Exhibit 99.1
Pitney Bowes Announces Third Quarter Results for 2012
STAMFORD, Conn.--(BUSINESS WIRE)--November 1, 2012--Pitney Bowes Inc. (NYSE: PBI) today reported financial results for the third quarter 2012.
Recent Highlights
- Revenues of $1.2 billion; Adjusted EPS of $0.47; GAAP EPS of $0.38
- Reaffirms full year 2012 guidance for the following:
- Revenue in the range of flat to -4%, excluding the impact of currency;
- Adjusted EPS guidance in the range of $1.95 to $2.15;
- Free cash flow in the range of $750 - $850 million.
- Updates GAAP EPS guidance to a range of $1.78 to $2.08, which includes new impairment and restructuring charges.
- Significant progress on expanding our participation in higher growth cross-border ecommerce parcel opportunities, including, a broader strategic relationship with eBay to provide ecommerce shipping solutions beginning in the 4th quarter.
- Decision to exit the International Mail Services business focused on delivering mail and catalogues internationally, in line with the focus on higher growth cross-border ecommerce parcel opportunities.
- Year-over-year growth in Production Mail revenue.
- Continued growth in Presort revenue.
Commenting on the quarter, Chairman, President and Chief Executive Officer Murray D. Martin said, “We continue to execute our strategy to be a leading provider of customer communications solutions; however, our earnings performance during the quarter did not meet our expectations. In the third quarter, our results continued to be affected by global economic weakness, especially in International Mailing and Software where public sector spending remains constrained. However, we were pleased to see gradually improving trends in North America Mailing, where equipment sales experienced a slower rate of decline and the best year-over-year comparisons in six quarters.”
Mr. Martin added, “We continue to take actions to drive sustainable long-term growth for Pitney Bowes and our shareholders and are focused on positioning Pitney Bowes to succeed in the changing market landscape. We decided to exit the International Mail Services business related to the delivery of international mail and catalogs. As we focus on the higher growth opportunities, we are growing our participation in ecommerce opportunities related to cross border parcel shipping services. One example is our collaboration with eBay to facilitate cross border ecommerce by providing technology solutions and parcel shipping services. Additionally, to address our changing business mix and current economic pressures, we are initiating actions to further streamline the business through organizational and management consolidations to further reduce our cost structure. And, we will further realign future investments in the business as we focus on higher growth opportunities.”
Third Quarter 2012 Results
Revenue in the third quarter totaled $1.2 billion, a decline of 6 percent compared to the prior year period, and reflects global economic conditions with particular impact on the International Mailing, Software and Management Services business segments. On a constant currency basis, revenue declined 5 percent and benefited from equipment sales growth in Production Mail and 3 percent growth in presort revenue.
Earnings per diluted share (EPS), as reported under Generally Accepted Accounting Principles basis (GAAP), for the quarter were $0.38, as compared with $0.85 per diluted share for the prior year. GAAP EPS for the quarter includes a charge of $0.09 per diluted share to reflect non-cash impairment charges for goodwill, intangible and long-lived assets related to the decision in October 2012 to exit the International Mail Services business. In comparison, the 2011 third quarter GAAP EPS included an $0.11 per share charge for restructuring costs and asset impairments; a $0.15 per share charge for goodwill; a $0.13 per share benefit from the sale of leveraged lease assets; and a $0.30 per share tax benefit from discontinued operations.
Adjusted EPS were $0.47, as compared with adjusted EPS of $0.69 in the same period last year. Adjusted EPS for 2012 excludes the non-cash impairment charges for goodwill, intangible and long-lived assets related to the International Mail Services business. In comparison, the 2011 third quarter adjusted EPS included a $0.05 per share benefit related to insurance reimbursements and an $0.08 per share favorable tax settlement.
Free cash flow during the quarter was $40 million and $551 million year to date. On a GAAP basis the Company generated $69 million in cash from operations for the quarter and $440 million year to date. Comparisons of cash flow this quarter versus the prior year were impacted by a large tax refund and the timing of tax payments in the third quarter of last year. Comparisons to the second quarter of this year were also impacted by the timing of tax payments, as well as the timing of working capital requirements. Year-to-date, the Company has used its cash primarily to reduce debt, pay dividends, contribute to its pension plans and make restructuring payments.
