Pitney Bowes 2007 Annual Report Download

Download and view the complete annual report

Please find the complete 2007 Pitney Bowes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 110

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110

Straight to the Point
Annual Report 2007

Table of contents

  • Page 1
    Straight to the Point Annual Report 2007

  • Page 2
    ... | Pick the best location for my next retail store | Track incoming mail and packages | Give my international mail a local look and feel | Protect my corporate brand | Manage multi-carrier shipping | Cleanse my address database | Merge multiple databases | Get purchasing power for all my mailstream...

  • Page 3
    "Everything we do has one goal-to ensure that our customers achieve their goals." Murray D. Martin President and Chief Executive Officer

  • Page 4
    ... major research centers. The foundation also does its fund-raising on an international scale, conducting direct-mail campaigns in the U.S. and Europe to raise more than 90 percent of its contributions. It relies on Pitney Bowes International Mail Services to consolidate its mail in the U.S. and ship...

  • Page 5
    ... showed the dealership how it could reduce turnaround time and cut costs in half by moving the direct-mail operation in-house. The solution includes Pitney Bowes address-cleansing software, folding and inserting equipment, and an advanced digital mailing system. Now, it takes just one day to produce...

  • Page 6
    ...Pitney Bowes to help ensure that doesn't happen. La Curacao uses our AnySite® tool to analyze income levels, shopping patterns, drive times, and a wealth of other information to assess the profitability of potential new sites. La Curacao currently operates 10 big-box stores in Southern California...

  • Page 7
    P I T N E Y B OW E S A N N UA L R E P O R T 2 0 0 7 5 "Carnaval" © 1994 Precita Eyes Muralists. 19th & Harrison Streets, San Francisco, CA. Directed and Designed by Joshua Sarantitis with Emmanuel Montoya. www.precitaeyes.org 415.285.2287

  • Page 8
    ... pricing plans, creative use of technology and, most important, an unwavering commitment to exceptional customer service. Its monthly statements represent an essential component of the company's customer communications strategy. Bouygues relies on Pitney Bowes to print, insert, send and track...

  • Page 9
    ... Retirement Plan Services knew it needed to communicate less. Counterintuitive, perhaps. And surprisingly difficult to do. The nation's leading provider of 401(k) plans, John Hancock typically sent its 45,000 plan sponsors updated fund information twice a year. It had been a generic document...

  • Page 10
    ... the mailstream- software, marketing services, and mail services. With this in mind, how did we do in 2007? Despite delivering less growth than planned in the second half of the year, we had a number of significant accomplishments that we are confident will yield benefits in 2008 and beyond. We...

  • Page 11
    ... allow users to design, print, assemble, and meter complex mailings in a single operation, for the highest levels of document integrity. Our mail services segment forged new strategic agreements that increased its customer base, extended its global distribution network, and strengthened its ability...

  • Page 12
    ... strong growth in our core mailing and production mail businesses. Over the next 12 months, we will be analyzing the more than 450 million touch points we have with our customers each year. Our goal is to improve their total experience with Pitney Bowes, from the bills they receive and the...

  • Page 13
    ... Group of Companies, Inc. David L. Shedlarz Retired Vice Chairman Pfizer Inc. David B. Snow, Jr. Chairman and Chief Executive Officer Medco Health Solutions, Inc. Robert E. Weissman Retired Chairman IMS Health Incorporated Stockholders may visit the Pitney Bowes corporate governance Web site...

  • Page 14
    ... actions to generate annualized savings of $150 million by 2009, half of which we expect to reinvest in the business to enhance our growth and competitiveness. Some of our businesses performed much better than expected, notably our software and mail services segments and our operations in the Asia...

  • Page 15
    meter migration in the U.S. and Canada, disappointing results in Europe, and weakness in the legal solutions business of our management services segment. Although our recurring revenue model largely insulates us from economic conditions, we did see some impact from the weakness in the U.S. economy, ...

