Pitney Bowes 2007 Annual Report Download - page 17

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Reconciliation
of Reported
Consolidated
Results to
Adjusted Results
For the year 2007 2006 2005
(Dollars in thousands, except per share amounts)
GAAP income from continuing operations
before income taxes and minority interest,
as reported $660,711 $914,490 $811,668
Restructuring and asset impairments 264,013 35,999 53,650
MapInfo purchase accounting 16,926 – –
Other income and expense 2,956 (3,022) –
Legal settlements, net (380) – –
Contributions to charitable foundations – – 10,000
Income from continuing operations
before income taxes, as adjusted 944,226 947,467 875,318
Provision for income taxes, as adjusted 323,870 326,875 293,999
Minority interest 19,242 13,827 9,828
Income from continuing operations, as adjusted 601,114 606,765 571,491
Interest expense, net 241,871 212,596 187,876
Provision for income taxes, as adjusted 323,870 326,875 293,999
Minority interest 19,242 13,827 9,828
EBIT $1,186,097 $1,160,063 $1,063,194
GAAP diluted earnings per share, as reported $1.66 $0.47 $2.19
Loss (income) from discontinued operations (0.03) 2.04 (0.15)
GAAP diluted earnings per share from continuing
operations, as reported 1.63 2.51 2.04
Restructuring and asset impairments 0.87 0.10 0.16
Tax adjustments 0.16 – 0.24
MapInfo purchase accounting 0.05 – –
Tax settlement – 0.09 –
Other income – (0.01) –
Contributions to charitable foundations – – 0.03
Diluted earnings per share from continuing
operations, as adjusted $2.72 $2.69 $2.46
GAAP net cash provided by (used in) operating
activities, as reported $1,060,465 $(286,574) $530,441
Capital expenditures (264,656) (327,877) (291,550)
Free cash fl ow 795,809 (614,451) 238,891
Reserve account deposits 62,666 28,780 9,800
Payments related to restructuring charges 31,568 51,566 88,544
Proceeds from sale of training facility 29,608 – –
Discontinued operations 4,263 16,844 (81,216)
Pension plan contribution – – 76,508
Contributions to charitable foundations – –
10,000
IRS / Capital Services tax payment – 1,040,700 –
IRS bond payment – – 200,000
Free cash fl ow, as adjusted $923,914 $523,439 $542,527
The sum of the earnings per share amounts may not equal the totals above due to rounding.
Management believes this presentation provides a reasonable basis on which to present the adjusted fi nancial
information. The Company’s fi nancial results are reported in accordance with generally accepted accounting
principles (GAAP). The earnings per share and free cash fl ow results are adjusted to exclude the impact of special
items such as restructuring charges and write-downs of assets, which materially impact the comparability of the
Company’s results of operations. The use of free cash fl ow has limitations. GAAP cash fl ow has the advantage of
including all cash available to the Company after actual expenditures for all purposes. Free cash fl ow is the amount
of cash that management could have available for discretionary uses if it made different decisions about employing
its cash. It adds back long-term commitments such as capital expenditures and pension plan contributions, as well
as special items such as charitable contributions and cash used for restructuring charges. All of these items use
cash that is not otherwise available to the Company and are important expenditures. Management compensates for
these limitations by using a combination of GAAP cash fl ow and free cash fl ow in doing its planning.
The adjusted fi nancial information and certain fi nancial measures such as EBIT and EBIT to interest are intended
to be more indicative of the ongoing operations and economic results of the Company. EBIT excludes interest
and taxes, and as a result has the effect of showing a greater amount of earnings than net income. The Company
believes that interest and taxes, though important, do not refl ect management effectiveness as these items are
largely outside of their control. In assessing performance, the Company uses both EBIT and net income.
This adjusted fi nancial information should not be construed as an alternative to our reported results determined
in accordance with GAAP. Further, our defi nition of this adjusted fi nancial information may differ from similarly
titled measures used by other companies.
PITNEY BOWES ANNUAL REPORT 2007 15