Pitney Bowes 2009 Annual Report Download

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Annual Report 2009
Every
connection
is a new
opportunity™

Table of contents

  • Page 1
    Every connection is a new opportunity â„¢ Annual Report 2009

  • Page 2
    ... Financial Data 15 Reconciliation of Reported Consolidated Results to Adjusted Results 16 Directors and Corporate Officers 17 Form 10-K IBC Stockholder Information 2 6 On the cover: Pitney Bowes is helping businesses connect with their customers and prospects in more ways than ever - the mail...

  • Page 3
    ... is ready. Pitney Bowes is a world leader in helping companies connect with customers. We are opening markets, speeding transactions and revolutionizing business communications. By doing so, we're creating new opportunities for our customers and ourselves. From mail solutions to multichannel...

  • Page 4
    ... growth." Murray D. Martin Chairman, President and Chief Executive Officer Fellow Shareholders: Our company was solidly profitable in 2009, underscoring the strength of our business model and our ability to manage through worldwide economic uncertainty and pressures within our own industry. While...

  • Page 5
    ... and new services. Some of the biggest names in online retailing use our e-commerce solutions to reach international customers, and this year we added 50 countries to our network. A growing number of corporate, university and retail customers have been purchasing our self-service mail-and-shipping...

  • Page 6
    ... the benefits of cloud computing to small businesses with another new product, our AddressRightNowâ„¢ online list management service. AddressRightNow is a new "software-as-a-service" (SaaS) offering that helps ensure that mailings reach the right people by incorporating address changes in real time...

  • Page 7
    ...into a new imaging-and-workflow solution to help companies reduce paper volumes and improve productivity. We have also taken collaboration beyond product development. A new distribution agreement with Digital China will bring our mailing solutions and software systems to small and midsize businesses...

  • Page 8
    By showing companies smarter ways to connect with customers, we're creating new avenues of growth for Pitney Bowes 6

  • Page 9
    ... used those insights to build a more targeted marketing campaign. Result: an extraordinary jump in its coupon redemption rate. Pitney Bowes has solutions to manage every stage in the customer relationship. Companies worldwide use our location intelligence and predictive analytics to model consumer...

  • Page 10
    ... and list management to printing, assembly, metering, sorting and tracking, Pitney Bowes can turn a full range of mailing activities into an efficient, integrated operation. We boost the value of mail itself with solutions like on-envelope marketing. We also help reduce costs by maximizing postage...

  • Page 11
    ...effective way. Using SendSuiteâ„¢ enterprise software right at their desktops, employees at 150 Cox locations can now instantly compare the rates of different carriers and select the best deal. For desktop users and corporate mail centers alike, our flexible shipping solutions simplify every step in...

  • Page 12
    10

  • Page 13
    ... integrated with our mailing systems through our Production Intelligence® software, the IntelliJet system brings a new level of performance to marketing and printand-mail operations. Banking, insurance and health care are just three of the industries where Pitney Bowes customers are capitalizing...

  • Page 14
    ... it finances for customers. We manage the entire process, from document scanning and data extraction to file generation and electronic archiving. Businesses of all sizes rely on our document-processing expertise to compete more effectively amid complex regulations. Our imaging and workflow solutions...

  • Page 15
    ... to the strategic transformation program we initiated in the third quarter of 2009. Our GAAP earnings also include $0.06 per diluted share for a non-cash tax charge associated with out-of-the-money stock options, and a $0.01 benefit related to certain leveraged lease transactions in Canada. We again...

  • Page 16
    ...targeting annualized benefits, net of investments, from our strategic transformation initiatives in the range of at least $150 million to $200 million on a pretax basis, and a related reduction in the number of required positions in the company. We expect the full-run rate to be achieved by 2012. We...

  • Page 17
    ... GAAP net cash provided by operating activities, as reported Capital expenditures Free cash flow Special pension plan contributions Payments related to restructuring charges Reserve account deposits Proceeds from sale of training facility Discontinued operations Free cash flow, as adjusted $ 693...

