Pitney Bowes Announces Fourth Quarter and Annual Results for 2012

  Pitney Bowes Announces Fourth Quarter and Annual Results for 2012

Business Wire

STAMFORD, Conn. -- January 31, 2013

Pitney Bowes Inc. (NYSE: PBI) today reported financial results for the fourth
quarter and full year 2012.

Highlights

  *Fourth quarter revenue of $1.3 billion; Adjusted EPS of $0.56; GAAP EPS of
    $0.55.

       *Year-over-year revenue growth in Management Services; first since
         2008.
       *Year-over-year revenue growth in International Mailing, Software and
         Mail Services.
       *Revenue trends continue to improve in the SMB group.

  *Full year revenue of $4.9 billion; Adjusted EPS of $2.18, which includes a
    first quarter $0.11 per share tax benefit; GAAP EPS of $2.21.
  *Full year free cash flow of $769 million.
  *Results reflect International Mail Services (IMS) as a discontinued
    operation.
  *The Board of Directors approved a first quarter 2013 dividend of $0.375
    per share for the Company’s common stock.

President and Chief Executive Officer, Marc Lautenbach, commented, “In my
brief tenure here, I have been impressed by the Company’s assets and our
opportunities to deliver long-term value to shareholders and customers. I am
working with the management team to develop strategies for driving growth and
on-going profitability as the Company continues to transform.”

Fourth Quarter 2012 Results

Revenue in the fourth quarter totaled $1.3 billion, a decline of one percent
compared to the prior year period, on both a reported and constant currency
basis. The year-over-year revenue comparison this quarter is an improvement in
the revenue trends as a result of growth in four of the business segments.

Earnings per diluted share (EPS), as reported under Generally Accepted
Accounting Principles (GAAP), for the fourth quarter were $0.55, which
includes a net charge of $0.07 per share for restructuring. GAAP earnings per
share also include income of $0.06 per share from discontinued operations,
which is the net of $0.07 per share of income from the resolution of tax
matters and a loss of less than $0.02 per share associated with the expected
sale of the International Mail Services (IMS) business. GAAP EPS for the
fourth quarter 2011 were $1.28, which included charges totaling $0.72 per
share for goodwill, restructuring and asset impairments, as well as income of
$1.03 per share in discontinued operations, which was primarily related to a
net tax benefit from the resolution of tax matters.

Adjusted earnings per diluted share from continuing operations for the fourth
quarter of 2012 and 2011 exclude any goodwill, restructuring and asset
impairment charges. For the fourth quarter 2012, adjusted EPS were $0.56 per
share, as compared with $0.98 in the same period in the 2011. In comparison,
2011 fourth quarter adjusted EPS from continuing operations also included a
$0.37 per share benefit related to favorable tax settlements. Excluding this
tax benefit, the comparable 2011 fourth quarter adjusted EPS from continuing
operations were $0.61 per share.

Full Year 2012 Results

For the full year, revenue totaled $4.9 billion, a decline of 4 percent
compared with the prior year on a reported basis and a decline of 3 percent
excluding the impact of currency fluctuations.

Earnings per diluted share on a GAAP basis for 2012 were $2.21, which includes
$0.08 per share net charge for restructuring, as well as a net benefit of
$0.06 per share from the sale of leveraged lease assets. GAAP earnings per
share also include income of $0.05 per share from discontinued operations,
which is the net of $0.17 per share of income from the resolution of tax
matters and a loss of $0.12 per share associated with the IMS business. GAAP
EPS for 2011 were $3.05 per share, which included charges totaling $0.89 per
share for goodwill, restructuring and asset impairments; a tax charge in
continuing operations of $0.02 per share; a net benefit of $0.13 per share
related to the sale of leveraged lease assets; as well as income in
discontinued operations of $1.07 per share which was the net of $1.31 per
share of income from the resolution of tax matters primarily related to the
former Capital Services business and a loss of $0.24 per share associated with
IMS.

Adjusted EPS per diluted share from continuing operations exclude goodwill,
restructuring and asset impairment charges; the net benefit from the sale of
leveraged lease assets; and net tax charges. For 2012 adjusted EPS were $2.18
per share, which includes a first quarter $0.11 per share net tax benefit.
2011 adjusted EPS per diluted share from continuing operations were $2.75 per
share, which included a $0.44 per share net tax benefit. Excluding these
benefits in adjusted EPS, comparable adjusted EPS from continuing operations
for 2012 were $2.07 per share versus $2.31 per share for 2011.