  • Page 16
    ... 40 20 0 2002 Pitney Bowes 2003 S&P 500 Peer Group 2004 2005 2006 2007 Peer Group Pitney Bowes Inc. Automatic Data Processing, Inc. Diebold, Inc. R.R. Donnelley & Sons Company DST Systems, Inc. FedEx Corporation Hewlett-Packard Company Ikon Office Solutions, Inc. Lexmark International, Inc. United...

  • Page 17
    ...(used in) operating activities, as reported Capital expenditures Free cash ï¬,ow Reserve account deposits Payments related to restructuring charges Proceeds from sale of training facility Discontinued operations Pension plan contribution Contributions to charitable foundations IRS / Capital Services...

  • Page 18
    ... Listed Company Manual was submitted on May 24, 2007. Additional copies of our Form 10-K will be sent to stockholders free of charge upon written request to: MSC 00-63-02 Investor Relations Pitney Bowes Inc. 1 Elmcroft Road, Stamford, CT 06926-0700 S T O C K E XC H A NG E S Owners of Pitney Bowes...

  • Page 19
    ... held by non-affiliates of the registrant was $10,295,378,321 based on the closing sale price as reported on the New York Stock Exchange. Number of shares of common stock, $1 par value, outstanding as of close of business on February 26, 2008: 211,088,288 shares. DOCUMENTS INCORPORATED BY REFERENCE...

  • Page 20
    ...on Accounting and Financial Disclosure...ITEM 9A. Controls and Procedures ...ITEM 9B. Other Information ...PART III ITEM 10. Directors, Executive Officers and Corporate Governance ...ITEM 11. Executive Compensation...ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 21
    .... PART I ITEM 1. - BUSINESS General Pitney Bowes Inc. was incorporated in the state of Delaware on April 23, 1920, as the Pitney Bowes Postage Meter Company. Today, Pitney Bowes Inc. is the largest provider of mail processing equipment and integrated mail solutions in the world. In the report, the...

  • Page 22
    ... mailing equipment from other postage meter and mailing machine suppliers, and our mailing products, services and software face competition from products and services offered as alternative means of message communications. In addition, the financing business is highly competitive. Leasing companies...

  • Page 23
    ... equipment, postage, and supplies. Our ability to provide these services is largely dependent upon our continued access to the U.S. capital markets. An additional source of liquidity for the company consists of deposits held in our wholly-owned industrial loan corporation, Pitney Bowes Bank ("Bank...

  • Page 24
    ... laws and other related regulations Several of our services and financing businesses use, process and store customer information that could include confidential, personal or financial information. We also provide third party benefits administrators with access to our employees' personal information...

  • Page 25
    ... 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, contractual or other disputes with customers disputes with employees...

  • Page 26
    ... 2007 programs, we repurchased a total of 9.1 million shares for a total price of $400.0 million during 2007. The following table summarizes our share repurchase activity during the fourth quarter for the 2007 program: Total number of shares purchased as part of a publicly announced plan Approximate...

  • Page 27
    ... provided by (used in) operating activities ...Depreciation and amortization...Capital expenditures ...Balance sheet Total assets ...Long-term debt ...Total debt...Preferred stockholders' equity in subsidiary companies...Stockholders' equity ...Other Common stockholders of record...Total employees...

  • Page 28
    ... by 1 cent from net legal settlements. Our Software and Mail Services segments experienced strong results during 2007. These strong performances were offset by disappointing results in Europe, weaker performance in the legal solutions portion of our Management Services segment, and lower sales at...

  • Page 29
    ...flat. Revenue benefited from growth in supplies, payment solutions, and the sale of equipment related to shape-based rating. However, results were unfavorably impacted by lower equipment sales due to the wind-down of meter migration and weak economic conditions. International Mailing' s revenue grew...

  • Page 30
    ... impacted by lower equipment sales and rentals in Europe, and incremental costs in 2007 related to back office operations, including the outsourcing of our European order and financial processing. Production Mail EBIT increased 11% driven primarily by revenue growth and net legal recoveries of...

  • Page 31
    ... depreciation costs from placements of new digital meters. Cost of support services as a percentage of revenue increased to 56.9% in 2007 compared with 55.8% in the prior year, primarily due to an increase in mix of production mail and international mailing revenue. Cost of business services as...

