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ANNUAL REPORT 2008
Smart Secure

Table of contents

  • Page 1
    Smart Secure ANNUAL REPORT 2008

  • Page 2
    03 08 13 14 15 16 17 IBC Letter to Shareholders Creating Value for Our Customers Financial Highlights from Our CFO Summary of Selected Financial Data Reconciliation of Reported Consolidated Results to Adjusted Results Directors and Corporate Officers Form 10-K Stockholder Information

  • Page 3
    ... a time of global economic uncertainty, what should a company be? For Pitney Bowes, the answer starts with smart and secure. If you're a customer, you want smart, secure solutions that help you seize opportunities with a minimum of cost and risk. If you're an investor, you want smart management and...

  • Page 4
    Murray D. Martin Chairman, President and Chief Executive Officer 02

  • Page 5
    ..., whether global or local, all in the cause of greater efficiency and growth. This report highlights several examples of our ability to turn our expertise in funds management, secure transactions, document management and outsourcing services into breakthrough business solutions for customers...

  • Page 6
    ... work by establishing a new customer operations group to ensure that we stay on top of changing customer needs and expectations and incorporate them into our day-to-day business processes. Pitney Bowes is an innovation-driven company. In addition to a significant annual investment in research and...

  • Page 7
    ... senior leadership team to good governance shows in our seamless and successful executive transitions. This year we faced a momentous change with the retirement of Executive Chairman Michael J. Critelli after a distinguished career at this great company. Through 29 years with Pitney Bowes, including...

  • Page 8
    Innovation Vision Insight Strategy Global Growth Creativity Knowledge Prospect Physical

  • Page 9
    Application Focus Action Execution Local Productivity Discipline Experience Customer Digital

  • Page 10
    ... images a year. Using our presort service, Broadridge earns discounts on U.S. postage, while our international mail services save the company time and money through direct global shipment. Add our ultra-high-speed inserters working at 22,000 pieces per hour, and it's an end-to-end solution...

  • Page 11
    ..., time, rates and costs. Public/private partnership By merging six print/copy/mail centers into one and hiring Pitney Bowes to run it, the state of Indiana is saving millions a year. To make it happen, we reconfigured operations and brought in new technology. Bridging physical and digital to...

  • Page 12
    ... right people at the right time. We're experts in areas ranging from data encryption to the physics of paper. We manage more than $20 billion a year in postage funds. We digitize everything from messy handwriting to the demographic nuggets buried inside addresses. We transform simple envelopes into...

  • Page 13
    ... the world had to manually process fees paid for passports, visas and other official documents using paper revenue stamps and hand cancellation. Pitney Bowes has streamlined these transactions with a new digital revenue metering system that integrates payment, authentication and funds management...

  • Page 14
    ... the United States. We give domestic and international shoppers a common online experience, instantly calculating end-to-end costs in the buyer's local currency. And with the new international package solution from our Mail Services business, we expedite delivery, getting purchases through customs...

  • Page 15
    ... in the production mail, U.S. management services, international mailing and marketing services businesses. Although annual results were lower in U.S. mailing, we saw good equipment sales growth in the fourth quarter as more leases became available for renewal. At the end of 2007 we announced our...

  • Page 16
    ... return and deliver sustained value in 2009 and beyond. Michael Monahan Executive Vice President and Chief Financial Officer Summary of Selected Financial Data For the year (Dollars in thousands, except per share amounts) 2008 2007 2006 As Reported Revenue Income from continuing operations...

  • Page 17
    ... activities, as reported Capital expenditures Free cash ï¬,ow Payments related to restructuring charges Reserve account deposits Discontinued operations Loss on redemption of preferred stock issued by a subsidiary Proceeds from sale of training facility IRS / Capital Services tax payment Free cash...

  • Page 18
    ... 2009 Leslie Abi-Karam Executive Vice President and President, Mailing Solutions Management Gregory E. Buoncontri Executive Vice President and Chief Information Officer Stockholders may visit the Pitney Bowes corporate governance Web site at www.pb.com/ under Our Company - Leadership + Governance...

  • Page 19
    ... fiscal year ended December 31, 2008 Commission file number: 1-3579 PITNEY BOWES INC. Incorporated in Delaware 1 Elmcroft Road, Stamford, Connecticut 06926-0700 (203) 356-5000 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Common Stock, $1 par value per share $2.12...

