UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31,September 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number: 1-03579
PITNEY BOWES INC.
(Exact name of registrant as specified in its charter)
State of incorporation:DelawareI.R.S. Employer Identification No.06-0495050
Address of Principal Executive Offices:3001 Summer Street,Stamford,Connecticut06926
Telephone Number:(203)356-5000

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common Stock, $1 par value per sharePBINew York Stock Exchange
6.7% Notes due 2043PBI.PRBNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerþAccelerated filerNon-accelerated filero
Smaller reporting companyEmerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No þ
As of April 28,October 27, 2023, 175,625,660176,331,236 shares of common stock, par value $1 per share, of the registrant were outstanding.



PITNEY BOWES INC.
INDEX
Page Number
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 31,September 30, 2023 and 2022
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended March 31,September 30, 2023 and 2022
Condensed Consolidated Balance Sheets at March 31,September 30, 2023 and December 31, 2022
Condensed Consolidated Statements of Cash Flows for the ThreeNine Months Ended March 31,September 30, 2023 and 2022
Item 6:Exhibits
2



PART I. FINANCIAL INFORMATION
Item 1: Financial Statements
PITNEY BOWES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share amounts)
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
202320222023202220232022
Revenue:Revenue:  Revenue:    
Business servicesBusiness services$523,491 $597,384 Business services$483,987 $518,405 $1,480,975 $1,667,267 
Support servicesSupport services105,284 110,352 Support services101,855 107,642 310,454 325,619 
FinancingFinancing67,049 72,029 Financing68,572 67,757 202,323 207,084 
Equipment salesEquipment sales82,610 89,296 Equipment sales76,705 83,528 238,766 262,810 
SuppliesSupplies38,835 41,061 Supplies35,695 37,455 111,035 116,761 
RentalsRentals17,269 16,820 Rentals16,937 16,127 51,217 49,810 
Total revenueTotal revenue834,538 926,942 Total revenue783,751 830,914 2,394,770 2,629,351 
Costs and expenses:Costs and expenses:Costs and expenses:
Cost of business servicesCost of business services446,317 503,215 Cost of business services419,859 452,715 1,276,814 1,433,474 
Cost of support servicesCost of support services36,840 37,134 Cost of support services35,589 36,618 107,447 111,463 
Financing interest expenseFinancing interest expense14,536 11,602 Financing interest expense16,813 13,692 46,112 37,827 
Cost of equipment salesCost of equipment sales57,171 63,771 Cost of equipment sales52,952 60,595 166,303 188,181 
Cost of suppliesCost of supplies11,225 11,517 Cost of supplies10,498 10,529 32,607 33,074 
Cost of rentalsCost of rentals5,428 5,309 Cost of rentals4,289 6,270 14,859 19,052 
Selling, general and administrativeSelling, general and administrative242,120 242,785 Selling, general and administrative209,416 209,576 674,085 678,999 
Research and developmentResearch and development10,493 11,334 Research and development10,362 9,812 31,129 32,400 
Restructuring charges3,599 4,184 
Restructuring charges and asset impairmentsRestructuring charges and asset impairments16,578 4,264 42,620 12,672 
Goodwill impairmentGoodwill impairment — 118,599 — 
Interest expense, netInterest expense, net22,342 22,124 Interest expense, net26,782 23,685 72,044 66,816 
Other components of net pension and postretirement (income) costOther components of net pension and postretirement (income) cost(1,710)844 Other components of net pension and postretirement (income) cost(2,683)1,427 (6,144)3,229 
Other income, netOther income, net(2,836)(11,901)Other income, net (8,398)(3,064)(20,299)
Total costs and expensesTotal costs and expenses845,525 901,918 Total costs and expenses800,455 820,785 2,573,411 2,596,888 
(Loss) income before taxes(Loss) income before taxes(10,987)25,024 (Loss) income before taxes(16,704)10,129 (178,641)32,463 
(Benefit) provision for income taxes(Benefit) provision for income taxes(3,250)4,203 (Benefit) provision for income taxes(4,185)4,642 (16,850)1,819 
Net (loss) incomeNet (loss) income$(7,737)$20,821 Net (loss) income$(12,519)$5,487 $(161,791)$30,644 
Basic net (loss) earnings per shareBasic net (loss) earnings per share$(0.04)$0.12 Basic net (loss) earnings per share$(0.07)$0.03 $(0.92)$0.18 
Diluted net (loss) earnings per shareDiluted net (loss) earnings per share$(0.04)$0.12 Diluted net (loss) earnings per share$(0.07)$0.03 $(0.92)$0.17 


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See Notes to Condensed Consolidated Financial Statements
3


PITNEY BOWES INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited; in thousands)

Three Months Ended March 31,
20232022
Net (loss) income$(7,737)$20,821 
Other comprehensive income (loss), net of tax:
Foreign currency translation, net of tax of $174 and $(167), respectively10,887 (17,565)
Net unrealized (loss) gain on cash flow hedges, net of tax of $(687) and $1,768, respectively(2,062)5,333 
Net unrealized gain (loss) on investment securities, net of tax of $1,028 and $(5,146), respectively3,272 (15,522)
Amortization of pension and postretirement costs, net of tax of $1,142 and $2,461, respectively3,489 7,736 
Other comprehensive income (loss), net of tax15,586 (20,018)
Comprehensive income$7,849 $803 


Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net (loss) income$(12,519)$5,487 $(161,791)$30,644 
Other comprehensive loss, net of tax:
Foreign currency translation, net of tax of $(262), $(2,393), $314 and $(5,466), respectively(25,640)(56,419)(5,560)(122,122)
Net unrealized (loss) gain on cash flow hedges, net of tax of $(439), $963, $(1,001) and $3,138, respectively(1,316)2,853 (3,003)9,415 
Net unrealized loss on investment securities, net of tax of $(1,972), $(2,545), $(1,360) and $(11,353), respectively(6,280)(9,583)(4,330)(36,148)
Amortization of pension and postretirement costs, net of tax of $1,032, $2,461, $3,397 and $6,792, respectively3,158 7,749 10,386 23,714 
Other comprehensive loss, net of tax(30,078)(55,400)(2,507)(125,141)
Comprehensive loss$(42,597)$(49,913)$(164,298)$(94,497)








































See Notes to Condensed Consolidated Financial Statements
4


PITNEY BOWES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in thousands, except per share amount)

March 31, 2023December 31, 2022September 30, 2023December 31, 2022
ASSETSASSETS  ASSETS  
Current assets:Current assets:  Current assets:  
Cash and cash equivalentsCash and cash equivalents$511,761 $669,981 Cash and cash equivalents$557,696 $669,981 
Short-term investments (includes $2,388 and $1,882, respectively, reported at fair value)15,614 11,172 
Accounts and other receivables (net of allowance of $6,083 and $5,344, respectively)271,496 343,557 
Short-term finance receivables (net of allowance of $11,683 and $11,395, respectively)551,348 564,972 
Short-term investments (includes $2,280 and $1,882, respectively, reported at fair value)Short-term investments (includes $2,280 and $1,882, respectively, reported at fair value)21,732 11,172 
Accounts and other receivables (net of allowance of $4,124 and $5,344, respectively)Accounts and other receivables (net of allowance of $4,124 and $5,344, respectively)288,592 343,557 
Short-term finance receivables (net of allowance of $14,128 and $11,395, respectively)Short-term finance receivables (net of allowance of $14,128 and $11,395, respectively)550,152 564,972 
InventoriesInventories94,016 83,720 Inventories83,781 83,720 
Current income taxesCurrent income taxes19,318 8,790 Current income taxes6,392 8,790 
Other current assets and prepaymentsOther current assets and prepayments125,746 115,824 Other current assets and prepayments109,189 115,824 
Total current assetsTotal current assets1,589,299 1,798,016 Total current assets1,617,534 1,798,016 
Property, plant and equipment, netProperty, plant and equipment, net411,793 420,672 Property, plant and equipment, net391,649 420,672 
Rental property and equipment, netRental property and equipment, net26,955 27,487 Rental property and equipment, net24,652 27,487 
Long-term finance receivables (net of allowance of $10,221 and $10,555 respectively)636,518 627,124 
Long-term finance receivables (net of allowance of $8,571 and $10,555 respectively)Long-term finance receivables (net of allowance of $8,571 and $10,555 respectively)641,251 627,124 
GoodwillGoodwill1,069,660 1,066,951 Goodwill945,418 1,066,951 
Intangible assets, netIntangible assets, net74,028 77,944 Intangible assets, net66,111 77,944 
Operating lease assetsOperating lease assets287,703 296,129 Operating lease assets309,995 296,129 
Noncurrent income taxesNoncurrent income taxes44,595 46,613 Noncurrent income taxes55,378 46,613 
Other assets (includes $231,732 and $229,936, respectively, reported at fair value)390,298 380,419 
Other assets (includes $214,752 and $229,936, respectively, reported at fair value)Other assets (includes $214,752 and $229,936, respectively, reported at fair value)370,716 380,419 
Total assetsTotal assets$4,530,849 $4,741,355 Total assets$4,422,704 $4,741,355 
LIABILITIES AND STOCKHOLDERS’ EQUITY 
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITYLIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY 
Current liabilities:Current liabilities:  Current liabilities:  
Accounts payable and accrued liabilitiesAccounts payable and accrued liabilities$800,050 $907,083 Accounts payable and accrued liabilities$793,609 $907,083 
Customer deposits at Pitney Bowes BankCustomer deposits at Pitney Bowes Bank594,546 628,072 Customer deposits at Pitney Bowes Bank642,556 628,072 
Current operating lease liabilitiesCurrent operating lease liabilities53,848 52,576 Current operating lease liabilities58,270 52,576 
Current portion of long-term debtCurrent portion of long-term debt262,439 32,764 Current portion of long-term debt56,533 32,764 
Advance billingsAdvance billings86,802 105,207 Advance billings87,739 105,207 
Current income taxesCurrent income taxes981 2,101 Current income taxes1,819 2,101 
Total current liabilitiesTotal current liabilities1,798,666 1,727,803 Total current liabilities1,640,526 1,727,803 
Long-term debtLong-term debt1,910,529 2,172,502 Long-term debt2,101,595 2,172,502 
Deferred taxes on incomeDeferred taxes on income268,193 263,131 Deferred taxes on income238,391 263,131 
Tax uncertainties and other income tax liabilitiesTax uncertainties and other income tax liabilities23,778 23,841 Tax uncertainties and other income tax liabilities21,386 23,841 
Noncurrent operating lease liabilitiesNoncurrent operating lease liabilities256,158 265,696 Noncurrent operating lease liabilities279,920 265,696 
Other noncurrent liabilitiesOther noncurrent liabilities213,561 227,729 Other noncurrent liabilities265,995 227,729 
Total liabilitiesTotal liabilities4,470,885 4,680,702 Total liabilities4,547,813 4,680,702 
Commitments and contingencies (See Note 13)Commitments and contingencies (See Note 13)Commitments and contingencies (See Note 13)
Stockholders’ equity:
Stockholders’ (deficit) equity:Stockholders’ (deficit) equity:
Common stock, $1 par value (480,000 shares authorized; 323,338 shares issued)Common stock, $1 par value (480,000 shares authorized; 323,338 shares issued)323,338 323,338 Common stock, $1 par value (480,000 shares authorized; 323,338 shares issued)323,338 323,338 
Retained earningsRetained earnings5,060,852 5,125,677 Retained earnings4,872,439 5,125,677 
Accumulated other comprehensive lossAccumulated other comprehensive loss(819,978)(835,564)Accumulated other comprehensive loss(838,071)(835,564)
Treasury stock, at cost (147,714 and 149,307 shares, respectively)(4,504,248)(4,552,798)
Total stockholders’ equity59,964 60,653 
Total liabilities and stockholders’ equity$4,530,849 $4,741,355 
Treasury stock, at cost (147,011 and 149,307 shares, respectively)Treasury stock, at cost (147,011 and 149,307 shares, respectively)(4,482,815)(4,552,798)
Total stockholders’ (deficit) equityTotal stockholders’ (deficit) equity(125,109)60,653 
Total liabilities and stockholders’ (deficit) equityTotal liabilities and stockholders’ (deficit) equity$4,422,704 $4,741,355 





See Notes to Condensed Consolidated Financial Statements
5


PITNEY BOWES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in thousands)

Three Months Ended March 31,
20232022
Cash flows from operating activities:  
Net (loss) income$(7,737)$20,821 
Adjustments to reconcile net (loss) income to net cash from operating activities:  
Depreciation and amortization39,897 42,002 
Allowance for credit losses4,308 2,024 
Stock-based compensation3,245 4,495 
Amortization of debt fees2,118 1,479 
(Gain) loss on debt redemption/refinancing(2,836)4,993 
Restructuring charges3,599 4,184 
Restructuring payments(4,641)(3,285)
Pension contributions and retiree medical payments(19,938)(13,517)
Gain on sale of assets (14,372)
Gain on sale of businesses (2,522)
Changes in operating assets and liabilities, net of acquisitions/divestitures:  
Accounts and other receivables69,841 33,086 
Finance receivables15,596 (172)
Inventories(10,226)(7,936)
Other current assets and prepayments(8,380)(25,426)
Accounts payable and accrued liabilities(103,990)(38,647)
Current and noncurrent income taxes(6,070)(3,836)
Advance billings(18,672)2,422 
Other, net4,172 4,769 
   Net cash from operating activities(39,714)10,562 
Cash flows from investing activities:  
Capital expenditures(28,666)(32,555)
Purchases of investment securities(5,180)(3,988)
Proceeds from sales/maturities of investment securities5,976 11,020 
Net investment in loan receivables(12,879)(11,230)
Proceeds from asset sales 50,766 
Proceeds from sale of businesses 9,016 
Other investing activities(664)5,000 
   Net cash from investing activities(41,413)28,029 
Cash flows from financing activities:  
Repayments of debt(31,018)(100,595)
Premiums and fees paid to redeem/refinance debt (4,759)
Dividends paid to stockholders(8,725)(8,688)
Customer deposits at Pitney Bowes Bank(33,526)(12,959)
Common stock repurchases (13,446)
Other financing activities(6,173)(5,411)
   Net cash from financing activities(79,442)(145,858)
Effect of exchange rate changes on cash and cash equivalents2,349 (2,638)
Change in cash and cash equivalents(158,220)(109,905)
Cash and cash equivalents at beginning of period669,981 732,480 
Cash and cash equivalents at end of period$511,761 $622,575 




Nine Months Ended September 30,
20232022
Cash flows from operating activities:  
Net (loss) income$(161,791)$30,644 
Adjustments to reconcile net (loss) income to net cash from operating activities:  
Depreciation and amortization120,032 124,752 
Allowance for credit losses11,393 6,355 
Stock-based compensation7,281 15,237 
Amortization of debt fees7,604 6,737 
(Gain) loss on debt redemption/refinancing(3,064)4,993 
Restructuring charges and asset impairments42,620 12,672 
Restructuring payments(25,152)(11,761)
Pension contributions and retiree medical payments(30,739)(23,411)
Gain on sale of assets (14,372)
Gain on sale of businesses (10,920)
Goodwill impairment118,599 — 
Changes in operating assets and liabilities, net of acquisitions/divestitures:  
Accounts and other receivables48,914 24,895 
Finance receivables8,144 (1,125)
Inventories54 (12,233)
Other current assets and prepayments5,239 (22,234)
Accounts payable and accrued liabilities(117,376)(120,993)
Current and noncurrent income taxes(34,819)(14,633)
Advance billings(16,106)(774)
Other, net4,714 15,400 
   Net cash from operating activities(14,453)9,229 
Cash flows from investing activities:  
Capital expenditures(77,598)(97,533)
Purchases of investment securities(11,248)(5,722)
Proceeds from sales/maturities of investment securities16,100 24,835 
Net investment in loan receivables(17,039)(31,101)
Proceeds from asset sales 50,766 
Proceeds from sale of businesses 109,326 
Acquisitions (1,154)
Settlement of derivative contracts(6,988)(48,987)
Other investing activities1,337 15,961 
   Net cash from investing activities(95,436)16,391 
Cash flows from financing activities:  
Proceeds from the issuance of debt, net of discount266,750 — 
Repayments of debt(308,755)(112,965)
Premiums and fees paid to redeem/refinance debt(10,531)(4,759)
Dividends paid to stockholders(26,330)(26,013)
Customer deposits at Pitney Bowes Bank88,456 31,359 
Common stock repurchases (13,446)
Other financing activities(11,649)(10,356)
   Net cash from financing activities(2,059)(136,180)
Effect of exchange rate changes on cash and cash equivalents(337)(25,273)
Change in cash and cash equivalents(112,285)(135,833)
Cash and cash equivalents at beginning of period669,981 732,480 
Cash and cash equivalents at end of period$557,696 $596,647 





See Notes to Condensed Consolidated Financial Statements
6


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

1. Description of Business and Basis of Presentation
Description of Business
Pitney Bowes Inc. (we, us, our, or the company) is a global shipping and mailing company that provides technology, logistics, and financial services to small and medium sized businesses, large enterprises, including more than 90 percent of the Fortune 500, retailers and government clients around the world. These clients rely on us to remove the complexity and increase the efficiency in their sending of mail and parcels. For additional information, visit www.pitneybowes.com.

Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In addition, the December 31, 2022 Condensed Consolidated Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In management's opinion, all adjustments, consisting only of normal recurring adjustments, considered necessary to fairly state our financial position, results of operations and cash flows for the periods presented have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2023. These statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report to Stockholders on Form 10-K for the year ended December 31, 2022 (2022 Annual Report).
During the second quarter of 2022, we determined that $5 million of cash outflows were incorrectly classified as operating activities instead of investing activities within the Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2022. During the second quarter of 2022, we corrected this misstatement for the six months ended June 30, 2022. The impact of the adjustments is not material to the consolidated financial statements for any prior quarterly or annual periods.
Factors Affecting Comparability
Certain transactions and changes occurred during 2022 that impact the comparability ofto our 2023 financial results to the prior periods.results. These transactions and changes include:
Thethe sale of our Borderfree cross-border ecommerce solutions business (Borderfree) in July 2022. Accordingly, reported revenue and costs for the first half ofnine months ended September 30, 2022 include revenue and costs for Borderfree.Borderfree through the sale date. Net income of Borderfree infor the first half ofyear-to-date 2022 period was not significant.
Aa change in the presentation of revenue for digital delivery services effective October 1, 2022, from a gross basis to a net basis. Accordingly, inThroughout 2023, revenue and costs of revenue for certain digital delivery services are reported on a net basis as business services revenue; whereas for the first nine months ofin 2022, revenue and costcosts of revenue for these services arewere reported as business services revenue and cost of business services, respectively. The change primarily impacts our Global Ecommerce business.segment.

Accounting Pronouncements Adopted in 2023
On January 1, 2023, we adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which requires disclosure of gross write-offs of finance receivables by year of origination. The adoption of this standard did not have a material impact on our financial statement disclosures.

Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The transition to new reference interest rates will require certain contracts to be modified and the ASU is intended to provide temporary optional expedients and exceptions to U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The accommodations provided by the ASU are effective through December 31, 2024, and may be applied at the beginning of any interim period within that time frame. We continue to assess the impact of this standard on our condensed consolidated financial statements.










7


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
2. Revenue
Disaggregated Revenue
The following tables disaggregate our revenue by source and timing of recognition:
Three Months Ended March 31, 2023
Global EcommercePresort ServicesSendTech SolutionsRevenue from products and servicesRevenue from leasing transactions and financingTotal consolidated revenue
Major products/service lines
Business services$348,391 $158,902 $16,198 $523,491 $ $523,491 
Support services  105,284 105,284  105,284 
Financing    67,049 67,049 
Equipment sales  19,995 19,995 62,615 82,610 
Supplies  38,835 38,835  38,835 
Rentals    17,269 17,269 
Subtotal348,391 158,902 180,312 687,605 $146,933 $834,538 
Revenue from leasing transactions and financing  146,933 146,933 
     Total revenue$348,391 $158,902 $327,245 $834,538 
Timing of revenue recognition from products and services
Products/services transferred at a point in time$ $ $77,064 $77,064 
Products/services transferred over time348,391 158,902 103,248 610,541 
      Total$348,391 $158,902 $180,312 $687,605 

Three Months Ended March 31, 2022
Global EcommercePresort ServicesSendTech SolutionsRevenue from products and servicesRevenue from leasing transactions and financingTotal consolidated revenue
Major products/service lines
Business services$418,527 $160,544 $18,313 $597,384 $— $597,384 
Support services— — 110,352 110,352 — 110,352 
Financing— — — — 72,029 72,029 
Equipment sales— — 21,299 21,299 67,997 89,296 
Supplies— — 41,061 41,061 — 41,061 
Rentals— — — — 16,820 16,820 
Subtotal418,527 160,544 191,025 770,096 $156,846 $926,942 
Revenue from leasing transactions and financing— — 156,846 156,846 
     Total revenue$418,527 $160,544 $347,871 $926,942 
Timing of revenue recognition from products and services
Products/services transferred at a point in time$— $— $78,373 $78,373 
Products/services transferred over time418,527 160,544 112,652 691,723 
      Total$418,527 $160,544 $191,025 $770,096 
Three Months Ended September 30, 2023
Global EcommercePresort ServicesSendTech SolutionsRevenue from products and servicesRevenue from leasing transactions and financingTotal consolidated revenue
Major products/service lines
Business services$313,161 $152,451 $18,375 $483,987 $ $483,987 
Support services  101,855 101,855  101,855 
Financing    68,572 68,572 
Equipment sales  18,353 18,353 58,352 76,705 
Supplies  35,695 35,695  35,695 
Rentals    16,937 16,937 
Subtotal313,161 152,451 174,278 639,890 $143,861 $783,751 
Revenue from leasing transactions and financing  143,861 143,861 
     Total revenue$313,161 $152,451 $318,139 $783,751 
Timing of revenue recognition from products and services
Products/services transferred at a point in time$ $ $71,634 $71,634 
Products/services transferred over time313,161 152,451 102,644 568,256 
      Total$313,161 $152,451 $174,278 $639,890 


Three Months Ended September 30, 2022
Global EcommercePresort ServicesSendTech SolutionsRevenue from products and servicesRevenue from leasing transactions and financingTotal consolidated revenue
Major products/service lines
Business services$354,326 $144,824 $19,255 $518,405 $— $518,405 
Support services— — 107,642 107,642 — 107,642 
Financing— — — — 67,757 67,757 
Equipment sales— — 20,389 20,389 63,139 83,528 
Supplies— — 37,455 37,455 — 37,455 
Rentals— — — — 16,127 16,127 
Subtotal354,326 144,824 184,741 683,891 $147,023 $830,914 
Revenue from leasing transactions and financing— — 147,023 147,023 
     Total revenue$354,326 $144,824 $331,764 $830,914 
Timing of revenue recognition from products and services
Products/services transferred at a point in time$— $— $76,667 $76,667 
Products/services transferred over time354,326 144,824 108,074 607,224 
      Total$354,326 $144,824 $184,741 $683,891 
8


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Nine Months Ended September 30, 2023
Global EcommercePresort ServicesSendTech SolutionsRevenue from products and servicesRevenue from leasing transactions and financingTotal consolidated revenue
Major products/service lines
Business services$974,306 $454,460 $52,209 $1,480,975 $ $1,480,975 
Support services  310,454 310,454  310,454 
Financing    202,323 202,323 
Equipment sales  57,408 57,408 181,358 238,766 
Supplies  111,035 111,035  111,035 
Rentals    51,217 51,217 
Subtotal974,306 454,460 531,106 1,959,872 $434,898 $2,394,770 
Revenue from leasing transactions and financing  434,898 434,898 
     Total revenue$974,306 $454,460 $966,004 $2,394,770 
Timing of revenue recognition from products and services
Products/services transferred at a point in time$ $ $222,193 $222,193 
Products/services transferred over time974,306 454,460 308,913 1,737,679 
      Total$974,306 $454,460 $531,106 $1,959,872 


Nine Months Ended September 30, 2022
Global EcommercePresort ServicesSendTech SolutionsRevenue from products and servicesRevenue from leasing transactions and financingTotal consolidated revenue
Major products/service lines
Business services$1,166,623 $444,302 $56,342 $1,667,267 $— $1,667,267 
Support services— — 325,619 325,619 — 325,619 
Financing— — — — 207,084 207,084 
Equipment sales— — 63,088 63,088 199,722 262,810 
Supplies— — 116,761 116,761 — 116,761 
Rentals— — — — 49,810 49,810 
Subtotal1,166,623 444,302 561,810 2,172,735 $456,616 $2,629,351 
Revenue from leasing transactions and financing— — 456,616 456,616 
     Total revenue$1,166,623 $444,302 $1,018,426 $2,629,351 
Timing of revenue recognition from products and services
Products/services transferred at a point in time$— $— $231,194 $231,194 
Products/services transferred over time1,166,623 444,302 330,616 1,941,541 
      Total$1,166,623 $444,302 $561,810 $2,172,735 







89


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Our performance obligations for revenue from products and services are as follows:
Business services includes fulfillment, delivery and return services, cross-border solutions, mail processing services and shipping subscription solutions. Revenue for fulfillment, delivery and return services and cross-border solutions and mail processing services is recognized over time using an output method based on the number of parcels or mail pieces either processed or delivered, depending on the service type, since that measure best depicts the value of goods and services transferred to the client over the contract period. Contract terms for these services initially range from one to five years and contain annual renewal options. Revenue for shipping subscription solutions is recognized ratably over the contract period as the client obtains equal benefit from these services through the period.
Support services includes providing maintenance, professional and subscription services for our equipment and digital mailing and shipping technology solutions. Contract terms range from one to five years, depending on the term of the lease contract for the related equipment. Revenue for maintenance and subscription services is recognized ratably over the contract period and revenue for professional services is recognized when services are provided.
Equipment sales generally includes the sale of mailing and shipping equipment, excluding sales-type leases. We recognize revenue upon delivery for self-install equipment and upon acceptance or installation for other equipment. We provide a warranty that the equipment is free of defects and meets stated specifications. The warranty is not considered a separate performance obligation.
Supplies includes revenue from supplies for our mailing equipment and is recognized upon delivery.
Revenue from leasing transactions and financing includes revenue from sales-type and operating leases, finance income, late fees and investment income, gains and losses at the Pitney Bowes Bank.

Advance Billings from Contracts with Customers
Balance sheet locationMarch 31, 2023December 31, 2022Increase/ (decrease)Balance sheet locationSeptember 30, 2023December 31, 2022Increase/ (decrease)
Advance billings, currentAdvance billings, currentAdvance billings$78,363 $97,904 $(19,541)Advance billings, currentAdvance billings$80,405 $97,904 $(17,499)
Advance billings, noncurrentAdvance billings, noncurrentOther noncurrent liabilities$949 $906 $43 Advance billings, noncurrentOther noncurrent liabilities$1,858 $906 $952 

Advance billings are recorded when cash payments are due in advance of our performance. Revenue is recognized ratably over the contract term. Items in advance billings primarily relate to support services on mailing equipment. Revenue recognized during the period includes $57$81 million of advance billings at the beginning of the period. Advance billings, current, at March 31,both September 30, 2023 and December 31, 2022 also includes $8 million and $7 million, respectively, from leasing transactions.

Future Performance Obligations
Future performance obligations include revenue streams bundled with our leasing contracts, primarily maintenance and subscription services. The transaction prices allocated to future performance obligations will be recognized as follows:
Remainder of 202320242025-2028Total
SendTech Solutions$193,946 $220,083 $293,623 $707,652 
Remainder of 202320242025-2028Total
SendTech Solutions$65,822 $236,924 $395,164 $697,910 
The amounts above do not include revenue for performance obligations under contracts with terms less than 12 months or revenue for performance obligations where revenue is recognized based on the amount billable to the customer.
910


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
3. Segment Information
Our reportable segments are Global Ecommerce, Presort Services and SendTech Solutions. The principal products and services of each reportable segment are as follows:
Global Ecommerce: Includes the revenue and related expenses from business to consumer logistics services for domestic parcel services,and cross-border servicesdelivery, returns and digital delivery services.fulfillment.
Presort Services: Includes revenue and related expenses from sortation services that enable clients to qualify large volumes offor USPS workshare discounts in First Class Mail, Marketing Mail, Marketing Mail Flats and Bound Printed Matter for postal worksharing discounts.Matter.
SendTech Solutions: Includes the revenue and related expenses from physical and digital mailing and shipping technology solutions, financing, services, supplies and other applications to help clients simplify and save on the sending, tracking and receiving of letters, parcels and flats.
Management measures segment profitability and performance using adjusted segment earnings before interest and taxes (EBIT). Adjusted segment EBIT is calculated by deducting from segment revenue the related costs and expenses attributable to the segment. Adjusted segment EBIT excludes interest, taxes, unallocated corporate expenses, restructuring charges and asset impairments, goodwill impairment, and other items not allocated to business segments. Costs related to shared assets are allocated to the relevant segments. Management believes that adjusted segment EBIT provides investors a useful measure of operating performance and underlying trends of the business. Adjusted segment EBIT may not be indicative of our overall consolidated performance and therefore, should be read in conjunction with our consolidated results of operations. The following tables provide information about our reportable segments and a reconciliation of adjusted segment EBIT to net (loss) income.
RevenueRevenue
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
202320222023202220232022
Global EcommerceGlobal Ecommerce$348,391 $418,527 Global Ecommerce$313,161 $354,326 $974,306 $1,166,623 
Presort ServicesPresort Services158,902 160,544 Presort Services152,451 144,824 454,460 444,302 
SendTech SolutionsSendTech Solutions327,245 347,871 SendTech Solutions318,139 331,764 966,004 1,018,426 
Total revenueTotal revenue$834,538 $926,942 Total revenue$783,751 $830,914 $2,394,770 $2,629,351 

Adjusted Segment EBIT
Three Months Ended March 31,
20232022
Global Ecommerce$(34,206)$(13,696)
Presort Services26,905 19,632 
SendTech Solutions96,671 104,575 
Total adjusted segment EBIT89,370 110,511 
Reconciliation of Adjusted Segment EBIT to net (loss) income:  
Unallocated corporate expenses(56,349)(57,834)
Restructuring charges(3,599)(4,184)
Interest expense, net(36,878)(33,726)
Proxy solicitation fees(6,367)— 
Gain (loss) on debt redemption/refinancing2,836 (4,993)
Gain on sale of assets 14,372 
Gain on sale of businesses, including transaction costs 878 
Benefit (provision) for income taxes3,250 (4,203)
Net (loss) income$(7,737)$20,821 

Adjusted Segment EBIT
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Global Ecommerce$(41,712)$(34,881)$(114,033)$(77,402)
Presort Services29,124 20,561 76,458 53,044 
SendTech Solutions97,761 95,234 291,912 295,374 
Total adjusted segment EBIT85,173 80,914 254,337 271,016 
Reconciliation of adjusted segment EBIT to net (loss) income:  
Unallocated corporate expenses(41,704)(42,908)(145,762)(141,537)
Restructuring charges and asset impairments(16,578)(4,264)(42,620)(12,672)
Interest expense, net(43,595)(37,377)(118,156)(104,643)
Proxy solicitation fees — (10,905)— 
Goodwill impairment — (118,599)— 
Gain (loss) on debt redemption/refinancing — 3,064 (4,993)
Gain on sale of assets —  14,372 
Gain on sale of businesses, including transaction costs 13,764  10,920 
Benefit (provision) for income taxes4,185 (4,642)16,850 (1,819)
Net (loss) income$(12,519)$5,487 $(161,791)$30,644 


1011


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
4. Earnings per Share
The calculation of basic and diluted earnings per share (EPS) is presented below.
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
202320222023202220232022
Numerator:Numerator:  Numerator:    
Net (loss) incomeNet (loss) income$(7,737)$20,821 Net (loss) income$(12,519)$5,487 $(161,791)$30,644 
Denominator:Denominator:  Denominator:    
Weighted-average shares used in basic EPSWeighted-average shares used in basic EPS174,626 174,115 Weighted-average shares used in basic EPS176,099 173,847 175,428 173,881 
Dilutive effect of common stock equivalents (1)
Dilutive effect of common stock equivalents (1)
 3,919 
Dilutive effect of common stock equivalents (1)
 3,119  3,537 
Weighted-average shares used in diluted EPSWeighted-average shares used in diluted EPS174,626 178,034 Weighted-average shares used in diluted EPS176,099 176,966 175,428 177,418 
      
Basic net (loss) earnings per shareBasic net (loss) earnings per share$(0.04)$0.12 Basic net (loss) earnings per share$(0.07)$0.03 $(0.92)$0.18 
Diluted net (loss) earnings per shareDiluted net (loss) earnings per share$(0.04)$0.12 Diluted net (loss) earnings per share$(0.07)$0.03 $(0.92)$0.17 
Common stock equivalents excluded from calculation of diluted earnings per share because their impact would be anti-dilutive:Common stock equivalents excluded from calculation of diluted earnings per share because their impact would be anti-dilutive:8,148 9,590 Common stock equivalents excluded from calculation of diluted earnings per share because their impact would be anti-dilutive:10,574 13,967 9,665 9,573 
(1) Due to the net loss for the three and nine months ended March 31,September 30, 2023, an additional 4.74.3 million and 4.2 million, respectively, of common stock equivalents were also excluded from the calculation of diluted earnings per share.


