This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Pitney Bowes Announces Third Quarter Results For 2012

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.




9 of 10

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,172.68 -107.06 -0.62%
S&P 500 1,994.29 -16.11 -0.80%
NASDAQ 4,527.6890 -52.10 -1.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs