Pitney Bowes Inc. (NYSE:PBI) today reported 2010 fourth quarter
and full year 2010 results.
Revenue for the quarter was $1.4 billion, a decline of one
percent compared with the prior year. Adjusted earnings per diluted
share from continuing operations for the fourth quarter was $0.66
compared with $0.64 for the prior year. On a Generally Accepted
Accounting Principles (GAAP) basis, the company reported earnings
per diluted share of $0.31 for the fourth quarter, compared with
$0.47 per diluted share for the prior year. GAAP earnings per
diluted share for the quarter included a $0.27 per share charge for
restructuring and asset impairment costs associated with the
company’s Strategic Transformation initiatives, including $0.07 per
share for pension and retiree medical curtailment related non-cash
charges; a non-cash net tax charge of $0.03 per share, associated
with out-of-the money stock options that expired during the
quarter; and a $0.05 per share loss associated with discontinued
operations.
For the full year revenue was $5.4 billion, a decline of 3
percent when compared with the prior year, and adjusted earnings
per diluted share from continuing operations was $2.23 compared
with $2.28 for the prior year. GAAP earnings per diluted share was
$1.41 for the full year compared with $2.04 for the prior year.
GAAP earnings per diluted share for the year included a $0.59
charge for restructuring and asset impairment costs primarily
associated with the company’s Strategic Transformation initiatives;
a non-cash net tax charge of $0.13 primarily associated with
out-of-the money stock options that expired during the year and
healthcare legislation enacted at the beginning of the year; and a
$0.09 loss associated with discontinued operations.
Free cash flow was $289 million for the quarter and $961 million
for the year. On a GAAP basis, the company generated $284 million
in cash from operations for the quarter and $951 million for the
year. In comparison to the prior year’s free cash flow of $889
million, free cash flow for 2010 benefited primarily from improved
working capital and reduced capital expenditures. Uses of cash for
the year included $320 million of dividend payments to
shareholders; $171 million of debt reduction; and $100 million to
repurchase the company’s common shares outstanding.
The company’s results for the quarter and the year are
summarized in the table below:
Fourth
Quarter Full Year 2010* Adjusted EPS
$0.66 $2.23
Restructuring and Asset
Impairments ($0.27) ($0.59)
Tax Charges
($0.03) ($0.13)
GAAP EPS from Continuing
Operations $0.36 $1.50
Discontinued
Operations ($0.05) ($0.09)
GAAP EPS
$0.31 $1.41
*The sum of the earnings per share does not equal the totals
above due to rounding.
Commenting on the quarter and the year, Chairman, President and
CEO Murray D. Martin noted, “Our quarterly and full year’s results
reflect progress against several key milestones toward growth.
Equipment sales improved for the second consecutive quarter on a
consolidated basis and in our global Mailing operations. Growth was
enhanced by placement of new products, in particular, our Connect+
TM web-based communications system. We again had solid growth in
software revenue even as we build more recurring streams through
multi-year licensing agreements. Importantly, as we anticipated,
relative comparisons in our recurring revenue streams of supplies,
rentals and financing are improving. We continue to execute on our
Strategic Transformation program and we reaped even greater
benefits than expected. In addition to the cost savings, we have
enhanced the way we interact with our customers and streamlined our
processes to develop new products more quickly and efficiently. The
program is reducing our fixed cost structure so we will be more
profitable and flexible as we grow the business.
“Strategic Transformation is also enabling us to continue
investing in new capabilities and solutions which are generating
value for our customers and shareholders, even in the current
global business climate. Our growth strategies are focused on
delivering a range of solutions that help our SMB and enterprise
customers more effectively manage communications with their
customers.
“As a result of the actions that we took during the year, we
exited the year in an excellent position to leverage profitable
growth in 2011 and beyond. Therefore, for the 29th consecutive year
our Board of Directors approved an increase in our quarterly
dividend. The dividend for the first quarter 2011 will be $0.37 per
common share. At the same time, the Board approved an increase of
$100 million in the company’s share repurchase authorization from
$50 million to a total of $150 million.
