Pitney Bowes Announces Second Quarter 2013 Results

STAMFORD, Conn., July 30, 2013 - Pitney Bowes Inc. (NYSE: PBI) today reported financial results for the second quarter 2013.

SECOND QUARTER HIGHLIGHTS

  • Revenue of $1.2 billion, nearly flat to the prior year excluding the impacts of currency and a decline of less than 1%, as reported
    • Double-digit revenue growth in Production Mail and Mail Services
    • Continued moderation in decline of recurring revenue streams in the SMB group
  • Adjusted EPS from continuing operations of $0.52
  • Operating results and the loss on sale related to the European businesses of the Management Services segment recorded in discontinued operations. Prior period results have been reclassified to reflect this change.
  • GAAP EPS loss of $0.05, which includes:
    • $0.40 per share charge for goodwill impairment
    • $0.07 per share charge for restructuring
    • $0.10 per share loss in discontinued operations
  • Free cash flow of $124 million; GAAP cash from operations of $147 million
  • Retired $375 million of debt that matured in June
  • Definitive agreement signed to sell the North America operations of Management Services to funds affiliated with Apollo Global Management, LLC
  • Updates annual guidance for 2013

“Pitney Bowes is making solid progress on its transformative journey to improve the growth profile and profitability of the business,” said Marc Lautenbach, President and Chief Executive Officer. “The actions we have taken over the last six months and the results for this quarter are consistent with the Company’s long-term strategies that we detailed at Analyst Day in May.

“We are continuing to invest in the growth areas of our business, while at the same time becoming more efficient, flexible and focused to meet the changing needs of our clients. In addition, we have strengthened our balance sheet by further reducing debt and continue to drive operational excellence that will further enhance client and shareholder value.”

SECOND QUARTER 2013 RESULTS

Today, the Company announced that it has entered into a definitive agreement to sell the North America portion of its Management Services business to funds affiliated with Apollo Global Management, LLC. This business will be reflected as a discontinued operation in the third quarter.

During the second quarter, the Company entered into definitive agreements to sell the European businesses of Management Services and has reflected the results of these businesses in discontinued operations. Prior period results have been reclassified to reflect this change. Revenue this quarter excludes approximately $45 million for revenue associated with the European operations of Management Services.

Revenue for the quarter was $1.2 billion, which was a decline of less than 1% when compared to the prior year and nearly flat to the prior year excluding the impacts of currency. Revenue for the quarter benefited from double-digit growth in the Production Mail and Mail Services segments. International Mailing revenue was flat with the prior year excluding the impacts of currency. The growth areas were offset by lower recurring revenue streams in the SMB group, lower licensing revenue in the Software segment and lower revenue due to continued pricing pressure on some contract renewals in the Management Services segment.

As a result of lower than expected first half operating performance for the North America operations of Management Services, including pricing pressure on contract renewals and a longer than anticipated sales cycle for some of the new growth areas, future near-term cash flows are now estimated to be lower than originally projected. Accordingly, the Company performed a goodwill impairment review as of June 30, 2013. As a result, a non-cash, pre-tax goodwill impairment charge of $98 million was recorded in the second quarter.

Earnings per diluted share for the quarter, on a Generally Accepted Accounting Principles (GAAP) basis was a loss of $0.05 per share compared to income of $0.50 per share for the prior year. GAAP earnings per share include a non-cash, pre-tax goodwill impairment charge of $0.40 per share; a restructuring charge of $0.07 per share; and a loss from discontinued operations of $0.10 per share.

Adjusted earnings per diluted share from continuing operations for the quarter were $0.52 per share compared to $0.51 per share for the prior year. Adjusted earnings per share exclude the goodwill impairment charge; restructuring charge; and the loss from discontinued operations. Prior year adjusted earnings per share exclude a $0.02 loss from discontinued operations.

The tax rate on diluted earnings per share declined when compared to the prior year due to the favorable resolution of certain outstanding tax issues in several countries. This had a non-recurring benefit of $0.05 per share this quarter.