5. Inventories
Inventories are stated at the lower of cost, determined on the first-in, first-out (FIFO) basis, or net realizable value. Inventories consisted of the following:
March 31,
2023
December 31,
2022
September 30,
2023
December 31,
2022
Raw materialsRaw materials$28,372 $25,539 Raw materials$25,494 $25,539 
Supplies and service partsSupplies and service parts35,239 27,573 Supplies and service parts28,775 27,573 
Finished productsFinished products30,405 30,608 Finished products29,512 30,608 
Total inventory, netTotal inventory, net$94,016 $83,720 Total inventory, net$83,781 $83,720 















1112


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
6. Finance Assets and Lessor Operating Leases
Finance Assets
Finance receivables are comprised of sales-type lease receivables, secured loans and unsecured loans. Sales-type leases and secured loans are from financing options for the purchase or lease of Pitney Bowes equipment or other manufacturers' equipment and are generally due in installments over periods ranging from three to five years. Unsecured loans comprise revolving credit lines offered to our clients for postage, supplies and working capital purposes. These revolving credit lines are generally due monthly; however, clients may rollover outstanding balances. Interest is recognized on finance receivables using the effective interest method. Annual fees are recognized ratably over the period covered and client acquisition costs are expensed as incurred. All finance receivables are in our SendTech Solutions segment and we segregate finance receivables into a North America portfolio and an International portfolio.
Finance receivables consisted of the following:
March 31, 2023December 31, 2022September 30, 2023December 31, 2022
North AmericaInternationalTotalNorth AmericaInternationalTotalNorth AmericaInternationalTotalNorth AmericaInternationalTotal
Sales-type lease receivablesSales-type lease receivables      Sales-type lease receivables      
Gross finance receivablesGross finance receivables$971,663 $149,227 $1,120,890 $967,298 $158,167 $1,125,465 Gross finance receivables$989,069 $135,913 $1,124,982 $967,298 $158,167 $1,125,465 
Unguaranteed residual valuesUnguaranteed residual values38,688 8,628 47,316 38,832 8,798 47,630 Unguaranteed residual values38,570 7,555 46,125 38,832 8,798 47,630 
Unearned incomeUnearned income(242,564)(47,243)(289,807)(239,238)(48,334)(287,572)Unearned income(249,639)(42,059)(291,698)(239,238)(48,334)(287,572)
Allowance for credit lossesAllowance for credit losses(13,458)(2,873)(16,331)(14,131)(2,893)(17,024)Allowance for credit losses(14,352)(2,454)(16,806)(14,131)(2,893)(17,024)
Net investment in sales-type lease receivablesNet investment in sales-type lease receivables754,329 107,739 862,068 752,761 115,738 868,499 Net investment in sales-type lease receivables763,648 98,955 862,603 752,761 115,738 868,499 
Loan receivablesLoan receivables     Loan receivables     
Loan receivablesLoan receivables313,945 17,426 331,371 311,887 16,636 328,523 Loan receivables317,269 17,424 334,693 311,887 16,636 328,523 
Allowance for credit lossesAllowance for credit losses(5,423)(150)(5,573)(4,787)(139)(4,926)Allowance for credit losses(5,747)(146)(5,893)(4,787)(139)(4,926)
Net investment in loan receivablesNet investment in loan receivables308,522 17,276 325,798 307,100 16,497 323,597 Net investment in loan receivables311,522 17,278 328,800 307,100 16,497 323,597 
Net investment in finance receivablesNet investment in finance receivables$1,062,851 $125,015 $1,187,866 $1,059,861 $132,235 $1,192,096 Net investment in finance receivables$1,075,170 $116,233 $1,191,403 $1,059,861 $132,235 $1,192,096 


Maturities of gross finance receivables at March 31,September 30, 2023 were as follows:

Sales-type Lease ReceivablesLoan ReceivablesSales-type Lease ReceivablesLoan Receivables
North AmericaInternationalTotalNorth AmericaInternationalTotalNorth AmericaInternationalTotalNorth AmericaInternationalTotal
Remainder 2023Remainder 2023$279,986 $52,333 $332,319 $229,683 $17,426 $247,109 Remainder 2023$103,877 $38,932 $142,809 $214,865 $17,424 $232,289 
20242024299,265 44,812 344,077 31,141 — 31,141 2024343,412 44,439 387,851 35,617 — 35,617 
20252025207,186 28,061 235,247 24,666 — 24,666 2025255,720 27,813 283,533 29,217 — 29,217 
20262026126,392 16,005 142,397 15,966 — 15,966 2026170,704 15,739 186,443 20,025 — 20,025 
2027202755,014 6,320 61,334 10,122 — 10,122 202791,804 6,777 98,581 13,163 — 13,163 
ThereafterThereafter3,820 1,696 5,516 2,367 — 2,367 Thereafter23,552 2,213 25,765 4,382 — 4,382 
TotalTotal$971,663 $149,227 $1,120,890 $313,945 $17,426 $331,371 Total$989,069 $135,913 $1,124,982 $317,269 $17,424 $334,693 








1213


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Aging of Receivables
The aging of gross finance receivables was as follows:
March 31, 2023September 30, 2023
Sales-type Lease ReceivablesLoan ReceivablesSales-type Lease ReceivablesLoan Receivables
North
America
InternationalNorth
America
InternationalTotalNorth
America
InternationalNorth
America
InternationalTotal
Past due amounts 0 - 90 daysPast due amounts 0 - 90 days$963,890 $146,958 $310,819 $17,321 $1,438,988 Past due amounts 0 - 90 days$980,673 $134,330 $314,832 $17,113 $1,446,948 
Past due amounts > 90 daysPast due amounts > 90 days7,773 2,269 3,126 105 13,273 Past due amounts > 90 days8,396 1,583 2,437 311 12,727 
TotalTotal$971,663 $149,227 $313,945 $17,426 $1,452,261 Total$989,069 $135,913 $317,269 $17,424 $1,459,675 

December 31, 2022
Sales-type Lease ReceivablesLoan Receivables
North
America
InternationalNorth
America
InternationalTotal
Past due amounts 0 - 90 days$959,203 $155,596 $308,872 $16,503 $1,440,174 
Past due amounts > 90 days8,095 2,571 3,015 133 13,814 
Total$967,298 $158,167 $311,887 $16,636 $1,453,988 

Allowance for Credit Losses
We provide an allowance for credit losses based on historical loss experience, the nature of our portfolios, adverse situations that may affect a client's ability to pay and current economic conditions and outlook based on reasonable and supportable forecasts. We continually evaluate the adequacy of the allowance for credit losses and adjust as necessary. The assumptions used in determining an estimate of credit losses are inherently subjective and actual results may differ significantly from estimated reserves.
We established credit approval limits based on the credit quality of the client and the type of equipment financed. We cease financing revenue recognition for lease receivables and for unsecured loan receivables that are more than 90 days past due. Revenue recognition is resumed when the client's payments reduce the account aging to less than 60 days past due. Finance receivables are written off against the allowance after all collection efforts have been exhausted and management deems the account to be uncollectible. We believe that our credit risk is low because of the geographic and industry diversification of our clients and small account balances for most of our clients.























1314


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Activity in the allowance for credit losses for finance receivables was as follows:
Sales-type Lease ReceivablesLoan ReceivablesSales-type Lease ReceivablesLoan Receivables
North
America
InternationalNorth
America
InternationalTotalNorth
America
InternationalNorth
America
InternationalTotal
Balance at January 1, 2023Balance at January 1, 2023$14,131 $2,893 $4,787 $139 $21,950 Balance at January 1, 2023$14,131 $2,893 $4,787 $139 $21,950 
Amounts charged to expenseAmounts charged to expense395 238 1,097 55 1,785 Amounts charged to expense1,339 800 3,246 305 5,690 
Write-offsWrite-offs(1,683)(267)(1,109)(46)(3,105)Write-offs(3,227)(1,209)(3,722)(292)(8,450)
RecoveriesRecoveries614 111 648  1,373 Recoveries2,058 151 1,488  3,697 
OtherOther1 (102) 2 (99)Other51 (181)(52)(6)(188)
Balance at March 31, 2023$13,458 $2,873 $5,423 $150 $21,904 
Balance at September 30, 2023Balance at September 30, 2023$14,352 $2,454 $5,747 $146 $22,699 
Sales-type Lease ReceivablesLoan ReceivablesSales-type Lease ReceivablesLoan Receivables
North
America
InternationalNorth
America
InternationalTotalNorth
America
InternationalNorth
America
InternationalTotal
Balance at January 1, 2022Balance at January 1, 2022$19,546 $3,246 $3,259 $167 $26,218 Balance at January 1, 2022$19,546 $3,246 $3,259 $167 $26,218 
Amounts charged to expenseAmounts charged to expense297 47 616 143 1,103 Amounts charged to expense(1,913)189 2,459 259 994 
Write-offsWrite-offs(1,640)(360)(1,341)(117)(3,458)Write-offs(4,625)(587)(3,684)(212)(9,108)
RecoveriesRecoveries744 — 761 — 1,505 Recoveries2,273 35 1,916 4,225 
OtherOther13 (143)(9)(137)Other(103)(589)(10)(62)(764)
Balance at March 31, 2022$18,960 $2,790 $3,297 $184 $25,231 
Balance at September 30, 2022Balance at September 30, 2022$15,178 $2,294 $3,940 $153 $21,565 

The table below shows write-offs of gross finance receivables by year of origination.

March 31, 2023
Sales Type Lease ReceivablesLoan ReceivablesTotal
2022202120202019Prior
Write-offs$455 $675 $412 $250 $158 $1,155 $3,105 
September 30, 2023
Sales Type Lease ReceivablesLoan ReceivablesTotal
20232022202120202019Prior
Write-offs$833 $912 $1,141 $748 $447 $355 $4,014 $8,450 
















1415


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Credit Quality
The extension of credit and management of credit lines to new and existing clients uses a combination of a client's credit score, where available, a detailed manual review of their financial condition and payment history, or an automated process. Once credit is granted, the payment performance of the client is managed through automated collections processes and is supplemented with direct follow up should an account become delinquent. We have robust automated collections and extensive portfolio management processes to ensure that our global strategy is executed, collection resources are allocated and enhanced tools and processes are implemented as needed.
Over 85% of our finance receivables are within the North American portfolio. We use a third-party to score the majority of this portfolio on a quarterly basis using a proprietary commercial credit score. The relative scores are determined based on a number of factors, including financial information, payment history, company type and ownership structure. We stratify the third party's credit scores of our clients into low, medium and high-risk accounts. Due to timing and other issues, our entire portfolio may not be scored at period end. We report these amounts as "Not Scored"; however, absence of a score is not indicative of the credit quality of the account. The third-party credit score is used to predict the payment behaviors of our clients and the probability that an account will become greater than 90 days past due during the subsequent 12-month period.
Low risk accounts are companies with very good credit scores and a predicted delinquency rate of less than 5%.
Medium risk accounts are companies with average to good credit scores and a predicted delinquency rate between 5% and 10%.
High risk accounts are companies with poor credit scores, are delinquent or are at risk of becoming delinquent. The predicted delinquency rate would be greater than 10%.

We do not use a third-party to score our International portfolio because the cost to do so is prohibitive as there is no single credit score model that covers all countries. Accordingly, the entire International portfolio is reported in the Not Scored category. This portfolio comprises less than 15% of total finance receivables. Most of the International credit applications are small dollar applications (i.e. below $50 thousand) and are subjected to an automated review process. Larger credit applications are manually reviewed, which includes obtaining client financial information, credit reports and other available financial information.

The table below shows gross finance receivables by relative risk class and year of origination based on the relative scores of the accounts within each class.

March 31, 2023September 30, 2023
Sales Type Lease ReceivablesLoan ReceivablesTotalSales Type Lease ReceivablesLoan ReceivablesTotal
20232022202120202019Prior20232022202120202019Prior
LowLow$77,542 $266,461 $193,093 $127,566 $81,723 $32,032 $243,405 $1,021,822 Low$214,237 $241,101 $172,532 $108,325 $55,651 $16,531 $239,612 $1,047,989 
MediumMedium15,687 49,635 36,497 27,075 18,527 8,744 55,282 211,447 Medium37,123 40,116 29,949 20,506 12,288 4,007 62,663 206,652 
HighHigh1,251 5,104 3,358 2,806 1,326 996 6,080 20,921 High3,426 4,495 2,909 2,231 824 801 7,632 22,318 
Not ScoredNot Scored40,595 58,689 38,828 19,716 10,064 3,575 26,604 198,071 Not Scored56,364 46,715 32,930 14,264 6,319 1,338 24,786 182,716 
TotalTotal$135,075 $379,889 $271,776 $177,163 $111,640 $45,347 $331,371 $1,452,261 Total$311,150 $332,427 $238,320 $145,326 $75,082 $22,677 $334,693 $1,459,675 
December 31, 2022December 31, 2022
Sales Type Lease ReceivablesLoan ReceivablesTotalSales Type Lease ReceivablesLoan ReceivablesTotal
20222021202020192018Prior20222021202020192018Prior
LowLow$286,297 $206,511 $140,800 $95,485 $34,721 $12,674 $239,635 $1,016,123 Low$286,297 $206,511 $140,800 $95,485 $34,721 $12,674 $239,635 $1,016,123 
MediumMedium53,419 40,669 27,013 19,668 6,751 3,441 56,048 207,009 Medium53,419 40,669 27,013 19,668 6,751 3,441 56,048 207,009 
HighHigh6,492 3,840 3,119 1,942 750 508 6,800 23,451 High6,492 3,840 3,119 1,942 750 508 6,800 23,451 
Not ScoredNot Scored71,435 53,831 29,957 19,232 5,889 1,021 26,040 207,405 Not Scored71,435 53,831 29,957 19,232 5,889 1,021 26,040 207,405 
TotalTotal$417,643 $304,851 $200,889 $136,327 $48,111 $17,644 $328,523 $1,453,988 Total$417,643 $304,851 $200,889 $136,327 $48,111 $17,644 $328,523 $1,453,988 






1516


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Lease Income
Lease income from sales-type leases, excluding variable lease payments, was as follows:
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
202320222023202220232022
Profit recognized at commencementProfit recognized at commencement$31,822 $35,040 Profit recognized at commencement$29,476 $31,576 $92,138 $100,951 
Interest incomeInterest income38,931 42,283 Interest income38,588 40,480 116,700 123,783 
Total lease income from sales-type leasesTotal lease income from sales-type leases$70,753 $77,323 Total lease income from sales-type leases$68,064 $72,056 $208,838 $224,734 

Lessor Operating Leases
We also lease mailing equipment under operating leases with terms of one to five years. Maturities of these operating leases are as follows:
Remainder 2023Remainder 2023$15,217 Remainder 2023$7,096 
2024202417,812 202417,430 
2025202519,591 202519,044 
202620265,808 202614,827 
202720272,205 20273,449 
ThereafterThereafter434 Thereafter1,048 
TotalTotal$61,067 Total$62,894 























1617


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
7. Intangible Assets and Goodwill
Intangible Assets
Intangible assets consisted of the following:
March 31, 2023December 31, 2022September 30, 2023December 31, 2022
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Customer relationshipsCustomer relationships$155,718 $(83,997)$71,721 $155,715 $(80,188)$75,527 Customer relationships$155,712 $(91,603)$64,109 $155,715 $(80,188)$75,527 
Software & technologySoftware & technology22,020 (19,713)2,307 22,000 (19,583)2,417 Software & technology21,941 (19,939)2,002 22,000 (19,583)2,417 
Total intangible assetsTotal intangible assets$177,738 $(103,710)$74,028 $177,715 $(99,771)$77,944 Total intangible assets$177,653 $(111,542)$66,111 $177,715 $(99,771)$77,944 

Amortization expense for the three months ended March 31,September 30, 2023 and 2022 was $4 million and $8$5 million, respectively and amortization expense for the nine months ended September 30, 2023 and 2022 was $12 million and $20 million, respectively.
Future amortization expense as of March 31,September 30, 2023 is shown in the table below. Actual amortization expense may differ due to, among other things, fluctuations in foreign currency exchange rates, acquisitions, divestitures and impairment charges.