  • Page 18
    ..., Global Financial Services David C. Dobson Executive Vice President and President, Pitney Bowes Management Services and Enterprise Sales and Solutions Steven J. Green Vice President - Finance and Chief Accounting Officer Michael J. Hickey Vice President and President, Pitney Bowes Business Insight...

  • Page 19
    ... COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2009 Commission file number: 1-3579 PITNEY BOWES INC. Incorporated in Delaware 1 Elmcroft Road, Stamford, Connecticut 06926...

  • Page 20
    ...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 ITEM 15. Exhibits and Financial...

  • Page 21
    ... our mail finishing, mail creation, shipping equipment and software; supplies; support and other professional services; and payment solutions. International Mailing: Includes the non-U.S. revenue and related expenses from the sale, rental and financing of our mail finishing, mail creation, shipping...

  • Page 22
    ...corporate, financial services, professional services and government markets, competing against national, regional and local firms specializing in facilities and document management throughout the world. We believe that our long experience and reputation for product quality, and our sales and support...

  • Page 23
    ... 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 Proceedings" in Item 3 of this Form 10-K. Employees and Employee Relations At December 31, 2009, we employed 23,465...

  • Page 24
    ... 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 25
    ...these lawsuits alleges that the Imagitas DriverSource program violates the federal Drivers Privacy Protection Act (DPPA). Under the DriverSource program, Imagitas entered into contracts with state governments to mail out automobile registration renewal materials along with third party advertisements...

  • Page 26
    ...MARKET 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...

  • Page 27
    ...the Company by the Standard & Poor's Corporation and is derived from their official total return calculation. Comparison of Cumulative Five Year Total Return $140 $120 $100 $80 $60 $40 $20 $0 2004 Pitney Bowes S&P 500 Peer Group 2005 2006 2007 2008 2009 The graph shows that on a total return basis...

  • Page 28
    ...dividends on common, preference and preferred stock Cash dividends per share of common stock Average common and potential common shares outstanding Depreciation and amortization Capital expenditures Balance sheet Total assets Long-term debt Total debt Noncontrolling interests (Preferred stockholders...

  • Page 29
    ...success at managing customer credit risk x our success at managing costs associated with our strategy of outsourcing functions and operations not central to our business x changes in interest rates x foreign currency fluctuations x cost, timing and execution of our transformation plans including any...

  • Page 30
    ... had a negative effect on equipment sales and the related high-margin financing, rental, and supplies revenue streams. While the company has been successful in reducing its cost structure across its entire business and is shifting to a more variable cost structure, these actions have not been enough...

  • Page 31
    ... 6,262 EBIT 2008 743 128 51 38 960 72 83 23 178 $ 1,138 $ $ 890 185 82 28 1,185 70 69 21 160 1,345 (Dollars in millions) U.S. Mailing International Mailing Production Mail Software Mailstream Solutions Management Services Mail Services Marketing Services Mailstream Services Total $ 2009 2,016 920...

  • Page 32
    ...of change of address kits mailed. Marketing Services EBIT increased 8% due to an improving cost structure and the exit from the motor vehicle registration services program. Revenue by source (Dollars in millions) Equipment sales Supplies Software Rentals Financing Support services Business services...

  • Page 33
    ... in millions) Cost of equipment sales Cost of supplies Cost of software Cost of rentals Financing interest expense Cost of support services Cost of business services Selling, general and administrative Research and development 2009 530 94 82 159 98 393 1,382 1,801 182 2008 663 104 101 154...

  • Page 34
    ... stock, offset by $13 million of tax benefits from retirement of inter-company obligations and the repricing of leveraged lease transactions. The write-off of deferred tax assets will not require the payment of any taxes. The effective tax rate for 2008 included $12 million of tax increases...

  • Page 35
    ...) U.S. Mailing International Mailing Production Mail Software Mailstream Solutions Management Services Mail Services Marketing Services Mailstream Services Total $ 2008 2,250 1,134 616 400 4,400 1,172 542 148 1,862 Revenue 2007 $ 2,409 1,070 623 326 4,428 1,135 441 126 1,702 $ 6,130 % change...

