Pitney Bowes (PBI) 10-K 26 Feb 10 2009 FY Annual report Financial data

Document and Entity Information

Document and Entity Information (USD $)
	12 Months Ended Dec. 31, 2009
Document And Entity Information Abstract
Entity Registrant Name	PITNEY BOWES INC /DE/
Entity Central Index Key	0000078814
Document Type	10-K
Document Period End Date	2009-12-31
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well Known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	No
Entity Filer Category	Large Accelerated Filer
Entity Public Float	$4,552,929,763
Entity Common Stock Shares Outstanding	207,450,919

Consolidated Statements of Inco

Consolidated Statements of Income (USD $)
In Thousands	12 Months Ended Dec. 31, 2009		12 Months Ended Dec. 31, 2008		12 Months Ended Dec. 31, 2007
Revenue:
Equipment sales	$1,006,542		$1,252,058		$1,335,538
Supplies	336,239		392,414		393,478
Software	365,185		424,296		346,020
Rentals	647,432		728,160		739,130
Financing	694,444		772,711		790,121
Support services	714,429		768,424		760,915
Business services	1,804,900		1,924,242		1,764,593
Total revenue	5,569,171		6,262,305		6,129,795
Cost and expenses:
Cost of equipment sales	530,004		663,430		696,900
Cost of supplies	93,660		103,870		106,702
Cost of software	82,241		101,357		82,097
Cost of rentals	158,881		153,831		171,191
Financing interest expense	97,586		110,136		126,648
Cost of support services	393,251		447,745		433,324
Cost of business services	1,382,401		1,485,703		1,357,377
Selling, general and administrative	1,800,714		1,970,868		1,930,324
Research and development	182,191		205,620		185,665
Restructuring charges and asset impairments	48,746		200,254		264,013
Other interest expense	111,269		119,207		123,892
Interest income	(4,949)		(12,893)		(8,669)
Other income	0		0		(380)
Total costs and expenses	4,875,995		5,549,128		5,469,084
Income from continuing operations before income taxes	693,176		713,177		660,711
Provision for income taxes	240,154		244,929		280,222
Income from continuing operations	453,022		468,248		380,489
(Loss) gain from discontinued operations, net of income tax	(8,109)		(27,700)		5,534
Net income before attribution of noncontrolling interests	444,913		440,548		386,023
Less: Preferred stock dividends of subsidiaries attributable to noncontrolling interests	21,468		20,755		19,242
Pitney Bowes Inc. net income	423,445		419,793		366,781
Amounts attributable to Pitney Bowes Inc. common stockholders:
Income from continuing operations	431,554		447,493		361,247
(Loss) gain from discontinued operations	(8,109)		(27,700)		5,534
Pitney Bowes Inc. net income	$423,445		$419,793		$366,781
Basic earnings per share of common stock attributable to Pitney Bowes Inc. common stockholders:
Continuing operations	2.09		2.15		1.65
Discontinued operations	-0.04		-0.13		0.03
Net income	2.05	[1]	2.01	[1]	1.68	[1]
Diluted earnings per share of common stock attributable to Pitney Bowes Inc. common stockholders:
Continuing operations	2.08		2.13		1.63
Discontinued operations	-0.04		-0.13		0.03
Net income	2.04	[1]	2	[1]	1.66	[1]
[1]The sum of the earnings per share amounts may not equal the totals above due to rounding.

Consolidated Balance Sheets

Consolidated Balance Sheets (USD $)
In Thousands	12 Months Ended Dec. 31, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$412,737	$376,671
Short-term investments	14,682	21,551
Accounts receivable
Accounts receivable, gross	859,633	924,886
Allowance for doubtful accounts receivables	(42,781)	(45,264)
Accounts receivable, net	816,852	879,622
Finance receivables
Finance receivables	1,417,708	1,501,678
Allowance for credit losses	(46,790)	(45,932)
Finance receivables, net	1,370,918	1,455,746
Inventories	156,502	161,321
Current income taxes	101,248	70,063
Other current assets and prepayments	98,297	78,108
Total current assets	2,971,236	3,043,082
Property, plant and equipment, net	514,904	574,260
Rental property and equipment, net	360,207	397,949
Finance receivables
Finance receivables	1,380,810	1,445,822
Allowance for credit losses	(25,368)	(25,858)
Finance receivables, net	1,355,442	1,419,964
Investment in leveraged leases	233,359	201,921
Goodwill	2,286,904	2,251,830
Intangible assets, net	316,417	375,822
Non-current income taxes	108,260	127,723
Other assets	387,182	417,685
Total assets	8,533,911	8,810,236
Current liabilities:
Accounts payable and accrued liabilities	1,748,254	1,922,399
Current income taxes	144,385	91,816
Notes payable and current portion of long-term obligations	226,022	770,501
Advance billings	447,786	441,556
Total current liabilities	2,566,447	3,226,272
Deferred taxes on income	293,459	307,360
Tax uncertainties and other income tax liabilities	525,253	431,031
Long-term debt	4,213,640	3,934,865
Other non-current liabilities	625,079	823,322
Total liabilities	8,223,878	8,722,850
Noncontrolling interests (Preferred stockholders' equity in subsidiaries)	296,370	374,165
Commitments and contingencies (See Note 15)
Stockholders' equity (deficit):
Cumulative preferred stock, $50 par value, 4% convertible	4	7
Cumulative preference stock, no par value, $2.12 convertible	868	976
Common stock, $1 par value (480,000,000 shares authorized; 323,337,912 shares issued)	323,338	323,338
Additional paid-in capital	256,133	259,306
Retained earnings	4,305,794	4,179,904
Accumulated other comprehensive loss	(457,378)	(596,341)
Treasury stock, at cost (116,140,084 and 117,156,719 shares, respectively)	(4,415,096)	(4,453,969)
Total Pitney Bowes Inc. stockholders' equity (deficit)	13,663	(286,779)
Total liabilities, noncontrolling interests and stockholders' equity (deficit)	$8,533,911	$8,810,236

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) (USD $)
Share data in Thousands	12 Months Ended Dec. 31, 2009	Dec. 31, 2008
CONSOLIDATED BALANCE SHEETS
Cumulative preferred stock par value	50
Cumulative preferred stock conversion dollar value	4%
Cumulative preference stock par value	no par value
Cumulative preference stock conversion dollar value	2.12
Common stock, par value	1
Common stock, shares authorized	480,000,000
Common stock, shares issued	323,337,912
Treasury stock, shares	116,140,084	117,156,719

