notes
(representing 99.61% of the aggregate principal amount of the
outstanding 2025 USD Senior Notes) tendered for exchange and issued
$718.1 in aggregate principal amount of the New 2025 USD Senior
Notes. The Dutch Issuer accepted €345.6 in aggregate principal
amount of the 2025 EUR Senior Notes (representing 98.75% of the
aggregate principal amount of the outstanding 2025 EUR Senior
Notes) tendered for exchange and issued €356.0 aggregate principal
amount of the New 2025 EUR Senior Notes. In addition, eligible
holders received payment in cash for accrued and unpaid interest on
the 2025 Senior Notes that were accepted for exchange.
The New 2025 USD Senior Notes are the Company’s senior secured
obligations. The New 2025 USD Senior Notes and the 2025 USD Senior
Notes that remain outstanding are guaranteed by the Company’s
material subsidiaries in the Specified Jurisdictions, in each case,
subject to agreed guaranty and security principles and certain
exclusions. The obligations of the Company and the guarantors are
secured (i) on a first-priority basis, ranking pari passu with the
Superpriority Facility (as defined below), the 2025 EUR Senior
Notes, the New 2025 EUR Senior Notes and the Existing Term Loans
(as defined below) (excluding released liens), by certain Non-ABL
Priority Collateral held by the Company and those guarantors that
are organized in the United States, (ii) on a second-priority basis
by certain other Non-ABL Priority Collateral held by the Company
and the guarantors and (iii) on a third-priority basis by the ABL
Priority Collateral.
The New 2025 USD Senior Notes will mature on July 15, 2025 and bear
interest at a rate of 9.375% per year from the Settlement
Date.
Interest on the New 2025 USD Senior Notes will be payable on
January 15 and July 15 of each year, commencing on January 15,
2023.
The New 2025 USD Senior Notes will be redeemable at the Company’s
option, in whole or in part, upon not less than 15 nor more than 60
days’ notice mailed or otherwise sent to each holder, at 104.688%
of their principal amount prior to July 15, 2023, 102.344% prior to
July 15, 2024 and 100% thereafter, together with accrued and unpaid
interest, if any, to, but excluding, the date of redemption,
subject to certain restrictions.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
Upon the occurrence of specific kinds of changes of control, the
Company will be required to make an offer to repurchase some or all
of the New 2025 USD Senior Notes at 101% of their principal amount,
plus accrued and unpaid interest to, but excluding, the repurchase
date, subject to certain restrictions. Further, if the Company or
its subsidiaries sell assets, under certain circumstances, the
Company will be required to use the net proceeds from such sales to
make an offer to purchase the New 2025 USD Senior Notes at an offer
price in cash in an amount equal to 100% of the principal amount of
the New 2025 USD Senior Notes plus accrued and unpaid interest to,
but excluding, the repurchase date, subject to certain
restrictions.
The New 2025 EUR Senior Notes are the Dutch Issuer’s senior secured
obligations. The New 2025 EUR Senior Notes and the 2025 EUR Senior
Notes that remain outstanding are guaranteed by the Company and the
Company’s material subsidiaries (other than the Dutch Issuer) in
the Specified Jurisdictions, in each case, subject to agreed
guaranty and security principles and certain exclusions. The
obligations of the Dutch Issuer and the guarantors are secured (i)
on a first-priority basis, ranking pari passu with the
Superpriority Facility, the 2025 USD Senior Notes, the New 2025 USD
Senior Notes and the Existing Term Loans (excluding released
liens), by certain Non-ABL Priority Collateral held by the Company
and those guarantors that are organized in the United States, (ii)
on a second-priority basis by certain other Non-ABL Priority
Collateral held by the Company and the guarantors and (iii) on a
third-priority basis by the ABL Priority Collateral.
The New 2025 EUR Senior Notes will mature on July 15, 2025 and bear
interest at a rate of 9.000% per year from the Settlement
Date.
Interest on the New 2025 EUR Senior Notes will be payable on
January 15 and July 15 of each year, commencing on January 15,
2023.
The New 2025 EUR Senior Notes will be redeemable at the Dutch
Issuer’s option, in whole or in part, upon not less than 15 nor
more than 60 days’ notice mailed or otherwise sent to each holder,
at 104.500% of their principal amount prior to July 15, 2023,
102.250% prior to July 15, 2024 and 100% thereafter, together with
accrued and unpaid interest, if any, to, but excluding, the date of
redemption, subject to certain restrictions.
Upon the occurrence of specific kinds of changes of control, the
Dutch Issuer will be required to make an offer to repurchase some
or all of the New 2025 EUR Senior Notes at 101% of their principal
amount, plus accrued and unpaid interest to, but excluding, the
repurchase date, subject to certain restrictions. Further, if the
Dutch Issuer or its subsidiaries sell assets, under certain
circumstances, the Dutch Issuer will be required to use the net
proceeds from such sales to make an offer to purchase the New 2025
EUR Senior Notes at an offer price in cash in an amount equal to
100% of the principal amount of the New 2025 EUR Senior Notes plus
accrued and unpaid interest to, but excluding, the repurchase date,
subject to certain restrictions.
The Twelfth Amendment to the Existing Credit Agreement
On the Settlement Date, the Company entered into a twelfth
amendment (the Twelfth Amendment) to the Credit Agreement, dated as
of November 23, 2015 (as amended, restated, amended and restated,
supplemented or otherwise modified from time to time, the Existing
Credit Agreement).
The Twelfth Amendment, among other things, (i) permits the Exchange
Offers and Consent Solicitations, the Term Loan Exchange (as
defined below), the Superpriority Facility, the ABL Facility and
certain other related transactions (together, the December 2022
Refinancing Transactions), (ii) removes substantially all negative
covenants and mandatory prepayment provisions from the Existing
Credit Agreement and (iii) directs the collateral agent under the
Existing Credit Agreement to release the liens on certain
current-asset collateral securing the ABL Facility on a
first-priority basis (the ABL Priority Collateral) and certain
other collateral securing the Company’s obligations under the
Existing Credit Agreement and the Company’s existing subsidiary
guarantors’ obligations under the related guarantees (in each case,
to the extent permitted, including under applicable
law).
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
Superpriority Facility
On the Settlement Date, the Company and Diebold Nixdorf Holding
Germany GmbH (the Superpriority Borrower) entered into a Credit
Agreement (the Superpriority Credit Agreement), providing for a
superpriority secured term loan facility of $400 (the Superpriority
Facility). On the Settlement Date, the Superpriority Borrower
borrowed the full $400 of term loans available (the Superpriority
Term Loans).
The proceeds of the borrowing under the Superpriority Facility were
or will be used, respectively, (i) on the Settlement Date, to repay
the New Term Loans (as defined below) in an amount equal to 15% of
the principal amount of Existing Term Loans (as defined below) that
participated in the Term Loan Exchange (the Initial New Term Loan
Paydown), (ii) on December 31, 2023, to repay the New Term Loans in
an amount equal to 5% of the principal amount (at the time of the
Term Loan Exchange) of Existing Term Loans that participated in the
Term Loan Exchange, subject to satisfaction of certain liquidity
conditions, (iii) solely in the event that the repayment in (ii) is
not made as a result of such liquidity conditions not being
satisfied, on December 31, 2024, to repay the New Term Loans in an
amount equal to 5% of the principal amount (at the time of the Term
Loan Exchange) of Existing Term Loans that participated in the Term
Loan Exchange, subject to satisfaction of the same liquidity
condition measured on a pro forma basis on December 31, 2024 and
(iv) for general corporate purposes (excluding making payments on
any other funded indebtedness).
The Superpriority Term Loans will mature on July 15, 2025. The
Superpriority Term Loans bear interest equal to (i) in the case of
Term Benchmark Loans (as defined in the Superpriority Credit
Agreement), the Adjusted Term SOFR Rate (as defined in the
Superpriority Credit Agreement and subject to a 4.0% floor) plus a
0.10% credit spread adjustment plus an applicable margin of 6.40%
and (ii) in the case of Floating Rate Loans (as defined in the
Superpriority Credit Agreement), the Alternate Base Rate (as
defined in the Superpriority Credit Agreement and subject to a 5.0%
floor) plus an applicable margin of 5.40%. Interest accrued on the
Superpriority Loans is payable (i) in the case of Term Benchmark
Loans, on the last day of the applicable Interest Period (as
defined in the Superpriority Credit Agreement) (provided that, if
the Interest Period is longer than three months, interest is also
payable on the last day of each three-month interval during such
Interest Period), on any date on which the Term Benchmark Loans are
repaid, and at maturity, and (ii) in the case of Floating Rate
Loans, on the last business day of each March, June, September and
December occurring after the Settlement Date, beginning with March
31, 2023, and at maturity.
Pursuant to the Transaction Support Agreement, the Superpriority
Borrower paid a fee to the lenders under the Superpriority Facility
in an amount equal to 6.40% per annum of such lenders’ commitments
(the Ticking Fee), which began accruing on December 20, 2022 until
the Settlement Date. The total amount of the Ticking Fee paid to
all lenders was $0.6, and was paid in the form of additional
Superpriority Term Loans on the Settlement Date.
The obligations of the Superpriority Borrower under the
Superpriority Facility are guaranteed, subject to certain
exclusions and agreed guaranty and security principles, by the
Company and the Company’s material subsidiaries in the Specified
Jurisdictions and secured (i) on a first-priority basis by
substantially all assets (subject to agreed guaranty and security
principles and certain exclusions) other than the ABL Priority
Collateral (the Non-ABL Priority Collateral) held by the
Superpriority Borrower and those guarantors that are organized
outside the United States and certain Non-ABL Priority Collateral
held by the Company and those guarantors that are organized in the
United States, (ii) on a first-priority basis, ranking pari passu
with the New Term Loans, the 2025 Senior Notes, the New 2025 Notes
and the Existing Term Loans (excluding released liens), by certain
Non-ABL Priority Collateral held by the Company and those
guarantors that are organized in the United States and (iii) on a
second-priority basis by the ABL Priority Collateral.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
The Superpriority Borrower may prepay the Superpriority Term Loans
at any time; provided that voluntary prepayments and certain
mandatory prepayments made (i) prior to December 29, 2024 must be
accompanied by a customary make-whole premium and (ii) on or after
December 29, 2024 must be accompanied by a premium of 5.00% of the
aggregate principal amount of the Superpriority Term Loans being
prepaid. The Superpriority Credit Agreement additionally provides
that the Superpriority Borrower is required to prepay the
Superpriority Term Loans in certain circumstances, including (i) in
connection with asset sales, where mandatory prepayments must be
made with the proceeds of such asset sales and accompanied by a
premium of 1.00% of the aggregate principal amount of the loans
being prepaid, and (ii) in connection with change of control and
certain other transformative transactions, where prepayments must
be accompanied by a premium of 5.00% of the aggregate principal
amount of the loans being prepaid. Amounts borrowed and repaid
under the Superpriority Facility may not be
reborrowed.