  • Page 36
    ...volumes in Management Services. Costs and expenses (Dollars in millions) Cost of equipment sales Cost of supplies Cost of software Cost of rentals Financing interest expense Cost of support services Cost of business services Selling, general and administrative Research and development 2008 663...

  • Page 37
    ...equity and applied our overall effective interest rate to the average outstanding finance receivables. Cost of support services as a percentage of revenue increased to 58.3% in 2008 compared with 56.9% in the prior year. Improvements in our Production Mail segment due to the impact of our transition...

  • Page 38
    ... reserves at December 31, 2009 for the restructuring actions taken in connection with the 2009 program are composed of the following: 2009 Program Balance at December 31, 2008 $ $ Cash payments $ (10) (5) $ (15) Non-cash charges $ $ Balance at December 31, 2009 $ 46 7 $ 53 Severance and benefit...

  • Page 39
    ... not limited to the following: growth and expansion opportunities; internal investments; customer financing; restructuring payments; tax payments; interest and dividend payments; pension and other benefit plan funding; acquisitions; and share repurchase program. We continue to review our liquidity...

  • Page 40
    ... for rental assets and acquisitions of $68 million partially offset by proceeds from short-term and other investments of $36 million, and increased reserve account balances for customer deposits of $33 million. Net cash used in financing activities was $761 million and consisted primarily of stock...

  • Page 41
    ... for general corporate purposes, including the repayment of commercial paper and repurchase of our stock. During 2009, we voluntarily contributed a total of $125 million in cash to our global defined benefit pension plans in excess of legally required minimum contributions to increase the funding...

  • Page 42
    ... 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 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
    ... long-term business plans and apply an appropriate discount rate. Changes in the estimates and assumptions incorporated into the long-lived asset and goodwill assessments could materially affect the determination of fair value and/or goodwill impairment for each reporting unit. For 2009, based upon...

  • Page 45
    ...expected return on plan assets assumption was 8.0% at December 31, 2009 and 2008. Sensitivity to changes in assumptions: U.S. Pension Plan x Discount rate - a 0.25% increase in the discount rate would decrease annual pension expense by approximately $2.4 million and would lower the projected benefit...

  • Page 46
    ... Note 19 to the Consolidated Financial Statements for our postretirement benefit plan disclosures. Noncontrolling Interests On January 1, 2009, we adopted new accounting guidance on noncontrolling interests. The new guidance addresses the accounting and reporting for the outstanding noncontrolling...

  • Page 47
    ... such as rental equipment. Despite these growing costs, we have generally been able to maintain profit margins through productivity and efficiency improvements, continual review of both manufacturing capacity and operating expense levels, and, where applicable, price increases. Currency translation...

  • Page 48
    ... and Euro. We 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...

  • Page 49
    ... to materially affect, such internal control over financial reporting. During 2009, we implemented new software to support the Company's accounting for income taxes. This change in our process resulted in changes in our internal controls over financial reporting. We have reviewed the system and the...

  • Page 50
    ... and Innovation Officer. In 2009, he was appointed Executive Vice President and President, Pitney Bowes Management Services and Enterprise Sales and Solutions. Mr. Dobson previously served as the Chief Executive Officer of Corel Corporation, a leading global packaged software company, since June...

  • Page 51
    ... March 31, 2010 in connection with the Company's 2010 Annual Meeting of Stockholders are incorporated herein by reference. ITEM 14. - PRINCIPAL ACCOUNTANT FEES AND SERVICES The section entitled "Principal Accountant Fees and Services" of the Pitney Bowes Inc. Definitive Proxy Statement to be filed...

  • Page 52
    ... Agent, as amended Certificate of 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...

  • Page 53
    ... effective January 1, 2009 Pitney Bowes Inc. 1998 U.K. S.A.Y.E. Stock Option Plan (h) (i) (j) Form of Equity Compensation Grant Letter (k) Form of Performance Award (l) Form of Long Term Incentive Award Agreement (m) Service Agreement between Pitney Bowes Limited and Patrick S. Keddy...

  • Page 54
    ... 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...

  • Page 55
    ..., thereunto duly authorized. Date: February 26, 2010 PITNEY BOWES INC. Registrant By: /s/ Murray D. Martin Murray D. Martin Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons...