Business Segment Results
SMB Solutions Group | ||||||
| 3Q 2012 | Y-O-Y Change | Change ex Currency | ||||
| Revenue | $602 million | (8%) | (6%) | |||
| EBIT | $180 million | (11%) | ||||
Within the SMB Solutions Group:
North America Mailing | ||||||
| 3Q 2012 | Y-O-Y Change | Change ex Currency | ||||
| Revenue | $448 million | (6%) | (6%) | |||
| EBIT | $169 million | (5%) | ||||
During the quarter, the North America Mailing segment continued to benefit from increased placements of Connect+™ and pbWebConnect™ mailing systems and SendSuite Live™ shipping solutions. As a result, there was a decline of less than 4 percent in equipment sales revenue this quarter, representing the best year-over-year performance in 6 quarters. Revenue was impacted by lower recurring revenue, although at a slower rate than the previous year. Supplies revenue declined in part because of lower sales of third-party supplies for copiers and printers.
EBIT margin for the segment again improved versus the prior year, even though there were fewer lease extensions on existing equipment. The higher proportion of equipment sales revenue will result in an improvement in customer retention and future recurring revenue streams; however, fewer lease extensions reduced EBIT margin in the quarter.
International Mailing | ||||||
| 3Q 2012 | Y-O-Y Change | Change ex Currency | ||||
| Revenue | $154 million | (13%) | (7%) | |||
| EBIT | $ 11 million | (55%) | ||||
International Mailing revenue was negatively impacted by the uncertain economic environment in Europe, resulting in fewer upgrades and lower equipment sales, especially in the U.K. In addition, revenue comparisons were impacted by a postal rate change in France in the third quarter of last year, which generated $6 million of equipment sales related to postal rate updates (PROMs), which was not repeated this year.
EBIT margin declined year-over-year due to lower revenue, lack of high-margin PROM sales contribution this quarter and the overall mix of business.
Enterprise Business Solutions Group | ||||||
| 3Q 2012 | Y-O-Y Change | Change ex Currency | ||||
| Revenue | $614 million | (5%) | (4%) | |||
| EBIT | $ 41 million | (46%) | ||||
Within the Enterprise Business Solutions Group:
Worldwide Production Mail | ||||||
| 3Q 2012 | Y-O-Y Change | Change ex Currency | ||||
| Revenue | $122 million | 4% | 7% | |||
| EBIT | $ 4 million | 204% | ||||
Production Mail revenue benefited from increased worldwide equipment sales following the Drupa trade show held during the second quarter.
The company continues to make progress with its Volly™ service and has now signed 60 large third-party mail service providers who will offer the Volly secure digital mail service to 6,500 companies and consumer brands. As it continues to work with billers and develop its software, the company has decided to add to and enhance its technology to provide additional capabilities that will improve the onboarding process for billers. This will result in improving the scalability of the service and facilitating biller density. Therefore, the company has determined that Volly’s long-term value will be enhanced by deferring its availability to consumers until 2013.
EBIT improved when compared to the prior year due to the growth of revenue and cost reduction initiatives in the U.S. and Europe, offset by continued investment in Volly. Excluding the investment in Volly, EBIT margin would have been approximately 540 basis points higher this quarter.
Software | ||||||
| 3Q 2012 | Y-O-Y Change | Change ex Currency | ||||
| Revenue | $ 89 million | (19%) | (18%) | |||
| EBIT | $ 1 million | (94%) | ||||
Given the overall slowdown in the global market, Software has experienced a reduction in the number of large license deals compared with the prior year. Additionally, revenue was impacted by the continued austerity measures in the public sector globally.
EBIT margin declined versus the prior year principally because of lower licensing revenue, as well as relatively higher R&D investment and marketing spend in the quarter.