                 
Earnings Per Diluted Share Reconciliation*       Q2 2013       Q2 2012
GAAP EPS       ($0.05)       $0.50
Loss from discontinued operations       $0.10       $0.02
GAAP EPS from continuing operations       $0.05       $0.51
Restructuring       $0.07       -
Goodwill impairment       $0.40       -
Adjusted EPS from continuing operations       $0.52       $0.51

* The sum of the earnings per share may not equal the totals above due to rounding.

FREE CASH FLOW RESULTS

Free cash flow for the quarter was $124 million, while on a GAAP basis the Company generated $147 million in cash from operations. Free cash flow this quarter is lower than the prior year due to the timing of tax payments and working capital. There was also less of a benefit from the declines in finance receivables and bank reserve account deposits this quarter. Free cash flow on a year-to-date basis was $232 million and the Company generated $279 million in cash from operations on a GAAP basis. During the quarter, the Company used $47 million of cash for dividends and $11 million for restructuring payments. Also during the quarter, the Company retired $375 million of debt that matured in June 2013.

BUSINESS SEGMENT RESULTS

SMB Solutions Group

                         
        2Q 2013       Y-O-Y Change       Change ex Currency
Revenue       $597 million       (3%)       (3%)
EBIT       $186 million       (2%)        

Within the SMB Solutions Group:

North America Mailing

        2Q 2013       Y-O-Y Change       Change ex Currency
Revenue       $433 million       (5%)       (4%)
EBIT       $166 million       (1%)        

During the quarter, North America Mailing continued to experience lower rates of decline in recurring revenue streams than in prior quarters and the prior year. The year-over-year rate of revenue decline also slowed due to improving trends in equipment sales in the current year. EBIT margin improved versus the prior year as a result of improved recurring revenue margins and cost reduction initiatives that offset the negative impacts of the lower mix of recurring revenue streams.

International Mailing

        2Q 2013       Y-O-Y Change       Change ex Currency
Revenue       $165 million       (1%)      

0%

EBIT       $19 million       (11%)        

International Mailing revenue benefited from increased sales of Connect+™ mailing systems in Europe. Increased equipment sales and supplies revenue in Asia Pacific also contributed to revenue performance this quarter. EBIT margin was adversely impacted by the equipment sales mix, which had lower margins.

Enterprise Business Solutions Group

                         
        2Q 2013       Y-O-Y Change       Change ex Currency
Revenue       $561 million       2%       3%
EBIT       $64 million       (1%)        

Within the Enterprise Business Solutions Group:

Worldwide Production Mail

        2Q 2013       Y-O-Y Change       Change ex Currency
Revenue       $145 million       18%       18%
EBIT       $14 million       143%        

Production Mail revenue benefited from the installation of large production print and inserting equipment orders in North America. Demand for new products and printers resulted in a higher backlog at the end of the quarter. Supplies revenue grew as a result of the increased base of production print installations. EBIT margin improved versus the prior year due to the growth in revenue and cost reduction initiatives. The Company continued to invest in Volly™ but the EBIT impact was partially offset by licensing and services revenue from Australia Post.

Software

        2Q 2013       Y-O-Y Change       Change ex Currency
Revenue       $92 million       (8%)       (7%)
EBIT       $16 million       85%        

Software revenue declined compared to the prior year due primarily to fewer large dollar licensing deals in North America. In addition, there continued to be weakness in the international markets, in part due to ongoing austerity measures in the public sector. Compared to the first quarter results, revenue improved due to increased sales effectiveness. EBIT margin improved significantly versus the prior year and the prior quarter due to cost reduction initiatives that have resulted in a more variable cost structure.

Management Services

        2Q 2013       Y-O-Y Change       Change ex Currency
Revenue       $175 million       (3%)       (3%)
EBIT       $15 million       4%        

Management Services results exclude the European businesses, which are now reflected as discontinued operations. Revenue for the quarter declined due to continued pricing pressure on contract renewals. EBIT margin improved compared to the prior year despite the decline in revenue due to lower operating costs associated with ongoing productivity programs.