  • Page 56
    ... 44 96 Report of Independent Registered Public Accounting Firm ...Consolidated Financial Statements of Pitney Bowes, Inc. Consolidated Statements of Income for the Years Ended December 31, 2009, 2008 and 2007 ...Consolidated Balance Sheets as of December 31, 2009 and 2008...Consolidated Statements...

  • Page 57
    ...position of Pitney Bowes Inc. and its subsidiaries at December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. In...

  • Page 58
    ... sales Supplies Software Rentals Financing Support services Business services Total revenue Costs and expenses: Cost of equipment sales Cost of supplies Cost of software Cost of rentals Financing interest expense Cost of support services Cost of business services Selling, general and administrative...

  • Page 59
    ...assets Property, plant and equipment, net Rental property and equipment, net Finance receivables Allowance for credit losses Finance receivables, net Investment in leveraged leases Goodwill Intangible assets, net Non-current income taxes Other assets Total assets December 31, 2008 $ 412,737 14,682...

  • Page 60
    ...: Depreciation and amortization Stock-based compensation Special pension plan contributions Changes in operating assets and liabilities, excluding effects of acquisitions: (Increase) decrease in accounts receivables (Increase) decrease in finance receivables (Increase) decrease in inventories...

  • Page 61
    ...: Preference Common Issuances of common stock Conversions to common stock Pre-tax stock-based compensation Adjustments to additional paid in capital, tax effect from sharebased compensation Repurchase of common stock Balance, December 31, 2008 Pitney Bowes Inc. net income Other comprehensive...

  • Page 62
    ...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 receivables contractually past due...

  • Page 63
    ...internally developed software is amortized on a straight-line basis over its estimated useful life, principally 3 to 10 years. We capitalize software development costs related to software to be sold, leased, or otherwise marketed in accordance with the software industry accounting guidance. Software...

  • Page 64
    ... extent that 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 sale of equipment, supplies, and software, rentals, financing, and support and business services. Revenue is...

  • Page 65
    ...throughout the world. We recognize revenue from these sales upon the transfer of title, which is generally at the point of shipment. We do not typically offer any rights of return or stock balancing rights. Our sales revenue from customized equipment, mail creation equipment and shipping products is...

  • Page 66
    ...recognition accounting guidance. 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. Shipping and...

  • Page 67
    ...) in the Consolidated Balance Sheets. Derivative Instruments In the normal course of business, the company is exposed to the impact of interest rate changes and foreign currency fluctuations. The company limits these risks by following established risk management policies and procedures, including...

  • Page 68
    ... net of cash acquired. Zipsort, Inc. acts as an intermediary between customers and the U.S. Postal Service. Zipsort, Inc. offers mailing services that include presorting of first class, standard class, flats, permit and international mail as well as metering services. We assigned the goodwill to the...

  • Page 69
    ... in 2008: 2008 Zipsort, Inc. Purchase price allocation Current assets Other non-current assets Intangible assets Goodwill Current liabilities Non-current liabilities Purchase price, net of cash acquired Intangible assets Customer relationships Non-compete agreements Total intangible assets...

  • Page 70
    ..., net Rental equipment Accumulated depreciation Rental property and equipment, net $ $ $ $ Depreciation expense was $269.8 million, $306.8 million and $318.1 million for the years ended December 31, 2009, 2008, and 2007, respectively. Rental equipment is primarily comprised of postage meters. 52

  • Page 71
    ... relationships Supplier relationships Mailing software and technology Trademarks and trade names Non-compete agreements $ $ $ $ $ $ Amortization expense for intangible assets was $69.1 million, $72.3 million and $65.0 million for the years ended December 31, 2009, 2008 and 2007, respectively...

  • Page 72
    ... at December 31, 2009 $ 218,567 342,549 137,366 633,938 1,332,420 500,055 259,632 194,797 954,484 2,286,904 U.S. Mailing International Mailing Production Mail Software Mailstream Solutions Management Services Mail Services Marketing Services Mailstream Services Total Other (2) (2,748) 20,319...