Management Services | ||||||
| 3Q 2012 | Y-O-Y Change | Change ex Currency | ||||
| Revenue | $221 million | (6%) | (5%) | |||
| EBIT | $ 10 million | (44%) | ||||
Management Services revenue and EBIT margin continue to be impacted by ongoing pricing pressures, lower volumes and account contractions resulting from worldwide economic uncertainty and competitive conditions. However, there continues to be positive net new written business, which, coupled with new strategic partnerships in print outsourcing, are expected to drive revenue growth in the future.
Mail Services | ||||||
| 3Q 2012 | Y-O-Y Change | Change ex Currency | ||||
| Revenue | $142 million | (1%) | (1%) | |||
| EBIT | $ 17 million | (53%) | ||||
Increased standard mail volumes and continued penetration in the workshare discount categories continue to drive revenue growth for the presort operations. Overall, Mail Services revenue declined slightly this quarter as a result of lower volumes in the International Mail Services business.
The Company recently announced a partnership with eBay to provide ecommerce solutions for cross-border package delivery which is beginning roll out in the fourth quarter.
EBIT margin comparisons versus the prior year were impacted by the $18 million insurance reimbursement received in the third quarter last year. Impacting EBIT margin this quarter was the Company’s continued investment in software applications and the distribution network to facilitate the expansion of its ecommerce solutions.
Marketing Services | ||||||
| 3Q 2012 | Y-O-Y Change | Change ex Currency | ||||
| Revenue | $ 40 million | (4%) | (4%) | |||
| EBIT | $ 9 million | 7% | ||||
Marketing Services EBIT benefited from reduced print production costs and ongoing productivity initiatives.
Executive Vice President and Chief Financial Officer, Michael Monahan, commented, “As the mix of business for the Company continues to shift to more enterprise-related revenues and we focus on incremental growth opportunities, we anticipate that these new revenue streams will have lower margins than our traditional Mailing business. Therefore, we intend to further streamline the business and reduce its cost structure to address margin mix, as the Company moves towards these initiatives. These actions, which are anticipated to result in annualized savings of $45 million to $55 million, combined with our ongoing efforts, will enhance shareholder value and improve the growth profile of the business.”
2012 Annual Guidance
This guidance discusses future results which are inherently subject to unforeseen risks and developments. As such, discussions about the business outlook should be read in the context of an uncertain future, as well as the risk factors identified in the safe harbor language at the end of this release and as more fully outlined in the Company's 2011 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission.
The Company is reaffirming its 2012 revenue, adjusted EPS and cash flow guidance for the year, and is updating its GAAP EPS guidance. Based on results to date and expectations for the fourth quarter, the Company anticipates:
- 2012 revenue, excluding the impacts of currency, to remain in a range of flat to a decline of 4 percent when compared to 2011;
- Adjusted earnings per diluted share from continuing operations to be in the range of $1.95 to $2.15;
- GAAP earnings per diluted share from continuing operations to be in the range of $1.78 to $2.08; and
- Free cash flow to be in the range of $750 million to $850 million.
The Company’s efforts to further streamline the business and reduce its cost structure will result in a pre-tax restructuring charge in the fourth quarter that is expected to be in the range of $40 million to $60 million and is anticipated to generate annualized savings in the range of $45 million to $55 million. The updated GAAP earnings per share guidance reflects the goodwill and asset impairment charges of $0.09 per share related to the recent performance of the International Mail Services business that was recorded during the quarter, and the anticipated restructuring charge in the range of $0.15 to $0.25 per share that will be recorded in the fourth quarter.
Conference Call and Webcast
Management of Pitney Bowes will discuss the Company’s results in a broadcast over the Internet today at 5:00 p.m. EDT. Instructions for listening to the earnings results via the Web are available on the Investor Relations page of the Company’s web site at www.pb.com.
