Pitney Bowes 2008 Annual Report Download - page 36

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17
The following table shows EBIT in 2007 and 2006 by business segment.
Results have been reclassified to conform to the current year presentation. Refer to Note 18 to the Consolidated Financial Statements
for further detail on these changes.
(Dollars in millions) 2007 2006 % change
EBIT
U.S. Mailing $ 965 $ 950 2 %
International Mailing 162 179 (10)%
Production Mail 74 69 9 %
Software 37 30 22 %
Mailstream Solutions 1,238 1,228 1 %
Management Services 76 83 (9)%
Mail Services 57 37 53 %
Marketing Services 9 20 (55)%
Mailstream Services 142 140 1 %
Total EBIT $ 1,380 $ 1,368 1 %
Mailstream Solutions EBIT increased 1% to $1.2 billion. Within Mailstream Solutions:
U.S. Mailing’s EBIT grew 2% due to the increase in mix of higher margin revenue from payment solutions and supplies as well as our
continued focus on controlling operating expenses. International Mailing EBIT decreased 10%. The segment’s profitability was
adversely 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 9% driven primarily by
revenue growth and net legal recoveries of approximately $4 million in Europe. Software EBIT increased 22%, driven by revenue
growth partially offset by integration costs for the MapInfo acquisition.
Mailstream Services EBIT increased 1% to $142 million. Within Mailstream Services:
Management Services EBIT decreased 9% due to continued weakness in our legal solutions vertical. Mail Services EBIT grew by
53% driven by revenue growth, successful integration of acquired sites, and increased operating efficiencies. Marketing Services
EBIT decreased 55%, principally due to lower revenue in our motor vehicle registration services program.
Revenue by source
(Dollars in millions) 2007 2006 % change
Equipment sales $ 1,336 $ 1,373 (3)%
Supplies 393 340 16 %
Software 346 202 71 %
Rentals 739 785 (6)%
Financing 790 725 9 %
Support services 761 717 6 %
Business services 1,765 1,588 11 %
Total revenue $ 6,130 $ 5,730 7 %
Equipment sales revenue decreased 3% from the prior year, primarily due to lower sales of mailing equipment in the U.S. and Europe,
partially offset by favorable foreign currency translation of 3%.
Supplies revenue increased 16% from the prior year due to the continued transition of our meter base to digital technology.
Acquisitions and foreign currency translation contributed 4% and 3% to this growth, respectively.
Software revenue increased 71% from the prior year primarily driven by strong worldwide demand for our software solutions,
acquisitions which contributed 50%, and currency translation which contributed 4%.
Rentals revenue decreased 6% from the prior year due to the continued downsizing by customers to smaller machines.