  • Page 32
    ... interest accrual for uncertain tax positions of $5.8 million. In 2006, we completed the sale of our Capital Services external financing business and our Imagistics lease portfolio. See Note 2 to the Consolidated Financial Statements for further discussion and details of discontinued operations. 14

  • Page 33
    ...our advanced, high-speed Infinity metering system in the U.S., offset by lower sales in Europe. Software' s revenue grew by 16% due to sales of document composition, and address management products. Mailstream Services revenue increased 7% driven by growth in Mail Services and Marketing Services and...

  • Page 34
    ... sales of networked digital mailing systems, inserting equipment, and shipping solutions. Supplies revenue increased 14% driven by customers' migration to digital technology, price increases and the expansion through acquisition of our print management business. At December 31, 2006, digital meters...

  • Page 35
    ...associated with our meter base migration. Cost of support services as a percentage of revenue increased to 55.8% in 2006 compared with 55.3% in the prior year, primarily due to an increase in the mix of higher cost Production Mail and International Mail support services. Cost of business services as...

  • Page 36
    ... related to a revised liability estimate associated with the settlement of a previous lawsuit and net pre-tax charges of approximately $3 million in 2007 and $2 million in 2006 for other legal matters. In 2005, we contributed $10 million to the Pitney Bowes Literacy and Education Fund and the Pitney...

  • Page 37
    ... acquired. Emtex is a software and services company that allows large-volume mailers to simplify document production and centrally manage complex multi-vendor and multi-site print operations. The goodwill was assigned to the Software segment. We accounted for these acquisitions using the purchase...

  • Page 38
    ...proceeds from the sale of a training facility for $30 million, proceeds from short-term investments of $42 million, and increased reserve account balances for customer deposits of $63 million. Net cash used in financing activities was $204 million and consisted primarily of stock repurchases of $400...

  • Page 39
    ... values of leased assets, useful lives of long-lived assets and intangible assets, warranty obligations, restructuring, pensions and other postretirement benefits, contingencies and litigation, and allocation of purchase price to tangible and intangible assets acquired in business combinations. Our...

  • Page 40
    ... sales, rentals, financing and services. Certain of our transactions are consummated at the same time and can therefore generate revenue from multiple sources. The most common form of these transactions involves a non-cancelable equipment lease, a meter rental and an equipment maintenance agreement...

  • Page 41
    ... tax rate would impact income from continuing operations by approximately $7 million. Long-lived assets Useful lives of long-lived assets We depreciate property, plant and equipment and rental property and equipment principally using the straight-line method over estimated useful lives: machinery...

  • Page 42
    ... gains or losses are recorded. See the new accounting pronouncements below for the effect of SFAS No. 158, Employers' Accounting for Defined Pension and Other Post Retirement Plans an amendment of FASB Statements No. 87, 88, 106 and 132(R). Investment related risks and uncertainties We invest our...

  • Page 43
    ... 132(R) ("FAS 158"), which required recognition of the overfunded or underfunded status of pension and other postretirement benefit plans on the balance sheet. Under FAS 158, gains and losses, prior service costs and credits, and any remaining transition amounts under SFAS 87 and SFAS 106 that have...

  • Page 44
    ... of adoption provided that management had properly concluded that the errors were not material to prior periods. SAB 108 was effective for fiscal years ending after November 15, 2006. In 2006, we determined that the accounting for certain leveraged lease transactions in Canada was misstated due to...

  • Page 45
    ... of corporate owned life insurance (COLI) and related interest expense, the tax effect of the sale of certain preferred share holdings, and the tax treatment of certain Capital Services lease transactions. In the second quarter of 2006, we estimated the tax due as a result of the IRS settlement...

  • Page 46
    ... successful entry into new markets mailers' utilization of alternative means of communication or competitors' products our success at managing customer credit risk our success at managing costs associated with our strategy of outsourcing functions and operations not central to our business changes...

  • Page 47
    ...employ established policies and procedures governing the use of financial instruments to manage our exposure to such risks. We do not enter into foreign currency or interest rate transactions for speculative purposes. The gains and losses on these contracts offset changes in the value of the related...