  • Page 73
    ... balances or 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...

  • Page 74
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) 8. Long-term Debt December 31, 2009 Recourse debt 0.64% to 1.88% credit facility due 2012 2.72% to 4.63% notes due 2012 3.88% notes due 2013 4.88% notes due 2014 5.00% notes due 2015 ...

  • Page 75
    ... stock, purchase contracts, depositary shares, warrants and units. The annual maturities of the outstanding long-term debt are as follows: 2010 - no maturities; 2011 - no maturities; 2012 - $550 million; 2013 - $375 million; 2014 - $450 million; and $2,800 million thereafter. 9. Income Taxes 2009...

  • Page 76
    ... following: 2009 Continuing operations: Federal statutory provision State and local income taxes Foreign tax differential Foreign valuation allowance Rate change Tax exempt income/reimbursement Federal income tax credits/incentives Unrealized stock compensation benefits Certain leasing transactions...

  • Page 77
    ... to finance subsidiaries Lease revenue and related depreciation 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 and tax credit...

  • Page 78
    ... of 2009, the Company recorded an additional $3.0 million tax provision, related primarily to state tax adjustments and international tax rate changes, and an additional $4.3 million provision in its loss from discontinued operations representing interest on Capital Services' tax uncertainties...

  • Page 79
    ...) At December 31, 2008, Pitney Bowes International Holdings, Inc. ("PBIH"), a subsidiary of the Company, had 3,750,000 shares outstanding or $375 million of variable term voting preferred stock owned by certain outside institutional investors. These preferred shares were entitled as a group...

  • Page 80
    ... can issue the balance of unreserved and unissued preferred stock (599,915 shares) and preference stock (4,967,921 shares). The Board will determine the dividend rate, terms of redemption, terms of conversion (if any) and other pertinent features. At December 31, 2009, unreserved and unissued...

  • Page 81
    ..., 2008 2009 $ 1,802 $ 1,486 777 640 1,073 884 21,862 18,020 888 731 26,402 21,761 (9,109) (7,458) $ 17,293 $ 14,303 0.07 0.07 $ $ 0.08 0.08 $ $ Cost of equipment sales Cost of support services Cost of business services Selling, general and administrative Research and development Pre-tax stock-based...

  • Page 82
    ... and 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 from 2005 through 2008 generally become...

  • Page 83
    ...- $48.03 Number 1,768,712 2,630,074 4,192,174 5,165,786 13,756,746 Per share weighted average exercise price $27.04 $33.57 $41.04 $46.69 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...

  • Page 84
    ... to purchase shares of our common stock at a discounted offering price and is considered a compensatory plan in accordance the share-based payments accounting guidance. In 2009, the offering price was increased to 95% from 85% in 2008 of the average price of our common stock on the New York Stock...

  • Page 85
    ... of the six-month holding period, provided the director retains a minimum of 7,500 shares of restricted common stock. Non-employee directors may defer up to 100% of their eligible compensation, subject to the terms and conditions of the Pitney Bowes Deferred Incentive Savings Plan for directors...

  • Page 86
    ...31, 2008 by Level Level 1 Level 2 Level 3 Total Assets: Investment securities Money market funds Equity securities Debt securities - U.S. and foreign governments, agencies, and municipalities Corporate notes and bonds Asset-backed securities Mortgage-backed securities Derivatives Interest rate swaps...

  • Page 87
    ... Pitney Bowes Bank (PBB). PBB, our wholly-owned subsidiary, is a Utah-chartered Industrial Loan Company (ILC). The bank's investments at December 31, 2009 were $222.4 million. We reported these investments in the Consolidated Balance Sheets as cash and cash equivalents of $151.3 million, short-term...

  • Page 88
    ...into variable interest rates. The variable rates payable by us are based on six month LIBOR plus 111.5 basis points. At December 31, 2009, the fair value of the derivatives was an asset of $8.6 million. Long-term debt was increased by $8.6 million at December 31, 2009. At December 31, 2008, the fair...