  • Page 20

  • Page 21
    ..., Executive Officers and Corporate Governance ...Executive Compensation ...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters...Certain Relationships, Related Transactions and Director Independence ...Principal Accountant Fees and Services...PART IV...

  • Page 22
    ... of mail processing equipment and integrated mail solutions in the world. In the report, the terms "we," "us," "our," or "Company" are used to refer collectively to Pitney Bowes Inc. and its subsidiaries. We offer a full suite of equipment, supplies, software and services for end-to-end mailstream...

  • Page 23
    ... 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. Leasing companies, commercial finance companies, commercial banks and other financial...

  • Page 24
    ...business practices involving our postage meters. From time to time, we will work with these governing bodies to help in the enhancement and growth of mail and the mail channel. See "Legal and Regulatory Matters" in Management's Discussion and Analysis of Financial Condition and Results of Operations...

  • Page 25
    ... 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 26
    ... FOR THE COMPANY'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Pitney Bowes common stock is traded under the symbol "PBI". The principal market is the New York Stock Exchange (NYSE). Our stock is also traded on the Boston, Chicago, Philadelphia, Pacific and...

  • Page 27
    ...2007 0.33 0.33 0.33 0.33 1.32 $ $ Quarterly price ranges of common stock as reported on the NYSE: 2008 Quarter First Second Third Fourth Share Repurchases We repurchase shares of our common stock under a systematic program to manage the dilution created by shares issued under employee stock plans...

  • Page 28
    ... Systems, Inc., Fedex Corporation, Hewlett-Packard Company, Ikon Office Solutions, Inc. (acquired by Ricoh Company, Ltd. on November 3, 2008), Lexmark International, Inc., Pitney Bowes Inc., United Parcel Service, Inc., and Xerox Corporation. Total return for the Peer Group and the S&P 500 Composite...

  • Page 29
    ... thereto included under Item 8 of this Form 10-K. Summary of Selected Financial Data (Dollars in thousands, except per share amounts) 2008 6,262,305 5,549,128 713,177 244,929 20,755 447,493 (27,700) 419,793 Years ended December 31, 2007 2006 2005 6,129,795 $ 5,730,018 $ 5,366,936 5,469,084 4,815...

  • Page 30
    ...related primarily to deferred tax assets associated with certain U.S. leasing transactions. In 2007, diluted earnings per share from continuing operations was also reduced by 5 cents for the purchase accounting alignment of MapInfo, and 16 cents for tax adjustments related principally to a valuation...

  • Page 31
    .... Revenue growth benefited from strong growth in France, Germany, Norway and other parts of Europe as well as in Latin America; and continued growth in supplies. Worldwide revenue for Production Mail decreased 1% due to lower equipment sales in the U.S., parts of Europe and Latin America as economic...

  • Page 32
    ... registration services program. Revenue by source (Dollars in millions) Equipment sales Supplies Software Rentals Financing Support services Business services Total revenue $ $ 2008 1,252 392 424 728 773 769 1,924 6,262 $ $ 2007 1,336 393 346 739 790 761 1,765 6,130 % change (6)% -% 23...

  • Page 33
    ... offset by lower transaction volumes in Management Services. Costs of revenue (Dollars in millions) 2008 Cost of equipment sales Cost of supplies Cost of software Cost of rentals Cost of support services Cost of business services 663 104 101 154 448 1,508 $ $ $ $ $ $ 2007 697 107 82 171 433 1,381...

  • Page 34
    ...Preferred Stock issued previously by a subsidiary company for $10 million. This redemption resulted in a net loss of $1.8 million accounting for the year over year increase. Discontinued operations (Dollars in millions) 2008 Revenue Pretax income Net income Total discontinued operations, net of tax...

  • Page 35
    ... 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 36
    ... vehicle registration services program. Revenue by source (Dollars in millions) Equipment sales Supplies Software Rentals Financing Support services Business services Total revenue $ $ 2007 1,336 393 346 739 790 761 1,765 6,130 $ $ 2006 1,373 340 202 785 725 717 1,588 5,730 % change (3)% 16...

  • Page 37
    ... of revenue (Dollars in millions) 2007 Cost of equipment sales Cost of supplies Cost of software Cost of rentals Cost of support services Cost of business services 697 107 82 171 433 1,381 $ $ $ $ $ $ 2006 694 90 43 171 400 1,242 Percentage of Revenue 2006 2007 50.5% 52.2% 26.5% 27.1% 21.3% 23...

