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41
See “Restructuring Charges and Project Costs” and “Acquisition and Divestiture-related Adjustments” sections that follow for further
discussion.
Operating Expense
The following table presents information regarding the Company’s operating expenses during the periods indicated:
(Dollars in millions)
2015
2014
% Change
2014
2013
% Change
Research and development
$
332.2
$
354.5
(6)
%
$
354.5
$
287.2
23
%
Selling, general and administrative
1,014.1
888.2
14
%
888.2
810.1
10
%
Gain on sale of inkjet-related
technology and assets
–
–
–
%
–
(73.5)
(100)
%
Restructuring and related charges
75.0
17.9
319
%
17.9
10.9
64
%
Total operating expense
$
1,421.3
$
1,260.6
13
%
$
1,260.6
$
1,034.7
22
%
For the year ended December 31, 2015, total operating expense increased 13% compared to the same period in 2014. The increase was
primarily due to higher selling, general and administrative expenses. Higher pre-tax restructuring and related charges and project costs
also contributed to the higher operating expenses as a result of the Company’s latest restructuring announcements. Selling, general and
administrative expenses for the year ended December 31, 2015 increased 14% compared with the same period in 2014, reflecting
higher acquisition-related adjustments and increases related to the acquisitions of ReadSoft and Kofax. Acquisition and divestiture-
related adjustments for the year ended December 31, 2015 included costs associated with the Company’s rebranding action announced
in April 2015 as well as related non-cash charges for the abandonment of certain obsolete marketing assets. These factors were
partially offset by favorable currency movements and expense reductions in ISS and Enterprise Software due to the Company’s
restructuring actions and overall expense management. Research and development expenses for the year ended December 31, 2015
decreased 6% compared with the same period in 2014 driven by favorable currency movements and overall expense management,
partially offset by increases related to the acquisition of ReadSoft in the third quarter of 2014 and Kofax in the second quarter of 2015.
For the year ended December 31, 2014, total operating expense increased 22% compared to the same period in 2013, primarily due to
the Gain on sale of inkjet-related technology and assets recognized in the 2013 period, a pension and other postretirement benefit plan
net loss in 2014 compared with a net gain in 2013 and higher acquisition-related adjustments. Research and development expenses for
the year ended December 31, 2014 increased compared with the same period in 2013 primarily due to a pension and other
postretirement benefit plan net loss compared with a net gain in 2013. Research and development expenses for the 2014 period also
reflected increased investment in Enterprise Software both organically and due to the Company’s acquisitions, particularly ReadSoft
in the third quarter of 2014. Selling, general and administrative expenses for the year ended December 31, 2014 increased compared
with the same period in 2013 primarily due to a pension and other postretirement benefit plan net loss compared with a net gain in
2013, higher acquisition and divestiture-related adjustments and investment in Enterprise Software, partially offset by expense
reductions in All other due to the Company’s 2012 restructuring actions and overall expense management.
The following table summarizes the restructuring and related charges and project costs, acquisition and divestiture-related
adjustments, the impact of the pension and other postretirement benefit plan net (gains) losses and remediation-related charges
included in the Company’s operating expenses for the periods presented in the table above:
Pension and other
Restructuring charges
Acquisition and divestiture-
postretirement benefit
Remediation-
and project costs
related adjustments
plan net loss (gain)
related charges
(Dollars in millions)
2015
2014
2013
2015
2014
2013
2015
2014
2013
2015
Research and
development
$
–
$
–
$
–
$
1.3
$
0.8
$
0.7
$
6.3
$
21.0
$
(36.0)
$
–
Selling, general and
administrative
11.6
18.6
22.1
162.1
57.7
41.6
1.1
40.6
(29.6)
7.5
Restructuring and
related charges
75.0
17.9
10.9
–
–
–
–
–
–
–
Gain on sale of inkjet-
related technology and
assets
–
–
–
–
–
(73.5)
–
–
–
–
Total
$
86.6
$
36.5
$
33.0
$
163.4
$
58.5
$
(31.2)
$
7.4
$
61.6
$
(65.6)
$
7.5
See “Restructuring Charges and Project Costs” and “Acquisition and Divestiture-related Adjustments” sections that follow for further
discussion.