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (USD $)
In Thousands	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Cash flows from operating activities:
Net income before attribution of noncontrolling interests	$444,913	$440,548	$386,023
Gain on sale of a facility, net of tax	0	0	(1,623)
Restructuring charges and asset impairments, net of tax	31,782	144,211	223,486
Restructuring payments	(105,090)	(102,680)	(31,568)
(Payments) proceeds for settlement of derivative instruments	(20,281)	43,991	0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	338,895	379,117	383,141
Stock-based compensation	22,523	26,402	24,131
Special pension plan contributions	(125,000)	0	0
Changes in operating assets and liabilities, excluding effects of acquisitions:
(Increase) decrease in accounts receivables	84,182	(23,690)	35,853
(Increase) decrease in finance receivables	206,823	24,387	(86,238)
(Increase) decrease in inventories	12,187	2,018	7,710
(Increase) decrease in prepaid, deferred expense and other assets	(15,036)	6,001	(7,793)
Increase (decrease) in accounts payable and accrued liabilities	(127,256)	(76,880)	32,789
Increase (decrease) in current and non-current income taxes	85,632	122,480	123,636
Increase (decrease) in advance billings	(2,744)	2,051	10,444
Increase (decrease) in other operating capital, net	(7,462)	21,459	(20,284)
Net cash provided by operating activities	824,068	1,009,415	1,079,707
Cash flows from investing activities:
Short-term and other investments	(8,362)	35,652	42,367
Proceeds from the sale of facilities	0	0	29,608
Capital expenditures	(166,728)	(237,308)	(264,656)
Net investment in external financing	1,456	1,868	(2,214)
Acquisitions, net of cash acquired	0	(67,689)	(594,110)
Reserve account deposits	1,664	33,359	62,666
Net cash used in investing activities	(171,970)	(234,118)	(726,339)
Cash flows from financing activities:
(Decrease) increase in notes payable, net	(389,666)	205,590	(89,673)
Proceeds from long-term obligations	297,513	245,582	640,765
Principal payments on long-term obligations	(150,000)	(576,565)	(174,191)
Proceeds from issuance of common stock	11,962	20,154	107,517
Payments to redeem preferred stock issued by a subsidiary	(375,000)	(10,000)	0
Proceeds from issuance of preferred stock by a subsidiary	296,370	0	0
Stock repurchases	0	(333,231)	(399,996)
Dividends paid to common stockholders	(297,555)	(291,611)	(288,790)
Dividends paid to noncontrolling interests	(19,485)	(20,755)	(19,242)
Net cash used in financing activities	(625,861)	(760,836)	(223,610)
Effect of exchange rate changes on cash and cash equivalents	9,829	(14,966)	8,316
Increase (decrease) in cash and cash equivalents	36,066	(505)	138,074
Cash and cash equivalents at beginning of period	376,671	377,176	239,102
Cash and cash equivalents at end of period	412,737	376,671	377,176
Cash interest paid	195,256	235,816	236,697
Cash income taxes paid, net	$197,925	$164,354	$178,469

Consolidated Statements of Stoc

Consolidated Statements of Stockholders' Equity (Deficit) (USD $)
In Thousands	Preferred stock	Preference stock	Common stock	Additional paid-in capital	Comprehensive income (loss)	Retained earnings	Accumulated other comprehensive (loss) income	Treasury stock		Total
Stockholders' equity, beginning balance at Dec. 31, 2006	$7	$1,068	$323,338	$235,558	$0	$4,156,994	($131,744)	($3,869,166)
Tax adjustment (see note 9)						(98,900)
Adoption of accounting for tax uncertainties						(84,363)
Pitney Bowes Inc. net income					366,781	366,781				366,781
Other comprehensive (loss) income, net of tax:
Foreign currency translations					164,728		164,728
Net unrealized gain (loss) on derivative instruments, net of tax					2,801		2,801
Net unrealized gain (loss) on investment securities, net of tax					352		352
Net unamortized gain (loss) on pension and postretirement plans, net of tax					30,347		30,347
Amortization of pension and postretirement costs, net of tax					22,172		22,172
Comprehensive income (loss)					587,181
Cash dividends:
Preference						(81)
Common						(288,709)
Issuances of common stock				(7,967)				111,925	[1]
Conversions to common stock		(65)		(1,530)				1,595
Pre-tax stock-based compensation				24,131
Adjustments to additional paid in capital, tax effect from share-based compensation				1,993
Repurchase of common stock								(399,996)	[2]
Stockholders' equity, ending balance at Dec. 31, 2007	7	1,003	323,338	252,185		4,051,722	88,656	(4,155,642)
Pitney Bowes Inc. net income					419,793	419,793				419,793
Other comprehensive (loss) income, net of tax:
Foreign currency translations					(305,452)		(305,452)
Net unrealized gain (loss) on derivative instruments, net of tax					(18,670)		(18,670)
Net unrealized gain (loss) on investment securities, net of tax					580		580
Net unamortized gain (loss) on pension and postretirement plans, net of tax					(375,544)		(375,544)
Amortization of pension and postretirement costs, net of tax					14,089		14,089
Comprehensive income (loss)					(265,204)
Cash dividends:
Preference						(77)
Common						(291,534)
Issuances of common stock				(11,573)				34,268	[1]
Conversions to common stock		(27)		(609)				636
Pre-tax stock-based compensation				26,402
Adjustments to additional paid in capital, tax effect from share-based compensation				(7,099)
Repurchase of common stock								(333,231)	[2]
Stockholders' equity, ending balance at Dec. 31, 2008	7	976	323,338	259,306		4,179,904	(596,341)	(4,453,969)		(286,779)
Pitney Bowes Inc. net income					423,445	423,445				423,445
Other comprehensive (loss) income, net of tax:
Foreign currency translations					119,820		119,820
Net unrealized gain (loss) on derivative instruments, net of tax					7,214		7,214
Net unrealized gain (loss) on investment securities, net of tax					(283)		(283)
Net unamortized gain (loss) on pension and postretirement plans, net of tax					(5,116)		(5,116)
Amortization of pension and postretirement costs, net of tax					17,328		17,328
Comprehensive income (loss)					562,408
Cash dividends:
Preference						(72)
Common						(297,483)
Issuances of common stock				(22,017)				36,419	[1]
Conversions to common stock	(3)	(108)		(2,343)				2,454
Pre-tax stock-based compensation				21,761
Adjustments to additional paid in capital, tax effect from share-based compensation				(574)
Stockholders' equity, ending balance at Dec. 31, 2009	$4	$868	$323,338	$256,133		$4,305,794	($457,378)	($4,415,096)		$13,663
[1]Treasury shares of 0.9 million, 0.9 million and 3.0 million were issued under employee plans in 2009, 2008 and 2007, respectively.
[2]We repurchased no shares in 2009. We repurchased 9.2 million and 9.1 million shares in 2008 and 2007, respectively.

1_Consolidated Statements of St

Consolidated Statements of Stockholders' Equity (Deficit) (Parenthetical) (USD $)
In Millions	1/1/2009 - 12/31/2009	1/1/2008 - 12/31/2008	1/1/2007 - 12/31/2007
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Net unrealized gain (loss) on derivative instruments, tax	4.9	-12.4	1.8
Net unrealized gain (loss) on investment securities, tax	-0.1	0.4	0
Net unamortized gain (loss) on pension and postretirement plans, tax	8.4	-216.1	15.9
Amortization of pension and postretirement costs, tax	10.6	8.6	13.3

Description of Business and Sum

Description of Business and Summary of Significant Accounting Policies
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Description of Business and Summary of Significant Accounting Policies	1. Description of Business and Summary of Significant Accounting Policies Description of Business We are a provider of global, integrated mail and document management solutions for organizations of all sizes. We operate in two business groups: Mailstream Solutions and Mailstream Services. We operate both inside and outside the United States. See Note 18 to the Consolidated Financial Statements for financial information concerning revenue, earnings before interest and taxes (EBIT) and identifiable assets, by reportable segment and geographic area. Basis of Presentation and Consolidation We have prepared the Consolidated Financial Statements of the Company in conformity with accounting principles generally accepted in the United States of America (GAAP). Operating results of acquired companies are included in the Consolidated Financial Statements from the date of acquisition. Intercompany transactions and balances have been eliminated in consolidation. Reclassification Certain prior year amounts in the Consolidated Financial Statements have been reclassified to conform to the current year presentation. Beginning in 2009, we have separately presented a financing interest expense line item, which represents our estimated cost of borrowing associated with the generation of financing revenues, in the Consolidated Statements of Income. In computing our financing interest expense, we assumed a 10:1 leveraging ratio of debt to equity and applied our overall effective interest rate to the average outstanding finance receivables. Use of Estimates The preparation of the Consolidated Financial Statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses that are reported in the Consolidated Financial Statements and accompanying disclosures, including the disclosure of contingent assets and liabilities. These estimates are based on our best knowledge of current events, historical experience, actions that we may undertake in the future, and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results could differ from those estimates and assumptions. Cash Equivalents and Short-Term Investments Cash equivalents include short-term, highly liquid investments with maturities of three months or less at the date of purchase. We place our temporary cash and highly liquid short-term investments with a maturity of greater than three months but less than one year from the reporting date with financial institutions or investment managers and/or invest in highly rated short-term obligations. Accounts Receivable and Allowance for Doubtful Accounts We estimate our accounts receivable risks and provide allowances for doubtful accounts accordingly. We believe that our credit risk for accounts receivable is limited because of our large number of customers and the relatively small account balances for most of our customers. Also, our customers are dispersed across different business and geographic areas. We evaluate the adequacy of the allowance for doubtful accounts based on our historical loss experience, le

