DFIN 2017 Annual Report

Net interest expense increased by $10.6 million for the year ended December 31, 2016 versus the year ended December 31, 2015, primarily due to the issuance of debt in connection with the Separation. Refer to “ Liquidity and Capital Resources ” for further discussion. 2016 2015 $ Change % Change (in millions, except percentages) Earnings before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $94.3 $171.7 $(77.4) (45.1%) Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.2 67.4 (32.2) (47.8%) Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.3% 39.3% The effective income tax rate was 37.3% for the year ended December 31, 2016 compared to 39.3% for the year ended December 31, 2015. The decrease in the effective tax rate from 2015 to 2016 is primarily the result of the reversal of certain international valuation allowances, partially offset by additional tax reserves recorded during 2016. Information by Segment The following tables summarize net sales, income (loss) from operations and certain items impacting comparability within each of the operating segments and Corporate. U.S. Year Ended December 31, 2016 2015 (in millions, except percentages) Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $845.2 $900.8 Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118.4 160.3 Operating margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0% 17.8% Restructuring, impairment and other charges-net . . . . . . . . . . . . . . . . 4.7 3.5 Spin-off related transaction expenses . . . . . . . . . . . . . . . . . . . . . . . . . 0.3 — Net Sales for the Year Ended December 31 Reporting unit 2016 2015 $ Change % Change (in millions, except percentages) Capital Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 466.1 $ 517.4 $ (51.3) (9.9%) Investment Markets . . . . . . . . . . . . . . . . . . . . . . . . . . 336.1 339.3 (3.2) (0.9%) Language Solutions and other . . . . . . . . . . . . . . . . . . 43.0 44.1 (1.1) (2.5%) Total U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 845.2 $ 900.8 $ (55.6) (6.2%) Net sales for the U.S. segment for the year ended December 31, 2016 were $845.2 million, a decrease of $55.6 million, or 6.2%, compared to the year ended December 31, 2015. Net sales decreased primarily due to lower capital markets transactions and compliance volume, lower commercial and mutual funds print volume and price pressures in investment markets, partially offset by an increase in virtual data room, translation and mutual fund content management services. An analysis of net sales for the U.S segment by reporting unit follows: • Capital Markets: Sales decreased due to lower transactional and compliance volumes, partially offset by an increase in virtual data room services. • Investment Markets: Sales decreased slightly due to lower mutual funds print volume and price pressures, partially offset by an increase in content management services. • Language Solutions and other: Sales decreased due to lower commercial print volume, mostly offset by higher translations services volume. 38