“As we enter 2011, we are introducing game-changing innovations
that will support our growth well into the future. We are enabling
businesses to bridge the physical and digital channels to enhance
communications with their customers. In January we introduced Volly
TM, which is our new secure digital mail delivery system. Volly TM
is a cloud-based platform that empowers consumers to receive, view,
organize and manage bills, statements, direct marketing catalogs,
coupons and other content from multiple providers using a single
application.”
Business Segment Results
The company reports its business segments in two groups based on
the customers served: Small and Medium Business (SMB) Solutions and
Enterprise Business Solutions. The SMB Solutions Group consists of
the company’s global Mailing operations. The Enterprise Business
Solutions Group includes the company’s global Production Mail,
Software, Management Services, Mail Services and Marketing Services
operations.
SMB Solutions
4Q 2010 Y-O-Y Change Change ex
Currency Revenue $716 million (3%) (2%)
EBIT
$219 million (2%) Within the SMB
Solutions Group:
U.S. Mailing
4Q
2010 Y-O-Y Change Change ex Currency Revenue $473
million (5%) (5%) EBIT $181 million 0%
U.S. Mailing had a second consecutive quarter of year-over-year
equipment sales growth among its mid-and larger-sized customers,
benefiting from increased placements of the new Connect+ ™ mailing
system and improved retention rates among existing customers.
Achieving sequential quarters of year-over-year equipment sales
growth in the U.S. Mailing segment is a key milestone towards
returning the other revenue components of the core business to
growth. The segment’s overall revenue continued to be affected by
lower rental and financing revenue as a result of lower equipment
sales in prior periods. However, the decline in financing revenue
continues to moderate and overall revenue declined at its lowest
rate in eight quarters. EBIT margin improved by 190 basis points
versus the prior year, as a result of ongoing productivity
improvements related to the company’s Strategic Transformation
program, lower credit losses, and ongoing benefits from previous
lease extensions.
International Mailing
4Q
2010 Y-O-Y Change Change ex Currency Revenue $244
million 1% 3% EBIT $37 million (9%)
International Mailing revenue grew both on a reported basis and
excluding the impact of foreign currency when compared with the
prior year. The segment also had a second consecutive quarter of
year-over-year equipment sales growth, helped by sales of the new
Connect+ ™ mailing system, which was introduced in the UK during
the quarter. The Connect+ ™ mailing system will be rolled-out to
other parts of Europe and Canada throughout 2011. Revenue also had
a modest benefit from the initial placements of recently approved
meter systems in Italy and growth in meters in service in Canada,
both of which are expected to generate additional revenues in the
future. Additionally, there was growth in support services revenue
during the quarter. As in the U.S., financing revenue declined as a
result of lower equipment sales in prior periods. EBIT declined
versus the prior year in part due to mix of revenue and higher
pension costs versus the prior year.
Enterprise Business Solutions
4Q 2010 Y-O-Y Change Change ex
Currency Revenue $718 million 0% 1%
EBIT
$100 million 8%
Within the Enterprise Business Solutions Group:
Worldwide Production Mail
4Q 2010 Y-O-Y
Change Change ex Currency Revenue $177 million 11% 12% EBIT
$25 million 5%
Worldwide Production Mail had double-digit revenue growth during
the quarter, when compared with the prior year, which was partially
driven by a higher backlog entering the quarter and continued
demand for the company’s high-speed, high integrity inserting
systems, especially in the financial services and insurance sectors
in the U.S. During the quarter, the company installed eleven
inserting systems in China and completed the installation of two
Intellijet™ color production printing systems from the company’s
technology distribution partnership with HP. EBIT margin improved
sequentially but declined versus the prior year due in part to
product mix and start-up installation costs associated with the
Intellijet™ color production printing systems.
Software
4Q
2010 Y-O-Y Change Change ex Currency Revenue $ 111
million 6% 6% EBIT $ 24 million 13%
During the quarter, the Software business experienced continued
demand for its analytics and CRM software solutions in the U.S. The
company’s continued transition to annuity-based pricing for
selected software solutions resulted in selling a majority of its
larger software solutions as multi-year arrangements, which will
benefit recurring revenue in future periods. If these deals had
been sold as one-time licenses, revenue would have grown at a
double-digit pace. Revenue for the quarter, as compared to the
prior year, benefited from the company’s recent acquisition of
Portrait Software, plc, which further enhances the company’s
analytics and customer communications management capabilities.
