PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2021
|
|
Global Ecommerce
|
Presort Services
|
SendTech Solutions
|
Revenue from products and services
|
Revenue from leasing transactions and financing
|
Total consolidated revenue
|
Major products/service lines
|
|
|
|
|
|
|
Business services
|
$
|
1,229,526
|
|
$
|
417,041
|
|
$
|
42,293
|
|
$
|
1,688,860
|
|
$
|
—
|
|
$
|
1,688,860
|
|
Support services
|
—
|
|
—
|
|
347,266
|
|
347,266
|
|
—
|
|
347,266
|
|
Financing
|
—
|
|
—
|
|
—
|
|
—
|
|
223,201
|
|
223,201
|
|
Equipment sales
|
—
|
|
—
|
|
66,600
|
|
66,600
|
|
189,704
|
|
256,304
|
|
Supplies
|
—
|
|
—
|
|
119,090
|
|
119,090
|
|
—
|
|
119,090
|
|
Rentals
|
—
|
|
—
|
|
—
|
|
—
|
|
55,128
|
|
55,128
|
|
Subtotal
|
1,229,526
|
|
417,041
|
|
575,249
|
|
2,221,816
|
|
$
|
468,033
|
|
$
|
2,689,849
|
|
|
|
|
|
|
|
|
Revenue from leasing transactions and financing
|
|
|
|
|
|
|
Financing
|
—
|
|
—
|
|
223,201
|
|
223,201
|
|
|
|
Equipment sales
|
—
|
|
—
|
|
189,704
|
|
189,704
|
|
|
|
Rentals
|
—
|
|
—
|
|
55,128
|
|
55,128
|
|
|
|
Total revenue
|
$
|
1,229,526
|
|
$
|
417,041
|
|
$
|
1,043,282
|
|
$
|
2,689,849
|
|
|
|
|
|
|
|
|
|
|
Timing of revenue recognition from products and services
|
|
|
|
|
Products/services transferred at a point in time
|
$
|
—
|
|
$
|
—
|
|
$
|
236,016
|
|
$
|
236,016
|
|
|
|
Products/services transferred over time
|
1,229,526
|
|
417,041
|
|
339,233
|
|
1,985,800
|
|
|
|
Total
|
$
|
1,229,526
|
|
$
|
417,041
|
|
$
|
575,249
|
|
$
|
2,221,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2020
|
|
Global Ecommerce
|
Presort Services
|
SendTech Solutions
|
Revenue from products and services
|
Revenue from leasing transactions and financing
|
Total consolidated revenue
|
Major products/service lines
|
|
|
|
|
|
|
Business services
|
$
|
1,100,757
|
|
$
|
386,552
|
|
$
|
37,014
|
|
$
|
1,524,323
|
|
$
|
—
|
|
$
|
1,524,323
|
|
Support services
|
—
|
|
—
|
|
353,320
|
|
353,320
|
|
—
|
|
353,320
|
|
Financing
|
—
|
|
—
|
|
—
|
|
—
|
|
260,758
|
|
260,758
|
|
Equipment sales
|
—
|
|
—
|
|
49,556
|
|
49,556
|
|
164,126
|
|
213,682
|
|
Supplies
|
—
|
|
—
|
|
118,117
|
|
118,117
|
|
—
|
|
118,117
|
|
Rentals
|
—
|
|
—
|
|
—
|
|
—
|
|
55,458
|
|
55,458
|
|
Subtotal
|
1,100,757
|
|
386,552
|
|
558,007
|
|
2,045,316
|
|
$
|
480,342
|
|
$
|
2,525,658
|
|
|
|
|
|
|
|
|
Revenue from leasing transactions and financing
|
|
|
|
|
|
|
Financing
|
—
|
|
—
|
|
260,758
|
|
260,758
|
|
|
|
Equipment sales
|
—
|
|
—
|
|
164,126
|
|
164,126
|
|
|
|
Rentals
|
—
|
|
—
|
|
55,458
|
|
55,458
|
|
|
|
Total revenue
|
$
|
1,100,757
|
|
$
|
386,552
|
|
$
|
1,038,349
|
|
$
|
2,525,658
|
|
|
|
|
|
|
|
|
|
|
Timing of revenue recognition from products and services
|
|
|
|
|
Products/services transferred at a point in time
|
$
|
—
|
|
$
|
—
|
|
$
|
210,726
|
|
$
|
210,726
|
|
|
|
Products/services transferred over time
|
1,100,757
|
|
386,552
|
|
347,281
|
|
1,834,590
|
|
|
|
Total
|
$
|
1,100,757
|
|
$
|
386,552
|
|
$
|
558,007
|
|
$
|
2,045,316
|
|
|
|
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Our performance obligations for revenue from products and services are as follows:
Business services includes providing mail processing services, shipping subscription solutions, fulfillment, delivery and return services and cross-border solutions. Revenue for shipping subscription solutions is recognized ratably over the contract period as the client obtains equal benefit from these services through the period. Revenue for mail processing services, fulfillment, delivery and return services and cross-border solutions is recognized over time using an output method based on the number of parcels or mail pieces either processed or delivered, depending on the service type, since that measure best depicts the value of goods and services transferred to the client over the contract period. Contract terms for these services range from one to five years followed by annual renewal periods.
Support services includes providing maintenance, professional and subscription services for our equipment and digital mailing and shipping technology solutions. Contract terms range from one to five years, depending on the lease term of the related equipment. Revenue for maintenance and subscription services is recognized ratably over the contract period and revenue for professional services is recognized when services are provided.
Equipment sales, excluding sales-type leases, generally includes the sale of mailing and shipping equipment. We recognize revenue upon delivery for self-install equipment and upon acceptance or installation for other equipment. We provide a warranty that our equipment is free of defects and meets stated specifications. The warranty is not considered a separate performance obligation.
Supplies revenue is recognized upon delivery.
Revenue from leasing transactions and financing includes revenue from sales-type and operating leases, finance income, late fees and investment income, gains and losses at the Bank.
Advance Billings from Contracts with Customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet location
|
|
September 30, 2021
|
|
December 31, 2020
|
|
Increase/ (decrease)
|
Advance billings, current
|
Advance billings
|
|
$
|
96,851
|
|
|
$
|
106,498
|
|
|
$
|
(9,647)
|
|
Advance billings, noncurrent
|
Other noncurrent liabilities
|
|
$
|
1,187
|
|
|
$
|
1,277
|
|
|
$
|
(90)
|
|
Advance billings are recorded when cash payments are due in advance of our performance. Revenue is recognized ratably over the contract term. Items in advance billings primarily relate to support services for our equipment and digital mailing and shipping technology solutions. Revenue recognized during the period includes $93 million of advance billings at the beginning of the period. Advance billings above at September 30, 2021 and December 31, 2020 excludes $7 million and $8 million, respectively, from leasing transactions.
Future Performance Obligations
Future performance obligations include revenue streams bundled with our leasing contracts, primarily maintenance and subscription services. The transaction prices allocated to future performance obligations will be recognized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remainder of 2021
|
|
2022
|
|
2023-2026
|
|
Total
|
SendTech Solutions
|
|
$
|
85,186
|
|
|
$
|
247,772
|
|
|
$
|
364,157
|
|
|
$
|
697,115
|
|
The amounts above exclude revenue related to performance obligations for contracts with terms less than 12 months and expected consideration for those performance obligations where revenue is recognized based on the amount billable to the customer.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
3. Segment Information
Our reportable segments are Global Ecommerce, Presort Services and Sending Technology Solutions (SendTech Solutions). The principal products and services of each reportable segment are as follows:
Global Ecommerce: Includes the revenue and related expenses from domestic parcel services, cross-border solutions and digital delivery services.
Presort Services: Includes revenue and related expenses from sortation services to qualify large volumes of First Class Mail, Marketing Mail, Marketing Mail Flats and Bound Printed Matter for postal worksharing discounts.
SendTech Solutions: Includes the revenue and related expenses from physical and digital mailing and shipping technology solutions, financing, services, supplies and other applications to help simplify and save on the sending, tracking and receiving of letters, parcels and flats.
Management measures segment profitability and performance using segment earnings before interest and taxes (EBIT). Segment EBIT is calculated by deducting from segment revenue the related costs and expenses attributable to the segment. Segment EBIT excludes interest, taxes, general corporate expenses, restructuring charges, asset impairment charges and other items not allocated to a particular business segment. Management believes that it provides investors a useful measure of operating performance and underlying trends of the business. Segment EBIT may not be indicative of our overall consolidated performance and therefore, should be read in conjunction with our consolidated results of operations. The following tables provide information about our reportable segments and reconciliation of segment EBIT to net income (loss).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Global Ecommerce
|
$
|
398,011
|
|
|
$
|
409,981
|
|
|
$
|
1,229,526
|
|
|
$
|
1,100,757
|
|
Presort Services
|
139,296
|
|
|
127,705
|
|
|
417,041
|
|
|
386,552
|
|
SendTech Solutions
|
338,142
|
|
|
354,212
|
|
|
1,043,282
|
|
|
1,038,349
|
|
Total revenue
|
$
|
875,449
|
|
|
$
|
891,898
|
|
|
$
|
2,689,849
|
|
|
$
|
2,525,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Global Ecommerce
|
$
|
(20,950)
|
|
|
$
|
(19,757)
|
|
|
$
|
(58,157)
|
|
|
$
|
(68,126)
|
|
Presort Services
|
21,062
|
|
|
14,481
|
|
|
56,247
|
|
|
42,758
|
|
SendTech Solutions
|
98,950
|
|
|
112,599
|
|
|
320,541
|
|
|
323,429
|
|
Total segment EBIT
|
99,062
|
|
|
107,323
|
|
|
318,631
|
|
|
298,061
|
|
Reconciliation of Segment EBIT to net income (loss):
|
|
|
|
|
|
|
|
Unallocated corporate expenses
|
(49,176)
|
|
|
(53,429)
|
|
|
(162,957)
|
|
|
(146,640)
|
|
Restructuring charges
|
(3,701)
|
|
|
(3,766)
|
|
|
(11,434)
|
|
|
(12,505)
|
|
Interest expense, net
|
(36,022)
|
|
|
(38,801)
|
|
|
(109,185)
|
|
|
(115,558)
|
|
Gain on sale of assets
|
—
|
|
|
—
|
|
|
1,434
|
|
|
11,908
|
|
Goodwill impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
(198,169)
|
|
Loss on debt refinancing
|
(3,193)
|
|
|
—
|
|
|
(55,576)
|
|
|
(36,987)
|
|
Gain on sale of business
|
—
|
|
|
—
|
|
|
10,201
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Transaction costs
|
—
|
|
|
—
|
|
|
—
|
|
|
(641)
|
|
Benefit (provision) for income taxes
|
1,525
|
|
|
(554)
|
|
|
10,602
|
|
|
(7,540)
|
|
Income (loss) from continuing operations
|
8,495
|
|
|
10,773
|
|
|
1,716
|
|
|
(208,071)
|
|
Income (loss) from discontinued operations, net of tax
|
572
|
|
|
616
|
|
|
(4,334)
|
|
|
7,648
|
|
Net income (loss)
|
$
|
9,067
|
|
|
$
|
11,389
|
|
|
$
|
(2,618)
|
|
|
$
|
(200,423)
|
|
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
4. Discontinued Operations
Discontinued operations for the three and nine months ended September 30, 2021 and 2020 include working capital adjustments, tax-related adjustments and other adjustments in connection with the sale of our Software Solutions business in 2019 and Production Mail business in 2018. Discontinued operations for the nine months ended September 30, 2021 also includes a tax charge related to the sale of the Production Mail business and discontinued operations for the nine months ended September 30, 2020 also includes the gain on the sale of our software business in Australia, which closed in January 2020.
5. Earnings per Share (EPS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Numerator:
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
$
|
8,495
|
|
|
$
|
10,773
|
|
|
$
|
1,716
|
|
|
$
|
(208,071)
|
|
Income (loss) from discontinued operations, net of tax
|
572
|
|
|
616
|
|
|
(4,334)
|
|
|
7,648
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
|
9,067
|
|
|
$
|
11,389
|
|
|
$
|
(2,618)
|
|
|
$
|
(200,423)
|
|
Denominator:
|
|
|
|
|
|
|
|
Weighted-average shares used in basic EPS
|
174,399
|
|
|
171,828
|
|
|
173,691
|
|
|
171,388
|
|
Dilutive effect of common stock equivalents (1)
|
5,010
|
|
|
2,876
|
|
|
5,258
|
|
|
—
|
|
Weighted-average shares used in diluted EPS
|
179,409
|
|
|
174,704
|
|
|
178,949
|
|
|
171,388
|
|
Basic earnings (loss) per share (2):
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
0.05
|
|
|
$
|
0.06
|
|
|
$
|
0.01
|
|
|
$
|
(1.21)
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
(0.02)
|
|
|
0.04
|
|
Net income (loss)
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
(0.02)
|
|
|
$
|
(1.17)
|
|
Diluted earnings (loss) per share (2):
|
|
|
|
|
|
|
|
Continuing operations
|
$
|
0.05
|
|
|
$
|
0.06
|
|
|
$
|
0.01
|
|
|
$
|
(1.21)
|
|
Discontinued operations
|
—
|
|
|
—
|
|
|
(0.02)
|
|
|
0.04
|
|
Net income (loss)
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
(0.02)
|
|
|
$
|
(1.17)
|
|
|
|
|
|
|
|
|
|
Common stock equivalents excluded from calculation of diluted earnings per share because their impact would be anti-dilutive:
|
6,529
|
|
|
14,828
|
|
|
6,529
|
|
|
15,855
|
|
(1) Due to the net loss for the nine months ended September 30, 2020, common stock equivalents of 1,604 were also excluded from the calculation of diluted earnings per share as the impact would have been anti-dilutive.
(2) The sum of the earnings per share amounts may not equal the totals due to rounding.
6. Inventories
Inventories are stated at the lower of cost or market. Cost is determined on the last-in, first-out (LIFO) basis, the first-in, first-out (FIFO) basis or average cost. Inventories consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2021
|
|
December 31,
2020
|
Raw materials
|
$
|
19,289
|
|
|
$
|
16,570
|
|
Supplies and service parts
|
26,162
|
|
|
24,061
|
|
Finished products
|
29,680
|
|
|
30,849
|
|
Inventory at FIFO cost
|
75,131
|
|
|
71,480
|
|
Excess of FIFO cost over LIFO cost
|
(5,635)
|
|
|
(5,635)
|
|
Total inventory, net
|
$
|
69,496
|
|
|
$
|
65,845
|
|
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
7. Finance Assets and Lessor Operating Leases
Finance Assets
Finance receivables are comprised of sales-type lease receivables and unsecured revolving loan receivables. Sales-type lease receivables are generally due in installments over periods ranging from three to five years. Loan receivables arise primarily from financing services offered to our clients for postage and supplies and are generally due monthly; however, clients may rollover outstanding balances. Interest is recognized on loan receivables using the effective interest method. Annual fees are recognized ratably over the annual period covered and client acquisition costs are expensed as incurred.
Finance receivables consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
North America
|
|
International
|
|
Total
|
|
North America
|
|
International
|
|
Total
|
Sales-type lease receivables
|
|
|
|
|
|
|
|
|
|
|
|
Gross finance receivables
|
$
|
960,290
|
|
|
$
|
186,979
|
|
|
$
|
1,147,269
|
|
|
$
|
994,985
|
|
|
$
|
211,944
|
|
|
$
|
1,206,929
|
|
Unguaranteed residual values
|
37,827
|
|
|
11,101
|
|
|
48,928
|
|
|
36,405
|
|
|
12,140
|
|
|
48,545
|
|
Unearned income
|
(251,451)
|
|
|
(57,565)
|
|
|
(309,016)
|
|
|
(275,359)
|
|
|
(61,686)
|
|
|
(337,045)
|
|
Allowance for credit losses
|
(22,321)
|
|
|
(3,977)
|
|
|
(26,298)
|
|
|
(22,917)
|
|
|
(6,006)
|
|
|
(28,923)
|
|
Net investment in sales-type lease receivables
|
724,345
|
|
|
136,538
|
|
|
860,883
|
|
|
733,114
|
|
|
156,392
|
|
|
889,506
|
|
Loan receivables
|
|
|
|
|
|
|
|
|
|
|
|
Loan receivables
|
259,653
|
|
|
22,410
|
|
|
282,063
|
|
|
268,690
|
|
|
22,092
|
|
|
290,782
|
|
Allowance for credit losses
|
(3,373)
|
|
|
(236)
|
|
|
(3,609)
|
|
|
(6,484)
|
|
|
(462)
|
|
|
(6,946)
|
|
Net investment in loan receivables
|
256,280
|
|
|
22,174
|
|
|
278,454
|
|
|
262,206
|
|
|
21,630
|
|
|
283,836
|
|
Net investment in finance receivables
|
$
|
980,625
|
|
|
$
|
158,712
|
|
|
$
|
1,139,337
|
|
|
$
|
995,320
|
|
|
$
|
178,022
|
|
|
$
|
1,173,342
|
|
Maturities of gross sales-type lease receivables and gross loan receivables at September 30, 2021 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales-type Lease Receivables
|
|
Loan Receivables
|
|
North America
|
|
International
|
|
Total
|
|
North America
|
|
International
|
|
Total
|
Remaining for year ending December 31, 2021
|
$
|
104,087
|
|
|
$
|
16,956
|
|
|
$
|
121,043
|
|
|
$
|
205,035
|
|
|
$
|
22,410
|
|
|
$
|
227,445
|
|
Year ending December 31, 2022
|
353,220
|
|
|
70,368
|
|
|
423,588
|
|
|
20,692
|
|
|
—
|
|
|
20,692
|
|
Year ending December 31, 2023
|
253,168
|
|
|
48,930
|
|
|
302,098
|
|
|
14,616
|
|
|
—
|
|
|
14,616
|
|
Year ending December 31, 2024
|
154,417
|
|
|
29,172
|
|
|
183,589
|
|
|
11,998
|
|
|
—
|
|
|
11,998
|
|
Year ending December 31, 2025
|
76,001
|
|
|
15,305
|
|
|
91,306
|
|
|
6,429
|
|
|
—
|
|
|
6,429
|
|
Thereafter
|
19,397
|
|
|
6,248
|
|
|
25,645
|
|
|
883
|
|
|
—
|
|
|
883
|
|
Total
|
$
|
960,290
|
|
|
$
|
186,979
|
|
|
$
|
1,147,269
|
|
|
$
|
259,653
|
|
|
$
|
22,410
|
|
|
$
|
282,063
|
|
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Aging of Receivables
The aging of gross finance receivables was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
Sales-type Lease Receivables
|
|
Loan Receivables
|
|
|
|
North
America
|
|
International
|
|
North
America
|
|
International
|
|
Total
|
Past due amounts 0 - 90 days
|
$
|
955,731
|
|
|
$
|
184,616
|
|
|
$
|
255,365
|
|
|
$
|
22,311
|
|
|
$
|
1,418,023
|
|
Past due amounts > 90 days
|
4,559
|
|
|
2,363
|
|
|
4,288
|
|
|
99
|
|
|
11,309
|
|
Total
|
$
|
960,290
|
|
|
$
|
186,979
|
|
|
$
|
259,653
|
|
|
$
|
22,410
|
|
|
$
|
1,429,332
|
|
Past due amounts > 90 days
|
|
|
|
|
|
|
|
|
|
Still accruing interest
|
$
|
2,046
|
|
|
$
|
872
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,918
|
|
Not accruing interest
|
2,513
|
|
|
1,491
|
|
|
4,288
|
|
|
99
|
|
|
8,391
|
|
Total
|
$
|
4,559
|
|
|
$
|
2,363
|
|
|
$
|
4,288
|
|
|
$
|
99
|
|
|
$
|
11,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
Sales-type Lease Receivables
|
|
Loan Receivables
|
|
|
|
North
America
|
|
International
|
|
North
America
|
|
International
|
|
Total
|
Past due amounts 0 - 90 days
|
$
|
972,266
|
|
|
$
|
208,968
|
|
|
$
|
264,484
|
|
|
$
|
21,932
|
|
|
$
|
1,467,650
|
|
Past due amounts > 90 days
|
22,719
|
|
|
2,976
|
|
|
4,206
|
|
|
160
|
|
|
30,061
|
|
Total
|
$
|
994,985
|
|
|
$
|
211,944
|
|
|
$
|
268,690
|
|
|
$
|
22,092
|
|
|
$
|
1,497,711
|
|
Past due amounts > 90 days
|
|
|
|
|
|
|
|
|
|
Still accruing interest
|
$
|
5,128
|
|
|
$
|
463
|
|
|
$
|
1,797
|
|
|
$
|
59
|
|
|
$
|
7,447
|
|
Not accruing interest
|
17,591
|
|
|
2,513
|
|
|
2,409
|
|
|
101
|
|
|
22,614
|
|
Total
|
$
|
22,719
|
|
|
$
|
2,976
|
|
|
$
|
4,206
|
|
|
$
|
160
|
|
|
$
|
30,061
|
|
Allowance for Credit Losses
We estimate an allowance for credit losses based on historical loss experience, the nature of our portfolios, adverse situations that may affect a client's ability to pay, current conditions, management forecasts and independent economic forecasts. Credit losses are estimated at the portfolio level based on asset type and geographic market. Historical loss experience is based on actual loss rates over the average term of the asset of five years for sales-type lease receivables and three years for loan receivables (including accrued interest). The assumptions used in determining an estimate of credit losses are inherently subjective and actual results may differ significantly from estimated reserves.
We establish credit approval limits based on the credit quality of the client and the type of equipment financed. Our policy is to discontinue revenue recognition for lease receivables that are more than 120 days past due and for loan receivables that are more than 90 days past due. We resume revenue recognition when the client's payments reduce the account aging to less than 60 days past due. Finance receivables deemed uncollectible are written off against the allowance after all collection efforts have been exhausted and management deems the account to be uncollectible. However, we believe that our credit risk is low because of the geographic and industry diversification of our clients and small account balances for most of our clients.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Activity in the allowance for credit losses for finance receivables was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales-type Lease Receivables
|
|
Loan Receivables
|
|
|
|
North
America
|
|
International
|
|
North
America
|
|
International
|
|
Total
|
Balance at January 1, 2021
|
$
|
22,917
|
|
|
$
|
6,006
|
|
|
$
|
6,484
|
|
|
$
|
462
|
|
|
$
|
35,869
|
|
|
|
|
|
|
|
|
|
|
|
Amounts charged to expense
|
1,959
|
|
|
(1,019)
|
|
|
(979)
|
|
|
33
|
|
|
(6)
|
|
Write-offs
|
(4,816)
|
|
|
(773)
|
|
|
(4,748)
|
|
|
(251)
|
|
|
(10,588)
|
|
Recoveries
|
2,256
|
|
|
(16)
|
|
|
2,615
|
|
|
3
|
|
|
4,858
|
|
Other
|
5
|
|
|
(221)
|
|
|
1
|
|
|
(11)
|
|
|
(226)
|
|
Balance at September 30, 2021
|
$
|
22,321
|
|
|
$
|
3,977
|
|
|
$
|
3,373
|
|
|
$
|
236
|
|
|
$
|
29,907
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales-type Lease Receivables
|
|
Loan Receivables
|
|
|
|
North
America
|
|
International
|
|
North
America
|
|
International
|
|
Total
|
Balance at December 31, 2019
|
$
|
10,920
|
|
|
$
|
2,085
|
|
|
$
|
5,906
|
|
|
$
|
740
|
|
|
$
|
19,651
|
|
Cumulative effect of accounting change
|
9,271
|
|
|
1,750
|
|
|
(1,116)
|
|
|
(402)
|
|
|
9,503
|
|
Amounts charged to expense
|
10,009
|
|
|
1,314
|
|
|
6,792
|
|
|
429
|
|
|
18,544
|
|
Write-offs
|
(5,950)
|
|
|
(548)
|
|
|
(7,370)
|
|
|
(343)
|
|
|
(14,211)
|
|
Recoveries
|
1,488
|
|
|
91
|
|
|
2,399
|
|
|
1
|
|
|
3,979
|
|
Other
|
148
|
|
|
210
|
|
|
181
|
|
|
63
|
|
|
602
|
|
Balance at September 30, 2020
|
$
|
25,886
|
|
|
$
|
4,902
|
|
|
$
|
6,792
|
|
|
$
|
488
|
|
|
$
|
38,068
|
|
Credit Quality
The extension of credit and management of credit lines to new and existing clients uses a combination of a client's credit score, where available, and a detailed manual review of their financial condition and payment history or an automated process for certain small dollar applications. Once credit is granted, the payment performance of the client is managed through automated collections processes and is supplemented with direct follow up should an account become delinquent. We have robust automated collections and extensive portfolio management processes to ensure that our global strategy is executed, collection resources are allocated appropriately and enhanced tools and processes are implemented as needed.
We use a third party to score the majority of the North America portfolio on a quarterly basis using a proprietary commercial credit score. The relative scores are determined based on a number of factors, including financial information, payment history, company type and ownership structure. We stratify the third party's credit scores of our clients into low, medium and high-risk accounts. Due to timing and other issues, our entire portfolio may not be scored at period end. We report these amounts as "Not Scored"; however, absence of a score is not indicative of the credit quality of the account. The third-party credit score is used to predict the payment behaviors of our clients and the probability that an account will become greater than 90 days past due during the subsequent 12-month period.
•Low risk accounts are companies with very good credit scores and a predicted delinquency rate of less than 5%.
•Medium risk accounts are companies with average to good credit scores and a predicted delinquency rate between 5% and 10%.
•High risk accounts are companies with poor credit scores, are delinquent or are at risk of becoming delinquent. The predicted delinquency rate would be greater than 10%.
