Pitney Bowes 2010 Annual Report Download - page 17

Pitney Bowes Annual Report 2010 15
Reconciliation of Reported Consolidated
Results to Adjusted Results
For the year 2010 2009 2008
(Dollars in thousands, except per share amounts)
GAAP income from continuing operations before income taxes,
as reported $ 534,577 $ 693,176 $ 713,177
Restructuring charges and asset impairments 182,274 48,746 200,254
MapInfo purchase accounting — — 492
Other income and expense — 4,450 5,712
Income from continuing operations before income taxes, as adjusted 716,851 746,372 919,635
Provision for income taxes, as adjusted 237,643 251,505 315,647
Preferred stock dividends of subsidiaries attributable to
noncontrolling interests 18,324 21,468 20,755
Income from continuing operations, as adjusted 460,884 473,399 583,233
Interest expense, net 201,324 203,906 216,450
Provision for income taxes, as adjusted 237,643 251,505 315,647
Preferred stock dividends of subsidiaries attributable to
noncontrolling interests 18,324 21,468 20,755
EBIT $ 918,175 $ 950,278 $ 1,136,085
GAAP diluted earnings per share, as reported $ 1.41 $ 2.04 $ 2.00
Loss from discontinued operations 0.09 0.04 0.13
GAAP diluted earnings per share from continuing operations,
as reported 1.50 2.08 2.13
Restructuring charges and asset impairments 0.59 0.15 0.69
Tax adjustments 0.13 0.05 (0.04)
MapInfo purchase accounting — — —
Diluted earnings per share from continuing operations, as adjusted $ 2.23 $ 2.28 $ 2.78
GAAP net cash provided by operating activities, as reported $ 952,111 $ 824,068 $ 1,009,415
Capital expenditures (119,768) (166,728) (237,308)
Free cash flow 832,343 657,340 772,107
Payments related to restructuring charges 119,565 105,090 102,680
Reserve account deposits 10,399 1,664 33,359
Pension plan contributions — 125,000 —
Discontinued operations — — 593
Free cash flow, as adjusted $ 962,307 $ 889,094 $ 908,739
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 financial information. The Company’s financial results are reported in accordance
with generally accepted accounting principles (GAAP). The earnings per share and free cash flow results are adjusted to exclude the impact of special items such as restructuring charges
and asset impairments, which materially impact the comparability of the Company’s results of operations. The use of free cash flow has limitations. GA AP cash flow has the advantage of
including all cash available to the Company after actual expenditures for all purposes. Free cash flow is the amount of cash that management could have available for discretionary uses if it
made different decisions about employing its cash. It adjusts for long-term commitments such as capital expenditures, as well as special items such as cash used for restructuring charges
and contributions to its pension funds. 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 GA AP cash flow and free cash flow in doing its planning.
The adjusted financial information and certain financial 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 reflect management effectiveness as these items are largely outside of its control. In assessing performance, the Company uses both EBIT and net income.
This adjusted financial information should not be construed as an alternative to our reported results determined in accordance with GA AP. Further, our definition of this adjusted financial
information may differ from similarly titled measures used by other companies.