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Contact(s):

Pitney Bowes Inc.
Editorial – Sheryl Y. Battles
VP, Corp. Communications
203-351-6808
or
Financial – Charles F. McBride
VP, Investor Relations
203-351-6349
Website – www.pitneybowes.com

January 31, 2013

STAMFORD, Conn., January 31, 2013 - Pitney Bowes Inc. (NYSE: PBI) today reported financial results for the fourth quarter and full year 2012.

Highlights

  • Fourth quarter revenue of $1.3 billion; Adjusted EPS of $0.56; GAAP EPS of $0.55.
    • Year-over-year revenue growth in Management Services; first since 2008.
    • Year-over-year revenue growth in International Mailing, Software and Mail Services.
    • Revenue trends continue to improve in the SMB group.
  • Full year revenue of $4.9 billion; Adjusted EPS of $2.18, which includes a first quarter $0.11 per share tax benefit; GAAP EPS of $2.21.
  • Full year free cash flow of $769 million.
  • Results reflect International Mail Services (IMS) as a discontinued operation.
  • The Board of Directors approved a first quarter 2013 dividend of $0.375 per share for the Company’s common stock.

President and Chief Executive Officer, Marc Lautenbach, commented, “In my brief tenure here, I have been impressed by the Company’s assets and our opportunities to deliver long-term value to shareholders and customers. I am working with the management team to develop strategies for driving growth and on-going profitability as the Company continues to transform.”

Fourth Quarter 2012 Results

Revenue in the fourth quarter totaled $1.3 billion, a decline of one percent compared to the prior year period, on both a reported and constant currency basis. The year-over-year revenue comparison this quarter is an improvement in the revenue trends as a result of growth in four of the business segments.

Earnings per diluted share (EPS), as reported under Generally Accepted Accounting Principles (GAAP), for the fourth quarter were $0.55, which includes a net charge of $0.07 per share for restructuring. GAAP earnings per share also include income of $0.06 per share from discontinued operations, which is the net of $0.07 per share of income from the resolution of tax matters and a loss of less than $0.02 per share associated with the expected sale of the International Mail Services (IMS) business. GAAP EPS for the fourth quarter 2011 were $1.28, which included charges totaling $0.72 per share for goodwill, restructuring and asset impairments, as well as income of $1.03 per share in discontinued operations, which was primarily related to a net tax benefit from the resolution of tax matters.

Adjusted earnings per diluted share from continuing operations for the fourth quarter of 2012 and 2011 exclude any goodwill, restructuring and asset impairment charges. For the fourth quarter 2012, adjusted EPS were $0.56 per share, as compared with $0.98 in the same period in the 2011. In comparison, 2011 fourth quarter adjusted EPS from continuing operations also included a $0.37 per share benefit related to favorable tax settlements. Excluding this tax benefit, the comparable 2011 fourth quarter adjusted EPS from continuing operations were $0.61 per share.

Full Year 2012 Results

For the full year, revenue totaled $4.9 billion, a decline of 4 percent compared with the prior year on a reported basis and a decline of 3 percent excluding the impact of currency fluctuations.

Earnings per diluted share on a GAAP basis for 2012 were $2.21, which includes $0.08 per share net charge for restructuring, as well as a net benefit of $0.06 per share from the sale of leveraged lease assets. GAAP earnings per share also include income of $0.05 per share from discontinued operations, which is the net of $0.17 per share of income from the resolution of tax matters and a loss of $0.12 per share associated with the IMS business. GAAP EPS for 2011 were $3.05 per share, which included charges totaling $0.89 per share for goodwill, restructuring and asset impairments; a tax charge in continuing operations of $0.02 per share; a net benefit of $0.13 per share related to the sale of leveraged lease assets; as well as income in discontinued operations of $1.07 per share which was the net of $1.31 per share of income from the resolution of tax matters primarily related to the former Capital Services business and a loss of $0.24 per share associated with IMS.