The Superpriority Credit Agreement contains affirmative and
negative covenants customary for facilities of its type, including,
but not limited to, delivery of financial information, limitations
on mergers, consolidations and fundamental changes, limitations on
sales of assets, limitations on investments and acquisitions,
limitations on liens, limitations on transactions with affiliates,
limitations on indebtedness, limitations on negative pledge
clauses, limitations on restrictions on subsidiary distributions,
limitations on restricted payments and limitations on certain
payments of indebtedness. The Superpriority Credit Agreement
contains restrictions on making repayments of certain junior
indebtedness prior to their maturity, subject to certain specified
repayment conditions.
The Superpriority Credit Agreement provides for certain customary
events of default, including, but not limited to, nonpayment of
principal, interest, fees or other amounts, breach of covenants,
cross default and cross acceleration to material indebtedness,
voluntary and involuntary bankruptcy or insolvency proceedings,
unpaid material judgments and change of control.
Term Loans
On December 16, 2022, the Company made an offer to (i) each of the
lenders (collectively, the Existing Dollar Term Lenders) holding
certain dollar term loans (the Existing Dollar Term Loans) under
the Existing Credit Agreement providing for the opportunity to
exchange all (but not less than all) of the principal amount of its
Existing Dollar Term Loans for the same principal amount of Dollar
Term Loans (the New Dollar Term Loans) as defined in and made
pursuant to the New Term Loan Credit Agreement (as defined below),
plus the Transaction Premium (as defined in the Twelfth Amendment),
and (ii) each of the lenders (collectively, the Existing Euro Term
Lenders and together with the Existing Dollar Term Lenders, the
Existing Term Lenders) holding certain euro term loans (the
Existing Euro Term Loans and together with the Existing Dollar Term
Loans, the Existing Term Loans; the loan facility for the Existing
Term Loans, the Existing Term Loan Facility) providing for the
opportunity to exchange all (but not less than all) of the
principal amount of its Existing Euro Term Loans for either (a) the
same principal amount of Euro Term Loans (the New Euro Term Loans
and together with the New Dollar Term Loans, the New Term Loans;
the loan facility for the New Term Loans, the New Term Loan
Facility) as defined in and made pursuant to the New Term Loan
Credit Agreement or (b) the same principal amount of New Dollar
Term Loans (with the exchange rate used for such conversion of the
existing principal amount denominated in euros to the equivalent
new principal amount denominated in dollars determined by reference
to the WMR 4pm London Mid Spot Rate published by Refinitiv at 4:00
p.m. (London Time) on the date that was two business days prior to
the Settlement Date), in each case, plus the Transaction Premium
(collectively, clauses (i) and (ii), the Term Loan Exchange Offer
and the exchange pursuant to the Term Loan Exchange Offer, the Term
Loan Exchange).
On the Settlement Date, the Company completed the Term Loan
Exchange whereby approximately 96.6% of the aggregate principal
amount of Existing Dollar Term Loans and approximately 98.6% of the
aggregate principal amount of Existing Euro Term Loans, were
exchanged into $626.0 (including a transaction premium of $18.2) in
aggregate principal amount of New Dollar Term Loans, and €106.0
(including a transaction premium of € 3.1) in aggregate principal
amount of New Euro Term Loans.
Substantially concurrently with the completion of the Term Loan
Exchange Offer, the Company prepaid $91.2 in aggregate principal
amount of New Dollar Term Loans and €15.4 in aggregate principal
amount of New Euro Term Loans, pursuant to the Initial New Term
Loan Paydown and consistent with the Transaction Support Agreement.
On December 31, 2023, the Company will prepay $30.4 in aggregate
principal amount of the New Dollar Term Loans and €5.1 in aggregate
principal amount of the New Euro Term Loans, subject to
satisfaction of certain liquidity conditions.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
As a result of the Term Loan Exchange, the Company’s obligations in
respect of the Existing Term Loans of each lender who participated
in the Term Loan Exchange were discharged and deemed satisfied in
full, and each such lender’s commitments with respect to the
Existing Term Loans were canceled.
The terms of the New Term Loans are governed by a Credit Agreement
(the New Term Loan Credit Agreement), dated as of the Settlement
Date, among the Company the lenders party thereto, JPMorgan Chase
Bank, N.A., as administrative agent, and GLAS America LLC, as
collateral agent, which provides that the New Term Loans will
mature on July 15, 2025.
The New Term Loans bear interest at a rate equal to (i) in the case
of Term Benchmark Loans (as defined in the New Term Loan Credit
Agreement), (a) for New Dollar Term Loans, the Adjusted Term SOFR
Rate (as defined in the New Term Loan Credit Agreement and subject
to a 1.50% floor) plus a 0.10% credit spread adjustment plus an
applicable margin of 5.25% and (b) for New Euro Term Loans, the
Adjusted EURIBOR Rate (as defined in the New Term Loan Credit
Agreement and subject to a 0.50% floor) plus an applicable margin
of 5.50% and (ii) in the case of Floating Rate Loans (as defined in
the New Term Loan Credit Agreement), the Alternate Base Rate (as
defined in the New Term Loan Credit Agreement and subject to a
2.50% floor) plus an applicable margin of 4.25%. Interest accrued
on the New Term Loans is payable (i) in the case of Term Benchmark
Loans, on the last day of the applicable Interest Period (as
defined in the New Term Loan Credit Agreement) (provided that, if
the Interest Period is longer than three months, interest is also
payable on the last day of each three month interval during such
Interest Period), on any date on which the Term Benchmark Loans are
repaid and at maturity, (ii) in the case of Floating Rate Loans, on
the last business day of each March, June, September and December
occurring after the Settlement Date, beginning with March 31, 2023,
and at maturity.
The obligations of the Company under the New Term Loan Credit
Agreement are guaranteed, subject to certain exclusions and agreed
guaranty and security principles, by the Company’s material
subsidiaries in the Specified Jurisdictions and secured (i) on a
first-priority basis, ranking pari passu with the Superpriority
Facility, the 2025 Senior Notes, the New 2025 Notes and the
Existing Term Loans (excluding released liens), by certain Non-ABL
Priority Collateral held by the Company and those guarantors that
are organized in the United States, (ii) on a second-priority basis
by certain other Non-ABL Priority Collateral held by the guarantors
that are organized outside the United States and (iii) on a
third-priority basis by the ABL Priority Collateral.
The New Term Loan Credit Agreement contains affirmative and
negative covenants customary for facilities of its type, including,
but not limited to, delivery of financial information, limitations
on mergers, consolidations and fundamental changes, limitations on
sales of assets, limitations on investments and acquisitions,
limitations on liens, limitations on transactions with affiliates,
limitations on indebtedness, limitations on negative pledge
clauses, limitations on restrictions on subsidiary distributions,
limitations on restricted payments and limitations on certain
payments of indebtedness.
The New Term Loan Credit Agreement provides that the Company may
prepay the New Term Loans at any time without premium or penalty,
subject to restrictions contained in the documentation governing
the Company’s other indebtedness. The New Term Loan Credit
Agreement additionally provides that the Company will be required
to prepay the New Term Loans in certain circumstances (without
premium), including with the proceeds of asset sales and in
connection with change of control transactions. Once repaid, the
New Term Loans may not be reborrowed.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
ABL Revolving Credit and Guaranty Agreements
On the Settlement Date, the Company and subsidiary borrowers
(together with the Company, the ABL Borrowers) entered into a
Revolving Credit and Guaranty Agreement (the ABL Credit Agreement).
The ABL Credit Agreement provides for an asset-based revolving
credit facility (the ABL Facility) consisting of three Tranches
(respectively, Tranche A, Tranche B and Tranche C) with a total
commitment of up to $250, including a Tranche A commitment of up to
$155, a Tranche B commitment of up to $25 and a Tranche C
commitment of up to $70. Letters of credit are limited to the
lesser of (i) $50 and (ii) the aggregate unused amount of the
applicable lenders’ Tranche A commitments then in effect. Swing
line loans are limited to the lesser (i) $50 and (ii) in respect of
an applicable borrower, such borrower’s Tranche A available credit
then in effect. Subject to currencies available under the
applicable Tranche, loans under the ABL Facility may be
denominated, depending on the Tranche being drawn, in U.S. Dollars,
Canadian Dollars, Euros and Pounds Sterling. The ABL Facility
replaced the commitments of the Company’s existing revolving credit
lenders under the Existing Credit Agreement, which were repaid in
full and terminated on the Settlement Date.
On the Settlement Date, certain ABL Borrowers borrowed a total of
$182 under the ABL Facility, consisting of $122 of Tranche A loans
and $60 of Tranche C loans. The proceeds of borrowing under the ABL
Facility were or will be used, as applicable, (i) to finance the
December 2022 Refinancing Transactions, including the repayment of
revolving loans outstanding under the Existing Credit Agreement on
the Settlement Date, (ii) to finance the ongoing working capital
requirements of the ABL Borrowers and their respective subsidiaries
and (iii) for other general corporate purposes.
The ABL Facility will mature on July 20, 2026, subject to a
springing maturity to a date that is 91 days prior to the maturity
date of any indebtedness for borrowed money (other than any
Existing Term Loans or 2024 Senior Notes that were not exchanged in
connection with the December 2022 Refinancing Transactions) in an
aggregate principal amount of more than $25 incurred by the Company
or any of its subsidiaries. Loans under the ABL Facility bear
interest determined by reference to a benchmark rate plus a margin
of between 1.50% and 3.00%, in each case, depending on the amount
of excess availability, the currency of the loans and the type of
loans under the ABL Facility. A commitment fee equal to 0.50% per
annum of the average daily unused portion is also payable quarterly
by the ABL Borrowers under the ABL Facility.