Discontinued Operations

Discontinued Operations
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Discontinued Operations	2. Discontinued Operations The following table shows selected financial information included in discontinued operations for the years ended December 31: 2009 2008 2007 Pre-tax income $ 20,624 $ - $ - Tax provision (28,733) (27,700) 5,534 (Loss) gain from discontinued operations, net of tax $ (8,109) $ (27,700) $ 5,534 The 2009 net loss includes $9.8 million of pre-tax income ($6.0 million net of tax) for a bankruptcy settlement received during 2009 and $10.9 million of pre-tax income ($6.7 million net of tax) related to the expiration of an indemnity agreement associated with the sale of a former subsidiary. This income was more than offset by the accrual of interest on uncertain tax positions. The 2008 net loss of $27.7 million includes an accrual of tax and interest on uncertain tax positions. The 2007 net gain includes a benefit of $11.3 million and the accrual of $5.8 million of interest expense, both related to uncertain tax positions.

Acquisitions

Acquisitions
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Acquisitions	3. Acquisitions There were no acquisitions during 2009. On April 21, 2008, we acquired Zipsort, Inc. for $40 million in cash, net of cash acquired. Zipsort, Inc. acts as an intermediary between customers and the U.S. Postal Service. Zipsort, Inc. offers mailing services that include presorting of first class, standard class, flats, permit and international mail as well as metering services. We assigned the goodwill to the Mail Services segment. The following table summarizes selected financial data for the opening balance sheet allocations of the Zipsort, Inc. acquisition in 2008: 2008 Zipsort, Inc. Purchase price allocation Current assets $ 708 Other non-current assets 11,707 Intangible assets 7,942 Goodwill 25,294 Current liabilities (2,975) Non-current liabilities (2,885) Purchase price, net of cash acquired $ 39,791 Intangible assets Customer relationships $ 7,658 Non-compete agreements 284 Total intangible assets $ 7,942 Intangible assets amortization period Customer relationships 15 years Non-compete agreements 4 years Total weighted average 15 years During 2008, we also completed several smaller acquisitions with an aggregate cost of $29.7 million. These acquisitions did not have a material impact on our financial results. The amount of tax deductible goodwill added from acquisitions in 2008 was $38.5 million. Consolidated impact of acquisitions The Consolidated Financial Statements include the results of operations of the acquired businesses from their respective dates of acquisition. The following table provides unaudited pro forma consolidated revenue for the years ended December 31, 2009 and 2008 as if our acquisitions had been acquired on January 1 of each year presented: 2009 2008 Total revenue $ 5,569,171 $ 6,288,242 The pro forma earnings results of these acquisitions were not material to net income or earnings per share. The pro forma consolidated results do not purport to be indicative of actual results that would have occurred had the acquisitions been completed on January 1, 2009 and 2008, nor do they purport to be indicative of the results that will be obtained in the future.

Inventories

Inventories
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Inventories	4. Inventories December 31, 2009 2008 Raw materials and work in process $ 36,331 $ 41,171 Supplies and service parts 69,506 78,018 Finished products 50,665 42,132 Total $ 156,502 $ 161,321 If all inventories valued at LIFO had been stated at current costs, inventories would have been $25.8 million and $24.4 million higher than reported at December 31, 2009 and 2008, respectively. In 2008, we recorded impairment charges to inventories for $13.6 million associated with our transition initiatives in the restructuring charges and asset impairments line of the Consolidated Statements of Income. See Note 14 to the Consolidated Financial Statements for further details.

Fixed Assets

Fixed Assets
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Fixed Assets	5. Fixed Assets December 31, 2009 2008 Land $ 32,517 $ 32,367 Buildings 384,257 387,478 Machinery and equipment 1,413,630 1,469,717 1,830,404 1,889,562 Accumulated depreciation (1,315,500) (1,315,302) Property, plant and equipment, net $ 514,904 $ 574,260 Rental equipment $ 813,544 $ 932,389 Accumulated depreciation (453,337) (534,440) Rental property and equipment, net $ 360,207 $ 397,949 Depreciation expense was $269.8 million, $306.8 million and $318.1 million for the years ended December 31, 2009, 2008, and 2007, respectively. Rental equipment is primarily comprised of postage meters.

Intangible Assets and Goodwill

Intangible Assets and Goodwill
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Intangible Assets and Goodwill	6. Intangible Assets and Goodwill The components of our purchased intangible assets are as follows: December 31, 2009 December 31, 2008 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 428,888 $ (197,497) $ 231,391 $ 428,946 $ (160,396) $ 268,550 Supplier relationships 29,000 (13,292) 15,708 29,000 (10,392) 18,608 Mailing software and technology 164,211 (103,388) 60,823 160,069 (84,016) 76,053 Trademarks and trade names 35,855 (27,898) 7,957 34,302 (22,541) 11,761 Non-compete agreements 7,753 (7,215) 538 6,577 (5,727) 850 $ 665,707 $ (349,290) $ 316,417 $ 658,894 $ (283,072) $ 375,822 Amortization expense for intangible assets was $69.1 million, $72.3 million and $65.0 million for the years ended December 31, 2009, 2008 and 2007, respectively. In 2008, we recorded impairment charges of $28.5 million and included these charges in the restructuring charges and asset impairments line of the Consolidated Statements of Income. See Note 14 to the Consolidated Financial Statements for further details. The estimated future amortization expense related to intangible assets as of December 31, 2009 is as follows: Year ended December 31, Amount 2010 $ 59,000 2011 52,000 2012 45,000 2013 41,000 2014 37,000 Thereafter 82,417 $ 316,417 During 2009, we recorded no additions to intangible assets. During 2008, we recorded additions to intangible assets of $18.6 million. The components of these purchased intangible assets are as follows: December 31, 2008 Amount Weighted Average Life Customer relationships $ 18,274 12 years Non-compete agreements 284 3 years $ 18,558 11 years The changes in the carrying amount of goodwill, by reporting segment, for the years ended December 31, 2009 and 2008 are as follows: Balance at December 31, 2008 (1) Acquired during the period Other (2) Balance at December 31, 2009 U.S. Mailing $ 221,315 $ - $ (2,748) $ 218,567 International Mailing 322,230 - 20,319 342,549 Production Mail 137,067 - 299 137,366 Software 623,995 - 9,943 633,938 Mailstream Solutions 1,304,607 - 27,813 1,332,420 Management Services 491,633 - 8,422 500,055 Mail Services 260,793 - (1,161) 259,632 Marketing Services 194,797 - - 194,797 Mailstream Services 947,223 - 7,261 954,484 Total $ 2,251,830 $ - $ 35,074 $ 2,286,904 Balance at December 31, 2007 (1) Acquired during the period Other (2) Balance at December 31, 2008 (1) U.S. Mailing $ 205,190 $ 4,034 $ 12,091 $ 221,315 International Mailing 346,328 7,553 (31,651) 322,230 Production Mail 137,855 - (788) 137,067 Software 669,436 - (45,441) 623,995 Mailstream Solutions 1,358,809 11,587 (65,789) 1,304,607 Management Services 519,089 - (27,456) 491,633 Mail Services 227,163 33,103 5

