Divestitures

In December 2015, the Company announced it was forming a new joint venture with a subsidiary of the Inspur Group, a Chinese cloud computing and data center company, to develop, manufacture and distribute FSS solutions in China. The Inspur Group will hold a majority stake of 51.0 percent in the new joint venture, which will be named Inspur (Suzhou) Financial Technology Service Co. Ltd. (Inspur JV). The Inspur JV will offer a complete range of self-service terminals within the Chinese market, including ATMs. The Company will serve as the exclusive distributor outside of China for all products developed by the Inspur JV, which will be sold under the Diebold brand. The Company will not consolidate Inspur JV once the joint venture is formed and will include its results of operations in equity in earnings of an investee included in other (expense) income of the condensed consolidated statements of operations. In November 2016, the Inspur JV was formed and the Company does not expect a significant gain or loss from the transaction.

In addition, to support Diebold's services-led approach to the market, the Inspur Group will acquire a minority share of Diebold's current China joint venture. Moving forward, this business will be focused on providing a whole suite of services, including installation, maintenance, professional and managed services related to ATMs and other automated transaction solutions.

During the third quarter of 2016, the Company received cash proceeds of $27.7 related to the sale of stock in its Aevi International GmbH and Wincor Nixdorf China subsidiaries. In addition to the cash proceeds, the Company obtained receivables of $44.7 for the divestiture of its Wincor Nixdorf China subsidiaries. The Wincor Nixdorf China sale was reflected in the opening balance sheet and no gain or loss was recorded. The Wincor Nixdorf China sale was in connection with the June 2016, Wincor Nixdorf announcement to establish a joint venture with Aisino Corporation, to position itself in China to offer solutions that meet Chinese banking regulations. Aisino Corporation is a Chinese company that specializes in intelligent anti-forgery tax control systems, electronic fund transfer (EFT) point of sale (POS) solutions, financial IC cards, bill receipt printing solutions and public IT security solutions. The joint venture (Aisino JV) with Wincor Nixdorf in China will develop, produce and market IT solutions for banking and retail companies in China. Operating under the name Aisino Wincor, the Aisino JV will offer banks and retailers an extensive range of hardware, software and services. The Aisino JV’s comprehensive portfolio comprises POS systems and self-checkout solutions for the retail segment as well as self-service solutions for the banking segment. Banking solutions include ATMs, cash recycling systems and the software necessary to operate the systems. The Aisino JV’s portfolio will also extend to offering the banking segment end-to-end services that help customers manage their self-service networks. These professional and managed services range from deployment and project management to life-cycle maintenance. Following the closing of the transaction, the Company will hold a noncontrolling interest in the Aisino JV of 43.6 percent. The Company will include the Aisino results of operations in equity in earnings of an investee included in other income (expense) of the condensed consolidated statements of operations.

On October 25, 2015, the Company entered into a definitive asset purchase agreement with a wholly owned subsidiary of Securitas AB (Securitas Electronic Security) to divest its NA electronic security business located in the United States and Canada for an aggregate purchase price of $350.0 in cash, 10.0 percent of which was contingent based on the successful transition of certain customer relationships. The Company received the full payment of $35.0 in the first quarter of 2016 as all contingencies for this payment were achieved. For the NA electronic security business to continue its growth, it would have required resources and investment that the Company was not committed to make given its focus on the self-service market. The closing of the NA electronic security divestiture occurred on February 1, 2016 and the Company recorded a gain on sale, net of tax, of $(4.6) and $145.0 for the three and nine months ended September 30, 2016, respectively. The closing purchase price was subject to a customary working capital adjustment, which was finalized in the third quarter of 2016. The purchase agreement provides for customary representations, warranties, covenants and agreements.

The Company also agreed to provide certain transition services to Securitas Electronic Security after the closing, including providing Securitas Electronic Security a $6.0 credit for such services, of which $5.0 relates to a quarterly payment to Securitas Electronic Security and $1.0 is a credit against payments due from Securitas Electronic Security. During the three and nine months ended September 30, 2016, $1.3 and $3.8, respectively, were paid as part of the quarterly payments and for the nine months ended September 30, 2016, $1.0 were used against amounts owed by Securitas Electronic Security.