The Company’s results for the quarter and the year are summarized in the table
below:

                                                             
Earnings Per Share Reconciliation*  Q4 2012  Q4 2011    FY 2012  FY 2011
Adjusted EPS from continuing        $0.56    $0.61         $2.07    $2.31
operations before net tax benefit
Net tax benefit                     -        $0.37         $0.11    $0.44
Adjusted EPS from continuing        $0.56    $0.98         $2.18    $2.75
operations
Restructuring and asset             ($0.07)  ($0.31)       ($0.08)  ($0.48)
impairments
Goodwill charge                     -        ($0.41)       -        ($0.41)
Tax charge                          -        -             -        ($0.02)
Sale of leveraged lease assets      -        -             $0.06    $0.13
GAAP EPS from continuing            $0.49    $0.25         $2.16    $1.98
operations
Discontinued operations – income    $0.06    $1.03         $0.05    $1.07
(loss)
GAAP EPS                            $0.55    $1.28      $2.21    $3.05

*2012 and 2011 results reflect the International Mail Services (IMS) business
as a discontinued operation.
The sum of the earnings per share may not equal the totals above due to
rounding.


Free Cash Flow Results

Free cash flow during the quarter was $253 million and $769 million for the
year. On a GAAP basis, the Company generated $256 million in cash from
operations for the quarter and $660 million for the year. During the fourth
quarter, the Company used cash to pay $84 million in dividends. For the year,
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

                                  
         4Q 2012       Y-O-Y Change  Change ex Currency
Revenue   $644 million   (3%)           (3%)
EBIT     $200 million  (9%)          
                                        

Within the SMB Solutions Group:

North America Mailing
         4Q 2012       Y-O-Y Change  Change ex Currency
Revenue   $456 million   (6%)           (6%)
EBIT     $174 million  (11%)         
                                        

During the quarter, North America Mailing revenue was impacted by lower
recurring revenue streams, although at a slower rate than previous quarters.
Equipment sales revenue for the segment declined 3 percent, which is a
continuation of the year-over-year improvement in trend, in part due to
increased placements of SendSuiteLive™ shipping solutions in the U.S. and
growth in equipment sales in Canada. Additionally, meter placements in Canada
continued to grow for the second consecutive quarter.

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.

Software                            
          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.

Executive Vice President and Chief Financial Officer, Michael Monahan,
commented, “During the quarter, the Company continued to invest in several
growth initiatives, including ecommerce and Volly, which are expected to help
drive future revenue. We remain focused on our cost structure to support the
changing mix of our business and to gain leverage as revenue improves. The
Company will continue to take actions, as necessary, to reduce costs and make
the appropriate investments in the business to drive shareholder returns.”

2013 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.

In 2013, the Company expects revenue growth in its Enterprise Solutions Group
and a moderation in the decline of revenue in its SMB Solutions Group. Revenue
in 2013 is expected to benefit from growth in the Company’s new ecommerce,
print outsourcing and software solutions. The Company also expects revenue to
benefit from improving trends in equipment sales, including increased
placements of Connect+ and SendSuiteLive; as well as a moderation in the
decline of its recurring revenue streams. The Company expects that the
economic and postal environments will not improve or deteriorate significantly
in 2013 as compared to 2012.

The Company’s 2013 guidance is as follows:

  *Revenue, excluding the impacts of currency, to be in the range of flat to
    3 percent growth when compared to 2012;
  *GAAP earnings per diluted share from continuing operations to be in the
    range of $1.85 to $2.00, which excludes any unusual items that may occur
    during the year;
  *Free cash flow to be in the range of $600 million to $700 million.

The Company expects that it will make continued investments in its growth
initiatives that will result in higher expenses in the first half of the year,
but are anticipated to lead to greater revenue and margin contribution in the
second half of the year. Additionally, it is expected that the decline in
recurring revenue streams will continue to moderate and will have less of an
impact on revenue and earnings in the second half of the year.

Conference Call and Webcast

Management of Pitney Bowes will discuss the Company’s results in a broadcast
over the Internet today at 8:00 a.m. EST. 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 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
twelve months ended December 31, 2012 and 2011, and consolidated balance
sheets at December 31, 2012 and 2011 are attached.