Current Liabilities

Current Liabilities
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Current Liabilities	7. Current Liabilities Accounts payable, accrued liabilities, notes payable and current portion of long-term obligations are composed of the following: December 31, 2009 2008 Accounts payable - trade $ 308,505 $ 323,959 Reserve account deposits 557,221 555,557 Accrued salaries, wages and commissions 244,170 271,940 Accrued restructuring charges 88,626 142,592 Miscellaneous accounts payable and accrued liabilities 549,732 628,351 Accounts payable and accrued liabilities $ 1,748,254 $ 1,922,399 Notes payable $ 220,794 $ 610,460 Current portion of long-term debt capital leases 5,228 160,041 Notes payable current portion of long-term obligations $ 226,022 $ 770,501 In countries outside the U.S., banks generally lend to our non-finance subsidiaries on an overdraft or term-loan basis. These overdraft arrangements and term-loans, for the most part, are extended on an uncommitted basis by banks and do not require compensating balances or commitment fees. Reserve account deposits represent customers' prepayment of postage. Deposits are held by our subsidiary, Pitney Bowes Bank. See Note 17 to the Consolidated Financial Statements for further details. Notes payable are issued as commercial paper, loans against bank lines of credit, or to trust departments of banks and others at below prevailing prime rates. The weighted average interest rates were 0.09% and 1.36% on notes payable and overdrafts outstanding at December 31, 2009 and 2008, respectively. We had unused credit facilities of $1.5 billion at December 31, 2009, primarily to support commercial paper issuances. Fees paid to maintain lines of credit were $0.8 million in 2009, 2008 and 2007.

Long-term Debt

Long-term Debt
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Long-term Debt	8. Long-term Debt December 31, 2009 2008 Recourse debt 0.64% to 1.88% credit facility due 2012 $ 150,000 $ 150,000 2.72% to 4.63% notes due 2012 400,000 400,000 3.88% notes due 2013 375,000 375,000 4.88% notes due 2014 450,000 450,000 5.00% notes due 2015 400,000 400,000 4.75% notes due 2016 500,000 500,000 5.75% notes due 2017 500,000 500,000 4.75% notes due 2018 (1) 350,000 350,000 1.79% to 3.02% notes due 2018 250,000 250,000 6.25% notes due 2019 300,000 - 5.25% notes due 2037 500,000 500,000 Fair value hedges basis adjustment (2) 52,788 76,043 Other (3) (14,148) (16,178) Total long-term debt $ 4,213,640 $ 3,934,865 (1)In April 2003, we entered into an interest rate swap for an aggregate notional amount of $350 million. The interest rate swap effectively converted the fixed rate of 4.75% on $350 million of our notes, due 2018, into variable interest rates. The variable rates payable by us in connection with the swap agreement were based on six month LIBOR less a spread of 22.8 basis points and the fixed rate received by us matched the fixed interest payment due on the notes. On November 21, 2008, we unwound this interest rate swap. This transaction was not undertaken for liquidity purposes but rather to fix our effective interest rate to 3.2% for the remaining term of these notes. We received $44 million, excluding accrued interest, associated with the unwind of this interest rate swap. This amount will be reflected as a reduction of interest expense over the remaining term of these notes. (2)The fair value hedges basis adjustment represents the revaluation of fixed rate debt that has been hedged in accordance with the derivatives and hedging accounting guidance. (3)Other consists primarily of debt discounts and premiums. On September 15, 2009, we repaid the 8.55% notes with a $150 million face value at their maturity. The repayment of these notes was funded through cash generated from operations and issuance of commercial paper. The notes were reported in current portion of long-term debt at December 31, 2008. On June 29, 2009, we entered into an interest rate swap for an aggregate notional amount of $100 million to effectively convert our interest payments on a portion of the $400 million, 4.625% fixed rate notes due in 2012, into variable interest rates. The variable rates payable are based on one month LIBOR plus 249 basis points. In July 2009, we entered into three additional interest rate swaps for an aggregate notional amount of $300 million to effectively convert our interest payments on the remainder of the $400 million, 4.625% fixed rate notes due in 2012, into variable interest rates. The variable rates payable are based on one month LIBOR plus 248 basis points for $100 million notional amount and one month LIBOR plus 250 basis points for $200 million notional amount. On March 2, 2009, we issued $300 million of 10-year fixed-rate notes with a coupon rate of 6.25%. The interest is paid semi-annually beginning September 15, 2009. The notes mature on March 15, 2019. We simultaneously unwound four

Income Taxes

Income Taxes
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Income Taxes	9. Income Taxes Years ended December 31, 2009 2008 2007 Continuing operations: Total current $ 251,101 $ 142,263 $ 160,839 Total deferred (10,947) 102,666 119,383 Provision for income taxes $ 240,154 $ 244,929 $ 280,222 U.S. and international components of income from operations before income taxes are as follows: Years ended December 31, 2009 2008 2007 Continuing operations: U.S. $ 552,636 $ 573,066 $ 624,030 International 140,540 140,111 36,681 Total continuing operations 693,176 713,177 660,711 Discontinued operations (see Note 2) 20,624 - - Total $ 713,800 $ 713,177 $ 660,711 The effective tax rates for continuing operations for 2009, 2008 and 2007 were 34.6%, 34.3% and 42.4%, respectively. The effective tax rate for 2009 included $12.9 million of tax charges related to the write-off of deferred tax assets associated with the expiration of out-of-the-money vested stock options and the vesting of restricted stock, offset by $13.0 million of tax benefits from retirement of inter-company obligations and the repricing of leveraged lease transactions. The effective tax rate for 2008 included $12.0 million of tax increases related to the low tax benefit associated with restructuring expenses recorded during 2008, offset by adjustments of $9.5 million related to deferred tax assets associated with certain U.S. leasing transactions. The effective tax rate for 2007 included $54.0 million of tax charges related principally to a valuation allowance for deferred tax assets and tax rate changes outside of the U.S. The items accounting for the difference between income taxes computed at the federal statutory rate and our provision for income taxes consist of the following: 2009 2008 2007 Continuing operations: Federal statutory provision $ 242,612 $ 249,612 $ 231,249 State and local income taxes 11,109 19,820 12,281 Foreign tax differential (18,037) (2,605) 2,379 Foreign valuation allowance - 4,560 51,724 Rate change - - 2,485 Tax exempt income/reimbursement (2,748) (5,404) (6,743) Federal income tax credits/incentives (4,792) (15,118) (12,732) Unrealized stock compensation benefits 12,852 - - Certain leasing transactions - (9,550) - Other, net (842) 3,614 (421) Provision for income taxes 240,154 244,929 280,222 Discontinued operations: External financing transactions (see Note 2) 28,733 27,700 (5,534) Total provision for income taxes $ 268,887 $ 272,629 $ 274,688 The components of our total provision for income taxes are as follows: Years ended December 31, 2009 2008 2007 U.S. Federal: Current $ 217,005 $ 112,931 $ 136,528 Deferred 18,979 81,936 53,235 235,984 194,867 189,763 U.S. State and Local: Current 30,981 17,058 12,813 Deferred (13,067) 13,434 6,083 17,914 30,492 18,896 International: Current 31,848 39,974 5,964 Deferred (16,859) 7,296 60,065