About Pitney Bowes
Delivering more than 90 years of innovation, Pitney Bowes provides business communications software, mailing systems and services that integrate physical and digital communications channels. Long known for making its customers more productive, Pitney Bowes is increasingly helping other companies grow their business through advanced customer communications management. Pitney Bowes is a $5.3 billion Company with 29,000 employees worldwide. Pitney Bowes: Every connection is a new opportunity™. www.pb.com
The Company's financial results are reported in accordance with generally accepted accounting principles (GAAP). The Company uses measures such as adjusted earnings per share, adjusted income from continuing operations and free cash flow to exclude the impact of special items like restructuring charges, tax adjustments, and asset write-downs, because, while these are actual Company expenses, they can mask underlying trends associated with our business. Such items are often inconsistent in amount and frequency and as such, the adjustments allow an investor greater insight into the current underlying operating trends of the business.
The use of free cash flow provides investors insight into the amount of cash that management could have available for other discretionary uses. It adjusts GAAP cash from operations for capital expenditures, as well as special items like cash used for restructuring charges, unusual tax payments and contributions to its pension funds. Management uses segment EBIT to measure profitability and performance at the segment level. EBIT is determined by deducting the related costs and expenses attributable to the segment. Segment EBIT excludes interest, taxes, general corporate expenses not allocated to a particular business segment, restructuring charges, asset impairments, and goodwill charges which are recognized on a consolidated basis. In addition, financial results are presented on a constant currency basis to exclude the impact of changes in foreign currency exchange rates since the prior period under comparison. Constant currency measures are intended to help investors better understand the underlying operational performance of the business excluding the impacts of shifts in currency exchange rates over the intervening period.
Pitney Bowes has provided a quantitative reconciliation to GAAP in supplemental schedules. This information may also be found at the Company's web site www.pb.com/investorrelations.
This document contains “forward-looking statements” about our expected or potential future business and financial performance. For us forward-looking statements include, but are not limited to, statements about our future revenue and earnings guidance and other statements about future events or conditions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to: mail volumes; the uncertain economic environment; timely development, market acceptance and regulatory approvals, if needed, of new products; fluctuations in customer demand; changes in postal regulations; interrupted use of key information systems; management of outsourcing arrangements; foreign currency exchange rates; changes in our credit ratings; management of credit risk; changes in interest rates; the financial health of national posts; and other factors beyond our control as more fully outlined in the Company's 2011 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission. Pitney Bowes assumes no obligation to update any forward-looking statements contained in this document as a result of new information, events or developments.