                                                            
Pitney Bowes Inc.
Consolidated Statements of Income
(Unaudited)
                                                                 
(Dollars in
thousands,
except per
share data)
                 Three months ended December     Twelve months ended December
                 31,                             31,
                 2012            2011 ^(2)       2012            2011 ^(2)
Revenue:
Equipment        $ 281,772       $ 280,365       $ 938,289       $ 986,392
sales
Supplies           69,815          72,246          283,604         307,974
Software           110,385         108,301         412,762         426,606
Rentals            141,445         151,926         569,619         618,990
Financing          121,435         134,311         495,130         547,269
Support            173,243         175,798         689,667         706,505
services
Business          389,212       382,208       1,514,944     1,528,860 
services
                                                                 
Total revenue     1,287,307     1,305,155     4,904,015     5,122,596 
                                                                 
Costs and
expenses:
Cost of
equipment          149,861         132,782         459,051         449,479
sales
Cost of            22,141          23,089          87,569          97,454
supplies
Cost of            24,427          25,566          92,708          99,107
software
Cost of            28,098          30,770          115,356         138,603
rentals
Financing
interest           19,755          20,783          81,140          87,698
expense
Cost of
support            105,750         107,815         440,055         452,582
services
Cost of
business           298,767         287,354         1,156,828       1,161,429
services
Selling,
general and        410,281         425,473         1,598,286       1,690,360
administrative
Research and       32,390          40,873          136,908         148,645
development
Restructuring
charges and        22,291          84,087          23,117          136,548
asset
impairments
Goodwill           -               84,500          -               84,500
impairment
Other interest     27,967          29,357          115,228         115,363
expense
Interest           (2,189    )     (1,093    )     (7,982    )     (5,795    )
income
Other income,     -             (9,200    )    1,138         (19,918   )
net
                                                                 
Total costs       1,139,539     1,282,156     4,299,402     4,636,055 
and expenses
                                                                 
Income from
continuing
operations         147,768         22,999          604,613         486,541
before income
taxes
                                                                 
Provision for     44,224        (32,170   )    150,305       67,610    
income taxes
                                                                 
Income from
continuing         103,544         55,169          454,308         418,931
operations
                                                                 
Income from
discontinued
operations,       11,387        206,899       9,231         216,924   
net of income
tax
                                                                 
Net income
before
attribution of     114,931         262,068         463,539         635,855
noncontrolling
interests
                                                                 
Less:
Preferred
stock
dividends of
subsidiaries
attributable
to
noncontrolling    4,594         4,594         18,376        18,375    
interests
                                                                 
Net income -
Pitney Bowes     $ 110,337      $ 257,474      $ 445,163      $ 617,480   
Inc.
                                                                 
                                                                 
Amounts
attributable
to common
stockholders:
Income from
continuing       $ 98,950        $ 50,575        $ 435,932       $ 400,556
operations
Income from
discontinued      11,387        206,899       9,231         216,924   
operations
                                                                 
Net income -
Pitney Bowes     $ 110,337      $ 257,474      $ 445,163      $ 617,480   
Inc.
                                                                 
Basic earnings
per share
attributable
to common
stockholders
^(1):
Continuing         0.49            0.25            2.18            1.98
operations
Discontinued      0.06          1.04          0.05          1.07      
operations
                                                                 
Net income -
Pitney Bowes     $ 0.55         $ 1.29         $ 2.22         $ 3.06      
Inc.
                                                                 
Diluted
earnings per
share
attributable
to common
stockholders
^(1):
Continuing         0.49            0.25            2.16            1.98
operations
Discontinued      0.06          1.03          0.05          1.07      
operations
                                                                 
Net income -
Pitney Bowes     $ 0.55         $ 1.28         $ 2.21         $ 3.05      
Inc.
                                                                 

^(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                                         12/31/12         12/31/11
Current assets:
Cash and cash equivalents                      $ 913,276        $ 856,238
Short-term investments                           36,611           12,971
                                                                
Accounts receivable, gross                       755,218          755,485
Allowance for doubtful accounts receivable      (26,968    )    (31,855    )
Accounts receivable, net                         728,250          723,630
                                                                
Finance receivables                              1,213,776        1,296,673
Allowance for credit losses                     (25,484    )    (45,583    )
Finance receivables, net                         1,188,292        1,251,090
                                                                
Inventories                                      179,678          178,599
Current income taxes                             51,836           102,556
Other current assets and prepayments            114,184        134,774    
                                                                
Total current assets                             3,212,127        3,259,858
                                                                
Property, plant and equipment, net               385,377          404,146
Rental property and equipment, net               241,192          258,711
                                                                
Finance receivables                              1,041,099        1,123,638
Allowance for credit losses                     (14,610    )    (17,847    )
Finance receivables, net                         1,026,489        1,105,791
                                                                
Investment in leveraged leases                   34,546           138,271
Goodwill                                         2,136,138        2,147,088
Intangible assets, net                           166,214          212,603
Non-current income taxes                         94,434           89,992
Other assets                                    563,374        530,644    
                                                                