The ABL Borrowers may borrow only up to the lesser of the level of
the then-current borrowing base and the committed maximum borrowing
capacity of $250.0, subject to certain sub-caps that are applicable
under the ABL Facility. The obligations of the ABL Borrowers under
the ABL Facility are guaranteed, subject to certain exclusions and
agreed guaranty and security principles, by the Company’s material
subsidiaries in the Specified Jurisdictions and secured (i) on a
first-priority basis by the ABL Priority Collateral, and (ii) on a
junior-most priority basis by the Non-ABL Priority
Collateral.
The ABL Borrowers may voluntarily repay outstanding loans under the
ABL Facility at any time, without prepayment premium, subject to
certain customary “breakage” costs. Amounts borrowed and repaid
under the ABL Facility may be reborrowed.
The ABL Credit Agreement contains affirmative and negative
covenants customary for facilities of its type, including, but not
limited to, delivery of financial information, limitations on
mergers, consolidations and fundamental changes, limitations on
sales of assets, limitations on investments and acquisitions,
limitations on liens, limitations on transactions with affiliates,
limitations on indebtedness, limitations on negative pledge
clauses, limitations on restrictions on subsidiary distributions,
limitations on restricted payments and limitations on certain
payments of indebtedness. The ABL Facility also requires the
maintenance of a minimum Fixed Charge Coverage Ratio (as defined in
the ABL Credit Agreement) of 1.00 to 1.00 for the
four-fiscal-quarter period immediately preceding such date when
excess availability is less than the greater of $25.0 and 10% of
the Line Cap (as defined in the ABL Credit Agreement) then in
effect.
The ABL Credit Agreement contains customary events of default,
including, but not limited to, nonpayment of principal, interest,
fees or other amounts, breach of covenants, cross default and cross
acceleration to material indebtedness, voluntary and involuntary
bankruptcy or insolvency proceedings, unpaid material judgments and
change of control.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
FILO Amendment
On March 21, 2023 the Company and certain of its subsidiaries
entered into an amendment and limited waiver (the FILO Amendment)
to the ABL Credit Agreement. The FILO Amendment provides for an
additional tranche (the FILO Tranche) of commitments under the ABL
Credit Agreement consisting of a senior secured “last out” term
loan facility (the FILO Facility). The initial commitments under
the FILO Facility were $55.0 and were borrowed in full and
terminated on the Closing Date. Proceeds of the loans made under
the FILO Facility will be used to finance the ongoing working
capital requirements of the Company and its subsidiaries and for
other general corporate purposes.
The FILO Facility will mature on June 4, 2023. Loans under the FILO
Facility bear interest determined by reference to, at the Company’s
option, either (x) adjusted term SOFR plus a margin of 8.00% or (y)
an alternative base rate plus a margin of 7.00%. The Company paid
an upfront fee of $3.9 to the lenders providing the FILO Facility,
which fee was capitalized and added to the outstanding balance
under the FILO Facility. The obligations of the Company under the
FILO Facility benefit from the same guarantees and security as the
existing obligations under the ABL Credit Agreement.
Pursuant to the FILO Amendment, among other things, for a 75-day
period ending on June 4, 2023 (the Waiver Period), the Company will
be permitted to maintain outstanding borrowings and letters of
credit in excess of its then-current borrowing base in an amount
not to exceed $233.8 (inclusive of amounts outstanding under the
FILO Facility but before giving effect to any payment in kind of
interest or fees added thereto). During the Waiver Period, the
Company will not be permitted to borrow any additional amounts
under the ABL Credit Agreement and must maintain an actual
borrowing base of at least $140.0. In addition, during the Waiver
Period, the Company will not be required to comply with certain
reporting provisions required by the ABL Credit
Agreement.
At the closing of the December 2022 Refinancing Transactions, the
Company drew down the ABL Facility and utilized the proceeds for
working capital, including payments to suppliers and vendors. As of
March 31, 2023, therefore, the Company had no additional
availability under the ABL Facility and $263.0 of cash, cash
equivalents, restricted cash and short-term investments. Initially,
the Company believed that the December 2022 Refinancing
Transactions, along with cash from operations, would be sufficient
to meet the Company’s near-term and long-term liquidity needs for
at least the next 12 months. Over the course of the first quarter
of 2023, based on the Company's revenue cycle and composition of
the borrowing base under the ABL Facility, the availability under
the ABL Facility as of March 2023 has been substantially limited.
In addition, slower-than-expected conversion of inventory into
revenue has further suppressed liquidity. Accordingly, on March 21,
2023, the Company entered into the FILO Amendment, which
established the FILO Facility. Commitments under the FILO Facility
were $55.0 and were borrowed in full and terminated on March 21,
2023. The liquidity provided by the FILO Facility is only expected
to sustain the Company through part of the second quarter of
2023.
Restructuring Support Agreement
The Restructuring Support Agreement sets forth the agreed-upon
terms among the Company and the Consenting Creditors for the
effectuation of a deleveraging transaction through, among other
things, (i) a pre-packaged chapter 11 plan of reorganization to be
filed by the Company and certain of its subsidiaries (collectively,
the Debtors) in connection with the anticipated commencement by the
Debtors of voluntary cases under chapter 11 (the Chapter 11 Cases)
of title 11 of the United States Code (the U.S. Bankruptcy Code) in
the U.S. Bankruptcy Court for the Southern District of Texas (the
U.S. Bankruptcy Court), (ii) a scheme of arrangement to be filed by
the Dutch Issuer and relating to certain of the Company's
subsidiaries (the Dutch Scheme Companies) in connection with the
commencement by the Dutch Issuer of voluntary proceedings (the
Dutch Scheme Proceedings) under the Dutch Act on Confirmation of
Extrajudicial Plans (Wet homologatie onderhands akkoord) (the Dutch
Restructuring Law) in the District Court of Amsterdam (the Dutch
Court) and (iii) recognition of such Dutch scheme pursuant to
proceedings to be commenced under chapter 15 of the U.S. Bankruptcy
Code by the Dutch Issuer.
Under the Restructuring Support Agreement, the Consenting Creditors
have agreed, subject to certain terms and conditions, to support
transactions (the Restructuring Transactions) that would result in
a financial restructuring of the existing funded debt and existing
equity interests of the Company Parties pursuant to plans to be
filed in the Chapter 11 Cases (the Chapter 11 Plan) and the Dutch
Scheme Proceedings (the WHOA Plan).
The Chapter 11 Plan and the WHOA Plan (together, the Plans) will be
based on the restructuring term sheet attached to and incorporated
into the Restructuring Support Agreement. Below is a summary of the
treatment that the stakeholders of the
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
Company would receive under the Chapter 11 Plan (capitalized terms
not defined have the meanings assigned to them in the Restructuring
Support Agreement):
•Holders
of Other Secured Claims.
Each holder of allowed Other Secured Claims would receive, at the
Company's option (with the reasonable consent of a requisite number
of Consenting Creditors (the Required Consenting Creditors): (a)
payment in full in cash; (b) the collateral securing its secured
claim; (c) reinstatement of its secured claim; or (d) such other
treatment rendering its secured claim unimpaired in accordance with
section 1124 of the U.S. Bankruptcy Code.
•Holders
of Other Priority Claims.
Each holder of allowed Other Priority Claims would receive, at the
Company's option (with the reasonable consent of the Required
Consenting Creditors): (a) payment in full in cash; or (b) such
other treatment rendering its other priority claim unimpaired in
accordance with section 1124 of the U.S. Bankruptcy
Code.
•Holders
of ABL Facility Claims.
On or before the effective date of the Plans (the Effective Date)
or earlier if ordered by the U.S. Bankruptcy Court (including in
the orders approving the DIP Facility (as defined below)), allowed
ABL Facility Claims would be paid in full and any letters of credit
will be cash collateralized.
•Holders
of Superpriority Term Loan Claims.
On or before the Effective Date, or earlier if ordered by the U.S.
Bankruptcy Court (including in the orders approving the DIP
Facility), allowed Superpriority Term Loan Claims would be paid in
full.
•Holders
of First Lien Claims.
On or as soon as practicable after the Effective Date, each holder
of allowed First Lien Claims would receive its pro rata share of
98% of the reorganized Company's new common equity interests (the
New Common Stock) available for distribution to certain creditors
under the Plans, which will be subject to dilution on account of
(a) the issuance of the Additional New Common Stock as described
below and (b) a new management incentive plan to be implemented in
connection with the Chapter 11 Cases pursuant to which 6% of the
number of shares of New Common Stock to be issued pursuant to the
Chapter 11 Plan on a fully diluted basis (the MIP Shares) will be
reserved for issuance to management as determined by the
restructured Company’s new board of directors.
•Holders
of Second Lien Notes Claims.
On or as soon as practicable after the Effective Date, each holder
of allowed Second Lien Notes Claims would receive its pro rata
share of 2% of the New Common Stock available for distribution to
creditors under the Plans, which will be subject to dilution on
account of (a) the issuance of the Additional New Common Stock
related to the Backstop Premiums as described below and (b) the MIP
Shares.
•Holders
of 2024 Stub Unsecured Notes Claims.
On or as soon as practicable after the Effective Date, each holder
of an allowed claim under or with respect to the 2024 Senior Notes
(the 2024 Stub Unsecured Notes Claims) would receive its pro rata
share of an amount of cash that would provide such holder with the
same percentage recovery on its allowed 2024 Stub Unsecured Notes
Claim that a holder of an allowed Second Lien Notes Claim would
receive in respect of its allowed Second Lien Notes Claim (as
diluted on account of the Additional New Common Stock, as
applicable) under the Chapter 11 Plan based on the midpoint of the
equity value of the New Common Stock as set forth in the disclosure
statement filed in the Chapter 11 Cases.
•Holders
of General Unsecured Claims.
On the Effective Date, each allowed General Unsecured Claim would
be reinstated and paid in the ordinary course of business in
accordance with the terms and conditions of the particular
transaction or agreement giving rise to such allowed general
unsecured claim, or otherwise provided such treatment to render it
unimpaired.
•Holders
of Section 510(b) Claims.
On the Effective Date, claims that could be asserted under section
510(b) of the U.S. Bankruptcy Code would be extinguished, cancelled
and discharged, and holders thereof would receive no distributions
from the Debtors in respect of their claims.