Noncontrolling Interests Prefer

Noncontrolling Interests Preferred Stockholders' Equity in Subsidiary Companies
	1/1/2009 - 12/31/2009
Notes to consolidated financial statements
Noncontrolling Interests (Preferred Stockholders' Equity in Subsidiary Companies)	10. Noncontrolling Interests (Preferred Stockholders' Equity in Subsidiaries) At December 31, 2008, Pitney Bowes International Holdings, Inc. ("PBIH"), a subsidiary of the Company, had 3,750,000 shares outstanding or $375 million of variable term voting preferred stock owned by certain outside institutional investors. These preferred shares were entitled as a group to 25% of the combined voting power of all classes of capital stock of PBIH. All outstanding common stock of PBIH, representing the remaining 75% of the combined voting power of all classes of capital stock, was owned directly or indirectly by Pitney Bowes Inc. The preferred stock, $.01 par value, was entitled to cumulative dividends at rates set at auction. The weighted average dividend rate was 4.8% for the variable term voting preferred stock during 2009 and 2008. In October 2009, PBIH issued 300,000 shares, or $300 million, of perpetual voting preferred stock to certain outside institutional investors. These preferred shares are entitled as a group to 25% of the combined voting power of all classes of capital stock of PBIH. All outstanding common stock of PBIH, representing the remaining 75% of the combined voting power of all classes of capital stock, is owned directly or indirectly by Pitney Bowes Inc. The preferred stock is entitled to cumulative dividends at a rate of 6.125% for a period of 7 years after which it becomes callable and, if it remains outstanding, will yield a dividend that increases by 150% every six months thereafter. In October 2009, PBIH redeemed $344 million of its existing variable term voting preferred stock. The redemption was funded by a combination of the issuance of the $300 million perpetual voting preferred stock and commercial paper. In December 2009, PBIH redeemed the remaining $31 million of its existing variable term voting preferred stock. The redemption was funded by cash flows from operations and the issuance of commercial paper. Preferred dividends are included in Preferred stock dividends of subsidiaries attributable to noncontrolling interests in the Consolidated Statements of Income. No dividends were in arrears at December 31, 2009 or December 31, 2008. A rollforward of noncontrolling interests is as follows: Beginning balance at January 1, 2007 and 2008 $ 384,165 Movements: Share redemptions (1) (10,000) Ending balance at December 31, 2008 $ 374,165 Movements: Share issuances 296,370 Share redemptions (374,165) Ending balance at December 31, 2009 $ 296,370 (1) At December 31, 2007, a subsidiary of the Company had 100 shares or $10 million of 9.11% Cumulative Preferred Stock, mandatorily redeemable in 20 years, owned by an institutional investor. In August 2008, we redeemed 100% of this Preferred Stock resulting in a net loss of $1.8 million.

Stockholders' Equity

Stockholders' Equity (Deficit)
	1/1/2009 - 12/31/2009
Notes to consolidated financial statements
Stockholders' Equity (Deficit)	11. Stockholders' Equity (Deficit) At December 31, 2009, 480,000,000 shares of common stock, 600,000 shares of cumulative preferred stock, and 5,000,000 shares of preference stock were authorized. At December 31, 2009, 207,197,828 shares of common stock (net of 116,140,084 shares of treasury stock), 85 shares of 4% convertible cumulative preferred stock (4% preferred stock) and 32,079 shares of $2.12 convertible preference stock ($2.12 preference stock) were issued and outstanding. In the future, the Board of Directors can issue the balance of unreserved and unissued preferred stock (599,915 shares) and preference stock (4,967,921 shares). The Board will determine the dividend rate, terms of redemption, terms of conversion (if any) and other pertinent features. At December 31, 2009, unreserved and unissued common stock (exclusive of treasury stock) amounted to 115,390,571 shares. The 4% preferred stock outstanding, entitled to cumulative dividends at the rate of $2 per year, can be redeemed at the Company's option, in whole or in part at any time, at the price of $50 per share, plus dividends accrued to the redemption date. Each share of the 4% preferred stock can be converted into 24.24 shares of common stock, subject to adjustment in certain events. The $2.12 preference stock is entitled to cumulative dividends at the rate of $2.12 per year and can be redeemed at the Company's option at the rate of $28 per share. Each share of the $2.12 preference stock can be converted into 16.53 shares of common stock, subject to adjustment in certain events. Cash dividends paid on common stock were $1.44 per share, $1.40 per share and $1.32 per share for 2009, 2008, and 2007, respectively. At December 31, 2009, a total of 532,326 shares of common stock were reserved for issuance upon conversion of the 4% preferred stock (2,060 shares) and $2.12 preference stock (530,266 shares). In addition, 40,739,191 shares of common stock were reserved for issuance under our dividend reinvestment and other corporate plans. The following table summarizes the preferred, preference and common stock outstanding: Common Stock Preferred Stock Preference Stock Issued Treasury Outstanding Balance, December 31, 2006 135 39,607 323,337,912 (102,724,590) 220,613,322 Repurchase of common stock (9,075,104) Issuances of common stock 2,934,801 Conversions of common stock - (2,538) 41,940 Balance, December 31, 2007 135 37,069 323,337,912 (108,822,953) 214,514,959 Repurchase of common stock (9,246,535) Issuances of common stock 896,030 Conversions of common stock - (1,013) 16,739 Balance, December 31, 2008 135 36,056 323,337,912 (117,156,719) 206,181,193 Repurchase of common stock - Issuances of common stock 949,689 Conversions of common stock (50) (3,977) 66,946 Balance, December 31, 2009 85 32,079 323,337,912 (116,140,084) 207,197,828 Accumulated Other Comprehensive (Loss) Income The components of accumulated other comprehensive (loss) income are as follow: 2009 2008 2007 Foreign currency translation adjustment

Stock Plans

Stock Plans
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Stock Plans	12. Stock Plans We account for stock-based awards exchanged for employee services in accordance with the share-based payment accounting guidance. Accordingly, stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the employee requisite service period. The following table shows total stock-based compensation expense for stock options, restricted stock units, and employee stock purchase plans. Years Ended December 31, 2009 2008 2007 Stock options $ 6,649 $ 11,851 $ 14,001 Restricted stock units 14,888 11,168 7,115 Employee stock purchase plans 224 3,383 3,015 Pre-tax stock-based compensation $ 21,761 $ 26,402 $ 24,131 The following table shows stock-based compensation expense as included in the Consolidated Statements of Income: Years Ended December 31, 2009 2008 2007 Cost of equipment sales $ 1,486 $ 1,802 $ 1,649 Cost of support services 640 777 710 Cost of business services 884 1,073 980 Selling, general and administrative 18,020 21,862 19,984 Research and development 731 888 808 Pre-tax stock-based compensation 21,761 26,402 24,131 Income tax (7,458) (9,109) (8,277) Stock-based compensation expense, net $ 14,303 $ 17,293 $ 15,854 Basic earnings per share impact $ 0.07 $ 0.08 $ 0.07 Diluted earnings per share impact $ 0.07 $ 0.08 $ 0.07 Capitalized stock-based compensation costs at December 31, 2009 and 2008 were not material. At December 31, 2009, $4.2 million of unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted average period of 1.3 years. At December 31, 2009, $23.0 million of unrecognized compensation cost related to non-vested restricted stock units is expected to be recognized over a weighted average period of 1.7 years. No options were exercised during 2009. The total intrinsic value of options exercised during the years ended 2008 and 2007, was $1.1 million and $28.1 million, respectively. The total intrinsic value of restricted stock units converted during 2009 was $5.2 million. Proceeds from issuance of stock in our Consolidated Statements of Cash Flows for 2009, 2008 and 2007 include $0.0 million, $5.0 million and $3.4 million, respectively, of windfall tax benefits from stock options exercised and restricted stock units converted. We settle employee stock compensation awards with treasury shares. Our stock-based compensation awards require a minimum requisite service period of one year for retirement eligible employees to vest. At December 31, 2009, there were 15,102,457 shares available for future grants of stock options and restricted stock units under our stock plans. Incentive Awards Long-term incentive awards are provided to employees under the terms of our plans. The Executive Compensation Committee of the Board of Directors administers these plans. Awards granted under these plans may include stock options, restricted stock units, other stock based awards, cash or any combination thereof. We have the following s

