Pitney Bowes 2010 Annual Report Download - page 36

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RESULTS OF OPERATIONS - 2009 Compared to 2008
Business segment results
The following table shows revenue and EBIT in 2009 and 2008 by business segment. Results have been reclassified to conform to the
current year presentation.
Revenue EBIT
2009 2008 % change 2009 2008 % change
U.S. Mailing $ 2,016 $ 2,250 (10)% $ 743 $ 890 (17)%
International Mailing 920 1,134 (19)% 128 185 (31)%
SMB Solutions 2,936 3,384 (13)% 871 1,075 (19)%
Production Mail 526 616 (15)% 51 82 (37)%
Software 346 400 (14)% 38 28 32%
Management Services 1,061 1,172 (9)% 72 70 3%
Mail Services 559 542 3% 83 69 20%
Marketing Services 141 148 (5)% 23 21 8%
EB Solutions 2,633 2,878 (9)% 267 270 (1)%
Total $ 5,569 $ 6,262 (11)% $ 1,138 $ 1,345 (15)%
Small & Medium Business Solutions
Small & Medium Business Solutions revenue decreased 13% to $2,936 million and EBIT decreased 19% to $871 million, compared
to the prior year. Within Small & Medium Business Solutions:
U.S. Mailing revenue decreased 10% primarily due to fewer placements of mailing equipment and related financing and rental
revenues as customers continued to delay purchases of new equipment and extend leases on existing equipment due to the economic
conditions. Revenue was adversely affected by lower business activity levels and the ongoing changing mix to more fully featured
smaller systems. Lease extensions have a positive impact on profit margins longer-term but negatively impact revenue in the current
year. As a result of lower business activity levels over the prior year, EBIT decreased 17% principally due to lower equipment sales,
financing revenue, meter rentals, and supplies sales.
International Mailing revenue decreased 19%, with 8% of this decline driven by the unfavorable impact of foreign currency
translation. The international economic environment continued to create weaker demand for our products and services. As a result,
many customers delayed making purchase decisions for new mailing systems and lower mail volume reduced supplies revenue. EBIT
declined 31%, primarily driven by lower levels of equipment and supplies sales, and lower financing revenue.
Enterprise Business Solutions:
Enterprise Business Solutions revenue decreased 9% to $2,633 million; however EBIT decreased only 1% to $267 million, compared
to the prior year. Within Enterprise Business Solutions:
Production Mail revenue decreased 15% primarily as a result of lower equipment sales in the U.S., France, and Asia Pacific as
economic uncertainty continued to delay large-ticket capital expenditures for many large enterprises worldwide. Foreign currency
translation had an unfavorable impact of 2%. EBIT decreased 37% driven by lower revenues and a shift in product mix to lower
margin products.
Software revenue decreased 14%, with 4% of this decline driven by the unfavorable impact of foreign currency translation.
Worldwide consolidation in the financial services industry and slowness in the retail sector adversely impacted the sales and renewal
of software licenses. Uncertainty surrounding the economy resulted in many large multi-national organizations changing their
approval policies for capital expenditures, which lengthened the sales cycle. EBIT increased to $38 million compared to $28 million
in the prior year due to business integration and productivity initiatives which resulted in substantial EBIT margin improvements.
This helped offset the pressure on margins from lower revenue and a higher mix of lower margin software sales.
Management Services revenue decreased 9%, of which 2% was driven by the unfavorable impact of foreign currency translation.
Revenue was adversely affected by lower business activity and decreased print and transaction volumes throughout the U.S. and