  • Page 89
    ...of our non-designated derivative instruments for the twelve months ended December 31, 2009: Derivatives Not Designated as Hedging Instruments Foreign exchange contracts Derivative Gain (Loss) Recognized in Income $ (861) Location of Derivative Gain (Loss) Selling, general and administrative expense...

  • Page 90
    ... Net Investment Hedging Relationships Non-derivative intercompany loan Loan Balance $ 61,209 Location of Deferred Translation Gain (Loss) Accumulated other comprehensive loss Credit-Risk-Related Contingent Features At December 31, 2009, Pitney Bowes maintained investment grade ratings of A / A1...

  • Page 91
    ...2008 and related to intangible assets of $16.0 million principally due to a loss of a customer in one of our marketing consulting businesses and the ongoing shift in market conditions for the litigation support vertical in our Management Services business. As of December 31, 2009, 2,999 terminations...

  • Page 92
    ...these lawsuits alleges that the Imagitas DriverSource program violates the federal Drivers Privacy Protection Act (DPPA). Under the DriverSource program, Imagitas entered into contracts with state governments to mail out automobile registration renewal materials along with third party advertisements...

  • Page 93
    ... 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 extending from 3 to 25 years. Future minimum lease payments under non-cancelable operating leases at December 31, 2009...

  • Page 94
    ... credit solution, which enables customers to finance their postage costs 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 95
    ... our mail finishing, mail creation, shipping equipment and software; supplies; support and other professional services; and payment solutions. International Mailing: Includes the non-U.S. revenue and related expenses from the sale, rental and financing of our mail finishing, mail creation, shipping...

  • Page 96
    ...,136 1,100,900 244,236 1,345,136 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 $ 2009 2,016,259 920,398 525,745 345,739...

  • Page 97
    ... $ $ 2009 Capital expenditures: U.S. Mailing International Mailing Production Mail Software Mailstream Solutions Management Services Mail Services Marketing Services Mailstream Services Total $ 78,808 25,448 1,292 4,371 109,919 19,766 21,058 514 41,338 151,257 Years ended December 31, 2008 $ 100...

  • Page 98
    ... except per share data) December 31, 2009 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...

  • Page 99
    ...the unamortized prior service costs as of December 31, 2014. During 2009, we voluntarily contributed a total of $125 million in cash to our global defined benefit pension plans in excess of legally required minimum contributions to increase the funding levels of the plans. Specifically, $100 million...

  • Page 100
    ... per share data) United States 2009 Change in plan assets: Fair value of plan assets at beginning of year Actual return on plan assets Company contributions Plan participants' contributions Foreign currency changes Benefits paid Fair value of plan assets at end of year Funded status, end of year...

  • Page 101
    ... to determine end of year benefit obligations: Discount rate Rate of compensation increase 5.75% 3.50% 6.05% 4.25% 2.25% - 6.00% 2.50% - 5.60% 2.25% - 6.60% 2.50% - 5.10% At December 31, 2009 there were no shares of our common stock included in the plan assets of our pension plans. We anticipate...

  • Page 102
    PITNEY BOWES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Tabular dollars in thousands, except per share data) Other changes in plan assets and benefit obligations for defined benefit pension plans recognized in other comprehensive income are as follows: United States 2008 2009 $ (28,404) 523,...

  • Page 103
    ...% Percentage of Plan Assets at December 31, 2008 2009 33% 35% 17% 19% 39% 38% 7% 4% 4% 4% 100% 100% Asset category U.S. equities Non-U.S. equities Fixed income Real estate Private equity Total The long-term asset allocation targets we use to manage the investment portfolio are based on the broad...

  • Page 104
    ... in the Pitney Bowes Pension Plan net assets available for benefits. Foreign Pension Plans - Fair Value Measurements at December 31, 2009 by Level Level 1 Level 2 Level 3 Assets: Investment securities Money market funds Equity securities Debt securities - U.S. and foreign governments, agencies, and...

  • Page 105
    ...hierarchy: x 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. The money market funds are classified...

  • Page 106
    ... the Company. Substantially all of our U.S. and Canadian employees become eligible for retiree health care benefits after reaching age 55 or in the case of employees of Pitney Bowes Management Services after reaching age 60 and with the completion of the required service period. U.S. employees hired...