Remainder 2023Remainder 2023$11,795 Remainder 2023$3,928 
2024202415,727 202415,714 
2025202515,523 202515,510 
2026202614,534 202614,520 
2027202711,478 202711,467 
ThereafterThereafter4,971 Thereafter4,972 
TotalTotal$74,028 Total$66,111 

Goodwill
Changes in the carrying value of goodwill by reporting segment are shown in the table below.
December 31, 2022Currency impactMarch 31,
2023
December 31, 2022ImpairmentCurrency impactSeptember 30,
2023
Global EcommerceGlobal Ecommerce$339,184 $ $339,184 Global Ecommerce$339,184 $(118,599)$ $220,585 
Presort ServicesPresort Services223,763  223,763 Presort Services223,763   223,763 
SendTech SolutionsSendTech Solutions504,004 2,709 506,713 SendTech Solutions504,004  (2,934)501,070 
Total goodwillTotal goodwill$1,066,951 $2,709 $1,069,660 Total goodwill$1,066,951 $(118,599)$(2,934)$945,418 

AtGlobal Ecommerce goodwill is net of accumulated goodwill impairment charges of $317 million and $198 million at September 30, 2023 and December 31, 2022, respectively.
At the estimatedend of the second quarter of 2023, we determined that the performance of our Global Ecommerce reporting unit through June 30, 2023 and continuing changes in macroeconomic conditions, was a triggering event that caused us to evaluate the Global Ecommerce goodwill for impairment. To assess Global Ecommerce goodwill for impairment, we determined the fair value of the Global Ecommerce reporting unit exceeded itsand compared it to the unit's carrying value, by less than 10%.including goodwill. We engaged a third-party to assist in the determination of the fair value of the reporting unit. The fair value of the reporting unit was estimated using a discounted cash flow model based on management developed cash flow projections, which included judgements and assumptions related to revenue growth rates, operating margins, operating income, and a discount rate. DuringWe determined that the first quarterestimated fair value of 2023, there were no triggering events that required us to determine if the goodwill of this reporting unit was impaired. However,less than its carrying value and recorded a non-cash, pre-tax goodwill impairment charge of $119 million in the judgements and assumptions used to estimate the fair valuesecond quarter of this reporting unit at December 31, 2022 were inherently subjective and2023. Future changes in any of thethese judgements or assumptions used could materially affect the determination of fair value and result in a differentan additional impairment charge in the future. The estimates and assumptions are considered Level 3 inputs under the fair value determination in a future period.





hierarchy.

1718


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
8. Fair Value Measurements and Derivative Instruments
We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. An entity is required to classify certain assets and liabilities measured at fair value based on the following fair value hierarchy that prioritizes the inputs used to measure fair value:
Level 1 –    Unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2 –    Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3– Unobservable inputs that are supported by little or no market activity, may be derived from internally developed methodologies based on management’s best estimate of fair value and that are significant to the fair value of the asset or liability.
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect its placement within the fair value hierarchy. The following tables show, by level within the fair value hierarchy, our financial assets and liabilities that are accounted for at fair value on a recurring basis.
March 31, 2023September 30, 2023
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:Assets:    Assets:    
Investment securitiesInvestment securities    Investment securities    
Money market fundsMoney market funds$13,523 $201,911 $ $215,434 Money market funds$13,365 $137,444 $ $150,809 
Equity securitiesEquity securities 15,327  15,327 Equity securities 13,778  13,778 
Commingled fixed income securitiesCommingled fixed income securities1,553 5,360  6,913 Commingled fixed income securities1,500 5,756  7,256 
Government and related securitiesGovernment and related securities10,370 18,869  29,239 Government and related securities10,456 17,350  27,806 
Corporate debt securitiesCorporate debt securities 53,607  53,607 Corporate debt securities 50,820  50,820 
Mortgage-backed / asset-backed securitiesMortgage-backed / asset-backed securities 126,737  126,737 Mortgage-backed / asset-backed securities 114,327  114,327 
DerivativesDerivatives Derivatives 
Interest rate swapInterest rate swap 12,697  12,697 Interest rate swap 11,683  11,683 
Foreign exchange contracts 1,818  1,818 
Total assetsTotal assets$25,446 $436,326 $ $461,772 Total assets$25,321 $351,158 $ $376,479 
Liabilities:Liabilities:    Liabilities:    
DerivativesDerivatives    Derivatives    
Foreign exchange contractsForeign exchange contracts$ $(53)$ $(53)Foreign exchange contracts$ $(715)$ $(715)
Total liabilitiesTotal liabilities$ $(53)$ $(53)Total liabilities$ $(715)$ $(715)
1819


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
December 31, 2022
Level 1Level 2Level 3Total
Assets:    
Investment securities    
Money market funds$29,087 $238,536 $— $267,623 
Equity securities— 13,233 — 13,233 
Commingled fixed income securities1,520 6,526 — 8,046 
Government and related securities10,253 18,796 — 29,049 
Corporate debt securities— 52,319 — 52,319 
Mortgage-backed / asset-backed securities— 126,882 — 126,882 
Derivatives   
Interest rate swap— 15,283 — 15,283 
Foreign exchange contracts— 479 — 479 
Total assets$40,860 $472,054 $— $512,914 
Liabilities:    
Derivatives    
Foreign exchange contracts$— $(1,472)$— $(1,472)
Total liabilities$— $(1,472)$— $(1,472)
Investment Securities
The valuation of investment securities is based on the market approach using inputs that are observable, or can be corroborated by observable data, in an active marketplace. The following information relates to our classification within the fair value hierarchy:
Money Market Funds: Money market funds typically invest in government securities, certificates of deposit, commercial paper and other highly liquid, low risk securities. Money market funds are principally used for overnight deposits and are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.
Equity Securities: Equity securities are comprised of mutual funds investing in U.S. and foreign stocks. These mutual funds are classified as Level 2.
Commingled Fixed Income Securities: Commingled fixed income securities are comprised of mutual funds that invest in a variety of fixed income securities, including securities of the U.S. government and its agencies, corporate debt, mortgage-backed securities and asset-backed securities. Fair value is based on the value of the underlying investments owned by each fund, minus its liabilities, divided by the number of shares outstanding, as reported by the fund manager. These mutual funds are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.
Government and Related Securities: Debt securities are classified as Level 1 when unadjusted quoted prices in active markets are available. Debt securities are classified as Level 2 where fair value is determined using quoted market prices for similar securities or benchmarking model derived prices to quoted market prices and trade data for identical or comparable securities.
Corporate Debt Securities: Corporate debt securities are valued using recently executed comparable transactions, market price quotations or bond spreads for the same maturity as the security. These securities are classified as Level 2.
Mortgage-Backed Securities / Asset-Backed Securities: These securities are valued based on external pricing indices or external price/spread data. These securities are classified as Level 2.

Derivative Securities
Foreign Exchange Contracts: The valuation of foreign exchange derivatives is based on the market approach using observable market inputs, such as foreign currency spot and forward rates and yield curves. These securities are classified as Level 2.
Interest Rate Swaps: The valuation of interest rate swaps is based on an income approach using inputs that are observable or that can be derived from, or corroborated by, observable market data. These securities are classified as Level 2.


1920


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Available-For-Sale Securities
Investment securities classified as available-for-sale are recorded at fair value with changes in fair value due to market conditions (i.e., interest rates) recorded in accumulated other comprehensive loss (AOCL), and changes in fair value due to credit conditions recorded in earnings. There were no unrealized losses due to credit losses charged to earnings in the threenine months ended March 31,September 30, 2023.

Available-for-sale securities consisted of the following:
March 31, 2023September 30, 2023
Amortized costGross unrealized gainsGross unrealized lossesEstimated fair valueAmortized costGross unrealized lossesEstimated fair value
Government and related securitiesGovernment and related securities$35,263 $ $(7,442)$27,821 Government and related securities$35,125 $(9,054)$26,071 
Corporate debt securitiesCorporate debt securities66,020 1 (12,414)53,607 Corporate debt securities65,271 (14,451)50,820 
Commingled fixed income securitiesCommingled fixed income securities1,759  (206)1,553 Commingled fixed income securities1,778 (278)1,500 
Mortgage-backed / asset-backed securitiesMortgage-backed / asset-backed securities154,256  (27,519)126,737 Mortgage-backed / asset-backed securities148,113 (33,786)114,327 
TotalTotal$257,298 $1 $(47,581)$209,718 Total$250,287 $(57,569)$192,718 
December 31, 2022
Amortized costGross unrealized gainsGross unrealized lossesEstimated fair value
Government and related securities$35,744 $11 $(8,210)$27,545 
Corporate debt securities66,300 — (13,981)52,319 
Commingled fixed income securities1,749 — (229)1,520 
Mortgage-backed / asset-backed securities156,352 — (29,470)126,882 
Total$260,145 $11 $(51,890)$208,266 


Investment securities in a loss position were as follows:
March 31, 2023December 31, 2022September 30, 2023December 31, 2022
Fair ValueGross unrealized lossesFair ValueGross unrealized lossesFair ValueGross unrealized lossesFair ValueGross unrealized losses
Greater than 12 continuous monthsGreater than 12 continuous monthsGreater than 12 continuous months
Government and related securitiesGovernment and related securities$17,515 $2,388 $17,063 $2,753 Government and related securities$26,071 $9,054 $17,063 $2,753 
Corporate debt securitiesCorporate debt securities52,359 12,398 48,812 13,749 Corporate debt securities50,820 14,451 48,812 13,749 
Mortgage-backed / asset-backed securitiesMortgage-backed / asset-backed securities117,321 26,504 114,839 28,040 Mortgage-backed / asset-backed securities114,327 33,786 114,839 28,040 
TotalTotal$187,195 $41,290 $180,714 $44,542 Total$191,218 $57,291 $180,714 $44,542 
Less than 12 continuous monthsLess than 12 continuous monthsLess than 12 continuous months
Government and related securitiesGovernment and related securities$10,306 $5,054 $10,061 $5,457 Government and related securities$ $ $10,061 $5,457 
Corporate debt securitiesCorporate debt securities1,180 16 3,508 232 Corporate debt securities  3,508 232 
Commingled fixed income securitiesCommingled fixed income securities1,553 206 1,520 229 Commingled fixed income securities1,500 278 1,520 229 
Mortgage-backed / asset-backed securitiesMortgage-backed / asset-backed securities9,416 1,015 12,042 1,430 Mortgage-backed / asset-backed securities  12,042 1,430 
TotalTotal$22,455 $6,291 $27,131 $7,348 Total$1,500 $278 $27,131 $7,348 
At March 31,September 30, 2023, approximately 99% of totalall securities in the investment portfolio were in aan unrealized loss position. However, we have the ability and intent to hold these securities until recovery of the unrealized losses or expect to receive the stated principal and interest at maturity. Accordingly, we have not recognized an impairment loss and our allowance for credit losses on these investment securities is not significant.

2021


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Scheduled maturities of available-for-sale securities at March 31,September 30, 2023 were as follows:
Amortized costEstimated fair valueAmortized costEstimated fair value
Within 1 yearWithin 1 year$2,601 $2,388 Within 1 year$2,567 $2,280 
After 1 year through 5 yearsAfter 1 year through 5 years15,175 13,873 After 1 year through 5 years15,107 13,669 
After 5 years through 10 yearsAfter 5 years through 10 years72,323 60,012 After 5 years through 10 years71,033 56,861 
After 10 yearsAfter 10 years167,199 133,445 After 10 years161,580 119,908 
TotalTotal$257,298 $209,718 Total$250,287 $192,718 
Actual maturities may not coincide with scheduled maturities as certain securities contain early redemption features and/or allow for the prepayment of obligations.

Held-to-Maturity Securities
Held-to-maturity securities at March 31,September 30, 2023 and December 31, 2022 totaled $23$25 million and $22 million, respectively. Held-to-maturity securities primarily consist of highly-liquid government securities with maturities less than two years.

Derivative Instruments
In the normal course of business, we are exposed to the impact of changes in foreign currency exchange rates and interest rates. We limit these risks by following established risk management policies and procedures, including the use of derivatives. We use derivative instruments to limit the effects of currency exchange rate fluctuations on financial results and manage the cost of debt. We do not use derivatives for trading or speculative purposes. Derivative instruments are recorded at fair value and the accounting for changes in fair value depends on the intended use of the derivative, the resulting designation and the effectiveness of the instrument in offsetting the risk exposure it is designed to hedge.

Foreign Exchange Contracts
We may enter into foreign exchange contracts to mitigate the currency risk associated with anticipated inventory purchases between affiliates and from third parties. These contracts are designated as cash flow hedges. The effective portion of the gain or loss on cash flow hedges is included in AOCL in the period that the change in fair value occurs and is reclassified to earnings in the period that the hedged item is recorded in earnings. There were no outstanding contracts associated with these anticipated transactions at September 30, 2023. At both March 31, 2023 and December 31, 2022, outstanding contracts associated with these anticipated transactions had a notional value of $1 million. Amounts included in AOCL at March 31, 2023 will be recognized in earnings within the next 12 months. No amount of ineffectiveness was recorded in earnings for these designated cash flow hedges.

Interest Rate Swaps
We have interest rate swap agreements with an aggregate notional value of $200 million that are designated as cash flow hedges. The fair value of the interest rate swaps is recorded as a derivative asset or liability at the end of each reporting period with the change in fair value reflected in AOCL.











2122


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
The fair value of derivative instruments was as follows:
Designation of DerivativesDesignation of DerivativesBalance Sheet LocationMarch 31,
2023
December 31,
2022
Designation of DerivativesBalance Sheet LocationSeptember 30,
2023
December 31,
2022
Derivatives designated as
hedging instruments
Derivatives designated as
hedging instruments
  Derivatives designated as hedging instruments  
Foreign exchange contractsForeign exchange contractsOther current assets and prepayments$ $15 Foreign exchange contractsOther current assets and prepayments$ $15 
Accounts payable and accrued liabilities(34)(23) Accounts payable and accrued liabilities (23)
Interest rate swapsInterest rate swapsOther assets12,697 15,283 Interest rate swapsOther assets11,683 15,283 
Derivatives not designated as
hedging instruments
Derivatives not designated as
hedging instruments
  Derivatives not designated as hedging instruments  
Foreign exchange contractsForeign exchange contractsOther current assets and prepayments1,818 464 Foreign exchange contractsOther current assets and prepayments 464 
Accounts payable and accrued liabilities(19)(1,449) Accounts payable and accrued liabilities(715)(1,449)
Total derivative assets$14,515 $15,762  Total derivative assets$11,683 $15,762 
Total derivative liabilities(53)(1,472) Total derivative liabilities(715)(1,472)
Total net derivative asset$14,462 $14,290  Total net derivative asset$10,968 $14,290 

Results of cash flow hedging relationships were as follows:
Three Months Ended March 31,Three Months Ended September 30,
Derivative Gain (Loss)
Recognized in AOCL
(Effective Portion)
Location of Gain (Loss)
(Effective Portion)
Gain (Loss) Reclassified
from AOCL to Earnings
(Effective Portion)
Derivative Gain (Loss)
Recognized in AOCL
(Effective Portion)
Location of Gain (Loss)
(Effective Portion)
Gain (Loss) Reclassified
from AOCL to Earnings
(Effective Portion)
Derivative InstrumentDerivative Instrument2023202220232022Derivative Instrument2023202220232022
Foreign exchange contractsForeign exchange contracts$25 $23 Revenue$ $— Foreign exchange contracts$ $134 Cost of sales$ $80 
  Cost of sales1 14 
Interest rate swapInterest rate swap(2,586)7,210 Interest expense137 137 Interest rate swap(1,600)3,936 Interest expense137 137 
$(2,561)$7,233  $138 $151  $(1,600)$4,070  $137 $217 
Nine Months Ended September 30,
Derivative Gain (Loss)
Recognized in AOCL
(Effective Portion)
Location of Gain (Loss)
(Effective Portion)
Gain (Loss) Reclassified
from AOCL to Earnings
(Effective Portion)
Derivative InstrumentDerivative Instrument2022Location of Gain (Loss)
(Effective Portion)
20232022
Foreign exchange contractsForeign exchange contracts$(25)$257 $(33)$143 
Interest rate swapInterest rate swap(3,600)12,863 Interest expense412 412 
$(3,625)$13,120  $379 $555 