  • Page 38
    ... (Dollars in millions) 2007 Revenue Pretax income Net income Gain on sale of Imagistics, net of $7 tax expense FSC tax law change Additional tax on IRS settlement Loss on sale of Capital Services, net of $285 tax benefit Total discontinued operations, net of tax $ $ $ 6 6 $ $ $ 2006 81 29 31...

  • Page 39
    ... the Management Services segment. On May 31, 2007, we acquired the remaining shares of Digital Cement, Inc. for a total purchase price of $52 million in cash, net of cash acquired. Digital Cement, Inc. provides marketing management strategy and services to help companies acquire, retain, manage, 20

  • Page 40
    ... uses of cash include but are not limited to the following: growth and expansion opportunities; internal investments; customer financing; tax payments; interest and dividend payments; share repurchase program; pension and other benefit plan funding; and acquisitions. In light of recent market...

  • Page 41
    ..., in 2007. The decrease in property, plant and equipment is due mostly to the continuing shift toward leased equipment in our Management Services segment. Financings and Capitalization We have a commercial paper program that is a significant source of liquidity for the Company. During 2008, we...

  • Page 42
    ... limited to, customer cancellations, bad debts, inventory obsolescence, residual 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...

  • Page 43
    ... customer's financial strength. We believe that our concentration of credit risk for finance receivables in our internal financing division is limited because of our large number of customers, small account balances and customer geographic and industry diversification. Our general policy for finance...

  • Page 44
    ... interest, a 1% change in our effective 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...

  • Page 45
    ... our strategic asset allocation policy. The composition of our U.S. pension plan assets at December 31, 2008 was approximately 50% equity securities, 39% fixed income securities, 7% real estate investments and 4% private equity investments. The composition of our U.K. pension plan assets at December...

  • Page 46
    ... of FSP 157-3. See Note 19 to the Consolidated Financial Statements for additional discussion on fair value measurements. In September 2006, the FASB issued SFAS No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans an amendment of FASB Statements No. 87, 88, 106...

  • Page 47
    ... that SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The FSP is effective for reporting periods ending after November 15, 2008. The Company does not sell credit derivatives. The Company has complied with the additional...

  • Page 48
    ... worldwide economies and the way companies operate. It increases labor costs and operating expenses, and raises costs associated with replacement of fixed assets such as rental equipment. Despite these growing costs and the USPS meter migration initiatives, we have generally been able to maintain...

  • Page 49
    ... 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 in interest rates foreign currency fluctuations cost, timing and execution of our transition plans including any...

  • Page 50
    ... and procedures were effective as of December 31, 2008. Management's Report on Internal Control Over Financial Reporting Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the...

  • Page 51
    ... 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 52
    ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS EQUITY COMPENSATION PLAN INFORMATION TABLE The following table provides information as of December 31, 2008 regarding the number of shares of the Company's common stock that may be issued under ...

  • Page 53
    ... amendment to the Preference Share Purchase Rights Agreement dated December 11, 1995 between the Company and Chemical Mellon Shareholder Services, LLC, as Rights Agent, as amended December 8, 1998 Form of Indenture between the Company and SunTrust Bank, as Trustee Supplemental Indenture No. 1 dated...

  • Page 54
    ... April 15, 2008. (Commission file number 1-3579) (h) (i) (j) Form of Equity Compensation Grant Letter (k) Service Agreement between Pitney Bowes Limited and Patrick S. Keddy dated January 29, 2003 Separation Agreement and General Release dated April 14, 2008 by and between Pitney Bowes Inc. and...

  • Page 55
    ... and Restated Credit Agreement dated May 19, 2006 between the Company and JPMorgan Chase Bank, N.A., as Administrative Agent Computation of ratio of earnings to fixed charges Subsidiaries of the registrant Consent of experts and counsel Certification of Chief Executive Officer Pursuant to Rules 13a...

  • Page 56
    ...Snow, Jr. David B. Snow, Jr. /s/ Robert E. Weissman Robert E. Weissman Title Chairman, President and Chief Executive Officer - Director Executive Vice President and Chief Financial Officer (Principal Financial Officer) Vice President-Finance and Chief Accounting Officer (Principal Accounting Officer...

  • Page 57
    ... 44 89 Report of Independent Registered Public Accounting Firm ...Consolidated Financial Statements of Pitney Bowes, Inc. Consolidated Statements of Income for the Years Ended December 31, 2008, 2007 and 2006 ...Consolidated Balance Sheets as of December 31, 2008 and 2007...Consolidated Statements...