Adjusted EPS per diluted share from continuing operations exclude goodwill, restructuring and asset impairment charges; the net benefit from the sale of leveraged lease assets; and net tax charges. For 2012 adjusted EPS were $2.18 per share, which includes a first quarter $0.11 per share net tax benefit. 2011 adjusted EPS per diluted share from continuing operations were $2.75 per share, which included a $0.44 per share net tax benefit. Excluding these benefits in adjusted EPS, comparable adjusted EPS from continuing operations for 2012 were $2.07 per share versus $2.31 per share for 2011.

The Company’s results for the quarter and the year are summarized in the table below:

                     
Earnings Per Share Reconciliation*   Q4 2012   Q4 2011       FY 2012   FY 2011
Adjusted EPS from continuing operations before net tax benefit   $0.56   $0.61       $2.07   $2.31
Net tax benefit   -   $0.37       $0.11   $0.44
Adjusted EPS from continuing operations   $0.56   $0.98       $2.18   $2.75
Restructuring and asset impairments   ($0.07)   ($0.31)       ($0.08)   ($0.48)
Goodwill charge   -   ($0.41)       -   ($0.41)
Tax charge   -   -       -   ($0.02)
Sale of leveraged lease assets   -   -       $0.06   $0.13
GAAP EPS from continuing operations   $0.49   $0.25       $2.16   $1.98
Discontinued operations – income (loss)   $0.06   $1.03       $0.05   $1.07
GAAP EPS   $0.55   $1.28       $2.21   $3.05
*2012 and 2011 results reflect the International Mail Services (IMS) business as a discontinued operation.
The sum of the earnings per share may not equal the totals above due to rounding.
 

Free Cash Flow Results

Free cash flow during the quarter was $253 million and $769 million for the year. On a GAAP basis, the Company generated $256 million in cash from operations for the quarter and $660 million for the year. During the fourth quarter, the Company used cash to pay $84 million in dividends. For the year, the Company has used its cash primarily to reduce debt, pay dividends, contribute to its pension plans and make restructuring payments.

Business Segment Results

SMB Solutions Group

             
    4Q 2012   Y-O-Y Change   Change ex Currency
Revenue   $644 million   (3%)   (3%)
EBIT   $200 million   (9%)    
             

Within the SMB Solutions Group:

North America Mailing

    4Q 2012   Y-O-Y Change   Change ex Currency
Revenue   $456 million   (6%)   (6%)
EBIT   $174 million   (11%)    
             

During the quarter, North America Mailing revenue was impacted by lower recurring revenue streams, although at a slower rate than previous quarters. Equipment sales revenue for the segment declined 3 percent, which is a continuation of the year-over-year improvement in trend, in part due to increased placements of SendSuiteLive™ shipping solutions in the U.S. and growth in equipment sales in Canada. Additionally, meter placements in Canada continued to grow for the second consecutive quarter.

EBIT margin for the segment declined versus the prior year as a result of fewer lease extensions on existing equipment and the decline in higher margin recurring revenue streams.

International Mailing

    4Q 2012   Y-O-Y Change   Change ex Currency
Revenue   $188 million   3%   4%
EBIT   $ 26 million   10%    
             

International Mailing revenue benefited from increased equipment sales in the Nordics. Revenue also benefited from increased placements of Connect+™ mailing systems, particularly in France where it was recently launched, offset by the impact of the overall economic environment in Europe. EBIT margin improved year-over-year primarily due to improved service margins and productivity initiatives.

Enterprise Business Solutions Group

             
    4Q 2012   Y-O-Y Change   Change ex Currency
Revenue   $643 million   1%   1%
EBIT   $ 77 million   (9%)  

 

             

Within the Enterprise Business Solutions Group:

Worldwide Production Mail

    4Q 2012   Y-O-Y Change   Change ex Currency
Revenue   $152 million   (6%)   (6%)
EBIT   $ 14 million   (30%)    
             

Production Mail revenue experienced a significant increase in the backlog of orders, especially in North America, as the outlook improved and some larger orders were written at the end of the year. These orders are expected to have a positive impact on revenue in future periods. However, revenue in the fourth quarter was negatively impacted due to global economic uncertainty experienced earlier in the year and the comparison against a strong quarter last year. EBIT margin declined when compared to the prior year due to lower revenue, the mix of equipment sales and continued investment in Volly™. Excluding the investment in Volly, EBIT margin would have been approximately 510 basis points higher this quarter.