We do not use a third party to score our International portfolio because the cost to do so is prohibitive as there is no single credit score model that covers all countries. Accordingly, the entire International portfolio is reported in the Not Scored category. Approximately 80% of credit applications are approved or denied through the automated review process. All other credit applications are manually reviewed by obtaining client financial information, credit reports and other available financial information.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
The table below shows the gross sales-type lease receivable and loan receivable balances by relative risk class and year of origination based on the relative scores of the accounts within each class as of September 30, 2021 and December 31, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
Sales Type Lease Receivables
|
|
Loan Receivables
|
|
Total
|
|
2021
|
|
2020
|
|
2019
|
|
2018
|
|
2017
|
|
Prior
|
|
|
Low
|
$
|
211,706
|
|
|
$
|
206,401
|
|
|
$
|
174,389
|
|
|
$
|
111,650
|
|
|
$
|
44,059
|
|
|
$
|
17,317
|
|
|
$
|
194,859
|
|
|
$
|
960,381
|
|
Medium
|
35,526
|
|
|
38,343
|
|
|
36,921
|
|
|
22,257
|
|
|
10,355
|
|
|
5,551
|
|
|
49,385
|
|
|
198,338
|
|
High
|
4,169
|
|
|
5,335
|
|
|
4,744
|
|
|
3,013
|
|
|
1,050
|
|
|
830
|
|
|
5,265
|
|
|
24,406
|
|
Not Scored
|
65,099
|
|
|
56,985
|
|
|
51,426
|
|
|
27,735
|
|
|
10,079
|
|
|
2,329
|
|
|
32,554
|
|
|
246,207
|
|
Total
|
$
|
316,500
|
|
|
$
|
307,064
|
|
|
$
|
267,480
|
|
|
$
|
164,655
|
|
|
$
|
65,543
|
|
|
$
|
26,027
|
|
|
$
|
282,063
|
|
|
$
|
1,429,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
Sales Type Lease Receivables
|
|
Loan Receivables
|
|
Total
|
|
2020
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
Prior
|
|
|
Low
|
$
|
256,573
|
|
|
$
|
228,344
|
|
|
$
|
165,244
|
|
|
$
|
87,346
|
|
|
$
|
30,518
|
|
|
$
|
12,249
|
|
|
$
|
192,971
|
|
|
$
|
973,245
|
|
Medium
|
50,785
|
|
|
49,946
|
|
|
37,168
|
|
|
21,388
|
|
|
6,470
|
|
|
2,375
|
|
|
61,625
|
|
|
229,757
|
|
High
|
6,182
|
|
|
5,396
|
|
|
3,782
|
|
|
1,974
|
|
|
1,051
|
|
|
143
|
|
|
4,518
|
|
|
23,046
|
|
Not Scored
|
80,854
|
|
|
77,362
|
|
|
48,704
|
|
|
24,291
|
|
|
7,813
|
|
|
971
|
|
|
31,668
|
|
|
271,663
|
|
Total
|
$
|
394,394
|
|
|
$
|
361,048
|
|
|
$
|
254,898
|
|
|
$
|
134,999
|
|
|
$
|
45,852
|
|
|
$
|
15,738
|
|
|
$
|
290,782
|
|
|
$
|
1,497,711
|
|
Lease Income
Lease income from sales-type leases was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Profit recognized at commencement (1)
|
$
|
28,394
|
|
|
$
|
29,169
|
|
|
$
|
92,756
|
|
|
$
|
80,348
|
|
Interest income
|
45,806
|
|
|
50,961
|
|
|
142,072
|
|
|
157,044
|
|
Total lease income from sales-type leases
|
$
|
74,200
|
|
|
$
|
80,130
|
|
|
$
|
234,828
|
|
|
$
|
237,392
|
|
(1) Lease contracts do not include variable lease payments.
The disclosure of total lease income from sales-type leases for the three and nine months ended September 30, 2020 has been revised from $63 million to $80 million and from $182 million to $237 million, respectively. The revision did not have any impact on our Condensed Consolidated Statements of Operations.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Lessor Operating Leases
We also lease mailing equipment under operating leases with terms of one to five years. Maturities of these operating leases are as follows:
|
|
|
|
|
|
Remaining for year ending December 31, 2021
|
$
|
10,624
|
|
Year ending December 31, 2022
|
28,138
|
|
Year ending December 31, 2023
|
21,658
|
|
Year ending December 31, 2024
|
6,395
|
|
Year ending December 31, 2025
|
2,221
|
|
Thereafter
|
320
|
|
Total
|
$
|
69,356
|
|
8. Intangible Assets and Goodwill
Intangible Assets
Intangible assets consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
Customer relationships
|
$
|
268,189
|
|
|
$
|
(134,871)
|
|
|
$
|
133,318
|
|
|
$
|
268,199
|
|
|
$
|
(115,010)
|
|
|
$
|
153,189
|
|
Software & technology
|
19,000
|
|
|
(15,200)
|
|
|
3,800
|
|
|
19,000
|
|
|
(12,350)
|
|
|
6,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total intangible assets
|
$
|
287,189
|
|
|
$
|
(150,071)
|
|
|
$
|
137,118
|
|
|
$
|
287,199
|
|
|
$
|
(127,360)
|
|
|
$
|
159,839
|
|
Amortization expense for both the three months ended September 30, 2021 and 2020 was $8 million. Amortization expense for the nine months ended September 30, 2021 and 2020 was $23 million and $26 million, respectively.
Future amortization expense as of September 30, 2021 is shown in the table below. Actual amortization expense may differ due to, among other things, fluctuations in foreign currency exchange rates, impairments, acquisitions and accelerated amortization.
|
|
|
|
|
|
Remaining for year ending December 31, 2021
|
$
|
7,573
|
|
Year ending December 31, 2022
|
29,315
|
|
Year ending December 31, 2023
|
26,465
|
|
Year ending December 31, 2024
|
26,465
|
|
Year ending December 31, 2025
|
19,805
|
|
Thereafter
|
27,495
|
|
Total
|
$
|
137,118
|
|
Goodwill
Changes in the carrying value of goodwill, by reporting segment, are shown in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross value before accumulated impairment
|
|
Accumulated impairment
|
|
December 31, 2020
|
|
|
|
Disposition
|
|
Currency impact
|
|
September 30,
2021
|
Global Ecommerce
|
$
|
609,431
|
|
|
$
|
(198,169)
|
|
|
$
|
411,262
|
|
|
|
|
$
|
(16,200)
|
|
|
$
|
—
|
|
|
$
|
395,062
|
|
Presort Services
|
220,992
|
|
|
—
|
|
|
220,992
|
|
|
|
|
—
|
|
|
—
|
|
|
220,992
|
|
SendTech Solutions
|
520,031
|
|
|
—
|
|
|
520,031
|
|
|
|
|
—
|
|
|
(11,380)
|
|
|
508,651
|
|
Total goodwill
|
$
|
1,350,454
|
|
|
$
|
(198,169)
|
|
|
$
|
1,152,285
|
|
|
|
|
$
|
(16,200)
|
|
|
$
|
(11,380)
|
|
|
$
|
1,124,705
|
|
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
During the second quarter, we sold a U.K. based software consultancy business ("Tacit") acquired as part of our 2017 acquisition of Newgistics. We received net proceeds of $28 million and recognized a pre-tax gain of $10 million (after-tax gain of $4 million), which included a goodwill allocation of $16 million attributable to Tacit.
9. Fair Value Measurements and Derivative Instruments
We measure certain financial assets and liabilities at fair value on a recurring basis. Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. An entity is required to classify certain assets and liabilities measured at fair value based on the following fair value hierarchy that prioritizes the inputs used to measure fair value:
Level 1 – Unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity, may be derived from internally developed methodologies based on management’s best estimate of fair value and that are significant to the fair value of the asset or liability.
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect its placement within the fair value hierarchy. The following tables show, by level within the fair value hierarchy, our financial assets and liabilities that are accounted for at fair value on a recurring basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Assets:
|
|
|
|
|
|
|
|
Investment securities
|
|
|
|
|
|
|
|
Money market funds
|
$
|
84,772
|
|
|
$
|
250,877
|
|
|
$
|
—
|
|
|
$
|
335,649
|
|
Equity securities
|
—
|
|
|
29,898
|
|
|
—
|
|
|
29,898
|
|
Commingled fixed income securities
|
1,704
|
|
|
19,277
|
|
|
—
|
|
|
20,981
|
|
Government and related securities
|
9,847
|
|
|
25,179
|
|
|
—
|
|
|
35,026
|
|
Corporate debt securities
|
—
|
|
|
66,433
|
|
|
—
|
|
|
66,433
|
|
Mortgage-backed / asset-backed securities
|
—
|
|
|
187,435
|
|
|
—
|
|
|
187,435
|
|
Derivatives
|
|
|
|
|
|
|
|
Interest rate swap
|
—
|
|
|
631
|
|
|
—
|
|
|
631
|
|
Foreign exchange contracts
|
—
|
|
|
723
|
|
|
—
|
|
|
723
|
|
Total assets
|
$
|
96,323
|
|
|
$
|
580,453
|
|
|
$
|
—
|
|
|
$
|
676,776
|
|
Liabilities:
|
|
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
(2,853)
|
|
|
$
|
—
|
|
|
$
|
(2,853)
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
(2,853)
|
|
|
$
|
—
|
|
|
$
|
(2,853)
|
|
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
Assets:
|
|
|
|
|
|
|
|
Investment securities
|
|
|
|
|
|
|
|
Money market funds
|
$
|
73,228
|
|
|
$
|
434,791
|
|
|
$
|
—
|
|
|
$
|
508,019
|
|
Equity securities
|
—
|
|
|
26,583
|
|
|
—
|
|
|
26,583
|
|
Commingled fixed income securities
|
1,722
|
|
|
19,669
|
|
|
—
|
|
|
21,391
|
|
Government and related securities
|
16,776
|
|
|
16,757
|
|
|
—
|
|
|
33,533
|
|
Corporate debt securities
|
—
|
|
|
71,433
|
|
|
—
|
|
|
71,433
|
|
Mortgage-backed / asset-backed securities
|
—
|
|
|
220,678
|
|
|
—
|
|
|
220,678
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange contracts
|
—
|
|
|
3,776
|
|
|
—
|
|
|
3,776
|
|
Total assets
|
$
|
91,726
|
|
|
$
|
793,687
|
|
|
$
|
—
|
|
|
$
|
885,413
|
|
Liabilities:
|
|
|
|
|
|
|
|
Derivatives
|
|
|
|
|
|
|
|
Interest rate swap
|
$
|
—
|
|
|
$
|
(2,163)
|
|
|
$
|
—
|
|
|
$
|
(2,163)
|
|
Foreign exchange contracts
|
—
|
|
|
(1,960)
|
|
|
—
|
|
|
(1,960)
|
|
Total liabilities
|
$
|
—
|
|
|
$
|
(4,123)
|
|
|
$
|
—
|
|
|
$
|
(4,123)
|
|
Investment Securities
The valuation of investment securities is based on the market approach using inputs that are observable, or can be corroborated by observable data, in an active marketplace. The following information relates to our classification within the fair value hierarchy:
•Money Market Funds: Money market funds typically invest in government securities, certificates of deposit, commercial paper and other highly liquid, low risk securities. Money market funds are principally used for overnight deposits and are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.