  • Page 58
    ... financial statements, the Company changed 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...

  • Page 59
    PITNEY BOWES INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) Years ended December 31, 2007 $ 1,335,538 393,478 346,020 739,130 790,121 760,915 1,764,593 6,129,795 $ 2008 Revenue: Equipment sales Supplies Software Rentals Financing Support services Business services ...

  • Page 60
    PITNEY BOWES INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) December 31, 2008 ASSETS Current assets: Cash and cash equivalents Short-term investments Accounts receivables, gross Allowance for doubtful accounts receivables Accounts receivables, net Finance receivables ...

  • Page 61
    ... 31, 2007 419,793 144,211 (102,680) 43,991 1,777 $ 366,781 (1,623) 223,486 (31,568) $ 2008 Cash flows from operating activities: Net income Gain on sale of a facility, net of tax Net gain on sale of businesses, net of tax Non-cash expense from FSC tax law change Non-cash expense related to IRS...

  • Page 62
    ... compensation Repurchase of common stock Balance, December 31, 2007 Net income Other comprehensive income, net of tax: Foreign currency translations Net unrealized loss on derivative instruments Net unrealized gain on on investment securities Net unamortized loss on pension and postretirement plans...

  • Page 63
    ... are a provider of global, integrated mail and document management solutions for organizations of all sizes. We operate in two business groups: Mailstream Solutions and Mailstream Services. We operate both inside and outside the United States. See Note 18 to the Consolidated Financial Statements for...

  • Page 64
    ..., at December 31, 2008 and 2007. 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 of depreciable fixed assets are as follows...

  • Page 65
    ... previously recognized credits to paid-in-capital are still available if the tax deduction is less than the deferred tax asset). Revenue Recognition We derive our revenue from the following sources equipment sales; supplies; software; rentals; financing; support services; and business services. 46

  • Page 66
    ... to our customers, primarily postage meters and mailing equipment, under short-term rental agreements, generally for periods of 3 months to 5 years. Rental revenue includes revenue from the subscription for digital meter services. We invoice in advance for postage meter rentals. We defer the billed...

  • Page 67
    ... over the term of the agreement as the services are provided. Multiple Element Arrangements Certain of our transactions are consummated at the same time. The most common form of these transactions involves the sale or lease of equipment, a meter rental and/or an equipment maintenance agreement. In...

  • Page 68
    .... The company limits these risks by following established 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...

  • Page 69
    ... of FSP 157-3. See Note 19 to the Consolidated Financial Statements for additional discussion on fair value measurements. In September 2006, the FASB issued SFAS No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans an amendment of FASB Statements No. 87, 88, 106...

  • Page 70
    ...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 segment. In...

  • Page 71
    ... the Management Services segment. On May 31, 2007, we acquired the remaining shares of Digital Cement, Inc. for a total purchase price of $52 million in cash, net of cash acquired. Digital Cement, Inc. provides marketing management strategy and services to help companies acquire, retain, manage, and...

  • Page 72
    ... software and technology Trademarks and trade names Non-compete agreements Total weighted average $ 42 12,617 7,942 24,962 (4,063) (2,994) 38,506 $ 2007 Digital Cement, Inc. $ 2,146 932 6,600 42,583 (213) 52,048 Asterion SAS 52,309 31,303 8,285 25,555 (58,286) (30,345) 28,821 MapInfo Corporation...

  • Page 73
    ...$311.2 million for the years ended December 31, 2008, 2007, and 2006, 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 transition initiative in...

  • Page 74
    ..., except per share data) 6. Intangible Assets and Goodwill The components of our purchased intangible assets are as follows: December 31, 2008 Gross Carrying Amount Customer relationships $ Supplier relationships Mailing software & technology Trademarks and trade names Non-compete agreements $ 423...

  • Page 75
    ...of goodwill, by reporting segment, for the years ended December 31, 2008 and 2007 are as follows: Balance at December 31, 2007 (1) U.S. Mailing International Mailing Production Mail Software Mailstream Solutions Management Services Mail Services Marketing Services Mailstream Services Total $ 131,807...

  • Page 76
    ...commitment fees. Reserve account deposits represent customers' prepayment of postage. Deposits are held by our subsidiary, Pitney Bowes Bank. See Note 17 to the Consolidated Financial Statements for further details. Notes payable are issued as commercial paper, loans against bank lines of credit, or...