Software EBIT grew at a double-digit rate and the margin improved
versus the prior year primarily due to margin leverage on revenue
growth and ongoing productivity gains.
Management Services
4Q
2010 Y-O-Y Change Change ex Currency Revenue $251
million (8%) (6%) EBIT $ 27 million 17%
During the quarter, Management Services had its best net new
written business in the U.S. in two years as the business
environment appears to be stabilizing. These new contracts will
begin to offset the revenue decline resulting from account
contractions and terminations in the U.S. during the economic
downturn. Also, as noted previously, the company exited a number of
postal facilities management contracts in the U.S., which reduced
revenue during the quarter. Outside the U.S., where the company
principally provides print and customer communication services to
enterprise accounts in Europe, the company decided to exit some
lower margin accounts. As a result of this decision and lower print
volumes, revenue declined in the quarter. Despite lower revenue,
segment EBIT margin improved for the sixth consecutive quarter
versus the prior year. The margin improvement resulted from the
company’s focus on more profitable contracts, ongoing productivity
initiatives, and a continued transition to a more variable cost
structure.
Mail Services
4Q
2010 Y-O-Y Change Change ex Currency Revenue $146
million 1% 1% EBIT $ 19 million (5%)
Mail Services continues to process increasing volumes of both
First Class and Standard Class mail from new and existing customers
in the U.S. There is ongoing customer demand for the company’s
unique nationwide logistics capability to help mailers maximize
presort discounts and expedite mail delivery. Presort-related
revenue for the quarter grew and the EBIT margin continued to
improve.
EBIT for the segment was impacted by increased costs associated
with the International Mail Services (IMS) portion of the business.
Higher shipping rates for some international destinations reduced
parcel revenue margins for the quarter. However, the company is
building scale in this business and has taken actions to mitigate
these cost increases, including updating customer contract rates
for 2011.
Marketing Services
4Q
2010 Y-O-Y Change Change ex Currency Revenue $ 33
million (3%) (3)% EBIT $ 6 million 2%
Marketing Services revenue declined versus the prior year
primarily because of a reduced number of household moves during the
quarter versus the prior year. EBIT margin continued to improve
year-over-year due to improved marketing revenue per move. This
business is built around a set of physical and digital products
that help approximately 44 million U.S. residents with the change
of address process each year.
Strategic Transformation Update
During 2010, the company accelerated several of its strategic
initiatives to streamline processes and make its cost structure
more variable to better leverage changing business conditions. As a
result, it achieved benefits for 2010 of $120 million net of system
and related investments, which was substantially in excess of its
original target of at least $50 million in net benefits. Pre-tax
restructuring and related impairment charges for the year were $182
million. This exceeded the company’s original target for 2010
charges in the range of $100 to $150 million, as it accelerated
programs and incurred pension and retiree medical curtailment
related non-cash charges of $24 million in the fourth quarter.
Total costs related to the program are expected to remain within
the original range, and are now estimated at $300 to $350 million.
The company now expects that annualized pre-tax benefits net of
system and related investments will be in the range of $250 to $300
million by 2012. This represents a $100 million increase in
projected net benefits resulting from process automation, channel
alignment, reduced infrastructure costs and streamlined product
development.
2011 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.
The company expects 2011 revenue, excluding the impacts of
currency, to be in a range of flat to 3 percent growth. The
company’s outlook projects a return to revenue growth due in part
to a number of initiatives designed to stabilize its base business
and drive new growth opportunities. This is occurring in a business
and economic environment characterized by gradual improvement at
varying rates by sector and geography.
The company anticipates continued improvement in equipment sales
in 2011 building on two consecutive quarters of year-over-year
improvement, as well as an expected positive outlook for sales of
new solutions like the Connect+ TM communications system. As
equipment sales improve, the company expects moderating declines in
recurring revenue streams primarily related to the SMB Solutions
Group. The company has previously discussed that lower equipment
sales during the economic downturn affects financing, rentals and
supplies revenue streams. The company expects growth in several
areas in 2011 to offset the anticipated declines in SMB stream
revenues. These include growth in Software revenue due to
increasing demand for term-based licenses of customer
communications management software solutions; expansion in Mail
Services; and new customer communications management solutions
across our enterprise business portfolio.