Fair Value Measurements

Fair Value Measurements
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Fair Value Measurements	13. Fair Value Measurements Effective January 1, 2008, we adopted the fair value measurements guidance for financial assets and liabilities. Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. The guidance emphasizes that an entity's valuation technique for measuring fair value should maximize observable inputs and minimize unobservable inputs. Non-recurring nonfinancial assets and nonfinancial liabilities include those measured at fair value in goodwill and indefinite lived intangible asset impairment testing, and those non-recurring nonfinancial assets and nonfinancial liabilities initially measured at fair value in a business combination. The new fair value definition and disclosure requirements for these specific nonfinancial assets and nonfinancial liabilities were effective January 1, 2009. The fair value measurement guidance established a fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of the fair value hierarchy are as follows: Level 1 Unadjusted quoted prices in active markets for identical assets and liabilities. Examples of Level 1 assets include money market securities and U.S. Treasury securities. Level 2 Observable inputs other than Level 1 inputs such as quoted prices for similar assets or liabilities; quoted prices in markets that trade infrequently; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Examples of Level 2 assets and liabilities include derivative contracts whose values are determined using a model with inputs that are observable in the market or can be derived from or corroborated by observable market data, such as mortgage-backed securities, asset backed securities, U.S. agency securities, and corporate notes and bonds. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability. These inputs may be derived with internally developed methodologies that result in management's best estimate of fair value. 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 at December 31, 2009 and 2008, respectively. As required by the fair value measurements guidance, 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 their placement within the fair value hierarchy levels. Recurring Fair Value Measurements at December 31, 2009 by Level Level 1 Level 2 Level 3 Total Assets: Investment securities Money market funds $ 225,581 $ - $ - $ 225,581 Equity securities - 21,027 - 21,027 Debt securities - U.S. and foreign governments, agencies, and municipalities 53,173 28,754 - 81,927 Corporate notes and bonds - 13,305 -

Restructuring Charges and Asset

Restructuring Charges and Assets Impairments
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Restructuring Charges and Assets Impairments	14. Restructuring Charges and Asset Impairments We recorded pre-tax restructuring charges and asset impairments of $48.7 million and $200.3 million for the years ended December 31, 2009 and 2008, respectively. 2009 Program In 2009, we announced that we are undertaking a series of initiatives that are designed to transform and enhance the way we operate as a global company. In order to enhance our responsiveness to changing market conditions, we are executing a strategic transformation program designed to create improved processes and systems to further enable us to invest in future growth in areas such as our global customer interactions and product development processes. This program is expected to continue into 2012 and will result in the reduction of up to 10 percent of the positions in the company. We expect the total pre-tax cost of this program will be in the range of $250 million to $350 million primarily related to severance and benefit costs incurred in connection with such workforce reductions. Most of the total pre-tax costs will be cash-related charges. Currently, we are targeting annualized benefits, net of system and related investments, in the range of at least $150 million to $200 million on a pre-tax basis. These costs and the related benefits will be recognized as different actions are approved and implemented. During 2009, we recorded pre-tax restructuring charges of $67.3 million, of which $55.8 million related to severance and benefit costs and $11.5 million related to other exit costs associated with this new transformation project. As of December 31, 2009, 548 employee terminations have occurred. The majority of the liability at December 31, 2009 is expected to be paid during the next twelve months from cash generated from operations. Pre-tax restructuring reserves at December 31, 2009 for the restructuring actions taken in connection with the 2009 program are composed of the following: 2009 Program Balance at December 31, 2008 Expenses Cash payments Non-cash charges Balance at December 31, 2009 Severance and benefit costs $ - $ 55,836 $ (9,941) $ - $ 45,895 Asset impairments - 18 - (18) - Other exit costs - 11,492 (4,685) - 6,807 Total $ - $ 67,346 $ (14,626) $ (18) $ 52,702 2007 Program We announced a program in November 2007 to lower our cost structure, accelerate efforts to improve operational efficiencies, and transition our product line. The program included charges primarily associated with older equipment that we had stopped selling upon transition to the new generation of fully digital, networked, and remotely-downloadable equipment. In 2009, we recorded a pre-tax adjustment to restructuring charges and asset impairments for $18.6 million due to lower than anticipated charges associated with the program announced in November 2007. In 2008, we recorded pre-tax restructuring charges and asset impairments of $200.3 million, the majority of which related to the program announced in November 2007. These charges included severance and benefit costs of $118.2 million, asset impairment charges related to older technology equipment of

Commitments and Contingencies

Commitments and Contingencies
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Commitments and Contingencies	15. Commitments and Contingencies Legal Proceedings In the ordinary course of business, we are routinely defendants in or party to a number of pending and threatened legal actions. These may involve litigation by or against us relating to, among other things, contractual rights under vendor, insurance or other contracts; intellectual property or patent rights; equipment, service, payment or other disputes with customers; or disputes with employees. Some of these actions may be brought as a purported class action on behalf of a purported class of employees, customers or others. Our wholly-owned subsidiary, Imagitas, Inc., is a defendant in ten purported class actions filed in six different states. These lawsuits have been coordinated in the United States District Court for the Middle District of Florida, In re: Imagitas, Driver's Privacy Protection Act Litigation (Coordinated, May 28, 2007). Each of these lawsuits alleges that the Imagitas DriverSource program violates the federal Drivers Privacy Protection Act (DPPA). Under the DriverSource program, Imagitas entered into contracts with state governments to mail out automobile registration renewal materials along with third party advertisements, without revealing the personal information of any state resident to any advertiser. The DriverSource program assisted the state in performing its governmental function of delivering these mailings and funding the costs of them. The plaintiffs in these actions are seeking statutory damages under the DPPA. On April 9, 2008, the District Court granted Imagitas' motion for summary judgment in one of the coordinated cases, Rine, et al. v. Imagitas, Inc. (United States District Court, Middle District of Florida, filed August 1, 2006). On July 30, 2008, the District Court issued a final judgment in the Rine lawsuit and stayed all of the other cases filed against Imagitas pending an appellate decision in Rine. On August 27, 2008, the Rine plaintiffs filed an appeal of the District Court's decision in the United States Court of Appeals, Eleventh Judicial Circuit (the "Circuit Court"). On December 21, 2009, the Circuit Court affirmed the District Court decision. On January 8, 2010, the Rine plaintiffs filed a petition for rehearing en banc with the Circuit Court. We expect to prevail in the lawsuits against Imagitas; however, as litigation is inherently unpredictable, there can be no assurance in this regard. If the plaintiffs do prevail, the results may have a material effect on our financial position, future results of operations or cash flows, including, for example, our ability to offer certain types of goods or services in the future. On October 28, 2009, the Company and certain of our current and former officers, were named as defendants in NECA-IBEW Health Welfare Fund v. Pitney Bowes Inc. et al., a class action lawsuit filed in the U.S. District Court for the District of Connecticut. The complaint asserts claims under the Securities Exchange Act of 1934 on behalf of those who purchased the common stock of the Company during the period between July 30, 2007 and October 29, 2007 alleging that the company, in essence, missed two financial pro

Leases

Leases
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Leases	16. Leases In addition to factory and office facilities owned, we lease similar properties, as well as sales and service offices, equipment and other properties, generally under long-term operating lease agreements extending from 3 to 25 years. Future minimum lease payments under non-cancelable operating leases at December 31, 2009 are as follows: Years ending December 31, Operating leases 2010 $ 109,603 2011 79,739 2012 56,388 2013 33,118 2014 19,623 Thereafter 23,453 Total minimum lease payments $ 321,924 Rental expense was $124.5 million, $129.1 million and $146.9 million in 2009, 2008 and 2007, respectively.