  • Page 77
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) 8. Long-term Debt December 31, 2007 2008 Recourse debt 8.55% notes due 2009 (1) 5.32% credit facility due 2012 4.63% notes due 2012 3.88% notes due 2013 4.88% notes due 2014 5.00% ...

  • Page 78
    ...In June 2008, we filed a "Well-known Seasoned Issuer" registration statement with the SEC which permits the issuance of debt securities, preferred stock, preference stock, common stock, purchase contracts, depositary shares, warrants and units. The annual maturities of the outstanding long-term debt...

  • Page 79
    ... 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: 2008 Continuing operations: Federal statutory provision Life insurance tax reserve, federal and state State and local...

  • Page 80
    ... sales to finance subsidiaries Lease revenue and related depreciation Pension Amortizable intangibles Other Deferred tax liabilities Deferred tax (assets): Nonpension postretirement benefits Pension Inventory and equipment capitalization Restructuring charges Long-term incentives Net operating loss...

  • Page 81
    ... at December 31, 2008 and December 31, 2007, respectively. Other Tax Matters We regularly assess the likelihood of tax adjustments in each of the tax jurisdictions in which we have operations and account for the related financial statement implications. Tax reserves have been established which...

  • Page 82
    ... restricted stock units previously granted to our employees. This write-off of deferred tax assets will not increase the amount of tax to be paid. 10. Preferred Stockholders' Equity in Subsidiary Companies Pitney Bowes International Holdings, Inc., a subsidiary of the Company, has 3,750,000 shares...

  • Page 83
    ... adoption of FAS 158 in 2006. 12. Stock Plans Effective January 1, 2006, we adopted the provisions of SFAS No. 123(R). SFAS No. 123(R) established accounting for stock-based awards exchanged for employee services. Accordingly, stock-based compensation cost is measured at the grant date, based on...

  • Page 84
    ...277) 15,854 0.07 0.07 $ 2008 Cost of equipment sales Cost of support services Cost of business services Selling, general and administrative Research and development Pre-tax stock-based compensation Income tax Stock-based compensation expense, net Basic earnings per share impact Diluted earnings per...

  • Page 85
    ... U.K. Employee Stock Purchase Plans (ESPP), and the Directors' Stock Plan. Stock Options Under our stock plan, certain officers and employees are granted options at prices equal to the market value of our common shares at the date of grant. Options granted in 2004 and prior thereto generally became...

  • Page 86
    ... years 0.1 years Per share weighted average exercise price $30.22 $40.33 $46.91 $64.00 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...

  • Page 87
    ... 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 2008, was 90% of the average closing price of our common stock on the New York Stock Exchange for the three business...

  • Page 88
    ... plans in 2008, 2007 and 2006, respectively. Defined Benefit Pension Plans The change in benefit obligations, plan assets and the funded status for defined benefit pension plans are as follows: United States 2007 2008 Change in benefit obligation: Benefit obligation at beginning of year Service cost...

  • Page 89
    ... Balance Sheets: Non-current asset Current liability Non-current liability Net amount recognized Pre-tax amounts recognized in accumulated other comprehensive income ("AOCI") consist of: Net actuarial loss Prior service cost/(credit) Transition obligation (asset) Total United States 2007 2008...

  • Page 90
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) The components of the net periodic benefit cost for defined pension plans are as follows: United States 2007 2008 28,500 $ 29,699 $ 94,173 96,205 (127,070) (132,748) (2,116) (2,560) 29,...

  • Page 91
    ... 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 92
    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 $ 261,720 3,529 13,904 7,951 (4,839) (...

  • Page 93
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) The components of the net periodic benefit cost for nonpension postretirement benefit plans are as follows: 2008 Service cost Interest cost Amortization of prior service benefit ...

  • Page 94
    ... million and $5.8 million in 2008 and 2007, respectively, relate primarily to lease termination fees, facility closing costs, contract cancellation costs and outplacement costs. As of December 31, 2008, 1,926 terminations have occurred under the restructuring program and approximately 300 additional...

  • Page 95
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) The pre-tax restructuring charges and asset impairments are composed of: Balance at December 31, 2007 Severance and benefit costs Asset impairments Other exit costs Total $ 81,251 5,795...

  • Page 96
    ... warranty liability at December 31, 2008 and 2007, respectively, was not material. 16. Leases In addition to factory and office facilities owned, we lease similar properties, as well as sales and service offices, equipment and other properties, generally under long-term operating lease agreements...

