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during the year, consistent with an overall shift in market trends. The 2014 and 2013 financial results for the Perceptive Software
reportable segment include only the activity occurring after the dates of acquisition.
For the year ended December 31, 2013, software and other increased 27% YTY, driven by the 43% YTY growth in Perceptive
Software. Excluding the impact of acquisition-related adjustments, revenue for Perceptive Software for the year ended December 31,
2013 increased 48% compared to the same period in 2012. The YTY increases are due to the acquisitions of Acuo in December 2012,
Twistage and AccessVia in March of 2013, Saperion in September of 2013, and Pacsgear in October of 2013, as well as organic
growth of 16% in Perceptive Software. The 2013 and 2012 financial results for the Perceptive Software reportable segment include
only the activity occurring after the dates of acquisition.
Reductions in revenue result from business combination accounting rules when deferred revenue balances assumed as part of
acquisitions are adjusted down to fair value. Fair value approximates the cost of fulfilling the service obligation, plus a reasonable
profit margin. Subsequent to acquisitions, the Company analyzes the amount of amortized revenue that would have been recognized
had the acquired company remained independent and had the deferred revenue balances not been adjusted to fair value.
See “Acquisition-related Adjustments” section that follows for further discussion.
Revenue by Geography
The following table provides a breakdown of the Company’s revenue by geography:
(Dollars in millions) 2014 % of Total 2013 % of Total % Change 2013 2012 % of Total % Change
United States $ 1,607.2 43 % $ 1,576.8 43 % 2 % $ 1,576.8 $ 1,695.5 45 % (7) %
EMEA (Europe, the
Middle East &
Africa) 1,368.8 37 % 1,353.5 37 % 1 % 1,353.5 1,320.3 35 % 3 %
Other International 734.5 20 % 737.3 20 % – % 737.3 781.8 20 % (6) %
Total revenue $ 3,710.5 100 % $ 3,667.6 100 % 1 % $ 3,667.6 $ 3,797.6 100 % (3) %
For the year ended December 31, 2014, revenues in the United States increased compared to the same period in 2013 primarily due
to higher laser supplies, laser hardware and Perceptive Software revenue, partially offset by unfavorable inkjet exit impact. Revenues
in EMEA increased compared to the same period in 2013 primarily due to increased laser supplies revenue and growth in Perceptive
Software in the region attributed to the acquisitions of ReadSoft and Saperion, partially offset by unfavorable inkjet exit impact and
unfavorable currency impacts, particularly in the fourth quarter. Revenues in other international regions were relatively unchanged
YTY, reflecting increased laser supplies revenue in Asia and Latin America, offset by unfavorable inkjet exit impact. For the year
ended December 31, 2014, laser supplies revenue increased in all geographies compared with the same period in the prior year. For
2014, currency exchange rates had a 1% unfavorable YTY impact on revenue.
For the year ended December 31, 2013, the decline in revenues compared to the same period in 2012 for all regions reflects the impact
of the Company’s planned exit from inkjet technologies partially offset by revenue growth, principally in EMEA. For 2013, currency
exchange rates had a negligible YTY impact on revenue.
Gross Profit
The following table provides gross profit information:
(Dollars in millions) 2014 2013 % Change 2013 2012 % Change
Gross profit dollars $ 1,409.8 $ 1,443.9 (2) % $ 1,443.9 $ 1,401.8 3 %
% of revenue 38 % 39 % (1) pts 39 % 37 % 2 pts
For the year ended December 31, 2014, consolidated gross profit decreased 2% while gross profit as a percentage of revenue
decreased 1 percentage point compared to the same period in 2013. Gross profit margin versus the same period in 2013 was impacted
by a 1 percentage point decrease primarily due to a net pension and other post-retirement benefit plan net loss compared with a gain in
the prior year and higher YTY acquisition-related adjustments. Product margins declined slightly, as improved hardware product
margins were more than offset by the impact of unfavorable currency movements. The slightly unfavorable product mix impact
was due to the benefit from lower relative levels of inkjet hardware and relatively more laser supplies revenue being more than offset
by the unfavorable impact of relatively less inkjet supplies revenue. Gross profit for the year ended December 31, 2014 included $62.3
million of pre-tax acquisition-related adjustments, a pension and other postretirement benefit plan net loss of $18.9 million and $9.3
million of pre-tax restructuring charges and project costs.
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