23


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Nondesignated Derivative Instruments
We also enter into foreign exchange contracts to minimize the impact on earnings from the revaluation of short-term intercompany loans and related interest denominated in a foreign currency. These foreign exchange contracts are not designated as hedging instruments. Accordingly, the revaluation of intercompany loans and interest and the change in fair value of these derivatives are recorded in earnings. All outstanding contracts at March 31,September 30, 2023 mature within three months.
The impact on earnings from the change in fair value of these foreign exchange contracts, exclusive of the corresponding impact on earnings from the revaluation of the intercompany loans and related interest, was as follows:
Three Months Ended March 31,Three Months Ended September 30,
Derivative Gain (Loss) Recognized in EarningsDerivative Gain (Loss) Recognized in Earnings
Derivatives InstrumentDerivatives InstrumentLocation of Derivative Gain (Loss)20232022Derivatives InstrumentLocation of Derivative Gain (Loss)20232022
Foreign exchange contractsForeign exchange contractsSelling, general and administrative expense$1,571 $(3,414)Foreign exchange contractsSelling, general and administrative expense$(11,614)$(24,116)
Nine Months Ended September 30,
Derivative Gain (Loss) Recognized in Earnings
Derivatives InstrumentDerivatives InstrumentLocation of Derivative Gain (Loss)20232022
Foreign exchange contractsForeign exchange contractsSelling, general and administrative expense$(4,150)$(45,299)







22


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Fair Value of Financial Instruments
Our financial instruments include cash and cash equivalents, available-for-sale and held-to-maturity investment securities, accounts receivable, loan receivables, derivative instruments, accounts payable and debt. The carrying value of cash and cash equivalents, held-to-maturity investment securities, accounts receivable, loans receivable, and accounts payable approximate fair value. The fair value of available-for-sale investment securities and derivative instruments are presented above. The fair value of debt is estimated based on recently executed transactions and market price quotations. The inputs used to determine the fair value of debt were classified as Level 2 in the fair value hierarchy. The carrying value and estimated fair value of debt was as follows:
March 31, 2023December 31, 2022September 30, 2023December 31, 2022
Carrying valueCarrying value$2,172,968 $2,205,266 Carrying value$2,158,128 $2,205,266 
Fair valueFair value$1,803,375 $1,856,878 Fair value$1,804,017 $1,856,878 



9. Restructuring Charges
Activity in our restructuring reserves was as follows:
Severance and other exit costs
Balance at January 1, 2023$7,647 
Amounts charged to expense3,599
Cash payments(4,641)
Balance at March 31, 2023$6,605
Balance at January 1, 2022$5,747 
Amounts charged to expense4,184 
Cash payments(3,285)
Noncash activity(172)
Balance at March 31, 2022$6,474 
The majority of the restructuring reserves are expected to be paid over the next 12 to 24 months.
In May 2023, management approved a worldwide plan (the 2023 Plan) designed to improve profitability and cash flow by reducing complexity, streamlining processes, and driving further operational efficiencies. The 2023 Plan includes the elimination of 400-500 positions worldwide, in part, through the expansion of the Company’s shared services activities, further centralization and standardization of processes, increased automation and the closure and consolidation of select facilities in North America. Total charges are expected to be $40 million - $50 million, consisting of employee-related costs and facility consolidation costs. We expect to substantially complete these actions by the first half of 2024.









2324


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
9. Restructuring Charges and Asset Impairments
In May 2023, we approved a worldwide restructuring plan (the 2023 Plan) designed to improve profitability and cash flow by reducing complexity, streamlining processes, and driving further operational efficiencies. This will be achieved through the elimination of 850-950 positions worldwide in part through further centralization and standardization of processes, including the expansion of our shared services activities, increased automation, and the consolidation or closure of select facilities in North America. Total charges are expected to be $60 million-$70 million, consisting of employee severance and facility consolidation costs. We expect to substantially complete these actions by the end of the first half of 2024.
Activity in our restructuring reserves was as follows:
2023 PlanPrior PlanTotal
Balance at January 1, 2023$— $7,647 $7,647 
Amounts charged to expense39,021 3,599 42,620 
Cash payments(13,906)(11,246)(25,152)
Noncash activity(8,049) (8,049)
Balance at September 30, 2023$17,066 $ $17,066 
Balance at January 1, 2022$— $5,747 $5,747 
Amounts charged to expense— 12,672 12,672 
Cash payments— (11,761)(11,761)
Noncash activity— (1,378)(1,378)
Balance at September 30, 2022$— $5,280 $5,280 

Components of restructuring expense were as follows:
Three Months Ended September 30, 2023Three Months Ended September 30, 2022
2023 PlanPrior PlanTotalPrior Plan
Severance$10,007 $ $10,007 $2,846 
Facilities and other6,571  6,571 1,418 
Total$16,578 $ $16,578 $4,264 
Nine Months Ended September 30, 2023Nine Months Ended September 30, 2022
2023 PlanPrior PlanTotalPrior Plan
Severance$30,972 $3,057 $34,029 $9,223 
Facilities and other8,049 542 8,591 3,449 
Total$39,021 $3,599 $42,620 $12,672 






25


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

10. Debt
Total debt consisted of the following:




Interest rateMarch 31, 2023December 31, 2022


Interest rateSeptember 30, 2023December 31, 2022
Notes due March 2024Notes due March 20244.625%$227,083 $236,749 Notes due March 20244.625%$ $236,749 
Term loan due March 2026Term loan due March 2026SOFR + 2.0%345,500 351,500 Term loan due March 2026SOFR + 2.25%297,500 351,500 
Notes due March 2027Notes due March 20276.875%380,000 396,750 Notes due March 20276.875%380,000 396,750 
Notes due March 2028Notes due March 2028SOFR + 6.9%275,000 — 
Term loan due March 2028Term loan due March 2028SOFR + 4.0%441,000 442,125 Term loan due March 2028SOFR + 4.0%438,750 442,125 
Notes due March 2029Notes due March 20297.25%350,000 350,000 Notes due March 20297.25%350,000 350,000 
Notes due January 2037Notes due January 20375.25%35,841 35,841 Notes due January 20375.25%35,841 35,841 
Notes due March 2043Notes due March 20436.70%425,000 425,000 Notes due March 20436.70%425,000 425,000 
Other debtOther debt2,132 2,446 Other debt1,500 2,446 
Principal amountPrincipal amount2,206,556 2,240,411 Principal amount2,203,591 2,240,411 
Less: unamortized costs, netLess: unamortized costs, net33,588 35,145 Less: unamortized costs, net45,463 35,145 
Total debtTotal debt2,172,968 2,205,266 Total debt2,158,128 2,205,266 
Less: current portion long-term debtLess: current portion long-term debt262,439 32,764 Less: current portion long-term debt56,533 32,764 
Long-term debtLong-term debt$1,910,529 $2,172,502 Long-term debt$2,101,595 $2,172,502 

During the quarter, we issued an aggregate $275 million of senior secured notes. The notes mature in March 2028 and bear interest of SOFR plus 6.9%, payable quarterly. The notes were issued with original issue discount of 3%, and the net proceeds were used to redeem the March 2024 notes and repay $30 million of the term loan due March 2026.
Through September 30, 2023, we purchased an aggregate $26$39 million of the March 2024 notes and March 2027 notes and recognized a gain of $3 million. Additionally, we made scheduled principal repayments of $7$27 million on our term loans. At March 31,September 30, 2023, the interest rate on the 2026 Term Loan was 6.7% and7.7%, the interest rate ofon the 2028 Term Loan was 8.7%9.4% and the interest rate on the March 2028 notes was 12.3%.
The credit agreement that governs our $500 million secured revolving credit facility and term loans contains financial and non-financial covenants. In June 2023, we amended this credit agreement to provide additional flexibility in managing our capital structure. At March 31,September 30, 2023, we were in compliance with all covenants and there were no outstanding borrowings under the revolving credit facility. Borrowings under the revolving credit facility, and term loans and March 2028 notes are secured by assets of the company.
We have outstanding interest rate swaps that effectively convert $200 million of our variable rate debt to fixed rates. EffectiveIn January 2023, the reference rate of the interest rate swaps was amended to align with the secured revolving credit facility. Under the terms of the interest rate swaps, we pay fixed-rate interest of 0.585% and receive variable-rate interest based on one-month SOFR plus 0.1%. The variable interest rates under the term loans and the swaps reset monthly.
The Pitney Bowes Bank (the Bank), a wholly owned subsidiary, is a member of the Federal Home Loan Bank of Des Moines and has access to certain credit products as a funding source known as "advances." As of March 31,September 30, 2023, the Bank had yet to apply for any advances.














2426


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

11. Pensions and Other Benefit Programs
The components of net periodic benefit (income) cost were as follows:
Defined Benefit Pension PlansNonpension Postretirement Benefit PlansDefined Benefit Pension PlansNonpension Postretirement Benefit Plans
United StatesForeignUnited StatesForeign
Three Months EndedThree Months EndedThree Months EndedThree Months EndedThree Months EndedThree Months Ended
March 31,March 31,March 31,September 30,September 30,September 30,
202320222023202220232022202320222023202220232022
Service costService cost$10 $24 $194 $355 $89 $179 Service cost$11 $14 $190 $291 $98 $191 
Interest costInterest cost16,089 11,141 5,222 3,634 1,305 940 Interest cost15,440 11,072 5,379 3,270 1,163 884 
Expected return on plan assetsExpected return on plan assets(21,613)(17,863)(7,344)(7,205) — Expected return on plan assets(21,280)(17,586)(7,575)(6,423) — 
Amortization of prior service (credit) costAmortization of prior service (credit) cost(5)(11)70 68  — Amortization of prior service (credit) cost(5)(11)72 60  — 
Amortization of net actuarial loss (gain)Amortization of net actuarial loss (gain)4,417 8,232 505 1,821 (356)87 Amortization of net actuarial loss (gain)4,209 8,317 525 1,625 (977)(131)
SettlementSettlement366 350  —  — 
Net periodic benefit (income) costNet periodic benefit (income) cost$(1,102)$1,523 $(1,353)$(1,327)$1,038 $1,206 Net periodic benefit (income) cost$(1,259)$2,156 $(1,409)$(1,177)$284 $944 
Contributions to benefit plansContributions to benefit plans$1,127 $1,138 $15,033 $8,221 $3,778 $4,158 Contributions to benefit plans$2,722 $2,103 $491 $348 $2,330 $2,401 
Defined Benefit Pension PlansNonpension Postretirement Benefit Plans
United StatesForeign
Nine Months EndedNine Months EndedNine Months Ended
September 30,September 30,September 30,
202320222023202220232022
Service costService cost$31 $62 $578 $978 $275 $549 
Interest costInterest cost47,618 33,354 15,935 10,354 3,774 2,763 
Expected return on plan assetsExpected return on plan assets(64,506)(53,311)(22,434)(20,437)  
Amortization of prior service (credit) costAmortization of prior service (credit) cost(15)(33)214 192  — 
Amortization of net actuarial loss (gain)Amortization of net actuarial loss (gain)13,042 24,781 1,552 5,172 (1,690)44 
SettlementSettlement680 350  —  — 
Net periodic benefit (income) costNet periodic benefit (income) cost$(3,150)$5,203 $(4,155)$(3,741)$2,359 $3,356 
Contributions to benefit plansContributions to benefit plans$5,756 $4,401 $16,036 $8,961 $8,947 $10,049 










27


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)

12. Income Taxes
The effective tax rate for the three months ended March 31,September 30, 2023 was 29.6%25.1%. The effective tax rate for the threenine months ended March 31, 2022September 30, 2023 was 16.8%9.4% and includes a benefit of $1 million on the $119 million goodwill impairment charge as the majority of this charge is nondeductible.
The effective tax rate for the three and nine months ended September 30, 2022, was 45.8% and 5.6%, respectively, and includes a charge of $2 million due to state tax legislation offset by a benefit of $1 million as a result of the finalization and filing of state income tax returns. The effective tax rate for the nine months ended September 30, 2022 also includesa tax benefit of $4 million on the pre-tax gain of $4 million from the sale of Borderfree as the tax basis was higher than book basis and a $1 million benefit associated with the 2019 sale of a business.
As is the case with other large corporations, our tax returns are examined by tax authorities in the U.S. and other global taxing jurisdictions in which we have operations. As a result, it is reasonably possible that the amount of unrecognized tax benefits will decrease in the next 12 months, and this decrease could be up to 15% of our unrecognized tax benefits.
With regard to U.S Federal income tax, the Internal Revenue Service examination of our consolidated U.S. income tax returns for tax years prior to 2019 are closed to audit, but for review of the Tax Cuts and Jobs Act (TCJA) SecSec. 965 transition tax. On a state and local level, the Companycompany is closed through 2017 in most jurisdictions. For our significant non-U.S. jurisdictions, Canada is closed to examination through 20172018 except for a specific issue under current exam. For France, Germany and the U.K., the Companycompany is closed through 2019, 2016, and 2020 respectively. We also have other less significant tax filings currently subject to examination.























25


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
13. Commitments and Contingencies
From time to time, in the ordinary course of business, we are involved in litigation pertaining to, among other things, contractual rights under vendor, insurance or other contracts; intellectual property or patent rights; equipment, service, payment or other disputes with clients; or disputes with employees. Some of these actions may be brought as a purported class action on behalf of a purported class of customers, employees, or others. Due to uncertainties inherent in litigation, any actions could have an adverse effect on our financial position, results of operations or cash flows; however, in management's opinion, the final outcome of outstanding matters will not have a material adverse effect on our business.
As of March 31,September 30, 2023, we have entered into real estate and equipment leases with aggregate payments of $62$18 million and terms ranging from three to seven years that have not commenced.

14. Stockholders’ Equity
Changes in stockholders’ equity were as follows:
Common stockAdditional paid-in capitalRetained earningsAccumulated other comprehensive lossTreasury stockTotal equity
Balance at January 1, 2023$323,338 $ $5,125,677 $(835,564)$(4,552,798)$60,653 
Net loss  (7,737)  (7,737)
Other comprehensive income   15,586  15,586 
Dividends paid ($0.05 per common share)  (8,725)  (8,725)
Issuance of common stock (3,245)(48,363) 48,550 (3,058)
Stock-based compensation expense 3,245    3,245 
Balance at March 31, 2023$323,338 $ $5,060,852 $(819,978)$(4,504,248)$59,964 


Common stockAdditional paid-in capitalRetained earningsAccumulated other comprehensive lossTreasury stockTotal equity
Balance at January 1, 2022$323,338 $2,485 $5,169,270 $(780,312)$(4,602,149)$112,632 
Net income— — 20,821 — — 20,821 
Other comprehensive loss— — — (20,018)— (20,018)
Dividends paid ($0.05 per common share)— — (8,688)— — (8,688)
Issuance of common stock— (6,980)(39,767)— 43,833 (2,914)
Stock-based compensation expense— 4,495 — — — 4,495 
Repurchase of common stock— — — — (13,446)(13,446)
Balance at March 31, 2022$323,338 $— $5,141,636 $(800,330)$(4,571,762)$92,882 














2628


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
14. Stockholders’ (Deficit) Equity
Changes in stockholders’ (deficit) equity were as follows:
Common stockAdditional paid-in capitalRetained earningsAccumulated other comprehensive lossTreasury stockTotal (deficit) equity
Balance at July 1, 2023$323,338 $ $4,908,641 $(807,993)$(4,499,473)$(75,487)
Net loss  (12,519)  (12,519)
Other comprehensive loss   (30,078) (30,078)
Dividends paid ($0.05 per common share)  (8,805)  (8,805)
Issuance of common stock (1,206)(14,878) 16,658 574 
Stock-based compensation expense 1,206    1,206 
Balance at September 30, 2023$323,338 $ $4,872,439 $(838,071)$(4,482,815)$(125,109)

Common stockAdditional paid-in capitalRetained earningsAccumulated other comprehensive lossTreasury stockTotal (deficit) equity
Balance at July 1, 2022$323,338 $— $5,137,248 $(850,053)$(4,566,379)$44,154 
Net income— — 5,487 — — 5,487 
Other comprehensive loss— — — (55,400)— (55,400)
Dividends paid ($0.05 per common share)— — (8,700)— — (8,700)
Issuance of common stock— (5,371)(6,005)— 12,188 812 
Stock-based compensation expense— 5,371 — — — 5,371 
Balance at September 30, 2022$323,338 $— $5,128,030 $(905,453)$(4,554,191)$(8,276)