•DNI
Equity Holders.
Each holder of an equity interest in the Diebold Nixdorf,
Incorporated would have such interest extinguished, cancelled and
discharged without any distribution.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
In addition, intercompany equity interests and claims may be
reinstated, distributed, contributed, set off, settled, canceled
and released, or otherwise addressed at the option of the Debtors
(with the consent of the Required Consenting Creditors such consent
not to be unreasonably delayed, withheld or conditioned). As a
general matter, the distributions of consideration as summarized
above and set forth in more detail in the Plans take into account
claim holders’ rights to payment, in respect of their claims
against all the Company Parties taken as a whole.
The WHOA Plan addresses only claims held by holders of First Lien
Claims, 2023 Stub First Lien Claims, Second Lien Notes Claims and
2024 Stub Unsecured Notes Claims against the Dutch Scheme
Companies. The WHOA Plan would include treatment in respect of
holders of such claims consistent with the treatment set forth
above except that the 2023 Stub First Lien Term Loan Claims, which
hold only unsecured claims against the Dutch Scheme Companies,
would be classified in a separate class in the WHOA Plan and would
receive no additional consideration under the WHOA Plan beyond what
they would receive in the Chapter 11 Plan.
The WHOA Plan would not propose any compromise or impairment of any
trade vendor or customer of the Dutch Scheme Companies or any
claims between or among Company Parties.
The Restructuring Support Agreement also includes a term sheet (the
DIP Term Sheet) that provides that the Debtors will seek approval
of a $1.25 billion debtor-in-possession term loan credit facility
(the DIP Facility) to be provided by certain of the Company's
existing first lien lenders on the terms set forth in the DIP Term
Sheet and such other terms that are acceptable to the Debtors and a
requisite number of lenders under the DIP Facility. The proceeds of
the DIP Facility will be used to: (i) repay in full the term loan
obligations, including a make-whole premium, under the
Superpriority Credit Agreement; (ii) repay in full the ABL Facility
and cash collateralize letters of credit thereunder; (iii) pay
costs and reasonable and documented out-of-pocket fees and expenses
related to the court-supervised restructuring proceedings; (iv)
make certain “adequate protection payments”; and (v) fund the
working capital needs and expenditures of the Company Parties and
their non-debtor affiliates during the pendency of the court
supervised restructuring proceedings.
As consideration for of their commitment with respect to the DIP
Facility, certain lenders who have agreed to backstop the DIP
Facility (the DIP Backstop Lenders) will receive (i) a commitment
backstop premium equal to 13.5% of the New Common Stock, (ii) an
upfront premium equal to 6.5% of the New Common Stock and (iii) an
additional premium equal to equal to 7.0% of the New Common Stock
(collectively, the Backstop Premiums). Additionally, holders of
First Lien Claims that wish to become a lender under the DIP
Facility and that execute a joinder to the Restructuring Support
Agreement prior to 11:59 p.m., New York City time, on June 2, 2023
will be eligible to participate in the DIP Facility and receive a
participation premium of their pro rata portion of 10% of the New
Common Stock. The New Common Stock issuable as premiums described
in this paragraph is referred to herein as Additional New Common
Stock.
Pursuant to the Restructuring Support Agreement, the Company
Parties must implement the Restructuring Transactions in accordance
with the following milestones (unless extended or waived by the
Required Consenting Creditors):
•no
later than 11:59 pm Eastern Time on May 31, 2023, the Company
Parties must have commenced solicitation of the Chapter 11 Plan and
the WHOA Plan;
•no
later than June 1, 2023, the Debtors must have filed their chapter
11 petitions under the U.S. Bankruptcy Code and commenced the
Chapter 11 Cases (such date of commencement, the Petition
Date);
•on
the Petition Date, the Company Parties must have filed the Chapter
11 Plan and the related disclosure statement with the U.S.
Bankruptcy Court;
•no
later than two days after the Petition Date, the U.S. Bankruptcy
Court must have entered an interim order approving the DIP
Facility;
•no
later than five days after the Petition Date, the Company Parties
must have commenced the Dutch Scheme Proceedings with the Dutch
Court;
•no
later than 45 days after the Petition Date, the U.S. Bankruptcy
Court must have entered a final order approving the DIP
Facility;
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
•no
later than 45 days after the Petition Date, the U.S. Bankruptcy
Court must have entered an order confirming the Chapter 11
Plan;
•no
later than 75 days after the Petition Date, the Dutch Court must
have entered an order sanctioning the WHOA Plan (the Dutch Sanction
Order); and
•no
later than 80 days after the Petition Date, the Effective Date must
have occurred.
In accordance with the Restructuring Support Agreement, the
Consenting Creditors have agreed, among other things, to (i)
support the Restructuring Transactions as contemplated by, and
within the timeframes outlined in, the Restructuring Support
Agreement and the definitive documents governing the Restructuring
Transactions; (ii) not object to, delay, impede, or take any action
to interfere with acceptance, implementation, or consummation of
the Restructuring Transactions; (iii) vote to accept the Plans; and
(iv) not transfer claims against a Company Party held by each
Consenting Creditor except with respect to limited and customary
exceptions, including requiring any transferee to either already be
bound or become bound by the terms of the Restructuring Support
Agreement.
In accordance with the Restructuring Support Agreement, the Company
Parties agreed, among other things, to: (a) support and take all
steps reasonably necessary and desirable to (i) consummate the
Restructuring Transactions in accordance with the Restructuring
Support Agreement, (ii) obtain the interim and final orders
approving the DIP Facility, (iii) obtain the order confirming the
Chapter 11 Plan and the Dutch Sanction Order and an order
recognizing the Dutch Sanction Order in the chapter 15 proceedings,
and (iv) prosecute and defend any appeals relating to the order
confirming the Chapter 11 Plan and the Dutch Sanction Order; (b)
comply with the milestones described above, (c) use commercially
reasonable efforts to obtain any and all required governmental
and/or regulatory approvals for the Restructuring Transactions; (d)
negotiate in good faith and, where applicable, execute and deliver
certain required documents and agreements to effectuate and
consummate the Restructuring Transactions as contemplated by the
Restructuring Support Agreement; (e) actively oppose and object to
the efforts of any person seeking to object to, delay, impede, or
take any other action to interfere with the acceptance,
implementation, or consummation of the Restructuring Transactions;
(f) use commercially reasonable efforts to seek additional support
for the Restructuring Transactions from other material stakeholders
to the extent reasonably prudent; (g) operate their business in the
ordinary course; (h) timely file a formal objection to any motion
filed with the U.S. Bankruptcy Court by a third party seeking the
entry of an order (i) modifying or terminating the U.S. Debtors’
exclusive right to file and/or solicit acceptances of a plan of
reorganization, as applicable, (ii) directing the appointment of a
trustee or examiner (with expanded powers beyond those set forth in
sections 1106(a)(3) and (4) of the U.S. Bankruptcy Code), (iii)
converting any of the Chapter 11 Cases to cases under chapter 7 of
the U.S. Bankruptcy Code, or (iv) dismissing any of the Chapter 11
Cases; and (i) at the request of the Required Consenting Creditors,
appoint a chief restructuring officer, who shall be selected by the
Required Consenting Creditors and be be reasonably acceptable to
the Chief Executive Officer of the Company.
The Consenting Creditors may terminate the Restructuring Support
Agreement (and thereby their obligations to support the Plans)
under certain circumstances, including the Company's failure to
meet the milestones described above (unless extended or
waived).
A Company Party may terminate the Restructuring Support Agreement
under certain circumstances, including the U.S. Bankruptcy Court's
failure to confirm the Chapter 11 Plan or dismissal of the Chapter
11 Cases or the Dutch Court's failure to sanction the WHOA Plan.
The Restructuring Support Agreement will be automatically
terminated in certain circumstances, including if the Company's
board of directors determines, after consulting with counsel, that
proceeding with any of the restructuring transactions contemplated
by the Restructuring Support Agreement would be inconsistent with
its fiduciary duties or applicable law.
Although the Company intends to pursue the Restructuring
Transactions in accordance with the terms set forth in the
Restructuring Support Agreement, there can be no assurance that the
Company will be successful in completing a restructuring or any
other similar transaction on the terms set forth in the
Restructuring Support Agreement, on different terms or at all. The
Restructuring Support Agreement is subject to various terms and
conditions set forth therein. Moreover, consummation of the Plans
will be subject to numerous conditions, including approval from the
U.S. Bankruptcy Court and the Dutch Court, as
applicable.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
Uncommitted Line of Credit
As of March 31, 2023, the Company had various international
short-term uncommitted lines of credit with borrowing limits
aggregating to $25.1. The weighted-average interest rate on
outstanding borrowings on the short-term uncommitted lines of
credit as of March 31, 2023 and December 31, 2022 was 18.44
percent and 11.02 percent, respectively, and primarily relate to
higher interest rate, short-term uncommitted lines of credit in
Columbia and Brazil. Short-term uncommitted lines mature in less
than one year. The remaining amount available under the short-term
uncommitted lines at March 31, 2023 was $21.2.
