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Pitney Bowes Announces Fourth Quarter And Annual Results For 2012

EBIT margin for the segment declined versus the prior year as a result of fewer lease extensions on existing equipment and the decline in higher margin recurring revenue streams.

International Mailing
  4Q 2012   Y-O-Y Change   Change ex Currency
Revenue $188 million 3% 4%
EBIT   $ 26 million   10%    

International Mailing revenue benefited from increased equipment sales in the Nordics. Revenue also benefited from increased placements of Connect+™ mailing systems, particularly in France where it was recently launched, offset by the impact of the overall economic environment in Europe. EBIT margin improved year-over-year primarily due to improved service margins and productivity initiatives.

Enterprise Business Solutions Group
  4Q 2012   Y-O-Y Change   Change ex Currency
Revenue $643 million 1% 1%
EBIT   $ 77 million   (9%)  


Within the Enterprise Business Solutions Group:

Worldwide Production Mail
  4Q 2012   Y-O-Y Change   Change ex Currency
Revenue $152 million (6%) (6%)
EBIT   $ 14 million   (30%)    

Production Mail revenue experienced a significant increase in the backlog of orders, especially in North America, as the outlook improved and some larger orders were written at the end of the year. These orders are expected to have a positive impact on revenue in future periods. However, revenue in the fourth quarter was negatively impacted due to global economic uncertainty experienced earlier in the year and the comparison against a strong quarter last year. EBIT margin declined when compared to the prior year due to lower revenue, the mix of equipment sales and continued investment in Volly™. Excluding the investment in Volly, EBIT margin would have been approximately 510 basis points higher this quarter.

  4Q 2012   Y-O-Y Change   Change ex Currency
Revenue $105 million 2% 2%
EBIT   $ 18 million   172%    

Software revenue increased versus the prior year in part due to the growth in large licensing deals, particularly in the Americas. However, there continued to be weakness in the European and Asian markets because of ongoing economic uncertainty and continued austerity measures in the public sector. EBIT margin increased versus the prior year due to revenue growth and the benefits of productivity initiatives.

Management Services
  4Q 2012   Y-O-Y Change   Change ex Currency
Revenue $242 million 5% 5%
EBIT   $ 19 million   11%    

Management Services revenue improved year-over-year for the first time since 2008 as a result of positive net new written business in prior quarters and an increased volume of documents processed in the quarter. There continued to be positive net new written business this quarter, which is expected to drive recurring revenue growth in future periods. EBIT margin benefited from revenue growth and continued expense management.

Mail Services
  4Q 2012   Y-O-Y Change   Change ex Currency
Revenue $113 million 3% 2%
EBIT   $ 20 million   (43%)    

Mail Services revenue improved in the fourth quarter as a result of continued penetration in workshare discount categories, as well as increased co-transportation of mail for customers. Revenue also benefited from an increase in the use of the Company’s ecommerce solutions for cross-border package delivery. EBIT margin comparisons with the prior year were impacted by a $9 million insurance reimbursement in the fourth quarter of last year. EBIT margin this quarter was also affected by the start-up investment in the Company’s new ecommerce offering. Excluding prior year’s insurance reimbursement, the underlying EBIT margin for the presort business continued to be in line with prior year.

Marketing Services
  4Q 2012   Y-O-Y Change   Change ex Currency
Revenue $ 32 million (5%) (5%)
EBIT   $ 6 million   (1%)    

Marketing Services revenue declined in part due to lower household move volumes during the quarter, while the EBIT margin improved due to lower print production costs and ongoing productivity initiatives.

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