Mail Services

        2Q 2013       Y-O-Y Change       Change ex Currency
Revenue       $119 million       10%       10%
EBIT       $15 million       (46%)        

Mail Services revenue benefited from increased transactions associated with the Company’s ecommerce solutions for cross-border package delivery, as well as growth in presort volumes for both Standard mail and First Class mail. EBIT margin was impacted by the ongoing investments and costs related to building out the infrastructure of the Company’s ecommerce offering. Prior year EBIT included a $4 million insurance reimbursement related to the fire at the Company’s Dallas presort facility, which adversely impacted year-over-year comparisons.

Marketing Services

        2Q 2013       Y-O-Y Change       Change ex Currency
Revenue       $30 million       (17%)       (17%)
EBIT       $4 million       (44%)        

Marketing Services revenue and EBIT declined due to lower fees for certain marketing category contract renewals when compared to the prior year.

2013 GUIDANCE UPDATE

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 2012 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission.

The Company is updating its 2013 annual guidance from continuing operations to reflect results to-date and the Management Services businesses in discontinued operations in the second half of the year.

The Company now expects annual revenue, excluding the impacts of currency, to be in the range of a 1 percent decline to 2 percent growth when compared to the 2012 pro-forma revenue of $3,983 million, which excludes the revenue of Pitney Bowes Management Services.

The Company now expects GAAP earnings per diluted share from continuing operations to be in the range of $1.07 to $1.22. This guidance includes restructuring charges recorded to date of $0.07 per share and excludes any additional actions that may occur as the Company implements plans to further streamline its operations and reduce costs. The guidance includes a goodwill impairment charge of $0.40 per share related to the Management Services business. This guidance also includes $0.08 per share for costs associated with the debt tender in the first quarter.

Adjusted earnings per diluted share from continuing operations are now expected to be in the range of $1.62 to $1.77.

The Company expects free cash flow to now be in the range of $575 million to $675 million.

OTHER

As a result of signing the definitive agreement for the sale of the North America Management Services business in the third quarter, the Company anticipates recording an after-tax charge in discontinued operations in the range of $0.40 per share to $0.50 per share primarily related to the difference between the Company’s book and tax basis in this business.

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. EDT. 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

Pitney Bowes provides technology solutions for small, mid-size and large firms that help them connect with customers to build loyalty and grow revenue. Many of the company’s solutions are delivered on open platforms to best organize, analyze and apply both public and proprietary data to two-way customer communications. Pitney Bowes includes direct mail, transactional mail and call center communications in its solution mix along with digital channel messaging for the Web, email and mobile applications.

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 goodwill 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 and goodwill and asset impairments, 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; changes in business portfolio; 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 2012 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 and six months ended June 30, 2013 and 2012, and consolidated balance sheets at June 30, 2013 and March 31, 2013 are attached.

 
Pitney Bowes Inc.
Consolidated Statements of Income

(Unaudited)

                                 
(Dollars in thousands, except per share data)                              
            Three months ended June 30,       Six months ended June 30,
              2013         2012           2013         2012  
Revenue:                              
  Equipment sales         $ 243,644       $ 224,235         $ 458,643       $ 444,414  
  Supplies           72,337         70,522           146,624         146,887  
  Software           100,482         104,551           187,494         208,901  
  Rentals           136,775         145,497           273,154         285,886  
  Financing           115,929         122,948           232,691         249,696  
  Support services           163,178         171,254           328,664         344,772  
  Business services           325,862         327,350           649,207         655,447  
                                 
  Total revenue           1,158,207         1,166,357           2,276,477         2,336,003  
                                 
Costs and expenses:                              
  Cost of equipment sales           128,426         106,718           237,763         203,634  
  Cost of supplies           22,692         20,863           45,954         44,734  
  Cost of software           21,435         24,404           42,141         45,497  
  Cost of rentals           26,424         31,851           54,179         62,076  
  Financing interest expense           19,798         20,642           39,673         41,781  
  Cost of support services           104,282         112,123           212,291         227,210  
  Cost of business services           248,715         242,010           495,611         485,952  
  Selling, general and administrative           376,559         380,656           748,014         779,852  
  Research and development           31,501         33,811           64,836         67,884  
  Restructuring charges and asset impairments           19,955         (585 )         19,955         (585 )
  Goodwill impairment           97,787         -           97,787         -  
  Other interest expense           31,347         30,353           62,086         59,720  
  Interest income           (1,302 )       (2,003 )         (3,050 )       (3,736 )
  Other income, net           -         4,372           25,121         1,138  
                                 