The company’s 2011 guidance for adjusted diluted earnings per
share from continuing operations is summarized below:
2011 Earnings Guidance Reconciliation
Full Year 2010 Adjusted EPS
$2.23 Operations Growth Excluding SMB Stream Revenues*
$0.32 to $0.42 Impact of Lower SMB Stream Revenues*
($0.30 to $0.25)
2011 EPS on a Comparative Basis
$2.25 to $2.40 Investment in Volly TM Market Development
($0.10 to $0.05)
2011 Adjusted EPS from Continuing
Operations $2.15 to $2.35
*Stream revenues include financing, rentals and supplies in the
SMB Solutions Group
In 2011, the company anticipates generating incremental earnings
of $0.32 to $0.42 per share from operations growth and
productivity, excluding the impact of SMB stream revenues. As noted
previously, the company anticipates lower SMB stream revenues as a
result of lower equipment sales in prior periods, which are
expected to negatively impact earnings by $0.25 - $0.30 per share,
resulting in comparative earnings for the year of $2.25 to $2.40
per share. The company also plans to invest $.05 to $.10 per share
to develop the market for Volly TM, a secure digital mail system.
As a result, the company expects 2011 adjusted earnings per share
from continuing operations in the range of $2.15 to $2.35.
The company’s 2011 guidance for GAAP diluted earnings per share
from continuing operations is summarized below:
Full Year 2011
Adjusted EPS from Continuing Operations $2.15 to
$2.35 Restructuring ($0.35 to $0.25)
2011 GAAP EPS
from Continuing Operations $1.80 to $2.10
On a GAAP basis, the company expects 2011 earnings per diluted
share from continuing operations in the range of $1.80 to $2.10
including the expected impact of $0.25 to $0.35 per share for
restructuring charges associated with Strategic Transformation.
The company expects to generate free cash flow for 2011 in the
range of $750 million to $850 million. As compared to the prior
year, the company expects increased investment in finance
receivables through higher levels of equipment sales, and higher
capital expenditures associated with investments in business growth
which would result in lower free cash flow in 2011.
The company’s Board of Directors approved an increase of $100
million in the company’s share repurchase authorization from $50
million to a total of $150 million. The company plans to utilize
this authorization over the next twelve to eighteen months.
In closing, Mr. Martin noted, “In 2011 we expect increasing
benefit from the actions we took to transform our business and
invest in long-term value creation. We are excited about pursuing
the promising growth opportunities that we see in leveraging our
leadership in physical mail and growing our digital and hybrid
capabilities to help our customers connect more effectively with
their customers and prospects.”
Management of Pitney Bowes will discuss the company’s results in
a broadcast over the Internet today at 5:00 p.m. EST which includes
a slide presentation. Instructions for accessing the webcast of the
earnings results, including the slides, are available on the
Investor Relations page of the company’s web site at
www.pb.com/investorrelations.
Pitney Bowes is a $5.4 billion global leader whose products,
services and solutions deliver value within the mailstream and
beyond. For more information visit www.pitneybowes.com.
The company's financial results are reported in accordance with
generally accepted accounting principles (GAAP). However, earnings
per share, income from continuing operations, and cash from
operations results are adjusted to exclude the impact of special
items such as transformation initiatives, restructuring charges,
tax adjustments, accounting adjustments and write downs of assets.
Although these charges represent actual expenses to the company,
these charges might mask the periodic income and financial and
operating trends associated with our business. The use of free cash
flow has limitations. GAAP cash from operations has the advantage
of including all cash available to the company after actual
expenditures for all purposes. Free cash flow permits a shareholder
insight into the amount of cash that management could have
available for other discretionary uses. It adjusts for long-term
commitments such as capital expenditures, as well as special items
like cash used for restructuring charges, unusual tax payments and
contributions to its pension funds. These items use cash that is
not otherwise available to the company and are important
expenditures. Management compensates for these limitations by using
a combination of GAAP cash from operations and free cash flow in
doing its planning.