Note: Consolidated statements of income; revenue and EBIT by business segment; and reconciliation of GAAP to non-GAAP measures for the three months and nine months ended September 30, 2012 and 2011, and consolidated balance sheets at September 30, 2012 and December 31, 2011 are attached.
| Pitney Bowes Inc. | ||||||||||||||||||
| Consolidated Statements of Income | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||||
| 2012 | 2011(2) | 2012 | 2011(2) | |||||||||||||||
| Revenue: | ||||||||||||||||||
| Equipment sales | $ | 212,103 | $ | 221,475 | $ | 656,517 | $ | 706,027 | ||||||||||
| Supplies | 66,902 | 74,271 | 213,789 | 235,728 | ||||||||||||||
| Software | 93,476 | 113,224 | 302,377 | 318,305 | ||||||||||||||
| Rentals | 142,288 | 154,210 | 428,174 | 467,064 | ||||||||||||||
| Financing | 123,999 | 136,000 | 373,695 | 412,958 | ||||||||||||||
| Support services | 171,652 | 175,286 | 516,424 | 530,707 | ||||||||||||||
| Business services | 405,257 | 425,258 | 1,226,175 | 1,266,478 | ||||||||||||||
| Total revenue | 1,215,677 | 1,299,724 | 3,717,151 | 3,937,267 | ||||||||||||||
| Costs and expenses: | ||||||||||||||||||
| Cost of equipment sales | 105,556 | 97,559 | 309,190 | 316,697 | ||||||||||||||
| Cost of supplies | 20,694 | 22,611 | 65,428 | 74,365 | ||||||||||||||
| Cost of software | 22,784 | 23,431 | 68,281 | 73,541 | ||||||||||||||
| Cost of rentals | 25,182 | 35,819 | 87,257 | 107,834 | ||||||||||||||
| Financing interest expense | 19,604 | 21,430 | 61,385 | 66,915 | ||||||||||||||
| Cost of support services | 107,095 | 114,074 | 334,304 | 344,767 | ||||||||||||||
| Cost of business services | 315,830 | 326,415 | 948,359 | 985,232 | ||||||||||||||
| Selling, general and administrative | 400,862 | 427,412 | 1,203,653 | 1,286,739 | ||||||||||||||
| Research and development | 36,669 | 35,573 | 104,518 | 107,772 | ||||||||||||||
| Restructuring charges and asset impairments | 9,986 | 32,956 | 11,060 | 63,974 | ||||||||||||||
| Goodwill impairment | 18,315 | 45,650 | 18,315 | 45,650 | ||||||||||||||
| Other interest expense | 27,541 | 28,932 | 87,261 | 86,006 | ||||||||||||||
| Interest income | (2,057 | ) | (1,265 | ) | (5,793 | ) | (4,702 | ) | ||||||||||
| Other income, net | - | (10,718 | ) | 1,138 | (10,718 | ) | ||||||||||||
| Total costs and expenses | 1,108,061 | 1,199,879 | 3,294,356 | 3,544,072 | ||||||||||||||
| Income from continuing operations before income taxes | 107,616 | 99,845 | 422,795 | 393,195 | ||||||||||||||
| Provision for income taxes | 26,489 | (17,087 | ) | 93,519 | 77,319 | |||||||||||||
| Income from continuing operations | 81,127 | 116,932 | 329,276 | 315,876 | ||||||||||||||
| Income from discontinued operations, net of income tax | - | 60,428 | 19,332 | 57,911 | ||||||||||||||
| Net income before attribution of noncontrolling interests | 81,127 | 177,360 | 348,608 | 373,787 | ||||||||||||||
| Less: Preferred stock dividends of subsidiaries attributable | ||||||||||||||||||
| to noncontrolling interests | 4,594 | 4,593 | 13,782 | 13,781 | ||||||||||||||
| Net income - Pitney Bowes Inc. | $ | 76,533 | $ | 172,767 | $ | 334,826 | $ | 360,006 | ||||||||||
| Amounts attributable to common stockholders: | ||||||||||||||||||
| Income from continuing operations | $ | 76,533 | $ | 112,339 | $ | 315,494 | $ | 302,095 | ||||||||||
| Income from discontinued operations | - | 60,428 | 19,332 | 57,911 | ||||||||||||||
| Net income - Pitney Bowes Inc. | $ | 76,533 | $ | 172,767 | $ | 334,826 | $ | 360,006 | ||||||||||
| Basic earnings per share attributable to common stockholders (1): | ||||||||||||||||||