Software

           
    4Q 2012   Y-O-Y Change   Change ex Currency
Revenue   $105 million   2%   2%
EBIT   $ 18 million   172%    
             

Software revenue increased versus the prior year in part due to the growth in large licensing deals, particularly in the Americas. However, there continued to be weakness in the European and Asian markets because of ongoing economic uncertainty and continued austerity measures in the public sector. EBIT margin increased versus the prior year due to revenue growth and the benefits of productivity initiatives.

Management Services

    4Q 2012   Y-O-Y Change   Change ex Currency
Revenue   $242 million   5%   5%
EBIT   $ 19 million   11%    
             

Management Services revenue improved year-over-year for the first time since 2008 as a result of positive net new written business in prior quarters and an increased volume of documents processed in the quarter. There continued to be positive net new written business this quarter, which is expected to drive recurring revenue growth in future periods. EBIT margin benefited from revenue growth and continued expense management.

Mail Services

    4Q 2012   Y-O-Y Change   Change ex Currency
Revenue   $113 million   3%   2%
EBIT   $ 20 million   (43%)    
             

Mail Services revenue improved in the fourth quarter as a result of continued penetration in workshare discount categories, as well as increased co-transportation of mail for customers. Revenue also benefited from an increase in the use of the Company’s ecommerce solutions for cross-border package delivery. EBIT margin comparisons with the prior year were impacted by a $9 million insurance reimbursement in the fourth quarter of last year. EBIT margin this quarter was also affected by the start-up investment in the Company’s new ecommerce offering. Excluding prior year’s insurance reimbursement, the underlying EBIT margin for the presort business continued to be in line with prior year.

Marketing Services

    4Q 2012   Y-O-Y Change   Change ex Currency
Revenue   $ 32 million   (5%)   (5%)
EBIT   $ 6 million   (1%)    
             

Marketing Services revenue declined in part due to lower household move volumes during the quarter, while the EBIT margin improved due to lower print production costs and ongoing productivity initiatives.

Executive Vice President and Chief Financial Officer, Michael Monahan, commented, “During the quarter, the Company continued to invest in several growth initiatives, including ecommerce and Volly, which are expected to help drive future revenue. We remain focused on our cost structure to support the changing mix of our business and to gain leverage as revenue improves. The Company will continue to take actions, as necessary, to reduce costs and make the appropriate investments in the business to drive shareholder returns.”

2013 Annual Guidance

This guidance discusses future results which are inherently subject to unforeseen risks and developments. As such, discussions about the business outlook should be read in the context of an uncertain future, as well as the risk factors identified in the safe harbor language at the end of this release and as more fully outlined in the Company's 2011 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission.

In 2013, the Company expects revenue growth in its Enterprise Solutions Group and a moderation in the decline of revenue in its SMB Solutions Group. Revenue in 2013 is expected to benefit from growth in the Company’s new ecommerce, print outsourcing and software solutions. The Company also expects revenue to benefit from improving trends in equipment sales, including increased placements of Connect+ and SendSuiteLive; as well as a moderation in the decline of its recurring revenue streams. The Company expects that the economic and postal environments will not improve or deteriorate significantly in 2013 as compared to 2012.

The Company’s 2013 guidance is as follows:

  • Revenue, excluding the impacts of currency, to be in the range of flat to 3 percent growth when compared to 2012;
  • GAAP earnings per diluted share from continuing operations to be in the range of $1.85 to $2.00, which excludes any unusual items that may occur during the year;
  • Free cash flow to be in the range of $600 million to $700 million.

The Company expects that it will make continued investments in its growth initiatives that will result in higher expenses in the first half of the year, but are anticipated to lead to greater revenue and margin contribution in the second half of the year. Additionally, it is expected that the decline in recurring revenue streams will continue to moderate and will have less of an impact on revenue and earnings in the second half of the year.

Conference Call and Webcast

Management of Pitney Bowes will discuss the Company’s results in a broadcast over the Internet today at 8:00 a.m. EST. Instructions for listening to the earnings results via the Web are available on the Investor Relations page of the Company’s web site at www.pb.com.