The cash flows related to debt borrowings and repayments were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
March 31, |
|
|
|
2023 |
|
2022 |
|
Revolving credit facility borrowings |
|
$ |
102.7 |
|
|
$ |
188.0 |
|
|
|
|
|
|
|
|
Revolving credit facility repayments |
|
$ |
(80.0) |
|
|
$ |
(113.0) |
|
|
|
|
|
|
|
|
Other debt borrowings |
|
|
|
|
|
International short-term uncommitted lines of credit
borrowings |
|
$ |
2.3 |
|
|
$ |
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other debt repayments |
|
|
|
|
|
Payments on Term Loan B Facility - USD under the Credit
Agreement |
|
$ |
(1.3) |
|
|
$ |
(1.8) |
|
|
Payments on Term Loan B Facility - Euro under the Credit
Agreement |
|
(0.3) |
|
|
(1.7) |
|
|
International short-term uncommitted lines of credit and other
repayments |
|
(0.5) |
|
|
(1.2) |
|
|
|
|
$ |
(2.1) |
|
|
$ |
(4.7) |
|
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) |
|
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 |
|
8.50% |
|
|
April 2024 |
|
8 |
|
2025 Senior Secured Notes – USD |
|
9.38% |
|
|
July 2025 |
|
5 |
|
2025 Senior Secured Notes – EUR |
|
9.00% |
|
|
July 2025 |
|
5 |
|
ABL(iii)
|
|
SOFR + 2.50-3.00% |
|
|
July 2026 |
|
3.5 |
|
New Term B USD(iv)
|
|
SOFR + 5.35% |
|
|
July 2025 |
|
2.5 |
|
New Term B EUR(v)
|
|
EURIBOR + 5.60% |
|
|
July 2025 |
|
2.5 |
|
2L Notes |
|
8.50% / 12.50% PIK |
|
|
October 2026 |
|
3.8 |
|
New USD Senior Secured Notes |
|
9.38% |
|
|
July 2025 |
|
2.5 |
|
New EUR Senior Secured Notes |
|
9.00% |
|
|
July 2025 |
|
2.5 |
|
Superpriority Term Loans(vi)
|
|
SOFR + 6.50% |
|
|
July 2025 |
|
2.5 |
|
FILO Facility
(iii)
|
|
SOFR + 8.00% |
|
|
June 2023 |
|
0.3 |
(i)LIBOR
with a floor of 0.0 percent
(ii)EURIBOR
with a floor of 0.0 percent
(iii)SOFR
with a floor of 0.0 percent
(iv)SOFR
with a floor of 1.5 percent
(v)EURIBOR
with a floor of 0.5 percent
(vi)SOFR
with a floor of 4.0 percent
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
Note 10: Equity
The following tables present changes in shareholders' equity
attributable to Diebold Nixdorf, Incorporated and the
noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Loss |
|
|
|
Total Diebold Nixdorf, Incorporated Shareholders'
Equity |
|
|
|
|
|
|
|
Common Shares |
|
Additional
Capital |
|
Accumulated Deficit |
|
Treasury
Shares |
|
|
Equity Warrants |
|
|
Non-controlling
Interests |
|
Total
Equity |
|
Balance, December 31, 2022 |
|
|
$ |
119.8 |
|
|
$ |
831.5 |
|
|
$ |
(1,406.7) |
|
|
$ |
(585.6) |
|
|
$ |
(360.0) |
|
|
$ |
20.1 |
|
|
$ |
(1,380.9) |
|
|
$ |
9.8 |
|
|
$ |
(1,371.1) |
|
|
Net loss |
|
|
— |
|
|
— |
|
|
(111.1) |
|
|
— |
|
|
— |
|
|
— |
|
|
(111.1) |
|
|
(0.4) |
|
|
(111.5) |
|
|
Other comprehensive loss |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6.3 |
|
|
— |
|
|
6.3 |
|
|
2.2 |
|
|
8.5 |
|
|
Share-based compensation issued |
|
|
1.0 |
|
|
(1.0) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Share-based compensation expense |
|
|
— |
|
|
1.3 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.3 |
|
|
— |
|
|
1.3 |
|
|
Treasury shares |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.8) |
|
|
— |
|
|
— |
|
|
(0.8) |
|
|
— |
|
|
(0.8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2023 |
|
|
$ |
120.8 |
|
|
$ |
831.8 |
|
|
$ |
(1,517.8) |
|
|
$ |
(586.4) |
|
|
$ |
(353.7) |
|
|
$ |
20.1 |
|
|
$ |
(1,485.2) |
|
|
$ |
11.6 |
|
|
$ |
(1,473.6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Loss |
|
|
|
Total Diebold Nixdorf, Incorporated Shareholders'
Equity |
|
|
|
|
|
|
|
Common Shares |
|
Additional
Capital |
|
Accumulated Deficit |
|
Treasury
Shares |
|
|
Equity Warrants |
|
|
Non-controlling
Interests |
|
Total
Equity |
|
Balance, December 31, 2021 |
|
|
$ |
118.3 |
|
|
$ |
819.6 |
|
|
$ |
(822.4) |
|
|
$ |
(582.1) |
|
|
$ |
(378.5) |
|
|
$ |
— |
|
|
$ |
(845.1) |
|
|
$ |
8.1 |
|
|
$ |
(837.0) |
|
|
Net loss |
|
|
— |
|
|
— |
|
|
(183.1) |
|
|
— |
|
|
— |
|
|
— |
|
|
(183.1) |
|
|
(0.8) |
|
|
(183.9) |
|
|
Other comprehensive loss |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
13.1 |
|
|
— |
|
|
13.1 |
|
|
0.8 |
|
|
13.9 |
|
|
Share-based compensation issued |
|
|
1.2 |
|
|
(1.2) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Share-based compensation expense |
|
|
— |
|
|
1.7 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.7 |
|
|
— |
|
|
1.7 |
|
|
Treasury shares |
|
|
— |
|
|
— |
|
|
— |
|
|
(3.3) |
|
|
— |
|
|
— |
|
|
(3.3) |
|
|
— |
|
|
(3.3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2022 |
|
|
$ |
119.5 |
|
|
$ |
820.1 |
|
|
$ |
(1,005.5) |
|
|
$ |
(585.4) |
|
|
$ |
(365.4) |
|
|
$ |
— |
|
|
$ |
(1,016.7) |
|
|
$ |
8.1 |
|
|
$ |
(1,008.6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
Note 11: 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,
2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation |
|
Foreign Currency Hedges |
|
Interest Rate Hedges |
|
Pension and Other Post-retirement Benefits |
|
|
|
Other |
|
Accumulated Other Comprehensive Income (Loss) |
|
Balance at January 1, 2023 |
|
$ |
(352.1) |
|
|
$ |
(1.9) |
|
|
$ |
5.3 |
|
|
$ |
(12.6) |
|
|
|
|
$ |
1.3 |
|
|
$ |
(360.0) |
|
|
Other comprehensive loss before reclassifications
(1)
|
|
4.7 |
|
|
— |
|
|
0.3 |
|
|
— |
|
|
|
|
— |
|
|
5.0 |
|
|
Amounts reclassified from AOCI |
|
— |
|
|
— |
|
|
— |
|
|
1.3 |
|
|
|
|
— |
|
|
1.3 |
|
|
Net current-period other comprehensive loss |
|
4.7 |
|
|
— |
|
|
0.3 |
|
|
1.3 |
|
|
|
|
— |
|
|
6.3 |
|
|
Balance at March 31, 2023 |
|
$ |
(347.4) |
|
|
$ |
(1.9) |
|
|
$ |
5.6 |
|
|
$ |
(11.3) |
|
|
|
|
$ |
1.3 |
|
|
$ |
(353.7) |
|
(1)
Other comprehensive income (loss) before reclassifications within
the translation component excludes $(2.2) 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,
2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation |
|
Foreign Currency Hedges |
|
Interest Rate Hedges |
|
Pension and Other Post-retirement Benefits |
|
|
|
Other |
|
Accumulated Other Comprehensive Income (Loss) |
|
Balance at January 1, 2022 |
|
$ |
(310.9) |
|
|
$ |
(1.9) |
|
|
$ |
0.4 |
|
|
$ |
(64.6) |
|
|
|
|
$ |
(1.5) |
|
|
$ |
(378.5) |
|
|
Other comprehensive loss before reclassifications
(1)
|
|
10.4 |
|
|
(1.0) |
|
|
2.9 |
|
|
— |
|
|
|
|
0.7 |
|
|
13.0 |
|
|
Amounts reclassified from AOCI |
|
— |
|
|
— |
|
|
(0.6) |
|
|
0.7 |
|
|
|
|
— |
|
|
0.1 |
|
|
Net current-period other comprehensive loss |
|
10.4 |
|
|
(1.0) |
|
|
2.3 |
|
|
0.7 |
|
|
|
|
0.7 |
|
|
13.1 |
|
|
Balance at March 31, 2022 |
|
$ |
(300.5) |
|
|
$ |
(2.9) |
|
|
$ |
2.7 |
|
|
$ |
(63.9) |
|
|
|
|
$ |
(0.8) |
|
|
$ |
(365.4) |
|
(1)
Other comprehensive income (loss) before reclassifications within
the translation component excludes $(0.8) of translation
attributable to noncontrolling interests.:
(1)
Other comprehensive income (loss) before reclassifications within
the translation component excludes $(0.8) of translation
attributable to noncontrolling interests.
The following table summarizes the details about the amounts
reclassified from AOCI:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
Affected Line Item on the Statement of Operations |
|
|
|
March 31, |
|
|
|
|
|
|
2023 |
|
2022 |
|
|
|
|
|
|
|
Interest rate hedge loss |
|
$ |
— |
|
|
$ |
(0.6) |
|
|
|
|
|
|
Interest expense |
|
|
Pension and post-retirement benefits: |
|
|
|
|
|
|
|
|
|
|
|
|
Net actuarial gain amortized (net of tax of $0.5 and $0.3,
respectively)
|
|
1.3 |
|
|
0.7 |
|
|
|
|
|
|
Miscellaneous, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reclassifications for the period |
|
$ |
1.3 |
|
|
$ |
0.1 |
|
|
|
|
|
|
|
|
Note 12: Benefit Plans
Qualified Retirement Benefits.
The Company has a qualified retirement plan covering certain U.S.
employees that has been closed to new participants since 2003 and
frozen since December 2013.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
The Company has a number of non-U.S. defined benefit plans covering
eligible employees located predominately in Europe, the most
significant of which are German plans. Benefits for these plans are
based primarily on each employee's final salary, with periodic
adjustments for inflation. The obligations in Germany consist of
employer funded pension plans and deferred compensation plans. The
employer funded pension 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.
The Company has other defined benefit plans outside the U.S., which
have not been mentioned here due to materiality.
Supplemental Executive Retirement Benefits.
The Company has non-qualified pension plans in the U.S. 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.
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.
