Pitney Bowes Announces Third Quarter 2014 Results

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 its expected or potential future business and financial performance. For us forward-looking statements include, but are not limited to, statements about its 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; the implementation of a new enterprise resource planning system; changes in business portfolio; foreign currency exchange rates; changes in our credit ratings; management of credit risk; changes in interest rates; the financial health of national posts; and other factors beyond its control as more fully outlined in the Company's 2013 Form 10-K Annual Report and other reports filed with the Securities and Exchange Commission. Pitney Bowes assumes no obligation to update any forward-looking statements contained in this document as a result of new information, events or developments.

Note: Consolidated statements of income; revenue and EBIT by business segment; and reconciliation of GAAP to non-GAAP measures for the three and nine months ended September 30, 2014 and 2013, and consolidated balance sheets at September 30, 2014 and December 31, 2013 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,
		2014			2013			2014			2013
Revenue:
Equipment sales	$	177,458		$	197,044		$	558,032		$	619,035
Supplies		72,548			68,692			228,349			213,185
Software		112,271			98,164			312,891			285,658
Rentals		119,047			125,918			365,069			384,436
Financing		107,835			111,032			325,529			337,739
Support services		154,321			159,508			470,763			482,400
Business services		198,164			160,131			576,958			458,061

Total revenue		941,644			920,489			2,837,591			2,780,514

Costs and expenses:
Cost of equipment sales		90,984			88,945			262,336			295,567
Cost of supplies		22,470			21,444			70,129			66,536
Cost of software		29,775			29,698			93,423			80,093
Cost of rentals		23,636			24,434			74,273			75,946
Financing interest expense		19,667			19,468			59,733			57,438
Cost of support services		92,500			98,425			288,203			300,291
Cost of business services		142,512			112,447			406,472			322,970
Selling, general and administrative		341,738			352,299			1,031,497			1,057,876
Research and development		26,060			24,769			80,901			81,351
Restructuring charges & asset impairments		4,526			34,909			22,666			53,940
Other interest expense		23,370			27,508			71,001			89,594
Interest income		(1,212	)		(1,457	)		(3,297	)		(4,507	)
Other (income) expense, net		(15,919	)		-			45,738			25,121

Total costs and expenses		800,107			832,889			2,503,075			2,502,216

Income from continuing operations before income taxes		141,537			87,600			334,516			278,298

Provision for income taxes		25,310			10,032			79,681			52,045

Income from continuing operations		116,227			77,568			254,835			226,253

Income (loss) from discontinued operations, net of tax		20,655			(78,501	)		30,173			(159,725	)

Net income (loss) before attribution of noncontrolling interests		136,882			(933	)		285,008			66,528

Less: Preferred stock dividends of subsidiaries attributable
to noncontrolling interests		4,593			4,594			13,781			13,782

Net income (loss) - Pitney Bowes Inc.	$	132,289		$	(5,527	)	$	271,227		$	52,746


Amounts attributable to common stockholders:
Income from continuing operations	$	111,634		$	72,974		$	241,054		$	212,471
Income (loss) from discontinued operations		20,655			(78,501	)		30,173			(159,725	)

Net income (loss) - Pitney Bowes Inc.	$	132,289		$	(5,527	)	$	271,227		$	52,746

Basic earnings per share attributable to common stockholders ⁽¹⁾ :
Continuing operations		0.55			0.36			1.19			1.05
Discontinued operations		0.10			(0.39	)		0.15			(0.79	)

Net income (loss) - Pitney Bowes Inc.	$	0.65		$	(0.03	)	$	1.34		$	0.26

Diluted earnings per share attributable to common stockholders ⁽¹⁾ :
Continuing operations		0.55			0.36			1.18			1.05
Discontinued operations		0.10			(0.39	)		0.15			(0.79	)

Net income (loss) - Pitney Bowes Inc.	$	0.65		$	(0.03	)	$	1.33		$	0.26

⁽¹⁾

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


Pitney Bowes Inc.
Consolidated Balance Sheets
(Unaudited in thousands, except per share data)

Assets	September 30, 2014			December 31, 2013 (1)
Current assets:
Cash and cash equivalents	$	923,676		$	907,806
Short-term investments		35,348			31,128

Accounts receivable, gross		412,702			482,949
Allowance for doubtful accounts receivable		(13,651	)		(13,149	)
Accounts receivable, net		399,051			469,800

Finance receivables		1,040,156			1,127,261
Allowance for credit losses		(21,914	)		(24,340	)
Finance receivables, net		1,018,242			1,102,921

Inventories		94,879			103,580
Current income taxes		29,815			28,934
Other current assets and prepayments		135,973			147,067
Assets held for sale		55,118			46,976

Total current assets		2,692,102			2,838,212

Property, plant and equipment, net		266,520			245,171
Rental property and equipment, net		206,394			226,146

Finance receivables		839,912			974,972
Allowance for credit losses		(9,323	)		(12,609	)
Finance receivables, net		830,589			962,363

Investment in leveraged leases		32,465			34,410
Goodwill		1,694,987			1,734,871
Intangible assets, net		91,797			120,387
Non-current income taxes		65,092			73,751
Other assets		544,091			537,397

Total assets	$	6,424,037		$	6,772,708

Liabilities, noncontrolling interests and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities	$	1,428,690		$	1,644,582
Current income taxes		153,809			157,340
Notes payable and current portion of long-term obligations		274,879			-
Advance billings		399,016			425,833

Total current liabilities		2,256,394			2,227,755

Deferred taxes on income		57,830			39,701
Tax uncertainties and other income tax liabilities		148,119			190,645
Long-term debt		2,962,997			3,346,295
Other non-current liabilities		423,981			466,766

Total liabilities		5,849,321			6,271,162

Noncontrolling interests (Preferred stockholders' equity in subsidiaries)		296,370			296,370

Stockholders' equity:
Cumulative preferred stock, $50 par value, 4% convertible		1			4
Cumulative preference stock, no par value, $2.12 convertible		559			591
Common stock, $1 par value		323,338			323,338
Additional paid-in-capital		174,783			196,977
Retained earnings		4,872,875			4,715,564
Accumulated other comprehensive loss		(614,741	)		(574,556	)
Treasury stock, at cost		(4,478,469	)		(4,456,742	)

Total Pitney Bowes Inc. stockholders' equity		278,346			205,176

Total liabilities, noncontrolling interests and stockholders' equity	$	6,424,037		$	6,772,708

(1)

Certain prior year amounts have been revised.