Finance Assets

Finance Assets
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Finance Assets	17. Finance Assets Finance Receivables Finance receivables are comprised of sales-type leases and customer loan receivables. Sales-type leases are generally due in monthly, quarterly or semi-annual installments over periods ranging from 3 to 5 years. Customer loan receivables arise primarily from financing services offered to our customers for postage, supplies and shipping payments. The components of finance receivables were as follows: December 31, 2009 2008 Gross finance receivables $ 3,117,741 $ 3,338,799 Unguaranteed residual values 282,208 273,529 Unearned income (601,431) (664,828) Allowance for credit losses (72,158) (71,790) Net investment in finance receivables $ 2,726,360 $ 2,875,710 Net investment in finance receivables include net customer loan receivables at December 31, 2009 and 2008 of $478.2 million and $528.8 million, respectively. Customer loan receivables are generally due each month, however, customers may rollover outstanding balances. See discussion on Pitney Bowes Bank below. Maturities of gross finance receivables are as follows: Years ending December 31, 2010 $ 1,516,802 2011 701,201 2012 478,911 2013 286,755 2014 113,598 Thereafter 20,474 Total $ 3,117,741 Pitney Bowes Bank The Pitney Bowes Bank (PBB), our wholly owned subsidiary, is a Utah-chartered Industrial Loan Company (ILC). At December 31, 2009, PBB had assets of $687 million and liabilities of $632 million. The bank's assets consist of finance receivables, short and long-term investments and cash. PBB's key product offering, Purchase Power, is a revolving credit solution, which enables customers to finance their postage costs when they refill their meter. PBB earns revenue through transaction fees, finance charges on outstanding balances, and other fees for services. The bank's liabilities consist primarily of PBB's deposit solution, Reserve Account, which provides value to large-volume mailers who prefer to prepay postage and earn interest on their deposits. PBB is regulated by the FDIC and the Utah Department of Financial Institutions. Leveraged Leases Our investment in leveraged lease assets consists of the following: December 31, 2009 2008 Rental receivables $ 1,747,811 $ 1,523,617 Unguaranteed residual values 13,399 11,522 Principal and interest on non-recourse loans (1,341,820) (1,173,789) Unearned income (186,031) (159,429) Investment in leveraged leases 233,359 201,921 Less: Deferred taxes related to leveraged leases (175,329) (149,262) Net investment in leveraged leases $ 58,030 $ 52,659 The following is a summary of the components of income from leveraged leases: December 31, 2009 2008 2007 Pre-tax leveraged lease income $ 918 $ 316 $ 4,270 Income tax effect 6,676 7,063 1,186 Income from leveraged leases $ 7,594 $ 7,379 $ 5,456 Income from leveraged leases was positively impacted by $2.8 million and $2.6 million in 2009 and 2008, respectively, and negatively impacted by $0.2 million in 2007 due to changes in statutory tax rates.

Business Segment Information

Business Segment Information
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Business Segment Information	18. Business Segment Information We conduct our business activities in seven reporting segments within two business groups, Mailstream Solutions and Mailstream Services. The principal products and services of each of our reporting segments are as follows: Mailstream Solutions: U.S. Mailing: Includes the U.S. revenue and related expenses from the sale, rental and financing of our mail finishing, mail creation, shipping equipment and software; supplies; support and other professional services; and payment solutions. International Mailing: Includes the non-U.S. revenue and related expenses from the sale, rental and financing of our mail finishing, mail creation, shipping equipment and software; supplies; support and other professional services; and payment solutions. Production Mail: Includes the worldwide revenue and related expenses from the sale, financing, support and other professional services of our high-speed, production mail systems and sorting equipment. Software: Includes the worldwide revenue and related expenses from the sale and support services of non-equipment-based mailing, customer communication and location intelligence software. Mailstream Services: Management Services: Includes worldwide facilities management services; secure mail services; reprographic, document management services; and litigation support and eDiscovery services. Mail Services: Includes presort mail services and cross-border mail services. Marketing Services: Includes direct marketing services for targeted customers. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. EBIT, a non-GAAP measure, is useful to management in demonstrating the operational profitability of the segments by excluding interest and taxes, which are generally managed across the entire company on a consolidated basis. EBIT is determined by deducting from revenue the related costs and expenses attributable to the segment. Segment EBIT also excludes general corporate expenses, restructuring charges and asset impairments. Identifiable assets are those used in our operations and exclude cash and cash equivalents, short-term investments and general corporate assets. Long-lived assets exclude finance receivables and investment in leveraged leases. As a result of certain organizational changes made during 2009, we have reclassified certain prior year amounts to conform to the current year presentation. The amounts reclassified did not have a material impact to our segment disclosures. Revenue and earnings before interest and taxes (EBIT) by business segment and geographic area follows: Revenue 2009 2008 2007 U.S. Mailing $ 2,016,259 $ 2,250,399 $ 2,409,211 International Mailing 920,398 1,133,652 1,069,713 Production Mail 525,745 616,255 622,699 Software 345,739 399,814 326,359 Mailstream Solutions 3,808,141 4,400,120 4,427,982 Management Services 1,060,907 1,172,170 1,134,767 Mail Services 559,200 541,776 441,353 Marketing Services 140,923 148,239 125,693 Mailstream Services 1,761,030

Retirement Plans and Postretire

Retirement Plans and Postretirement Medical Benefits
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Retirement Plans and Postretirement Medical Benefits	19. Retirement Plans and Postretirement Medical Benefits We have several defined benefit and defined contribution retirement plans covering substantially all employees worldwide. Benefits are primarily based on employees' compensation and years of service. Our contributions are determined based on the funding requirements of U.S. federal and other governmental laws and regulations. We use a measurement date of December 31 for all of our retirement plans. U.S. employees hired after January 1, 2005, Canadian employees hired after April 1, 2005, and U.K. employees hired after July 1, 2005, are not eligible for our defined benefit retirement plans. During 2009, the Board of Directors approved and adopted a resolution amending both U.S. pension plans, the Pitney Bowes Pension Plan and the Pitney Bowes Pension Restoration Plan, to provide that benefit accruals as of December 31, 2014, will be determined and frozen and no future benefit accruals under the plans will occur after that date. Due to the freezes, the assets and liabilities of the plans were re-measured, resulting in a reduction of pension expense of $2.0 million for 2009. This expense reduction was offset by a one-time curtailment loss of $2.1 million which represents the unamortized prior service costs as of December 31, 2014. During 2009, we voluntarily contributed a total of $125 million in cash to our global defined benefit pension plans in excess of legally required minimum contributions to increase the funding levels of the plans. Specifically, $100 million was contributed to the U.S. qualified plan and $25 million to certain foreign qualified plans. For our U.S. defined contribution plans, we contributed $27.2 million, $32.1 million and $30.5 million in 2009, 2008 and 2007, respectively. Defined Benefit Pension Plans The change in benefit obligations, plan assets and the funded status for defined benefit pension plans are as follows: United States Foreign 2009 2008 2009 2008 Change in benefit obligation: Benefit obligation at beginning of year $ 1,605,380 $ 1,596,486 $ 384,507 $ 557,185 Service cost 24,274 29,699 6,853 10,562 Interest cost 93,997 96,205 25,200 29,140 Plan participants contributions - - 2,231 2,978 Actuarial loss (gain) 17,698 528 63,325 (75,728) Foreign currency changes - - 45,858 (117,234) Settlement / curtailment (24,297) - (1,579) - Special termination benefits 112 2,105 2,012 632 Benefits paid (117,658) (119,643) (20,475) (23,028) Benefit obligation at end of year $ 1,599,506 $ 1,605,380 $ 507,932 $ 384,507 United States Foreign 2009 2008 2009 2008 Change in plan assets: Fair value of plan assets at beginning of year $ 1,175,271 $ 1,675,002 $ 312,206 $ 532,627 Actual return on plan assets 177,119 (390,374) 48,128 (101,822) Company contributions 115,313 10,286 32,755 7,868 Plan participants contributions - - 2,231 2,978 Foreign currency changes - - 39,468 (106,417) Benefits paid (117,658) (119,643) (20,475) (