  • Page 48
    ...Chief Financial Officer Senior Vice President and Chief Human Resources Officer Executive Vice President and President, Document Messaging Technologies Executive Vice President and President, Global Financial Services Executive Vice President and President, Pitney Bowes Management Services Executive...

  • Page 49
    ... President, Pitney Bowes Management Services. Prior to joining the Company, Mr. De Palma was with Automatic Data Processing (ADP) where he was a Corporate Officer and served as President of ADP Benefit Services. Mr. De Palma has also held senior management positions at Petroleum Heat & Power Company...

  • Page 50
    ... of Incorporation (as amended May 29, 1996) Pitney Bowes Inc. Amended and Restated By-laws (b) (4)(a) Preference Share Purchase Rights Agreement dated December 11, 1995 between the Company and Chemical Mellon Shareholder Services, LLC, as Rights Agent, as amended Certificate of amendment to the...

  • Page 51
    ... file number 1-3579) (g.1) (h) (i) (j) (k) (l) Service Agreement between Pitney Bowes Limited and Patrick S. Keddy dated January 29, 2003 Other: (m) Stock Purchase Agreement, dated as of May 16, 2006, among Pitney Bowes Inc., JCC Management LLC and Pitney Bowes Credit Corporation (for...

  • Page 52
    ...Pitney Bowes Inc. Global Medium-Term Notes Terms Agreement Incorporated by reference to Exhibit 1. d. 1. to Form 8-K as filed with the Commission on September 11, 2007. (Commission file number... Executive Officer Pursuant to 18 U.S.C. Section 1350 Certification of Chief Financial Officer Pursuant ...

  • Page 53
    ..., the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: February 29, 2008 PITNEY BOWES INC. Registrant By: /s/ Murray D. Martin (Murray D. Martin) President and Chief Executive Officer Pursuant to the requirements of the Securities...

  • Page 54
    ... FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA Report of Independent Registered Public Accounting Firm...Consolidated Financial Statements of Pitney Bowes, Inc. Consolidated Statements of Income for the Years Ended December 31, 2007, 2006 and 2005...Consolidated Balance Sheets as of December 31, 2007...

  • Page 55
    ... the manner in which it accounts for defined benefit pension and other postretirement plans effective December 31, 2006 and the manner in which it accounts for uncertainty in income taxes in 2007. A company' s internal control over financial reporting is a process designed to provide reasonable...

  • Page 56
    PITNEY BOWES INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Years ended December 31, 2006 $ 1,372,566 339,594 202,415 785,068 725,131 716,556 1,588,688 5,730,018 $ 2007 Revenue: Equipment sales ...$ Supplies...Software ...Rentals...Financing...Support services ......

  • Page 57
    PITNEY BOWES INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) December 31, 2006 2007 ASSETS Current assets: Cash and cash equivalents ...$ 377,176 Short-term investments ...63,279 Accounts receivable, less allowances of $49,324 and $50,052, respectively ...841,072 Finance ...

  • Page 58
    ... in external financing...Net proceeds from sale of Imagistics lease portfolio...Net proceeds from sale of Capital Services...Cash included in the sale of Capital Services...Advance against COLI cash surrender value ...Acquisitions, net of cash acquired...Reserve account deposits ...Net cash (used in...

  • Page 59
    ... plans ...Amortization of pension and postretirement costs...Comprehensive income...Initial adjustment for FIN 48 Cash dividends: Preferred ($2.00 per share) ...Preference ($2.12 per share) .. Common ($1.32 per share) ...Issuances of common stock...Conversions to common stock ...Stock-based...

  • Page 60
    .... Our financial services businesses base credit decisions primarily on a customer' s financial strength and we may also consider collateral values. We believe that our concentration of credit risk for finance receivables in our internal financing division is limited because of our large number of...

  • Page 61
    ... postage meter receivables billed in advance and costs paid in advance. Fixed Assets and Depreciation Property, plant and equipment and rental equipment are stated at cost and depreciated principally using the straight-line method over their estimated useful lives. The estimated useful lives...