•Equity Securities: Equity securities are comprised of mutual funds investing in U.S. and foreign stocks. These mutual funds are classified as Level 2.
•Commingled Fixed Income Securities: Commingled fixed income securities are comprised of mutual funds that invest in a variety of fixed income securities, including securities of the U.S. government and its agencies, corporate debt, mortgage-backed securities and asset-backed securities. Fair value is based on the value of the underlying investments owned by each fund, minus its liabilities, divided by the number of shares outstanding, as reported by the fund manager. These mutual funds are classified as Level 1 when unadjusted quoted prices in active markets are available and as Level 2 when they are not actively traded on an exchange.
•Government and Related Securities: Debt securities are classified as Level 1 where active, high volume trades for identical securities exist. Valuation adjustments are not applied to these securities. Debt securities are classified as Level 2 where fair value is determined using quoted market prices for similar securities or benchmarking model derived prices to quoted market prices and trade data for identical or comparable securities.
•Corporate Debt Securities: Corporate debt securities are valued using recently executed comparable transactions, market price quotations or bond spreads for the same maturity as the security. These securities are classified as Level 2.
•Mortgage-Backed Securities / Asset-Backed Securities: These securities are valued based on external pricing indices or external price/spread data. These securities are classified as Level 2.
Derivative Securities
•Foreign Exchange Contracts: The valuation of foreign exchange derivatives is based on the market approach using observable market inputs, such as foreign currency spot and forward rates and yield curves. We have not seen a material change in the creditworthiness of those banks acting as derivative counterparties. These securities are classified as Level 2.
•Interest Rate Swaps: The valuation of interest rate swaps is based on an income approach using inputs that are observable or that can be derived from, or corroborated by, observable market data. These securities are classified as Level 2.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Available-For-Sale Securities
Available-for-sale securities are held at the Pitney Bowes Bank. Investment securities classified as available-for-sale are recorded at fair value with changes in fair value due to market conditions (i.e., interest rates) recorded in accumulated other comprehensive loss (AOCL), and changes in fair value due to credit conditions recorded in earnings. There were no unrealized losses due to credit losses charged to earnings through the nine months ended September 30, 2021.
Available-for-sale securities consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
Amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Estimated fair value
|
Government and related securities
|
$
|
36,282
|
|
|
$
|
74
|
|
|
$
|
(1,330)
|
|
|
$
|
35,026
|
|
Corporate debt securities
|
68,720
|
|
|
313
|
|
|
(2,600)
|
|
|
66,433
|
|
Commingled fixed income securities
|
1,721
|
|
|
—
|
|
|
(17)
|
|
|
1,704
|
|
Mortgage-backed / asset-backed securities
|
191,769
|
|
|
215
|
|
|
(4,549)
|
|
|
187,435
|
|
Total
|
$
|
298,492
|
|
|
$
|
602
|
|
|
$
|
(8,496)
|
|
|
$
|
290,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
Amortized cost
|
|
Gross unrealized gains
|
|
Gross unrealized losses
|
|
Estimated fair value
|
Government and related securities
|
$
|
31,882
|
|
|
$
|
157
|
|
|
$
|
(78)
|
|
|
$
|
31,961
|
|
Corporate debt securities
|
71,174
|
|
|
614
|
|
|
(355)
|
|
|
71,433
|
|
Commingled fixed income securities
|
1,706
|
|
|
16
|
|
|
—
|
|
|
1,722
|
|
Mortgage-backed / asset-backed securities
|
220,659
|
|
|
734
|
|
|
(715)
|
|
|
220,678
|
|
Total
|
$
|
325,421
|
|
|
$
|
1,521
|
|
|
$
|
(1,148)
|
|
|
$
|
325,794
|
|
Investment securities in a loss position were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
Fair Value
|
|
Gross unrealized losses
|
|
Fair Value
|
|
Gross unrealized losses
|
Less than 12 continuous months
|
$
|
181,105
|
|
|
$
|
4,695
|
|
|
$
|
132,267
|
|
|
$
|
1,072
|
|
Greater than 12 continuous months
|
93,587
|
|
|
3,801
|
|
|
2,369
|
|
|
76
|
|
Total
|
$
|
274,692
|
|
|
$
|
8,496
|
|
|
$
|
134,636
|
|
|
$
|
1,148
|
|
At September 30, 2021, 35% of the securities in the investment portfolio were in a loss position. We believe our allowance for credit losses on available-for-sale investment securities is adequate as our investments are primarily in highly liquid U.S. government and agency securities, high grade corporate bonds and municipal bonds. The majority of our mortgage-backed securities are either guaranteed or supported by the U.S. Government. We have not recognized an impairment on investment securities in an unrealized loss position because we have the ability and intent to hold these securities until recovery of the unrealized losses or we receive the stated principal and interest at maturity.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
Scheduled maturities of available-for-sale securities at September 30, 2021 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
Estimated fair value
|
Within 1 year
|
$
|
3,090
|
|
|
$
|
3,082
|
|
After 1 year through 5 years
|
15,198
|
|
|
15,102
|
|
After 5 years through 10 years
|
73,743
|
|
|
71,325
|
|
After 10 years
|
206,461
|
|
|
201,089
|
|
Total
|
$
|
298,492
|
|
|
$
|
290,598
|
|
The scheduled maturities of mortgage-backed and asset-backed securities may not coincide with the actual payment as borrowers have the right to prepay obligations.
Held-to-Maturity Securities
At September 30, 2021, certain investments classified as available-for-sale are now classified as held-to-maturity as management determined that the intent is to now hold these securities until maturity. The reclassification of these securities did not have a material impact on our financial statements. Held-to-maturity securities at September 30, 2021 and December 31, 2020 totaled $19 million and $75 million, respectively, of short-term, highly liquid investments.
Derivative Instruments
In the normal course of business, we are exposed to the impact of changes in foreign currency exchange rates and interest rates. We mitigate these exposures by following established risk management policies and procedures, including the use of derivatives. We use derivative instruments to limit the effects of exchange rate fluctuations on financial results and manage the cost of debt. We do not use derivatives for trading or speculative purposes. We record derivative instruments at fair value and the accounting for changes in the fair value depends on the intended use of the derivative, the resulting designation and the effectiveness of the instrument in offsetting the risk exposure it is designed to hedge.
Foreign Exchange Contracts
We enter into foreign exchange contracts to mitigate the currency risk associated with the anticipated purchase of inventory between affiliates and from third parties. These contracts are designated as cash flow hedges. The effective portion of the gain or loss on cash flow hedges is included in AOCL in the period that the change in fair value occurs and is reclassified to earnings in the period that the hedged item is recorded in earnings. No amount of ineffectiveness was recorded in earnings for these designated cash flow hedges. At September 30, 2021 and December 31, 2020, we had outstanding contracts associated with these anticipated transactions with notional amounts of $2 million and $8 million, respectively. Amounts included in AOCL at September 30, 2021 will be recognized in earnings within the next 12 months.