Total assets                                   $ 7,859,891     $ 8,147,104  
                                                                
Liabilities, noncontrolling interests and
stockholders' equity (deficit)
Current liabilities:
Accounts payable and accrued liabilities       $ 1,809,226      $ 1,840,465
Current income taxes                             240,681          242,972
Notes payable and current portion of             375,000          550,000
long-term obligations
Advance billings                                452,130        458,425    
                                                                
Total current liabilities                        2,877,037        3,091,862
                                                                
Deferred taxes on income                         69,222           175,944
Tax uncertainties and other income tax           145,881          194,840
liabilities
Long-term debt                                   3,642,375        3,683,909
Other non-current liabilities                   718,375        743,165    
                                                                
Total liabilities                               7,452,890      7,889,720  
                                                                
Noncontrolling interests (Preferred              296,370          296,370
stockholders' equity in subsidiaries)
                                                                
Stockholders' equity:
Cumulative preferred stock, $50 par value,       4                4
4% convertible
Cumulative preference stock, no par value,       648              659
$2.12 convertible
Common stock, $1 par value                       323,338          323,338
Additional paid-in-capital                       223,847          240,584
Retained Earnings                                4,744,802        4,600,217
Accumulated other comprehensive loss             (681,213   )     (661,645   )
Treasury Stock, at cost                         (4,500,795 )    (4,542,143 )
                                                                
Total Pitney Bowes Inc. stockholders' equity    110,631        (38,986    )
(deficit)
                                                                
Total liabilities, noncontrolling interests    $ 7,859,891     $ 8,147,104  
and stockholders' equity (deficit)
                                                                             

                                      
Pitney Bowes Inc.
Revenue and EBIT
Business Segments
December 31, 2012
(Unaudited)
                                                                    
(Dollars in thousands)                  Three Months Ended December 31,
                                                                        %
                                        2012            2011            Change
Revenue
                                                                        
North America Mailing                   $ 456,243       $ 482,843       (6  %)
International Mailing                    187,973       182,928      3   %
Small & Medium Business Solutions        644,216       665,771      (3  %)
                                                                        
Production Mail                           151,775         161,888       (6  %)
Software                                  104,550         102,481       2   %
Management Services                       241,880         231,378       5   %
Mail Services                             112,690         109,849       3   %
Marketing Services                       32,196        33,788       (5  %)
Enterprise Business Solutions            643,091       639,384      1   %
                                                                        
Total revenue                           $ 1,287,307    $ 1,305,155    (1  %)
                                                                        
EBIT (1)
                                                                        
North America Mailing                   $ 173,690       $ 195,272       (11 %)
International Mailing                    25,939        23,568       10  %
Small & Medium Business Solutions        199,629       218,840      (9  %)
                                                                        
Production Mail                           13,716          19,591        (30 %)
Software                                  17,823          6,564         172 %
Management Services                       19,012          17,065        11  %
Mail Services                             19,841          34,651        (43 %)
Marketing Services                       6,444         6,516        (1  %)
Enterprise Business Solutions            76,836        84,387       (9  %)
                                                                        
Total EBIT                              $ 276,465       $ 303,227       (9  %)
                                                                        
Unallocated amounts:
Interest, net (2)                         (45,533   )     (49,047   )
Corporate and other expenses              (60,873   )     (62,594   )
Restructuring and asset impairments       (22,291   )     (84,087   )
Goodwill impairment                      -             (84,500   )
                                                                        
Income from continuing operations       $ 147,768      $ 22,999    
before income taxes
                                                                        

      Earnings before interest and taxes (EBIT) excludes general corporate
(1)  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
December 31, 2012
(Unaudited)
                                                                    
(Dollars in thousands)                  Twelve Months Ended December 31,
                                                                        %
                                        2012            2011            Change
Revenue
                                                                        
North America Mailing                   $ 1,818,952     $ 1,961,198     (7  %)
International Mailing                    675,637       707,416      (4  %)
Small & Medium Business Solutions        2,494,589     2,668,614    (7  %)
                                                                        
Production Mail                           512,109         544,483       (6  %)
Software                                  393,380         407,402       (3  %)
Management Services                       920,959         948,891       (3  %)
Mail Services                             445,092         411,634       8   %
Marketing Services                       137,886       141,572      (3  %)
Enterprise Business Solutions            2,409,426     2,453,982    (2  %)
                                                                        
Total Revenue                           $ 4,904,015    $ 5,122,596    (4  %)
                                                                        
EBIT (1)
                                                                        
North America Mailing                   $ 688,665       $ 727,999       (5  %)
International Mailing                    78,979        98,601       (20 %)
Small & Medium Business Solutions        767,644       826,600      (7  %)
                                                                        