The following tables set forth the net periodic benefit cost for
the Company’s defined benefit pension plans and other benefits for
the three months ended March 31, 2023 and March 31, 2022,
respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
|
|
Pension Benefits |
|
|
|
|
U.S. Plans |
|
Non-U.S. Plans |
|
Other Benefits |
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Components of net periodic benefit cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1.6 |
|
|
$ |
2.4 |
|
|
$ |
— |
|
|
$ |
— |
|
|
Interest cost |
|
4.9 |
|
|
4.3 |
|
|
2.9 |
|
|
1.1 |
|
|
0.1 |
|
|
0.1 |
|
|
Expected return on plan assets |
|
(4.5) |
|
|
(5.8) |
|
|
(3.4) |
|
|
(3.9) |
|
|
— |
|
|
— |
|
|
Recognized net actuarial loss (gain) |
|
0.2 |
|
|
1.6 |
|
|
(0.9) |
|
|
(0.4) |
|
|
(0.1) |
|
|
(0.1) |
|
|
Amortization of prior service cost |
|
— |
|
|
— |
|
|
(0.2) |
|
|
(0.1) |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension benefit cost |
|
$ |
0.6 |
|
|
$ |
0.1 |
|
|
$ |
— |
|
|
$ |
(0.9) |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions and Reimbursements
For the three months ended March 31, 2023 and March 31, 2022,
contributions of $17.5 and $21.8, respectively, were made to the
qualified and non-qualified pension plans. The Company received
reimbursements of $22.8 and $17.0 for certain benefits paid from
its German plan trustee during March 2023 and May 2022,
respectively.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
Note 13: Fair Value of Assets and Liabilities
Assets and Liabilities Recorded at Fair Value
Assets and liabilities subject to fair value measurement by fair
value level and recorded as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|
December 31, 2022 |
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of deposit |
|
Short-term investments |
|
$ |
16.6 |
|
|
$ |
16.6 |
|
|
$ |
— |
|
|
$ |
24.6 |
|
|
$ |
24.6 |
|
|
$ |
— |
|
|
Assets held in rabbi trusts |
|
Securities and other investments |
|
4.2 |
|
|
4.2 |
|
|
— |
|
|
4.4 |
|
|
4.4 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
$ |
20.8 |
|
|
$ |
20.8 |
|
|
$ |
— |
|
|
$ |
29.0 |
|
|
$ |
29.0 |
|
|
$ |
— |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred compensation |
|
Other liabilities |
|
4.2 |
|
|
4.2 |
|
|
— |
|
|
4.4 |
|
|
4.4 |
|
|
— |
|
|
Total |
|
|
|
$ |
4.2 |
|
|
$ |
4.2 |
|
|
$ |
— |
|
|
$ |
4.4 |
|
|
$ |
4.4 |
|
|
$ |
— |
|
The Company uses the end of period when determining the timing of
transfers between levels. During each of the three months ended
March 31, 2023 and 2022, there were no transfers between
levels.
The carrying amount of the Company's revolving credit facility
approximates fair value. The remaining debt had a carrying value of
$2,573.8 and fair value of $1,441.0 at March 31, 2023, and a
carrying value of $2,557.6 and fair value of $1,819.7 at
December 31, 2022.
Refer to Note 9 for further details surrounding the Company's debt
as of March 31, 2023 compared to December 31, 2022.
Additionally, the Company would remeasure certain assets at fair
value, using Level 3 measurements, as a result of the occurrence of
triggering events.
Note 14: Commitments and Contingencies
Indirect Tax Contingencies
The Company accrues 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 accruals at that time.
At March 31, 2023, 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.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
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 liabilities. The Company
estimated the aggregate risk at March 31, 2023 to be up to $51.1
for its material indirect tax matters. The aggregate risk related
to indirect taxes is adjusted as the applicable statutes of
limitations expire.
Legal Contingencies
At March 31, 2023, 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 or asserted
claims.
In addition to these normal course of business litigation matters,
the Company is a party to the proceedings described
below:
Diebold Nixdorf Holding Germany GmbH, formerly Diebold Nixdorf
Holding Germany Inc. & Co. KGaA (Diebold KGaA), is a party to
two separate appraisal proceedings (Spruchverfahren) in connection
with the purchase of all shares in its former listed subsidiary,
Diebold Nixdorf AG. The first appraisal proceeding, which relates
to the Domination and Profit Loss Transfer Agreement (DPLTA)
entered into by Diebold KGaA and former Diebold Nixdorf AG, which
became effective on February 17, 2017, is pending at the Higher
Regional Court (Oberlandesgericht) of Düsseldorf (Germany) as the
court of appeal. 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.
The second appraisal proceeding relates to the cash merger
squeeze-out of minority shareholders of Diebold Nixdorf AG in 2019
and is pending at the same Chamber for Commercial Matters (Kammer
für Handelssachen) at the District Court (Landgericht) of Dortmund
(Germany) that was originally competent for the DPLTA appraisal
proceedings. The squeeze-out appraisal proceeding was filed by
former minority shareholders of Diebold Nixdorf AG challenging the
adequacy of the 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.
In the second quarter of 2022, the District Court of Dortmund
dismissed all claims to increase the cash compensation in the DPLTA
appraisal proceedings. This first instance decision, however, is
not final as some of the plaintiffs filed appeals. The Company
believes that the compensation offered in connection with the DPLTA
and the merger squeeze-out was in both cases fair and that the
decision of the District Court of Dortmund in the DPLTA appraisal
proceedings validates its position. 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 a court may increase the cash
compensation in these appraisal proceedings. The Company, however,
is convinced that its defense in both appraisal proceedings is
supported by strong sets of facts and the Company will continue to
vigorously defend itself in these matters.
Bank Guarantees, Standby Letters of Credit, and Surety
Bonds
In the ordinary course of business, the Company may issue
performance guarantees on behalf of its subsidiaries to certain
customers and other parties. Some of those guarantees may be backed
by standby letters of credit, surety bonds, or similar instruments.
In general, under the guarantees, the Company would be obligated to
perform, or cause performance, over the term of the underlying
contract in the event of an unexcused, uncured breach by its
subsidiary, or some other specified triggering event, in each case
as defined by the applicable guarantee. At March 31, 2023, the
maximum future contractual obligations relative to these various
guarantees totaled
$140.6,
of which
$24.0
represented standby letters of credit to insurance providers, and
no associated liability was recorded. At December 31, 2022,
the maximum future payment obligations relative to
these
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
various guarantees totaled $173.2, of which $24.0 represented
standby letters of credit to insurance providers, and no associated
liability was recorded.
Note 15: Revenue Recognition
A performance obligation is a contractual promise to transfer a
distinct good or service to the customer. A contract's transaction
price is allocated to each distinct performance obligation and is
recognized as revenue when (point in time) or as (over time) the
performance obligation is satisfied. The following table represents
the percentage of revenue recognized either at a point in time or
over time:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
March 31, |
|
Timing of revenue recognition |
|
2023 |
|
2022 |
|
Products transferred at a point in time |
|
40 |
% |
|
37 |
% |
|
Products and services transferred over time |
|
60 |
% |
|
63 |
% |
|
Net sales |
|
100 |
% |
|
100 |
% |
Contract balances
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. Contract assets are minimal for the periods
presented.
The following table provides 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, 2022 |
|
$ |
612.2 |
|
|
$ |
453.2 |
|
|
|
|
Balance at March 31, 2023 |
|
$ |
627.1 |
|
|
$ |
486.7 |
|
|
|
There have been $7.2 and $4.6 of impairment losses recognized as
bad debt related to receivables or contract assets arising from the
Company's contracts with customers during the three months ended
March 31, 2023 and 2022, respectively.
As of December 31, 2022, the Company had $453.2 of unrecognized
deferred revenue constituting the remaining performance obligations
that are unsatisfied (or partially unsatisfied). During the three
months ended March 31, 2023, the Company recognized revenue of
$122.1 related to the Company's deferred revenue balance at
December 31, 2022.
Transaction price allocated to the remaining performance
obligations
As of March 31, 2023, the aggregate amount of the transaction price
allocated to remaining performance obligations was approximately
$1,400. 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.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
Note 16: Finance Lease Receivables
Under certain circumstances, the Company provides financing
arrangements to customers that are largely classified and accounted
for as sales-type leases. 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.
The following table presents the components of finance lease
receivables:
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|
December 31, 2022 |
|
Gross minimum lease receivables |
$ |
29.4 |
|
|
$ |
28.1 |
|
|
Allowance for credit losses |
(0.2) |
|
|
(0.2) |
|
|
Estimated unguaranteed residual values |
0.1 |
|
|
0.1 |
|
|
|
29.3 |
|
|
28.0 |
|
|
Less: |
|
|
|
|
Unearned interest income |
(1.5) |
|
|
(1.5) |
|
|
|
|
|
|
|
|
|
|
Total |
$ |
27.8 |
|
|
$ |
26.5 |
|
Future minimum payments due from customers under finance lease
receivables as of March 31, 2023 are as follows:
|
|
|
|
|
|
|
2023 |
$ |
7.3 |
|
|
2024 |
5.9 |
|
|
2025 |
5.2 |
|
|
2026 |
5.0 |
|
|
2027 |
3.7 |
|
|
Thereafter |
2.3 |
|
|
|
$ |
29.4 |
|
There were no significant changes in provision for credit losses,
recoveries and write-offs during the three months ended March 31,
2023 or 2022.
Note 17: Segment Information
During the second quarter of 2022, the Company appointed a new
Chief Executive Officer, who is also the CODM, and announced an
organizational simplification initiative. In connection with those
events, the Company's reportable segments are no longer Americas
Banking, Eurasia Banking and Retail, and instead the reportable
operating segments are the following: Banking and Retail. Under the
simplified organization and related restructuring discussed in Note
8, the Company does not have regionally focused direct reports to
the CODM, and the CODM analyzes Banking and Retail on a global
basis and not based on regional profitability metrics.
The Company's new reportable segment information below directly
aligns with how the CODM regularly reviews results to make
decisions, allocate resources and assess performance. The new
Banking segment's sales and cost of sales are the summation of the
legacy Americas Banking and Eurasia Banking's sales and cost of
sales. The Company will continually consider its operating
structure and the information subject to regular
review.
Segment operating profit (loss) as disclosed herein is consistent
with the segment profit or loss measure used by the CODM and does
not include corporate charges, amortization of acquired intangible
assets, asset impairment, restructuring and transformation charges,
the results of the held-for-sale European retail business, or other
non-routine, unusual or infrequently occurring items, as the CODM
does not regularly review and use such financial measures to make
decisions, allocate resources and assess performance.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
Segment revenue represents revenues from sales to external
customers. Segment operating profit is defined as revenues less
expenses directly attributable to the segments. The Company does
not allocate to its segments certain operating expenses which are
managed at the headquarters level; that are not used in the
management of the segments, not segment-specific, and impractical
to allocate. In some cases the allocation of corporate charges has
changed from the legacy structure to the new structure, but prior
periods have been recast to conform to the new presentation.