  Total costs and expenses           1,127,619         1,005,215           2,142,361         2,015,157  
                                 
Income from continuing operations before income taxes           30,588         161,142           134,116         320,846  
                                 
Provision for income taxes           15,160         53,113           42,899         68,211  
                                 
Income from continuing operations           15,428         108,029           91,217         252,635  
                                 
(Loss) income from discontinued operations, net of income tax           (20,067 )       (3,812 )         (23,756 )       14,846  
                                 

Net (loss) income before attribution of noncontrolling interests

          (4,639 )       104,217           67,461         267,481  
                                 
Less: Preferred stock dividends of subsidiaries attributable              
to noncontrolling interests           4,594         4,594           9,188         9,188  
                                 

Net (loss) income - Pitney Bowes Inc.

        $ (9,233 )     $ 99,623         $ 58,273       $ 258,293  
                                 
                                 
Amounts attributable to common stockholders:                    
  Income from continuing operations         $ 10,834       $ 103,435         $ 82,029       $ 243,447  
  Loss (income) from discontinued operations           (20,067 )       (3,812 )         (23,756 )       14,846  
                                 
 

Net (loss) income - Pitney Bowes Inc.

        $ (9,233 )     $ 99,623         $ 58,273       $ 258,293  
                                 
Basic earnings per share attributable to common stockholders (1):              
  Continuing operations           0.05         0.52           0.41         1.22  
  Discontinued operations           (0.10 )       (0.02 )         (0.12 )       0.07  
                                 
 

Net (loss) income - Pitney Bowes Inc.

        $ (0.05 )     $ 0.50         $ 0.29       $ 1.29  
                                 
Diluted earnings per share attributable to common stockholders (1):              
  Continuing operations           0.05         0.51           0.41         1.21  
  Discontinued operations           (0.10 )       (0.02 )         (0.12 )       0.07  
                                 
 

Net (loss) income - Pitney Bowes Inc.

        $ (0.05 )     $ 0.50         $ 0.29       $ 1.29  
                                                 
(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

      June 30,

2013

    December 31,

2012

Current assets:                
  Cash and cash equivalents       $ 608,568         $ 913,276  
  Short-term investments         22,898           36,611  
                   
  Accounts receivable, gross         604,068           748,469  
  Allowance for doubtful accounts receivable         (15,528 )         (20,219 )
  Accounts receivable, net         588,540           728,250  
                   
  Finance receivables         1,158,795           1,213,776  
  Allowance for credit losses         (26,277 )         (25,484 )
  Finance receivables, net         1,132,518           1,188,292  
                   
  Inventories         141,061           179,678  
  Current income taxes         30,578           51,836  
  Other current assets and prepayments         158,812           114,184  
  Assets held for sale         71,052           -  
                   
Total current assets         2,754,027           3,212,127  
                   
Property, plant and equipment, net         351,606           385,377  
Rental property and equipment, net         230,759           241,192  
                   
Finance receivables         960,480           1,041,099  
Allowance for credit losses         (9,824 )         (14,610 )
Finance receivables, net         950,656           1,026,489  
                   
Investment in leveraged leases         33,606           34,546  
Goodwill         2,012,752           2,136,138  
Intangible assets, net         143,451           166,214  
Non-current income taxes         93,318           94,434  
Other assets         563,027           563,374  
                   
Total assets       $ 7,133,202         $ 7,859,891  
                   

Liabilities, noncontrolling interests and stockholders' equity

               
Current liabilities:                
  Accounts payable and accrued liabilities       $ 1,563,069         $ 1,809,226  
  Current income taxes         225,208           240,681  
  Notes payable and current portion of long-term obligations         -           375,000  
  Advance billings         448,129           452,130  
  Liabilities held for sale         50,331           -  
                   