Interest Rate Swaps
In May 2021, we terminated our $500 million aggregate notional amount of interest rate swap agreements. We received $2 million that was recorded in AOCL and will be recognized ratably in income through 2024. We concurrently entered into new interest rate swap agreements with an aggregate notional amount of $200 million and designated these instruments as cash flow hedges. The fair value of the interest rate swaps is recorded as a derivative asset or liability at the end of each reporting period with the change in fair value reflected in AOCL.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
The fair value of derivative instruments was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Designation of Derivatives
|
|
Balance Sheet Location
|
|
September 30,
2021
|
|
December 31,
2020
|
Derivatives designated as
hedging instruments
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
Other current assets and prepayments
|
|
$
|
42
|
|
|
$
|
96
|
|
|
|
Accounts payable and accrued liabilities
|
|
(6)
|
|
|
(112)
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
|
Other assets (Other noncurrent liabilities)
|
|
631
|
|
|
(2,163)
|
|
|
|
|
|
|
|
|
Derivatives not designated as
hedging instruments
|
|
|
|
|
|
|
Foreign exchange contracts
|
|
Other current assets and prepayments
|
|
681
|
|
|
3,680
|
|
|
|
Accounts payable and accrued liabilities
|
|
(2,847)
|
|
|
(1,848)
|
|
|
|
|
|
|
|
|
|
|
Total derivative assets
|
|
$
|
1,354
|
|
|
$
|
3,776
|
|
|
|
Total derivative liabilities
|
|
(2,853)
|
|
|
(4,123)
|
|
|
|
Total net derivative liability
|
|
$
|
(1,499)
|
|
|
$
|
(347)
|
|
Results of cash flow hedging relationships were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Derivative Gain (Loss)
Recognized in AOCL
(Effective Portion)
|
|
Location of Gain (Loss)
(Effective Portion)
|
|
Gain (Loss) Reclassified
from AOCL to Earnings
(Effective Portion)
|
Derivative Instrument
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
Foreign exchange contracts
|
|
$
|
41
|
|
|
$
|
(80)
|
|
|
Revenue
|
|
$
|
45
|
|
|
$
|
(104)
|
|
|
|
|
|
|
|
Cost of sales
|
|
(21)
|
|
|
(6)
|
|
Interest rate swap
|
|
186
|
|
|
(1,303)
|
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
|
$
|
227
|
|
|
$
|
(1,383)
|
|
|
|
|
$
|
24
|
|
|
$
|
(110)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
Derivative Gain (Loss)
Recognized in AOCI
(Effective Portion)
|
|
Location of Gain (Loss)
(Effective Portion)
|
|
Gain (Loss) Reclassified
from AOCI to Earnings
(Effective Portion)
|
Derivative Instrument
|
|
2021
|
|
2020
|
|
|
2021
|
|
2020
|
Foreign exchange contracts
|
|
$
|
215
|
|
|
$
|
(361)
|
|
|
Revenue
|
|
$
|
289
|
|
|
$
|
(107)
|
|
|
|
|
|
|
|
Cost of sales
|
|
(126)
|
|
|
36
|
|
Interest rate swap
|
|
2,794
|
|
|
(2,908)
|
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
|
$
|
3,009
|
|
|
$
|
(3,269)
|
|
|
|
|
$
|
163
|
|
|
$
|
(71)
|
|
We enter into foreign exchange contracts to minimize the impact of exchange rate fluctuations on short-term intercompany loans and related interest that are denominated in a foreign currency. The revaluation of intercompany loans and interest and the corresponding mark-to-market adjustment on derivatives are recorded in earnings. All outstanding contracts at September 30, 2021 mature within 12 months.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
The mark-to-market adjustments of non-designated derivative instruments were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
|
|
|
|
Derivative Gain (Loss) Recognized in Earnings
|
|
|
|
|
Derivatives Instrument
|
|
Location of Derivative Gain (Loss)
|
|
2021
|
|
2020
|
|
|
|
|
Foreign exchange contracts
|
|
Selling, general and administrative expense
|
|
$
|
(5,592)
|
|
|
$
|
891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
|
|
Derivative Gain (Loss) Recognized in Earnings
|
|
|
|
|
Derivatives Instrument
|
|
Location of Derivative Gain (Loss)
|
|
2021
|
|
2020
|
|
|
|
|
Foreign exchange contracts
|
|
Selling, general and administrative expense
|
|
$
|
(4,524)
|
|
|
$
|
(2,776)
|
|
|
|
|
|
Fair Value of Financial Instruments
Financial instruments not reported at fair value on a recurring basis include cash and cash equivalents, held-to-maturity investment securities, accounts receivable, loan receivables, accounts payable and debt. The carrying value for cash and cash equivalents, held-to-maturity investment securities, accounts receivable, loans receivable and accounts payable approximate fair value. The fair value of debt is estimated based on recently executed transactions and market price quotations. The inputs used to determine the fair value of debt are classified as Level 2 in the fair value hierarchy. The carrying value and estimated fair value of debt was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
Carrying value
|
$
|
2,338,884
|
|
|
$
|
2,564,393
|
|
Fair value
|
$
|
2,396,064
|
|
|
$
|
2,479,895
|
|
10. Restructuring Charges
Activity in our restructuring reserves was as follows:
|
|
|
|
|
|
|
|
|
|
|
Severance and other exit costs
|
|
|
|
|
Balance at January 1, 2021
|
$
|
10,063
|
|
|
|
|
|
Expenses, net
|
11,434
|
|
|
|
|
|
Cash payments
|
(14,847)
|
|
|
|
|
|
Noncash activity
|
(541)
|
|
|
|
|
|
Balance at September 30, 2021
|
$
|
6,109
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2020
|
$
|
12,006
|
|
|
|
|
|
Expenses, net
|
12,505
|
|
|
|
|
|
Cash payments
|
(15,869)
|
|
|
|
|
|
Noncash activity
|
(2,649)
|
|
|
|
|
|
Balance at September 30, 2020
|
$
|
5,993
|
|
|
|
|
|
The majority of the restructuring reserves are expected to be paid over the next 12 to 24 months.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
11. Debt
Total debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate
|
|
September 30, 2021
|
|
December 31, 2020
|
Notes due October 2021
|
4.875%
|
|
$
|
—
|
|
|
$
|
152,588
|
|
Notes due May 2022
|
5.625%
|
|
—
|
|
|
148,792
|
|
Notes due April 2023
|
6.20%
|
|
91,766
|
|
|
271,000
|
|
Notes due March 2024
|
4.625%
|
|
251,046
|
|
|
374,000
|
|
Notes due March 2027
|
6.875%
|
|
400,000
|
|
|
—
|
|
Notes due March 2029
|
7.25%
|
|
350,000
|
|
|
—
|
|
Notes due January 2037
|
5.25%
|
|
35,841
|
|
|
35,841
|
|
Notes due March 2043
|
6.70%
|
|
425,000
|
|
|
425,000
|
|
Term loan due March 2026
|
LIBOR + 1.75%
|
|
375,250
|
|
|
380,000
|
|
Term loan due January 2025
|
LIBOR + 5.5%
|
|
—
|
|
|
818,125
|
|
Term loan due March 2028
|
LIBOR + 4.0%
|
|
447,750
|
|
|
—
|
|
Other debt
|
|
|
3,991
|
|
|
4,900
|
|
Principal amount
|
|
|
2,380,644
|
|
|
2,610,246
|
|
Less: unamortized costs, net
|
|
|
41,760
|
|
|
45,853
|
|
Total debt
|
|
|
2,338,884
|
|
|
2,564,393
|
|
Less: current portion long-term debt
|
|
|
24,733
|
|
|
216,032
|
|
Long-term debt
|
|
|
$
|
2,314,151
|
|
|
$
|
2,348,361
|
|
In 2021, we issued a $400 million 6.875% unsecured note due March 2027, a $350 million 7.25% unsecured note due March 2029 and entered into a new seven-year $450 million secured term loan maturing March 2028. We redeemed all the outstanding October 2021 notes and an aggregate $363 million of the May 2022 notes, April 2023 notes and March 2024 notes under a tender offer, the remaining balance of the May 2022 notes and repaid the remaining balance of our January 2025 term loan. A $56 million pre-tax loss was incurred on the refinancing of debt.
We also amended our $500 million secured revolving credit facility and our $380 million secured term loan to extend their maturities from November 2024 to March 2026. The credit agreement that governs the revolving credit facility and term loans contains financial and non-financial covenants. At September 30, 2021, we were in compliance with all covenants and there were no outstanding borrowings under the revolving credit facility.
We also terminated our existing $500 million interest rate swap agreements and entered into new interest rate swap agreements with an aggregate notional amount of $200 million. Under the terms of the new swap agreements, we pay fixed-rate interest of 0.56% and receive variable-rate interest based on one-month LIBOR. The variable interest rate under the term loans and the swaps reset monthly.
At September 30, 2021, the interest rate of the 2028 Term Loan was 4.1% and the interest rate on the 2026 Term Loan was 1.8%.