Segment operating profit reconciles to consolidated income (loss)
before income taxes by deducting items that are not attributed to
the segments and which are managed independently of segment
results. 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.
The following tables present information regarding the Company’s
segment performance and provide a reconciliation between segment
operating profit and the consolidated income (loss) before income
taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
March 31, |
|
|
|
|
|
2023 |
|
2022 |
|
|
|
|
|
Net sales summary by segment |
|
|
|
|
|
|
|
|
|
Banking |
|
$ |
592.9 |
|
|
$ |
562.7 |
|
|
|
|
|
|
Retail |
|
260.4 |
|
|
261.7 |
|
|
|
|
|
|
Held for sale non-core European retail business(7)
|
|
4.8 |
|
|
5.4 |
|
|
|
|
|
|
Total revenue |
|
$ |
858.1 |
|
|
$ |
829.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating profit |
|
|
|
|
|
|
|
|
|
Banking |
|
$ |
79.9 |
|
|
$ |
46.1 |
|
|
|
|
|
|
Retail |
|
39.1 |
|
|
24.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment operating profit |
|
$ |
119.0 |
|
|
$ |
70.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate charges not allocated to segments
(1)
|
|
$ |
(69.0) |
|
|
$ |
(71.2) |
|
|
|
|
|
|
Impairment of assets
(2)
|
|
(0.9) |
|
|
(55.2) |
|
|
|
|
|
|
Amortization of Wincor Nixdorf purchase accounting intangible
assets(3)
|
|
(17.7) |
|
|
(18.5) |
|
|
|
|
|
|
Restructuring and transformation expenses(4)
|
|
(15.0) |
|
|
— |
|
|
|
|
|
|
Refinancing related costs(5)
|
|
(14.1) |
|
|
— |
|
|
|
|
|
|
Net non-routine expense(6)
|
|
(0.7) |
|
|
(2.4) |
|
|
|
|
|
|
Held for sale non-core European retail business(7)
|
|
(3.7) |
|
|
(6.4) |
|
|
|
|
|
|
|
|
(121.1) |
|
|
(153.7) |
|
|
|
|
|
|
Operating loss |
|
(2.1) |
|
|
(83.4) |
|
|
|
|
|
|
Other income (expense) |
|
(88.2) |
|
|
(48.9) |
|
|
|
|
|
|
Loss before taxes |
|
$ |
(90.3) |
|
|
$ |
(132.3) |
|
|
|
|
|
(1) Corporate
charges not allocated to segments include headquarter-based costs
associated primarily with human resources, finance, IT and legal
that are not directly attributable to a particular segment and are
separately assessed by the CODM for purposes of making decisions,
assessing performance and allocating resources.
(2) Impairment
of $0.9 in the first quarter of 2023 relates to leased European
facilities closures and $55.2 in the first quarter 2022 related to
impairment of capitalized cloud-based North America ERP costs of
$38.4, and as a result of the Russian incursion into Ukraine and
the related economic sanctions, the Company impaired $16.8 of
assets connected with the Company's operations in Russia, Ukraine
and Belarus.
(3) The
amortization of purchase accounting intangible assets is not
included in the segment results used by the CODM to make decisions,
allocate resources or assess performance.
(4) Refer
to Note 8 for further information regarding restructurings.
Consistent with the historical reportable segment structure,
restructuring and transformation costs are not assigned to the
segments, and are separately analyzed by the CODM.
(5) Refinancing
related costs are fees earned by our advisors that have been
accounted for as period expense.
(6) 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 as they are not included in the
measure used by the CODM to make decisions, allocate resources and
assess performance.
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
(7) Held
for sale non-core European retail business represents the revenue
and operating profit of a business that has been classified as held
for sale for all of the periods presented, but which was removed in
2022 from the retail segment's information used by the CODM to make
decisions, assess performance and allocate resources, and now is
individually analyzed. This change and timing thereof aligns with
the build-out of a data center that makes the entity capable of
operating autonomously and is consistent with material provided in
connection with our refinancing effort which are exclusive of this
entity. The first quarter of 2022 has been restated above to
exclude the results of the held for sale non-core European retail
business from the Retail segment for comparability to current year
results.
The following table presents information regarding the Company’s
segment net sales by service and product solution:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
March 31, |
|
|
|
|
2023 |
|
2022 |
|
|
|
|
|
Segments |
|
|
|
|
|
|
|
|
|
Banking |
|
|
|
|
|
|
|
|
|
Services |
|
$ |
381.1 |
|
|
$ |
383.7 |
|
|
|
|
|
|
Products |
|
211.8 |
|
|
179.0 |
|
|
|
|
|
|
Total Banking |
|
592.9 |
|
|
562.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
|
|
|
|
|
|
|
|
|
Services |
|
133.2 |
|
|
140.0 |
|
|
|
|
|
|
Products |
|
127.2 |
|
|
121.7 |
|
|
|
|
|
|
Total Retail |
|
260.4 |
|
|
261.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held for sale non-core European retail business |
|
|
|
|
|
|
|
|
|
Services |
|
2.1 |
|
|
2.5 |
|
|
|
|
|
|
Products |
|
2.7 |
|
|
2.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
858.1 |
|
|
$ |
829.8 |
|
|
|
|
|
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
FORM 10-Q as of March 31, 2023
Notes to Condensed Consolidated Financial Statements
(continued)
(unaudited)
(in millions, except share and per share amounts)
Note 18: Cloud Implementation
At December 31, 2021, the Company had capitalized $50.7 of cloud
implementation costs, which are presented in the Other assets
caption of the condensed consolidated balance sheets. During the
first quarter of 2022, the Company impaired $38.4 of capitalized
cloud implementation costs related to a cloud-based North American
enterprise resource planning (ERP) system, which was intended to
replace the on premise ERP currently in use. In connection with the
executive transition that took place in the first quarter of 2022
and the culmination of related process optimization workshops in
March 2022, the Company made the decision to indefinitely suspend
the cloud-based North America ERP implementation, which was going
to require significant additional investment before it could
function as well as our current North America ERP, and to instead
focus the Company's ERP implementation efforts on the distribution
subsidiaries, which can better leverage the standardization and
simplification initiatives connected with the cloud-based
implementation. As a result of the completed process optimization
walkthroughs, the Company determined that the customizations
already built for the North America ERP should not be leveraged at
the distribution subsidiaries which require more streamlined and
scalable process flows.
At March 31, 2023, the Company had a net book value of capitalized
cloud implementation costs of $19.6, which relates to a combination
of the distribution subsidiary ERP and corporate tools to support
business operations.
Amortization of cloud implementation fees totaled $0.8 and $0.5 in
the three months ended March 31, 2023 and 2022, respectively. These
fees are expensed over the term of the cloud computing arrangement,
and the expense is required to be recognized in the same line item
in the income statement as the associated hosting service
expenses.
Note 19: War in Ukraine
The Company has a Russian distribution subsidiary that generated
approximately $45.0 in revenue and $5.0 in operating profit during
the year ended December 31, 2021. Due to the economic sanctions
levied on and economic conditions in Russia, the Company is making
progress towards liquidating the distribution
subsidiary.
Additionally, the Company has distribution partners in Russia,
Ukraine and Belarus that generated approximately $35.0 in revenue
and $5.0 in gross profit during the year ended December 31, 2021.
Due to the Russian incursion into Ukraine and the related economic
sanctions, the prospect of re-establishing revenue from these
relationships is currently uncertain.
Based on the circumstances outlined above, the Company recorded an
impairment charge of $16.8 in the first quarter of 2022, inclusive
of trade receivables from customers in the region that are doubtful
of being collected, inventory specifically for customers in the
region and various other assets that are not
recoverable.
The war in Ukraine has had implication on logistic routes, which is
one of several macroeconomic conditions that is negatively
impacting our supply chain. We are not particularly reliant on
specific suppliers based in the affected areas, but circumvention
has impacted lead times of inbound product. Management has
identified elevated cybersecurity risk related to the matter, and
has implemented mitigation strategies. The net cost of these risks
in addition to the aforementioned liquidation, management of
economic sanctions, humanitarian efforts and other related
expenditures offset with certain recoveries was not material during
the three months ended March 31, 2023.
Discussion and Analysis of
Financial Condition and Results of Operations as of March 31,
2023
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
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 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 a
majority of the world's top 100 financial institutions and 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 21,000 employees
worldwide.
Strategy
The Company is focused on consistently innovating its solutions to
support a better transaction experience for consumers at bank and
retail locations while simultaneously streamlining cost structures
and business processes through the integration of hardware,
software and services.
RECENT DEVELOPMENTS
Restructuring Support Agreement
On May 30, 2023, the Company Parties entered into the Restructuring
Support Agreement with the Consenting Creditors holding: (i)
obligations under the Superpriority Credit Agreement; (ii) term
loan obligations under the New Term Loan Credit Agreement; (iii)
the 2025 Senior Notes; and (iv) the 2L Notes. The Consenting
Creditors collectively hold significant majority of the Companies
outstanding secured debt obligations.
The Restructuring Support Agreement sets forth the agreed-upon
terms among the Company and the Consenting Creditors for the
effectuation of a deleveraging transaction through, among other
things (i) a pre-packaged chapter 11 plan of reorganization to be
filed by the Debtors in connection with the anticipated
commencement by the Debtors of the Chapter 11 Cases under the U.S.
Bankruptcy Code in the U.S. Bankruptcy Court, (ii) a scheme of
arrangement to be filed by the Dutch Issuer in connection with the
commencement by the Dutch Issuer of the Dutch Scheme Proceedings
under the Dutch Restructuring Law in the the Dutch Court and (iii)
recognition of such Dutch scheme pursuant to proceedings to be
commenced under chapter 15 of the U.S. Bankruptcy Code by the Dutch
Issuer.
Under the Restructuring Support Agreement, the Consenting Creditors
have agreed, subject to certain terms and conditions, to support
transactions (the Restructuring Transactions) that would result in
a financial restructuring of the existing debt of, existing equity
interests in the Company Parties pursuant to the Chapter 11 Plan
and the WHOA Plan.