Common stockAdditional paid-in capitalRetained earningsAccumulated other comprehensive lossTreasury stockTotal (deficit) equity
Balance at January 1, 2023$323,338 $ $5,125,677 $(835,564)$(4,552,798)$60,653 
Net loss  (161,791)  (161,791)
Other comprehensive loss   (2,507) (2,507)
Dividends paid ($0.15 per common share)  (26,330)  (26,330)
Issuance of common stock (7,281)(65,117) 69,983 (2,415)
Stock-based compensation expense 7,281    7,281 
Balance at September 30, 2023$323,338 $ $4,872,439 $(838,071)$(4,482,815)$(125,109)

Common stockAdditional paid-in capitalRetained earningsAccumulated other comprehensive lossTreasury stockTotal (deficit) equity
Balance at January 1, 2022$323,338 $2,485 $5,169,270 $(780,312)$(4,602,149)$112,632 
Net income— — 30,644 — — 30,644 
Other comprehensive loss— — — (125,141)— (125,141)
Dividends paid ($0.15 per common share)— — (26,013)— — (26,013)
Issuance of common stock— (17,722)(45,871)— 61,404 (2,189)
Stock-based compensation expense— 15,237 — — — 15,237 
Repurchase of common stock— — — — (13,446)(13,446)
Balance at September 30, 2022$323,338 $— $5,128,030 $(905,453)$(4,554,191)$(8,276)



29


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
15. Accumulated Other Comprehensive Loss
Reclassifications out of AOCL were as follows:
Gain (Loss) Reclassified from AOCLGain (Loss) Reclassified from AOCL
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
202320222023202220232022
Cash flow hedgesCash flow hedgesCash flow hedges
Cost of salesCost of sales$1 $14 Cost of sales 80 $(33)$143 
Interest expense, netInterest expense, net137 137 Interest expense, net137 137 412 412 
Total before taxTotal before tax138 151 Total before tax137 217 379 555 
Income tax provisionIncome tax provision34 37 Income tax provision34 54 95 138 
Net of taxNet of tax$104 $114 Net of tax$103 $163 $284 $417 
Available-for-sale securitiesAvailable-for-sale securitiesAvailable-for-sale securities
Financing revenueFinancing revenue$10 $(2)Financing revenue$(20)$(3)$(11)$(9)
Selling, general and administrative expenseSelling, general and administrative expense (13)Selling, general and administrative expense 64  86 
Total before taxTotal before tax10 (15)Total before tax(20)61 (11)77 
Income tax provision (benefit)2 (3)
Income tax (benefit) provisionIncome tax (benefit) provision(5)15 (3)20 
Net of taxNet of tax$8 $(12)Net of tax$(15)$46 $(8)$57 
Pension and postretirement benefit plansPension and postretirement benefit plansPension and postretirement benefit plans
Prior service costsPrior service costs$(65)$(57)Prior service costs(67)(49)$(199)$(159)
Actuarial lossesActuarial losses(4,566)(10,140)Actuarial losses(3,757)(9,811)(12,904)(29,997)
SettlementSettlement(366)(350)(680)(350)
Total before taxTotal before tax(4,631)(10,197)Total before tax(4,190)(10,210)(13,783)(30,506)
Income tax benefitIncome tax benefit(1,142)(2,461)Income tax benefit(1,032)(2,461)(3,397)(6,792)
Net of taxNet of tax$(3,489)$(7,736)Net of tax$(3,158)$(7,749)$(10,386)$(23,714)

Changes in AOCL, net of tax were as follows:
Cash flow hedgesAvailable for sale securitiesPension and postretirement benefit plansForeign currency adjustmentsTotalCash flow hedgesAvailable for sale securitiesPension and postretirement benefit plansForeign currency adjustmentsTotal
Balance at January 1, 2023Balance at January 1, 2023$12,503 $(39,440)$(716,056)$(92,571)$(835,564)Balance at January 1, 2023$12,503 $(39,440)$(716,056)$(92,571)$(835,564)
Other comprehensive (loss) income before reclassifications(1,958)3,280  10,887 12,209 
Other comprehensive loss before reclassificationsOther comprehensive loss before reclassifications(2,719)(4,338) (5,560)(12,617)
Reclassifications into earningsReclassifications into earnings(104)(8)3,489  3,377 Reclassifications into earnings(284)8 10,386  10,110 
Net other comprehensive (loss) incomeNet other comprehensive (loss) income(2,062)3,272 3,489 10,887 15,586 Net other comprehensive (loss) income(3,003)(4,330)10,386 (5,560)(2,507)
Balance at March 31, 2023$10,441 $(36,168)$(712,567)$(81,684)$(819,978)
Balance at September 30, 2023Balance at September 30, 2023$9,500 $(43,770)$(705,670)$(98,131)$(838,071)

Cash flow hedgesAvailable for sale securitiesPension and postretirement benefit plansForeign currency adjustmentsTotal
Balance at January 1, 2022$3,803 $(6,249)$(756,639)$(21,227)$(780,312)
Other comprehensive income (loss) before reclassifications5,447 (15,534)— (17,565)(27,652)
Reclassifications into earnings(114)12 7,736 — 7,634 
Net other comprehensive income (loss)5,333 (15,522)7,736 (17,565)(20,018)
Balance at March 31, 2022$9,136 $(21,771)$(748,903)$(38,792)$(800,330)

Cash flow hedgesAvailable for sale securitiesPension and postretirement benefit plansForeign currency adjustmentsTotal
Balance at January 1, 2022$3,803 $(6,249)$(756,639)$(21,227)$(780,312)
Other comprehensive income (loss) before reclassifications9,832 (36,091)— (122,122)(148,381)
Reclassifications into earnings(417)(57)23,714 — 23,240 
Net other comprehensive income (loss)9,415 (36,148)23,714 (122,122)(125,141)
Balance at September 30, 2022$13,218 $(42,397)$(732,925)$(143,349)$(905,453)




2730


PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
16. Supplemental Financial Statement Information
Activity in the allowance for credit losses on accounts and other receivables and other assets is presented below. See Note 7 for information regarding the allowance for credit losses on finance receivables.
Three Months Ended March 31,Nine Months Ended September 30,
2023202220232022
Balance at beginning of yearBalance at beginning of year$5,864 $29,179 Balance at beginning of year$5,864 $29,179 
Amounts charged to expenseAmounts charged to expense2,523 921 Amounts charged to expense5,703 5,361 
Write-offs, recoveries and otherWrite-offs, recoveries and other(2,304)(19,519)Write-offs, recoveries and other(7,443)(28,110)
Balance at end of periodBalance at end of period$6,083 $10,581 Balance at end of period$4,124 $6,430 
Accounts and other receivablesAccounts and other receivables$6,083 $10,061 Accounts and other receivables$4,124 $5,910 
Other assetsOther assets 520 Other assets 520 
TotalTotal$6,083 $10,581 Total$4,124 $6,430 
Other income, net consisted of the following:
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
20232022202220232022
(Gain) loss on debt redemption/refinancing(Gain) loss on debt redemption/refinancing$(2,836)$4,993 (Gain) loss on debt redemption/refinancing$— $(3,064)$4,993 
Gain on sale of assetsGain on sale of assets (14,372)Gain on sale of assets—  (14,372)
Gain on sale of businesses, including transaction costs (2,522)
Gain on sale of businessesGain on sale of businesses(8,398) (10,920)
Other income, netOther income, net$(2,836)$(11,901)Other income, net$(8,398)$(3,064)$(20,299)

In 2022, we entered into a sale and leaseback agreement for our Shelton, Connecticut office building and received proceeds of $51 million and recognized a gain of $14 million and received proceeds of $9 million and recognized a gain of $3 million on the prior year sale of a business.

Supplemental cash flow information is as follows:
Three Months Ended March 31,Nine Months Ended September 30,
2023202220232022
Cash interest paidCash interest paid$53,721 $49,430 Cash interest paid$134,157 $114,752 
Cash income tax payments, net of refundsCash income tax payments, net of refunds$2,781 $8,079 Cash income tax payments, net of refunds$18,200 $16,533 
Noncash activityNoncash activityNoncash activity
Capital assets obtained under capital lease obligationsCapital assets obtained under capital lease obligations$721 $8,721 Capital assets obtained under capital lease obligations$4,804 $21,665 


2831




Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains statements that are forward-looking. We caution readers that any forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (Securities Act) and Section 21E of the Securities Exchange Act of 1934 (Exchange Act) may change based on various factors. Forward-looking statements are based on current expectations and assumptions, which we believe are reasonable; however, such statements are subject to risks and uncertainties, and actual results could differ materially from those projected or assumed in any of our forward-looking statements. Words such as "estimate," "target," "project," "plan," "believe," "expect," "anticipate," "intend" and similar expressions may identify such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Forward-looking statements in this Form 10-Q speak only as of the date hereof, and forward-looking statements in documents that are incorporated by reference speak only as of the date of those documents.
Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in our forward-looking statements. Our results of operations, financial condition and forward-looking statements are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the Securities and Exchange Commission. While conditions related to the COVID-19 pandemic have improved, the pandemic continues to be dynamic, and near-term challenges across the economy remain; and the effects that they may have on our, and our clients' businesses remain uncertain. Other factors which could cause future financial performance to differ materially from expectations, include, without limitation:
declining physical mail volumes
changes in postal regulations or the operations and financial health of posts in the U.S. or other major markets, or changes to the broader postal or shipping markets
our ability to continue to grow and manage unexpected fluctuations in volumes, gain additional economies of scale and improve profitability within our Global Ecommerce segment
the loss of some of our larger clients in our Global Ecommerce and Presort Services segments
the loss of, or significant changes to, United States Postal Service (USPS) commercial programs or our contractual relationships with the USPS or USPS' performance under those contracts
the impacts of inflation and rising prices, higher interest rates and a slow-down in economic activity, including a global recession, to the company, our clients and retail consumers
changes in labor and transportation availability and costs
the impacts on our cost of debt due to recent increases in interest rates and the potential for future interest rate hikes
declines in demand for our ecommerce services resulting from supply chain delays or interruptions affecting our retail clients, or changes in retail consumer behavior or spending patterns
competitive factors, including pricing pressures, technological developments and the introduction of new products and services by competitors
changes in foreign currency exchange rates, especiallyinternational trade policies, including the impact a strengthening U.S. dollar could have on our global operationsimposition or expansion of trade tariffs, and other geopolitical risks, including those related to China
global supply chain issues adversely impacting our third-party suppliers' ability to provide us products and services
expenses and potential impacts resulting from a breach of security, including cyber-attacks or other comparable events
changes in labor and transportation availability and costs
competitive factors, including pricing pressures, technological developments and the introduction of new products and services by competitors
capital market disruptions or credit rating downgrades that adversely impact our ability to access capital markets at reasonable costs
the impacts of inflation and rising prices, higher interest rates and a slow-down in economic activity, including a global recession, or a U.S. government shutdown, to the company, our clients and retail consumers
changes in foreign currency exchange rates, especially the impact a strengthening U.S. dollar could have on our global operations
our success at managing customer credit risk
changes in banking regulations, major bank failures or the loss of our Industrial Bank charter
changes in tax laws, rulings or regulations
capital market disruptions or credit rating downgrades that adversely impact our ability to access capital markets at reasonable costs
our success in developing and marketing new products and services and obtaining regulatory approvals, if required
the continued availability and security of key information technology systems and the cost to comply with information security requirements and privacy laws
changes in international trade policies, including the imposition or expansion of trade tariffs, and other geopolitical risks
our success at managing relationships and costs with outsource providers of certain functions and operations
increased environmental and climate change requirements or other developments in these areas
intellectual property infringement claims
the use of the postal system for transmitting harmful biological agents, illegal substances or other terrorist attacks
impact of pandemics (including the lingering effects of COVID-19) and acts of nature on the Company and the services and solutions we offer
Further information about factors that could materially affect us, including our results of operations and financial condition, is contained in Item 1A. "Risk Factors" in our 2022 Annual Report, as supplemented by Part II, Item 1A in this Quarterly Report on Form 10-Q.
2932




RESULTS OF OPERATIONS

OUTLOOK
We earn a larger percentage of our revenue in the fourth quarter as compared to other quarters, primarily driven by increased shipping volumes during the holiday season. We believe we are well-positioned to process the holiday shipping volumes. For the full year 2023, we expect consolidated revenue in 2023, on a comparable basis (see Factors Affecting Comparability below), to range from a low-single digit decline between 3%-4% and adjusted EBIT margins to a low-single digit increase asremain relatively flat compared to 2022, and we expect the percentage of adjusted EBIT growth to outpace revenue performance.2022.
Within Global Ecommerce, we anticipaterevenue growth in Domestic Parcel,domestic parcel partially offset by continuedoffsets softness in our Cross-bordercross-border and digital delivery services operations. We anticipate Domestic Parcel margin and profit improvements from higher parcel volumes and the investments we made in our facilities and network. We expect ourThroughout 2023, cross-border operations to behave been adversely impacted by macroeconomic challenges and a reduction in parcel volumes, primarily from two clients, in 2023as compared to 2022. We anticipate this revenue trend to continue during the remainder of 2023. We anticipate full year margin and profit improvements in domestic parcel as compared to the prior year; however, these improvements will be more than offset by declines in both cross-border and digital delivery services operations primarily driven by lower volumes.
Within Presort Services revenue is expected to benefithas benefited from pricing actions designed to offset inflationary pressure on costs, a full year of mailcosts. In addition, incremental volumes from prior year acquisitions and growth in Marketing Mail Flats and Bound and Packet MailPrinted Matter volumes, which are expected tohave offset the impact on revenue from the expected decline inlower First Class Mail and Marketing Mail volumes. We expect full year revenue growth compared to 2022 and margin and profit improvements driven by pricing actions and our investments in network management, automation and facilities consolidation.higher-throughput sortation equipment.
In SendTech Solutions, we expect revenue growth from new products and our cloud-enabled shipping solutions to partially offset anthe expected decline in mailing related revenues.revenues and we expect to see this trend continue through the remainder of the year. Overall segment margins are expected to remain strong.within their historical range.
In May 2023, managementwe approved a worldwide restructuring plan (the 2023 Plan) designed to improve profitability and cash flow by reducing complexity, streamlining its operating processes, and driving further operational efficiencies. We have identified additional actions under the 2023 Plan and are updating our initial estimates. The updated 2023 Plan includes the elimination of 400-500850-950 positions worldwide in part through the expansion of the Company’s shared services activities, further centralization and standardization of processes, including the expansion of our shared services activities, increased automation, and the consolidation or closure and consolidation of select facilities in North America. Total charges are expected to be $40$60 million-$70 million, -with cash-related charges of $50 million. Total cash payments are expected to be $20million-$60 million, - $30 millionthe majority of which a majority will be paid in 2023. We expect to substantially complete these actions by the first halfend of 2024. As a result of theThe 2023 Plan we expectis expected to generate annualized cost savings of $35 million - $45$75 million-$85 million by the end of 2024. We expect these actions will be substantially completed by the end of the first half of 2024.
Certain factors beyond our control could have adverse impacts on our 2023 results including, but not limited to, reduced consumer spending due to inflationary pressures and rising prices, higher interest rates, downward pricing pressure in the market for shipping services, a slow-down in economic activity, higher fuel and transportation costs and other adverse geopolitical developments.developments, including those related to China. Inflationary pressures and rising prices could put increaseincreased pressure on wages, particularly warehouse and transportation employees, and result in higher component costs. Higher fuel and freight costs could also adversely impact our operations. We expect interest expense for 2023 will be about $30 million higher than 2022 due to the recent increases in interest rates and additional increases anticipated in 2023.

OVERVIEW OF CONSOLIDATED RESULTS
Factors Affecting Comparability
Certain transactions and changes occurred in 2022 that impact the comparability of our 2023 financial results to the prior periods. These transactions and changes include:

Thethe sale of our Borderfree cross-border ecommerce solutions business (Borderfree) in July 2022. Accordingly, reported revenue and costs for the first half ofnine months ended September 30, 2022 include revenue and costs for Borderfree. Net income of Borderfree in the first half of 2022for these periods was not significant.
Aa change in the presentation of revenue for digital delivery services effective October 1, 2022, from a gross basis to a net basis. Accordingly, in 2023, revenue and costs of revenue for certain digital delivery services are reported on a net basis as business services revenue; whereas for the firstthree and nine months ofended September 30, 2022, revenue and cost of revenue for these services arewere reported as business services revenue and cost of business services, respectively. The change primarily impacts our Global Ecommerce business.segment.