EBIT excludes interest payments and taxes, both cash expenses to
the company, and as a result, has the effect of showing a greater
amount of earnings than net income. The company uses EBIT for
purposes of measuring the performance of its management team. The
interest rates and tax rates applicable to the company generally
are outside the control of management, and it can be useful to
judge performance independent of those variables. Financial results
on a constant currency basis exclude the impact of changes in
foreign currency exchange rates since the prior period under
comparison and are calculated using the average of the rates in
effect during that period. 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 in the
Investor Relations section.
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 possible transformation initiatives; restructuring
charges; 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: the uncertain economic
environment, fluctuations in customer demand; mail volumes; foreign
currency exchange rates; the outcome of litigations; and changes in
postal regulations, as more fully outlined in the company's 2009
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 years ended December 31, 2010 and 2009,
and consolidated balance sheets at December 31, 2010 and September
30, 2010 are attached.
Pitney Bowes Inc.
Consolidated Statements of
Income
(Unaudited)
(Dollars in thousands, except per share
data)
Three Months Ended December 31, Twelve Months Ended December
31, 2010
2009 (2)
2010
2009 (2)
Revenue:
Equipment sales $ 312,017 $ 291,762 $ 1,030,416 $ 1,006,542
Supplies 78,795 82,773 318,430 336,239 Software 117,236 110,784
382,366 365,185 Rentals 143,782 159,440 600,759 647,432 Financing
161,236 165,910 637,948 694,444 Support services 180,343 183,229
711,519 714,429 Business services 440,633
460,407 1,743,816 1,804,900
Total revenue 1,434,042 1,454,305
5,425,254 5,569,171
Costs and expenses:
Cost of equipment sales 151,270 124,832 476,390 455,976 Cost of
supplies 23,791 25,165 97,172 93,660 Cost of software 25,095 21,761
86,159 82,241 Cost of rentals 33,807 44,509 141,465 158,881
Financing interest expense 22,344 23,721 88,292 97,586 Cost of
support services 113,787 110,659 451,609 467,279 Cost of business
services 333,524 348,468 1,337,236 1,382,401 Selling, general and
administrative 455,736 483,304 1,760,677 1,800,714 Research and
development 38,884 43,568 156,371 182,191 Restructuring charges and
asset impairments 79,235 35,901 182,274 48,746 Other interest
expense 29,447 26,721 115,619 111,269 Interest income (736 )
(1,796 ) (2,587 ) (4,949 ) Total costs
and expenses 1,306,184 1,286,813
4,890,677 4,875,995
Income from continuing operations before
income taxes
127,858 167,492 534,577 693,176
Provision for income taxes
50,468 47,779 205,770
240,154
Income from continuing operations
77,390 119,713 328,807 453,022
Loss from discontinued operations, net of
income tax
(9,772 ) (13,405 ) (18,104 ) (8,109 )
Net income before attribution of
noncontrolling interests
67,618 106,308 310,703 444,913
Less: Preferred stock dividends of
subsidiaries
attributable to noncontrolling interests 4,594
7,754 18,324 21,468
Pitney Bowes Inc. net income
$ 63,024 $ 98,554 $ 292,379 $ 423,445
Amounts attributable to Pitney Bowes
Inc.:
Income from continuing operations $ 72,796 $ 111,959 $ 310,483 $
431,554 Loss from discontinued operations (9,772 )
(13,405 ) (18,104 ) (8,109 ) Pitney Bowes Inc.