Earnings per Share

Earnings per Share
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Earnings per Share	20. Earnings per Share A reconciliation of the basic and diluted earnings per share computations for income from continuing operations for the years ended December 31, 2009, 2008 and 2007 is as follows: 2009 (Weighted average shares in thousands) Income Weighted Average Shares Per Share Pitney Bowes Inc. net income $ 423,445 Less: Preferred stock dividends - Preference stock dividends (72) Basic earnings per share $ 423,373 206,734 $ 2.05 Basic earnings per share $ 423,373 206,734 Effect of dilutive securities: Preferred stock - 3 Preference stock 72 568 Stock options and stock purchase plans - 7 Other stock plans - 10 Diluted earnings per share $ 423,445 207,322 $ 2.04 Basic earnings per share of common stock attributable to Pitney Bowes Inc. common stockholders: Continuing operations $ 2.09 Discontinued operations (0.04) Net income $ 2.05 Diluted earnings per share of common stock attributable to Pitney Bowes Inc. common stockholders: Continuing operations $ 2.08 Discontinued operations (0.04) Net income $ 2.04 Note: The sum of the earnings per share amounts may not equal the totals above due to rounding. 2008 (Weighted average shares in thousands) Income Weighted Average Shares Per Share Pitney Bowes Inc. net income $ 419,793 Less: Preferred stock dividends - Preference stock dividends (77) Basic earnings per share $ 419,716 208,425 $ 2.01 Basic earnings per share $ 419,716 208,425 Effect of dilutive securities: Preferred stock - 3 Preference stock 77 601 Stock options and stock purchase plans - 603 Other stock plans - 67 Diluted earnings per share $ 419,793 209,699 $ 2.00 Basic earnings per share of common stock attributable to Pitney Bowes Inc. common stockholders: Continuing operations $ 2.15 Discontinued operations (0.13) Net income $ 2.01 Diluted earnings per share of common stock attributable to Pitney Bowes Inc. common stockholders: Continuing operations $ 2.13 Discontinued operations (0.13) Net income $ 2.00 Note: The sum of the earnings per share amounts may not equal the totals above due to rounding. 2007 (Weighted average shares in thousands) Income Weighted Average Shares Per Share Pitney Bowes Inc. net income $ 366,781 Less: Preferred stock dividends - Preference stock dividends (81) Basic earnings per share $ 366,700 218,444 $ 1.68 Basic earnings per share $ 366,700 218,444 Effect of dilutive securities: Preferred stock - 3 Preference stock 81 638 Stock options and stock purchase plans - 2,028 Other stock plans - 107 Diluted earnings per share $ 366,781 221,220 $ 1.66 Basic earnings per share of common stock attributable to Pitney Bowes Inc. common stockholders: Continuing operations $ 1.65 Discontinued operations 0.03 Net income $ 1.68 Diluted earnings per share of common

Quarterly Financial Data

Quarterly Financial Data (unaudited)
	12 Months Ended Dec. 31, 2009
Notes to consolidated financial statements
Quarterly Financial Data (unaudited)	21. Quarterly Financial Data (unaudited) Summarized quarterly financial data for 2009 and 2008 follows: 2009 First Quarter Second Quarter Third Quarter Fourth Quarter Full Year Total revenue $ 1,379,584 $ 1,378,462 $ 1,356,820 $ 1,454,305 $ 5,569,171 Gross profit (1) 701,988 685,596 688,373 755,190 2,831,147 Restructuring charges and asset impairments - - 12,845 35,901 48,746 Income from continuing operations 106,300 116,731 110,278 119,713 453,022 Gain (loss) from discontinued operations, net of income tax 2,623 5,102 (2,429) (13,405) (8,109) Net income before attribution of noncontrolling interests 108,923 121,833 107,849 106,308 444,913 Less: Preferred stock dividends of subsidiaries attributable to noncontrolling interests 4,521 4,571 4,622 7,754 21,468 Pitney Bowes Inc. net income $ 104,402 $ 117,262 $ 103,227 $ 98,554 $ 423,445 Amounts attributable to Pitney Bowes Inc. common stockholders: Income from continuing operations $ 101,779 $ 112,160 $ 105,656 $ 111,959 $ 431,554 Gain (loss) from discontinued operations 2,623 5,102 (2,429) (13,405) (8,109) Pitney Bowes Inc. net income $ 104,402 $ 117,262 $ 103,227 $ 98,554 $ 423,445 Basic earnings per share of common stock attributable to Pitney Bowes Inc. common stockholders (2): Continuing operations $ 0.49 $ 0.54 $ 0.51 $ 0.54 $ 2.09 Discontinued operations 0.01 0.02 (0.01) (0.06) (0.04) Net Income $ 0.51 $ 0.57 $ 0.50 $ 0.48 $ 2.05 Diluted earnings per share of common stock attributable to Pitney Bowes Inc. common stockholders (2): Continuing operations $ 0.49 $ 0.54 $ 0.51 $ 0.54 $ 2.08 Discontinued operations 0.01 0.02 (0.01) (0.06) (0.04) Net Income $ 0.50 $ 0.57 $ 0.50 $ 0.47 $ 2.04 (1)Gross profit is defined as total revenue less cost of equipment sales, cost of supplies, cost of software, cost of rentals, financing interest expense, cost of support services and cost of business services. (2)The sum of the quarters and earnings per share amounts may not equal the annual and total amounts due to rounding. 2008 First Quarter Second Quarter Third Quarter Fourth Quarter Full Year Total revenue $ 1,573,957 $ 1,588,086 $ 1,547,673 $ 1,552,589 $ 6,262,305 Gross profit (1) 801,503 808,856 790,033 795,841 3,196,233 Restructuring charges and asset impairments 17,093 18,815 49,229 115,117 200,254 Income from continuing operations 127,733 136,136 106,832 97,547 468,248 Loss from discontinued operations, net of income tax (3,832) (2,831) (2,063) (18,974) (27,700) Net income before attribution of noncontrolling interests 123,901 133,305 104,769 78,573 440,548 Less: Preferred stock dividends of subsidiaries attributable to noncontrolling interests 4,798 4,796 6,540 4,621 20,755 Pitney Bowes Inc. net income $ 119,103 $ 128,509 $ 98,229 $ 73,952 $ 419,793 Amou

Valuation and Qualifying Accoun

Valuation and Qualifying Accounts and Reserves
	12 Months Ended Dec. 31, 2009
Schedule of Valuation and Qualifying Accounts Disclosure
Schedule II Valuation and Qualifying Accounts and Reserves	PITNEY BOWES INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE YEARS ENDED DECEMBER 31, 2007 TO 2009 (Dollars in thousands) Balance at Balance at Description beginning of year Additions Deductions end of year Allowance for doubtful accounts 2009 $ 45,264 $ 10,516 (1) $ (12,999) (2) $ 42,781 2008 $ 49,324 $ 17,134 (1) $ (21,194) (2) $ 45,264 2007 $ 50,052 $ 19,880 (1) $ (20,608) (2) $ 49,324 Allowance for credit losses on finance receivables 2009 $ 71,790 $ 61,755 $ (61,387) (2) $ 72,158 2008 $ 78,371 $ 51,736 $ (58,317) (2) $ 71,790 2007 $ 82,499 $ 44,440 $ (48,568) (2) $ 78,371 Valuation allowance for deferred tax asset (3) 2009 $ 91,405 $ 5,628 $ (1,043) $ 95,990 2008 $ 69,792 $ 37,942 $ (16,329) $ 91,405 2007 $ 33,563 $ 64,487 $ (28,258) $ 69,792 (1) Includes additions charged to expenses, additions from acquisitions and impact of foreign exchange translation. (2) Includes uncollectible accounts written off and amounts included in divestitures. (3) Included in Consolidated Balance Sheet as a liability.