Total current liabilities         2,286,737           2,877,037  
                   
Deferred taxes on income         44,460           69,222  
Tax uncertainties and other income tax liabilities         144,260           145,881  
Long-term debt         3,654,032           3,642,375  
Other non-current liabilities         685,002           718,375  
                   
Total liabilities         6,814,491           7,452,890  
                   
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         613           648  
  Common stock, $1 par value         323,338           323,338  
  Additional paid-in-capital         198,938           223,847  
  Retained Earnings         4,689,969           4,744,802  
  Accumulated other comprehensive loss         (723,523 )         (681,213 )
  Treasury Stock, at cost         (4,466,998 )         (4,500,795 )
                   
Total Pitney Bowes Inc. stockholders' equity         22,341           110,631  
                   
Total liabilities, noncontrolling interests and stockholders' equity       $ 7,133,202         $ 7,859,891  
                         

 

                             
Pitney Bowes Inc.
Revenue and EBIT
Business Segments
June 30, 2013

(Unaudited)

                             
(Dollars in thousands)         Three Months Ended June 30,
              2013           2012        

%

Change

 
 

Revenue

                         
                             
  North America Mailing         $ 432,889           453,484         (5 %)
  International Mailing           164,556           165,480         (1 %)
  Small & Medium Business Solutions           597,445           618,964         (3 %)
                             
  Production Mail           144,986           123,067         18 %
  Software           92,242           99,874         (8 %)
  Management Services           174,708           180,562         (3 %)
  Mail Services           119,058           108,045         10 %
  Marketing Services           29,768           35,845         (17 %)
  Enterprise Business Solutions           560,762           547,393         2 %
                             
  Total revenue         $ 1,158,207           1,166,357         (1 %)
                             
 

EBIT (1)

                         
                             
  North America Mailing         $ 166,363         $ 167,870         (1 %)
  International Mailing           19,285           21,758         (11 %)
  Small & Medium Business Solutions           185,648           189,628         (2 %)
                             
  Production Mail           13,617           5,594         143 %
  Software           15,729           8,487         85 %
  Management Services           14,735           14,222         4 %
  Mail Services           15,484           28,464         (46 %)
  Marketing Services           4,181           7,503         (44 %)
  Enterprise Business Solutions           63,746           64,270         (1 %)
                             
  Total EBIT         $ 249,394         $ 253,898         (2 %)
                             
  Unallocated amounts:                          
  Interest, net (2)           (49,843 )         (48,992 )        
  Corporate and other expenses           (51,221 )         (44,349 )        
  Restructuring and asset impairments           (19,955 )         585          
  Goodwill impairment           (97,787 )         -          
                             
  Income from continuing operations before income taxes         $ 30,588         $ 161,142          
                             
(1)   Earnings before interest and taxes (EBIT) excludes general corporate expenses, restructuring, goodwill and asset impairments.
(2)   Interest, net includes financing interest expense, other interest expense and interest income.
     

 

                             
Pitney Bowes Inc.
Revenue and EBIT
Business Segments
June 30, 2013

(Unaudited)

                             
(Dollars in thousands)         Six Months Ended June 30,
              2013           2012        

%

Change

 

Revenue

                         
                             
  North America Mailing         $ 863,264           914,789         (6 %)
  International Mailing           332,011           333,494         (0 %)
  Small & Medium Business Solutions           1,195,275           1,248,283         (4 %)
                             
  Production Mail           263,788           238,083         11 %
  Software           172,963           200,201         (14 %)
  Management Services           351,278           360,702         (3 %)
  Mail Services           237,913           222,681         7 %
  Marketing Services           55,260           66,053         (16 %)
  Enterprise Business Solutions           1,081,202           1,087,720         (1 %)
                             
  Total Revenue         $ 2,276,477           2,336,003         (3 %)
                             
 

EBIT (1)

                         
                             
  North America Mailing         $ 320,868         $ 346,041         (7 %)
  International Mailing           37,034           41,755         (11 %)
  Small & Medium Business Solutions           357,902           387,796         (8 %)
                             