net income $ 63,024 $ 98,554 $ 292,379 $
423,445
Basic earnings per share of common stock
attributable to
Pitney Bowes Inc. common stockholders (1): Continuing operations $
0.36 $ 0.54 $ 1.51 $ 2.09 Discontinued operations (0.05 )
(0.06 ) (0.09 ) (0.04 ) Net income $
0.31 $ 0.48 $ 1.42 $ 2.05
Diluted earnings per share of common stock
attributable to
Pitney Bowes Inc. common stockholders (1): Continuing operations $
0.36 $ 0.54 $ 1.50 $ 2.08 Discontinued operations (0.05 )
(0.06 ) (0.09 ) (0.04 ) Net income $
0.31 $ 0.47 $ 1.41 $ 2.04
Average common and potential common
shares outstanding 204,215,176 207,733,717
206,752,872 207,322,440
(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)
(Dollars in thousands, except per share data)
Assets
12/31/10 09/30/10 Current assets: Cash and cash equivalents $
484,363 $ 386,046 Short-term investments 30,609 21,351 Accounts
receivable, less allowances:
12/10
$31,880 09/10 $34,865
792,135 725,667 Finance receivables, less allowances:
12/10
$48,709 09/10 $48,366
1,321,596 1,308,821 Inventories 168,967 187,875 Current income
taxes 93,013 112,719 Other current assets and prepayments
107,029 102,838
Total current assets
2,997,712 2,845,317 Property, plant and equipment, net
426,501 458,766 Rental property and equipment, net 300,170 315,489
Long-term finance receivables, less allowances:
12/10
$20,721 09/10 $20,511
1,244,499 1,245,798 Investment in leveraged leases 251,006 241,125
Goodwill 2,306,793 2,312,304 Intangible assets, net 297,443 304,186
Non-current income taxes 126,754 108,546 Other assets
478,769 484,376 Total assets $
8,429,647 $ 8,315,907
Liabilities,
noncontrolling interests and stockholders' deficit
Current liabilities: Accounts payable and accrued liabilities $
1,825,261 $ 1,694,745 Current income taxes 218,372 130,114 Notes
payable and current portion of long-term obligations 53,494 135,674
Advance billings 481,900 461,573
Total current liabilities
2,579,027 2,422,106 Deferred taxes on income 221,294 304,765
Tax uncertainties and other income tax liabilities 536,531 546,314
Long-term debt 4,239,248 4,242,845 Other non-current liabilities
653,758 573,447
Total liabilities
8,229,858 8,089,477
Noncontrolling interests (Preferred stockholders' equity in
subsidiaries) 296,370 296,370 Stockholders' deficit:
Cumulative preferred stock, $50 par value, 4% convertible 4 4
Cumulative preference stock, no par value, $2.12 convertible 752
804 Common stock, $1 par value 323,338 323,338 Additional paid-in
capital 250,928 247,800 Retained earnings 4,282,316 4,293,549
Accumulated other comprehensive loss (473,806 ) (451,880 ) Treasury
stock, at cost (4,480,113 ) (4,483,555 )
Total Pitney Bowes Inc. stockholders'
deficit
(96,581 ) (69,940 ) Total liabilities,
noncontrolling interests and stockholders' deficit $ 8,429,647
$ 8,315,907
Pitney Bowes Inc.
Revenue and EBIT
Business Segments
December 31, 2010
(Unaudited)
(Dollars in thousands)
Three Months Ended December 31, % 2010
2009 Change
Revenue
U.S. Mailing $ 472,834 $ 498,882 (5 %) International Mailing
243,510 240,505 1 % Small & Medium
Business Solutions 716,344 739,387 (3
%) Production Mail 177,105 159,745 11 % Software 111,037
105,180 6 % Management Services 250,750 271,272 (8 %) Mail Services
146,281 145,309 1 % Marketing Services 32,525
33,412 (3 %) Enterprise Business Solutions 717,698
714,918 0 %
Total revenue
$ 1,434,042 $ 1,454,305
(1 %)
EBIT
(1)
U.S. Mailing $ 181,442 $ 181,876 (0 %) International Mailing
37,406 40,883 (9 %) Small & Medium
Business Solutions 218,848 222,759 (2
%) Production Mail 25,262 24,063 5 % Software 24,070 21,271
13 % Management Services 26,890 23,013 17 % Mail Services 18,517
19,401 (5 %) Marketing Services 5,703 5,615
2 % Enterprise Business Solutions 100,442
93,363 8 %
Total EBIT $
319,290 $ 316,122 1 %
Unallocated amounts: Interest, net (2) (51,055 ) (48,646 )
Corporate expense (61,142 ) (59,633 ) Restructuring charges and
asset impairments (79,235 ) (35,901 ) Other items -
(4,450 )
Income from continuing operations before
income taxes $ 127,858 $
167,492 (1) Earnings before interest and taxes
(EBIT) excludes general corporate expenses and restructuring
charges and asset impairments. (2) Interest, net includes
financing interest expense, other interest expense and interest
income.
