Pitney Bowes 2007 Annual Report Download - page 15

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We enjoyed remarkable success
in generating free cash fl ow—a
total of $924 million, which was
154 percent of our adjusted net
income for the year and exceeded
the $550–$625 million projected
at the beginning of the year.
We have launched a series of
transition initiatives to reduce
costs, accelerate improvements
in operational effi ciencies, and
position our product line for the
current and future regulatory
environment.
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, especially the unsettled conditions in the fi nancial
services sector.
Despite our disappointing earnings, we enjoyed remarkable success
in generating free cash fl ow—a total of $924 million, which was
154 percent of our adjusted net income for the year and exceeded
the $550–$625 million projected at the beginning of the year.
The substantial increase in free cash fl ow was the result of our
increased emphasis on cash fl ow management, including the optimi-
zation of working capital requirements and worldwide tax deferrals,
as well as lower growth in fi nance receivables and reduced capital
expenditures for rental assets.
Our free cash fl ow enabled us to pay $289 million in dividends to
shareholders, repurchase $400 million of stock, and make 18 acqui-
sitions for a net investment of $583 million. Our strong cash fl ow
also was an important factor in our decision to increase the quarterly
dividend rate to $0.35, the 26th consecutive annual increase. In
addition, we are maintaining an active share repurchase program,
with $407 million of authorization available at the start of 2008.
As we look ahead, we expect to achieve a stronger earnings perfor-
mance in 2008, especially in the second half of the year. We are
re doubling our efforts to enhance our competitiveness in all aspects
of our business, while continually working to improve how we interact
with our customers. We should see improving year-over-year compari-
sons in our business segments, and we expect to realize benefi ts from
our transition initiatives and lower interest rates.
We remain resolutely committed to delivering double-digit returns
to our shareholders through an attractive dividend yield and steadily
increasing earnings per share. We believe that our long-term strategies
and our recent actions have positioned the company to meet this
expectation for the foreseeable future.
Michael Monahan EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
PITNEY BOWES ANNUAL REPORT 2007 13