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. |