About Pitney Bowes

Delivering more than 90 years of innovation, Pitney Bowes provides business communications software, mailing systems and services that integrate physical and digital communications channels. Long known for making its customers more productive, Pitney Bowes is increasingly helping other companies grow their business through advanced customer communications management. Pitney Bowes is a $5 billion company with 29,000 employees worldwide. Pitney Bowes: Every connection is a new opportunity™. www.pb.com

The Company's financial results are reported in accordance with generally accepted accounting principles (GAAP). The Company uses measures such as adjusted earnings per share, adjusted income from continuing operations and free cash flow to exclude the impact of special items like restructuring charges, tax adjustments, and asset write-downs, because, while these are actual Company expenses, they can mask underlying trends associated with our business. Such items are often inconsistent in amount and frequency and as such, the adjustments allow an investor greater insight into the current underlying operating trends of the business.

The use of free cash flow provides investors insight into the amount of cash that management could have available for other discretionary uses. It adjusts GAAP cash from operations for capital expenditures, as well as special items like cash used for restructuring charges, unusual tax payments and contributions to its pension funds. Management uses segment EBIT to measure profitability and performance at the segment level. EBIT is determined by deducting the related costs and expenses attributable to the segment. Segment EBIT excludes interest, taxes, general corporate expenses not allocated to a particular business segment, restructuring charges, asset impairments, and goodwill charges which are recognized on a consolidated basis. In addition, financial results are presented on a constant currency basis to exclude the impact of changes in foreign currency exchange rates since the prior period under comparison. Constant currency measures are intended to help investors better understand the underlying operational performance of the business excluding the impacts of shifts in currency exchange rates over the intervening period.

Pitney Bowes has provided a quantitative reconciliation to GAAP in supplemental schedules. This information may also be found at the Company's web site www.pb.com/investorrelations.

This document contains “forward-looking statements” about our expected or potential future business and financial performance. For us forward-looking statements include, but are not limited to, statements about our future revenue and earnings guidance and other statements about future events or conditions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to: mail volumes; the uncertain economic environment; timely development, market acceptance and regulatory approvals, if needed, of new products; fluctuations in customer demand; changes in postal regulations; interrupted use of key information systems; management of outsourcing arrangements; foreign currency exchange rates; changes in our credit ratings; management of credit risk; changes in interest rates; the financial health of national posts; and other factors beyond our control as more fully outlined in the Company's 2011 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission. Pitney Bowes assumes no obligation to update any forward-looking statements contained in this document as a result of new information, events or developments.

Note: Consolidated statements of income; revenue and EBIT by business segment; and reconciliation of GAAP to non-GAAP measures for the three months and twelve months ended December 31, 2012 and 2011, and consolidated balance sheets at December 31, 2012 and 2011 are attached.

                 
Pitney Bowes Inc.
Consolidated Statements of Income
(Unaudited)
                 
(Dollars in thousands, except per share data)                
    Three months ended December 31,   Twelve months ended December 31,
    2012  

2011 (2)

  2012  

2011 (2)

Revenue:                
Equipment sales   $ 281,772     $ 280,365     $ 938,289     $ 986,392  
Supplies     69,815       72,246       283,604       307,974  
Software     110,385       108,301       412,762       426,606  
Rentals     141,445       151,926       569,619       618,990  
Financing     121,435       134,311       495,130       547,269  
Support services     173,243       175,798       689,667       706,505  
Business services     389,212       382,208       1,514,944       1,528,860  
                 
Total revenue     1,287,307       1,305,155       4,904,015       5,122,596  
                 
Costs and expenses:                
Cost of equipment sales     149,861       132,782       459,051       449,479  
Cost of supplies     22,141       23,089       87,569       97,454  
Cost of software     24,427       25,566       92,708       99,107  
Cost of rentals     28,098       30,770       115,356       138,603  
Financing interest expense     19,755       20,783       81,140       87,698  
Cost of support services     105,750       107,815       440,055       452,582  
Cost of business services     298,767       287,354       1,156,828       1,161,429  
Selling, general and administrative     410,281       425,473       1,598,286       1,690,360  
Research and development     32,390       40,873       136,908       148,645  
Restructuring charges and asset impairments     22,291       84,087       23,117       136,548  
Goodwill impairment     -       84,500       -       84,500  
Other interest expense     27,967       29,357       115,228       115,363  
Interest income     (2,189 )     (1,093 )     (7,982 )     (5,795 )
Other income, net     -       (9,200 )     1,138       (19,918 )
                 