The Company cannot predict the ultimate outcome of the Chapter 11
Cases and the Dutch Scheme Proceedings at this time or the
satisfaction of any of the Restructuring Support Agreement
milestones yet to come. For the duration of any Chapter 11 Cases or
Dutch Scheme Proceedings, the Company’s operations and ability to
develop and execute its business plan would be subject to the risks
and uncertainties associated with the Chapter 11 process and Dutch
Restructuring Law process. The amount and composition of the
Company’s assets, liabilities, officers and/or directors could be
significantly different following the outcome of the Chapter 11
Cases and the Dutch Scheme Proceedings, and our historical
financial performance would likely not be indicative of our future
financial performance. In particular, the description of the
Company’s operations, properties and liquidity and capital
resources included in this Quarterly Report on Form 10-Q may not
accurately reflect our operations, properties and liquidity and
capital resources following the Chapter 11 process and Dutch
Restructuring Law process.
For a more detailed discussion of the Restructuring Support
Agreement and the Restructuring Transactions, see “Restructuring
Support Agreement” in Note 9 to our Condensed Consolidated
Financial Statements and Part II, Item 1A “Risk Factors” in this
Quarterly Report.
Going Concern
Discussion and Analysis of
Financial Condition and Results of Operations as of March 31,
2023
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
Our condensed consolidated financial statements included herein
have been prepared using the going concern basis of accounting,
which contemplates continuity of operations, realization of assets,
and satisfaction of liabilities in the normal course of business.
Pursuant to the requirements of ASC Topic 205-40,
Disclosure of Uncertainties about an Entity’s Ability to Continue
as a Going Concern,
management must evaluate whether there are conditions or events,
considered in the aggregate, that raise substantial doubt about the
Company’s ability to continue as a going concern for one year from
the date the consolidated financial statements are issued. Our
ability to continue as a going concern is contingent upon, among
other things, our ability to successfully implement the
Restructuring Transactions contemplated in the Restructuring
Support Agreement, subject to the approval of the U.S. Bankruptcy
Court and the Dutch Court. The Restructuring Transactions are
intended to provide the Company with additional liquidity and a
sustainable capital structure. There can be no certainty that the
Restructuring Transactions will be effected or that disruption from
the Chapter 11 Cases and Dutch Scheme Proceedings contemplated by
the Restructuring Agreement will not interfere with the Company’s
business. As of March 31, 2023 substantial doubt exists regarding
our ability to continue as a going concern.
For a more detailed discussion of the Going Concern Assessment see
“Going Concern Assessment” in Note 1 to our Condensed Consolidated
Financial Statements and Part II, Item 1A “Risk Factors” in this
Quarterly Report.
SERVICES AND PRODUCT SOLUTIONS
The Company offers a broad portfolio of solutions designed to
automate, digitize and transform the way people bank and shop. As a
result, 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 and products
embedded with software that drive the most value to their
businesses.
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 Services
Services represents the largest operational component of the
Company and includes product-related services, implementation
services and managed services. Product-related services incidents
are managed through remote service capabilities or an on-site
visit. The portfolio includes contracted maintenance, preventive
maintenance, “on-demand” maintenance and total implementation
services. Implementation services help our customers effectively
respond to changing customer demands and includes scalable
solutions based on globally standardized processes and tools, a
single point of contact and reliable local expertise. Managed
services and outsourcing consists of managing the end-to-end
business processes and technology integration. Our integrated
business solutions include self-service fleet management, branch
life-cycle management and ATM as-a-service
capabilities.
The Company's DN Vynamic software is the first end-to-end software
portfolio in the banking marketplace designed to simplify and
enhance the consumer experience. This platform is cloud-native,
provides new capabilities and supports advanced transactions via
open application program interface (API). In addition, the
Company’s software suite simplifies operations by eliminating the
traditional focus on internal silos and enabling inter-connected
partnerships between financial institutions and payment providers.
Through its open approach, DN Vynamic brings together legacy
systems, enabling new levels of connectivity, integration, and
interoperability. The Company’s software suite provides a shared
analytic and transaction engine. The DN Vynamic platform can
generate new insights to enhance operations; prioritizing consumer
preferences rather than technology.
In 2020, the Company launched the AllConnect Data Engine (ACDE),
which enables a more data-driven and predictive approach to
services. As of March 31, 2023, more than 182,000 devices were
connected to ACDE. As the number of connected devices continues to
increase, the Company expects to benefit from more efficient and
cost-effective operations.
Discussion and Analysis of
Financial Condition and Results of Operations as of March 31,
2023
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
Banking Products
The banking portfolio of products consists of cash recyclers and
dispensers, intelligent deposit terminals, teller automation, and
kiosk technologies. As financial institutions seek to expand the
self-service transaction set and reduce operating costs by
shrinking their physical branch footprint, the Company offers the
DN Series™ family of self-service solutions.
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:
◦superior
availability and performance;
◦next-generation
cash recycling technology;
◦full
integration with the DN Vynamic™
software suite;
◦a
modular and upgradeable design, which enables customers to respond
more quickly to changing customer demands;
◦higher
note capacity and processing power;
◦improved
security safeguards to protect customers against emerging physical,
data and cyber threats;
◦physical
footprint as much as 40% less vs. competing ATMs in certain
models;
◦made
of recycled and recyclable materials and is 25% lighter than most
traditional ATMs, reducing CO2
emissions both in the manufacturing and transportation of
components and terminals;
◦uses
LED technology and highly efficient electrical systems, resulting
in up to 50% power savings versus traditional ATMs;
and
◦increased
branding options for financial institutions.
Retail
The Company’s comprehensive portfolio of retail services and
products improves the checkout process for retailers while
enhancing shopping experiences for consumers.
Retail Services
Diebold Nixdorf AllConnect Services® for retailers include
maintenance and availability services to continuously optimize the
performance and total cost of ownership of retail touchpoints, such
as checkout, self-service and mobile devices, as well as critical
store infrastructure. The solutions portfolio includes:
implementation services to expand, modernize or upgrade store
concepts; maintenance services for on-site incident resolution and
restoration of multivendor solutions; support services for
on-demand service desk support; operations services for remote
monitoring of stationary and mobile endpoint hardware; as well as
application services for remote monitoring of multivendor software
and planned software deployments and data moves. As a single point
of contact, service personnel plan and supervise store openings,
renewals and transformation projects, with attention to local
details and customers’ global IT infrastructure.
The DN Vynamic software suite for retailers provides a
comprehensive, modular and open solution ranging from the in-store
check-out to solutions across multiple channels that improve
end-to-end store processes and 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), POS, store systems and
customer relationship management systems (CRM), may be integrated
across all customer connection points to create seamless and
differentiated consumer experiences.
In 2021, the Company announced it entered the electric vehicle (EV)
charging station services business, a market with a customer
profile potentially comparable to the existing retail business. Our
global services capability, including our technicians, our skills
in global spare parts logistics management, and multi-lingual help
desks have initially resonated with market participants who own
public charging stations.
Discussion and Analysis of
Financial Condition and Results of Operations as of March 31,
2023
DIEBOLD NIXDORF, INCORPORATED AND SUBSIDIARIES
(unaudited)
(dollars in millions, except per share amounts)
Retail Products
The retail product portfolio includes self-checkout (SCO) products
and ordering kiosks facilitate a seamless and efficient transaction
experience. The BEETLE®/iSCAN EASY eXpress™, hybrid products, can
alternate from attended operation to SCO with the press of a
button. The K-two Kiosk automates routine tasks and in-store
transactions, offers order-taking abilities, particularly at quick
service restaurants (QSRs) and fast casual restaurants and presents
functionality that furthers store automation and digitalization.
The retail product portfolio also includes modular and integrated,
“all-in-one” point of sale (POS) and self-service terminals that
meet changing consumer shopping journeys, as well as retailers’ and
store staff’s automation requirements. 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.
Additionally, our retail software solutions are inclusive of a
cloud native software platform which is hardware agnostic and
multi-vendor capable.
Business Drivers
The business drivers of the Company's future performance include,
but are not limited to:
•demand
for self-service and automation from Banking and Retail customers
driven by the evolution of consumer behavior;
•demand
for cost efficiencies and better usage of real estate for bank
branches and retail stores as they transform their businesses to
meet the needs of their customers while facing macro-economic
challenges;
•demand
for services on distributed IT assets such as ATMs, POS and SCO,
including managed services and professional services;
•timing
of product upgrades and/or replacement cycles for ATMs, POS and
SCO;
•demand
for software products and professional services;
•demand
for security products and services for the financial, retail and
commercial sectors; and
•demand
for innovative technology in connection with the Company's
strategy.
Refinancing Transactions
On October 20, 2022, the Company, certain of its subsidiaries,
including Diebold Nixdorf Dutch Holding B.V., a private company
with limited liability (besloten vennootschap met beperkte
aansprakelijkheid) incorporated under Dutch law and a direct wholly
owned subsidiary of the Company (the Dutch Subsidiary), and certain
initial consenting holders entered into a Transaction Support
Agreement (which was subsequently amended on November 28, 2022 and
December 20, 2022), to which the other consenting holders became
parties (together with all exhibits, annexes and schedules thereto,
and as so amended, the Transaction Support Agreement). As
contemplated in the Transaction Support Agreement, the following
refinancing transactions (the December 2022 Refinancing
Transactions) were completed on December 29, 2022:
•The
Company and certain of its subsidiaries obtained a new $250.0
asset-based credit facility (the ABL Facility), which will mature
in July 2026, subject to a springing maturity to a date that is 91
days prior to the maturity of certain indebtedness of the Company
or its subsidiaries above a certain threshold amount. The ABL
Facility is provided by, and replaces the commitments of, the
Company’s existing revolving credit lenders under the Credit
Agreement, dated as of November 23, 2015 (as amended, restated,
amended and restated, supplemented or otherwise modified from time
to time, the Existing Credit Agreement), among the Company, as
borrower, the Company’s subsidiary borrowers party thereto, the
lenders party thereto from time to time and JPMorgan Chase Bank
N.A., as administrative agent.
•Diebold
Nixdorf Holding Germany GmbH (the German Borrower), a wholly-owned
subsidiary of the Company, obtained a new $400.0 superpriority term
loan credit facility (the Superpriority Facility), which will
mature in July 2025.
•Certain
holders of the term loans (the Existing Term Loans) under the
Existing Credit Agreement exchanged such Exis