Constant Currency
In this discussion,the tables below, we refer toreport the change in revenue growth on a reported basis and a constant currency basis. Constant currency measures exclude the impact of changes in currency exchange rates from the prior period under comparison. We believe that excluding the impacts of currency exchange rates provides investors with a better understanding of the underlying revenue performance. Constant currency change is calculated by converting the current period non-U.S. dollar denominated revenue using the prior year’s exchange rate. Where constant currency measures are not provided, the actual change and constant currency change are the same.




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Financial Results Summary - Three and Nine Months Ended March 31:September 30:
Three Months Ended March 31,Three Months Ended September 30,
Favorable/(Unfavorable)Favorable/(Unfavorable)
20232022Actual % ChangeConstant Currency % change20232022Actual % ChangeConstant Currency % change
Total revenueTotal revenue$834,538 $926,942 (10)%(9)%Total revenue$783,751 $830,914 (6)%(6)%
Total costs and expensesTotal costs and expenses845,525 901,918 %Total costs and expenses800,455 820,785 %
(Loss) income before taxes(Loss) income before taxes(10,987)25,024 >(100%)(Loss) income before taxes(16,704)10,129 >(100%)
(Benefit) provision for income taxes(Benefit) provision for income taxes(3,250)4,203 >100%(Benefit) provision for income taxes(4,185)4,642 >(100%)
Net (loss) incomeNet (loss) income$(7,737)$20,821 >(100%)Net (loss) income$(12,519)$5,487 >(100%)

Revenue decreased 10% (9% at constant currency)$47 million in the firstthird quarter of 2023 compared to the prior year primarily due to a decrease in business services revenue. Revenue also declined due torevenue of $34 million, lower equipment sales of $7 million and lower support services revenue and financing revenue.of $6 million.

Total costs and expenses declined $56decreased $20 million compared to the prior year primarily due to:

Costs of revenue (excluding financing interest expense) decreased $64$44 million primarily due to lower cost of business services of $57$33 million and lower cost of equipment sales of $7$8 million.

Selling, general and administrative (SG&A) expense was flat compared to the prior year period as incremental proxy solicitation feesprimarily driven by lower salary expense of $6$5 million, and higher outsourcing feeslower stock-based compensation expense of $4 million wereand lower credit card fees of $2 million, which was offset by a decline in consulting feeshigher credit loss provision of $6$5 million, and lowerhigher variable compensation expense of $4 million and higher professional and outsourcing fees of $2 million.

Restructuring charges and asset impairments increased $12 million compared to the prior year period primarily driven by actions taken under the 2023 Plan.

Interest expense, net represents interest on our outstanding debt, net of interest income. We allocate a portion of totalgross interest expense to financing interest expense based on our effective interest rate and average finance receivables for the period. Total interest expense, net, for the third quarter of 2023, including financing interest expense, for the first quarter of 2023 increased $3$6 million compared to the prior year period primarily due to rising interest rates which resulted in higher interest expense on our debt of $6 million, which was partially offset by higher interest income of $3 million.

Other income, net for the first quarter of 2023 declined $9 million compared to the prior year period primarily driven by gains on asset sales in the first quarter of 2022. Other income for the current period includes a $3 million gain on the purchase of debt.rates.

The effective tax rate for the three months ended March 31,September 30, 2023 and 2022 was 29.6% and 16.8%, respectively.25.1%. See Note 12 for more information.

Net loss for the third quarter was $8$13 million compared to net income of $21$5 million in the prior year period.








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Nine Months Ended September 30,
Favorable/(Unfavorable)
20232022Actual % ChangeConstant Currency % change
Total revenue$2,394,770 $2,629,351 (9)%(9)%
Total costs and expenses2,573,411 2,596,888 %
(Loss) income before taxes(178,641)32,463 >(100%)
(Benefit) provision for income taxes(16,850)1,819 >100%
Net (loss) income$(161,791)$30,644 >(100%)

Revenue decreased $235 million in the first nine months of 2023 compared to the prior year primarily due to a decrease in business services revenue of $186 million, lower equipment sales of $24 million and lower support services revenue of $15 million.

Total costs and expenses decreased $23 million compared to the prior year primarily due to:

Costs of revenue (excluding financing interest expense) decreased $187 million primarily due to lower cost of business services of $157 million and lower cost of equipment sales of $22 million.

SG&A expense declined $5 million compared to the prior year period primarily driven by lower credit cards fees of $9 million, lower amortization expense of $8 million, lower stock based compensation expense of $8 million, and lower marketing expenses of $4 million, partially offset by incremental proxy solicitation fees of $11 million, higher variable compensation expense of $9 million and higher credit loss provision of $5 million.

Restructuring charges and asset impairments increased $30 million compared to the prior year period primarily driven by actions taken under the 2023 Plan.

A non-cash goodwill impairment charge of $119 million associated with our Global Ecommerce reporting unit.

Interest expense, net represents interest on our outstanding debt, net of interest income. We allocate a portion of gross interest expense to financing interest expense based on our effective interest rate and average finance receivables for the period. Total interest expense, net for the first nine months of 2023, including financing interest expense, increased $14 million compared to the prior year period primarily due to higher interest rates.

Other income, net declined $17 million compared to the prior year period primarily driven by prior year gains of $25 million from the sale of assets and businesses, partially offset by a favorable year-over-year impact of $8 million associated with the redemption/refinancing of debt.

The effective tax rate for the nine months ended September 30, 2023 was 9.4%, primarily due to the nondeductibility of the goodwill impairment charge. See Note 12 for more information.

Net loss for the first nine months of 2023 was $162 million compared to net income of $31 million in the prior year period.

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SEGMENT RESULTS
Management measures segment profitability and performance by deducting from segment revenue the related costs and expenses attributable to the segment. Segment results exclude interest, taxes, unallocated corporate expenses, restructuring charges, and other items not allocated to a business segment.
Global Ecommerce
Global Ecommerce includes the revenue and related expenses from business to consumer logistics services for domestic parcel services,and cross-border servicesdelivery, returns and digital delivery services.fulfillment. Our domestic parcel services provide retailers domestic parcel delivery and returns services for its end consumers through our nationwide parcel sortation centers and transportation network. Our cross-border services offers our clients a range of services to manage their international shopping and parcel shipping experience. Using our digital delivery services, clients can purchase postage, print shipping labels and access shipping and tracking services from multiple carriers. Delivery and return parcels using our digital delivery services are not physically processed through our network.
Financial performance for the Global Ecommerce segment was as follows:
Three Months Ended March 31,Three Months Ended September 30,
Favorable/(Unfavorable)Favorable/(Unfavorable)
20232022Actual % ChangeConstant Currency % change20232022Actual % ChangeConstant Currency % change
Business Services RevenueBusiness Services Revenue$348,391 $418,527 (17)%(16)%Business Services Revenue$313,161 $354,326 (12)%(12)%
Cost of Business ServicesCost of Business Services326,746 368,468 11 %Cost of Business Services309,240 333,964 %
Gross MarginGross Margin21,645 50,059 (57)%Gross Margin3,921 20,362 (81)%
Gross Margin %Gross Margin %6.2 %12.0 %Gross Margin %1.3 %5.7 %
Selling, general and administrativeSelling, general and administrative53,210 60,861 13 %Selling, general and administrative42,893 53,562 20 %
Research and developmentResearch and development2,641 2,894 %Research and development2,740 1,681 (63)%
Adjusted segment EBITAdjusted segment EBIT$(34,206)$(13,696)>(100%)Adjusted segment EBIT$(41,712)$(34,881)(20)%
Global Ecommerce revenue decreased 17% (16% at constant currency)$41 million in the third quarter of 2023 compared to the prior year period. The change in revenue presentation for digital delivery services accounted for $40 million of this decrease. Cross-border revenue declined $57 million due to lower volumes, primarily driven by changes in how two of our largest clients access our services, and digital delivery services revenue declined $2 million. These declines were partially offset by domestic parcel delivery revenue growth of $60 million, driven by an increase in domestic parcel volumes.
Gross margin decreased $16 million and gross margin percentage decreased to 1.3% from 5.7% compared to the prior year period. Cross-border services gross margin declined $13 million, primarily due to the decline in volumes. Digital delivery services gross margin declined $1 million. Domestic parcel delivery services gross margin decreased $2 million primarily due to $4 million of one-time costs in the current period related to facility consolidation.
SG&A expenses declined $11 million compared to the prior year period, primarily due to lower employee-related expenses of $5 million, lower credit card fees of $2 million and lower amortization expense of $1 million.
Adjusted segment EBIT was a loss of $42 million for the third quarter of 2023 compared to a loss of $35 million in the prior year period.

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Nine Months Ended September 30,
Favorable/(Unfavorable)
20232022Actual % ChangeConstant Currency % change
Business Services Revenue$974,306 $1,166,623 (16)%(16)%
Cost of Business Services935,058 1,058,457 12 %
Gross Margin39,248 108,166 (64)%
Gross Margin %4.0 %9.3 %
Selling, general and administrative144,781 177,700 19 %
Research and development8,500 7,868 (8)%
Adjusted segment EBIT$(114,033)$(77,402)(47)%
Global Ecommerce revenue decreased $192 million in the first quarternine months of 2023 compared to the prior year period. The change in revenue presentation for digital delivery services and the sale of Borderfree impacted current periodaccounted for $139 million of the decrease. Cross-border revenue by $38declined $143 million and $12 million, respectively, adversely contributing a 12% revenue decline. Global Ecommerce revenue was also adversely impacted bydue to lower cross-border parcel volumes, primarily driven by changes in how two of our largest clients access our services which contributedand digital delivery services revenue declined $26 million due to a 7% revenue decline and a declinedecrease in the number of shipping labels printed for digital delivery services contributed a revenue decline of 3%.printed. These declines were partially offset by domestic parcel delivery revenue growth of $138 million, driven by an increase in domestic parcel delivery volumes contributing revenue growth of 6%.volumes.
Gross margin decreased $28$69 million and gross margin percentage decreased to 6.2%4.0% from 12.0%9.3% compared to the prior year period. Cross-border services gross margin declined $16$41 million, primarily due to athe decline in higher-margin parcel volumes. Digital delivery services gross margin declined $5$11 million primarily due to the decline in the number of shipping labels printed. The sale of Borderfree contributed a decline in gross margin of $4$8 million. Offsetting these declines, domesticDomestic parcel delivery services gross margin increased $1 millionwas flat compared to the prior year primarily due to higher$4 million of one-time costs in the third quarter related to facility consolidation which offset revenue from increased parcel volumes.
Selling, general and administrativeSG&A expenses declined $8$33 million compared to the prior year period, primarily due to lower amortization expense of $4$9 million, and lower credit card fees of $3$9 million and lower employee-related expenses of $8 million.
AsAdjusted segment EBIT was a resultloss of the factors above, adjusted segment loss$114 million for the first quarternine months of 2023 increased $21 millioncompared to a loss of $34$77 million compared toin the prior year period.












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Presort Services
We are the largest workshare partner of the USPS and national outsource provider of mail sortation services that allow clients to qualify large volumes of First Class Mail, Marketing Mail, and Marketing Mail Flats and Bound Printed Matter for postal worksharing discounts.
Financial performance for the Presort Services segment was as follows:
Three Months Ended March 31,Three Months Ended September 30,
Favorable/(Unfavorable)Favorable/(Unfavorable)
20232022Actual % ChangeConstant Currency % change20232022Actual % ChangeConstant Currency % change
Business Services RevenueBusiness Services Revenue$158,902 $160,544 (1)%(1)%Business Services Revenue$152,451 $144,824 %%
Cost of Business ServicesCost of Business Services112,496 124,652 10 %Cost of Business Services104,685 107,789 %
Gross MarginGross Margin46,406 35,892 29 %Gross Margin47,766 37,035 29 %
Gross Margin %Gross Margin %29.2 %22.4 %Gross Margin %31.3 %25.6 %
Selling, general and administrativeSelling, general and administrative19,446 16,212 (20)%Selling, general and administrative18,582 16,438 (13)%
Other components of net pension and postretirement costsOther components of net pension and postretirement costs55 48 (15)%Other components of net pension and postretirement costs60 36 (67)%
Adjusted segment EBITAdjusted segment EBIT$26,905 $19,632 37 %Adjusted segment EBIT$29,124 $20,561 42 %
Total mail volumes sortedRevenue increased $8 million in the third quarter declined 9%of 2023 compared to the prior year quarter. Revenue decreased 1% driven by the decline in mail volumes offset byperiod as pricing actions to mitigate inflationary pressures on costs.costs offset the revenue decline driven by a 5% decrease in total mail volumes. The processing of Marketing Mail and First Class Mail contributed revenue declines of 2% and 1%, respectively, which was partially offset by an increase in revenue of 2% from the processing of Marketing Mail Flats and Bound Printed Matter.Matter and First Class Mail contributed revenue increases of $5 million and $4 million, respectively, while the processing of Marketing Mail contributed a revenue decrease of $1 million.
Gross margin increased $11 million and gross margin percentage increased from 22.4%25.6% to 29.2%31.3% compared to the prior year period. These margin improvements wereperiod driven by the increase in revenue and investments we made in network management, automation and higher-throughput sortation equipment. As a result of these investments, transportationTransportation costs declined $5$4 million due to improved network management, which was partially offset by higher production labor costs of $2 million.
SG&A expenses increased $2 million, primarily due to higher employee-related expenses of $2 million and higher professional fees of $1 million.
Adjusted segment EBIT was $29 million for the third quarter of 2023 compared to $21 million in the prior year period.









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Nine Months Ended September 30,
Favorable/(Unfavorable)
20232022Actual % ChangeConstant Currency % change
Business Services Revenue$454,460 $444,302 %%
Cost of Business Services321,249 343,745 %
Gross Margin133,211 100,557 32 %
Gross Margin %29.3 %22.6 %
Selling, general and administrative56,582 47,380 (19)%
Other components of net pension and postretirement costs171 133 (29)%
Adjusted segment EBIT$76,458 $53,044 44 %

Revenue for the first nine months of 2023 increased $10 million compared to the prior year period as pricing actions to mitigate inflationary pressures on costs offset the revenue decline driven by a 7% decrease in total mail volumes. The processing of Marketing Mail Flats and Bound Printed Matter and First Class Mail contributed revenue increases of $14 million and $3 million, respectively, while the processing of Marketing Mail contributed to a revenue decrease of $7 million.
Gross margin increased $33 million and gross margin percentage increased from 22.6% to 29.3% compared to the prior year period driven by higher revenues and investments in network management, automation and higher-throughput sortation equipment. Transportation costs declined $14 million due to improved network management and production labor costs declined $4$3 million due to higher mail throughput per labor hour.
Selling, general and administrativeSG&A expenses increased $3$9 million primarily due to higher salariesemployee-related expenses of $8 million and variable compensation expense.higher professional fees of $1 million.
As a resultAdjusted segment EBIT was $76 million in the first nine months of the above, adjusted segment profit increased $7 million, or 37%,2023 compared to $53 million in the prior year period.



















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SendTech Solutions
SendTech Solutions provides clients with physical and digital mailing and shipping technology solutions and other applications to help simplify and save on the sending, tracking and receiving of letters, parcels and flats, as well as supplies and maintenance services for these offerings. We offer financing alternatives that enable clients to finance equipment and product purchases, and a revolving credit solution that enables clients to make meter rental payments and purchase postage, services and supplies, and an interest-bearing deposit solution to clients who prefer to prepay postage. We also offer financing alternatives that enable clients to finance or lease other manufacturers’ equipment and provide working capital.