Total costs and expenses     1,139,539       1,282,156       4,299,402       4,636,055  
                 
Income from continuing operations before income taxes     147,768       22,999       604,613       486,541  
                 
Provision for income taxes     44,224       (32,170 )     150,305       67,610  
                 
Income from continuing operations     103,544       55,169       454,308       418,931  
                 
Income from discontinued operations, net of income tax     11,387       206,899       9,231       216,924  
                 
Net income before attribution of noncontrolling interests     114,931       262,068       463,539       635,855  
                 
Less: Preferred stock dividends of subsidiaries attributable            
to noncontrolling interests     4,594       4,594       18,376       18,375  
                 
Net income - Pitney Bowes Inc.   $ 110,337     $ 257,474     $ 445,163     $ 617,480  
                 
                 
Amounts attributable to common stockholders:                
Income from continuing operations   $ 98,950     $ 50,575     $ 435,932     $ 400,556  
Income from discontinued operations     11,387       206,899       9,231       216,924  
                 
Net income - Pitney Bowes Inc.   $ 110,337     $ 257,474     $ 445,163     $ 617,480  
                 

Basic earnings per share attributable to common stockholders (1):

           
Continuing operations     0.49       0.25       2.18       1.98  
Discontinued operations     0.06       1.04       0.05       1.07  
                 
Net income - Pitney Bowes Inc.   $ 0.55     $ 1.29     $ 2.22     $ 3.06  
                 
Diluted earnings per share attributable to common stockholders (1):            
Continuing operations     0.49       0.25       2.16       1.98  
Discontinued operations     0.06       1.03       0.05       1.07  
                 
Net income - Pitney Bowes Inc.   $ 0.55     $ 1.28     $ 2.21     $ 3.05  
                 
(1)   The sum of the earnings per share amounts may not equal the totals above due to rounding.
     
(2)   Certain prior year amounts have been reclassified to conform to the current year presentation.
     

 

         
Pitney Bowes Inc.
Consolidated Balance Sheets
(Unaudited in thousands, except per share data)
 
Assets   12/31/12   12/31/11
Current assets:        
Cash and cash equivalents   $ 913,276     $ 856,238  
Short-term investments     36,611       12,971  
         
Accounts receivable, gross     755,218       755,485  
Allowance for doubtful accounts receivable     (26,968 )     (31,855 )
Accounts receivable, net     728,250       723,630  
         
Finance receivables     1,213,776       1,296,673  
Allowance for credit losses     (25,484 )     (45,583 )
Finance receivables, net     1,188,292       1,251,090  
         
Inventories     179,678       178,599  
Current income taxes     51,836       102,556  
Other current assets and prepayments     114,184       134,774  
         
Total current assets     3,212,127       3,259,858  
         
Property, plant and equipment, net     385,377       404,146  
Rental property and equipment, net     241,192       258,711  
         
Finance receivables     1,041,099       1,123,638  
Allowance for credit losses     (14,610 )     (17,847 )
Finance receivables, net     1,026,489       1,105,791  
         
Investment in leveraged leases     34,546       138,271  
Goodwill     2,136,138       2,147,088  
Intangible assets, net     166,214       212,603  
Non-current income taxes     94,434       89,992  
Other assets     563,374       530,644  
         
Total assets   $ 7,859,891     $ 8,147,104  
         
Liabilities, noncontrolling interests and stockholders' equity (deficit)        
Current liabilities:        
Accounts payable and accrued liabilities   $ 1,809,226     $ 1,840,465  
Current income taxes     240,681       242,972  
Notes payable and current portion of long-term obligations     375,000       550,000  
Advance billings     452,130       458,425  
         
Total current liabilities     2,877,037       3,091,862  
         
Deferred taxes on income     69,222       175,944  
Tax uncertainties and other income tax liabilities     145,881       194,840  
Long-term debt     3,642,375       3,683,909  
Other non-current liabilities     718,375       743,165  
         