Pitney Bowes Inc.
Revenue and EBIT
Business Segments
December 31, 2010
(Unaudited)
(Dollars in thousands)
Twelve Months Ended December 31, % 2010
2009 Change
Revenue
U.S. Mailing $ 1,879,298 $ 2,016,259 (7 %) International
Mailing 922,471 920,398 0 % Small &
Medium Business Solutions 2,801,769 2,936,657
(5 %) Production Mail 557,219 525,745 6 % Software
362,914 345,739 5 % Management Services 999,288 1,060,907 (6 %)
Mail Services (3) 562,526 559,200 1 % Marketing Services
141,538 140,923 0 % Enterprise Business
Solutions 2,623,485 2,632,514 (0 %)
Total revenue $ 5,425,254
$ 5,569,171 (3 %)
EBIT
(1)
U.S. Mailing $ 689,363 $ 743,108 (7 %) International Mailing
142,875 128,084 12 % Small & Medium
Business Solutions 832,238 871,192 (4
%) Production Mail 60,373 51,037 18 % Software 42,206 37,335
13 % Management Services 92,671 72,307 28 % Mail Services (3)
63,330 82,723 (23 %) Marketing Services 26,133
22,938 14 % Enterprise Business Solutions 284,713
266,340 7 %
Total EBIT $
1,116,951 $ 1,137,532 (2 %)
Unallocated amounts: Interest, net (2) (201,324 ) (203,906 )
Corporate expense (198,776 ) (187,254 ) Restructuring charges and
asset impairments (182,274 ) (48,746 ) Other items -
(4,450 )
Income from continuing operations before
income taxes $ 534,577 $
693,176 (1) Earnings before interest
and taxes (EBIT) excludes general corporate expenses and
restructuring charges and asset impairments. (2) Interest,
net includes financing interest expense, other interest expense and
interest income. (3) The Mail Services segment for the
twelve-month period ended December 31, 2010 includes a one-time out
of period adjustment primarily to correct rates used to estimate
earned but unbilled revenue for the periods 2007 through first
quarter 2010. The adjustment reduced 2010 year-to-date revenue and
EBIT by $21 million and $16 million, respectively. The impact of
this adjustment was not material on any individual quarter or year
during these periods and is not material to 2010 results.
Pitney Bowes Inc. Reconciliation of Reported Consolidated
Results to Adjusted Results (Unaudited)
(Dollars in thousands, except per share data) Three
Months Ended December 31, Twelve Months Ended December 31, 2010
2009 2010 2009 GAAP income from continuing operations after
income taxes, as reported $ 72,796 $ 111,959 $ 310,483 $ 431,554
Restructuring charges and asset impairments 55,865 23,482 122,892
31,782 Tax adjustments 5,451 (2,141 )
27,509 10,063 Income from continuing
operations after income taxes, as adjusted $ 134,112 $
133,300 $ 460,884 $ 473,399 GAAP
diluted earnings per share from continuing operations, as reported
$ 0.36 $ 0.54 $ 1.50 $ 2.08 Restructuring charges and asset
impairments 0.27 0.11 0.59 0.15 Tax adjustments 0.03
(0.01 ) 0.13 0.05 Diluted
earnings per share from continuing operations, as adjusted $ 0.66
$ 0.64 $ 2.23 $ 2.28 GAAP
net cash provided by operating activities, as reported $ 284,406 $
91,644 $ 951,293 $ 824,068 Capital expenditures (29,591 ) (40,219 )
(119,768 ) (166,728 ) Restructuring payments and discontinued
operations 28,853 38,333 119,566 105,090
Pension contribution
-
125,000
-
125,000
Reserve account deposits 4,994 7,900
10,399 1,664 Free cash flow, as
adjusted $ 288,662 $ 222,658 $ 961,490 $
889,094 Note: The sum of the earnings per share
amounts may not equal the totals above due to rounding.
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