The operating results for the NA electronic security business were previously included in the Company's NA segment and have been reclassified to discontinued operations for all of the periods presented. The assets and liabilities of this business were classified as held for sale in the Company's condensed consolidated balance sheet as of December 31, 2015. Cash flows provided or used by the NA electronic security business are presented as cash flows from discontinued operations for all of the periods presented. The operating results, assets and liabilities and cash flows from discontinued operations are no longer included in the financial statements of the Company from February 1, 2016.

The following summarizes select financial information included in income from discontinued operations, net of tax:



	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2016			2015		2016			2015
Net sales
Services	$	—		$	58.0	$	16.3		$	167.6
Products	—			33.4		8.5			93.3
	—			91.4		24.8			260.9
Cost of sales
Services	—			47.3		15.1			136.8
Products	—			27.0		6.9			74.3
	—			74.3		22.0			211.1
Gross profit	—			17.1		2.8			49.8
Selling and administrative expense	—			9.9		4.8			29.3
Income (loss) from discontinued operations before taxes	—			7.2		(2.0		)	20.5
Income tax (benefit) expense	—			2.6		(0.7		)	7.1
	—			4.6		(1.3		)	13.4

Gain (loss) on sale of discontinued operations before taxes	(3.8		)	—		239.5			—
Income tax (benefit) expense	0.8			—		94.5			—
Gain (loss) on sale of discontinued operations, net of tax	(4.6		)	—		145.0			—
Income from discontinued operations, net of tax	$	(4.6	)	$	4.6	$	143.7		$	13.4

The following summarizes the assets and liabilities classified as held for sale in the condensed consolidated balance sheet:



	December 31, 2015
ASSETS
Cash and cash equivalents	$	(1.5	)
Trade receivables, less allowances for doubtful accounts of $4.0	75.6
Inventories	29.1
Prepaid expenses	0.9
Other current assets	5.0
Total current assets	109.1
Property, plant and equipment, net	5.2
Goodwill	33.9
Current assets held for sale	$	148.2

LIABILITIES
Accounts payable	$	24.8
Deferred revenue	13.3
Payroll and other benefits liabilities	6.6
Other current liabilities	4.7
Current liabilities held for sale	$	49.4

As of December 31, 2015 all assets and liabilities classified as held for sale were included in total current assets based on the cash conversion of these assets and liabilities during the first quarter of 2016. The cash and cash equivalents of the NA electronic security business represents outstanding checks as of December 31, 2015.

During the first quarter of 2015, the Company agreed to sell its equity interest in its Venezuela joint venture to its joint venture partner and recorded a $10.3 impairment of assets. On April 29, 2015, the Company closed the sale for the estimated fair market value and recorded a $1.0 reversal of impairment of assets based on final adjustments in the second quarter of 2015, resulting in a $9.3 impairment of assets for the nine months ended September 30, 2015. During the remainder of 2015, the Company incurred an additional $0.4 related to uncollectible accounts receivable, which is included in selling and administrative expense on the consolidated statements of operations.

Prior to the sale, the Company's Venezuela operations consisted of a fifty-percent owned subsidiary, which was consolidated. Venezuela was measured using the U.S. dollar as its functional currency because its economy is considered highly inflationary. On February 10, 2015, the Venezuela government introduced a new foreign currency exchange platform called the Marginal Currency System, or SIMADI, which replaced the SICAD 2 mechanism, yielding another significant increase in the exchange rate. As of March 31, 2015, management determined it was unlikely that the Company would be able to convert bolivars under a currency exchange other than SIMADI and remeasured its Venezuela balance sheet using the SIMADI rate of 192.95 compared to the previous SICAD 2 rate of 50.86, which resulted in a loss of $7.5 recorded within foreign exchange loss, net in the condensed consolidated statements of operations in the first quarter of 2015.