  • Page 62
    ... cost. We use a measurement date of December 31 for all of our retirement plans. See Note 13 to the Consolidated Financial Statements for further details. Revenue Recognition We derive our revenue from the following sources equipment sales; supplies; software; rentals; financing; support services...

  • Page 63
    ... mailrooms, copy centers, or other document management functions, are typically 1 to 5 year contracts that contain a monthly service fee and in many cases a "click" charge based on the number of copies made, machines in use, etc. Revenue is recognized over the term of the agreement, based on monthly...

  • Page 64
    ...104. Fair values of any meter rental or equipment maintenance agreement are determined by reference to the prices charged in standalone and renewal transactions. Fair value of equipment is determined based upon the present value of the minimum lease payments. Costs and Expenses We have a centralized...

  • Page 65
    ... risk management policies and procedures, including the use of derivatives. The derivatives are used to manage the related cost of debt and to limit the effects of foreign exchange rate fluctuations on financial results. In our hedging program, we normally use forward contracts, interest-rate swaps...

  • Page 66
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) Interest Rate Swaps Derivatives designated as fair value hedges include interest rate swaps related to fixed rate debt. Changes in the fair value of both the derivative and hedged item ...

  • Page 67
    ... 132(R) ("FAS 158"), which required recognition of the overfunded or underfunded status of pension and other postretirement benefit plans on the balance sheet. Under FAS 158, gains and losses, prior service costs and credits, and any remaining transition amounts under SFAS 87 and SFAS 106 that have...

  • Page 68
    ...closing were used to pay our tax obligations. We reported the results of the Capital Services business in discontinued operations including an after-tax loss of $445 million from the sale of this business. We retained certain leveraged leases in Canada which are included in our International Mailing...

  • Page 69
    ... Emtex Ltd. (Emtex) for approximately $33 million in cash, net of cash acquired. Emtex is a software and services company that allows large-volume mailers to simplify document production and centrally manage complex multi-vendor and multi-site print operations. The goodwill was assigned to the...

  • Page 70
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) The following table summarizes selected financial data for the opening balance sheet allocations of the acquisitions in 2007: Asterion SAS Purchase price allocation Short-term ...

  • Page 71
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) Allocation of the purchase price to the assets acquired and liabilities assumed has not been finalized for MapInfo, Asterion SAS and Digital Cement, Inc. The purchase price allocation ...

  • Page 72
    ... respectively. Rental equipment is primarily comprised of postage meters. A pre-tax non-cash impairment charge of $61.5 million for net rental property and equipment was recorded in 2007 associated with our transitional initiatives, included in the restructuring charges and asset impairments line of...

  • Page 73
    ...by reporting segment, for the years ended December 31, 2007 and 2006 are as follows: Balance at December 31, 2006 U.S. Mailing ...$ International Mailing ...Production Mail ...Software...Mailstream Solutions ...Management Services ...Mail Services ...Marketing Services ...Mailstream Services...Total...

  • Page 74
    ...commitment fees. Reserve account deposits represent customers' prepayment of postage. Deposits are held by our subsidiary, Pitney Bowes Bank. See Note 18 to the Consolidated Financial Statements for further details. Notes payable are issued as commercial paper, loans against bank lines of credit, or...

  • Page 75
    ...notes bear interest at an annual rate of 5.75% and pay interest semi-annually beginning in March 2008. The proceeds from these notes were used for general corporate purposes, including the repayment of commercial paper, the financing of acquisitions, and repurchase of our stock. In November 2006, we...

  • Page 76
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) The items accounting for the difference between income taxes computed at the federal statutory rate and our provision for income taxes consist of the following: 2007 Continuing ...

  • Page 77
    ...2007 Deferred tax liabilities: Depreciation ...$ Deferred profit (for tax purposes) on...sales to finance subsidiaries...Lease revenue and related depreciation ...Pension...which we have operations and account for the related financial statement implications. Tax reserves have been established which we...

  • Page 78
    ... of corporate owned life insurance (COLI) and related interest expense, the tax effect of the sale of certain preferred share holdings, and the tax treatment of certain Capital Services lease transactions. In the second quarter of 2006, we estimated the tax due as a result of the IRS settlement...