| Continuing operations | 0.38 | 0.56 | 1.58 | 1.49 | ||||||||||||||
| Discontinued operations | 0.00 | 0.30 | 0.10 | 0.29 | ||||||||||||||
| Net income - Pitney Bowes Inc. | $ | 0.38 | $ | 0.86 | $ | 1.67 | $ | 1.78 | ||||||||||
| Diluted earnings per share attributable to common stockholders (1): | ||||||||||||||||||
| Continuing operations | 0.38 | 0.56 | 1.57 | 1.48 | ||||||||||||||
| Discontinued operations | 0.00 | 0.30 | 0.10 | 0.28 | ||||||||||||||
| Net income - Pitney Bowes Inc. | $ | 0.38 | $ | 0.85 | $ | 1.66 | $ | 1.77 | ||||||||||
| (1) | The sum of the earnings per share amounts may not equal the totals above due to rounding. | |
| (2) | Certain prior year amounts have been reclassified to conform to the current year presentation. |
| Pitney Bowes Inc. | ||||||||||
| Consolidated Balance Sheets | ||||||||||
(Unaudited in thousands, except per share data) | ||||||||||
Assets | 09/30/12 | 12/31/11 | ||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 424,789 | $ | 856,238 | ||||||
| Short-term investments | 36,238 | 12,971 | ||||||||
| Accounts receivable, gross | 695,575 | 755,485 | ||||||||
| Allowance for doubtful accounts receivable | (28,355 | ) | (31,855 | ) | ||||||
| Accounts receivable, net | 667,220 | 723,630 | ||||||||
| Finance receivables | 1,218,080 | 1,296,673 | ||||||||
| Allowance for credit losses | (26,368 | ) | (45,583 | ) | ||||||
| Finance receivables, net | 1,191,712 | 1,251,090 | ||||||||
| Inventories | 187,082 | 178,599 | ||||||||
| Current income taxes | 22,044 | 102,556 | ||||||||
| Other current assets and prepayments | 144,987 | 134,774 | ||||||||
| Total current assets | 2,674,072 | 3,259,858 | ||||||||
| Property, plant and equipment, net | 382,850 | 404,146 | ||||||||
| Rental property and equipment, net | 249,310 | 258,711 | ||||||||
| Finance receivables | 1,047,411 | 1,123,638 | ||||||||
| Allowance for credit losses | (18,235 | ) | (17,847 | ) | ||||||
| Finance receivables, net | 1,029,176 | 1,105,791 | ||||||||
| Investment in leveraged leases | 34,373 | 138,271 | ||||||||
| Goodwill | 2,127,114 | 2,147,088 | ||||||||
| Intangible assets, net | 175,995 | 212,603 | ||||||||
| Non-current income taxes | 45,615 | 89,992 | ||||||||
| Other assets | 555,661 | 530,644 | ||||||||
| Total assets | $ | 7,274,166 | $ | 8,147,104 | ||||||
Liabilities, noncontrolling interests and stockholders' equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable and accrued liabilities | $ | 1,643,395 | $ | 1,840,465 | ||||||
| Current income taxes | 220,236 | 242,972 | ||||||||
| Notes payable and current portion of long-term obligations | 375,000 | 550,000 | ||||||||
| Advance billings | 449,051 | 458,425 | ||||||||
| Total current liabilities | 2,687,682 | 3,091,862 | ||||||||
| Deferred taxes on income | 25,017 | 175,944 | ||||||||
| Tax uncertainties and other income tax liabilities | 193,867 | 194,840 | ||||||||
| Long-term debt | 3,305,504 | 3,683,909 | ||||||||
| Other non-current liabilities | 641,093 | 743,165 | ||||||||
| Total liabilities | 6,853,163 | 7,889,720 | ||||||||
| Noncontrolling interests (Preferred stockholders' equity in subsidiaries) | 296,370 | 296,370 | ||||||||
| Stockholders' equity: | ||||||||||
| Cumulative preferred stock, $50 par value, 4% convertible | 4 | 4 | ||||||||
| Cumulative preference stock, no par value, $2.12 convertible | 653 | 659 | ||||||||
| Common stock, $1 par value | 323,338 | 323,338 | ||||||||
| Additional paid-in-capital | 222,620 | 240,584 | ||||||||
| Retained Earnings | 4,709,761 | 4,600,217 | ||||||||
| Accumulated other comprehensive loss | (625,868 | ) | (661,645 | ) | ||||||