Production Mail                           25,644          32,562        (21 %)
Software                                  37,958          38,182        (1  %)
Management Services                       55,198          76,321        (28 %)
Mail Services                             101,005         103,026       (2  %)
Marketing Services                       28,061        26,184       7   %
Enterprise Business Solutions            247,866       276,275      (10 %)
                                                                        
Total EBIT                              $ 1,015,510     $ 1,102,875     (8  %)
                                                                        
Unallocated amounts:
Interest, net                             (188,386  )     (197,266  )
Corporate and other expenses              (199,394  )     (198,020  )
Restructuring and asset impairments       (23,117   )     (136,548  )
Goodwill impairment                      -             (84,500   )
                                                                        
Income from continuing operations       $ 604,613      $ 486,541   
before income taxes
                                                                        

      Earnings before interest and taxes (EBIT) excludes general corporate
(1)  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 December      Twelve Months Ended December
                 31,                              31,
                 2012              2011           2012           2011
                                                                 
GAAP income
from
continuing
operations
after income
taxes, as        $  98,950         $  50,575      $ 435,932      $ 400,556
reported
Restructuring
charges and         15,096            62,571        15,407         97,660
asset
impairments
Goodwill            -                 82,890        -              82,890
impairment
Sale of
leveraged           -                 -             (12,886  )     (26,689   )
lease assets
Tax                -               579         -            3,539     
adjustments
Income from
continuing
operations
after income
taxes, as        $  114,046       $  196,615    $ 438,453     $ 557,956   
adjusted
                                                                 
                                                                 
GAAP diluted
earnings per
share from
continuing
operations, as   $  0.49           $  0.25        $ 2.16         $ 1.98
reported
Restructuring
charges and         0.07              0.31          0.08           0.48
asset
impairments
Goodwill            -                 0.41          -              0.41
impairment
Sale of
leveraged           -                 -             (0.06    )     (0.13     )
lease
Tax                -               0.00        -            0.02      
adjustments
Diluted
earnings per
share from
continuing
operations, as   $  0.56          $  0.98       $ 2.18        $ 2.75      
adjusted
                                                                 
                                                                 
GAAP net cash
provided by
operating
activities,
as reported      $  255,560        $  198,531     $ 660,188      $ 948,987
Capital             (48,770  )        (32,951 )     (176,586 )     (155,980  )
expenditures
Restructuring       13,972            28,623        74,718         107,002
payments
Pension             -                 -             95,000         123,000
contribution
Tax payments
on sale of          14,879            -             114,128        -
leveraged
lease assets
Reserve
account            17,009          49,882      1,636        35,354    
deposits
                                                                 
Free cash
flow, as         $  252,650       $  244,085    $ 769,084     $ 1,058,363 
adjusted


NOTE:

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

The above table includes an adjustment to GAAP net cash provided by operating
activities due to a reclassification between net cash provided by operating
activities and net cash used in investing activities. As a result, GAAP net
cash provided by operating activities increased by $28.8 million for the year
ended December 31, 2011, and decreased by $35.0 million for the nine months
ended September 30, 2012.



Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results
(Unaudited)
                                               
(Dollars in
thousands,                                                   
except per
share data)
                                                                 
                  Three Months Ended December    Twelve Months Ended December
                  31,                            31,
                  2012           2011            2012            2011
                                                                 
GAAP income
from continuing
operations
after income
taxes, as         $  98,950      $  50,575       $ 435,932       $ 400,556
reported
Restructuring
charges and          15,096         62,571         15,407          97,660
asset
impairments
Goodwill             -              82,890         -               82,890
impairment
Sale of
leveraged lease      -              -              (12,886   )     (26,689   )
assets
Tax adjustments     -             579          -             3,539     
Income from
continuing
operations
after income
taxes, as            114,046        196,615        438,453         557,956
adjusted
Provision for
income taxes,        51,418         (9,623   )     174,718         138,539
as adjusted
Preferred stock
dividends of
subsidiaries
attributable to
noncontrolling      4,594         4,594        18,376        18,375    
interests
Income from
continuing           170,058        191,586        631,547         714,870
operations, as
adjusted
Interest            45,533        49,047       188,386       197,266   
expense, net
Adjusted EBIT        215,591        240,633        819,933         912,136
Depreciation
and                 64,049        67,141       255,556       272,142   
amortization
Adjusted EBITDA   $  279,640     $  307,774     $ 1,075,489    $ 1,184,278 

Contact:

Pitney Bowes Inc.
Editorial – Sheryl Y. Battles
VP, Corp. Communications
203-351-6808
or
Financial – Charles F. McBride
VP, Investor Relations
203-351-6349
Website – www.pitneybowes.com
 
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