  • Page 79
    ... common stock of Pitney Bowes International Holdings, Inc., representing the remaining 75% of the combined voting power of all classes of capital stock, is owned directly or indirectly by Pitney Bowes Inc. The preferred stock, $.01 par value, is entitled to cumulative dividends at rates set...

  • Page 80
    ... shows total stock-based compensation expense for stock options, restricted stock units, and employee stock purchase plans. Years Ended December 31, 2006 $ 20,412 3,363 3,600 27,375 $ 2007 Stock options ...$ Restricted stock units...Employee stock purchase plans ...Pre-tax stock-based compensation...

  • Page 81
    ...table shows stock-based compensation expense as included in the Condensed Consolidated Statements of Income: Years Ended December 31, 2006 $ 1,869 806 1,112 22,669 919 27,375 (9,308) 18,067 0.08 0.08 $ 2007 Cost of equipment sales ...$ Cost of support services...Cost of business services ...Selling...

  • Page 82
    ... share weighted average exercise price $30.11 $41.86 $47.01 $63.92 Certain employees eligible for performance-based compensation may defer up to 100% of their annual awards, subject to the terms and conditions of the Pitney Bowes Deferred Incentive Savings Plan. Participants may allocate deferred...

  • Page 83
    ... Revenue Code. The U.K. S.A.Y.E. Plan also enables eligible employees of our participating U.K. subsidiaries to purchase shares of our stock at a discounted offering price which, in 2007, was 90% of the average closing price of our common stock on the New York Stock Exchange for the three business...

  • Page 84
    ...Benefits are primarily based on employees' compensation and years of service. Our contributions are determined based on the funding requirements of U.S. federal and other governmental laws and regulations. We use a measurement date of December 31 for all of our retirement plans. U.S. employees hired...

  • Page 85
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) United States 2006 2007 Change in plan assets: Fair value of plan assets at beginning of year...$ Actual return on plan assets...Company contributions ...Plan participants' ...

  • Page 86
    ... stock included in the plan assets of our pension plans. We anticipate making contributions of up to $10 million to both our U.S. and foreign pension plans during 2008. The components of the net periodic benefit cost for defined pension plans are as follows: United States Foreign 2006 2005 2006 2007...

  • Page 87
    ... health care and life insurance benefits to eligible retirees and their dependents. The cost of these benefits is recognized over the period the employee provides credited services to the Company. Substantially all of our U.S. and Canadian employees become eligible for retiree health care benefits...

  • Page 88
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) The change in benefit obligations, plan assets and the funded status for nonpension postretirement benefit plans are as follows: December 31, 2007 Change in benefit obligation: Benefit ...

  • Page 89
    ...rate - Canada...The estimated amounts that will be amortized from AOCI into net periodic benefit cost in 2008 are as follows: Net actuarial loss ...Prior service credit...Total ...2007 5.85% 5.00% 2006 5.60% 5.00% 2005 5.75% 5.75% $ $ 2,982 (2,465) 517 The assumed health care cost trend rate used...

  • Page 90
    ...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 customers; or disputes with employees...

  • Page 91
    ..., as well as sales and service offices, equipment and other properties, generally under long-term operating lease agreements extending from 3 to 25 years. Future minimum lease payments under non-cancelable operating leases at December 31, 2007 are as follows: Years ending December 31, 2008 ...$ 2009...

  • Page 92
    ... credit solution, which enables customers to defer payment for postage when they refill their meter. PBB earns revenue through transaction fees, finance charges on outstanding balances, and other fee items. The bank' s liabilities consist primarily of PBB' s deposit solution, Reserve Account...

  • Page 93
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) Leveraged Leases Our investment in leveraged lease assets consists of the following: December 31, 2007 Rental receivables...$ 1,889,083 Unguaranteed residual values ...32,487 Principal ...

  • Page 94
    ...1,368,162 $ $ 2007 U.S. Mailing ...$ International Mailing ...Production Mail ...Software...Mailstream Solutions ...Management Services ...Mail Services ...Marketing Services ...Mailstream Services...Total...$ Geographic areas: United States...$ Outside the United States...Total...$ 2,346,431 1,069...