| Treasury Stock, at cost | (4,505,875 | ) | (4,542,143 | ) | ||||||
| Total Pitney Bowes Inc. stockholders' equity | 124,633 | (38,986 | ) | |||||||
| Total liabilities, noncontrolling interests and stockholders' equity | $ | 7,274,166 | $ | 8,147,104 | ||||||
| Pitney Bowes Inc. | |||||||||||||
| Revenue and EBIT | |||||||||||||
| Business Segments | |||||||||||||
| September 30, 2012 | |||||||||||||
(Unaudited) | |||||||||||||
| (Dollars in thousands) | Three Months Ended September 30, | ||||||||||||
| % | |||||||||||||
| 2012 | 2011 | Change | |||||||||||
Revenue | |||||||||||||
| North America Mailing | $ | 447,920 | 475,663 | (6 | %) | ||||||||
| International Mailing | 154,171 | 177,797 | (13 | %) | |||||||||
| Small & Medium Business Solutions | 602,091 | 653,460 | (8 | %) | |||||||||
| Production Mail | 122,251 | 117,220 | 4 | % | |||||||||
| Software | 88,629 | 109,153 | (19 | %) | |||||||||
| Management Services | 220,887 | 235,428 | (6 | %) | |||||||||
| Mail Services | 142,182 | 143,055 | (1 | %) | |||||||||
| Marketing Services | 39,637 | 41,408 | (4 | %) | |||||||||
| Enterprise Business Solutions | 613,586 | 646,264 | (5 | %) | |||||||||
| Total revenue | $ | 1,215,677 | 1,299,724 | (6 | %) | ||||||||
EBIT (1) | |||||||||||||
| North America Mailing | $ | 168,934 | $ | 177,280 | (5 | %) | |||||||
| International Mailing | 11,286 | 25,105 | (55 | %) | |||||||||
| Small & Medium Business Solutions | 180,220 | 202,385 | (11 | %) | |||||||||
| Production Mail | 3,555 | (3,426 | ) | 204 | % | ||||||||
| Software | 956 | 16,564 | (94 | %) | |||||||||
| Management Services | 10,266 | 18,248 | (44 | %) | |||||||||
| Mail Services | 16,671 | 35,107 | (53 | %) | |||||||||
| Marketing Services | 9,297 | 8,716 | 7 | % | |||||||||
| Enterprise Business Solutions | 40,745 | 75,209 | (46 | %) | |||||||||
| Total EBIT | $ | 220,965 | $ | 277,594 | (20 | %) | |||||||
| Unallocated amounts: | |||||||||||||
| Interest, net (2) | (45,088 | ) | (49,097 | ) | |||||||||
| Corporate and other expenses | (39,960 | ) | (50,046 | ) | |||||||||
| Restructuring and asset impairments | (9,986 | ) | (32,956 | ) | |||||||||
| Goodwill impairment | (18,315 | ) | (45,650 | ) | |||||||||
| Income from continuing operations before income taxes | $ | 107,616 | $ | 99,845 | |||||||||
| (1) | Earnings before interest and taxes (EBIT) excludes general corporate expenses, restructuring charges and asset impairments and goodwill impairment. | |
| (2) | Interest, net includes financing interest expense, other interest expense and interest income. |
| Pitney Bowes Inc. | ||||||||||||
| Revenue and EBIT | ||||||||||||
| Business Segments | ||||||||||||
| September 30, 2012 | ||||||||||||
(Unaudited) | ||||||||||||
| (Dollars in thousands) | Nine Months Ended September 30, | |||||||||||
| % | ||||||||||||
| 2012 | 2011 | Change | ||||||||||
Revenue | ||||||||||||
| North America Mailing | $ | 1,362,709 | 1,478,355 | (8%) | ||||||||
| International Mailing | 487,665 | 524,488 | (7%) | |||||||||
| Small & Medium Business Solutions | 1,850,374 | 2,002,843 | (8%) | |||||||||
| Production Mail | 360,334 | 382,595 | (6%) | |||||||||
| Software | 288,830 | 304,921 | (5%) | |||||||||
| Management Services | 679,078 | 717,513 | (5%) | |||||||||
| Mail Services | 432,845 | 421,611 | 3% | |||||||||
| Marketing Services | 105,690 | 107,784 | (2%) | |||||||||
| Enterprise Business Solutions | 1,866,777 | 1,934,424 | (3%) | |||||||||
| Total Revenue | $ | 3,717,151 | 3,937,267 | (6%) | ||||||||
EBIT (1) | ||||||||||||
| North America Mailing | $ | 514,975 | $ | 532,727 | (3%) | |||||||