Total liabilities     7,452,890       7,889,720  
         
Noncontrolling interests (Preferred stockholders' equity in subsidiaries)     296,370       296,370  
         
Stockholders' equity:        
Cumulative preferred stock, $50 par value, 4% convertible     4       4  
Cumulative preference stock, no par value, $2.12 convertible     648       659  
Common stock, $1 par value     323,338       323,338  
Additional paid-in-capital     223,847       240,584  
Retained Earnings     4,744,802       4,600,217  
Accumulated other comprehensive loss     (681,213 )     (661,645 )
Treasury Stock, at cost     (4,500,795 )     (4,542,143 )
         
Total Pitney Bowes Inc. stockholders' equity (deficit)     110,631       (38,986 )
         
Total liabilities, noncontrolling interests and stockholders' equity (deficit)   $ 7,859,891     $ 8,147,104  
                 

 

   
Pitney Bowes Inc.
Revenue and EBIT
Business Segments
December 31, 2012

(Unaudited)

             
(Dollars in thousands)   Three Months Ended December 31,
            %
    2012   2011   Change

Revenue

           
             
North America Mailing   $ 456,243     $ 482,843     (6 %)
International Mailing     187,973       182,928     3 %
Small & Medium Business Solutions     644,216       665,771     (3 %)
             
Production Mail     151,775       161,888     (6 %)
Software     104,550       102,481     2 %
Management Services     241,880       231,378     5 %
Mail Services     112,690       109,849     3 %
Marketing Services     32,196       33,788     (5 %)
Enterprise Business Solutions     643,091       639,384     1 %
             
Total revenue   $ 1,287,307     $ 1,305,155     (1 %)
             

EBIT (1)

           
             
North America Mailing   $ 173,690     $ 195,272     (11 %)
International Mailing     25,939       23,568     10 %
Small & Medium Business Solutions     199,629       218,840     (9 %)
             
Production Mail     13,716       19,591     (30 %)
Software     17,823       6,564     172 %
Management Services     19,012       17,065     11 %
Mail Services     19,841       34,651     (43 %)
Marketing Services     6,444       6,516     (1 %)
Enterprise Business Solutions     76,836       84,387     (9 %)
             
Total EBIT   $ 276,465     $ 303,227     (9 %)
             
Unallocated amounts:            
Interest, net (2)     (45,533 )     (49,047 )    
Corporate and other expenses     (60,873 )     (62,594 )    
Restructuring and asset impairments     (22,291 )     (84,087 )    
Goodwill impairment     -       (84,500 )    
             
Income from continuing operations before income taxes   $ 147,768     $ 22,999      
                     
(1)   Earnings before interest and taxes (EBIT) excludes general corporate expenses, restructuring charges and asset impairments and goodwill impairment.
(2)   Interest, net includes financing interest expense, other interest expense and interest income.
     

 

 
Pitney Bowes Inc.
Revenue and EBIT
Business Segments
December 31, 2012

(Unaudited)

             
(Dollars in thousands)   Twelve Months Ended December 31,
            %
    2012   2011   Change

Revenue

           
             
North America Mailing   $ 1,818,952     $ 1,961,198     (7 %)
International Mailing     675,637       707,416     (4 %)
Small & Medium Business Solutions     2,494,589       2,668,614     (7 %)
             
Production Mail     512,109       544,483     (6 %)
Software     393,380       407,402     (3 %)
Management Services     920,959       948,891     (3 %)
Mail Services     445,092       411,634     8 %
Marketing Services     137,886       141,572     (3 %)
Enterprise Business Solutions     2,409,426       2,453,982     (2 %)
             
Total Revenue   $ 4,904,015     $ 5,122,596     (4 %)
             

EBIT (1)

           
             
North America Mailing   $ 688,665     $ 727,999     (5 %)
International Mailing     78,979       98,601     (20 %)
Small & Medium Business Solutions     767,644       826,600     (7 %)
             
Production Mail     25,644       32,562     (21 %)
Software     37,958       38,182     (1 %)
Management Services     55,198       76,321     (28 %)
Mail Services     101,005       103,026     (2 %)
Marketing Services     28,061       26,184     7 %
Enterprise Business Solutions     247,866       276,275     (10 %)
             