  • Page 97
    ... 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 fees for services. The bank's liabilities consist primarily of PBB's deposit solution, Reserve Account...

  • Page 98
    ... are those used in our operations and exclude cash and cash equivalents, short-term investments and general corporate assets. Long-lived assets exclude finance receivables and investment in leveraged leases. As a result of certain organizational changes made during 2008, we have reclassified certain...

  • Page 99
    ...,715 1,177,920 201,795 1,379,715 $ $ 2008 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 $ 2,206,856 1,133,652 616,255 399...

  • Page 100
    ...31, 2007 2008 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 the United States Total $ 3,012...

  • Page 101
    ... BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) Reconciliation of Segment Amounts to Consolidated Totals: Years ended December 31, 2007 $ 1,379,715 (241,871) (210,544) (264,013) (2,576) $ 660,711 $ $ 2008 EBIT: Total EBIT for reportable...

  • Page 102
    ...the fair value hierarchy: â- Money Market Funds: Money market funds typically invest in government securities, certificates of deposit, commercial paper of companies and other highly liquid and low-risk securities. Money market funds are principally used for overnight deposits and are classified in...

  • Page 103
    ...The majority of our mortgage-backed securities are either guaranteed or supported by the U.S. government. The recent market events have not caused our money market funds to experience declines in their net asset value below $1.00 dollar per share or to incur imposed limits on redemptions. We have no...

  • Page 104
    ...period that the change in fair value occurs and is reclassified to income in the same period that the hedged item is recorded in income. We had no outstanding contracts at December 31, 2008 and 2007. Certain foreign currency derivatives have been entered into to manage foreign currency transactional...

  • Page 105
    ... ended December 31, 2008, 2007 and 2006 is as follows: Income 447,493 (77) 447,416 447,416 77 447,493 2008 Shares Per Share Income from continuing operations Less: Preferred stock dividends Preference stock dividends Basic earnings per share Basic earnings per share Effect of dilutive securities...

  • Page 106
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) 2007 Shares Income from continuing operations Less: Preferred stock dividends Preference stock dividends Basic earnings per share Basic earnings per share Effect of dilutive securities...

  • Page 107
    ...) per share $ (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. (2) The sum of the quarters and earnings per share amounts may not equal the annual and total amounts...

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    PITNEY BOWES INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE YEARS ENDED DECEMBER 31, 2006 TO 2008 (Dollars in thousands) Description Balance at beginning of year Additions Deductions Balance at end of year Allowance for doubtful accounts 2008 $ 2007 $ 2006 $ 49,324 50,...

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    EXHIBIT (iv) PITNEY BOWES INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (1) (Dollars in thousands) 2008 Income from continuing operations before income taxes and minority interest Add: Interest expense Portion of rents representative of the interest factor Amortization of capitalized ...

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    ... LP PB Partnership Financing Inc. PB Professional Services Inc. 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...

  • Page 111
    ... S.r.l. Pitney Bowes Management Services Limited Pitney Bowes Management Services Netherlands, B.V. Pitney Bowes Management Services Norway A.S. Pitney Bowes Management Services Sweden AB Pitney Bowes Management Services, Inc. Pitney Bowes MapInfo Australia Pty Ltd Pitney Bowes MapInfo Business...

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    ... PUBLIC ACCOUNTING FIRM ...Pitney Bowes Inc. of our report dated February 26, 2009 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. PricewaterhouseCoopers LLP Stamford, Connecticut...

  • Page 113
    ... (31.1) CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I, Murray D. Martin, 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...

  • Page 114
    ... respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in...

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    ... with the Annual Report of Pitney Bowes Inc. (the "Company") on Form 10-K for the year ended December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act...

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    ... with the Annual Report of Pitney Bowes Inc. (the "Company") on Form 10-K for the year ended December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act...

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    ... on the Chicago, Philadelphia, Boston, Pacific and Cincinnati stock exchanges. Investor Inquiries All investor inquiries about Pitney Bowes should be addressed to: MSC 00-63-02 Investor Relations Pitney Bowes Inc. 1 Elmcroft Road, Stamford, CT 06926-0700 Comments concerning the Annual Report should...

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    Pitney Bowes Inc. World Headquarters 1 Elmcroft Road Stamford, CT 06926-0700 203.356.5000 www.pb.com