  • Page 107
    ...benefit obligations for the Canadian plan were 5.85% in 2009 and 6.60% in 2008. Amounts recognized in the Consolidated Balance Sheets consist of: Current liability Non-current liability Net amount recognized Pre-tax amounts recognized in AOCI consist of: Net actuarial loss Prior service credit Total...

  • Page 108
    ... follows: Net actuarial loss Prior service credit Total $ $ 5,894 (2,513) 3,381 The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligations for the U.S. plan was 7.50% for 2009 and 8.00% for 2008. The assumed health care trend rate is 7.50% for 2010...

  • Page 109
    ... Average Shares Per Share Pitney Bowes Inc. net income Less: Preferred stock dividends Preference stock dividends Basic earnings per share Basic earnings per share Effect of dilutive securities: Preferred stock Preference stock Stock options and stock purchase plans Other stock plans Diluted...

  • Page 110
    ... Average Shares Per Share Pitney Bowes Inc. net income Less: Preferred stock dividends Preference stock dividends Basic earnings per share Basic earnings per share Effect of dilutive securities: Preferred stock Preference stock Stock options and stock purchase plans Other stock plans Diluted...

  • Page 111
    ... Average Shares Per Share Pitney Bowes Inc. net income Less: Preferred stock dividends Preference stock dividends Basic earnings per share Basic earnings per share Effect of dilutive securities: Preferred stock Preference stock Stock options and stock purchase plans Other stock plans Diluted...

  • Page 112
    ... is defined as total revenue less cost of equipment sales, cost of supplies, cost of software, cost of rentals, financing interest expense, 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...

  • Page 113
    ... is defined as total revenue less cost of equipment sales, cost of supplies, cost of software, cost of rentals, financing interest expense, 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...

  • Page 114
    PITNEY BOWES INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE YEARS ENDED DECEMBER 31, 2007 TO 2009 (Dollars in thousands) Description Balance at beginning of year Additions Deductions Balance at end of year Allowance for doubtful accounts 2009 $ 2008 $ 2007 $ 45,264 49,...

  • Page 115
    ...TO FIXED CHARGES (1) (Dollars in thousands) 2009 Income from continuing operations before income taxes Add: Interest expense (2) Portion of rents representative of the interest factor Amortization of capitalized interest Income as adjusted Years ended December 31, 2008 2007 2006 2005 $ 693,176 208...

  • Page 116
    ... Management AB Horizon Scandinavia AB Ibis Consulting, Inc. Imagitas, Inc. Imagitas Security Corporation Informatech Inc. International Imaging Limited Mag Systèmes SAS MailCode Holdings, Inc. MailCode, Inc. MapInfo Realty LLC PB Australia Funding Pty. Limited PB Canada Funding Ltd. PB Equipment...

  • Page 117
    ... England England India England England Netherlands New Zealand Norway Canada Finland Korea Poland Portugal Connecticut Puerto Rico South Africa France Delaware Brazil Mexico Connecticut Singapore China Canada Germany UK Germany Delaware Japan Delaware UK Singapore Australia France Sweden Switzerland...

  • Page 118
    ... PUBLIC ACCOUNTING FIRM ...Pitney Bowes Inc. of our report dated February 26, 2010 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 119
    EXHIBIT (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...

  • Page 120
    ... ACT OF 1934, AS AMENDED I, Michael Monahan, 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...

  • Page 121
    ... PURSUANT TO 18 U.S.C. SECTION 1350 The certification set forth below is being submitted in connection with the Annual Report of Pitney Bowes Inc. (the "Company") on Form 10-K for the year ended December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the...

  • Page 122
    ... PURSUANT TO 18 U.S.C. SECTION 1350 The certification set forth below is being submitted in connection with the Annual Report of Pitney Bowes Inc. (the "Company") on Form 10-K for the year ended December 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the...

  • Page 123
    ... 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...

  • Page 124
    Pitney Bowes Inc. World Headquarters 1 Elmcroft Road Stamford, CT 06926-0700 203.356.5000 www.pb.com