  • Page 95
    ..., 2006 2007 Identifiable assets: U.S. Mailing ...$ International Mailing ...Production Mail ...Software...Mailstream Solutions...Management Services...Mail Services ...Marketing Services ...Mailstream Services ...Total...$ Identifiable long-lived assets by geographic areas: United States...$ Outside...

  • Page 96
    ...quoted market prices, dealer quotes or by discounting the future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and similar remaining maturities. Long-term Debt The fair value of long-term debt is estimated based on quoted dealer...

  • Page 97
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) Interest Rate Swap Agreements and Foreign Currency Exchange Contracts The fair values of interest rate swaps and foreign currency exchange contracts are obtained from dealer quotes. ...

  • Page 98
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) Income from continuing operations ...$ Less: Preferred stock dividends...Preference stock dividends ...Basic earnings per share ...$ Basic earnings per share ...$ Effect of dilutive ...

  • Page 99
    ... (1) Gross profit is defined as total revenue less cost of equipment sales, cost of supplies, cost of software, cost of rentals, cost of support services and cost of business services. The sum of the quarters and earnings per share amounts may not equal the annual and total amounts due to rounding...

  • Page 100
    PITNEY BOWES INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE YEARS ENDED DECEMBER 31, 2005 TO 2007 (Dollars in thousands) Description Balance at Beginning of year Additions Deductions Balance at end of year Allowance for doubtful accounts 2007 ...$ 2006 ...$ 2005 ...$ 50...

  • Page 101
    ...PITNEY BOWES INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (1) (Dollars in thousands) 2007...fixed charges...Total fixed charges...$ Ratio of earnings to fixed charges...660,711 250,540 48,969 1,717 961,937 $ Years ended December 31...rental expense as the representative portion of interest. 83

  • Page 102
    .... PB Texas LP PB World Trade Corp. PBCC LP PBCC Texas LLC PBDorm Ireland Limited PCAN Mailing Solutions, Inc./Solutions D' Affranchissement PCAN Inc. Pitney Bowes (Asia Pacific) Pte. Ltd Pitney Bowes Asterion SAS Pitney Bowes Australia FAS Pty. Limited Pitney Bowes Australia Pty Limited Pitney Bowes...

  • Page 103
    ... Malaysia 85 Company name Sagent (Singapore) Pte Ltd. Sales and Service Training Center Inc. SCI François Gillet SCI Méditerranée Secap (Groupe Pitney Bowes) SAS Secap Technologies Limited Southbank Systems Australia Pty Ltd Technopli SARL The Pitney Bowes Bank, Inc. Time-Sensitive Delivery...

  • Page 104
    ... of Pitney Bowes Inc. of our report dated February 29, 2008 relating to the financial statements, financial statement schedule, and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Stamford...

  • Page 105
    ...summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 29, 2008 /s/ Murray D. Martin Murray D. Martin President and...

  • Page 106
    ...ACT OF 2002 I, Bruce P. Nolop, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K of Pitney Bowes Inc.; Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light...

  • Page 107
    ... of Section 13(a) or 15(d) of the Exchange Act; and The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Murray D. Martin Murray D. Martin President and Chief Executive Officer February 29, 2008 89

  • Page 108
    ... with the Annual Report of Pitney Bowes Inc. (the "Company") on Form 10-K for the year ended December 31, 2007 as filed with... of the United States Code. I, Bruce P. Nolop, Chief Financial Officer of the Company, certify that, to the best of my knowledge: (1) The Report fully complies with the...

  • Page 109
    ... | Pick the best location for my next retail store | Track incoming mail and packages | Give my international mail a local look and feel | Protect my corporate brand | Manage multi-carrier shipping | Cleanse my address database | Merge multiple databases | Get purchasing power for all my mailstream...

  • Page 110
    Pitney Bowes Inc. World Headquarters 1 Elmcroft Road Stamford, CT 06926-0700 (203) 356-5000 www.pb.com