Total EBIT   $ 1,015,510     $ 1,102,875     (8 %)
             
Unallocated amounts:            
Interest, net     (188,386 )     (197,266 )    
Corporate and other expenses     (199,394 )     (198,020 )    
Restructuring and asset impairments     (23,117 )     (136,548 )    
Goodwill impairment     -       (84,500 )    
             
Income from continuing operations before income taxes   $

604,613

    $ 486,541      
             
(1)   Earnings before interest and taxes (EBIT) excludes general corporate expenses, restructuring charges and asset impairments and goodwill impairment.
(2)   Interest, net includes financing interest expense, other interest expense and interest income.
     

 

     
Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited)
         
(Dollars in thousands, except per share data)                
                 
    Three Months Ended December 31,   Twelve Months Ended December 31,
    2012   2011   2012   2011
                 
GAAP income from continuing operations                
after income taxes, as reported   $ 98,950     $ 50,575     $ 435,932     $ 400,556  
Restructuring charges and asset impairments     15,096       62,571       15,407       97,660  
Goodwill impairment     -       82,890       -       82,890  
Sale of leveraged lease assets     -       -       (12,886 )     (26,689 )
Tax adjustments     -       579       -       3,539  
Income from continuing operations                
after income taxes, as adjusted   $ 114,046     $ 196,615     $ 438,453     $ 557,956  
                 
                 
GAAP diluted earnings per share from                
continuing operations, as reported   $ 0.49     $ 0.25     $ 2.16     $ 1.98  
Restructuring charges and asset impairments     0.07       0.31       0.08       0.48  
Goodwill impairment     -       0.41       -       0.41  
Sale of leveraged lease     -       -       (0.06 )     (0.13 )
Tax adjustments     -       0.00       -       0.02  
Diluted earnings per share from continuing                
operations, as adjusted   $ 0.56     $ 0.98     $ 2.18     $ 2.75  
                 
                 
GAAP net cash provided by operating activities,                
as reported   $ 255,560     $ 198,531     $ 660,188     $ 948,987  
Capital expenditures     (48,770 )     (32,951 )     (176,586 )     (155,980 )
Restructuring payments     13,972       28,623       74,718       107,002  
Pension contribution     -       -       95,000       123,000  
Tax payments on sale of leveraged lease assets     14,879       -       114,128       -  
Reserve account deposits     17,009       49,882       1,636       35,354  
                 
Free cash flow, as adjusted   $ 252,650     $ 244,085     $ 769,084     $ 1,058,363  
 
NOTE:
 
The sum of the earnings per share amounts may not equal the totals above due to rounding.
 
The above table includes an adjustment to GAAP net cash provided by operating activities due to a reclassification between net cash provided by operating activities and net cash used in investing activities. As a result, GAAP net cash provided by operating activities increased by $28.8 million for the year ended December 31, 2011, and decreased by $35.0 million for the nine months ended September 30, 2012.
 

 

 
Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited)
     
(Dollars in thousands, except per share data)                
                 
    Three Months Ended December 31,   Twelve Months Ended December 31,
    2012   2011   2012   2011
                 
GAAP income from continuing operations                
after income taxes, as reported   $ 98,950   $ 50,575     $ 435,932     $ 400,556  
Restructuring charges and asset impairments     15,096     62,571       15,407       97,660  
Goodwill impairment     -     82,890       -       82,890  
Sale of leveraged lease assets     -     -       (12,886 )     (26,689 )
Tax adjustments     -     579       -       3,539  
Income from continuing operations                
after income taxes, as adjusted     114,046     196,615       438,453       557,956  
Provision for income taxes, as adjusted     51,418     (9,623 )     174,718       138,539  
Preferred stock dividends of subsidiaries                

attributable to noncontrolling interests

    4,594     4,594       18,376       18,375  
Income from continuing operations, as adjusted     170,058     191,586       631,547       714,870  
Interest expense, net     45,533     49,047       188,386       197,266  
Adjusted EBIT     215,591     240,633       819,933       912,136  
Depreciation and amortization     64,049     67,141       255,556       272,142  
Adjusted EBITDA   $ 279,640   $ 307,774     $ 1,075,489     $ 1,184,278