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
12. Pensions and Other Benefit Programs
The components of net periodic benefit cost (income) were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Pension Plans
|
|
Nonpension Postretirement Benefit Plans
|
|
United States
|
|
Foreign
|
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Service cost
|
$
|
64
|
|
|
$
|
16
|
|
|
$
|
346
|
|
|
$
|
422
|
|
|
$
|
232
|
|
|
$
|
229
|
|
Interest cost
|
10,353
|
|
|
12,719
|
|
|
2,961
|
|
|
3,548
|
|
|
891
|
|
|
1,255
|
|
Expected return on plan assets
|
(18,883)
|
|
|
(20,932)
|
|
|
(7,979)
|
|
|
(8,297)
|
|
|
—
|
|
|
—
|
|
Amortization of transition credit
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
Amortization of prior service (credit) cost
|
(15)
|
|
|
(15)
|
|
|
67
|
|
|
62
|
|
|
32
|
|
|
93
|
|
Amortization of net actuarial loss
|
9,366
|
|
|
7,972
|
|
|
2,340
|
|
|
2,092
|
|
|
913
|
|
|
926
|
|
Settlement
|
—
|
|
|
75
|
|
|
—
|
|
|
833
|
|
|
—
|
|
|
—
|
|
Net periodic benefit cost (income)
|
$
|
885
|
|
|
$
|
(165)
|
|
|
$
|
(2,265)
|
|
|
$
|
(1,341)
|
|
|
$
|
2,068
|
|
|
$
|
2,503
|
|
Contributions to benefit plans
|
$
|
1,161
|
|
|
$
|
2,061
|
|
|
$
|
355
|
|
|
$
|
445
|
|
|
$
|
2,642
|
|
|
$
|
2,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined Benefit Pension Plans
|
|
Nonpension Postretirement Benefit Plans
|
|
United States
|
|
Foreign
|
|
|
|
Nine Months Ended
|
|
Nine Months Ended
|
|
Nine Months Ended
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Service cost
|
$
|
195
|
|
|
$
|
69
|
|
|
$
|
1,055
|
|
|
$
|
1,220
|
|
|
$
|
682
|
|
|
$
|
663
|
|
Interest cost
|
31,842
|
|
|
39,077
|
|
|
8,929
|
|
|
10,473
|
|
|
2,816
|
|
|
3,742
|
|
Expected return on plan assets
|
(57,839)
|
|
|
(63,539)
|
|
|
(24,070)
|
|
|
(24,474)
|
|
|
—
|
|
|
—
|
|
Amortization of transition credit
|
—
|
|
|
—
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
|
—
|
|
Amortization of prior service (credit) cost
|
(45)
|
|
|
(45)
|
|
|
202
|
|
|
182
|
|
|
97
|
|
|
280
|
|
Amortization of net actuarial loss
|
28,643
|
|
|
24,367
|
|
|
7,065
|
|
|
6,156
|
|
|
3,068
|
|
|
2,400
|
|
Settlement
|
314
|
|
|
1,076
|
|
|
—
|
|
|
4,023
|
|
|
—
|
|
|
—
|
|
Net periodic benefit cost (income)
|
$
|
3,110
|
|
|
$
|
1,005
|
|
|
$
|
(6,819)
|
|
|
$
|
(2,423)
|
|
|
$
|
6,663
|
|
|
$
|
7,085
|
|
Contributions to benefit plans
|
$
|
4,020
|
|
|
$
|
5,959
|
|
|
$
|
9,379
|
|
|
$
|
9,013
|
|
|
$
|
9,542
|
|
|
$
|
10,493
|
|
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
13. Income Taxes
The effective tax rate for the three and nine months ended September 30, 2021 was (21.9)% and 119.3%, respectively, and includes a net tax benefit of $3 million from the resolution of tax matters partially offset by a charge from the filing of state income tax returns. The effective tax rate for the nine months ended September 30, 2021 also includes benefits of $5 million due to tax legislation in the U.K., a tax charge of $6 million on the pre-tax gain of $10 million from the sale of Tacit as the tax basis was lower than the book basis, a benefit of $3 million from an affiliate reorganization and $2 million from the vesting of restricted stock, partially offset by a charge of $1 million for the write-off of deferred tax assets associated with the expiration of out-of-the-money stock options.
The effective tax rate for the three and nine months ended September 30, 2020 was 4.9% and (3.8)%, respectively, and includes a $3 million benefit, which is primarily due to regulations enacted into law during the quarter. The effective tax rate for the nine months ended September 30, 2020 also includes a $12 million charge for the surrender of company owned life insurance policies, a benefit of $2 million on the $198 million goodwill impairment charge as the majority of this charge was nondeductible, a benefit of $1 million from the resolution of certain tax examinations and a charge of $3 million for the write-off of deferred tax assets associated with the expiration of out-of-the-money stock options and the vesting of restricted stock.
As is the case with other large corporations, our tax returns are examined by tax authorities in the U.S. and other global taxing jurisdictions in which we have operations. As a result, it is reasonably possible that the amount of unrecognized tax benefits will decrease in the next 12 months, and this decrease could be up to 10% of our unrecognized tax benefits.
The Internal Revenue Service examinations of our consolidated U.S. income tax returns for tax years prior to 2017 are closed to audit; however, various post-2014 U.S. state and local tax returns are still subject to examination, with some states in appeals from 2011. For our significant non-U.S. jurisdictions, Canada is closed to examination through 2016 except for a specific issue arising in earlier years, France is closed through 2019, Germany is closed through 2016 and the U.K. is closed through 2018. We also have other less significant tax filings currently subject to examination.
14. Commitments and Contingencies
In the ordinary course of business, we are routinely defendants in, or party to, a number of pending and threatened legal actions. These may involve litigation by or against us relating to, among other things, contractual rights under vendor, insurance or other contracts; intellectual property or patent rights; equipment, service, payment or other disputes with clients; or disputes with employees. Some of these actions may be brought as a purported class action on behalf of a purported class of employees, customers or others. In management's opinion, as of September 30, 2021, the potential liability, if any, that may result from these actions, either individually or collectively, is not reasonably expected to have a material effect on our financial position, results of operations or cash flows. However, as litigation is inherently unpredictable, there can be no assurances in this regard.
As of September 30, 2021, we have entered into leases that have not commenced. These leases have terms ranging from seven to ten years and aggregate payments of $20 million.
15. Stockholders’ Equity
Changes in stockholders’ equity were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive loss
|
|
Treasury stock
|
|
Total equity
|
Balance at July 1, 2021
|
|
|
|
|
$
|
323,338
|
|
|
$
|
5,903
|
|
|
$
|
5,172,185
|
|
|
$
|
(831,303)
|
|
|
$
|
(4,616,753)
|
|
|
$
|
53,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
—
|
|
|
—
|
|
|
9,067
|
|
|
—
|
|
|
—
|
|
|
9,067
|
|
Other comprehensive loss
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,927)
|
|
|
—
|
|
|
(9,927)
|
|
Dividends paid ($0.05 per common share)
|
|
|
|
|
—
|
|
|
—
|
|
|
(8,725)
|
|
|
—
|
|
|
—
|
|
|
(8,725)
|
|
Issuance of common stock
|
|
|
|
|
—
|
|
|
(6,610)
|
|
|
—
|
|
|
—
|
|
|
8,318
|
|
|
1,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
|
|
—
|
|
|
3,170
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2021
|
|
|
|
|
$
|
323,338
|
|
|
$
|
2,463
|
|
|
$
|
5,172,527
|
|
|
$
|
(841,230)
|
|
|
$
|
(4,608,435)
|
|
|
$
|
48,663
|
|
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive loss
|
|
Treasury stock
|
|
Total equity
|
Balance at July 1, 2020
|
|
|
|
|
$
|
323,338
|
|
|
$
|
68,498
|
|
|
$
|
5,188,119
|
|
|
$
|
(836,262)
|
|
|
$
|
(4,699,113)
|
|
|
$
|
44,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
—
|
|
|
—
|
|
|
11,389
|
|
|
—
|
|
|
—
|
|
|
11,389
|
|
Other comprehensive income
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,690
|
|
|
—
|
|
|
22,690
|
|
Dividends paid ($0.05 per common share)
|
|
|
|
|
—
|
|
|
—
|
|
|
(8,594)
|
|
|
—
|
|
|
—
|
|
|
(8,594)
|
|
Issuance of common stock
|
|
|
|
|
—
|
|
|
(9,272)
|
|
|
—
|
|
|
—
|
|
|
10,046
|
|
|
774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
|
|
—
|
|
|
8,286
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2020