| International Mailing | 53,041 | 75,033 | (29%) | |||||||||
| Small & Medium Business Solutions | 568,016 | 607,760 | (7%) | |||||||||
| Production Mail | 11,928 | 12,971 | (8%) | |||||||||
| Software | 20,135 | 31,618 | (36%) | |||||||||
| Management Services | 36,187 | 59,256 | (39%) | |||||||||
| Mail Services | 75,661 | 55,191 | 37% | |||||||||
| Marketing Services | 21,617 | 19,668 | 10% | |||||||||
| Enterprise Business Solutions | 165,528 | 178,704 | (7%) | |||||||||
| Total EBIT | $ | 733,544 | $ | 786,464 | (7%) | |||||||
| Unallocated amounts: | ||||||||||||
| Interest, net | (142,853 | ) | (148,219 | ) | ||||||||
| Corporate and other expenses | (138,521 | ) | (135,426 | ) | ||||||||
| Restructuring and asset impairments | (11,060 | ) | (63,974 | ) | ||||||||
| Goodwill impairment | (18,315 | ) | (45,650 | ) | ||||||||
| Income from continuing operations before income taxes | $ | 422,795 | $ | 393,195 | ||||||||
| (1) | Earnings before interest and taxes (EBIT) excludes general corporate expenses, restructuring charges and asset impairments and goodwill impairment. | |
| (2) | Interest, net includes financing interest expense, other interest expense and interest income. |
| Pitney Bowes Inc. | ||||||||||||||||||
| Reconciliation of Reported Consolidated Results to Adjusted Results | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||
| GAAP income from continuing operations | ||||||||||||||||||
| after income taxes, as reported | $ | 76,533 | $ | 112,339 | $ | 315,494 | $ | 302,095 | ||||||||||
| Restructuring charges and asset impairments | 6,430 | 22,169 | 6,892 | 43,038 | ||||||||||||||
| Goodwill impairment | 11,172 | 31,334 | 11,172 | 31,334 | ||||||||||||||
| Sale of leveraged lease assets | - | (26,689 | ) | (12,886 | ) | (26,689 | ) | |||||||||||
| Tax adjustments | - | 447 | - | 2,960 | ||||||||||||||
| Income from continuing operations | ||||||||||||||||||
| after income taxes, as adjusted | $ | 94,135 | $ | 139,600 | $ | 320,672 | $ | 352,738 | ||||||||||
| GAAP diluted earnings per share from | ||||||||||||||||||
| continuing operations, as reported | $ | 0.38 | $ | 0.56 | $ | 1.57 | $ | 1.48 | ||||||||||
| Restructuring charges and asset impairments | 0.03 | 0.11 | 0.03 | 0.21 | ||||||||||||||
| Goodwill impairment | 0.06 | 0.15 | 0.06 | 0.15 | ||||||||||||||
| Sale of leveraged lease | - | (0.13 | ) | (0.06 | ) | (0.13 | ) | |||||||||||
| Tax adjustments | - | 0.00 | - | 0.01 | ||||||||||||||
| Diluted earnings per share from continuing | ||||||||||||||||||
| operations, as adjusted | $ | 0.47 | $ | 0.69 | $ | 1.59 | $ | 1.73 | ||||||||||
| GAAP net cash provided by operating activities, | ||||||||||||||||||
| as reported | $ | 69,466 | $ | 301,055 | $ | 439,633 | $ | 750,456 | ||||||||||
| Capital expenditures | (39,065 | ) | (35,012 | ) | (127,816 | ) | (123,029 | ) | ||||||||||
| Restructuring payments | 12,871 | 26,411 | 60,746 | 78,379 | ||||||||||||||
| Pension contribution | - | - | 95,000 | 123,000 | ||||||||||||||
| Tax payments on sale of leveraged lease assets | 14,345 | - | 99,249 | - | ||||||||||||||
| Reserve account deposits | (17,707 | ) | (32,616 | ) | (15,373 | ) | (14,528 | ) | ||||||||||
| Free cash flow, as adjusted | $ | 39,910 | $ | 259,838 | $ | 551,439 | $ | 814,278 | ||||||||||
| Note: The sum of the earnings per share amounts may not equal the totals above due to rounding. | ||||||||||||||||||
CONTACT:
Editorial
Pitney Bowes Inc.
Sheryl Y. Battles, 203-351-6808
VP, Corp. Communications
or
Financial
Pitney Bowes Inc.
Charles F. McBride, 203-351-6349
VP, Investor Relations
Website - www.pitneybowes.com