DFS Annual Report

Corporate The following table summarizes unallocated operating expenses and certain items impacting comparability within the activities presented as Corporate: Year Ended December 31, 2016 2015 (in millions) Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $22.0 $ 2.9 Spin-off related transaction expenses . . . . . . . . . . . . . . . . . . . . . . . . 4.6 — Share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 1.6 Restructuring, impairment and other charges-net . . . . . . . . . . . . . . . 0.1 — Corporate operating expenses for the year ended December 31, 2016 increased $19.1 million versus the year ended December 31, 2015 due to higher employee compensation costs incurred to operate as an independent public company, spin-off related transaction expenses, and an increase in bad debt and share-based compensation expense. Results of Operations for the Year Ended December 31, 2015 as Compared to the Year Ended December 31, 2014 The following table shows the results of operations for the year ended December 31, 2015 and 2014, which reflects the results of acquired businesses from the relevant acquisition dates: 2015 2014 $ Change % Change (in millions, except percentages) Services net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 628.6 $ 638.2 $ (9.6) (1.5%) Products net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420.9 441.9 (21.0) (4.8%) Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,049.5 1,080.1 (30.6) (2.8%) Services cost of sales (exclusive of depreciation and amortization) . . . . . . . . . . 291.9 301.2 (9.3) (3.1%) Services cost of sales with RRD affiliates (exclusive of depreciation and amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.4 39.3 1.1 2.8% Products cost of sales (exclusive of depreciation and amortization) . . . . . . . . . . 230.9 236.3 (5.4) (2.3%) Products cost of sales with RRD affiliates (exclusive of depreciation and amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68.3 76.5 (8.2) (10.7%) Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 631.5 653.3 (21.8) (3.3%) Selling, general and administrative expenses (exclusive of depreciation and amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199.2 290.5 (91.3) (31.4%) Restructuring, impairment and other charges-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 4.8 (0.4) (8.3%) Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.7 40.7 1.0 2.5% Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 172.7 $ 90.8 $ 81.9 90.2% Combined Net sales of services for the year ended December 31, 2015 decreased $9.6 million, or 1.5%, to $628.6 million, versus the year ended December 31, 2014 including an $8.7 million, or 1.4%, decrease due to changes in foreign exchange rates. Additionally, net sales of services decreased due to lower capital market transactions volume, partially offset by volume growth in translation services, virtual data room services and mutual fund content management services. Net sales of products for the year ended December 31, 2015 decreased $21.0 million, or 4.8%, to $420.9 million versus the year ended December 31, 2014, including a $6.8 million, or 1.5%, decrease due to changes in foreign exchange rates. The decline in net sales of products was primarily due to lower healthcare and mutual funds print volume, price pressures in Investment Markets and lower commercial print volume. 35