  Production Mail           16,672           8,373         99 %
  Software           20,619           19,179         8 %
  Management Services           29,097           26,210         11 %
  Mail Services           34,833           62,709         (44 %)
  Marketing Services           6,167           12,320         (50 %)
  Enterprise Business Solutions           107,388           128,791         (17 %)
                             
  Total EBIT         $ 465,290         $ 516,587         (10 %)
                             
  Unallocated amounts:                          
  Interest, net (2)           (98,709 )         (97,765 )        
  Corporate and other expenses           (114,723 )         (98,561 )        
  Restructuring and asset impairments           (19,955 )         585          
  Goodwill impairment           (97,787 )         -          
                             
  Income from continuing operations before income taxes         $ 134,116         $ 320,846          
           
(1)   Earnings before interest and taxes (EBIT) excludes general corporate expenses, restructuring, goodwill and asset impairments.
(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 June 30,         Six Months Ended June 30,
            2013       2012             2013       2012  
                             
GAAP income from continuing operations                            
after income taxes, as reported         $ 10,834     $ 103,435           $ 82,029     $ 243,447  
Restructuring charges and asset impairments           13,493       (912 )           13,493       (912 )
Goodwill impairment           81,638       -             81,638       -  
Sale of leveraged lease assets           -       -             -       (12,886 )
Extinguishment of debt           -       -             15,325       -  
Income from continuing operations                            
after income taxes, as adjusted         $ 105,965     $ 102,523           $ 192,485     $ 229,649  
                             
                             
GAAP diluted earnings per share from                            
continuing operations, as reported         $ 0.05     $ 0.51           $ 0.41     $ 1.21  
Restructuring charges and asset impairments           0.07       (0.00 )           0.07       (0.00 )
Goodwill impairment           0.40       -             0.40       -  
Sale of leveraged lease           -       -             -       (0.06 )
Extinguishment of debt           -       -             0.08       -  
Diluted earnings per share from continuing                            
operations, as adjusted         $ 0.52     $ 0.51           $ 0.95     $ 1.14  
                             
                             
GAAP net cash provided by operating activities,                            
as reported         $ 146,875     $ 268,452           $ 279,035     $ 339,832  
Capital expenditures           (34,602 )     (38,722 )           (73,441 )     (88,751 )
Restructuring payments           10,980       21,630             27,255       47,875  
Pension contribution           -       -             -       95,000  
Tax payments on sale of leveraged lease assets           -       15,671             -       84,904  
Reserve account deposits           1,138       28,008             (26,189 )     2,334  
Extinguishment of debt           -       -             25,121       -  
                             
Free cash flow, as adjusted         $ 124,391     $ 295,039           $ 231,781     $ 481,194  

 

   
Note: The sum of the earnings per share amounts may not equal the totals above due to rounding.

 

 
Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited)
                               
(Dollars in thousands, except per share data)                            
                               
            Three Months Ended June 30,         Six Months Ended June 30,
              2013     2012             2013     2012  
                               
GAAP income from continuing operations                            
after income taxes, as reported         $ 10,834   $ 103,435           $ 82,029   $ 243,447  
Restructuring charges and asset impairments           13,493     (912 )           13,493     (912 )
Goodwill impairment           81,638     -             81,638     -  
  Sale of leveraged lease assets           -     -             -     (12,886 )
  Extinguishment of debt           -     -             15,325     -  
Income from continuing operations                            
after income taxes, as adjusted           105,965     102,523             192,485     229,649  
Provision for income taxes, as adjusted           37,771     53,440             75,306     85,240  
Preferred stock dividends of subsidiaries          

 

   

 

           

 

   

 

 

attributable to noncontrolling interests

          4,594     4,594             9,188  

 

9,188  
Income from continuing operations, as adjusted           148,330     160,557             276,979     324,077  
  Interest expense, net           49,843     48,992             98,709     97,765  
Adjusted EBIT           198,173     209,549             375,688     421,842  
Depreciation and amortization           56,475     67,237             113,702     131,607  
                               
Adjusted EBITDA         $ 254,648   $ 276,786           $ 489,390   $ 553,449