|
|
|
|
|
$
|
323,338
|
|
|
$
|
67,512
|
|
|
$
|
5,190,914
|
|
|
$
|
(813,572)
|
|
|
$
|
(4,689,067)
|
|
|
$
|
79,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive loss
|
|
Treasury stock
|
|
Total equity
|
Balance at January 1, 2021
|
|
|
|
|
$
|
323,338
|
|
|
$
|
68,502
|
|
|
$
|
5,201,195
|
|
|
$
|
(839,131)
|
|
|
$
|
(4,687,509)
|
|
|
$
|
66,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
—
|
|
|
—
|
|
|
(2,618)
|
|
|
—
|
|
|
—
|
|
|
(2,618)
|
|
Other comprehensive loss
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,099)
|
|
|
—
|
|
|
(2,099)
|
|
Dividends paid ($0.15 per common share)
|
|
|
|
|
—
|
|
|
—
|
|
|
(26,050)
|
|
|
—
|
|
|
—
|
|
|
(26,050)
|
|
Issuance of common stock
|
|
|
|
|
—
|
|
|
(81,487)
|
|
|
—
|
|
|
—
|
|
|
79,074
|
|
|
(2,413)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
|
|
—
|
|
|
15,448
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2021
|
|
|
|
|
$
|
323,338
|
|
|
$
|
2,463
|
|
|
$
|
5,172,527
|
|
|
$
|
(841,230)
|
|
|
$
|
(4,608,435)
|
|
|
$
|
48,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
Additional paid-in capital
|
|
Retained earnings
|
|
Accumulated other comprehensive loss
|
|
Treasury stock
|
|
Total equity
|
Balance at January 1, 2020
|
|
|
|
|
$
|
323,338
|
|
|
$
|
98,748
|
|
|
$
|
5,438,930
|
|
|
$
|
(840,143)
|
|
|
$
|
(4,734,777)
|
|
|
$
|
286,096
|
|
Cumulative effect of accounting change
|
|
|
|
|
—
|
|
|
—
|
|
|
(21,900)
|
|
|
—
|
|
|
—
|
|
|
(21,900)
|
|
Net loss
|
|
|
|
|
—
|
|
|
—
|
|
|
(200,423)
|
|
|
—
|
|
|
—
|
|
|
(200,423)
|
|
Other comprehensive income
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,571
|
|
|
—
|
|
|
26,571
|
|
Dividends paid ($0.15 per common share)
|
|
|
|
|
—
|
|
|
—
|
|
|
(25,693)
|
|
|
—
|
|
|
—
|
|
|
(25,693)
|
|
Issuance of common stock
|
|
|
|
|
—
|
|
|
(46,472)
|
|
|
—
|
|
|
—
|
|
|
45,710
|
|
|
(762)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense
|
|
|
|
|
—
|
|
|
15,236
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2020
|
|
|
|
|
$
|
323,338
|
|
|
$
|
67,512
|
|
|
$
|
5,190,914
|
|
|
$
|
(813,572)
|
|
|
$
|
(4,689,067)
|
|
|
$
|
79,125
|
|
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
16. Accumulated Other Comprehensive Loss
Reclassifications out of AOCL were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) Reclassified from AOCL
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Cash flow hedges
|
|
|
|
|
|
|
|
Revenue
|
$
|
45
|
|
|
$
|
(104)
|
|
|
$
|
289
|
|
|
$
|
(107)
|
|
Cost of sales
|
(21)
|
|
|
(6)
|
|
|
(126)
|
|
|
36
|
|
Interest expense, net
|
(133)
|
|
|
—
|
|
|
(229)
|
|
|
—
|
|
Total before tax
|
(109)
|
|
|
(110)
|
|
|
(66)
|
|
|
(71)
|
|
Income tax benefit
|
(28)
|
|
|
(27)
|
|
|
(17)
|
|
|
(18)
|
|
Net of tax
|
$
|
(81)
|
|
|
$
|
(83)
|
|
|
$
|
(49)
|
|
|
$
|
(53)
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities
|
|
|
|
|
|
|
|
Financing revenue
|
$
|
(2)
|
|
|
$
|
6,490
|
|
|
$
|
(2)
|
|
|
$
|
10,060
|
|
Selling, general and administrative expense
|
(183)
|
|
|
263
|
|
|
76
|
|
|
210
|
|
Total before tax
|
(185)
|
|
|
6,753
|
|
|
74
|
|
|
10,270
|
|
Income tax (benefit) provision
|
(45)
|
|
|
1,681
|
|
|
19
|
|
|
2,557
|
|
Net of tax
|
$
|
(140)
|
|
|
$
|
5,072
|
|
|
$
|
55
|
|
|
$
|
7,713
|
|
|
|
|
|
|
|
|
|
Pension and postretirement benefit plans
|
|
|
|
|
|
|
|
Transition credit
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Prior service costs
|
(84)
|
|
|
(140)
|
|
|
(254)
|
|
|
(417)
|
|
Actuarial losses
|
(12,619)
|
|
|
(10,990)
|
|
|
(38,776)
|
|
|
(32,923)
|
|
Settlement
|
—
|
|
|
(908)
|
|
|
(314)
|
|
|
(5,099)
|
|
Total before tax
|
(12,703)
|
|
|
(12,037)
|
|
|
(39,344)
|
|
|
(38,436)
|
|
Income tax benefit
|
(3,097)
|
|
|
(2,875)
|
|
|
(9,608)
|
|
|
(9,027)
|
|
Net of tax
|
$
|
(9,606)
|
|
|
$
|
(9,162)
|
|
|
$
|
(29,736)
|
|
|
$
|
(29,409)
|
|
Changes in AOCL, net of tax were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedges
|
|
Available for sale securities
|
|
Pension and postretirement benefit plans
|
|
Foreign currency adjustments
|
|
Total
|
Balance at January 1, 2021
|
$
|
(1,411)
|
|
|
$
|
402
|
|
|
$
|
(851,063)
|
|
|
$
|
12,941
|
|
|
$
|
(839,131)
|
|
Other comprehensive income (loss) before reclassifications
|
3,425
|
|
|
(6,330)
|
|
|
—
|
|
|
(28,924)
|
|
|
(31,829)
|
|
Reclassifications into earnings
|
49
|
|
|
(55)
|
|
|
29,736
|
|
|
—
|
|
|
29,730
|
|
Net other comprehensive income (loss)
|
3,474
|
|
|
(6,385)
|
|
|
29,736
|
|
|
(28,924)
|
|
|
(2,099)
|
|
Balance at September 30, 2021
|
$
|
2,063
|
|
|
$
|
(5,983)
|
|
|
$
|
(821,327)
|
|
|
$
|
(15,983)
|
|
|
$
|
(841,230)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedges
|
|
Available for sale securities
|
|
Pension and postretirement benefit plans
|
|
Foreign currency adjustments
|
|
Total
|
Balance at January 1, 2020
|
$
|
337
|
|
|
$
|
2,849
|
|
|
$
|
(819,018)
|
|
|
$
|
(24,311)
|
|
|
$
|
(840,143)
|
|
Other comprehensive (loss) income before reclassifications
|
(2,455)
|
|
|
2,237
|
|
|
—
|
|
|
5,040
|
|
|
4,822
|
|
Reclassifications into earnings
|
53
|
|
|
(7,713)
|
|
|
29,409
|
|
|
—
|
|
|
21,749
|
|
Net other comprehensive (loss) income
|
(2,402)
|
|
|
(5,476)
|
|
|
29,409
|
|
|
5,040
|
|
|
26,571
|
|
Balance at September 30, 2020
|
$
|
(2,065)
|
|
|
$
|
(2,627)
|
|
|
$
|
(789,609)
|
|
|
$
|
(19,271)
|
|
|
$
|
(813,572)
|
|
PITNEY BOWES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited; table amounts in thousands unless otherwise noted, except per share amounts)
17. Supplemental Financial Statement Information
Activity in the allowance for credit losses on accounts receivables for the nine months ended September 30, 2021 and 2020 is presented below. See Note 7 for additional information pertaining to our finance receivables.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of year
|
|
Cumulative effect of accounting change
|
|
Amounts charged to expense
|
|
Write-offs, recoveries and other
|
|
Balance at end of period
|
|
Accounts and other receivables
|
|
Other assets
|
September 30, 2021
|
$
|
35,344
|
|
|
$
|
—
|
|
|
$
|
6,388
|
|
|
$
|
(11,677)
|
|
|
$
|
30,055
|
|
|
$
|
11,807
|
|
|
$
|
18,248
|
|
September 30, 2020
|
$
|
17,830
|
|
|
$
|
15,336
|
|
|
$
|
16,856
|
|
|
$
|
(20,353)
|
|
|
$
|
29,669
|
|
|
$
|
29,669
|
|
|
$
|
—
|
|
Other expense (income) consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Loss on debt refinancing
|
$
|
3,193
|
|
|
$
|
—
|
|
|
$
|
55,576
|
|
|
$
|
36,987
|
|
Insurance proceeds
|
—
|
|
|
(6,325)
|
|
|
(3,000)
|
|
|
(15,292)
|
|
Gain on sale of assets
|
—
|
|
|
—
|
|
|
(1,434)
|
|
|
(11,908)
|
|
Gain on sale of business
|
—
|
|
|
—
|
|
|
(10,201)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Other expense (income)
|
$
|
3,193
|
|
|
$
|
(6,325)
|
|
|
$
|
40,941
|
|
|
$
|
9,787
|
|
Supplemental cash flow information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Cash interest paid
|
$
|
106,942
|
|
|
$
|
115,143
|
|
|
|
Cash income tax payments, net of refunds
|
$
|
2,451
|
|
|
$
|
19,861
|
|
|
|
Finance leased assets obtained in exchange for new lease obligations
|
$
|
25,882
|
|
|
$
|
3,614
|
|
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18. Subsequent Event
In November 2021, we entered into an agreement to sell our Shelton, Connecticut facility for approximately $50 million and simultaneously entered into a ten year lease agreement. This transaction is expected to close before the end of 2021 and we anticipate recognizing a pre-tax gain from the sale of approximately $15 million.
In November 2021, we also acquired CrescoData for $15 million in cash plus potential additional payments of up to $7 million based on the achievement of revenue targets during the periods 2022-2024. CrescoData is a Singapore based, Platform-as-a-Service business that enables mapping and automating of product, stock and order data between platforms and will be reported in our SendTech Solutions segment.