	Pitney Bowes Inc.
	Revenue and EBIT
	Business Segments
	September 30, 2014
	(Unaudited)

(Dollars in thousands)		Three Months Ended September 30,
								%
			2014			2013		Change
	Revenue

	North America Mailing	$	363,285		$	381,685		(5	%)
	International Mailing		132,291			141,332		(6	%)
	Small & Medium Business Solutions		495,576			523,017		(5	%)

	Production Mail		113,497			116,477		(3	%)
	Presort Services		111,434			105,093		6	%
	Enterprise Business Solutions		224,931			221,570		2	%

	Digital Commerce Solutions		221,137			175,902		26	%

	Total revenue	$	941,644		$	920,489		2	%

	EBIT (1)

	North America Mailing	$	159,638		$	158,692		1	%
	International Mailing		16,079			15,627		3	%
	Small & Medium Business Solutions		175,717			174,319		1	%

	Production Mail		9,570			10,620		(10	%)
	Presort Services		21,927			20,398		7	%
	Enterprise Business Solutions		31,497			31,018		2	%

	Digital Commerce Solutions		24,534			12,885		90	%

	Total EBIT	$	231,748		$	218,222		6	%

	Unallocated amounts:
	Interest, net (2)		(41,825	)		(45,519	)
	Corporate and other expenses		(59,779	)		(50,194	)
	Restructuring charges & asset impairments		(4,526	)		(34,909	)
	Other income, net		15,919			-

	Income from continuing operations before income taxes	$	141,537		$	87,600

(1)		Earnings before interest and taxes (EBIT) excludes general corporate expenses and restructuring charges & asset impairments.
(2)		Interest, net includes financing interest expense, other interest expense and interest income.


	Pitney Bowes Inc.
	Revenue and EBIT
	Business Segments
	September 30, 2014
	(Unaudited)

(Dollars in thousands)		Nine Months Ended September 30,
								%
			2014			2013		Change
	Revenue

	North America Mailing	$	1,115,507		$	1,162,718		(4	%)
	International Mailing		438,819			444,665		(1	%)
	Small & Medium Business Solutions		1,554,326			1,607,383		(3	%)

	Production Mail		330,469			360,352		(8	%)
	Presort Services		339,205			322,954		5	%
	Enterprise Business Solutions		669,674			683,306		(2	%)

	Digital Commerce Solutions		613,591			489,825		25	%

	Total revenue	$	2,837,591		$	2,780,514		2	%

	EBIT (1)

	North America Mailing	$	476,757		$	464,668		3	%
	International Mailing		67,347			53,092		27	%
	Small & Medium Business Solutions		544,104			517,760		5	%

	Production Mail		27,865			34,239		(19	%)
	Presort Services		68,235			65,132		5	%
	Enterprise Business Solutions		96,100			99,371		(3	%)

	Digital Commerce Solutions		51,994			27,969		86	%

	Total EBIT	$	692,198		$	645,100		7	%

	Unallocated amounts:
	Interest, net (2)		(127,437	)		(142,525	)
	Corporate and other expenses		(161,841	)		(145,216	)
	Restructuring charges & asset impairments		(22,666	)		(53,940	)
	Other expense, net		(45,738	)		(25,121	)

	Income from continuing operations before income taxes	$	334,516		$	278,298

(1)		Earnings before interest and taxes (EBIT) excludes general corporate expenses and restructuring charges & asset impairments.
(2)		Interest, net includes financing interest expense, other interest expense and interest income.


Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2014			2013			2014			2013

GAAP income from continuing operations
after income taxes, as reported	$	111,634		$	72,974		$	241,054		$	212,471
Restructuring charges & asset impairments		2,903			22,536			15,161			35,662
Extinguishment of debt		-			-			37,833			15,324
Investment divestiture		(9,774	)		-			(9,774	)		-
Income from continuing operations
after income taxes, as adjusted	$	104,763		$	95,510		$	284,274		$	263,457


GAAP diluted earnings per share from
continuing operations, as reported	$	0.55		$	0.36		$	1.18		$	1.05
Restructuring charges & asset impairments		0.01			0.11			0.07			0.18
Extinguishment of debt		-			-			0.19			0.08
Investment divestiture		(0.05	)		-			(0.05	)		-
Diluted earnings per share from continuing
operations, as adjusted	$	0.51		$	0.47		$	1.39		$	1.30


GAAP net cash provided by operating activities,
as reported	$	116,985		$	214,526		$	397,432		$	493,560
Capital expenditures		(48,920	)		(29,951	)		(121,270	)		(103,392	)
Restructuring payments		8,621			14,098			42,151			41,353
Payments related to investment divestiture		53,738			-			53,738			-
Reserve account deposits		(12,563	)		9,227			(15,919	)		(16,962	)
Extinguishment of debt		-			-			61,657			25,121

Free cash flow, as adjusted	$	117,861		$	207,900		$	417,789		$	439,680

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