Financial performance for the SendTech Solutions segment was as follows:
Three Months Ended March 31,Three Months Ended September 30,
Favorable/(Unfavorable)Favorable/(Unfavorable)
20232022Actual % changeConstant Currency % change20232022Actual % changeConstant Currency % change
Business servicesBusiness services$16,198 $18,313 (12)%(11)%Business services$18,375 $19,255 (5)%(5)%
Support servicesSupport services105,284 110,352 (5)%(3)%Support services101,855 107,642 (5)%(6)%
FinancingFinancing67,049 72,029 (7)%(6)%Financing68,572 67,757 %%
Equipment salesEquipment sales82,610 89,296 (7)%(6)%Equipment sales76,705 83,528 (8)%(8)%
SuppliesSupplies38,835 41,061 (5)%(3)%Supplies35,695 37,455 (5)%(6)%
RentalsRentals17,269 16,820 %%Rentals16,937 16,127 %%
Total revenueTotal revenue327,245 347,871 (6)%(5)%Total revenue318,139 331,764 (4)%(5)%
Cost of business servicesCost of business services6,667 9,882 33 %Cost of business services8,106 10,668 24 %
Cost of support servicesCost of support services36,532 36,935 %Cost of support services33,136 36,357 %
Cost of equipment salesCost of equipment sales56,716 63,441 11 %Cost of equipment sales52,745 60,125 12 %
Cost of suppliesCost of supplies11,156 11,475 %Cost of supplies10,469 10,470 — %
Cost of rentalsCost of rentals5,360 5,267 (2)%Cost of rentals4,259 6,211 31 %
Total costs of revenueTotal costs of revenue116,431 127,000 %Total costs of revenue108,715 123,831 12 %
Gross marginGross margin210,814 220,871 (5)%Gross margin209,424 207,933 %
Gross margin %Gross margin %64.4 %63.5 %Gross margin %65.8 %62.7 %
Selling, general and administrativeSelling, general and administrative109,697 110,842 %Selling, general and administrative106,906 107,372 — %
Research and developmentResearch and development5,044 5,539 %Research and development5,322 5,410 %
Other components of pension and post retirement costsOther components of pension and post retirement costs(598)(85)>(100%)Other components of pension and post retirement costs(565)(83)>(100%)
Adjusted Segment EBITAdjusted Segment EBIT$96,671 $104,575 (8)%Adjusted Segment EBIT$97,761 $95,234 %
SendTech Solutions revenue decreased 6% (5% at constant currency)$14 million in the firstthird quarter of 2023 compared to the prior year period.period, primarily driven by lower equipment sales, support services revenue and supplies revenue. Equipment sales declined 7% (6% at constant currency) primarily due$7 million as we are seeing initial leases of some of our advanced technology products expiring and customers opting to unusually high demand in the last half of 2021 that translated into higherextend these leases rather than normal installations in the first quarter of 2022.purchase new equipment. Support services revenue declined 5% (3% at constant currency)$6 million primarily due tothe declining meter population and the continuing shift to cloud-enabled products that do not include an annual maintenance agreement option. Financingproducts. Supplies revenue declined 7% (6% at constant currency) primarily due to $2 million of lower lease extensions as more clients are opting to lease new equipment rather than extend leases on existing equipment and lower late fees of $1 million.
Gross margin decreased $10 million primarily due to a declining meter population. Business services revenue decreased $1 million; however, the declinechange in revenue butpresentation for digital delivery services reduced revenue by $4 million. The underlying increase of $3 million is primarily due to growth in enterprise shipping subscriptions.
Gross margin increased $1 million and gross margin percentage increased to 64.4%65.8% from 63.5%62.7% compared to the prior year period, primarily due to improvements in business services equipment salesgross margin due to the growth in revenue, rentals gross margin driven in part by a current period favorable adjustment and rentals margins.support services gross margin driven by a shift away from lower margin clients.
SG&A expenses were flat compared to the prior year period.
Adjusted segment EBIT decreased $8was $98 million or 8%, primarily duein the third quarter of 2023 compared to $95 million in the decrease in gross margin of $10 million, partially offset by lower operating expenses of $2 million.


prior year period.

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Nine Months Ended September 30,
Favorable/(Unfavorable)
20232022Actual % changeConstant Currency % change
Business services$52,209 $56,342 (7)%(7)%
Support services310,454 325,619 (5)%(4)%
Financing202,323 207,084 (2)%(2)%
Equipment sales238,766 262,810 (9)%(9)%
Supplies111,035 116,761 (5)%(5)%
Rentals51,217 49,810 %%
Total revenue966,004 1,018,426 (5)%(5)%
Cost of business services21,922 30,408 28 %
Cost of support services104,466 110,658 %
Cost of equipment sales165,211 186,798 12 %
Cost of supplies32,451 32,901 %
Cost of rentals14,703 18,879 22 %
Total costs of revenue338,753 379,644 11 %
Gross margin627,251 638,782 (2)%
Gross margin %64.9 %62.7 %
Selling, general and administrative322,027 327,230 %
Research and development15,000 16,430 %
Other components of pension and post retirement costs(1,688)(252)>(100%)
Adjusted Segment EBIT$291,912 $295,374 (1)%
SendTech Solutions revenue decreased $52 million in the first nine months of 2023 compared to the prior year period. Equipment sales declined $24 million primarily due to customers opting to extend leases of their existing advanced-technology equipment rather than purchase new equipment. Support services revenue declined $15 million primarily due to the declining meter population and continuing shift to cloud-enabled products. Supplies revenue declined $6 million primarily driven by a declining meter population. Financing revenue declined $5 million primarily due to $6 million of lower lease extensions and lower late fees of $2 million, partially offset by higher investment income of $5 million. Business services revenue decreased $4 million; however, the change in revenue presentation for digital delivery services reduced revenue by $13 million. The underlying increase of $9 million is primarily due to growth in enterprise shipping subscriptions.
Gross margin decreased $12 million primarily due to the decline in revenue; however, gross margin percentage increased to 64.9% from 62.7% compared to the prior year period. The increase in gross profit percentage was primarily driven by improvements in business services gross margin due to growth in enterprise shipping subscriptions, rentals gross margin due in part to a $2 million prior year unfavorable scrap adjustment and a current year favorable adjustment and equipment sales gross margin due to cost management.
SG&A expenses declined $5 million primarily driven by lower outsourcing and professional fees.
Adjusted segment EBIT was $292 million in the first nine months of 2023 compared to $295 million for the prior year period.





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UNALLOCATED CORPORATE EXPENSES
The majority of our operating expenses are recorded directly or allocated to our reportable segments. Operating expenses not recorded directly or allocated to our reportable segments are reported as unallocated corporate expenses. Unallocated corporate expenses primarily represents corporate administrative functions such as finance, marketing, human resources, legal, information technology, and research and development.
Unallocated corporate expenses were as follows:
Three Months Ended March 31,
Favorable/(Unfavorable)
20232022Actual % change
Unallocated corporate expenses$56,349 $57,834 (3)%
Three Months Ended September 30,
Favorable/(Unfavorable)
20232022Actual % change
Unallocated corporate expenses$41,704 $42,908 %
Unallocated corporate expenses for the firstthird quarter of 2023 decreased $1 million compared to the prior year period primarily due to lower variable compensation expenseprofessional and outsourcing fees of $4$3 million and lower marketing expenses of $1 million, partially offset by higher insurance costsvariable compensation expense of $1$2 million.


Nine Months Ended September 30,
Favorable/(Unfavorable)
20232022Actual % change
Unallocated corporate expenses$145,762 $141,537 (3)%
Unallocated corporate expenses for the first nine months of 2023 increased $4 million compared to the prior year period primarily due to higher variable compensation expense of $4 million and higher insurance costs of $2 million, partially offset by lower marketing expenses of $3 million.
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LIQUIDITY AND CAPITAL RESOURCES
At March 31,September 30, 2023, we had cash, cash equivalents and short-term investments of $527$579 million, which includes $140$117 million held at our foreign subsidiaries used to support the liquidity needs of those subsidiaries. Our ability to maintain adequate liquidity for our operations is dependent upon a number of factors, including our revenue and earnings, our clients' ability to pay their balances on a timely basis, the impacts of changing macroeconomic and geopolitical conditions and our ability to manage costs and improve productivity. At this time, we believe that existing cash and investments, cash generated from operations and borrowing capacity under our $500 million revolving credit facility will be sufficient to fund our cash needs for the next 12 months.

Cash Flow Summary
Changes in cash and cash equivalents were as follows:
20232022Change20232022Change
Net cash from operating activitiesNet cash from operating activities$(39,714)$10,562 $(50,276)Net cash from operating activities$(14,453)$9,229 $(23,682)
Net cash from investing activitiesNet cash from investing activities(41,413)28,029 (69,442)Net cash from investing activities(95,436)16,391 (111,827)
Net cash from financing activitiesNet cash from financing activities(79,442)(145,858)66,416 Net cash from financing activities(2,059)(136,180)134,121 
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents2,349 (2,638)4,987 Effect of exchange rate changes on cash and cash equivalents(337)(25,273)24,936 
Change in cash and cash equivalentsChange in cash and cash equivalents$(158,220)$(109,905)$(48,315)Change in cash and cash equivalents$(112,285)$(135,833)$23,548 
Operating Activities
Cash flows from operating activities in 2023 declined $50$24 million compared to the prior year period. This decline was driven in part by lower net incomeearnings, higher interest payments of $19 million, higher restructuring payments of $13 million and higher paymentspension contributions of accounts payable ($44 million) and accrued liabilities ($21 million),$7 million, partially offset by higher cashcollections of $53accounts receivables and finance receivables of $33 million, fromlower inventory purchases of $12 million, lower prepayments of $19 million due to timing and changes in accounts and finance receivables.other working capital items.
Investing Activities
Cash flows from investing activities for 2023 declined $69$112 million compared to the prior year period as theprimarily due to prior year benefited from proceeds of $60$160 million from the sale of a businessbusinesses and our Shelton, Connecticut office building.building, partially offset by lower payments of $42 million from settlements of derivative contracts and lower capital expenditures of $20 million.
Financing Activities
Cash flows from financing activities for 2023 improved $66$134 million compared to the prior year period primarily due to lower net repaymentspayments of debt of $70$71 million, and prior year common stock repurchases of $13 million, partially offset by a declinean increase in reservecustomer account deposits at the Bank of $21 million.$57 million and $13 million of common stock repurchases in the prior year period.

Financings and Capitalization
During the quarter, we issued an aggregate $275 million of senior secured notes. The notes mature in March 2028 and bear interest of SOFR plus 6.9%, payable quarterly, and were issued with original issue discount of 3%. Net proceeds were used to redeem the March 2024 notes and repay $30 million of the March 2026 term loan.
Through September 30, 2023, we purchased an aggregate $26$39 million of the March 2024 notes and March 2027 notes in the open market and recognized a gain of $3 million. Additionally, we made scheduled term loan principal repayments of $7 million.$27 million on our term loans.
The credit agreement that governs our $500 million secured revolving credit facility and term loans contains financial and non-financial covenants. In June 2023, we amended the credit agreement to provide additional flexibility in managing our capital structure. At March 31,September 30, 2023, we were in compliance with all covenants and there were no outstanding borrowings under the revolving credit facility. Borrowings under the revolving credit facility, and term loans and notes due March 2028 are secured by assets of the company.
We have $262 million of debt that is due withing the next 12 months, including our March 2024 notes. We are currently planning to refinance these notes in the U.S. capital markets. However, in the event we are unable to obtain acceptable terms and conditions in the U.S. capital markets, we plan to use a combination of cash on hand and capacity under our secured revolving credit facility to repay the obligation.

The Pitney Bowes Bank, a wholly owned subsidiary, is a member of the Federal Home Loan Bank of Des Moines. As a member, the Bank has access to certain credit products as a funding source known as "advances." As of March 31,September 30, 2023, the Bank had yet to apply for any advances.
Each quarter, our Board of Directors considers whether to approve the payment as well as the amount, of a dividend. There are no material restrictions on our ability to declare dividends.Under the terms of the March 2028 note purchase agreement, the annual amount of permitted dividend payments is capped at the lesser of $36 million or a maximum dividend yield of 6.25%. In addition, share repurchases would further limit this amount. We currently expect to continue to paypaying a quarterly dividend; however, no assurances can be given.




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Contractual Obligations and Off-Balance Sheet Arrangements
At March 31,September 30, 2023, we have entered into real estate and equipment leases with aggregate payments of $62$18 million and terms ranging from three to seven years that have not commenced. Most of these leases are expected to commence in the first half of 2023.2024.
At March 31,September 30, 2023, there are no off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our financial condition, results of operations or liquidity.

Critical Accounting Estimates

Goodwill
At December 31, 2022,The performance of our Global Ecommerce reporting unit through June 30, 2023, and continuing changes in macroeconomic conditions, was a triggering event causing us to evaluate the estimatedGlobal Ecommerce goodwill for impairment at June 30, 2023. To assess Global Ecommerce goodwill for impairment, we determined the fair value of the Global Ecommerce reporting unit exceededand compared it to the unit's carrying value, including goodwill. We engaged a third-party to assist in the determination of the fair value of the reporting unit. We determined that the reporting unit's estimated fair value was less than its carrying value by less than 10%. and recorded a non-cash, pre-tax goodwill impairment charge of $119 million in the second quarter of 2023 to reduce the carrying value of the Global Ecommerce reporting unit to its estimated fair value.
The fair value of the reporting unit was estimated using a discounted cash flow model based on management developed cash flow projections, which included judgements and assumptions related to revenue growth rates, operating margins, operating income, and a discount rate. During the first quarter of 2023, there were no triggering events that required us to determine if the goodwill of this reporting unit was impaired. However, theThe judgements and assumptions used to estimate the fair value of this reporting unit at December 31, 2022 were inherently subjective and changes in any of the judgements or assumptions used could materially affect the determination of fair value and result in a different fair value determinationan additional impairment charge in a future period.the future.

Regulatory Matters
There have been no significant changes to the regulatory matters disclosed in our 2022 Annual Report.
Item 3: Quantitative and Qualitative Disclosures About Market Risk
There were no material changes to the disclosures made in our 2022 Annual Report.

Item 4: Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures are also designed to reasonably ensure that such information is accumulated and communicated to management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), to allow timely decisions regarding disclosures.
With the participation of our CEO and CFO, management evaluated our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) and internal controls over financial reporting as of the end of the period covered by this report. Our CEO and CFO concluded that, as of the end of the period covered by this report, such disclosure controls and procedures were effective to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the required time periods. In addition, no changes in internal control over financial reporting occurred during the quarter covered by this report that materially affected, or are reasonably likely to materially affect, such internal control over financial reporting.
It should be noted that any system of controls is based in part upon certain assumptions designed to obtain reasonable (and not absolute) assurance as to its effectiveness, and there can be no assurance that any design will succeed in achieving its stated goals. Notwithstanding this caution, the CEO and CFO have reasonable assurance that the disclosure controls and procedures were effective as of March 31,September 30, 2023.




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PART II. OTHER INFORMATION
Item 1: Legal Proceedings
See Note 13 to the Condensed Consolidated Financial Statements.
Item 1A: Risk Factors
There were no material changes to the risk factors identified in our 2022 Annual Report.
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
Repurchases of Equity Securities
We periodically repurchase shares of our common stock in the open market to manage the dilution created by shares issued under employee stock plans and for other purposes. There were no purchases of our common stock during the three months ended March 31,September 30, 2023. We have remaining authorization to purchase up to $3 million of our common stock.
Item 5: Other Information
None.
38
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Item 6: Exhibits
Exhibit
Number
Exhibit
Number
Description Exhibit Number in this Form 10-QExhibit
Number
Description Exhibit Number in this Form 10-Q
3(i)(a)3(i)(a)3(i)(a)
3(a)3(a)3(i)(a)3(a)3
33
1010
10.110.110.1
10.210.210.2
10.310.310.3
10.410.410.4
10.510.510.5
10.610.610.6
10.710.710.7
10.810.810.8
10.910.910.9
10.1010.1010.10
10.1110.1110.11
10.1210.1210.12
31.131.1 31.131.1 31.1
31.231.2 31.231.2 31.2
32.132.1 32.132.1 32.1
32.232.2 32.232.2 32.2
101.SCH101.SCHInline XBRL Taxonomy Extension Schema Document  101.SCHInline XBRL Taxonomy Extension Schema Document  
101.CAL101.CALInline XBRL Taxonomy Calculation Linkbase Document  101.CALInline XBRL Taxonomy Calculation Linkbase Document  
101.DEF101.DEFInline XBRL Taxonomy Definition Linkbase Document  101.DEFInline XBRL Taxonomy Definition Linkbase Document  
101.LAB101.LABInline XBRL Taxonomy Label Linkbase Document  101.LABInline XBRL Taxonomy Label Linkbase Document  
101.PRE101.PREInline XBRL Taxonomy Presentation Linkbase Document  101.PREInline XBRL Taxonomy Presentation Linkbase Document  
104104The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in Inline XBRL. (included as Exhibit 101).104The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL. (included as Exhibit 101).
* Pursuant to Item 601(a)(5) of Regulation S-K, certain exhibits and schedules have been omitted. The registrant hereby agrees to furnish
supplementally a copy of any omitted attachment to the SEC upon request.

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Signatures  
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 PITNEY BOWES INC.
  
Date:May 5,November 2, 2023 
  
 /s/ Ana Maria Chadwick
 Ana Maria Chadwick
 Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
  
 /s/ Joseph R. Catapano
 Joseph R. Catapano
 Vice President and Chief Accounting Officer
 (Duly Authorized Officer and Principal Accounting Officer)

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